FIRST DIVISION

[G.R. No. 138051. June 10, 2004]

JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent.

DECISION

CARPIO, J.:

The Case

Before this Court is a petition for review on certiorari[1] assailing the 26 March 1999 Decision[2] of the Court of Appeals in CA-G.R.
SP No. 49190 dismissing the petition filed by Jose Y. Sonza (SONZA). The Court of Appeals affirmed the findings of the National Labor
Relations Commission (NLRC), which affirmed the Labor Arbiters dismissal of the case for lack of jurisdiction.

The Facts

In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement (Agreement) with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented
by SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred to in the Agreement
as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement listed
the services SONZA would render to ABS-CBN, as follows:

a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]

ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the second and
third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:

Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our
company relative to our talent JOSE Y. SONZA.

As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider
these acts of the station violative of the Agreement and the station as in breach thereof. In this connection, we hereby serve notice
of rescission of said Agreement at our instance effective as of date.

Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the
Agreement but reserves the right to seek recovery of the other benefits under said Agreement.

Thank you for your attention.

Very truly yours,

(Sgd.)
JOSE Y. SONZA

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 President and Gen. Manager[4]

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital
Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP).

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the
parties. SONZA filed an Opposition to the motion on 19 July 1996.

Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon Avenue
Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZAs talent fees
and other payments due him under the Agreement.

In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to dismiss and directed the parties to file their
respective position papers. The Labor Arbiter ruled:

In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April 15,
1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the instant case in this Office. And
as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter to be resolved
only after and as a result of a hearing. Thus, the respondents plea of lack of employer-employee relationship may be pleaded only as
a matter of defense. It behooves upon it the duty to prove that there really is no employer-employee relationship between it and the
complainant.

The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24 February
1997.

On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge Respondents Annex 4 and Annex
5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses
stated in their affidavits that the prevailing practice in the television and broadcast industry is to treat talents like SONZA as independent
contractors.

The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.[6] The pertinent parts
of the decision read as follows:

xxx

While Philippine jurisprudence has not yet, with certainty, touched on the true nature of the contract of a talent, it stands to reason
that a talent as above-described cannot be considered as an employee by reason of the peculiar circumstances surrounding the
engagement of his services.

It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and
a radio broadcaster. Unlike an ordinary employee, he was free to perform the services he undertook to render in
accordance with his own style. The benefits conferred to complainant under the May 1994 Agreement are certainly very much
higher than those generally given to employees. For one, complainant Sonzas monthly talent fees amount to a
staggering P317,000. Moreover, his engagement as a talent was covered by a specific contract. Likewise, he was not bound to
render eight (8) hours of work per day as he worked only for such number of hours as may be necessary.

The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an employee is
inconsequential. Whatever benefits complainant enjoyed arose from specific agreement by the parties and not by reason
of employer-employee relationship. As correctly put by the respondent, All these benefits are merely talent fees and other
contractual benefits and should not be deemed as salaries, wages and/or other remuneration accorded to an employee,
notwithstanding the nomenclature appended to these benefits. Apropos to this is the rule that the term or nomenclature given to a
stipulated benefit is not controlling, but the intent of the parties to the Agreement conferring such benefit.

The fact that complainant was made subject to respondents Rules and Regulations, likewise, does not detract from the
absence of employer-employee relationship. As held by the Supreme Court, The line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed
in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result
and the means to achieve it. (Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).

x x x (Emphasis supplied)[7]

SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters decision. SONZA
filed a motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.

On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and resolution
of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the case.[8]

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 Hence, this petition.

The Rulings of the NLRC and Court of Appeals

The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed between SONZA and ABS-CBN.
Adopting the NLRCs decision, the appellate court quoted the following findings of the NLRC:

x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of complainant Sonza,
the principal. By all indication and as the law puts it, the act of the agent is the act of the principal itself. This fact is made
particularly true in this case, as admittedly MJMDC is a management company devoted exclusively to managing the careers of Mr.
Sonza and his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)

Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of the May 1994 Agreement which specifically referred to MJMDC as the AGENT. As a matter
of fact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued the notice of rescission
in behalf of Mr. Sonza, who himself signed the same in his capacity as President.

Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the said agreements
are ABS-CBN and Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest Agreement executed between ABS-CBN
and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr. Sonza.

We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that there exist[s] employer-employee
relationship between the latter and Mr. Sonza. On the contrary, We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but
of the talent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994 Agreement.

It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the same being in
the nature of an action for alleged breach of contractual obligation on the part of respondent-appellee. As squarely apparent from
complainant-appellants Position Paper, his claims for compensation for services, 13 th month pay, signing bonus and travel allowance
against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement, while his
claims for proceeds under Stock Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-
appellant bears perusal:

Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay complainant a signing bonus
consisting of shares of stockswith FIVE HUNDRED THOUSAND PESOS (P500,000.00).

Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was receiving
prior to effectivity of (the) Agreement.

Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One
Hundred Fifty Thousand Pesos (P150,000.00) per year.

Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations with ABS-CBN are
founded on the New Civil Code, rather than the Labor Code, that instead of merely resigning from ABS-CBN, complainant-appellant
served upon the latter a notice of rescission of Agreement with the station, per his letter dated April 1, 1996, which asserted that
instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining amount stipulated in
paragraph 7 of the Agreement but reserves the right to such recovery of the other benefits under said Agreement. (Annex 3 of the
respondent ABS-CBNs Motion to Dismiss dated July 10, 1996).

Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase Agreement by
respondent-appellee that complainant-appellant filed his complaint.Complainant-appellants claims being anchored on the alleged
breach of contract on the part of respondent-appellee, the same can be resolved by reference to civil law and not to labor
law. Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in the case of Dai-Chi
Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an action for breach of contractual obligation is
intrinsically a civil dispute.[9] (Emphasis supplied)

The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a factual
question that is within the jurisdiction of the NLRC to resolve.[10] A special civil action for certiorari extends only to issues of want or
excess of jurisdiction of the NLRC.[11] Such action cannot cover an inquiry into the correctness of the evaluation of the evidence which

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served as basis of the NLRCs conclusion.[12] The Court of Appeals added that it could not re-examine the parties evidence and substitute
the factual findings of the NLRC with its own.[13]

The Issue

In assailing the decision of the Court of Appeals, SONZA contends that:

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO FIND THAT AN EMPLOYER-
EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.[14]

The Courts Ruling

We affirm the assailed decision.

No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which upheld
the Labor Arbiters dismissal of the case for lack of jurisdiction.

The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the elements
of an employer-employee relationship, this is the first time that the Court will resolve the nature of the relationship between a television
and radio station and one of its talents. There is no case law stating that a radio and television program host is an employee of the
broadcast station.

The instant case involves big names in the broadcast industry, namely Jose Jay Sonza, a known television and radio personality,
and ABS-CBN, one of the biggest television and radio networks in the country.

SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN. On the other
hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an independent contractor.

Employee or Independent Contractor?

The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor
Arbiter and the NLRC not only respect but also finality when supported by substantial evidence. [15] Substantial evidence means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[16] A party cannot prove the absence of
substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not
substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible.[17]

SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has
consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and methods
by which the work is accomplished.[18] The last element, the so-called control test, is the most important element.[19]

A. Selection and Engagement of Employee

ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs peculiar skills, talent and
celebrity status. SONZA contends that the discretion used by respondent in specifically selecting and hiring complainant over other
broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship.

Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary
employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed
by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did
not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would
have hired him through its personnel department just like any other employee.

In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the
circumstances of the relationship, with the control test being the most important element.

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B. Payment of Wages

ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of
fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and privileges
which he would not have enjoyed if he were truly the subject of a valid job contract.

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-
CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare, x x x and 13th month
pay[20] which the law automatically incorporates into every employer-employee contract.[21] Whatever benefits SONZA enjoyed arose
from contract and not because of an employer-employee relationship.[22]

SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they
indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA
such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not possessed by ordinary employees.
Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The
power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an
independent contractual relationship.

The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent
contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom
MJMDC would have to turn over any talent fee accruing under the Agreement.

C. Power of Dismissal

For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show that ABS-
CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under
labor laws.[23]

During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza shall faithfully
and completely perform each condition of this Agreement.[24] Even if it suffered severe business losses, ABS-CBN could not retrench
SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This circumstance indicates
an independent contractual relationship between SONZA and ABS-CBN.

SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees. Plainly, ABS-
CBN adhered to its undertaking in the Agreement to continue paying SONZAs talent fees during the remaining life of the Agreement
even if ABS-CBN cancelled SONZAs programs through no fault of SONZA.[25]

SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he is not an employee of
ABS-CBN. The Labor Arbiter stated that if it were true that complainant was really an employee, he would merely resign, instead.
SONZA did actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement.SONZAs letter clearly bears
this out.[26] However, the manner by which SONZA terminated his relationship with ABS-CBN is immaterial. Whether SONZA rescinded
the Agreement or resigned from work does not determine his status as employee or independent contractor.

D. Power of Control

Since there is no local precedent on whether a radio and television program host is an employee or an independent contractor,
we refer to foreign case law in analyzing the present case. The United States Court of Appeals, First Circuit, recently held in Alberty-
Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica (WIPR)[27] that a television program host is an independent contractor.
We quote the following findings of the U.S. court:

Several factors favor classifying Alberty as an independent contractor. First, a television actress is a skilled position requiring
talent and training not available on-the-job. x x x In this regard, Alberty possesses a masters degree in public communications
and journalism; is trained in dance, singing, and modeling; taught with the drama department at the University of Puerto Rico; and
acted in several theater and television productions prior to her affiliation with Desde Mi Pueblo. Second, Alberty provided the
tools and instrumentalities necessary for her to perform. Specifically, she provided, or obtained sponsors to provide, the
costumes, jewelry, and other image-related supplies and services necessary for her appearance. Alberty disputes that this factor
favors independent contractor status because WIPR provided the equipment necessary to tape the show. Albertys argument is
misplaced. The equipment necessary for Alberty to conduct her job as host of Desde Mi Pueblo related to her appearance on the
show.Others provided equipment for filming and producing the show, but these were not the primary tools that Alberty used to
perform her particular function. If we accepted this argument, independent contractors could never work on collaborative projects
because other individuals often provide the equipment required for different aspects of the collaboration. x x x

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Third, WIPR could not assign Alberty work in addition to filming Desde Mi Pueblo. Albertys contracts with WIPR specifically
provided that WIPR hired her professional services as Hostess for the Program Desde Mi Pueblo. There is no evidence that WIPR
assigned Alberty tasks in addition to work related to these tapings. x x x[28] (Emphasis supplied)

Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control
test is the most important test our courts apply in distinguishing an employee from an independent contractor. [29] This test is based
on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely
the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is
considered an independent contractor.[30]

First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.

SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs. ABS-CBN did
not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines,
appeared on television, and sounded on radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff
meetings.[31] ABS-CBN could not dictate the contents of SONZAs script. However, the Agreement prohibited SONZA from criticizing in
his shows ABS-CBN or its interests.[32] The clear implication is that SONZA had a free hand on what to say or discuss in his shows
provided he did not attack ABS-CBN or its interests.

We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work. [33] ABS-
CBN did not instruct SONZA how to perform his job.ABS-CBN merely reserved the right to modify the program format and airtime
schedule for more effective programming.[34] ABS-CBNs sole concern was the quality of the shows and their standing in the
ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZAs work.

SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and methods of the
performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still obligated to pay
SONZAs talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZAs performance of his
work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do
is not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.[35]

Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying in full SONZAs
talent fees, did not amount to control over the means and methods of the performance of SONZAs work. ABS-CBN could not terminate
or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television
- did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work, whether to
broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of the Agreement.

In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals ruled that vaudeville performers were
independent contractors although the management reserved the right to delete objectionable features in their shows. Since the
management did not have control over the manner of performance of the skills of the artists, it could only control the result of the
work by deleting objectionable features.[37]

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN
supplied the equipment, crew and airtime needed to broadcast the Mel & Jay programs. However, the equipment, crew and airtime
are not the tools and instrumentalities SONZA needed to perform his job. What SONZA principally needed were his talent or skills and
the costumes necessary for his appearance. [38] Even though ABS-CBN provided SONZA with the place of work and the necessary
equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern
was for SONZA to display his talent during the airing of the programs.[39]

A radio broadcast specialist who works under minimal supervision is an independent contractor.[40] SONZAs work as television
and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show that ABS-CBN
exercised any supervision and control over how SONZA utilized his skills and talent in his shows.

Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and standards of
performance. SONZA claims that this indicates ABS-CBNs control not only [over] his manner of work but also the quality of his work.

The Agreement stipulates that SONZA shall abide with the rules and standards of performance covering talents[41] of ABS-CBN.
The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-
CBN. The code of conduct imposed on SONZA under the Agreement refers to the Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.[42] The KBP code applies to
broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television
stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to
employees of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.[43] In
this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are
merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that
comply with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services
being rendered may be accorded the effect of establishing an employer-employee relationship. The facts of this case fall squarely
with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:

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Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.[44]

The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to
insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according
to his own initiative.[45]

Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-CBN exercised
over him.

This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.

The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry.[46] This practice is not designed
to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast
station normally spends substantial amounts of money, time and effort in building up its talents as well as the programs they appear
in and thus expects that said talents remain exclusive with the station for a commensurate period of time.[47] Normally, a much higher
fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity, as in the present case.

MJMDC as Agent of SONZA

SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN. The Labor
Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC is a labor-only contractor
and ABS-CBN is his employer.

In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the employee who is ostensibly under
the employ of the labor-only contractor; and (3) the principal who is deemed the real employer. Under this scheme, the labor-only
contractor is the agent of the principal. The law makes the principal responsible to the employees of the labor-only contractor as
if the principal itself directly hired or employed the employees.[48] These circumstances are not present in this case.

There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC merely acted as
SONZAs agent. The Agreement expressly states that MJMDC acted as the AGENT of SONZA. The records do not show that MJMDC
acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation organized
and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC,
which is owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN in entering into the Agreement with SONZA,
who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA.

As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting. MJMDC does not have any other function
apart from acting as agent of SONZA or TIANGCO to promote their careers in the broadcast and television industry. [49]

Policy Instruction No. 40

SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the
status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and
program employees.

Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no legal
presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive issuance cannot exclude independent
contractors from the class of service providers to the broadcast industry. The classification of workers in the broadcast industry into
only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in
law or in fact.

Affidavits of ABS-CBNs Witnesses

SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz without giving his counsel
the opportunity to cross-examine these witnesses.SONZA brands these witnesses as incompetent to attest on the prevailing practice
in the radio and television industry. SONZA views the affidavits of these witnesses as misleading and irrelevant.

Page 7 of 205
 While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying or refuting the allegations in
the affidavits. The Labor Arbiter has the discretion whether to conduct a formal (trial-type) hearing after the submission of the position
papers of the parties, thus:

Section 3. Submission of Position Papers/Memorandum

xxx

These verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may
have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective
witnesses which shall take the place of the latters direct testimony. x x x

Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties of their position
papers/memorandum, the Labor Arbiter shall motu propio determine whether there is need for a formal trial or hearing. At this
stage, he may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary evidence, if any from any party or witness. [50]

The Labor Arbiter can decide a case based solely on the position papers and the supporting documents without a formal
trial.[51] The holding of a formal hearing or trial is something that the parties cannot demand as a matter of right.[52] If the Labor Arbiter
is confident that he can rely on the documents before him, he cannot be faulted for not conducting a formal trial, unless under the
particular circumstances of the case, the documents alone are insufficient. The proceedings before a Labor Arbiter are non-litigious in
nature. Subject to the requirements of due process, the technicalities of law and the rules obtaining in the courts of law do not strictly
apply in proceedings before a Labor Arbiter.

Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like SONZA
as independent contractors. SONZA argues that if such practice exists, it is void for violating the right of labor to security of tenure.

The right of labor to security of tenure as guaranteed in the Constitution[53] arises only if there is an employer-employee
relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that
every person who renders services to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to
absurd results.

Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right
to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot
operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent
contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods
by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents
to render their services only as employees. If radio and television program hosts can render their services only as employees, the
station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to
freedom of the press.

Different Tax Treatment of Talents and Broadcasters

The National Internal Revenue Code (NIRC)[54] in relation to Republic Act No. 7716,[55] as amended by Republic Act No.
8241,[56] treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are subject to the 10% value-
added tax (VAT) on services they render. Exempted from the VAT are those under an employer-employee relationship.[57] This different
tax treatment accorded to talents and broadcasters bolters our conclusion that they are independent contractors, provided all the basic
elements of a contractual relationship are present as in this case.

Nature of SONZAs Claims

SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus,
travel allowance, and amounts due under the Employee Stock Option Plan. We agree with the findings of the Labor Arbiter and the
Court of Appeals that SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor
Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation
of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable
by the regular courts.[58]

Page 8 of 205
 WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190
is AFFIRMED. Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.

FIRST DIVISION

[G.R. No. 159890. May 28, 2004]

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID,
President, respondents.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the 1997 Revised Rules of Civil Procedure assailing the Decision dated March 7,
2003 of the Court of Appeals in CA-G.R. SP No. 73102 which affirmed the Resolution dated April 2, 2002 of the National Labor Relations
Commission.

Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation sometime in June 1985 as a salesman
earning a commission of 3% of the total paid-up sales covering the whole area of Mindanao. His average monthly income was more or
less P16,000.00, but later was increased to approximately P20,269.50. Aside from selling the merchandise of respondent corporation,
he was also tasked to collect payments from his various customers. Respondent corporation had complete control over his work because
its President, respondent Jose Lamadrid, frequently directed him to report to a particular area for his sales and collection activities,
and occasionally required him to go to Manila to attend conferences regarding product competition, prices, and other market strategies.

Sometime in 1998, petitioner encountered five customers/clients with bad accounts, namely:

Customers/Clients Amount

1) A&B Engineering Services P 86,431.20

2) Emmanuel Engineering Services 126,858.50
3) Panabo Empire Marketing 226,458.76
4) Southern Fortune Marketing 191,208.00
5) Alreg Marketing 56, 901.18
Less Returns: 691.02 56, 210.16
Total Bad Accounts P 687,166.62

Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he does not issue his own checks to
cover the said bad accounts, his commissions will not be released and he will lose his job. Despite serious misgivings, he issued his
personal checks in favor of respondent corporation on condition that the same shall not be deposited for clearing and that they shall
be offset against his periodic commissions.[1]

Not contented with the issuance of the foregoing checks as security for the bad accounts, respondents tricked petitioner into
signing two documents, which he later discovered to be a Promissory Note[2] and a Deed of Real Estate Mortgage.[3]

Pursuant to the parties agreement that the checks would not be deposited, as their corresponding values would be offset from
petitioners sales commissions, respondents returned the same to petitioner as evidenced by the undeposited checks and respondent
Lamadrids computations of petitioners commissions.[4]

Due to financial difficulties, petitioner inquired about his membership with the Social Security System in order to apply for a salary
loan. To his dismay, he learned that he was not covered by the SSS and therefore was not entitled to any benefit. When he brought
the matter of his SSS coverage to his employer, the latter berated and hurled invectives at him and, contrary to their agreement,
deposited the remaining checks which were dishonored by the drawee bank due to Account Closed.

Page 9 of 205
 On March 22, 2001, counsel for respondent corporation sent a letter to petitioner demanding that he make good the dishonored
checks or pay their cash equivalent. In response, petitioner sent a letter addressed to Atty. Meneses, counsel for respondent
corporation, which reads:[5]

This has reference to your demand letter dated March 22, 2001 which I received on March 30, 2001, relative to the checks I issued
to my employer LAMADRID BEARING PARTS CORPORATION.

May I respectfully request for a consideration as to the payment of the amount covered by the said checks, as follows:

1. I have an earned commission in the amount of P33,412.39 as shown in the hereto attached Summary of Sales as of February 28,
2001 (P22,748.60) and as of March 31, 2001 (P10,664.79), which I offer to be charged or deducted as partial payment thereof;

2. I hereby commit One Hundred Percent (100%) of all my commission to be directly charged or deducted as payment, from date
onward, until such time that payment will be completed;

Sir, kindly convey my good faith to your client and my employer, as is shown by my willingness to continue working as Commission
Salesman, having served the Company for the last sixteen (16) years.

Im sincerely appealing to my employer, through you, Sir, to settle these accountabilities which all resulted from the checks issued by
my customers which bounced and later charged to my account, in the manner afore-cited.

May this request merit your kindest consideration, Sirs.

Thank you very much.

On April 2, 2001, petitioner sent another letter to respondent Lamadrid, to wit:[6]

Dear Mr. Lamadrid,

This is to inform your good office that if you pursue the case against me, I may refer this problem to Mr. Paul Dominguez and Atty.
Jesus Dureza to solicit proper legal advice. I may also file counter charges against your company of (sic) unfair labor practice and
unfair compensation of 3% commission to my sales and commissions of more or less 90,000,000.00 (all collected and covered with
cleared check payments) for 16 years working with your company up to the present year 2001.

If I am not wrong your company did not exactly declare the correct amount of P90,000,000.00 more or less representing my sales
and collections (all collected and covered with cleared check payments to the Bureau of Internal Revenue [BIR] for tax declaration
purposes). In short your company profited large amount of money to (sic) the above-mentioned sales and collections of
P90,000,000.00 more or less for 16 years working with your company.

I remember that upon my employment with your company last 1985 up to the present year 2001 as commission basis salesman, I
have not signed any contract with your company stating that all uncollected accounts including bounced checks from Lamadrid
Bearing & Parts Corp. will be charged to me. I wonder why your company forcibly instructed me to secure checking account to pay
and issue check payment of P15,000.00 per month to cover your companys bad accounts in which this amount is too heavy on my
part paying a total bad accounts of more than P650,000.00 for my 16 years employment with your company as commission basis
salesman.

Recalling your visit here at my Davao City residence, located at Zone 1 2 nd Avenue, San Vicente Buhangin Davao City, way back
1998, you even forced me to sign mortgage contract of my house and lot located at Zone 1 2 nd Avenue, San Vicente, Buhangin,
Davao City, according to Mr. Jose Lamadrid this mortgage contract of my house and lot will serve as guarantee to the uncollected
and bounced checks from Lamadrid Bearing and Parts Corp., customers. I have asked 1 copy of the mortgage contract I have signed
but Mr. Jose C. Lamadrid never furnished me a copy.

Very truly yours,

(Sgd) Empermaco B. Abante, Jr.

While doing his usual rounds as commission salesman, petitioner was handed by his customers a letter from the respondent
company warning them not to deal with petitioner since it no longer recognized him as a commission salesman.

In the interim, petitioner received a subpoena from the Office of the City Prosecutor of Manila for violations of Batas Pambansa
Blg. 22 filed by respondent Lamadrid.

Petitioner thus filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose
Lamadrid, before the NLRC Regional Arbitration Branch No. XI, Davao City.

Page 10 of 205
 By way of defense, respondents countered that petitioner was not its employee but a freelance salesman on commission basis,
procuring and purchasing auto parts and supplies from the latter on credit, consignment and installment basis and selling the same to
his customers for profit and commission of 3% out of his total paid-up sales. Respondents cite the following as indicators of the absence
of an employer-employee relationship between them:

(1) petitioner constantly admitted in all his acts, letters, communications with the respondents that his relationship with the
latter was strictly commission basis salesman;

(2) he does not have a monthly salary nor has he received any benefits accruing to regular employment;

(3) he was not required to report for work on a daily basis but would occasionally drop by the Manila office when he went
to Manila for some other purpose;

(4) he was not given the usual pay-slip to show his monthly gross compensation;

(5) neither has the respondent withheld his taxes nor was he enrolled as an employee of the respondent under the Social
Security System and Philhealth;

(6) he was in fact working as commission salesman of five other companies, which are engaged in the same line of business
as that of respondent, as shown by certifications issued by the said companies;[7]

(7) if respondent owed petitioner his alleged commissions, he should not have executed the Promissory Note and the Deed
of Real Estate Mortgage.[8]

Finding no necessity for further hearing the case after the parties submitted their respective position papers, the Labor Arbiter
rendered a decision dated November 29, 2001, the decretal portion of which reads: [9]

WHEREFORE, premises considered judgment is hereby rendered DECLARING respondents LAMADRID BEARING & PARTS
CORPORATION AND JOSE LAMADRID to pay jointly and severally complainant EMPERMACO B. ABANTE, JR., the sum of PESOS ONE
MILLION THREE HUNDRED THIRTY SIX THOUSAND SEVEN HUNDRED TWENTY NINE AND 62/100 ONLY (P1,336,729.62) representing
his awarded separation pay, back wages (partial) unpaid commissions, refund of deductions, damages and attorneys fees.

SO ORDERED.

On appeal, the National Labor Relations Commission reversed the decision of the Labor Arbiter in a Resolution dated April 5,
2002, the dispositive portion of which reads:[10]

WHEREFORE, the Appeal is GRANTED. Accordingly, the appealed decision is Set Aside and Vacated. In lieu thereof, a new judgment
is entered dismissing the instant case for lack of cause of action.

SO ORDERED.

Petitioner challenged the decision of the NLRC before the Court of Appeals, which rendered the assailed judgment on March 7,
2003, the dispositive portion of which reads:[11]

WHEREFORE, premises considered, petition is hereby DENIED. Let the supersedeas bond dated 09 January 2002, issued the
Philippine Charter Insurance Corporation be cancelled and released.

SO ORDERED.

Upon denial of his motion for reconsideration, petitioner filed the instant appeal based on the following grounds:

THE HONORABLE COURT OF APPEALS IN GRAVE ABUSE OF DISCRETION MODIFIED THE IMPORT OF THE RELEVANT ANTECEDENTS
AS ITS PREMISE IN ITS QUESTIONED DECISION CAUSING IT TO ARRIVE AT ERRONEOUS CONCLUSIONS OF FACT AND LAW.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPRECIATING THE TRUE FACTS OF THIS CASE THEREBY IT MADE A
WRONG CONCLUSION BY STATING THAT THE FOURTH ELEMENT FOR DETERMINING EMPLOYER-EMPLOYEE RELATIONSHIP, WHICH
IS THE CONTROL TEST, IS WANTING IN THIS CASE.

III

THE HONORABLE COURT OF APPEALS IS AT WAR WITH THE EVIDENCE PRESENTED IN THIS CASE AS WELL AS WITH THE
APPLICABLE LAW AND ESTABLISHED RULINGS OF THIS HONORABLE COURT.

Page 11 of 205
 Initially, petitioner challenged the statement by the appellate court that petitioner, who was contracted a 3% of the total gross
sales as his commission, was tasked to sell private respondents merchandise in the Mindanao area and to collect payments of his sales
from the customers. He argues that this statement, which suggests contracting or subcontracting under Department Order No. 10-97
Amending the Rules Implementing Books III and VI of the Labor Code, is erroneous because the circumstances to warrant such
conclusion do not exist. Not being an independent contractor, he must be a regular employee pursuant to Article 280 of the Labor Code
because an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.

Petitioner likewise disputes the finding of the appellate court that no employer-employee relationship exists between him and
respondent corporation since the power of control, which is the most decisive element to determine such relationship, is wanting. He
argues that the following circumstances show that he was in truth an employee of the respondent corporation:

(1) As salesman of the private respondents, petitioner was also the one collecting payment of his sales from various
customers. Thus, he was bringing with him Provisional Receipts, samples of which are attached to his Position Paper filed with the
Labor Arbiter.

(2) Private respondents had complete control over the work of the petitioner. From time to time, respondent JOSE LAMADRID was
directing him to report to a particular area in Mindanao for his sales and collection activities, and sometimes he was required to go to
Manila for a conference regarding competitions, new prices (if any), special offer (if competitors gave special offer or discounts), and
other selling/marketing strategy. In other words, respondent JOSE LAMADRID was closely monitoring the sales and collection
activities of the petitioner.

Petitioner further contends that it was illogical for the appellate court to conclude that since he was not required to report for
work on a daily basis, the power of control is absent. He reasons that being a field personnel, as defined under Article 82 of the Labor
Code, who is covering the Mindanao area, it would be impractical for him to report to the respondents office in Manila in order to keep
tab of his actual working hours.

Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that
the findings thereon by the Labor Arbiter and the National Labor Relations Commission shall be accorded not only respect but even
finality when supported by substantial evidence. The decisive factor in such finality is the presence of substantial evidence to support
said finding, otherwise, such factual findings cannot be accorded finality by this Court.[12] Considering the conflicting findings of fact by
the Labor Arbiter and the NLRC as well as the Court of Appeals, there is a need to reexamine the records to determine with certainty
which of the propositions espoused by the contending parties is supported by substantial evidence.

We are called upon to resolve the issue of whether or not petitioner, as a commission salesman, is an employee of respondent
corporation. To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test,
namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of
dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the most important.[13] The so-called
control test is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee
relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.

Applying the aforementioned test, an employer-employee relationship is notably absent in this case. It is undisputed that
petitioner Abante was a commission salesman who received 3% commission of his gross sales. Yet no quota was imposed on him by
the respondent; such that a dismal performance or even a dead result will not result in any sanction or provide a ground for
dismissal. He was not required to report to the office at any time or submit any periodic written report on his sales performance and
activities. Although he had the whole of Mindanao as his base of operation, he was not designated by respondent to conduct his sales
activities at any particular or specific place. He pursued his selling activities without interference or supervision from respondent
company and relied on his own resources to perform his functions. Respondent company did not prescribe the manner of selling the
merchandise; he was left alone to adopt any style or strategy to entice his customers. While it is true that he occasionally reported to
the Manila office to attend conferences on marketing strategies, it was intended not to control the manner and means to be used in
reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing performance. As correctly
observed by the appellate court, reports on sales, collection, competitors, market strategies, price listings and new offers relayed by
petitioner during his conferences to Manila do not indicate that he was under the control of respondent. [14] Moreover, petitioner was
free to offer his services to other companies engaged in similar or related marketing activities as evidenced by the certifications issued
by various customers.[15]

In Encyclopedia Britannica (Philippines), Inc. v. NLRC,[16] we reiterated the rule that there could be no employer-employee
relationship where the element of control is absent. Where a person who works for another does so more or less at his own pleasure
and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the
amount thereof, no relationship of employer-employee exists.

We do not agree with petitioners contention that Article 280[17] is a crucial factor in determining the existence of an employment
relationship. It merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of
determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where
the existence of an employment relationship is in dispute.[18]

Neither can we subscribe to petitioners misplaced reliance on the case of Songco v. NLRC.[19] While in that case the term
commission under Article 96 of the Labor Code was construed as being included in the definition of the term wage available to
employees, there is no categorical pronouncement that the payment of compensation on commission basis is conclusive proof of the

Page 12 of 205
existence of an employer-employee relationship. After all, commission, as a form of remuneration, may be availed of by both an
employee or a non-employee.

Petitioner decried the alleged intimidation and trickery employed by respondents to obtain from him a Promissory Note and to
issue forty-seven checks as security for the bad accounts incurred by five customers.

While petitioner may have been coerced into executing force to issue the said documents, it may equally be true that petitioner
did so in recognition of a valid financial obligation. He who claims that force or intimidation was employed upon him lies the onus
probandi. He who asserts must prove. It is therefore incumbent upon petitioner to overcome the disputable presumption that private
transactions have been prosecuted fairly and regularly, and that there is sufficient consideration for every contract.[20] A fortiori, it is
difficult to imagine that petitioner, a salesman of long standing, would accede without raising a protest to the patently capricious and
oppressive demand by respondent of requiring him to assume bad accounts which, as he contended, he had not incurred. This lends
credence to the respondents assertion that petitioner procured the goods from the said company on credit, consignment or installment
basis and then sold the same to various customers. In the scheme of things, petitioner, having directly contracted with the respondent
company, becomes responsible for the amount of merchandise he took from the respondent, and in turn, the customer/s would be
liable for their respective accounts to the seller, i.e., the petitioner, with whom they contracted the sale.

All told, we sustain the factual and legal findings of the appellate court and accordingly, find no cogent reason to overturn the
same.

WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated March 7, 2003 in CA-G.R. SP No. 73102, which
denied the petition of Empermaco B. Abante, is AFFIRMED in toto.

SO ORDERED.

Panganiban, (Working Chairman), Carpio, and Azcuna, JJ., concur

SECOND DIVISION

[G.R. No. 121605. February 2, 2000]

PAZ MARTIN JO and CESAR JO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and PETER
MEJILA, respondents.

DECISION

QUISUMBING, J.:

This petition for certiorari seeks to set aside the Decision[1] of National Labor Relations Commission (Fifth Division) promulgated on
November 21, 1994, and its Resolution dated June 7, 1995, which denied petitioners motion for reconsideration.

Private respondent Peter Mejila worked as barber on a piece rate basis at Dinas Barber Shop. In 1970, the owner, Dina Tan, sold the
barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including private respondent, were absorbed by the new
owners. The name of the barbershop was changed to Windfield Barber Shop.

The owners and the barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of the fee paid for every
haircut or shaving job done, while one-third (1/3) went to the owners of the shop.

In 1977, petitioners designated private respondent as caretaker of the shop because the former caretaker became physically unfit.
Private respondents duties as caretaker, in addition to his being a barber, were: (1) to report to the owners of the barbershop
whenever the airconditioning units malfunctioned and/or whenever water or electric power supply was interrupted; (2) to call the
laundry woman to wash dirty linen; (3) to recommend applicants for interview and hiring; (4) to attend to other needs of the shop.
For this additional job, he was given an honorarium equivalent to one-third (1/3) of the net income of the shop.

When the building occupied by the shop was demolished in 1986, the barbershop closed. But soon a place nearby was rented by
petitioners and the barbershop resumed operations as Cesars Palace Barbershop and Massage Clinic. In this new location, private
respondent continued to be a barber and caretaker, but with a fixed monthly honorarium as caretaker, to wit: from February 1986 to
1990 - P700; from February 1990 to March 1991 - P800; and from July 1992 P1,300.

In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings, characterized by constant
exchange of personal insults during working hours, became serious so that private respondent reported the matter to Atty. Allan
Macaraya of the labor department. The labor official immediately summoned private respondent and petitioners to a conference.
Upon investigation, it was found out that the dispute was not between private respondent and petitioners; rather, it was between the
former and his fellow barber. Accordingly, Atty. Macaraya directed petitioners counsel, Atty. Prudencio Abragan, to thresh out the
problem.

During the mediation meeting held at Atty. Abragans office a new twist was added. Despite the assurance that he was not being
driven out as caretaker-barber, private respondent demanded payment for several thousand pesos as his separation pay and other

Page 13 of 205
monetary benefits. In order to give the parties enough time to cool off, Atty. Abragan set another conference but private respondent
did not appear in such meeting anymore.

Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2, 1993, he turned over the
duplicate keys of the shop to the cashier and took away all his belongings therefrom. On January 8, 1993, he began working as a
regular barber at the newly opened Goldilocks Barbershop also in Iligan City.

On January 12, 1993, private respondent filed a complaint[2] for illegal dismissal with prayer for payment of separation pay, other
monetary benefits, attorneys fees and damages. Significantly, the complaint did not seek reinstatement as a positive relief.

In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was an employee of petitioners, and that private
respondent was not dismissed but had left his job voluntarily because of his misunderstanding with his co-worker.[3] The Labor
Arbiter dismissed the complaint, but ordered petitioners to pay private respondent his 13th month pay and attorneys fees.

Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor arbiters judgment. The NLRC
sustained the labor arbiters finding as to the existence of employer-employee relationship between petitioners and private
respondent, but it ruled that private respondent was illegally dismissed. Hence, the petitioners were ordered to reinstate private
respondent and pay the latters backwages, 13th month pay, separation pay and attorneys fees, thus:

"For failure of respondents to observe due process before dismissing the complainant, We rule and hold that he
was illegally terminated. Consequently, he should be reinstated and paid his backwages starting from January 1,
1993 up to the time of his reinstatement and payment of separation pay, should reinstatement not be feasible on
account of a strained employer-employee relationship.

As complainants income was mixed, (commission and caretaker), he becomes entitled to 13th month pay only in
his capacity as caretaker at the last rate of pay given to him.

With respect to separation pay, even workers paid on commission are given separation pay as they are considered
employees of the company. Complainant should be adjudged entitled to separation pay reckoned from 1970 up to
the time he was dismissed on December 31, 1992 at one-half month pay of his earning as a barber; and as a
caretaker the same should be reckoned from 1977 up to December 31, 1992.

As complainant has been assisted by counsel not only in the preparation of the complaint, position paper but in
hearings before the Labor Arbiter a quo, attorneys fees equivalent to 10% of the money awards should likewise be
paid to complainant.

WHEREFORE, the decision appealed from is Vacated and Set Aside and a new one entered in accordance with the
above-findings and awards.

SO ORDERED."[4]

Its motion for reconsideration having been denied in a Resolution dated June 7, 1995, petitioners filed the instant petition.

The issues for resolution are as follows:

1. Whether or not there exists an employer-employee relationship between petitioners and private respondent.

2. Whether or not private respondent was dismissed from or had abandoned his employment.

Petitioners contend that public respondent gravely erred in declaring that private respondent was their employee. They claim that
private respondent was their "partner in trade" whose compensation was based on a sharing arrangement per haircut or shaving job
done. They argue that private respondents task as caretaker could be considered an employment because the chores are very
minimal.

At the outset, we reiterate the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and
that the findings thereon by the labor arbiter and the NLRC shall be accorded not only respect but even finality when supported by
ample evidence.[5]

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and
engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the
workers conduct, with the latter assuming primacy in the overall consideration. The power of control refers to the existence of the
power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of
duties of the employee; it is enough that the employer has the right to wield that power. [6]

Page 14 of 205
Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of industrial partnership, we
entertain no doubt that private respondent was employed by petitioners as caretaker-barber. Initially, petitioners, as new owners of
the barbershop, hired private respondent as barber by absorbing the latter in their employ. Undoubtedly, the services performed by
private respondent as barber is related to, and in the pursuit of the principal business activity of petitioners. Later on, petitioners
tapped private respondent to serve concurrently as caretaker of the shop. Certainly, petitioners had the power to dismiss private
respondent being the ones who engaged the services of the latter. In fact, private respondent sued petitioners for illegal
dismissal, albeit contested by the latter. As a caretaker, private respondent was paid by petitioners wages in the form of honorarium,
originally, at the rate of one-third (1/3) of the shops net income but subsequently pegged at a fixed amount per month. As a barber,
private respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done. Furthermore, the following facts
indubitably reveal that petitioners controlled private respondents work performance, in that: (1) private respondent had to inform
petitioners of the things needed in the shop; (2) he could only recommend the hiring of barbers and masseuses, with petitioners
having the final decision; (3) he had to be at the shop at 9:00 a.m. and could leave only at 9:00 p.m. because he was the one who
opened and closed it, being the one entrusted with the key.[7] These duties were complied with by private respondent upon
instructions of petitioners. Moreover, such task was far from being negligible as claimed by petitioners. On the contrary, it was
crucial to the business operation of petitioners as shown in the preceding discussion. Hence, there was enough basis to declare
private respondent an employee of petitioners. Accordingly, there is no cogent reason to disturb the findings of the labor arbiter and
NLRC on the existence of employer-employee relationship between herein private parties.

With regard to the second issue, jurisprudence has laid out the rules regarding abandonment as a just and valid ground for
termination of employment. To constitute abandonment, there must be concurrence of the intention to abandon and some overt acts
from which it may be inferred that the employee concerned has no more interest in working.[8] In other words, there must be a clear,
deliberate and unjustified refusal to resume employment and a clear intention to sever the employer-employee relationship on the
part of the employee.[9]

In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left his work on his own volition
because he could no longer bear the incessant squabbles with his co-worker. Nevertheless, public respondent did not give credence
to petitioners claim that private respondent abandoned his job. On this score, public respondent gravely erred as hereunder
discussed.

At the outset, we must stress that where the findings of the NLRC contradict those of the labor arbiter, the Court, in the exercise of
its equity jurisdiction, may look into the records of the case and reexamine the questioned findings. [10]

In this case, the following circumstances clearly manifest private respondents intention to sever his ties with petitioners. First,
private respondent even bragged to his co-workers his plan to quit his job at Cesars Palace Barbershop and Massage Clinic as borne
out by the affidavit executed by his former co-workers.[11] Second, he surrendered the shops keys and took away all his things from
the shop. Third, he did not report anymore to the shop without giving any valid and justifiable reason for his absence. Fourth, he
immediately sought a regular employment in another barbershop, despite previous assurance that he could remain in petitioners
employ. Fifth, he filed a complaint for illegal dismissal without praying for reinstatement.

Moreover, public respondents assertion that the institution of the complaint for illegal dismissal manifests private respondents lack of
intention to abandon his job[12] is untenable. The rule that abandonment of work is inconsistent with the filing of a complaint for
illegal dismissal is not applicable in this case. Such rule applies where the complainant seeks reinstatement as a relief. Corollarily, it
has no application where the complainant does not pray for reinstatement and just asks for separation pay instead [13] as in the
present case. It goes without saying that the prayer for separation pay, being the alternative remedy to reinstatement,[14] contradicts
private respondents stance. That he was illegally dismissed is belied by his own pleadings as well as contemporaneous conduct.

We are, therefore, constrained to agree with the findings of the Labor Arbiter that private respondent left his job voluntarily for
reasons not attributable to petitioners. It was error and grave abuse of discretion for the NLRC to hold petitioners liable for illegal
dismissal of private respondent.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of public respondent NLRC are reversed and set aside.
The decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

Page 15 of 205
 THIRD DIVISION

G.R. No. 75112 August 17, 1992

FILAMER CHRISTIAN INSTITUTE, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, in his capacity as Judge of the Regional Trial
Court, Branch XIV, Roxas City and POTENCIANO KAPUNAN, SR., respondents.

Bedona & Bedona Law Office for petitioner.

Rhodora G. Kapunan for private respondents.

GUTIERREZ, JR., J.:

The private respondents, heirs of the late Potenciano Kapunan, seek reconsideration of the decision rendered by this Court on
October 16, 1990 (Filamer Christian Institute v. Court of Appeals, 190 SCRA 477) reviewing the appellate court's conclusion that
there exists an employer-employee relationship between the petitioner and its co-defendant Funtecha. The Court ruled that the
petitioner is not liable for the injuries caused by Funtecha on the grounds that the latter was not an authorized driver for whose acts
the petitioner shall be directly and primarily answerable, and that Funtecha was merely a working scholar who, under Section 14,
Rule X, Book III of the Rules and Regulations Implementing the Labor Code is not considered an employee of the petitioner.

The private respondents assert that the circumstances obtaining in the present case call for the application of Article 2180 of the Civil
Code since Funtecha is no doubt an employee of the petitioner. The private respondents maintain that under Article 2180 an injured
party shall have recourse against the servant as well as the petitioner for whom, at the time of the incident, the servant was
performing an act in furtherance of the interest and for the benefit of the petitioner. Funtecha allegedly did not steal the school jeep
nor use it for a joy ride without the knowledge of the school authorities.

After a re-examination of the laws relevant to the facts found by the trial court and the appellate court, the Court reconsiders its
decision. We reinstate the Court of Appeals' decision penned by the late Justice Desiderio Jurado and concurred in by Justices Jose C.
Campos, Jr. and Serafin E. Camilon. Applying Civil Code provisions, the appellate court affirmed the trial court decision which
ordered the payment of the P20,000.00 liability in the Zenith Insurance Corporation policy, P10,000.00 moral damages, P4,000.00
litigation and actual expenses, and P3,000.00 attorney's fees.

It is undisputed that Funtecha was a working student, being a part-time janitor and a scholar of petitioner Filamer. He was, in
relation to the school, an employee even if he was assigned to clean the school premises for only two (2) hours in the morning of
each school day.

Having a student driver's license, Funtecha requested the driver, Allan Masa, and was allowed, to take over the vehicle while the
latter was on his way home one late afternoon. It is significant to note that the place where Allan lives is also the house of his father,
the school president, Agustin Masa. Moreover, it is also the house where Funtecha was allowed free board while he was a student of
Filamer Christian Institute.

Page 16 of 205
Allan Masa turned over the vehicle to Funtecha only after driving down a road, negotiating a sharp dangerous curb, and viewing that
the road was clear. (TSN, April 4, 1983, pp. 78-79) According to Allan's testimony, a fast moving truck with glaring lights nearly hit
them so that they had to swerve to the right to avoid a collision. Upon swerving, they heard a sound as if something had bumped
against the vehicle, but they did not stop to check. Actually, the Pinoy jeep swerved towards the pedestrian, Potenciano Kapunan
who was walking in his lane in the direction against vehicular traffic, and hit him. Allan affirmed that Funtecha followed his advise to
swerve to the right. (Ibid., p. 79) At the time of the incident (6:30 P.M.) in Roxas City, the jeep had only one functioning headlight.

Allan testified that he was the driver and at the same time a security guard of the petitioner-school. He further said that there was
no specific time for him to be off-duty and that after driving the students home at 5:00 in the afternoon, he still had to go back to
school and then drive home using the same vehicle.

Driving the vehicle to and from the house of the school president where both Allan and Funtecha reside is an act in furtherance of
the interest of the petitioner-school. Allan's job demands that he drive home the school jeep so he can use it to fetch students in the
morning of the next school day.

It is indubitable under the circumstances that the school president had knowledge that the jeep was routinely driven home for the
said purpose. Moreover, it is not improbable that the school president also had knowledge of Funtecha's possession of a student
driver's license and his desire to undergo driving lessons during the time that he was not in his classrooms.

In learning how to drive while taking the vehicle home in the direction of Allan's house, Funtecha definitely was not having a joy ride.
Funtecha was not driving for the purpose of his enjoyment or for a "frolic of his own" but ultimately, for the service for which the
jeep was intended by the petitioner school. (See L. Battistoni v. Thomas, Can SC 144, 1 D.L.R. 577, 80 ALR 722 [1932]; See also
Association of Baptists for World Evangelism, Inc. v. Fieldmen's Insurance Co., Inc. 124 SCRA 618 [1983]). Therefore, the Court is
constrained to conclude that the act of Funtecha in taking over the steering wheel was one done for and in behalf of his employer for
which act the petitioner-school cannot deny any responsibility by arguing that it was done beyond the scope of his janitorial duties.
The clause "within the scope of their assigned tasks" for purposes of raising the presumption of liability of an employer, includes any
act done by an employee, in furtherance of the interests of the employer or for the account of the employer at the time of the
infliction of the injury or damage. (Manuel Casada, 190 Va 906, 59 SE 2d 47 [1950]) Even if somehow, the employee driving the
vehicle derived some benefit from the act, the existence of a presumptive liability of the employer is determined by answering the
question of whether or not the servant was at the time of the accident performing any act in furtherance of his master's business.
(Kohlman v. Hyland, 210 NW 643, 50 ALR 1437 [1926]; Jameson v. Gavett, 71 P 2d 937 [1937])

Section 14, Rule X, Book III of the Rules implementing the Labor Code, on which the petitioner anchors its defense, was
promulgated by the Secretary of Labor and Employment only for the purpose of administering and enforcing the provisions of the
Labor Code on conditions of employment. Particularly, Rule X of Book III provides guidelines on the manner by which the powers of
the Labor Secretary shall be exercised; on what records should be kept; maintained and preserved; on payroll; and on the exclusion
of working scholars from, and inclusion of resident physicians in the employment coverage as far as compliance with the substantive
labor provisions on working conditions, rest periods, and wages, is concerned.

In other words, Rule X is merely a guide to the enforcement of the substantive law on labor. The Court, thus, makes the distinction
and so holds that Section 14, Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted by an injured
person during a vehicular accident against a working student of a school and against the school itself.

The present case does not deal with a labor dispute on conditions of employment between an alleged employee and an alleged
employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts of a person, against both
doer-employee and his employer. Hence, the reliance on the implementing rule on labor to disregard the primary liability of an
employer under Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used by an employer as a shield
to avoid liability under the substantive provisions of the Civil Code.

There is evidence to show that there exists in the present case an extra-contractual obligation arising from the negligence or reckless
imprudence of a person "whose acts or omissions are imputable, by a legal fiction, to other(s) who are in a position to exercise an
absolute or limited control over (him)." (Bahia v. Litonjua and Leynes, 30 Phil. 624 [1915])

Funtecha is an employee of petitioner Filamer. He need not have an official appointment for a driver's position in order that the
petitioner may be held responsible for his grossly negligent act, it being sufficient that the act of driving at the time of the incident
was for the benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or was not acting within the scope of his
janitorial duties does not relieve the petitioner of the burden of rebutting the presumption juris tantum that there was negligence on
its part either in the selection of a servant or employee, or in the supervision over him. The petitioner has failed to show proof of its
having exercised the required diligence of a good father of a family over its employees Funtecha and Allan.

The Court reiterates that supervision includes the formulation of suitable rules and regulations for the guidance of its employees and
the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations
through his employees. (Bahia v. Litonjua and Leynes, supra, at p. 628; Phoenix Construction, v. Intermediate Appellate Court, 148
SCRA 353 [1987])

Page 17 of 205
An employer is expected to impose upon its employees the necessary discipline called for in the performance of any act
indispensable to the business and beneficial to their employer.

In the present case, the petitioner has not shown that it has set forth such rules and guidelines as would prohibit any one of its
employees from taking control over its vehicles if one is not the official driver or prohibiting the driver and son of the Filamer
president from authorizing another employee to drive the school vehicle. Furthermore, the petitioner has failed to prove that it had
imposed sanctions or warned its employees against the use of its vehicles by persons other than the driver.

The petitioner, thus, has an obligation to pay damages for injury arising from the unskilled manner by which Funtecha drove the
vehicle. (Cangco v. Manila Railroad Co., 38 Phil. 768, 772 [1918]). In the absence of evidence that the petitioner had exercised the
diligence of a good father of a family in the supervision of its employees, the law imposes upon it the vicarious liability for acts or
omissions of its employees. (Umali v. Bacani, 69 SCRA 263 [1976]; Poblete v. Fabros, 93 SCRA 200 [1979]; Kapalaran Bus Liner v.
Coronado, 176 SCRA 792 [1989]; Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989]; Pantranco North Express, Inc. v.
Baesa, 179 SCRA 384 [1989]) The liability of the employer is, under Article 2180, primary and solidary. However, the employer shall
have recourse against the negligent employee for whatever damages are paid to the heirs of the plaintiff.

It is an admitted fact that the actual driver of the school jeep, Allan Masa, was not made a party defendant in the civil case for
damages. This is quite understandable considering that as far as the injured pedestrian, plaintiff Potenciano Kapunan, was
concerned, it was Funtecha who was the one driving the vehicle and presumably was one authorized by the school to drive. The
plaintiff and his heirs should not now be left to suffer without simultaneous recourse against the petitioner for the consequent injury
caused by a janitor doing a driving chore for the petitioner even for a short while. For the purpose of recovering damages under the
prevailing circumstances, it is enough that the plaintiff and the private respondent heirs were able to establish the existence of
employer-employee relationship between Funtecha and petitioner Filamer and the fact that Funtecha was engaged in an act not for
an independent purpose of his own but in furtherance of the business of his employer. A position of responsibility on the part of the
petitioner has thus been satisfactorily demonstrated.

WHEREFORE, the motion for reconsideration of the decision dated October 16, 1990 is hereby GRANTED. The decision of the
respondent appellate court affirming the trial court decision is REINSTATED.

SO ORDERED.

Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

SECOND DIVISION

[G.R. No. 119268. February 23, 2000]

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA
and AMADO CENTENO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI
(PHILJAMA INTERNATIONAL, INC.), respondents.

DECISION

QUISUMBING, J.:

This special civil action for certiorari seeks to annul the decision[1] of public respondent promulgated on October 28, 1994, in NLRC
NCR CA No. 003883-92, and its resolution[2] dated December 13, 1994 which denied petitioners motion for reconsideration.

Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of
"Goodman Taxi." Petitioners used to drive private respondents taxicabs every other day on a 24-hour work schedule under the
boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners daily earnings the amount of P30.00 supposedly for the washing of the taxi units.
Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for
work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders
and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent
for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision[3] dated August 31, 1992, the labor
arbiter dismissed said complaint for lack of merit.

On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor
arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for
just cause and after due process. It disposed of the case as follows:

Page 18 of 205
 "WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby
SET ASIDE and another one entered:

1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the
complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny M.
Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr.,
and Joel Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to
pay the complainants full backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the
amount paid as washing charges; and

2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence.

SO ORDERED."[4]

Private respondents first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for
reconsideration. This time, public respondent, in its decision[5] dated October 28, 1994, granted aforesaid second motion for
reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee
relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code,
and disposed of the case as follows:

"VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course.

Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The
Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing the
complaint for lack of jurisdiction.

No costs.

SO ORDERED."[6]

Expectedly, petitioners sought reconsideration of the labor tribunals latest decision which was denied. Hence, the instant petition.

In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave abuse of discretion
in rendering the assailed decision, arguing that:

"I

THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENTS SECOND MOTION FOR RECONSIDERATION
WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO GRANT THE SAME ON
GROUNDS NOT EVEN INVOKED THEREIN.

II

THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A SETTLED

ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO REVERSE, ALTER OR
MODIFY.

III

IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI
DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY."[7]

The petition is impressed with merit.

The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of
procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as
to amount to lack of power.[8] In labor cases, this Court has declared in several instances that disregarding rules it is bound to
observe constitutes grave abuse of discretion on the part of labor tribunal.

In Garcia vs. NLRC,[9] private respondent therein, after receiving a copy of the labor arbiters decision, wrote the labor arbiter who
rendered the decision and expressed dismay over the judgment. Neither notice of appeal was filed nor cash or surety bond was
posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private respondent and treated said

Page 19 of 205
letter as private respondents appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with grave abuse
of discretion in treating a mere letter from private respondent as private respondents appeal in clear violation of the rules on appeal
prescribed under Section 3(a), Rule VI of the New Rules of Procedure of NLRC.

In Philippine Airlines Inc. vs. NLRC,[10] we held that the labor arbiter committed grave abuse of discretion when he failed to resolve
immediately by written order a motion to dismiss on the ground of lack of jurisdiction and the supplemental motion to dismiss as
mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC.

In Unicane Workers Union-CLUP vs. NLRC,[11] we held that the NLRC gravely abused its discretion by allowing and deciding an appeal
without an appeal bond having been filed as required under Article 223 of the Labor Code.

In Maebo vs. NLRC,[12] we declared that the labor arbiter gravely abused its discretion in disregarding the rule governing position
papers. In this case, the parties have already filed their position papers and even agreed to consider the case submitted for decision,
yet the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into consideration, as basis for his
decision, the alleged facts adduced therein and the documents attached thereto.

In Gesulgon vs. NLRC,[13] we held that public respondent gravely abused its discretion in treating the motion to set aside judgment
and writ of execution as a petition for relief of judgment. In doing so, public respondent had, without sufficient basis, extended the
reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law.

In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public
respondents decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal
had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had.[14] Thus,
when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance
with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party, thus:

"SEC. 14. Motions for Reconsideration. --- Motions for reconsideration of any order, resolution or decision of the
Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is
under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of
service that a copy of the same has been furnished within the reglementary period the adverse party and provided
further, that only one such motion from the same party shall be entertained." [Emphasis supplied]

The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious
and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes.
The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food,
shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry. [15]

As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited
pleading[16] which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of
"satisfying the ends of justice",[17] especially when its disposition of a legal controversy ran afoul with a clear and long standing
jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated
by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking
cognizance and granting private respondents second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs
in labor cases.

But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As
mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of this Court. The labor tribunal
reasoned out as follows:

"On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are
taxi drivers purely on the boundary system. Under this system the driver takes out his unit and pays the
owner/operator a fee commonly called boundary for the use of the unit. Now, in the determination the existence of
employer-employee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No.
73199, 26 October 1988) has applied the following four-fold test: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees
conduct.

Among the four (4) requisites, the Supreme Court stresses that control is deemed the most important that the
other requisites may even be disregarded. Under the control test, an employer-employee relationship exists if the
employer has reserved the right to control the employee not only as to the result of the work done but also as to
the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. (Ibid.)

Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the
drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the use of the vehicle. On
the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they
conduct their trade and are beyond the physical control of the owner/operator; they themselves determine the
Page 20 of 205
 amount of revenue they would want to earn in a days driving; and, more significantly aside from the fact that they
pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles
they are driving.

Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is
covered by a charter agreement under the Civil Code rather than the Labor Code."[18]

The foregoing ratiocination goes against prevailing jurisprudence.

In a number of cases decided by this Court,[19] we ruled that the relationship between jeepney owners/operators on one hand and
jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in
the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney
drivers, the former exercise supervision and control over the latter. The management of the business is in the owners hands. The
owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only
that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them
from that of employer and employee. We have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor,[20] auto-calesa owner/operator and driver,[21] and recently between taxi owners/operators and
taxi drivers.[22] Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities
which are usually necessary or desirable in the usual business or trade of their employer.

As consistently held by this Court, termination of employment must be effected in accordance with law. The just and authorized
causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor Code. The requirement of notice
and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be
dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case,
private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent
by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and
failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding
petitioners dismissal.

Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement.[23] It must be
emphasized, though, that recent judicial pronouncements[24] distinguish between employees illegally dismissed prior to the effectivity
of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus, employees
illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or qualification, while
those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary
equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The
legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that
petitioners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily
earnings.

With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as
not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has
driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and
is in fact dictated by fair play.[25] Hence, the drivers are not entitled to reimbursement of washing charges.

WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28, 1994, is hereby SET
ASIDE. The DECISION of public respondent dated April 28, 1994, and its RESOLUTION dated December 13, 1994, are hereby
REINSTATED subject to MODIFICATION. Private respondent is directed to reinstate petitioners to their positions held at the time of
the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the
date of dismissal until their actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount
paid as washing charges is deleted. Costs against private respondents.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, and De Leon, Jr., JJ., concur.

Buena, J., on official leave.

Page 21 of 205
 FIRST DIVISION

G.R. No. 79664 August 11, 1992

ANDRES VILLAVILLA and ESTER GADIENTE VILLAVILLA, petitioners,

vs.
COURT OF APPEALS, SOCIAL SECURITY COMMISSION, REYNALDO MERCADO, and MARCELO COSUCO, respondents,
SOCIAL SECURITY SYSTEM, intervenor.

Public Attorney's Office for petitioners.

F.V. Faylona & Associates for Marcelino Casuco.

BELLOSILLO, J.:

This is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated April 10, 1987, affirming the Order 2 of the
Social Security Commission dated November 28, 1984, dismissing the complaint of herein petitioners for lack of cause of action, as
well as the Resolution 3 of respondent court denying the motion of petitioners for reconsideration.

The antecedents: Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint
Theresa" from 1974 until September 11, 1977, when the boat sank off Isla Binatikan, Taytay, Palawan. Arturo was not among the
known survivors of that sinking and had been missing since then. 4

On November 20, 1979, petitioners Andres Villavilla and Ester Gadiente Villavilla, parents of Arturo, filed a petition with the Social
Security Commission against Reynaldo Mercado and Marcelino Cosuco, owners of the ill-fated fishing boat, for death compensation
benefits of Arturo whom respondents failed to register as their employee. 5

On May 29, 1981, the Social Security System (SSS) filed a petition in intervention alleging that records from the SSS Production
Department showed that "F/B Saint Theresa", owned by Marcelino Cosuco and operated by Reynaldo Mercado, was a registered
member-employer, and that in the event petitioners succeeded in proving the employment of Arturo with private respondents, the
latter should be held liable in damages equivalent to the benefits due the petitioners for failure to report Arturo for coverage
pursuant to Sec. 24 (a) of the Social Security Act, as amended. 6

Respondent Cosuco filed his answer denying all allegations in the petition and claiming that he already sold the fishing boat to
respondent Mercado on December 10, 1975, and from then on he did not participate anymore in the operation and management of
the boat nor in the hiring of its crewmembers. 7

Meanwhile respondent Mercado was declared in default for failure to file his answer.

After petitioners had presented their evidence and rested their case, respondent Cosuco filed a motion to dismiss (demurrer to
evidence) on the ground of res judicata and lack of cause of action. 8

On November 28, 1984, respondent Social Security Commission issued an Order dismissing the petition for lack of cause of action. 9

On appeal, respondent Court of Appeals in its decision of April 10, 1987, affirmed the questioned Order of respondent Commission
there being no reversible error. 10

Petitioners are before Us predicating their petition for review on the following issues: whether there was an employer-employee
relationship between petitioners' deceased son, Arturo Villavilla, and herein private respondents; whether private respondents are
liable for death compensation benefits of Arturo Villavilla; and, whether there was a violation of the Social Security Act, as amended,
by private respondents for not registering Arturo Villavilla with the System as their employee as mandated by law.

Petitioners argue that it was private respondent Reynaldo Mercado who recruited Arturo Villavilla sometime in 1974 to be a crew
member of the fishing boat "F/B Saint Theresa" with a daily wage of P20.00. The boat was then owned by private respondent
Marcelino Cosuco and operated by Reynaldo Mercado. On December 10, 1975, Cosuco sold the fishing boat to Mercado.

Invoking Negre vs. Workmen's Compensation Commission, 11 petitioners assert that "fishermen-crew members are individual
employees and not industrial partners as in the case at bar" so that the "mere presence of Arturo Villavilla in the fishing boat of

Page 22 of 205
Mercado makes him an employee of the employer, Mercado." Further citing RJL Martinez Fishing Corporation vs. NLRC, 12 petitioners
posit that "the main factor that determines whether a person is an employee of the employer is the kind of work being performed by
that person. If the work of the laborer is part of the regular business or occupation of the employer, the said laborer is a regular
employee of the employer." Petitioners thus contend that since Arturo was recruited by Mercado himself sometime in 1974 as one of
his fishermen-crew members and that the crew members were uniformly paid by Mercado, there can be no other conclusion but that
Arturo was an employee of Mercado at the time his fishing boat sank.

A careful and assiduous review of the records, however, completely undermines the base of petitioners' position. The records disclose
that the relationship between Mercado and the crew members of the ship headed by its skipper, Capt. Pedro Matibag, is one
positively showing the existence of a joint venture. This is clearly revealed in the testimonies of Capt. Pedro Matibag and Gil Chua, a
crew member, both witnesses for petitioners, to wit:

Atty. Aganan (to witness Pedro Matibag):

Q Mr. Witness, will you tell us who your employer is?

A Mr. Cosuco, Ma'am.

xxx xxx xxx

Q Who pays your salary?

A The procedure is sharing. It we have a catch, we share the catch.

Q What is the nature of "partihan" or sharing?

A Upon selling the fish to the market, a certain portion will be deducted for the expenses and
taken by the checker and the remaining amount will be shared by the crew-members.

Q By crew-members, you mean, those who are fishing or who catch fish?

A Yes, Ma'am.

xxx xxx xxx

Q Is the checker also paid and also included in the sharing?

A Yes, Ma'am. 13

xxx xxx xxx

Atty. Riva:

Q Mr. Captain, is Arturo Villavilla a member of the crew?

A A fisherman.

Q As a fisherman, what is his duty?

A His duty is, he will ride the fishing boat and he will "mangangawil".

Q By the way, who hired him?

A There was a master whom we talked to.

Q And this master is the one who hired him and gave him the share for fishing?

A Yes, Sir.

Q So, assuming that Marcelino Cosuco is the owner, he has nothing to do with Arturo Villavilla?
Page 23 of 205
A Yes, Sir, it was the master.

Q And the same was through (true) with Reynaldo Mercado that he has nothing to do with the
hiring of Arturo Villavilla because it is the master fisherman who hired him, is that right?

A Yes, Sir.

Q And Mr. Mercado only buys fish from them?

A Yes, Sir. 14

xxx xxx xxx

Hearing Officer:

Q Do you want to convey to this Honorable Commission Mr. Matibag, that you went to fishing
venture to fish?

A Yes, Sir.

Q In this fishing venture, do you have any agreement to (with) the owner of the fishing boat?

A Our agreement with the owner was to go to high seas for fishing.

Q Do you receive monthly salary from the owner of the fishing boat?

A None, Sir, because it was a sharing basis.

Q So, what is the contribution of the owner of the fishing boat to your fishing venture?

A Food and other equipment.

Q Mr. Matibag, who supplied you the gasoline?

A The owner of the fishing boat, Sir.

Q Who gave you provisions or food in your fishing or during the duration of your fishing?

A The owner.

Q While you were in high seas, was there anybody who supervised you?

A None, Sir, there was no radio. I gave the order.

Q Before you go (sic) to the high seas for fishing purposes, did you receive any instruction from
the owner?

A There was no instruction given. 15

xxx xxx xxx

Atty. Agana (to witness Gil Chua):

Q Will you please inform the Honorable Investigator how much is your salary and where did you
get your salary?

A It was given to us by the captain when there is (sic) a sale.

Q So, I understand from you, Mr. witness, that whenever there is a sale of fish, you get a share?
Page 24 of 205
 A We received P 200 or P 300, not the same always.

xxx xxx xxx

Atty. Riva:

Q Depending on the volume of sale of fish, is it not?

A That is all I know. 16

xxx xxx xxx

Hearing Officer:

Q Was there a time that you did not receive any share?

A If we have a trip, we usually receive.

Q How about if there is no trip, did you receive any salary from Mr. Mercado as owner of fishing
boat St. Theresa?

A No., Sir.

xxx xxx xxx

Q So, you are sure Mister Witness, that when your fishing boat has no catch, you did (sic) not
receive any share?

A Yes, Sir. 17

It is thus clear that the arrangement between the boat owner and the crew members, one of whom was petitioners' son, partook of
the nature of a joint venture: the crew members did not receive fixed compensation as they only shared in their catch; they
ventured to the sea irrespective of the instructions of the boat owners, i.e., upon their own best judgment as to when, how long, and
where to go fishing; the boat owners did not hire them but simply joined the fishing expedition upon invitation of the ship master,
even without the knowledge of the boat owner. In short, there was neither right of control nor actual exercise of such right on the
part of the boat owner over his crew members.

Consequently, respondent Court of Appeals is correct in upholding the application by respondent Social Security Commission of the
ruling in Pajarillo v. Social Security System 18 where We held:

. . . an employee is defined as a "person who performs services for an employer in which either or both mental and
physical efforts are used and who receives compensation for such services, where there is an employer-employee
relationship" (Sec. 8[d], Rep. Act 1161, as amended by Rep. Act 2658). In the present case, neither the pilots nor
the crew-members receive compensation from boat-owners. They only share in their own catch produced by their
own efforts. There is no showing that outside of their one third share, the boat-owners have anything to do with
the distribution of the rest of the catch among the pilots and the crew members. The latter perform no service for
the boat-owners, but mainly for their own benefit.

In the undertaking in question, the boat-owners obviously are not responsible for the wage, salary, or fee of the
pilot and crew-members. Their sole participation in the venture is the furnishing or delivery of the equipment used
for fishing, after which, they merely wait for the boat's return and receive their share in the catch, if there is any.
For his part, a person who joins the outfit is entitled to a share or participation in the fruit of the fishing trip. If it
gives no return, the men get nothing. It appears to us therefore that the undertaking is in the nature of a joint
venture, with the boat-owner supplying the boat and its equipment (sic), and the pilot and crew-members
contributing the necessary labor, and the parties getting specific shares for their respective contributions.

xxx xxx xxx

Add to this extreme difficulty, if not impossibility of determining the monthly wage or earning of these fishermen
for the purpose of fixing the amount of their and the supposed employer's contributions (See Secs. 18 and
19, Ibid.), and there is every reason to exempt the parties to this kind of undertaking from compulsory registration
with the Social Security System.

Page 25 of 205
Certainly, petitioners' reliance on Negre v. Workmen's Compensation Commission, supra, and RJL Fishing Corp. v. NLRC, supra, is
misplaced. The observations of respondent Social Security Commission are more persuasive and correct. Thus

The case of Jose Negre vs. Workmen's Compensation, et al., 135 SCRA 651, invoked by the petitioners-appellants
in support of their claim that there existed an employer-employee relationship between their son Arturo Villavilla
and private respondent Reynaldo Mercado cannot be applied to the instant case for the simple reason that the facts
in the aforesaid case are different from those in the case at bar. A look at the Jose Negre case will show that it
made referral to the case of Abong vs. Workmen's Compensation Commission, 54 SCRA 379, wherein this
Honorable Court stated, and we beg to quote:

xxx xxx xxx

In Abong vs. Workmen's Compensation Commission (54 SCRA 379) we held that fisherman crew-
members Manuel and Miguel are employees and not industrial partners.

xxx xxx xxx

It is to be noted, however, that in the case of Abong vs. Workmen's Compensation Commission, this Honorable
Court stated and we again beg to quote:

xxx xxx xxx

As pointed by the Commission's finding, the fundamental bases showing that petitioner Dr.
Agustino R. Abong is the employer, are present, namely, the selection and engagement of the
employee; the payment of wages; the power of dismissal and the employer's power to control
the employees conduct. These powers were lodged in petitioner Abong, thru his agent, Simplicio
Panganiban, whom he alleges to be his partner. On this score alone, the petition for review must
fail. It is well-settled that employer-employee relationship involves findings of facts which are
conclusive and binding and not subject to review by this Court. (emphasis supplied).

xxx xxx xxx

Interestingly, the aforementioned fundamental bases for the existence of employer-employee relationship are not
present in the case at bar. As mentioned earlier, private respondent Reynaldo Mercado had no connection with the
selection and engagement of Arturo Villavilla (pp. 38-39, T.S.N. 12-6-83); exercised no power of dismissal over
Arturo Villavilla; neither had he any power of control or had reserved the right to control Arturo Villavilla as to the
result of the work to be done as well as the means and methods by which the same is to be accomplished, and
there was no such uniform salary involved (pp. 41-43, T.S.N. 12-6-83).

In the case before Us, it is clear that there was no employer-employee relationship between petitioner's son Arturo and private
respondent Mercado, much less private respondent Cosuco. As such, Arturo could not be made subject of compulsory coverage
under the Social Security Act; hence, private respondents cannot be said to have violated said law when they did not register him
with the Social Security System. A fortiori, respondent as well as intervenor are not answerable to petitioners for any death benefits
under the law.

Culled from the foregoing, the inexorable conclusion is that respondent Court of Appeals did not err in sustaining the judgment of
respondent Social Security Commission.

It may not be amiss to mention that while petitioners merely raise factual questions which are not proper under Rule 45 of the Rules
of Court, We nevertheless went to great lengths in dissecting the facts of this case if only to convince Us that petitioners, who are
pauper litigants and seeking claims under a social legislation, have not been denied its benefits. For, We are not unaware that in this
jurisdiction all doubts in the implementation and interpretation of provisions of social legislations should be resolved in favor of the
working class. But, alas, justice is not fully served by sustaining the contention of the poor simply because he is poor. Justice is done
by properly applying the law regardless of the station in life of the contending parties.

WHEREFORE, finding no reversible error in the questioned judgment of the appellate court, the same is AFFIRMED. No costs.

SO ORDERED.

Cruz, Grio-Aquino and Medialdea, JJ., concur.

Page 26 of 205
 CHARLIE JAO, G.R. No. 163700
Petitioner,
Present:

CORONA, C.J., Chairperson,

- versus - LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

BCC PRODUCTS SALES INC., Promulgated:

and TERRANCE TY, April 18, 2012
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

The issue is whether petitioner was respondents employee or not. Respondents denied an employer-employee relationship

with petitioner, who insisted the contrary.

Through his petition for review on certiorari, petitioner appeals the decision promulgated by the Court of Appeals (CA)

on February 27, 2004,[1] finding no employee-employer relationship between him and respondents, thereby reversing the ruling by the

National Labor Relations Commission (NLRC) to the effect that he was the employee of respondents.

Antecedents

Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, respondent Terrance Ty (Ty), employed him as

comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCCs business;[2] that

on October 19,1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC

where he then worked; that his attempts to report to work in November and December 12, 1995 were frustrated because he continued

to be barred from entering the premises of BCC;[3] and that he filed a complaint dated December 28, 1995 for illegal dismissal,

reinstatement with full backwages, non-payment of wages, damages and attorneys fees.[4]

Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor

and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCCs finances and business operations and to

look after SFCs interests or investments in BCC.[5]

Page 27 of 205
 Although Labor Arbiter Felipe Pati ruled in favor of petitioner on June 24, 1996,[6] the NLRC vacated the ruling and remanded

the case for further proceedings.[7]Thereafter, Labor Arbiter Jovencio Ll. Mayor rendered a new decision on September 20, 2001,

dismissing petitioners complaint for want of an employer-employee relationship between the parties.[8] Petitioner appealed

the September 20, 2001 decision of Labor Arbiter Mayor.

On July 31, 2002, the NLRC rendered a decision reversing Labor Arbiter Mayors decision, and declaring that petitioner had

been illegally dismissed. It ordered the payment of unpaid salaries, backwages and 13 th month pay, separation pay and attorneys

fees.[9] Respondents moved for the reconsideration of the NLRC decision, but their motion for reconsideration was denied on September

30, 2002.[10] Thence, respondents assailed the NLRC decision on certiorari in the CA.

Ruling of the CA

On February 27, 2004, the CA promulgated its assailed decision,[11] holding:

After a judicious review of the records vis--vis the respective posturing of the contending parties, we agree with the
finding that no employer-employee relationship existed between petitioner BCC and the private respondent. On this
note, the conclusion of the public respondent must be reversed for being issued with grave abuse of discretion.

Etched in an unending stream of cases are the four (4) standards in determining the existence of an employer-
employee relationship, namely, (a) the manner of selection and engagement of the putative employee; (b) the mode
of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of control
of the putative employees conduct. Of these powers the power of control over the employees conduct is generally
regarded as determinative of the existence of the relationship.

Apparently, in the case before us, all these four elements are absent. First, there is no proof that the services of the
private respondent were engaged to perform the duties of a comptroller in the petitioner company. There is no proof
that the private respondent has undergone a selection procedure as a standard requisite for employment, especially
with such a delicate position in the company. Neither is there any proof of his appointment nor is there any showing
that the parties entered into an employment contract, stipulating thereof that he will receive P20,000.00/month
salary as comptroller, before the private respondent commenced with his work as such. Second, as clearly established
on record, the private respondent was not included in the petitioner companys payroll during the time of his alleged
employment with the former. True, the name of the private respondent Charlie Jao appears in the payroll however
it does not prove that he has received his remuneration for his services. Notably, his name was not among the
employees who will receive their salaries as represented by the payrolls. Instead, it appears therein as a comptroller
who is authorized to approve the same. Suffice it to state that it is rather obscure for a certified public accountant
doing the functions of a comptroller from September 1995 up to December 1995 not to receive his salary during the
said period. Verily, such scenario does not conform with the usual and ordinary experience of man. Coming now to
the most controlling factor, the records indubitably reveal the undisputed fact that the petitioner company did not
have nor did not exercise the power of control over the private respondent. It did not prescribe the manner by which
the work is to be carried out, or the time by which the private respondent has to report for and leave from work. As
already stated, the power of control is such an important factor that other requisites may even be
disregarded. In Sevilla v. Court of Appeals, the Supreme Court emphatically held, thus:

The control test, under which the person for whom the services are rendered reserves the right
to direct not only the end to be achieved but also the means for reaching such end, is generally
relied on by the courts.

We have carefully examined the evidence submitted by the private respondent in the formal offer of evidence and
unfortunately, other than the bare assertions of the private respondent which he miserably failed to substantiate, we
find nothing therein that would decisively indicate that the petitioner BCC exercised the fundamental power of control
over the private respondent in relation to his employmentnot even the ID issued to the private respondent and the
affidavits executed by Bertito Jemilla and Rogelio Santias. At best, these pieces of documents merely suggest the
existence of employer-employee relationship as intimated by the NLRC. On the contrary, it would appear that the
said sworn statement provided a substantial basis to support the contention that the private respondent worked at
the petitioner BCC as SFCs representative, being its major creditor and supplier of goods and merchandise. Moreover,
as clearly pointed out by the petitioner in his Reply to the private respondents Comment, it is unnatural for SFC to
still employ the private respondent to oversee and supervise collections of account receivables due SFC from its
customers or clients like the herein petitioner BCC on a date later than December, 1995 considering that a criminal
complaint has already been instituted against him.

Page 28 of 205
 Sadly, the private respondent failed to sufficiently discharge the burden of showing with legal certainty that
employee-employer relationship existed between the parties. On the other hand, it was clearly shown by the
petitioner that it neither exercised control nor supervision over the conduct of the private respondents
employment. Hence, the allegation that there is employer-employee relationship must necessarily fail.

Consequently, a discussion on the issue of illegal dismissal therefore becomes unnecessary.

WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision of the public respondent
NLRC dated July 31, 2002 and the Resolution dated September 30, 2002are REVERSED and SET ASIDE. Accordingly,
the decision of the Labor Arbiter dated September 20, 2001 is hereby REINSTATED.

SO ORDERED.

After the CA denied petitioners motion for reconsideration on May 14, 2004,[12] he filed a motion for extension to file petition for review,

which the Court denied through the resolution dated July 7, 2004 for failure to render an explanation on why the service of copies of

the motion for extension on respondents was not personally made.[13] The denial notwithstanding, he filed his petition for review

on certiorari. The Court denied the petition on August 18, 2004 in view of the denial of the motion for extension of time and the

continuing failure of petitioner to render the explanation as to the non-personal service of the petition on respondents.[14] However,

upon a motion for reconsideration, the Court reinstated the petition for review on certiorari and required respondents to comment.[15]

Issue

The sole issue is whether or not an employer-employee relationship existed between petitioner and BCC. A finding on the

existence of an employer-employee relationship will automatically warrant a finding of illegal dismissal, considering that respondents

did not state any valid grounds to dismiss petitioner.

Ruling

The petition lacks merit.

The existence of an employer-employee relationship is a question of fact. Generally, a re-examination of factual findings cannot be

done by the Court acting on a petition for review on certiorari because the Court is not a trier of facts but reviews only questions of

law. Nor may the Court be bound to analyze and weigh again the evidence adduced and considered in the proceedings below.[16] This

rule is not absolute, however, and admits of exceptions. For one, the Court may look into factual issues in labor cases when the factual

findings of the Labor Arbiter, the NLRC, and the CA are conflicting.[17]

Here, the findings of the NLRC differed from those of the Labor Arbiter and the CA. This conflict among such adjudicating offices

compels the Courts exercise of its authority to review and pass upon the evidence presented and to draw its own conclusions therefrom.

To prove his employment with BCC, petitioner offered the following: (a) BCC Identification Card (ID) issued to him stating his name

and his position as comptroller, and bearing his picture, his signature, and the signature of Ty; (b) a payroll of BCC for the period of

October 1-15, 1996 that petitioner approved as comptroller; (c) various bills and receipts related to expenditures of BCC bearing the

signature of petitioner; (d) various checks carrying the signatures of petitioner and Ty, and, in some checks, the signature of petitioner

alone; (e) a court order showing that the issuing court considered petitioners ID as proof of his employment with BCC; (f) a letter of
Page 29 of 205
petitioner dated March 1, 1997 to the Department of Justice on his filing of a criminal case for estafa against Ty for non-payment of

wages; (g) affidavits of some employees of BCC attesting that petitioner was their co-employee in BCC; and (h) a notice of raffle dated

December 5, 1995 showing that petitioner, being an employee of BCC, received the notice of raffle in behalf of BCC. [18]

Respondents denied that petitioner was BCCs employee. They affirmed that SFC had installed petitioner as its comptroller in BCC to

oversee and supervise SFCs collections and the account of BCC to protect SFCs interest; that their issuance of the ID to petitioner was

only for the purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC

for SFC; that the ID should not be considered as evidence of petitioners employment in BCC;[19] that petitioner executed an affidavit

in March 1996,[20] stating, among others, as follows:

1. I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by,
Sobien Food Corporation with the same business address as abovestated;

2. In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I
have been entrusted by my employer to oversee and supervise collections on account of receivables
due SFC from its customers or clients; for instance, certain checks due and turned over by one of
SFCs customers is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and
General manager), pursuant to, or in accordance with, arrangements or agreement thereon; such
arrangement or agreement is duly confirmed by said Terrance Ty, as shown or admitted by him in a
public instrument executed therefor, particularly par. 2 of that certain Counter-Affidavit executed and subscribed
on December 11, 1995, xerox copy of which is hereto attached, duly marked as Annex A and made integral part
hereof.

3. Despite such admission of an arrangement, or agreement insofar as BCC-checks were delivered to, or
turned over in favor of SFC, Mr. Terrance Ty, in a desire to blemish my reputation or to cause me dishonor
as well as to impute unto myself the commission of a crime, state in another public instrument executed therefor
in that:

3. That all the said 158 checks were unlawfully appropriated by a certain Charlie Jao absolutely without
any authority from BCC and the same were reportedly turned over by said Mr. Jao to a person who is
not an agent or is not authorized representative of BCC.

xerox copy of which document (Affidavit) is hereto attached, duly marked as Annex B and made integral part
hereof. (emphasis supplied)

and that the affidavit constituted petitioners admission of the arrangement or agreement between BCC and SFC for the latter to appoint

a comptroller to oversee the formers operations.

Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee relationship between

him and respondents because it had been executed in March 1996, or after his employment with respondents had been terminated on

December 12, 1995; and that the affidavit referred to his subsequent employment by SFC following the termination of his employment

by BCC.[21]

We cannot side with petitioner.

Our perusal of the affidavit of petitioner compels a conclusion similar to that reached by the CA and the Labor Arbiter to the

effect that the affidavit actually supported the contention that petitioner had really worked in BCC as SFCs representative. It does

seem more natural and more believable that petitioners affidavit was referring to his employment by SFC even while he was reporting

to BCC as a comptroller in behalf of SFC. As respondents pointed out, it was implausible for SFC to still post him to oversee and

supervise the collections of accounts receivables due from BCC beyond December 1995 if, as he insisted, BCC had already illegally

Page 30 of 205
dismissed him and had even prevented him from entering the premises of BCC. Given the patent animosity and strained relations

between him and respondents in such circumstances, indeed, how could he still efficiently perform in behalf of SFC the essential

responsibility to oversee and supervise collections at BCC? Surely, respondents would have vigorously objected to any arrangement

with SFC involving him.

We note that petitioner executed the affidavit in March 1996 to refute a statement Ty himself made in his own affidavit dated

December 11, 1995 to the effect that petitioner had illegally appropriated some checks without authority from BCC.[22] Petitioner

thereby sought to show that he had the authority to receive the checks pursuant to the arrangements between SFC and BCC. This

showing would aid in fending off the criminal charge respondents filed against him arising from his mishandling of the checks. Naturally,

the circumstances petitioner adverted to in his March 1996 affidavit concerned those occurring before December 11, 1995, the same

period when he actually worked as comptroller in BCC.

Further, an affidavit dated September 5, 2000 by Alfredo So, the President of SFC, whom petitioner offered as a rebuttal

witness, lent credence to respondents denial of petitioners employment. So declared in that affidavit, among others, that he had known

petitioner for being earlier his retained accountant having his own office but did not hold office in SFCs premises; that Ty had

approached him (So) looking for an accountant or comptroller to be employed by him (Ty) in [BCCs] distribution business of SFCs

general merchandise, and had later asked him on his opinion about petitioner; and that he (So) had subsequently learned that Ty had

already employed [petitioner] as his comptroller as of September 1995.[23]

The statements of So really supported respondents position in that petitioners association with SFC prior to his supposed

employment by BCC went beyond mere acquaintance with So. That So, who had earlier merely retained petitioner as his accountant,

thereafter employed petitioner as a retained accountant after his supposed illegal dismissal by BCC raised a doubt as to his employment

by BCC, and rather confirmed respondents assertion of petitioner being an employee of SFC while he worked at BCC.

Moreover, in determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the

following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;

and (d) the employers power to control the employee on the means and methods by which the work is accomplished. The last element,

the so-called control test, is the most important element.[24]

Hereunder are some of the circumstances and incidents occurring while petitioner was supposedly employed by BCC that

debunked his claim against respondents.

It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to deliver some 158 checks to

SFC. Considering that he contested respondents challenge by pointing to the existing arrangements between BCC and SFC, it should

be clear that respondents did not exercise the power of control over him, because he thereby acted for the benefit and in the interest

of SFC more than of BCC.

Page 31 of 205
In addition, petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement

on terms of employment may be understandable and expected if he was a common or ordinary laborer who would not jeopardize his

employment by demanding such document from the employer, but may not square well with his actual status as a highly educated

professional.

Petitioners admission that he did not receive his salary for the three months of his employment by BCC, as his complaint for

illegal dismissal and non-payment of wages[25] and the criminal case for estafa he later filed against the respondents for non-payment

of wages[26] indicated, further raised grave doubts about his assertion of employment by BCC. If the assertion was true, we are puzzled

how he could have remained in BCCs employ in that period of time despite not being paid the first salary of P20,000.00/month.

Moreover, his name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity of petitioners assertion

of employment by BCC. In the petition for review on certiorari, he averred that he had been barred from entering the premises of BCC

on October 19, 1995,[27] and thus was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally

dismissed on December 12, 1995 when respondents security guards barred him from entering the premises of BCC,[28] causing him to

bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The wide gap

between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering that the several incidents

affecting the veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioners claim, we need not dwell at length on the other proofs he presented, like the

affidavits of some of the employees of BCC, the ID, and the signed checks, bills and receipts. Suffice it to be stated that such other

proofs were easily explainable by respondents and by the aforestated circumstances showing him to be the employee of SFC, not of

BCC.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petitioner to pay the costs of suit.

SO ORDERED.

Page 32 of 205
 THIRD DIVISION

LOLITA LOPEZ, G.R. No. 155731

Petitioner,
Present:

YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
BODEGA CITY (Video-Disco REYES, JJ.
Kitchen of the Philippines) and/or
ANDRES C. TORRES-YAP, Promulgated:
Respondents. September 3, 2007
x------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the July 18, 2002 Decision[1] of the

Court of Appeals (CA) in CA-G.R. SP No. 66861, dismissing the petition for certiorari filed before it and affirming the Decision of the

National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 00-03-01729-95; and its Resolution dated October 16,

2002,[2] denying petitioners Motion for Reconsideration. The NLRC Decision set aside the Decision of the Labor Arbiter finding that

Lolita Lopez (petitioner) was illegally dismissed by Bodega City and/or Andres C. Torres-Yap (respondents).

Respondent Bodega City (Bodega City) is a corporation duly registered and existing under and by virtue of the laws of the Republic of

the Philippines, while respondent Andres C. Torres-Yap (Yap) is its owner/ manager. Petitioner was the lady keeper

of Bodega City tasked with manning its ladies comfort room.

In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why the concessionaire agreement between her and

respondents should not be terminated or suspended in view of an incident that happened on February 3, 1995, wherein petitioner was

seen to have acted in a hostile manner against a lady customer of Bodega City who informed the management that she saw petitioner

sleeping while on duty.

In a subsequent letter dated February 25, 1995, Yap informed petitioner that because of the incident that happened on February 3,

1995, respondents had decided to terminate the concessionaire agreement between them.

Page 33 of 205
On March 1, 1995, petitioner filed with the Arbitration Branch of the NLRC, National Capital Region, Quezon City, a complaint for illegal

dismissal against respondents contending that she was dismissed from her employment without cause and due process.

In their answer, respondents contended that no employer-employee relationship ever existed between them and petitioner; that the

latters services rendered within the premises of Bodega City was by virtue of a concessionaire agreement she entered into with

respondents.

The complaint was dismissed by the Labor Arbiter for lack of merit. However, on appeal, the NLRC set aside the order of dismissal and

remanded the case for further proceedings. Upon remand, the case was assigned to a different Labor Arbiter. Thereafter, hearings

were conducted and the parties were required to submit memoranda and other supporting documents.

On December 28, 1999, the Labor Arbiter rendered judgment finding that petitioner was an employee of respondents and that the

latter illegally dismissed her.[3]

Respondents filed an appeal with the NLRC. On March 22, 2001, the NLRC issued a Resolution, the dispositive portion of which reads

as follows:

WHEREFORE, premises duly considered, the Decision appealed from is hereby ordered SET ASIDE and VACATED,
and in its stead, a new one entered DISMISSING the above-entitled case for lack of merit.[4]

Petitioner filed a motion for reconsideration of the above-quoted NLRC Resolution, but the NLRC denied the same.

Aggrieved, petitioner filed a Petition for Certiorari with the CA. On July 18, 2002, the CA promulgated the presently assailed Decision

dismissing her special civil action forcertiorari. Petitioner moved for reconsideration but her motion was denied.

Hence, herein petition based on the following grounds:

1. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT THE NATIONAL LABOR RELATIONS
COMMISSION DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE LABOR
ARBITER FINDING PETITIONER TO HAVE BEEN ILLEGALLY DISMISSED BY PRIVATE RESPONDENTS.

2. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT PETITIONER WAS NOT AN EMPLOYEE
OF PRIVATE RESPONDENTS.[5]

Petitioner contends that it was wrong for the CA to conclude that even if she did not sign the document evidencing the concessionaire

agreement, she impliedly accepted and thus bound herself to the terms and conditions contained in the said agreement when she

continued to perform the task which was allegedly specified therein for a considerable length of time. Petitioner claims that the

concessionaire agreement was only offered to her during her tenth year of service and after she organized a union and filed a

complaint against respondents. Prior to all these, petitioner asserts that her job as a lady keeper was a task assigned to her as an

employee of respondents.

Page 34 of 205
Petitioner further argues that her receipt of a special allowance from respondents is a clear evidence that she was an employee of

the latter, as the amount she received was equivalent to the minimum wage at that time.

Petitioner also contends that her identification card clearly shows that she was not a concessionaire but an employee of respondents;

that if respondents really intended the ID card issued to her to be used simply for having access to the premises of Bodega City,

then respondents could have clearly indicated such intent on the said ID card.

Moreover, petitioner submits that the fact that she was required to follow rules and regulations prescribing appropriate conduct

while she was in the premises of Bodega City is clear evidence of the existence of an employer-employee relationship between her

and petitioners.

On the other hand, respondents contend that the present petition was filed for the sole purpose of delaying the proceedings of the

case; the grounds relied upon in the instant petition are matters that have been exhaustively discussed by the NLRC and the CA;

the present petition raises questions of fact which are not proper in a petition for review on certiorari under Rule 45 of the Rules of

Court; the respective decisions of the NLRC and the CA are based on evidence presented by both parties; petitioners compliance

with the terms and conditions of the proposed concessionaire contract for a period of three years is evidence of her implied

acceptance of such proposal; petitioner failed to present evidence to prove her allegation that the subject concessionaire agreement

was only proposed to her in her 10th year of employment with respondent company and after she organized a union and filed a

labor complaint against respondents; petitioner failed to present competent documentary and testimonial evidence to prove her

contention that she was an employee of respondents since 1985.

The main issue to be resolved in the present case is whether or not petitioner is an employee of respondents.

The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact.[6]

While it is a settled rule that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA

decisions,[7] there are well-recognized exceptions to this rule, as in this case, when the factual findings of the NLRC as affirmed by

the CA contradict those of the Labor Arbiter.[8] In that event, it is this Courts task, in the exercise of its equity jurisdiction, to re-

evaluate and review the factual issues by looking into the records of the case and re-examining the questioned findings.[9]

It is a basic rule of evidence that each party must prove his affirmative allegation.[10] If he claims a right granted by law, he must

prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his

opponent.[11]

The test for determining on whom the burden of proof lies is found in the result of an inquiry as to which party would be successful

if no evidence of such matters were given.[12]

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.[13] However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established.[14]

Page 35 of 205
In filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that she was an employee of respondent, it is

incumbent upon petitioner to prove the employee-employer relationship by substantial evidence.[15]

The NLRC and the CA found that petitioner failed to discharge this burden, and the Court finds no cogent reason to depart

from their findings.

The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,[16] to wit:

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold
test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence
of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the
most important. The so-called control test is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to control not only the
end achieved, but also the manner and means to be used in reaching that end.[17]

To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for five

(5) days.[18] The CA did not err when it held that a solitary petty cash voucher did not prove that petitioner had been receiving salary

from respondents or that she had been respondents employee for 10 years.

Indeed, if petitioner was really an employee of respondents for that length of time, she should have been able to present salary

vouchers or pay slips and not just a single petty cash voucher. The Court agrees with respondents that petitioner could have easily

shown other pieces of evidence such as a contract of employment, SSS or Medicare forms, or certificates of withholding tax on

compensation income; or she could have presented witnesses to prove her contention that she was an employee of

respondents. Petitioner failed to do so.

Anent the element of control, petitioners contention that she was an employee of respondents because she was subject to their control

does not hold water.

Petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which

she should perform her job as a lady keeper was concerned.

It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct while within the premises

of Bodega City. However, this was imposed upon petitioner as part of the terms and conditions in the concessionaire agreement

embodied in a 1992 letter of Yap addressed to petitioner, to wit:

January 6, 1992

Dear Ms. Lolita Lopez,

The new owners of Bodega City, 1121 Food Service Corporation offers to your goodself the
concessionaire/contract to provide independently, customer comfort services to assist users of the ladies comfort
room of the Club to further enhance its business, under the following terms and conditions:

Page 36 of 205
 1. You will provide at your own expense, all toilet supplies, useful for the purpose, such as toilet papers, soap, hair
pins, safety pins and other related items or things which in your opinion is beneficial to the services you will
undertake;

2. For the entire duration of this concessionaire contract, and during the Clubs operating hours, you shall maintain
the cleanliness of the ladies comfort room. Provided, that general cleanliness, sanitation and physical maintenance
of said comfort rooms shall be undertaken by the owners of Bodega City;

3. You shall at all times ensure satisfaction and good services in the discharge of your undertaking. More importantly,
you shall always observe utmost courtesy in dealing with the persons/individuals using said comfort room and shall
refrain from doing acts that may adversely affect the goodwill and business standing of Bodega City;

4. All remunerations, tips, donations given to you by individuals/persons utilizing said comfort rooms and/or guests
of Bodega City shall be waived by the latter to your benefit provided however, that if concessionaire receives tips or
donations per day in an amount exceeding 200% the prevailing minimum wage, then, she shall remit fifty percent
(50%) of said amount to Bodega City by way of royalty or concession fees;

5. This contract shall be for a period of one year and shall be automatically renewed on a yearly basis unless notice
of termination is given thirty (30) days prior to expiration. Any violation of the terms and conditions of this contract
shall be a ground for its immediate revocation and/or termination.

6. It is hereby understood that no employer-employee relationship exists between Bodega City and/or
1121 FoodService Corporation and your goodself, as you are an independent contractor who has represented to us
that you possess the necessary qualification as such including manpower compliment, equipment, facilities, etc. and
that any person you may engage or employ to work with or assist you in the discharge of your undertaking shall be
solely your own employees and/or agents.

1121 FoodService Corporation

Bodega City

By:
(Sgd.) ANDRES C. TORRES-YAP

Conforme:
_______________
LOLITA LOPEZ[19]

Petitioner does not dispute the existence of the letter; neither does she deny that respondents offered her the subject concessionaire

agreement. However, she contends that she could not have entered into the said agreement with respondents because she did not

sign the document evidencing the same.

Settled is the rule that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by

the offeror.[20] For a contract, to arise, the acceptance must be made known to the offeror.[21] Moreover, the acceptance of the thing

and the cause, which are to constitute a contract, may be express or implied as can be inferred from the contemporaneous and

subsequent acts of the contracting parties.[22] A contract will be upheld as long as there is proof of consent, subject matter and cause;

it is generally obligatory in whatever form it may have been entered into.[23]

In the present case, the Court finds no cogent reason to disregard the findings of both the CA and the NLRC that while petitioner did

not affix her signature to the document evidencing the subject concessionaire agreement, the fact that she performed the tasks

indicated in the said agreement for a period of three years without any complaint or question only goes to show that she has given her

implied acceptance of or consent to the said agreement.

Petitioner is likewise estopped from denying the existence of the subject concessionaire agreement. She should not, after enjoying the

benefits of the concessionaire agreement with respondents, be allowed to later disown the same through her allegation that she was

an employee of the respondents when the said agreement was terminated by reason of her violation of the terms and conditions

thereof.
Page 37 of 205
The principle of estoppel in pais applies wherein -- by ones acts, representations or admissions, or silence when one ought to speak

out -- intentionally or through culpable negligence, induces another to believe certain facts to exist and to rightfully rely and act on

such belief, so as to be prejudiced if the former is permitted to deny the existence ofthose facts.[24]

Moreover, petitioner failed to dispute the contents of the affidavit[25] as well as the testimony[26] of Felimon Habitan (Habitan), the

concessionaire of the mens comfort room ofBodega City, that he had personal knowledge of the fact that petitioner was the

concessionaire of the ladies comfort room of Bodega City.

Petitioner also claims that the concessionaire agreement was offered to her only in her 10th year of service, after she organized a union

and filed a complaint against respondents.However, petitioner's claim remains to be an allegation which is not supported by any

evidence. It is a basic rule in evidence that each party must prove his affirmative allegation,[27] that mere allegation is not evidence.[28]

The Court is not persuaded by petitioners contention that the Labor Arbiter was correct in concluding that there existed an employer-

employee relationship between respondents and petitioner. A perusal of the Decision[29] of the Labor Arbiter shows that his only

basis for arriving at such a conclusion are the bare assertions of petitioner and the fact thatthe latter did not sign the letter of Yap

containing the proposed concessionaire agreement. However, as earlier discussed, this Court finds no error in the findings of the NLRC

and the CA that petitioner is deemed as having given her consent to the said proposal when she continuously performed the tasks

indicated therein for a considerable length of time.For all intents and purposes, the concessionaire agreement had been perfected.

Petitioner insists that her ID card is sufficient proof of her employment. In Domasig v. National Labor Relations Commission,[30] this

Court held that the complainants ID card and the cash vouchers covering his salaries for the months indicated therein were substantial

evidence that he was an employee of respondents, especially in light of the fact that the latter failed to deny said evidence. This is not

the situation in the present case. The only evidence presented by petitioner as proof of her alleged employment are her ID card and

one petty cash voucher for a five-day allowance which were disputed by respondents.

As to the ID card, it is true that the words EMPLOYEES NAME appear printed below petitioners name.[31] However, she failed

to dispute respondents evidence consisting of Habitans testimony,[32] that he and the other contractors of Bodega City such as the

singers and band performers, were also issued the same ID cards for the purpose of enabling them to enter the premises

of Bodega City.

The Court quotes, with approval, the ruling of the CA on this matter, to wit:

Nor can petitioners identification card improve her cause any better. It is undisputed that non-employees, such
as Felimon Habitan, an admitted concessionaire, musicians, singers and the like at Bodega City are also issued
identification cards. Given this premise, it appears clear to Us that petitioner's I.D. Card is incompetent proof of an
alleged employer-employee relationship between the herein parties. Viewed in the context of this case, the card is
at best a passport from management assuring the holder thereof of his unmolested access to the premises
of Bodega City.[33]

Page 38 of 205
With respect to the petty cash voucher, petitioner failed to refute respondents claim that it was not given to her for services rendered

or on a regular basis, but simply granted as financial assistance to help her temporarily meet her familys needs.

Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner shall maintain the

cleanliness of the ladies comfort room and observe courtesy guidelines that would help her obtain the results they wanted to

achieve. There is nothing in the agreement which specifies the methods by which petitioner should achieve these results. Respondents

did not indicate the manner in which she should go about in maintaining the cleanliness of the ladies comfort room. Neither did

respondents determine the means and methods by which petitioner could ensure the satisfaction of respondent companys

customers. In other words, petitioner was given a free hand as to how she would perform her job as a lady keeper. In fact, the last

paragraph of the concessionaire agreement even allowed petitioner to engage persons to work with or assist her in the discharge of

her functions.[34]

Moreover, petitioner was not subjected to definite hours or conditions of work. The fact that she was expected to maintain the

cleanliness of respondent companys ladies comfort room during Bodega Citys operating hours does not indicate that her performance

of her job was subject to the control of respondents as to make her an employee of the latter.Instead, the requirement that she had

to render her services while Bodega City was open for business was dictated simply by the very nature of her undertaking, which was

to give assistance to the users of the ladies comfort room.

In Consulta v. Court of Appeals,[35] this Court held:

It should, however, be obvious that not every form of control that the hiring party reserves to himself over the
conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-
employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if
the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically,
it would be a rare contract of service that gives untrammeled freedom to the party hired and eschews any intervention
whatsoever in his performance of the engagement.

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control
or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the second, which address both the result and
the means used to achieve it.[36]

Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal are not present in the instant

case.

It has been established that there has been no employer-employee relationship between respondents and petitioner. Their contractual

relationship was governed by the concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not dismissed by

respondents. Instead, as shown by the letter of Yap to her dated February 15, 1995,[37] their contractual relationship was terminated

by reason of respondents' termination of the subject concessionaire agreement, which was in accordance with the provisions of the

agreement in case of violation of its terms and conditions.

In fine, the CA did not err in dismissing the petition for certiorari filed before it by petitioner.

Page 39 of 205
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED. Costs

against petitioner.

SO ORDERED.

FIRST DIVISION

G.R. No. 186621, March 12, 2014

SOUTH EAST INTERNATIONAL RATTAN, INC. AND/OR ESTANISLAO1 AGBAY, Petitioners, v. JESUS J. COMING, Respondent.

DECISION

VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the Decision2 dated February 21, 2008
and Resolution3 dated February 9, 2009 of the Court of Appeals (CA) in CAG.R. CEBSP No. 02113.

Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business of manufacturing and
exporting furniture to various countries with principal place of business at Paknaan, Mandaue City, while petitioner Estanislao Agbay,
as per records, is the President and General Manager of SEIRI.4

On November 3, 2003, respondent Jesus J. Coming filed a complaint5 for illegal dismissal, underpayment of wages, nonpayment of
holiday pay, 13th month pay and service incentive leave pay, with prayer for reinstatement, back wages, damages and attorneys
fees.

Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984. His work schedule is from 8:00
a.m. to 5:00 p.m. Initially, his compensation was on pakiao basis but sometime in June 1984, it was fixed at P150.00 per day
which was paid weekly. In 1990, without any apparent reason, his employment was interrupted as he was told by petitioners to
resume work in two months time. Being an uneducated person, respondent was persuaded by the management as well as his
brother not to complain, as otherwise petitioners might decide not to call him back for work. Fearing such consequence, respondent
accepted his fate. Nonetheless, after two months he reported back to work upon order of management.6

Despite being an employee for many years with his work performance never questioned by petitioners, respondent was dismissed on
January 1, 2002 without lawful cause. He was told that he will be terminated because the company is not doing well financially and
that he would be called back to work only if they need his services again. Respondent waited for almost a year but petitioners did
not call him back to work. When he finally filed the complaint before the regional arbitration branch, his brother Vicente was used by
management to persuade him to withdraw the case.7

On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated only in 1986, and that respondent
actually worked for SEIRIs furniture suppliers because when the company started in 1987 it was engaged purely in buying and
exporting furniture and its business operations were suspended from the last quarter of 1989 to August 1992. They stressed that
respondent was not included in the list of employees submitted to the Social Security System (SSS). Moreover, respondents
brother, Vicente Coming, executed an affidavit8 in support of petitioners position while Allan Mayol and Faustino Apondar issued
notarized certifications9 that respondent worked for them instead.10

With the denial of petitioners that respondent was their employee, the latter submitted an affidavit 11signed by five former co
workers stating that respondent was one of the pioneer employees who worked in SEIRI for almost twenty years.

In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is a regular employee of SEIRI and
that the termination of his employment was illegal. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South East (Intl.) Rattan, Inc. to pay
complainant Jesus J. Coming the following:

1. Separation pay P114,400.00

2. Backwages P 30,400.00

Page 40 of 205
3. Wage differential P 15,015.00
4. 13th month pay P 5,958.00
5. Holiday pay P 4,000.00
6. Service incentive leave pay P 2,000.00
Total award P171,773.00

The other claims and the case against respondent Estanislao Agbay are dismissed for lack of merit.

SO ORDERED.13

Petitioners appealed to the National Labor Relations Commission (NLRC)Cebu City where they submitted the following additional
evidence: (1) copies of SEIRIs payrolls and individual pay records of employees;14 (2) affidavit15 of SEIRIs Treasurer, Angelina
Agbay; and (3) second affidavit16 of Vicente Coming.

On July 28, 2005, the NLRCs Fourth Division rendered its Decision,17 the dispositive portion of which states:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered
DISMISSING the complaint.

SO ORDERED.18

The NLRC likewise denied respondents motion for reconsideration.19

Respondent elevated the case to the CA via a petition for certiorari under Rule 65.

By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an employeremployee relationship
between petitioners and respondent who was dismissed without just and valid cause. The CA thus decreed:

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision dated July 28, 2005 issued by the
National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC Case No. V0006252004 is REVERSED and SET
ASIDE. The Decision of the Labor Arbiter dated April 30, 2004 is REINSTATED with MODIFICATION on the computation of
backwages which should be computed from the time of illegal termination until the finality of this decision.

Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the award of separation pay as well as
the monetary awards of wage differential, 13thmonth pay, holiday pay and service incentive leave pay.

SO ORDERED.20

Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated February 9, 2009.

Hence, this petition raising the following issues:

6.1

WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE HONORABLE COURT OF APPEALS THAT THERE
EXISTS EMPLOYEREMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND RESPONDENT IS IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.

6.2

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN ACCORDANCE WITH APPLICABLE LAW AND
JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.

6.3

WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE HONORABLE COURT OF APPEALS THAT
PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD WITH APPLICABLE LAW AND JURISPRUDENCE.

6.4

WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT OF APPEALS THAT THE BACKWAGES DUE THE
RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL TERMINATION UNTIL THE FINALITY OF THE DECISION IS
SUPPORTED BY PREVAILING JURISPRUDENCE.21

Resolution of the first issue is paramount in view of petitioners denial of the existence of employeremployee relationship.

Page 41 of 205
The issue of whether or not an employeremployee relationship exists in a given case is essentially a question of fact. As a rule, this
Court is not a trier of facts and this applies with greater force in labor cases.22 Only errors of law are generally reviewed by this
Court.23 This rule is not absolute, however, and admits of exceptions. For one, the Court may look into factual issues in labor cases
when the factual findings of the Labor Arbiter, the NLRC, and the CA are conflicting. 24 Here, the findings of the NLRC differed from
those of the Labor Arbiter and the CA, which compels the Courts exercise of its authority to review and pass upon the evidence
presented and to draw its own conclusions therefrom.25

To ascertain the existence of an employeremployee relationship jurisprudence has invariably adhered to the fourfold test, to wit:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees conduct, or the socalled control test.26 In resolving the issue of whether such relationship exists in a given
case, substantial evidence that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion is sufficient. Although no particular form of evidence is required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless
rest on substantial evidence.27

In support of their claim that respondent was not their employee, petitioners presented Employment Reports to the SSS from 1987
to 2002, the Certifications issued by Mayol and Apondar, two affidavits of Vicente Coming, payroll sheets (19992000), individual
pay envelopes and employee earnings records (19992000) and affidavit of Angelina Agbay (Treasurer and Human Resources
Officer). The payroll and pay records did not include the name of respondent. The affidavit of Ms. Agbay stated that after SEIRI
started its business in 1986 purely on export trading, it ceased operations in 1989 as evidenced by Certification dated January 18,
1994 from the Securities and Exchange Commission (SEC); that when business resumed in 1992, SEIRI undertook only a little of
manufacturing; that the company never hired any workers for varnishing and pole sizing because it bought the same from various
suppliers, including Faustino Apondar; respondent was never hired by SEIRI; and while it is true that Mr. Estanislao Agbay is the
company President, he never dispensed the salaries of workers.28

In his first affidavit, Vicente Coming averred that:

6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with Ben Mayol as round core maker/splitter.

7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan trader with business address near Cebu
Rattan Factory on a Pakiao basis.

8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined Eleuterio Agbay in Labogon, Cebu in 1989. In
1991, we went back to Okay Okay located near the residence of Atty. Vicente de la Serna in Mandaue City. We were on a pakiao
basis. We stayed put until 1993 when we resigned and joined Dodoy Luna in Labogon, Mandaue City as classifier until 1995. In
1996[,] Jesus rested. It was only in 1997 that he worked back. He replaced me, as a classifier in Rattan Traders owned by Allan
Mayol. But then, towards the end of the year, he left the factory and relaxed in our place of birth, in Sogod, Cebu.

9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as sizing machine operator. However, the work
was off and on basis. Not regular in nature, he was harping a side line job with me knowing that I am now working with Faustino
Apondar that supplies rattan furnitures [sic] to South East (Intl) Rattan, Inc. As a brother, I allowed Jesus to work with me and
collect the proceeds of his services as part of my collectibles from Faustino Apondar since I was on a pakiao basis. He was working
at his pleasure. Which means, he works if he likes to? That will be until 10:00 oclock in the evening.

x x x x29

The Certification dated January 20, 2004 of Allan Mayol reads:

This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a rattan factory worker and he was
working with me as rattan pole sizing/classifier of my business from 1997 up to part of 1998 when he left my factory at will. I took
him back towards the end of 1999, this time as a sizing machine operator. In all these years, his services are not regular. He works
only if he likes to.30

Faustino Apondar likewise issued a Certification which states:

This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several rattan furniture workers under me,
one of whom is Vicente Coming, the brother of Jesus Coming.

That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was already connected with Allan
Mayol. Having vouched for the integrity of his brother and knowing that the job is temporary in character, I allowed Jesus to work
with his brother Vicente. However, the proceeds will be collected together with his brother Vicente since it was the latter who was
working with me. He renders services to his brother work only after the regular working hours but off and on basis.31

On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro Brigoli, Napoleon Coming, Efren Coming
and Gil Coming who all attested that respondent was their coworker at SEIRI. Their affidavit reads:

We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly sworn to in accordance with law,
depose and say:

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That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;

That we personally know JESUS COMING considering that we worked together in one company SOUTH EAST RATTANT [sic];

That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY considering that the latter is the one directly
paying us and holds the absolute control of all aspects of our employment;

That it is not true that JESUS COMING is under the employ of one person other than ESTAN ESLAO AGBAY OF SOUTH EAST RATTAN;

That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been employed therein for almost twenty
years;

That we executed this affidavit to attest to the truth of the foregoing facts and to deny any contrary allegation made by the company
against his employment with SOUTH EAST RATTAN.32

In his decision, Labor Arbiter Carreon found that respondents work as sizing machine operator is usually necessary and desirable to
the rattan furniture business of petitioners and their failure to include respondent in the employment report to SSS is not conclusive
proof that respondent is not their employee. As to the affidavit of Vicente Coming, Labor Arbiter Carreon did not give weight to his
statement that respondent is not petitioners employee but that of one Faustino Apondar. Labor Arbiter Carreon was not convinced
that Faustino Apondar is an independent contractor who has a contractual relationship with petitioners.

In reversing the Labor Arbiter, the NLRC reasoned as follows:

First complainant alleged that he worked continuously from March 17, 1984 up to January 21, 2002. Records reveal however that
South East (Intl.) Rattan, Inc. was incorporated only last July 18, 1986 (p. 55 records)[.] Moreover, when they started to actually
operate in 1987, the company was engaged purely on buying and exporting rattan furniture hence no manufacturing employees
were hired. Furthermore, from the last quarter of 1989 up to August of 1992, the company suspended operations due to economic
reverses as per Certification issued by the Securities and Exchange Commission (p. 56 records)[.]

Second, for all his insistence that he was a regular employee, complainant failed to present a single payslip, voucher or a copy of a
company payroll showing that he rendered service during the period indicated therein. x x x

From the above established facts we are inclined to give weight and credence to the Certifications of Allan Mayol and Faustino
Apondar, both suppliers of finished Rattan Furniture (pp. 44243, records). It appears that complainant first worked with Allan
Mayol and later with Faustino Apondar upon the proddings of his brother Vicente. Vicentes affidavit as to complainants employment
history was more detailed and forthright. x x x

xxxx

In the case at bar, there is likewise substantial evidence to support our findings that complainant was not an employee of
respondents. Thus:

1. Complainants name does not appear in the list of employees reported to the SSS.
2. is name does not also appear in the sample payrolls of respondents employees.
3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan products[,] that complainant had
at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainants full brother[,] attesting that complainant had never been an
employee of respondent. The only connection was that their employer Faustino Apondar supplies finished rattan
products to respondents.33

On the other hand, the CA gave more credence to the declarations of the five former employees of petitioners that respondent was
their coworker in SEIRI. One of said affiants is Vicente Comings own son, Gil Coming. Vicente averred in his second affidavit that
when he confronted his son, the latter explained that he was merely told by their Pastor to sign the affidavit as it will put an end to
the controversy. Vicente insisted that his son did not know the contents and implications of the document he signed. As to the
absence of respondents name in the payroll and SSS employment report, the CA observed that the payrolls submitted were only
from January 1, 1999 to December 29, 2000 and not the entire period of eighteen years when respondent claimed he worked for
SEIRI. It further noted that the names of the five affiants, whom petitioners admitted to be their former employees, likewise do not
appear in the aforesaid documents. According to the CA, it is apparent that petitioners maintained a separate payroll for certain
employees or willfully retained a portion of the payroll.

x x x As to the control test, the following facts indubitably reveal that respondents wielded control over the work performance of
petitioner, to wit: (1) they required him to work within the company premises; (2) they obliged petitioner to report every day of the
week and tasked him to usually perform the same job; (3) they enforced the observance of definite hours of work from 8 oclock in
the morning to 5 oclock in the afternoon; (4) the mode of payment of petitioners salary was under their discretion, at first paying
him on pakiao basis and thereafter, on daily basis; (5) they implemented company rules and regulations; (6) [Estanislao] Agbay
directly paid petitioners salaries and controlled all aspects of his employment and (7) petitioner rendered work necessary and
desirable in the business of the respondent company.34

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We affirm the CA.

In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee to the SSS is not conclusive proof
of the absence of employeremployee relationship. Otherwise, an employer would be rewarded for his failure or even neglect to
perform his obligation.36

Nor does the fact that respondents name does not appear in the payrolls and pay envelope records submitted by petitioners negate
the existence of employeremployee relationship. For a payroll to be utilized to disprove the employment of a person, it must
contain a true and complete list of the employee.37 In this case, the exhibits offered by petitioners before the NLRC consisting of
copies of payrolls and pay earnings records are only for the years 1999 and 2000; they do not cover the entire 18year period
during which respondent supposedly worked for SEIRI.

In their comment to the petition filed by respondent in the CA, petitioners emphasized that in the certifications issued by Mayol and
Apondar, it was shown that respondent was employed and working for them in those years he claimed to be working for
SEIRI. However, a reading of the certification by Mayol would show that while the latter claims to have respondent under his employ
in 1997, 1998 and 1999, respondents services were not regular and that he works only if he wants to. Apondars certification
likewise stated that respondent worked for him since 1999 through his brother Vicente as sideline but only after regular working
hours and off and on basis. Even assuming the truth of the foregoing statements, these do not foreclose respondents regular or
fulltime employment with SEIRI. In effect, petitioners suggest that respondent was employed by SEIRIs suppliers, Mayol and
Apondar but no competent proof was presented as to the latters status as independent contractors.

In the same comment, petitioners further admitted that the five affiants who attested to respondents employment with SEIRI are its
former workers whom they describe as disgruntled workers of SEIRI with an axe to grind against petitioners, and that their
execution of affidavit in support of respondents claim is their very way of hitting back the management of SEIRI after disciplinary
measures were meted against them.38 This allegation though was not substantiated by petitioners. Instead, after the CA rendered
its decision reversing the NLRCs ruling, petitioners subsequently changed their theory by denying the employment relationship with
the five affiants in their motion for reconsideration, thus:

x x x Since the five workers were occupying and working on a leased premises of the private respondent, they were called workers of
SEIRI (private respondent). Such admission however, does not connote employment. For the truth of the matter, all of the five
employees of the supplier assigned at the leased premises of the private respondent. Because of the recommendation of the private
respondent with regards to the disciplinary measures meted on the five workers, they wanted to hit back against the private
respondent. Their motive to implicate private respondent was to vindicate. Definitely, they have an axe to grind against the private
respondent. Mention has to be made that despite the dismissal of these five (5) witnesses from their service, none of them ever
went to the National Labor [Relations] Commission and invoked their rights, if any, against their employer or at the very least
against the respondent. The reason is obvious, since they knew pretty well that they were not employees of SEIRI but rather under
the employ of Allan Mayol and Faustino Apondar, working on a leased premise of respondent. x x x 39

Petitioners admission that the five affiants were their former employees is binding upon them. While they claim that respondent
was the employee of their suppliers Mayol and Apondar, they did not submit proof that the latter were indeed independent
contractors; clearly, petitioners failed to discharge their burden of proving their own affirmative allegation.40 There is thus no
showing that the five former employees of SEIRI were motivated by malice, bad faith or any illmotive in executing their affidavit
supporting the claims of respondent.

In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of the
laborer.41

As a regular employee, respondent enjoys the right to security of tenure under Article 279 42 of the Labor Code and may only be
dismissed for a just43 or authorized44 cause, otherwise the dismissal becomes illegal.

Respondent, whose employment was terminated without valid cause by petitioners, is entitled to reinstatement without loss of
seniority rights and other privileges and to his full back wages, 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. Where
reinstatement is no longer viable as an option, back wages shall be computed from the time of the illegal termination up to the
finality of the decision. Separation pay equivalent to one month salary for every year of service should likewise be awarded as an
alternative in case reinstatement in not possible.45

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21, 2008 and Resolution dated
February 9, 2009 of the Court of Appeals in CAG.R. No. CEBSP No. 02113 are hereby AFFIRMED and UPHELD.

Petitioners to pay the costs of suit.

SO ORDERED.

Sereno, C.J., (Chairperson), LeonardoDe Castro, Bersamin, and Reyes, JJ., concur.

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 SECOND DIVISION

[ G.R. No. 195190, July 28, 2014 ]

ROYALE HOMES MARKETING CORPORATION, PETITIONER, VS. FIDEL P. ALCANTARA [DECEASED], SUBSTITUTED BY HIS HEIRS,
RESPONDENT.

DECISION

DEL CASTILLO, J.:

Not every form of control that a hiring party imposes on the hired party is indicative of employee-employer relationship. Rules and
regulations that merely serve as guidelines towards the achievement of a mutually desired result without dictating the means and
methods of accomplishing it do not establish employer-employee relationship.[1]

This Petition for Review on Certiorari[2] assails the June 23, 2010 Decision[3] of the Court of Appeals (CA) in CA-G.R. SP No. 109998
which (i) reversed and set aside the February 23, 2009 Decision[4] of the National Labor Relations Commission (NLRC), (ii) ordered
petitioner Royale Homes Marketing Corporation (Royale Homes) to pay respondent Fidel P. Alcantara (Alcantara) backwages and
separation pay, and (iii) remanded the case to the Labor Arbiter for the proper determination and computation of said monetary
awards.

Also assailed in this Petition is the January 18, 2011 Resolution[5] of the CA denying Royale Homes Motion for Reconsideration,[6] as
well as its Supplemental[7] thereto.

Factual Antecedents

In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing Director for a fixed
period of one year. His work consisted mainly of marketing Royale Homes real estate inventories on an exclusive basis. Royale
Homes reappointed him for several consecutive years, the last of which covered the period January 1 to December 31, 2003 where
he held the position of Division 5 Vice-President-Sales.[8]

Proceedings before the Labor Arbiter

On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal[9] against Royale Homes and its President Matilde Robles,
Executive Vice-President for Administration and Finance Ma. Melinda Bernardino, and Executive Vice- President for Sales Carmina
Sotto. Alcantara alleged that he is a regular employee of Royale Homes since he is performing tasks that are necessary and

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desirable to its business; that in 2003 the company gave him P1.2 million for the services he rendered to it; that in the first week of
November 2003, however, the executive officers of Royale Homes told him that they were wondering why he still had the gall to
come to office and sit at his table;[10] and that the acts of the executive officers of Royale Homes amounted to his dismissal from
work without any valid or just cause and in gross disregard of the proper procedure for dismissing employees. Thus, he also
impleaded the corporate officers who, he averred, effected his dismissal in bad faith and in an oppressive manner.

Alcantara prayed to be reinstated to his former position without loss of seniority rights and other privileges, as well as to be paid
backwages, moral and exemplary damages, and attorneys fees. He further sought that the ownership of the Mitsubishi Adventure
with Plate No. WHD-945 be transferred to his name.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the appointment paper of
Alcantara is clear that it engaged his services as an independent sales contractor for a fixed term of one year only. He never
received any salary, 13th month pay, overtime pay or holiday pay from Royale Homes as he was paid purely on commission basis. In
addition, Royale Homes had no control on how Alcantara would accomplish his tasks and responsibilities as he was free to solicit
sales at any time and by any manner which he may deem appropriate and necessary. He is even free to recruit his own sales
personnel to assist him in pursuance of his sales target.

According to Royale Homes, Alcantara decided to leave the company after his wife, who was once connected with it as a sales agent,
had formed a brokerage company that directly competed with its business, and even recruited some of its sales agents. Although
this was against the exclusivity clause of the contract, Royale Homes still offered to accept Alcantaras wife back so she could
continue to engage in real estate brokerage, albeit exclusively for Royale Homes. In a special management committee meeting on
October 8, 2003, however, Alcantara announced publicly and openly that he would leave the company by the end of October 2003
and that he would no longer finish the unexpired term of his contract. He has decided to join his wife and pursue their own
brokerage business. Royale Homes accepted Alcantaras decision. It then threw a despedida party in his honor and, subsequently,
appointed a new independent contractor.

Two months after he relinquished his post, however, Alcantara appeared in Royale Homes and submitted a letter claiming that he
was illegally dismissed.

Ruling of the Labor Arbiter

On September 7, 2005, the Labor Arbiter rendered a Decision[11] holding that Alcantara is an employee of Royale Homes with a fixed-
term employment period from January 1 to December 31, 2003 and that the pre-termination of his contract was against the
law. Hence, Alcantara is entitled to an amount which he may have earned on the average for the unexpired portion of the
contract. With regard to the impleaded corporate officers, the Labor Arbiter absolved them from any liability.

The dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Royale Homes Marketing Corp. to pay the
complainant the total amount of TWO HUNDRED SEVENTY SEVEN THOUSAND PESOS (P277,000.00) representing his
compensation/commission for the unexpired term of his contract.

All other claims are dismissed for lack of merit.

SO ORDERED.[12]

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Both parties appealed the Labor Arbiters Decision to the NLRC. Royale Homes claimed that the Labor Arbiter grievously erred in
ruling that there exists an employer-employee relationship between the parties. It insisted that the contract between them expressly
states that Alcantara is an independent contractor and not an ordinary employee. It had no control over the means and methods by
which he performed his work. Royale Homes likewise assailed the award of P277,000.00 for lack of basis as it did not pre-terminate
the contract. It was Alcantara who chose not to finish the contract.

Alcantara, for his part, argued that the Labor Arbiter erred in ruling that his employment was for a fixed-term and that he is not
entitled to backwages, reinstatement, unpaid commissions, and damages.

Ruling of the National Labor Relations Commission

On February 23, 2009, the NLRC rendered its Decision,[13] ruling that Alcantara is not an employee but a mere independent
contractor of Royale Homes. It based its ruling mainly on the contract which does not require Alcantara to observe regular working
hours. He was also free to adopt the selling methods he deemed most effective and can even recruit sales agents to assist him in
marketing the inventories of Royale Homes. The NLRC also considered the fact that Alcantara was not receiving monthly salary, but
was being paid on commission basis as stipulated in the contract. Being an independent contractor, the NLRC concluded that
Alcantaras Complaint is cognizable by the regular courts.

The fallo of the NLRC Decision reads:

WHEREFORE, premises considered, the Decision of Labor Arbiter Dolores Peralta-Beley dated September 5, 2005 is REVERSED and
SET ASIDE and a NEW ONE rendered dismissing the complaint for lack of jurisdiction.

SO ORDERED.[14]

Alcantara moved for reconsideration.[15] In a Resolution[16] dated May 29, 2009, however, the NLRC denied his motion.

Alcantara thus filed a Petition for Certiorari[17] with the CA imputing grave abuse of discretion on the part of the NLRC in ruling that
he is not an employee of Royale Homes and that it is the regular courts which have jurisdiction over the issue of whether the pre-
termination of the contract is valid.

Ruling of the Court of Appeals

On June 23, 2010, the CA promulgated its Decision[18] granting Alcantaras Petition and reversing the NLRCs Decision. Applying the
four-fold and economic reality tests, it held that Alcantara is an employee of Royale Homes. Royale Homes exercised some degree of
control over Alcantara since his job, as observed by the CA, is subject to company rules, regulations, and periodic evaluations. He
was also bound by the company code of ethics. Moreover, the exclusivity clause of the contract has made Alcantara economically
dependent on Royale Homes, supporting the theory that he is an employee of said company.

The CA further held that Alcantaras termination from employment was without any valid or just cause, and it was carried out in
violation of his right to procedural due process. Thus, the CA ruled that he is entitled to backwages and separation pay, in lieu of
reinstatement. Considering, however, that the CA was not satisfied with the proof adduced to establish the amount of Alcantaras
annual salary, it remanded the case to the Labor Arbiter to determine the same and the monetary award he is entitled to. With
regard to the corporate officers, the CA absolved them from any liability for want of clear proof that they assented to the patently
unlawful acts or that they are guilty of bad faith or gross negligence. Thus:

Page 47 of 205
WHEREFORE, in view of the foregoing, the instant PETITION is GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA NO. 046104-05 dated February 23, 2009 as well as the Resolution
dated May 29, 2009 are hereby SET ASIDE and a new one is entered ordering the respondent company to pay petitioner backwages
which shall be computed from the time of his illegal termination in October 2003 up to the finality of this decision, plus separation
pay equivalent to one month salary for every year of service. This case is REMANDED to the Labor Arbiter for the proper
determination and computation of back wages, separation pay and other monetary benefits that petitioner is entitled to.

SO ORDERED.[19]

Royale Homes filed a Motion for Reconsideration[20] and a Supplemental Motion for Reconsideration.[21] In a Resolution[22] dated
January 18, 2011, however, the CA denied said motions.

Issues

Hence, this Petition where Royale Homes submits before this Court the following issues for resolution:

A.

WHETHER THE COURT OF APPEALS HAS DECIDED THE INSTANT CASE NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF
THE SUPREME COURT WHEN IT REVERSED THE RULING OF THE NLRC DISMISSING THE COMPLAINT OF RESPONDENT FOR LACK OF
JURISDICTION AND CONSEQUENTLY, IN FINDING THAT RESPONDENT WAS ILLEGALLY DISMISSED[.]

B.

WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DISREGARDING THE EN BANC RULING OF THIS
HONORABLE COURT IN THE CASE OF TONGKO VS. MANULIFE, AND IN BRUSHING ASIDE THE APPLICABLE RULINGS OF SONZA VS.
ABS CBN AND CONSULTA V. CA[.]

C.

WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DENYING THE MOTION FOR RECONSIDERATION OF
PETITIONER AND IN REFUSING TO CORRECT ITSELF[.][23]

Royale Homes contends that its contract with Alcantara is clear and unambiguous - it engaged his services as an independent
contractor. This can be readily seen from the contract stating that no employer-employee relationship exists between the parties;
that Alcantara was free to solicit sales at any time and by any manner he may deem appropriate; that he may recruit sales personnel
to assist him in marketing Royale Homes inventories; and, that his remunerations are dependent on his sales performance.

Royale Homes likewise argues that the CA grievously erred in ruling that it exercised control over Alcantara based on a shallow
ground that his performance is subject to company rules and regulations, code of ethics, periodic evaluation, and exclusivity clause
of contract. Royale Homes maintains that it is expected to exercise some degree of control over its independent contractors, but
that does not automatically result in the existence of employer-employee relationship. For control to be considered as a proof
tending to establish employer-employee relationship, the same must pertain to the means and method of performing the work; not
on the relationship of the independent contractors among themselves or their persons or their source of living.

Royale Homes further asserts that it neither hired nor wielded the power to dismiss Alcantara. It was Alcantara who openly and

Page 48 of 205
publicly declared that he was pre-terminating his fixed-term contract.

The pivotal issue to be resolved in this case is whether Alcantara was an independent contractor or an employee of Royale Homes.

Our Ruling

The Petition is impressed with merit.

The determination of whether a party who renders services to another is an employee or an independent contractor involves an
evaluation of factual matters which, ordinarily, is not within the province of this Court. In view of the conflicting findings of the
tribunals below, however, this Court is constrained to go over the factual matters involved in this case. [24]

The juridical relationship of the parties

based on their written contract

The primary evidence of the nature of the parties relationship in this case is the written contract that they signed and executed in
pursuance of their mutual agreement. While the existence of employer-employee relationship is a matter of law, the characterization
made by the parties in their contract as to the nature of their juridical relationship cannot be simply ignored, particularly in this case
where the parties written contract unequivocally states their intention at the time they entered into it. In Tongko v. The
Manufacturers Life Insurance Co. (Phils.), Inc.,[25] it was held that:

To be sure, the Agreements legal characterization of the nature of the relationship cannot be conclusive and binding on the courts; x
x x the characterization of the juridical relationship the Agreement embodied is a matter of law that is for the courts to
determine. At the same time, though, the characterization the parties gave to their relationship in the Agreement cannot simply be
brushed aside because it embodies their intent at the time they entered the Agreement, and they were governed by this
understanding throughout their relationship. At the very least, the provision on the absence of employer-employee relationship
between the parties can be an aid in considering the Agreement and its implementation, and in appreciating the other evidence on
record.[26]

In this case, the contract,[27] duly signed and not disputed by the parties, conspicuously provides that no employer-employee
relationship exists between Royale Homes and Alcantara, as well as his sales agents. It is clear that they did not want to be bound
by employer-employee relationship at the time of the signing of the contract. Thus:

January 24, 2003

MR. FIDEL P. ALCANTARA

13 Rancho I
Marikina City

Dear Mr. Alcantara,

This will confirm your appointment as Division 5 VICE[-]PRESIDENT-SALES of ROYALE HOMES MARKETING CORPORATION effective
January 1, 2003 to December 31, 2003.

Your appointment entails marketing our real estate inventories on an EXCLUSIVE BASIS under such price, terms and condition to be
provided to you from time to time.

Page 49 of 205
As such, you can solicit sales at any time and by any manner which you deem appropriate and necessary to market our real estate
inventories subject to rules, regulations and code of ethics promulgated by the company. Further, you are free to recruit sales
personnel/agents to assist you in marketing of our inventories provided that your personnel/agents shall first attend the required
seminars and briefing to be conducted by us from time to time for the purpose of familiarizing them of terms and conditions of sale,
the nature of property sold, etc., attendance of which shall be a condition precedent for their accreditation by us.

That as such Division 5 VICE[-]PRESIDENT-SALES you shall be entitled to:

1. Commission override of 0.5% for all option sales beginning January 1, 2003 booked by your sales agents.

2. Budget allocation depending on your divisions sale performance as per our budget guidelines.

3. Sales incentive and other forms of company support which may be granted from time to time.

It is understood, however, that no employer-employee relationship exists between us, that of your sales
personnel/agents, and that you shall hold our company x x x, its officers and directors, free and harmless from any and all claims
of liability and damages arising from and/or incident to the marketing of our real estate inventories.

We reserve, however, our right to terminate this agreement in case of violation of any company rules and regulations, policies and
code of ethics upon notice for justifiable reason.

Your performance shall be subject to periodic evaluation based on factors which shall be determined by the management.

If you are amenable to the foregoing terms and conditions, please indicate your conformity by signing on the space provided below
and return [to] us a duplicate copy of this letter, duly accomplished, to constitute as our agreement on the matter. (Emphasis ours)

Since the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations should control.[28] No construction is even needed as they already expressly state their intention. Also, this Court
adopts the observation of the NLRC that it is rather strange on the part of Alcantara, an educated man and a veteran sales broker
who claimed to be receiving P1.2 million as his annual salary, not to have contested the portion of the contract expressly indicating
that he is not an employee of Royale Homes if their true intention were otherwise.

The juridical relationship of the

parties based on Control Test

In determining the existence of an employer-employee relationship, this Court has generally relied on the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers power
to control the employee with respect to the means and methods by which the work is to be accomplished.[29] Among the four, the
most determinative factor in ascertaining the existence of employer-employee relationship is the right of control test.[30] It is
deemed to be such an important factor that the other requisites may even be disregarded.[31] This holds true where the issues to be
resolved is whether a person who performs work for another is the latters employee or is an independent contractor, [32] as in this
case. For where the person for whom the services are performed reserves the right to control not only the end to be achieved, but
also the means by which such end is reached, employer-employee relationship is deemed to exist.[33]

Page 50 of 205
In concluding that Alcantara is an employee of Royale Homes, the CA ratiocinated that since the performance of his tasks is subject
to company rules, regulations, code of ethics, and periodic evaluation, the element of control is present.

The Court disagrees.

Not every form of control is indicative of employer-employee relationship. A person who performs work for another and is subjected
to its rules, regulations, and code of ethics does not necessarily become an employee.[34] As long as the level of control does not
interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party
do not amount to the labor law concept of control that is indicative of employer-employee relationship. In Insular Life Assurance
Co., Ltd. v. National Labor Relations Commission[35] it was pronounced that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. x x x[36]

In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and periodic evaluation alluded to by
Alcantara do not involve control over the means and methods by which he was to perform his job. Understandably, Royale Homes
has to fix the price, impose requirements on prospective buyers, and lay down the terms and conditions of the sale, including the
mode of payment, which the independent contractors must follow. It is also necessary for Royale Homes to allocate its inventories
among its independent contractors, determine who has priority in selling the same, grant commission or allowance based on
predetermined criteria, and regularly monitor the result of their marketing and sales efforts. But to the mind of this Court, these do
not pertain to the means and methods of how Alcantara was to perform and accomplish his task of soliciting sales. They do not
dictate upon him the details of how he would solicit sales or the manner as to how he would transact business with prospective
clients. In Tongko, this Court held that guidelines or rules and regulations that do not pertain to the means or methods to be
employed in attaining the result are not indicative of control as understood in labor law. Thus:

From jurisprudence, an important lesson that the first Insular Life case teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso facto make the insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agents conduct necessarily indicate control as this term is defined in jurisprudence. Guidelines
indicative of labor law control, as the first Insular Life case tells us, should not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating the means or methods
to be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the
use of these means. In fact, results-wise, the principal can impose production quotas and can determine how many agents, with
specific territories, ought to be employed to achieve the companys objectives. These are management policy decisions that the labor
law element of control cannot reach. Our ruling in these respects in the first Insular Life case was practically reiterated in
Carungcong. Thus, as will be shown more fully below, Manulifes codes of conduct, all of which do not intrude into the insurance
agents means and manner of conducting their sales and only control them as to the desired results and Insurance Code norms,
cannot be used as basis for a finding that the labor law concept of control existed between Manulife and Tongko.[37] (Emphases in
the original)

As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to prove the elements thereof,
particularly Royale Homes power of control over the means and methods of accomplishing the work.[38] He, however, failed to cite
specific rules, regulations or codes of ethics that supposedly imposed control on his means and methods of soliciting sales and
dealing with prospective clients. On the other hand, this case is replete with instances that negate the element of control and the
existence of employer-employee relationship. Notably, Alcantara was not required to observe definite working hours.[39] Except for

Page 51 of 205
soliciting sales, Royale Homes did not assign other tasks to him. He had full control over the means and methods of accomplishing
his tasks as he can solicit sales at any time and by any manner which [he may] deem appropriate and necessary. He performed
his tasks on his own account free from the control and direction of Royale Homes in all matters connected therewith, except as to the
results thereof.[40]

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship.[41] As discussed above, the
absence of control over the means and methods disproves employer-employee relationship. The continuous rehiring of Alcantara
simply signifies the renewal of his contract with Royale Homes, and highlights his satisfactory services warranting the renewal of
such contract. Nor does the exclusivity clause of contract establish the existence of the labor law concept of control. In Consulta v.
Court of Appeals,[42] it was held that exclusivity of contract does not necessarily result in employer-employee relationship, viz:

x x x However, the fact that the appointment required Consulta to solicit business exclusively for Pamana did not mean that Pamana
exercised control over the means and methods of Consultas work as the term control is understood in labor jurisprudence. Neither
did it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being
connected with any other company, for as long as the business [of the] company did not compete with Pamanas business. [43]

The same scenario obtains in this case. Alcantara was not prohibited from engaging in any other business as long as he does not sell
projects of Royale Homes competitors. He can engage in selling various other products or engage in unrelated businesses.

Payment of Wages

The element of payment of wages is also absent in this case. As provided in the contract, Alcantaras remunerations consist only of
commission override of 0.5%, budget allocation, sales incentive and other forms of company support. There is no proof that he
received fixed monthly salary. No payslip or payroll was ever presented and there is no proof that Royale Homes deducted from his
supposed salary withholding tax or that it registered him with the Social Security System, Philippine Health Insurance Corporation, or
Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his alleged salary of P100,000.00, more or less. All of these
indicate an independent contractual relationship.[44] Besides, if Alcantara indeed considered himself an employee of Royale Homes,
then he, an experienced and professional broker, would have complained that he was being denied statutorily mandated
benefits. But for nine consecutive years, he kept mum about it, signifying that he has agreed, consented, and accepted the fact that
he is not entitled to those employee benefits because he is an independent contractor.

This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere independent contractor. The
NLRC is, therefore, correct in concluding that the Labor Arbiter has no jurisdiction over the case and that the same is cognizable by
the regular courts.

WHEREFORE, the instant Petition is hereby GRANTED. The June 23, 2010 Decision of the Court of Appeals in CA-G.R. SP No.
109998 is REVERSED and SET ASIDE. The February 23, 2009 Decision of the National Labor Relations Commission is
REINSTATED and AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Brion, Perez, and Perlas-Bernabe, JJ., concur.

Page 52 of 205
 SECOND DIVISION

G.R. No. 64948 September 27, 1994

MANILA GOLF & COUNTRY CLUB, INC., petitioner,

vs.
INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents.

Bito, Misa & Lozada for petitioner.

Remberto Z. Evio for private respondent.

NARVASA, C.J.:

The question before the Court here is whether or not persons rendering caddying services for members of golf clubs and their guests
in said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social
Security System (SSS).

That question appears to have been involved, either directly or peripherally, in three separate proceedings, all initiated by or on
behalf of herein private respondent and his fellow caddies. That which gave rise to the present petition for review was originally filed
with the Social Security Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies of Manila Golf and
Country Club-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended, "PTCCEA" being
the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the
petitioners claimed to be affiliated. The petition, docketed as SSC Case No. 5443, alleged in essence that although the petitioners
were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the
SSS.

At about the same time, two other proceedings bearing on the same question were filed or were pending; these were:

(1) a certification election case filed with the Labor Relations Division of the Ministry of Labor by the PTCCEA on
behalf of the same caddies of the Manila Golf and Country Club, the case being titled "Philippine Technical, Clerical,
Page 53 of 205
 Commercial Association vs. Manila Golf and Country Club" and docketed as Case No. R4-LRDX-M-10-504-78; it
appears to have been resolved in favor of the petitioners therein by Med-Arbiter Orlando S. Rojo who was
thereafter upheld by Director Carmelo S. Noriel, denying the Club's motion for reconsideration; 1

(2) a compulsory arbitration case initiated before the Arbitration Branch of the Ministry of Labor by the same labor
organization, titled "Philippine Technical, Clerical, Commercial Employees Association (PTCCEA), Fermin Lamar and
Raymundo Jomok vs. Manila Golf and Country Club, Inc., Miguel Celdran, Henry Lim and Geronimo Alejo;" it was
dismissed for lack of merit by Labor Arbiter Cornelio T. Linsangan, a decision later affirmed on appeal by the
National Labor Relations Commission on the ground that there was no employer-employee relationship between
the petitioning caddies and the respondent Club. 2

In the case before the SSC, the respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the
petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and
guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not
subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not
the Club's employees.

Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security coverage, avowedly
coming to realize that indeed there was no employment relationship between them and the Club. The case continued, and was
eventually adjudicated by the SSC after protracted proceedings only as regards the two holdouts, Fermin Llamar and Raymundo
Jomok. The Commission dismissed the petition for lack of merit, 3ruling:

. . . that the caddy's fees were paid by the golf players themselves and not by respondent club. For instance,
petitioner Raymundo Jomok averred that for their services as caddies a caddy's Claim Stub (Exh. "1-A") is issued
by a player who will in turn hand over to management the other portion of the stub known as Caddy Ticket (Exh.
"1") so that by this arrangement management will know how much a caddy will be paid (TSN, p. 80, July 23,
1980). Likewise, petitioner Fermin Llamar admitted that caddy works on his own in accordance with the rules and
regulations (TSN, p. 24, February 26, 1980) but petitioner Jomok could not state any policy of respondent that
directs the manner of caddying (TSN, pp. 76-77, July 23, 1980). While respondent club promulgates rules and
regulations on the assignment, deportment and conduct of caddies (Exh. "C") the same are designed to impose
personal discipline among the caddies but not to direct or conduct their actual work. In fact, a golf player is at
liberty to choose a caddy of his preference regardless of the respondent club's group rotation system and has the
discretion on whether or not to pay a caddy. As testified to by petitioner Llamar that their income depends on the
number of players engaging their services and liberality of the latter (TSN, pp. 10-11, Feb. 26, 1980). This lends
credence to respondent's assertion that the caddies are never their employees in the absence of two elements,
namely, (1) payment of wages and (2) control or supervision over them. In this connection, our Supreme Court
ruled that in the determination of the existence of an employer-employee relationship, the "control test" shall be
considered decisive (Philippine Manufacturing Co. vs. Geronimo and Garcia, 96 Phil. 276; Mansal vs. P.P. Coheco
Lumber Co., 96 Phil. 941; Viana vs.
Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al. vs. The Manila Hotel Co., 101 Phil. 358, LVN Pictures Inc. vs.
Phil. Musicians Guild, et al.,
L-12582, January 28, 1961, 1 SCRA 132. . . . (reference being made also to Investment Planning Corporation Phil.
vs. SSS 21 SCRA 925).

Records show the respondent club had reported for SS coverage Graciano Awit and Daniel Quijano, as bat unloader
and helper, respectively, including their ground men, house and administrative personnel, a situation indicative of
the latter's concern with the rights and welfare of its employees under the SS law, as amended. The unrebutted
testimony of Col. Generoso A. Alejo (Ret.) that the ID cards issued to the caddies merely intended to identify the
holders as accredited caddies of the club and privilege(d) to ply their trade or occupation within its premises which
could be withdrawn anytime for loss of confidence. This gives us a reasonable ground to state that the defense
posture of respondent that petitioners were never its employees is well taken.4

From this Resolution appeal was taken to the Intermediate appellate Court by the union representing Llamar and Jomok. After the
appeal was docketed 5 and some months before decision thereon was reached and promulgated, Raymundo Jomok's appeal was
dismissed at his instance, leaving Fermin Llamar the lone appellant. 6

The appeal ascribed two errors to the SSC:

(1) refusing to suspend the proceedings to await judgment by the Labor Relations Division of National Capital
Regional Office in the certification election case (R-4-LRD-M-10-504-78) supra, on the precise issue of the
existence of employer-employee relationship between the respondent club and the appellants, it being contended
that said issue was "a function of the proper labor office"; and

(2) adjudicating that self same issue a manner contrary to the ruling of the Director of the Bureau of Labor
Relations, which "has not only become final but (has been) executed or (become) res adjudicata." 7

Page 54 of 205
The Intermediate Appellate Court gave short shirt to the first assigned error, dismissing it as of the least importance. Nor, it would
appear, did it find any greater merit in the second alleged error. Although said Court reserved the appealed SSC decision and
declared Fermin Llamar an employee of the Manila Gold and Country Club, ordering that he be reported as such for social security
coverage and paid any corresponding benefits, 8 it conspicuously ignored the issue of res adjudicata raised in said second
assignment. Instead, it drew basis for the reversal from this Court's ruling in Investment Planning Corporation of the Philippines
vs. Social Security System, supra 9 and declared that upon the evidence, the questioned employer-employee relationship between
the Club and Fermin Llamar passed the so-called "control test," establishment in the case i.e., "whether the employer controls or
has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods
by which the same is to be accomplished," the Club's control over the caddies encompassing:

(a) the promulgation of no less than twenty-four (24) rules and regulations just about every aspect of the conduct
that the caddy must observe, or avoid, when serving as such, any violation of any which could subject him to
disciplinary action, which may include suspending or cutting off his access to the club premises;

(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which
designates his turn to serve a player;

(c) the club's "suggesting" the rate of fees payable to the caddies.

Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the players, not by the Club, that
they observed no definite working hours and earned no fixed income. It quoted with approval from an American decision 10 to the
effect that: "whether the club paid the caddies and afterward collected in the first instance, the caddies were still employees of the
club." This, no matter that the case which produced this ruling had a slightly different factual cast, apparently having involved a
claim for workmen's compensation made by a caddy who, about to leave the premises of the club where he worked, was hit and
injured by an automobile then negotiating the club's private driveway.

That same issue of res adjudicata, ignored by the IAC beyond bare mention thereof, as already pointed out, is now among the
mainways of the private respondent's defenses to the petition for review. Considered in the perspective of the incidents just
recounted, it illustrates as well as anything can, why the practice of forum-shopping justly merits censure and punitive sanction.
Because the same question of employer-employee relationship has been dragged into three different fora, willy-nilly and in quick
succession, it has birthed controversy as to which of the resulting adjudications must now be recognized as decisive. On the one
hand, there is the certification case [R4-LRDX-M-10-504-78), where the decision of the Med-Arbiter found for the existence of
employer-employee relationship between the parties, was affirmed by Director Carmelo S. Noriel, who ordered a certification election
held, a disposition never thereafter appealed according to the private respondent; on the other, the compulsory arbitration case
(NCR Case No. AB-4-1771-79), instituted by or for the same respondent at about the same time, which was dismissed for lack of
merit by the Labor Arbiter, which was afterwards affirmed by the NLRC itself on the ground that there existed no such relationship
between the Club and the private respondent. And, as if matters were not already complicated enough, the same respondent, with
the support and assistance of the PTCCEA, saw fit, also contemporaneously, to initiate still a third proceeding for compulsory social
security coverage with the Social Security Commission (SSC Case No. 5443), with the result already mentioned.

Before this Court, the petitioner Club now contends that the decision of the Med-Arbiter in the certification case had never become
final, being in fact the subject of three pending and unresolved motions for reconsideration, as well as of a later motion for early
resolution. 11 Unfortunately, none of these motions is incorporated or reproduced in the record before the Court. And, for his part,
the private respondent contends, not only that said decision had been appealed to and been affirmed by the Director of the BLR, but
that a certification election had in fact been held, which resulted in the PTCCEA being recognized as the sole bargaining agent of the
caddies of the Manila Golf and Country Club with respect to wages, hours of work, terms of employment, etc. 12 Whatever the truth
about these opposing contentions, which the record before the Court does not adequately disclose, the more controlling
consideration would seem to be that, however, final it may become, the decision in a certification case, by the
very nature of that proceedings, is not such as to foreclose all further dispute between the parties as to the existence, or non-
existence, of employer-employee relationship between them.

It is well settled that for res adjudicata, or the principle of bar by prior judgment, to apply, the following essential requisites must
concur: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the court rendering the
same must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases identity of
parties, identity of subject matter and identity of cause of action. 13

Clearly implicit in these requisites is that the action or proceedings in which is issued the "prior Judgment" that would operate in bar
of a subsequent action between the same parties for the same cause, be adversarial, or contentious, "one having opposing parties;
(is) contested, as distinguished from an ex parte hearing or proceeding. . . . of which the party seeking relief has given legal notice
to the other party and afforded the latter an opportunity to contest it" 14 and a certification case is not such a proceeding, as this
Court already ruled:

A certification proceedings is not a "litigation" in the sense in which the term is commonly understood, but mere
investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their
representation. The court enjoys a wide discretion in determining the procedure necessary to insure the fair and
free choice of bargaining representatives by the employees.15
Page 55 of 205
Indeed, if any ruling or judgment can be said to operate as res adjudicata on the contested issue of employer-employee relationship
between present petitioner and the private respondent, it would logically be that rendered in the compulsory arbitration case (NCR
Case No. AB-4-771-79, supra), petitioner having asserted, without dispute from the private respondent, that said issue was there
squarely raised and litigated, resulting in a ruling of the Arbitration Branch (of the same Ministry of Labor) that such relationship did
not exist, and which ruling was thereafter affirmed by the National Labor Relations Commission in an appeal taken by said
respondent. 16

In any case, this Court is not inclined to allow private respondent the benefit of any doubt as to which of the conflicting ruling just
adverted to should be accorded primacy, given the fact that it was he who actively sought them simultaneously, as it were, from
separate fora, and even if the graver sanctions more lately imposed by the Court for forum-shopping may not be applied to him
retroactively.

Accordingly, the IAC is not to be faulted for ignoring private respondent's invocation of res adjudicata; on contrary, it acted correctly
in doing so.

Said Courts holding that upon the facts, there exists (or existed) a relationship of employer and employee between petitioner and
private respondent is, however, another matter. The Court does not agree that said facts necessarily or logically point to such a
relationship, and to the exclusion of any form of arrangements, other than of employment, that would make the respondent's
services available to the members and guest of the petitioner.

As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the
petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to
leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things,
caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the
premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they
attach themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime
they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline
may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent
any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept
of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another
indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary,
showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer
would possess.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an assurance
that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being
assigned instead the last number for the day. 17

By and large, there appears nothing in the record to refute the petitioner's claim that:

(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation
in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or
otherwise with any entity or individual without restriction by petitioner. . . .

. . . In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required
to render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation.

It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work
elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other place of
work that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent himself if he has
more profitable caddying, or another, engagement in some other place. These are things beyond petitioner's
control and for which it imposes no direct sanctions on the caddies. . . . 18

WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought, is reversed and set aside, it being hereby
declared that the private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that
petitioner is under no obligation to report him for compulsory coverage to the Social Security System. No pronouncement as to costs.

SO ORDERED.

Regalado and Mendoza, JJ., concur.

Padilla, J., is on leave.

Page 56 of 205
 Puno, J., took no part.

WILHELMINA S. OROZCO, G.R. No. 155207

Petitioner,
Present:

YNARES-SANTIAGO, J.,

Chairperson,
- versus -
AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and

REYES, JJ.
THE FIFTH DIVISION OF THE HONORABLE COURT OF
APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA
JIMENEZ MAGSANOC,
Promulgated:
Respondents.

August 13, 2008

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

DECISION

NACHURA, J.:

The case before this Court raises a novel question never before decided in our jurisdiction whether a newspaper columnist is

an employee of the newspaper which publishes the column.

In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner Wilhelmina S. Orozco assails the

Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 50970 dated June 11, 2002 and its Resolution[2] dated September 11,

2002 denying her Motion for Reconsideration. The CA reversed and set aside the Decision[3] of the National Labor Relations Commission

(NLRC), which in turn had affirmed the Decision[4] of the Labor Arbiter finding that Orozco was an employee of private

respondent Philippine Daily Inquirer (PDI) and was illegally dismissed as columnist of said newspaper.

Page 57 of 205
 In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously

submitted her articles every week, except for a six-month stint in New York City when she, nonetheless, sent several articles through

mail. She received compensation of P250.00 later increased to P300.00 for every column published.[5]

On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner claims that her then editor, Ms.

Lita T. Logarta,[6] told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column for no

reason at all and advised petitioner to talk to Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter

informed her that it was PDI Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone

conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section already had many

columnists.[7]

On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how to improve

said section. They agreed to cut down the number of columnists by keeping only those whose columns were well-written, with regular

feedback and following. In their judgment, petitioners column failed to improve, continued to be superficially and poorly written, and

failed to meet the high standards of the newspaper. Hence, they decided to terminate petitioners column.[8]

Aggrieved by the newspapers action, petitioner filed a complaint for illegal dismissal, backwages, moral and exemplary

damages, and other money claims before the NLRC.

On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of petitioner, the dispositive portion of which

reads:

WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent company;

ordering respondent company to reinstate her to her former or equivalent position, with backwages.

Respondent company is also ordered to pay her 13 th month pay and service incentive leave pay.

Other claims are hereby dismissed for lack of merit.

SO ORDERED.[9]

The Labor Arbiter found that:

Page 58 of 205
 [R]espondent company exercised full and complete control over the means and method by which complainants work
that of a regular columnist had to be accomplished. This control might not be found in an instruction, verbal or oral,
given to complainant defining the means and method she should write her column. Rather, this control is manifested
and certained (sic) in respondents admitted prerogative to reject any article submitted by complainant for publication.

By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of writing
to suit the editorial taste of her editor. Otherwise, off to the trash can went her articles.

Moreover, this control is already manifested in column title, Feminist Reflection allotted complainant. Under this title,
complainants writing was controlled and limited to a womans perspective on matters of feminine interests. That
respondent had no control over the subject matter written by complainant is strongly belied by this observation.
Even the length of complainants articles were set by respondents.

Inevitably, respondents would have no control over when or where complainant wrote her articles as she was a
columnist who could produce an article in thirty (3) (sic) months or three (3) days, depending on her mood or the
amount of research required for an article but her actions were controlled by her obligation to produce an article a
week. If complainant did not have to report for work eight (8) hours a day, six (6) days a week, it is because her
task was mainly mental. Lastly, the fact that her articles were (sic) published weekly for three (3) years show that
she was respondents regular employee, not a once-in-a-blue-moon contributor who was not under any pressure or
obligation to produce regular articles and who wrote at his own whim and leisure.[10]

PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second Division dismissed the appeal

thereby affirming the Labor Arbiters Decision. The NLRC initially noted that PDI failed to perfect its appeal, under Article 223 of the

Labor Code, due to non-filing of a cash or surety bond. The NLRC said that the reason proffered by PDI for not filing the bond that it

was difficult or impossible to determine the amount of the bond since the Labor Arbiter did not specify the amount of the judgment

award was not persuasive. It said that all PDI had to do was compute based on the amount it was paying petitioner, counting the

number of weeks from November 7, 1992 up to promulgation of the Labor Arbiters decision. [11]

The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiters findings of fact and law. It sustained

the Labor Arbiters reasoning that respondent PDI exercised control over petitioners work.

PDI then filed a Petition for Review[12] before this Court seeking the reversal of the NLRC Decision. However, in a

Resolution[13] dated December 2, 1998, this Court referred the case to the Court of Appeals, pursuant to our ruling in St. Martin Funeral

Homes v. National Labor Relations Commission.[14]

The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and dismissed petitioners Complaint.

It held that the NLRC misappreciated the facts and rendered a ruling wanting in substantial evidence. The CA said:

Page 59 of 205
 The Court does not agree with public respondent NLRCs conclusion. First, private respondent admitted that
she was and [had] never been considered by petitioner PDI as its employee. Second, it is not disputed that private
respondent had no employment contract with petitioner PDI. In fact, her engagement to contribute articles for
publication was based on a verbal agreement between her and the petitioners Lifestyle Section Editor. Moreover, it
was evident that private respondent was not required to report to the office eight (8) hours a day. Further, it is not
disputed that she stayed in New York for six (6) months without petitioners permission as to her leave of absence
nor was she given any disciplinary action for the same. These undisputed facts negate private respondents claim that
she is an employee of petitioner.

Moreover, with regards (sic) to the control test, the public respondent NLRCs ruling that the guidelines given
by petitioner PDI for private respondent to follow, e.g. in terms of space allocation and length of article, is not the
form of control envisioned by the guidelines set by the Supreme Court. The length of the article is obviously limited
so that all the articles to be featured in the paper can be accommodated. As to the topic of the article to be published,
it is but logical that private respondent should not write morbid topics such as death because she is contributing to
the lifestyle section. Other than said given limitations, if the same could be considered limitations, the topics of the
articles submitted by private respondent were all her choices. Thus, the petitioner PDI in deciding to publish private
respondents articles only controls the result of the work and not the means by which said articles were written.

As such, the above facts failed to measure up to the control test necessary for an employer-employee
relationship to exist.[15]

Petitioners Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She then filed the present

Petition for Review.

In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the Labor Arbiter to clarify

the amount of the award due petitioner and, thereafter, ordered PDI to post the requisite bond. Upon compliance therewith, the petition

would be given due course. Labor Arbiter Amansec clarified that the award under the Decision amounted to P15,350.00. Thus, PDI

posted the requisite bond on January 25, 2007.[16]

We shall initially dispose of the procedural issue raised in the Petition.

Petitioner argues that the CA erred in not dismissing outright PDIs Petition for Certiorari for PDIs failure to post a cash or

surety bond in violation of Article 223 of the Labor Code.

This issue was settled by this Court in its Resolution dated April 29, 2005.[17] There, the Court held:

But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the
perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional instances wherein the Court
relaxed the bond requirement as a condition for posting the appeal.

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 xxxx

In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of the Labor
Arbiter concerned did not contain a computation of the monetary award due the employees, a circumstance which is
likewise present in this case. In said case, the Court stated,

As a rule, compliance with the requirements for the perfection of an appeal within the
reglamentary (sic) period is mandatory and jurisdictional. However, in National Federation of Labor
Unions v. Ladrido as well as in several other cases, this Court relaxed the requirement of the posting
of an appeal bond within the reglementary period as a condition for perfecting the appeal. This is
in line with the principle that substantial justice is better served by allowing the appeal to be
resolved on the merits rather than dismissing it based on a technicality.

The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages,
13th month pay and service incentive leave pay without however including a computation of the alleged amounts.

xxxx

In the case of NFLU v. Ladrido III, this Court postulated that private respondents cannot be expected to
post such appeal bond equivalent to the amount of the monetary award when the amount thereof was not included
in the decision of the labor arbiter. The computation of the amount awarded to petitioner not having been clearly
stated in the decision of the labor arbiter, private respondents had no basis for determining the amount of the bond
to be posted.

Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered
indispensable interdictions against needless delays and for orderly discharge of judicial business, the law does admit
of exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the parties. But while this Court may relax the
observance of reglementary periods and technical rules to achieve substantial justice, it is not prepared to give due
course to this petition and make a pronouncement on the weighty issue obtaining in this case until the law has been
duly complied with and the requisite appeal bond duly paid by private respondents.[18]

Records show that PDI has complied with the Courts directive for the posting of the bond;[19] thus, that issue has been laid to

rest.

We now proceed to rule on the merits of this case.

The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in the affirmative, whether

she was illegally dismissed.

We rule for the respondents.

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 The existence of an employer-employee relationship is essentially a question of fact.[20] Factual findings of quasi-judicial

agencies like the NLRC are generally accorded respect and finality if supported by substantial evidence. [21]

Considering, however, that the CAs findings are in direct conflict with those of the Labor Arbiter and NLRC, this Court must

now make its own examination and evaluation of the facts of this case.

It is true that petitioner herself admitted that she was not, and [had] never been considered respondents employee because the terms

of works were arbitrarily decided upon by the respondent.[22] However, the employment status of a person is defined and prescribed

by law and not by what the parties say it should be.[23]

This Court has constantly adhered to the four-fold test to determine whether there exists an employer-employee relationship

between parties.[24] The four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the

payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. [25]

Of these four elements, it is the power of control which is the most crucial[26] and most determinative factor,[27] so important,

in fact, that the other elements may even be disregarded.[28] As this Court has previously held:

the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority
to control the method and the details of performance of the service being rendered, and the degree to which the
principal may intervene to exercise such control.[29]

In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to

the work done, but also as to the means and methods by which the same is accomplished.[30]

Petitioner argues that several factors exist to prove that respondents exercised control over her and her work, namely:

a. As to the Contents of her Column The PETITIONER had to insure that the contents of her
column hewed closely to the objectives of its Lifestyle Section and the over-all principles that the newspaper projects
itself to stand for. As admitted, she wanted to write about death in relation to All Souls Day but was advised not to.

b. As to Time Control The PETITIONER, as a columnist, had to observe the deadlines of the
newspaper for her articles to be published. These deadlines were usually that time period when the Section Editor

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 has to close the pages of the Lifestyle Section where the column in located. To close the pages means to prepare
them for printing and publication.

As a columnist, the PETITIONERs writings had a definite day on which it was going to appear. So she
submitted her articles two days before the designated day on which the column would come out.

This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers obligations to the
readers with regard to timeliness and freshness of ideas.

c. As to Control of Space The PETITIONER was told to submit only two or three pages of article
for the column, (sic) Feminist Reflections per week. To go beyond that, the Lifestyle editor would already chop off
the article and publish the rest for the next week. This shows that PRIVATE RESPONDENTS had control over the
space that the PETITIONER was assigned to fill.

d. As to Discipline Over time, the newspaper readers eyes are trained or habituated to look for
and read the works of their favorite regular writers and columnists. They are conditioned, based on their daily
purchase of the newspaper, to look for specific spaces in the newspapers for their favorite write-ups/or opinions on
matters relevant and significant issues aside from not being late or amiss in the responsibility of timely submission
of their articles.

The PETITIONER was disciplined to submit her articles on highly relevant and significant issues on time by
the PRIVATE RESPONDENTS who have a say on whether the topics belong to those considered as highly relevant and
significant, through the Lifestyle Section Editor. The PETITIONER had to discuss the topics first and submit the articles
two days before publication date to keep her column in the newspaper space regularly as expected or without miss
by its readers.[31]

Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor laws contemplate such

as to establish an employer-employee relationship between petitioner and respondent PDI?

It is not.

Petitioner has misconstrued the control test, as did the Labor Arbiter and the NLRC.

Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which

serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.[32] Thus,

this Court has explained:

It should, however, be obvious that not every form of control that the hiring party reserves to himself over the
conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-
employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere,
if the recognized distinction between an employee and an individual contractor is not to vanish
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 altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired
and eschews any intervention whatsoever in his performance of the engagement.

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement
of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that
control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim
only to promote the result, create no employer-employee relationship unlike the second, which address both the
result and the means used to achieve it. x x x.[33]

The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also

the means and method to be used by the hired party in order to achieve such results. Thus, in this case, we are to examine the factors

enumerated by petitioner to see if these are merely guidelines or if they indeed fulfill the requirements of the control test.

Petitioner believes that respondents acts are meant to control how she executes her work. We do not agree. A careful

examination reveals that the factors enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the

so-called control as to time, space, and discipline are dictated by the very nature of the newspaper business itself.

We agree with the observations of the Office of the Solicitor General that:

The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the country. As
such, public interest dictates that every article appearing in the newspaper should subscribe to the standards set by
the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual for the Inquirer to control what would
be published in the newspaper. What is important is the fact that such control pertains only to the end result, i.e.,
the submitted articles. The Inquirer has no control over [petitioner] as to the means or method used by her in the
preparation of her articles. The articles are done by [petitioner] herself without any intervention from the Inquirer.[34]

Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week.

Aside from the constraints presented by the space allocation of her column, there were no restraints on her creativity; petitioner was

free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed suitable

for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to

control, but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the

preference of the readers of that section.

The perceived constraint on petitioners column was dictated by her own choice of her columns perspective. The column title

Feminist Reflections was of her own choosing, as she herself admitted, since she had been known as a feminist writer.[35] Thus,

respondent PDI, as well as her readers, could reasonably expect her columns to speak from such perspective.

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 Contrary to petitioners protestations, it does not appear that there was any actual restraint or limitation on the subject matter

within the Lifestyle section that she could write about. Respondent PDI did not dictate how she wrote or what she wrote in her column.

Neither did PDIs guidelines dictate the kind of research, time, and effort she put into each column. In fact, petitioner herself said that

she received no comments on her articlesexcept for her to shorten them to fit into the box allotted to her column. Therefore, the

control that PDI exercised over petitioner was only as to the finished product of her efforts, i.e., the column itself, by way of either

shortening or outright rejection of the column.

The newspapers power to approve or reject publication of any specific article she wrote for her column cannot be the control

contemplated in the control test, as it is but logical that one who commissions another to do a piece of work should have the right to

accept or reject the product. The important factor to consider in the control test is still the element of control over how the work itself

is done, not just the end result thereof.

In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the common practice

in the newspaper business of assigning its regular reporters to cover specific subjects, geographical locations, government agencies,

or areas of concern, more commonly referred to as beats. A reporter must produce stories within his or her particular beat and cannot

switch to another beat without permission from the editor. In most newspapers also, a reporter must inform the editor about the story

that he or she is working on for the day. The story or article must also be submitted to the editor at a specified time. Moreover, the

editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the need arises.

This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded from submitting

her column ahead of time or from submitting columns to be published at a later time. More importantly, respondents did not dictate

upon petitioner the subject matter of her columns, but only imposed the general guideline that the article should conform to the

standards of the newspaper and the general tone of the particular section.

Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not

subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof,

no employer-employee relationship exists.[36]

Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing within the

activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the

relationship between the parties.[37] This is especially appropriate when, as in this case, there is no written agreement or contract on

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which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships

for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer. [38]

Petitioners main occupation is not as a columnist for respondent but as a womens rights advocate working in various womens

organizations.[39] Likewise, she herself admits that she also contributes articles to other publications.[40] Thus, it cannot be said that

petitioner was dependent on respondent PDI for her continued employment in respondents line of business. [41]

The inevitable conclusion is that petitioner was not respondent PDIs employee but an independent contractor, engaged to do

independent work.

There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the characterization of

the relationship must be made based on the particular circumstances of each case.[42] There are several factors[43] that may be

considered by the courts, but as we already said, the right to control is the dominant factor in determining whether one is an employee

or an independent contractor.[44]

In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and independent business

and undertakes to perform the job, work, or service on ones own account and under ones own responsibility according to ones 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.[45]

On this point, Sonza v. ABS-CBN Broadcasting Corporation[46] is enlightening. In that case, the Court found, using the four-

fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but an independent contractor. Sonza was hired by ABS-

CBN due to his unique skills, talent and celebrity status not possessed by ordinary employees, a circumstance that, the Court said,

was indicative, though not conclusive, of an independent contractual relationship. Independent contractors often present themselves

to possess unique skills, expertise or talent to distinguish them from ordinary employees.[47] The Court also found that, as to payment

of wages, Sonzas talent fees were the result of negotiations between him and ABS-CBN.[48] As to the power of dismissal, the Court

found that the terms of Sonzas engagement were dictated by the contract he entered into with ABS-CBN, and the same contract

provided that either party may terminate the contract in case of breach by the other of the terms thereof. [49] However, the Court held

that the foregoing are not determinative of an employer-employee relationship. Instead, it is still the power of control that is most

important.

On the power of control, the Court found that in performing his work, Sonza only needed his skills and talent how he delivered

his lines, appeared on television, and sounded on radio were outside ABS-CBNs control.[50] Thus:
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 We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZAs work. ABS-CBN did not instruct SONZA how to perform his job.ABS-CBN merely reserved the right to modify
the program format and airtime schedule for more effective programming. ABS-CBNs sole concern was the quality
of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods
of performance of SONZAs work.

SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means
and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show,
ABS-CBN was still obligated to pay SONZAs talent fees. Thus, even if ABS-CBN was completely dissatisfied with the
means and methods of SONZAs performance of his work, or even with the quality or product of his work, ABS-CBN
could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-
CBN must still pay his talent fees in full.

Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue
paying in full SONZAs talent fees, did not amount to control over the means and methods of the performance of
SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of
his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that
ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. In
either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of the Agreement.

In Vaughan, et al. v. Warner, et al., the United States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although the management reserved the right to delete objectionable
features in their shows. Since the management did not have control over the manner of performance of the skills of
the artists, it could only control the result of the work by deleting objectionable features.

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay
programs. However, the equipment, crew and airtime are not the tools and instrumentalities SONZA needed to
perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his
appearance. Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA
was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern
was for SONZA to display his talent during the airing of the programs.

A radio broadcast specialist who works under minimal supervision is an independent contractor. SONZAs
work as television and radio program host required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and
talent in his shows.[51]

The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill, experience, and her unique

viewpoint as a feminist advocate. How she utilized all these in writing her column was not subject to dictation by respondent. As

in Sonza, respondent PDI was not involved in the actual performance that produced the finished product. It only reserved the right to

shorten petitioners articles based on the newspapers capacity to accommodate the same. This fact, we note, was not unique to

petitioners column. It is a reality in the newspaper business that space constraints often dictate the length of articles and columns,

even those that regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed to perform her work. Petitioner

only needed her talent and skill to come up with a column every week. As such, she had all the tools she needed to perform her work.

Considering that respondent PDI was not petitioners employer, it cannot be held guilty of illegal dismissal.

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 WHEREFORE, the foregoing premises considered, the Petition is DISMISSED. The Decision and Resolution of the Court of

Appeals in CA-G.R. SP No. 50970 are hereby AFFIRMED.

SO ORDERED.

[G.R. No. 59229. August 22, 1991.]

HIJOS DE F. ESCAO, INC., and PIER 8 ARRASTRE AND STEVEDORING SERVICES, INC., Petitioners, v. NATIONAL
LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF WORKINGMEN (NOWM) PSSLU-TUCCP and ROLANDO
VILLALOBOS, Respondents.

Beltran, Beltran & Beltran, for Petitioners.

Bautista, Santiago & Associates for Private Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATION-SHIP; DETERMINING FACTORS. It is firmly settled that
the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain
factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the
mode of payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of a power to
control the putative employees conduct.

2. ID.; REGULAR EMPLOYEES; WHEN THE FUNCTION IS DESIRABLE AND INDISPENSABLE IN THE BUSINESS OF EMPLOYER; NOT
APPLICABLE IN CASE AT BAR. The Court is unable to agree with conclusion reached by the Labor Arbiter, particularly that portion
where the Labor Arbiter supposed stevedoring to be an indispensable part of the business of Escao. Escao is a corporation
engaged in interisland shipping business, being the operator of the Escao Shipping Lines. It was not alleged, nor has it been shown,
that Escao or any other shipping company is also engaged in arrastre and stevedoring services. Stevedoring is not ordinarily
included in the business of transporting goods, it (stevedoring) being a special kind of service which involves the loading or
unloading of cargo on or from a vessel on port. It consists of the handling of cargo from the hold of the ship to the dock, in case of
pier-side unloading, or to a barge, in case of unloading at sea. The loading on a ship of outgoing cargo is also part of stevedoring
work. Arrastre, upon the other hand, involves the handling of cargo deposited on the wharf or between the establishment of the
consignee or shipper and the ships tackle. Considering that a shipping company is not normally or customarily engaged in
stevedoring and arrastre activities either for itself or other vessels, it contracts with other companies offering those services. The
employees, however, of the stevedoring and/or arrastre company should not be deemed the employees of the shipping company, in
the absence of any showing, that the arrastre and/or stevedoring company in fact acted as an agent only of the shipping company.
No such showing was made in this case.

3. ID.; UNFAIR LABOR PRACTICES OF EMPLOYER; ESTABLISHED IN CASE AT BAR. The Labor Arbiter had found that: "Now comes
the issue of unfair labor practice. This Labor Arbiter believes that respondents are guilty as charged. The unfair labor practice acts of
the respondents started when they came to know that the petitioners have organized themselves and affiliated with the NOWM.
Subsequent acts of the respondents like requiring the petitioners to disaffiliate with the NOWM and affiliate with the General Maritime
Stevedores Union and later on to Independent Workers Union, requiring them to sign applications for membership therein, they were
threatened and coerced, are all acts of unfair labor practices. Thereafter, the petitioners working schedules were rotated when the
respondent Hijos de F. Escao transferred to Pier 16 through the alleged approval of the Philippine Port Authority and later on the
said petitioners were left without work, were all in furtherance of such unfair labor practice acts. . . ." Both the Constitution and the
Labor Code guarantee to the stevedores a right to self-organization. It was unlawful for PIER 8 A&S to deprive them of that right by
its undue interference. The Constitution (Article III, Section 7) expressly recognizes the right of employees, whether of the public or
the private sector, to form unions.

4. ID.; TERMINATION OF EMPLOYMENT; DISMISSAL; REQUIRES PRIOR CLEARANCE FROM MINISTRY OF LABOR AND EMPLOYMENT;
NOT COMPLIED IN CASE AT BAR. PIER 8 A&S was also liable for illegal dismissal. PIER 8 A&S did not obtain prior clearance from
the MOLE before it dismissed the stevedores, as required by the law then in force which read: "Section 1. Requirement for shutdown
or dismissal. No employer may shut down his establishment or dismiss any of his employees with at least one year of service

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during the last two years, whether the service is broken or continuous, without prior clearance issued therefor in accordance with
this Rule. Any provision in a collective bargaining agreement dispensing with the clearance requirement shall be null and void.
Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without prior clearance shall be conclusively
presumed to be a termination of employment without a just cause. The Regional Director shall, in such case, order the immediate
reinstatement of the employee and the payment of his wages from the time of the shutdown or dismissal until the time of
reinstatement." B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of prior clearance from
the MOLE but since the dismissal of the stevedores was effected prior to the promulgation of B.P. Blg. 130, PIER 8 A&S was then
bound to comply with the old law. The Court, interpreting Sections 1 and 2 above quoted, has consistently held that a dismissal
without said clearance shall be conclusively presumed a termination without just cause. The record is bare of any evidence that could
compel the Court to overturn the factual findings of the Labor Arbiter on this point.

DECISION

FELICIANO, J.:

Petitioners seek to set aside the Decision of the National Labor Relations Commission ("NLRC") dated 11 November 1981, which
affirmed the Decision of the Labor Arbiter dated 28 February 1980.

Private respondent National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor organization that counts among its
members a majority of the laborers of petitioner Pier 8 Arrastre & Stevedoring Services, Inc. ("PIER 8 A&S") consisting, among
others, of stevedores, dockworkers, sweepers and forklift operators (hereinafter collectively referred to as "the stevedores"). On 31
July 1978, NOWM PSSLU-TUCP and about 300 stevedores filed with the then Ministry of Labor and Employment ("MOLE") a
complaint 1 for unfair labor practice ("ULP") and illegal dismissal against PIER 8 A&S.

On 8 September 1978, NOWM PSSLU-TUCP amended its complaint to include the monetary claims of the stevedores for overtime
compensation, legal holiday pay, emergency cost of living allowance, 13th month pay, night shift differential pay, and the difference
between the salaries they received and that prescribed under the minimum wage law. The complaint was also amended to implead
petitioner Hijos de F. Escao, Inc. ("Escao") as respondent before the MOLE. 2

The MOLE Director in the National Capital Region certified for compulsory arbitration only the claims for illegal dismissal and ULP.
Considering that NOWM PSSLU-TUCP wanted to include as well the other issues It had raised in the amended complaint, it filed a
motion for reconsideration. The motion was denied because money claims, according to the MOLE Director, should be brought
against Escao and PIER 8 A&S in a separate complaint.

On the basis of the position papers submitted by the parties and the annexes attached thereto, the case was considered submitted
for resolution. On 28 February 1980, the Labor Arbiter rendered a Decision 3 with the following dispositive portion:jgc:

"WHEREFORE, consonant with the foregoing premises, the respondents Hijos de F. Escao and Pier 8 Arrastre and Stevedoring
Services, Inc. are hereby found guilty of committing acts of unfair labor practice and are ordered to jointly and severally reinstate all
of the petitioners named in the amended complaint, with payment of full backwages counted from the time they were illegally
dismissed which was on August 10, 1978 up to March 27, 1979, inclusive, when the petitioners admitted having received return to
work notice from the respondent but refused to comply in view of the pendency of the present case, based on their individual rate at
the time of their dismissal or on the minimum wage then prevailing whichever is more beneficial to them.

For purposes of this decision, the Socio-Economic Analyst of this branch is hereby directed to compute the backwages of the
individual petitioners as mandated herein, and to submit his report within ten (10) days from receipt hereof which shall form part of
this award.

SO ORDERED."

Petitioners appealed to the NLRC which, however, affirmed the Decision of the Labor Arbiter.

The instant Petition for Certiorari imputes grave abuse of discretion to the NLRC in upholding the finding of the Labor Arbiter that the
stevedores are employees not only of PIER 8 A&S but also of Escao. Petitioners also assail that portion of the Decision which
directed them to reinstate the dismissed stevedores with the obligation to pay backwages from 10 August 1978 to 27 March 1979.

In his Decision, the Labor Arbiter took the view that PIER 8 A&S was a labor-only contractor and held that Escao was the principal
employer of the stevedores. For that reason, the Labor Arbiter adjudged the petitioners solidarily liable for payment of backwages to
the stevedores as well as for reinstatement.

While petitioner PIER 8 A&S does not dispute that the stevedores were its employees, petitioner Escao denies the existence of an
employer-employee relationship between it and the stevedores. Escao therefore contends that liability, if any, should attach only to
PIER 8 A&S.

PIER 8 A&S is a corporation providing arrastre and stevedoring services to vessels docked at Pier 8 of the Manila North Harbor. Prior
to the incorporation of PIER 8 A&S, two (2) stevedoring companies had been servicing vessels docking at Pier 8. One of these was
the Manila Integrated Services, Inc. ("MISI") which was servicing Escao vessels, then berthing at Pier 8 . The other was the San
Nicolas Stevedoring and Arrastre Services, Inc." ("SNSASI") which was servicing Compaia Maritime vessels. Aside, of course, from
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MISI and SNSASI, there were individual contractors known as the "cabos" who were operating in Pier 8.

On 11 July 1974, the Philippine Port Authority ("PPA") was created pursuant to the policy of the State to implement an integrated
program of port development for the entire country. 4 Towards this end, the PPA issued Administrative Order No. 1377 specifically
adopting the policy of "one pier, one arrastre and or stevedoring company." MISI and SNSASI merged to form the Pier 8 Arrastre
and Stevedoring Services, Inc.

Sometime in June 1978, Escao had transferred berth to Pier 16 with the approval of the PPA. PIER 8 A&S then started to encounter
problems; it found its business severely reduced with only Compaia Maritime vessels to service. Even if it had wanted to continue
servicing the vessels of Escao at Pier 16, that was simply not possible as there was another company exclusively authorized to
handle and render arrastre and stevedoring services at Pier 16.

Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its stevedores by rotating them. The rotation
scheme was resisted by the stevedores, especially those formerly assigned to service Escao vessels. It appears that the employees
formerly belonging to MISI continued to service Escao vessels in like manner that those employees formerly belonging to SNSASI
continued to service Compania Maritime vessels, although MISI and SNSASI had already merged to form PIER 8 A&S. The affected
stevedores boycotted Pier 8 leading to their severance from employment by PIER 8 A&S on 10 August 1978. Their refusal to work
continued even after they were served with a return-to-work order.

The stevedores claim that since they had long been servicing Escao vessels, i.e. from the time Escao was exclusively serviced by
MISI until the time MISI was merged with SNSASI to form PIER 8 A&S, they should also be considered as employees of Escao.
Escao disclaimed any employment relationship with the stevedores. In its Position Paper, Escao alleged that the stevedores are
included in the payroll of PIER 8 A&S and that the SSS and Medicare contributions of the stevedores are paid by PIER 8 A&S as well.

It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by
examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the
putative employee; (b) the mode of payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence
or absence of a power to control the putative employees conduct. 5

The Court notes that in finding against PIER 8 A&S and Escao, the Labor Arbiter relied solely on the position paper of the parties.
The record of the case is bare of evidence tending to support such allegations; what is found in the record instead are the self-
serving statements from both parties. It is not clear to the Court from examination of the record which entity paid the salaries of the
stevedores. While the stevedores attached to their amended complaint a list of their daily wages set forth opposite their individual
names under the heading "Hijos de F. Escao, Inc. and/or Pier 8 Arrastre and Stevedoring Services, Inc." 6 apparently to show that
they are paid for their services by either or both of petitioners, they did not submit direct evidence, e.g., copies of payrolls and
remittances to the SSS and Medicare, establishing this fact. Further, the stevedores failed to substantiate their allegation that the
supervisors of Escao had control over them while discharging their (stevedores) duties. On the contrary, their Position Paper
submitted to the Labor Arbiter disclosed that the supervisors of Escao "merely supervised" them..

The record includes letters written by the National President of NOWM PSSLU-TUCP to which the stevedores belong relating to
collective bargaining and other operating matters, were all addressed to the management of PIER 8 A&S, indicating that they
recognized PIER 8 A&S as their employer. Specifically, in the letter dated 21 May 1977, the stevedores proposed that PIER 8 A&S
recognize their union as the sole and exclusive representative of the stevedores for the purpose of collective bargaining. They also
sought to submit for collective bargaining with PIER 8 A&S such other labor standard issues as wage increases, 13th month pay and
vacation and sick leave pay. 7

The stevedores, however, now contend that PIER 8 A&S is not an independent contract but a labor-only contractor. In their Amended
Complaint and Position Paper, the stevedores alleged that:

(1) They perform their duties or work assignments under the close supervision of supervisors of respondent Hijos de F. Escao, Inc.;

(2) The machineries, equipment, tools and other facilities complainants used, while in the performance of their jobs, are owned by
respondent Hijos de E. Escao, Inc.;

(3) The jobs they were performing from the time they were first employed, until their dismissals, are principal phases of
respondents operations; and

(4) The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere middleman; its vital role is purely one of supplying workers
to respondent Hijos de F. Escao, Inc. in short, a mere recruiting agent. Plainly, said contractor can be categorized as an agent of
respondent Hijos de F. Escao, Inc. as it performs activities directly related to the principal business of said Hijos de F. Escao, Inc.

Although the record does not show that the stevedores had submitted any evidence to fortify their claim that PIER 8 A&S is a labor-
only contractor, the Labor Arbiter simply conceded that claim to be factual. The Labor Arbiter added that the business of PIER 8 A&S
is "desirable and indispensable in the business of Hijos de F. Escao and without [the stevedores], its vessels could not be operated."

The Court is unable to agree with the conclusion reached by the Labor Arbiter, particularly that portion where the Labor Arbiter
supposed stevedoring to be an indispensable part of the business of Escao. Escao is a corporation engaged in inter island shipping
business, being the operator of the Escao Shipping Lines. It was not alleged, nor has it been shown, that Escao or any other
shipping company is also engaged in arrastre and stevedoring services. Stevedoring is not ordinarily included in the business of
transporting goods, it (stevedoring) being a special kind of service which involves the loading or unloading of cargo on or from a
vessel on port. It consists of the handling of cargo from the hold of the ship to the dock, in case of pier-side unloading, or to a barge,
Page 70 of 205
in case of unloading at sea. The loading on a ship of outgoing cargo is also part of stevedoring work. 8 Arrastre, upon the other
hand, involves the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the snips
tackle. 9 Considering that a shipping company is not normally or customarily engaged in stevedoring and arrastre activities either for
itself or other vessels, it contracts with other companies offering those services. The employees, however, of the stevedoring and or
arrastre company should not be deemed the employees of the shipping company, in the absence of any showing, that the arrastre
and/or stevedoring company in fact acted as an agent only of the shipping company. No such showing was made in this case.

We turn next to the stevedores contention that PIER 8 A&S is guilty of ULP. In this respect, the Labor Arbiter had found that:

"Now comes the issue of unfair labor practice. This Labor Arbiter believes that respondents are guilty as charged. The unfair labor
practice acts of the respondents started when they came to know that the petitioners have organized themselves and affiliated with
the NOWM. Subsequent acts of the respondents like requiring the petitioners to disaffiliate with the NOWM and affiliate with the
General Maritime Stevedores Union and later on to Independent Workers Union, requiring them to sign applications for membership
therein, they were threatened and coerced, are all acts of unfair labor practices. Thereafter, the petitioners working schedules were
rotated when the respondent Hijos de F. Escao transferred to Pier 16 through the alleged approval of the Philippine Port Authority
and later on the said petitioners were left without work, were all in furtherance of such unfair labor practice acts. . .." 10

Both the Constitution and the Labor Code guarantee to the stevedores a right to self-organization. It was unlawful for PIER 8 A&S to
deprive them of that right by its undue interference. The Constitution (Article III, Section 7) expressly recognizes the right of
employees, whether of the public or the private sector, to form unions. Article 248 of the Labor Code provides:

"Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor
practice:

(a) To interfere with restrain or coerce employees in the exercise of their right to self-organization;

(b) To require as a condition of employment that a person or am employee shall not join a labor organization or shall withdraw from
one to which he belongs;

(c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the
giving of financial or other support to it or its organizations or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or
discourage membership in any labor organization. . . .

x x x"

(Emphasis supplied.)

Not only was PIER 8 A&S guilty of ULP; it was also liable for illegal dismissal. PIER 8 A&S did not obtain prior clearance from the
MOLE before it dismissed the stevedores, as required by the law then in force which read:

"Section 1. Requirement for shutdown or dismissal. No employer may shut down his establishment or dismiss any of his
employees with at least one year of service during the last two years whether the service is broken or continuous, without prior
clearance issued therefor in accordance with this Rule. Any provision in a collective bargaining agreement dispensing with the
clearance requirement shall be null and void.

Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without prior clearance shall be conclusively
presumed to be a termination of employment without a just cause. The Regional Director shall, in such case, order the immediate
reinstatement of the employee and the payment of his wages from the time of the shutdown or dismissal until the time of
reinstatement." 11

B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of prior clearance from the MOLE bout
since the dismissal of the stevedores was effected prior to the promulgation of B.P. Blg. 130, PIER 8 A&S was then bound to comply
with the old law. The Court, interpreting Sections 1 and 2 above quoted, has consistently held that a dismissal without said clearance
shall be conclusively presumed a termination without just cause. 12 The record is bare of any evidence that could compel the Court
to overturn the factual findings of the Labor Arbiter on this point:

WHEREFORE, considering the absence of an employer-employee relationship between Hijos de F. Escao, Inc. and private
respondents, the Decision of the Labor Arbiter dated 28 February 1980 in NLRC Case No. RB-IV-2326-79, and the Decision of the
NLRC dated 11 November 1981 are hereby MODIFIED so that only Pier 8 Arrastre & Stevedoring Services, Inc. shall be liable for
reinstatement and payment of backwages. As so modified, both Decisions are hereby AFFIRMED. No costs.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.

Page 71 of 205
 [G.R. No. 124354. April 11, 2002]

ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS,
ROY RODERICK RAMOS, and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DE LOS SANTOS
MEDICAL CENTER, DR. ORLINO HOSAKA and DR. PERFECTA GUTIERREZ, respondents.

RESOLUTION

KAPUNAN, J.:

Private respondents De Los Santos Medical Center, Dr. Orlino Hosaka and Dr. Perfecta Gutierrez move for a reconsideration of
the Decision, dated December 29, 1999, of this Court holding them civilly liable for petitioner Erlinda Ramos comatose condition after
she delivered herself to them for their professional care and management.

For better understanding of the issues raised in private respondents respective motions, we will briefly restate the facts of the
case as follows:

Sometime in 1985, petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an operation for
the removal of a stone in her gall bladder (cholecystectomy). She was referred to Dr. Hosaka, a surgeon, who agreed to perform the
operation on her. The operation was scheduled for June 17, 1985 at 9:00 in the morning at private respondent De Los Santos Medical
Center (DLSMC). Since neither petitioner Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka
recommended to them the services of Dr. Gutierrez.

Page 72 of 205
 Petitioner Erlinda was admitted to the DLSMC the day before the scheduled operation. By 7:30 in the morning of the following
day, petitioner Erlinda was already being prepared for operation. Upon the request of petitioner Erlinda, her sister-in-law, Herminda
Cruz, who was then Dean of the College of Nursing at the Capitol Medical Center, was allowed to accompany her inside the operating
room.

At around 9:30 in the morning, Dr. Hosaka had not yet arrived so Dr. Gutierrez tried to get in touch with him by phone. Thereafter,
Dr. Gutierrez informed Cruz that the operation might be delayed due to the late arrival of Dr. Hosaka. In the meantime, the patient,
petitioner Erlinda said to Cruz, Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor.

By 10:00 in the morning, when Dr. Hosaka was still not around, petitioner Rogelio already wanted to pull out his wife from the
operating room. He met Dr. Garcia, who remarked that he was also tired of waiting for Dr. Hosaka. Dr. Hosaka finally arrived at the
hospital at around 12:10 in the afternoon, or more than three (3) hours after the scheduled operation.

Cruz, who was then still inside the operating room, heard about Dr. Hosakas arrival. While she held the hand of Erlinda, Cruz saw
Dr. Gutierrez trying to intubate the patient. Cruz heard Dr. Gutierrez utter: ang hirap ma-intubate nito, mali yata ang pagkakapasok.
O lumalaki ang tiyan. Cruz noticed a bluish discoloration of Erlindas nailbeds on her left hand. She (Cruz) then heard Dr. Hosaka
instruct someone to call Dr. Calderon, another anesthesiologist. When he arrived, Dr. Calderon attempted to intubate the patient. The
nailbeds of the patient remained bluish, thus, she was placed in a trendelenburg position a position where the head of the patient is
placed in a position lower than her feet. At this point, Cruz went out of the operating room to express her concern to petitioner Rogelio
that Erlindas operation was not going well.

Cruz quickly rushed back to the operating room and saw that the patient was still in trendelenburg position. At almost 3:00 in
the afternoon, she saw Erlinda being wheeled to the Intensive Care Unit (ICU). The doctors explained to petitioner Rogelio that his
wife had bronchospasm. Erlinda stayed in the ICU for a month. She was released from the hospital only four months later or on
November 15, 1985.Since the ill-fated operation, Erlinda remained in comatose condition until she died on August 3, 1999. [1]

Petitioners filed with the Regional Trial Court of Quezon City a civil case for damages against private respondents. After due trial,
the court a quo rendered judgment in favor of petitioners. Essentially, the trial court found that private respondents were negligent in
the performance of their duties to Erlinda. On appeal by private respondents, the Court of Appeals reversed the trial courts decision
and directed petitioners to pay their unpaid medical bills to private respondents.

Petitioners filed with this Court a petition for review on certiorari. The private respondents were then required to submit their
respective comments thereon. On December 29, 1999, this Court promulgated the decision which private respondents now seek to be
reconsidered. The dispositive portion of said Decision states:

WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of
petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual damages computed as of the date of
promulgation of this decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos expires or
miraculously survives; 2) P2,000,000.00 as moral damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each
exemplary damages and attorneys fees; and 5) the costs of the suit.[2]

In his Motion for Reconsideration, private respondent Dr. Hosaka submits the following as grounds therefor:

THE HONORABLE SUPREME COURT COMMITTED REVERSIBLE ERROR WHEN IT HELD RESPONDENT DR. HOSAKA LIABLE
ON THE BASIS OF THE CAPTAIN-OF-THE-SHIP DOCTRINE.

II

THE HONORABLE SUPREME COURT ERRED IN HOLDING RESPONDENT DR. HOSAKA LIABLE DESPITE THE FACT THAT NO
NEGLIGENCE CAN BE ATTRIBUTABLE TO HIM.

III

ASSUMING WITHOUT ADMITTING THAT RESPONDENT DR. HOSAKA IS LIABLE, THE HONORABLE SUPREME COURT ERRED
IN AWARDING DAMAGES THAT WERE CLEARLY EXCESSIVE AND WITHOUT LEGAL BASIS.[3]

Private respondent Dr. Gutierrez, for her part, avers that:

Page 73 of 205
 A. THE HONORABLE SUPREME COURT MAY HAVE INADVERTENTLY OVERLOOKED THE FACT THAT THE COURT OF APPEALS
DECISION DATED 29 MAY 1995 HAD ALREADY BECOME FINAL AND EXECUTORY AS OF 25 JUNE 1995, THEREBY
DEPRIVING THIS HONORABLE COURT OF JURISDICTION OVER THE INSTANT PETITION;

B. THE HONORABLE SUPREME COURT MAY HAVE INADVERTENTLY OVERLOOKED SEVERAL MATERIAL FACTUAL
CIRCUMSTANCES WHICH, IF PROPERLY CONSIDERED, WOULD INDUBITABLY LEAD TO NO OTHER CONCLUSION BUT
THAT PRIVATE RESPONDENT DOCTORS WERE NOT GUILTY OF ANY NEGLIGENCE IN RESPECT OF THE INSTANT CASE;

B.1 RESPONDENT DOCTOR PERFECTA GUTIERREZ HAS SUFFICIENTLY DISCHARGED THE BURDEN OF
EVIDENCE BY SUBSTANTIAL PROOF OF HER COMPLIANCE WITH THE STANDARDS OF DUE CARE EXPECTED
IN HER RESPECTIVE FIELD OF MEDICAL SPECIALIZATION.

B.2 RESPONDENT DOCTOR PERFECTA GUTIERREZ HAS SUFFICIENTLY DISCHARGED THE BURDEN OF
EVIDENCE BY SUBSTANTIAL PROOF OF HER HAVING SUCCESSFULLY INTUBATED PATIENT ERLINDA
RAMOS

C. THE SUPREME COURT MAY HAVE INADVERTENTLY PLACED TOO MUCH RELIANCE ON THE TESTIMONY OF PETITIONERS
WITNESS HERMINDA CRUZ, DESPITE THE EXISTENCE OF SEVERAL FACTUAL CIRCUMSTANCES WHICH RENDERS DOUBT
ON HER CREDIBILITY

D. THE SUPREME COURT MAY HAVE INADVERTENTLY DISREGARDED THE EXPERT TESTIMONY OF DR. JAMORA AND DRA.
CALDERON

E. THE HONORABLE SUPREME COURT MAY HAVE INADVERTENTLY AWARDED DAMAGES TO PETITIONERS DESPITE THE
FACT THAT THERE WAS NO NEGLIGENCE ON THE PART OF RESPONDENT DOCTOR.[4]

Private respondent De Los Santos Medical Center likewise moves for reconsideration on the following grounds:

THE HONORABLE COURT ERRED IN GIVING DUE COURSE TO THE INSTANT PETITION AS THE DECISION OF THE
HONORABLE COURT OF APPEALS HAD ALREADY BECOME FINAL AND EXECUTORY

II

THE HONORABLE SUPREME COURT ERRED IN FINDING THAT AN EMPLOYER-EMPLOYEE [RELATIONSHIP] EXISTS
BETWEEN RESPONDENT DE LOS SANTOS MEDICAL CENTER AND DRS. ORLINO HOSAKA AND PERFECTA GUTIERREZ

III

THE HONORABLE SUPREME COURT ERRED IN FINDING THAT RESPONDENT DE LOS SANTOS MEDICAL CENTER IS
SOLIDARILY LIABLE WITH RESPONDENT DOCTORS

IV

THE HONORABLE SUPREME COURT ERRED IN INCREASING THE AWARD OF DAMAGES IN FAVOR OF PETITIONERS.[5]

In the Resolution of February 21, 2000, this Court denied the motions for reconsideration of private respondents Drs. Hosaka and
Gutierrez. They then filed their respective second motions for reconsideration. The Philippine College of Surgeons filed its Petition-in-
Intervention contending in the main that this Court erred in holding private respondent Dr. Hosaka liable under the captain of the ship
doctrine. According to the intervenor, said doctrine had long been abandoned in the United States in recognition of the developments
in modern medical and hospital practice.[6] The Court noted these pleadings in the Resolution of July 17, 2000.[7]

On March 19, 2001, the Court heard the oral arguments of the parties, including the intervenor. Also present during the hearing
were the amicii curiae: Dr. Felipe A. Estrella, Jr., Consultant of the Philippine Charity Sweepstakes, former Director of the Philippine
General Hospital and former Secretary of Health; Dr. Iluminada T. Camagay, President of the Philippine Society of Anesthesiologists,
Inc. and Professor and Vice-Chair for Research, Department of Anesthesiology, College of Medicine-Philippine General Hospital,
University of the Philippines; and Dr. Lydia M. Egay, Professor and Vice-Chair for Academics, Department of Anesthesiology, College
of Medicine-Philippine General Hospital, University of the Philippines.

Page 74 of 205
 The Court enumerated the issues to be resolved in this case as follows:

1. WHETHER OR NOT DR. ORLINO HOSAKA (SURGEON) IS LIABLE FOR NEGLIGENCE;

2. WHETHER OR NOT DR. PERFECTA GUTIERREZ (ANESTHESIOLOGIST) IS LIABLE FOR NEGLIGENCE; AND

3. WHETHER OR NOT THE HOSPITAL (DELOS SANTOS MEDICAL CENTER) IS LIABLE FOR ANY ACT OF NEGLIGENCE
COMMITTED BY THEIR VISITING CONSULTANT SURGEON AND ANESTHESIOLOGIST.[8]

We shall first resolve the issue pertaining to private respondent Dr. Gutierrez. She maintains that the Court erred in finding her
negligent and in holding that it was the faulty intubation which was the proximate cause of Erlindas comatose condition. The following
objective facts allegedly negate a finding of negligence on her part: 1) That the outcome of the procedure was a comatose patient and
not a dead one; 2) That the patient had a cardiac arrest; and 3) That the patient was revived from that cardiac arrest. [9] In effect, Dr.
Gutierrez insists that, contrary to the finding of this Court, the intubation she performed on Erlinda was successful.

Unfortunately, Dr. Gutierrez claim of lack of negligence on her part is belied by the records of the case. It has been sufficiently
established that she failed to exercise the standards of care in the administration of anesthesia on a patient. Dr. Egay enlightened the
Court on what these standards are:

x x x What are the standards of care that an anesthesiologist should do before we administer anesthesia? The initial step is the
preparation of the patient for surgery and this is a pre-operative evaluation because the anesthesiologist is responsible for
determining the medical status of the patient, developing the anesthesia plan and acquainting the patient or the responsible adult
particularly if we are referring with the patient or to adult patient who may not have, who may have some mental handicaps of the
proposed plans. We do pre-operative evaluation because this provides for an opportunity for us to establish identification and
personal acquaintance with the patient. It also makes us have an opportunity to alleviate anxiety, explain techniques and risks to the
patient, given the patient the choice and establishing consent to proceed with the plan. And lastly, once this has been agreed upon
by all parties concerned the ordering of pre-operative medications. And following this line at the end of the evaluation we usually
come up on writing, documentation is very important as far as when we train an anesthesiologist we always emphasize this because
we need records for our protection, well, records. And it entails having brief summary of patient history and physical findings
pertinent to anesthesia, plan, organize as a problem list, the plan anesthesia technique, the plan post operative, pain management if
appropriate, special issues for this particular patient. There are needs for special care after surgery and if it so it must be written
down there and a request must be made known to proper authorities that such and such care is necessary. And the request for
medical evaluation if there is an indication. When we ask for a cardio-pulmonary clearance it is not in fact to tell them if this patient
is going to be fit for anesthesia, the decision to give anesthesia rests on the anesthesiologist. What we ask them is actually to give us
the functional capacity of certain systems which maybe affected by the anesthetic agent or the technique that we are going to
use. But the burden of responsibility in terms of selection of agent and how to administer it rest on the anesthesiologist. [10]

The conduct of a preanesthetic/preoperative evaluation prior to an operation, whether elective or emergency, cannot be dispensed
with.[11] Such evaluation is necessary for the formulation of a plan of anesthesia care suited to the needs of the patient concerned.

Pre-evaluation for anesthesia involves taking the patients medical history, reviewing his current drug therapy, conducting physical
examination, interpreting laboratory data, and determining the appropriate prescription of preoperative medications as necessary to
the conduct of anesthesia.[12]

Physical examination of the patient entails not only evaluating the patients central nervous system, cardiovascular system and
lungs but also the upper airway. Examination of the upper airway would in turn include an analysis of the patients cervical spine
mobility, temporomandibular mobility, prominent central incisors, deceased or artificial teeth, ability to visualize uvula and the
thyromental distance.[13]

Nonetheless, Dr. Gutierrez omitted to perform a thorough preoperative evaluation on Erlinda. As she herself admitted, she saw
Erlinda for the first time on the day of the operation itself, one hour before the scheduled operation. She auscultated[14] the patients
heart and lungs and checked the latters blood pressure to determine if Erlinda was indeed fit for operation. [15] However, she did not
proceed to examine the patients airway. Had she been able to check petitioner Erlindas airway prior to the operation, Dr. Gutierrez
would most probably not have experienced difficulty in intubating the former, and thus the resultant injury could have been avoided.
As we have stated in our Decision:

In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17
June 1985. Before this date, no prior consultations with, or pre-operative evaluation of Erlinda was done by her. Until the day of the
operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was likewise not properly
informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez act
of seeing her patient for the first time only an hour before the scheduled operative procedure was, therefore, an act of exceptional
negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the
core of the physicians centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her
negligence.[16]
Page 75 of 205
 Further, there is no cogent reason for the Court to reverse its finding that it was the faulty intubation on Erlinda that caused her
comatose condition. There is no question that Erlinda became comatose after Dr. Gutierrez performed a medical procedure on her. Even
the counsel of Dr. Gutierrez admitted to this fact during the oral arguments:

CHIEF JUSTICE:

Mr. Counsel, you started your argument saying that this involves a comatose patient?

ATTY. GANA:

Yes, Your Honor.

CHIEF JUSTICE:

How do you mean by that, a comatose, a comatose after any other acts were done by Dr. Gutierrez or comatose before any
act was done by her?

ATTY. GANA:

No, we meant comatose as a final outcome of the procedure.

CHIEF JUSTICE:

Meaning to say, the patient became comatose after some intervention, professional acts have been done by Dr. Gutierrez?

ATTY. GANA:

Yes, Your Honor.

CHIEF JUSTICE:

In other words, the comatose status was a consequence of some acts performed by D. Gutierrez?

ATTY. GANA:

It was a consequence of the well, (interrupted)

CHIEF JUSTICE:

An acts performed by her, is that not correct?

ATTY. GANA:

Yes, Your Honor.

CHIEF JUSTICE:

Thank you.[17]

What is left to be determined therefore is whether Erlindas hapless condition was due to any fault or negligence on the part of
Dr. Gutierrez while she (Erlinda) was under the latters care. Dr. Gutierrez maintains that the bronchospasm and cardiac arrest resulting
in the patients comatose condition was brought about by the anaphylactic reaction of the patient to Thiopental Sodium
(pentothal).[18] In the Decision, we explained why we found Dr. Gutierrez theory unacceptable. In the first place, Dr. Eduardo Jamora,
the witness who was presented to support her (Dr. Gutierrez) theory, was a pulmonologist. Thus, he could not be considered an
authority on anesthesia practice and procedure and their complications.[19]

Secondly, there was no evidence on record to support the theory that Erlinda developed an allergic reaction to pentothal. Dr.
Camagay enlightened the Court as to the manifestations of an allergic reaction in this wise:

DR. CAMAGAY:

All right, let us qualify an allergic reaction. In medical terminology an allergic reaction is something which is not usual response
and it is further qualified by the release of a hormone called histamine and histamine has an effect on all the organs of the
body generally release because the substance that entered the body reacts with the particular cell, the mass cell, and the
mass cell secretes this histamine. In a way it is some form of response to take away that which is not mine, which is not part
of the body. So, histamine has multiple effects on the body. So, one of the effects as you will see you will have redness, if
you have an allergy you will have tearing of the eyes, you will have swelling, very crucial swelling sometimes of the larynges
which is your voice box main airway, that swelling may be enough to obstruct the entry of air to the trachea and you could
also have contraction, constriction of the smaller airways beyond the trachea, you see you have the trachea this way, we
brought some visual aids but unfortunately we do not have a projector. And then you have the smaller airways, the bronchi
and then eventually into the mass of the lungs you have the bronchus. The difference is that these tubes have also in their

Page 76 of 205
 walls muscles and this particular kind of muscles is smooth muscle so, when histamine is released they close up like this and
that phenomenon is known as bronco spasm. However, the effects of histamine also on blood vessels are different. They dilate
blood vessel open up and the patient or whoever has this histamine release has hypertension or low blood pressure to a point
that the patient may have decrease blood supply to the brain and may collapse so, you may have people who have this. [20]

These symptoms of an allergic reaction were not shown to have been extant in Erlindas case. As we held in our Decision, no
evidence of stridor, skin reactions, or wheezing some of the more common accompanying signs of an allergic reaction appears on
record. No laboratory data were ever presented to the court.[21]

Dr. Gutierrez, however, insists that she successfully intubated Erlinda as evidenced by the fact that she was revived after suffering
from cardiac arrest. Dr. Gutierrez faults the Court for giving credence to the testimony of Cruz on the matter of the administration of
anesthesia when she (Cruz), being a nurse, was allegedly not qualified to testify thereon. Rather, Dr. Gutierrez invites the Courts
attention to her synopsis on what transpired during Erlindas intubation:

12:15 p.m. Patient was inducted with sodium pentothal 2.5% (250 mg) given by slow IV. 02 was started by mask. After
pentothal injection this was followed by IV injection of Norcuron 4mg. After 2 minutes 02 was given by positive
pressure for about one minute. Intubation with endotracheal tube 7.5 m in diameter was done with slight
difficulty (short neck & slightly prominent upper teeth) chest was examined for breath sounds & checked if
equal on both sides. The tube was then anchored to the mouth by plaster & cuff inflated. Ethrane 2% with 02
4 liters was given. Blood pressure was checked 120/80 & heart rate regular and normal 90/min.

12:25 p.m. After 10 minutes patient was cyanotic. Ethrane was discontinued & 02 given alone. Cyanosis disappeared. Blood
pressure and heart beats stable.

12:30 p.m. Cyanosis again reappeared this time with sibilant and sonorous rales all over the chest. D_5%_H20 & 1 ampule
of aminophyline by fast drip was started. Still the cyanosis was persistent. Patient was connected to a cardiac
monitor. Another ampule of of [sic] aminophyline was given and solu cortef was given.

12:40 p.m. There was cardiac arrest. Extra cardiac massage and intercardiac injection of adrenalin was given & heart beat
reappeared in less than one minute. Sodium bicarbonate & another dose of solu cortef was given by
IV. Cyanosis slowly disappeared & 02 continuously given & assisted positive pressure. Laboratory exams done
(see results in chart).

Patient was transferred to ICU for further management.[22]

From the foregoing, it can be allegedly seen that there was no withdrawal (extubation) of the tube. And the fact that the cyanosis
allegedly disappeared after pure oxygen was supplied through the tube proved that it was properly placed.

The Court has reservations on giving evidentiary weight to the entries purportedly contained in Dr. Gutierrez synopsis. It is
significant to note that the said record prepared by Dr. Gutierrez was made only after Erlinda was taken out of the operating room. The
standard practice in anesthesia is that every single act that the anesthesiologist performs must be recorded. In Dr. Gutierrez case, she
could not account for at least ten (10) minutes of what happened during the administration of anesthesia on Erlinda. The following
exchange between Dr. Estrella, one of the amicii curiae, and Dr. Gutierrez is instructive:

DR. ESTRELLA

You mentioned that there were two (2) attempts in the intubation period?

DR. GUTIERREZ

Yes.

Q There were two attempts. In the first attempt was the tube inserted or was the laryngoscope only inserted, which was
inserted?

A All the laryngoscope.

Q All the laryngoscope. But if I remember right somewhere in the re-direct, a certain lawyer, you were asked that you did a first
attempt and the question was did you withdraw the tube? And you said you never withdrew the tube, is that right?

A Yes.

Q Yes. And so if you never withdrew the tube then there was no, there was no insertion of the tube during that first
attempt. Now, the other thing that we have to settle here is when cyanosis occurred, is it recorded in the anesthesia record
when the cyanosis, in your recording when did the cyanosis occur?

A (sic)

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Q Is it a standard practice of anesthesia that whatever you do during that period or from the time of induction to the time that
you probably get the patient out of the operating room that every single action that you do is so recorded in your
anesthesia record?

A I was not able to record everything I did not have time anymore because I did that after the, when the patient was about to
leave the operating room. When there was second cyanosis already that was the (interrupted)

Q When was the first cyanosis?

A The first cyanosis when I was (interrupted)

Q What time, more or less?

A I think it was 12:15 or 12:16.

Q Well, if the record will show you started induction at 12:15?

A Yes, Your Honor.

Q And the first medication you gave was what?

A The first medication, no, first the patient was oxygenated for around one to two minutes.

Q Yes, so, that is about 12:13?

A Yes, and then, I asked the resident physician to start giving the pentothal very slowly and that was around one minute.

Q So, that is about 12:13 no, 12:15, 12:17?

A Yes, and then, after one minute another oxygenation was given and after (interrupted)

Q 12:18?

A Yes, and then after giving the oxygen we start the menorcure which is a relaxant. After that relaxant (interrupted)

Q After that relaxant, how long do you wait before you do any manipulation?

A Usually you wait for two minutes or three minutes.

Q So, if our estimate of the time is accurate we are now more or less 12:19, is that right?

A Maybe.

Q 12:19. And at that time, what would have been done to this patient?

A After that time you examine the, if there is relaxation of the jaw which you push it downwards and when I saw that the patient
was relax because that monorcure is a relaxant, you cannot intubate the patient or insert the laryngoscope if it is not
keeping him relax. So, my first attempt when I put the laryngoscope on I saw the trachea was deeply interiorly. So, what I
did ask mahirap ata ito ah. So, I removed the laryngoscope and oxygenated again the patient.

Q So, more or less you attempted to do an intubation after the first attempt as you claimed that it was only the laryngoscope
that was inserted.

A Yes.

Q And in the second attempt you inserted the laryngoscope and now possible intubation?

A Yes.

Q And at that point, you made a remark, what remark did you make?

A I said mahirap ata ito when the first attempt I did not see the trachea right away. That was when I (interrupted)

Q That was the first attempt?

A Yes.

Q What about the second attempt?

A On the second attempt I was able to intubate right away within two to three seconds.

Q At what point, for purposes of discussion without accepting it, at what point did you make the comment na mahirap ata to
intubate, mali ata ang pinasukan

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 A I did not say mali ata ang pinasukan I never said that.

Q Well, just for the information of the group here the remarks I am making is based on the documents that were forwarded to
me by the Supreme Court. That is why for purposes of discussion I am trying to clarify this for the sake of
enlightenment. So, at what point did you ever make that comment?

A Which one, sir?

Q The mahirap intubate ito assuming that you (interrupted)

A Iyon lang, that is what I only said mahirap intubate (interrupted)

Q At what point?

A When the first attempt when I inserted the laryngoscope for the first time.

Q So, when you claim that at the first attempt you inserted the laryngoscope, right?

A Yes.

Q But in one of the recordings somewhere at the, somewhere in the transcript of records that when the lawyer of the other party
try to inquire from you during the first attempt that was the time when mayroon ba kayong hinugot sa tube, I do not
remember the page now, but it seems to me it is there. So, that it was on the second attempt that (interrupted)

A I was able to intubate.

Q And this is more or less about what time 12:21?

A Maybe, I cannot remember the time, Sir.

Q Okay, assuming that this was done at 12:21 and looking at the anesthesia records from 12:20 to 12:30 there was no recording
of the vital signs. And can we presume that at this stage there was already some problems in handling the patient?

A Not yet.

Q But why are there no recordings in the anesthesia record?

A I did not have time.

Q Ah, you did not have time, why did you not have time?

A Because it was so fast, I really (at this juncture the witness is laughing)

Q No, I am just asking. Remember I am not here not to pin point on anybody I am here just to more or less clarify certainty
more ore less on the record.

A Yes, Sir.

Q And so it seems that there were no recording during that span of ten (10) minutes. From 12:20 to 12:30, and going over your
narration, it seems to me that the cyanosis appeared ten (10) minutes after induction, is that right?

A Yes.

Q And that is after induction 12:15 that is 12:25 that was the first cyanosis?

A Yes.

Q And that the 12:25 is after the 12:20?

A We cannot (interrupted)

Q Huwag ho kayong makuwan, we are just trying to enlighten, I am just going over the record ano, kung mali ito kuwan eh di
ano. So, ganoon po ano, that it seems to me that there is no recording from 12:20 to 12:30, so, I am just wondering why
there were no recordings during the period and then of course the second cyanosis, after the first cyanosis. I think that was
the time Dr. Hosaka came in?

A No, the first cyanosis (interrupted).[23]

We cannot thus give full credence to Dr. Gutierrez synopsis in light of her admission that it does not fully reflect the events that
transpired during the administration of anesthesia on Erlinda. As pointed out by Dr. Estrella, there was a ten-minute gap in Dr. Gutierrez
synopsis, i.e., the vital signs of Erlinda were not recorded during that time. The absence of these data is particularly significant because,
as found by the trial court, it was the absence of oxygen supply for four (4) to five (5) minutes that caused Erlindas comatose condition.

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 On the other hand, the Court has no reason to disbelieve the testimony of Cruz. As we stated in the Decision, she is competent
to testify on matters which she is capable of observing such as, the statements and acts of the physician and surgeon, external
appearances and manifest conditions which are observable by any one.[24] Cruz, Erlindas sister-in-law, was with her inside the operating
room.Moreover, being a nurse and Dean of the Capitol Medical Center School of Nursing at that, she is not entirely ignorant of anesthetic
procedure. Cruz narrated that she heard Dr. Gutierrez remark, Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki
ang tiyan. She observed that the nailbeds of Erlinda became bluish and thereafter Erlinda was placed in trendelenburg position.[25] Cruz
further averred that she noticed that the abdomen of Erlinda became distended.[26]

The cyanosis (bluish discoloration of the skin or mucous membranes caused by lack of oxygen or abnormal hemoglobin in the
blood) and enlargement of the stomach of Erlinda indicate that the endotracheal tube was improperly inserted into the esophagus
instead of the trachea. Consequently, oxygen was delivered not to the lungs but to the gastrointestinal tract. This conclusion is
supported by the fact that Erlinda was placed in trendelenburg position. This indicates that there was a decrease of blood supply to
the patients brain. The brain was thus temporarily deprived of oxygen supply causing Erlinda to go into coma.

The injury incurred by petitioner Erlinda does not normally happen absent any negligence in the administration of anesthesia and
in the use of an endotracheal tube. As was noted in our Decision, the instruments used in the administration of anesthesia, including
the endotracheal tube, were all under the exclusive control of private respondents Dr. Gutierrez and Dr. Hosaka. [27] In Voss vs.
Bridwell,[28]which involved a patient who suffered brain damage due to the wrongful administration of anesthesia, and even before the
scheduled mastoid operation could be performed, the Kansas Supreme Court applied the doctrine of res ipsa loquitur, reasoning that
the injury to the patient therein was one which does not ordinarily take place in the absence of negligence in the administration of an
anesthetic, and in the use and employment of an endotracheal tube. The court went on to say that [o]rdinarily a person being put
under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon
these facts and under these circumstances, a layman would be able to say, as a matter of common knowledge and observation, that
the consequences of professional treatment were not as such as would ordinarily have followed if due care had been
exercised.[29] Considering the application of the doctrine of res ipsa loquitur, the testimony of Cruz was properly given credence in the
case at bar.

For his part, Dr. Hosaka mainly contends that the Court erred in finding him negligent as a surgeon by applying the Captain-of-
the-Ship doctrine.[30] Dr. Hosaka argues that the trend in United States jurisprudence has been to reject said doctrine in light of the
developments in medical practice. He points out that anesthesiology and surgery are two distinct and specialized fields in medicine and
as a surgeon, he is not deemed to have control over the acts of Dr. Gutierrez. As anesthesiologist, Dr. Gutierrez is a specialist in her
field and has acquired skills and knowledge in the course of her training which Dr. Hosaka, as a surgeon, does not possess. [31] He
states further that current American jurisprudence on the matter recognizes that the trend towards specialization in medicine has
created situations where surgeons do not always have the right to control all personnel within the operating room,[32] especially a fellow
specialist.[33]

Dr. Hosaka cites the case of Thomas v. Raleigh General Hospital,[34] which involved a suit filed by a patient who lost his voice due
to the wrongful insertion of the endotracheal tube preparatory to the administration of anesthesia in connection with the laparotomy
to be conducted on him. The patient sued both the anesthesiologist and the surgeon for the injury suffered by him. The Supreme Court
of Appeals of West Virginia held that the surgeon could not be held liable for the loss of the patients voice, considering that the surgeon
did not have a hand in the intubation of the patient. The court rejected the application of the Captain-of-the-Ship Doctrine, citing the
fact that the field of medicine has become specialized such that surgeons can no longer be deemed as having control over the other
personnel in the operating room. It held that [a]n assignment of liability based on actual control more realistically reflects the actual
relationship which exists in a modern operating room.[35] Hence, only the anesthesiologist who inserted the endotracheal tube into the
patients throat was held liable for the injury suffered by the latter.

This contention fails to persuade.

That there is a trend in American jurisprudence to do away with the Captain-of-the-Ship doctrine does not mean that this Court
will ipso facto follow said trend. Due regard for the peculiar factual circumstances obtaining in this case justify the application of the
Captain-of-the-Ship doctrine. From the facts on record it can be logically inferred that Dr. Hosaka exercised a certain degree of, at the
very least, supervision over the procedure then being performed on Erlinda.

First, it was Dr. Hosaka who recommended to petitioners the services of Dr. Gutierrez. In effect, he represented to petitioners
that Dr. Gutierrez possessed the necessary competence and skills. Drs. Hosaka and Gutierrez had worked together since
1977. Whenever Dr. Hosaka performed a surgery, he would always engage the services of Dr. Gutierrez to administer the anesthesia
on his patient.[36]

Second, Dr. Hosaka himself admitted that he was the attending physician of Erlinda. Thus, when Erlinda showed signs of cyanosis,
it was Dr. Hosaka who gave instructions to call for another anesthesiologist and cardiologist to help resuscitate Erlinda. [37]

Third, it is conceded that in performing their responsibilities to the patient, Drs. Hosaka and Gutierrez worked as a team. Their
work cannot be placed in separate watertight compartments because their duties intersect with each other. [38]

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 While the professional services of Dr. Hosaka and Dr. Gutierrez were secured primarily for their performance of acts within their
respective fields of expertise for the treatment of petitioner Erlinda, and that one does not exercise control over the other, they were
certainly not completely independent of each other so as to absolve one from the negligent acts of the other physician.

That they were working as a medical team is evident from the fact that Dr. Hosaka was keeping an eye on the intubation of the
patient by Dr. Gutierrez, and while doing so, he observed that the patients nails had become dusky and had to call Dr. Gutierrezs
attention thereto. The Court also notes that the counsel for Dr. Hosaka admitted that in practice, the anesthesiologist would also have
to observe the surgeons acts during the surgical process and calls the attention of the surgeon whenever necessary [39] in the course
of the treatment. The duties of Dr. Hosaka and those of Dr. Gutierrez in the treatment of petitioner Erlinda are therefore not as clear-
cut as respondents claim them to be. On the contrary, it is quite apparent that they have a common responsibility to treat the patient,
which responsibility necessitates that they call each others attention to the condition of the patient while the other physician is
performing the necessary medical procedures.

It is equally important to point out that Dr. Hosaka was remiss in his duty of attending to petitioner Erlinda promptly, for he
arrived more than three (3) hours late for the scheduled operation. The cholecystectomy was set for June 17, 1985 at 9:00 a.m., but
he arrived at DLSMC only at around 12:10 p.m. In reckless disregard for his patients well being, Dr. Hosaka scheduled two procedures
on the same day, just thirty minutes apart from each other, at different hospitals. Thus, when the first procedure (protoscopy) at the
Sta. Teresita Hospital did not proceed on time, Erlinda was kept in a state of uncertainty at the DLSMC.

The unreasonable delay in petitioner Erlindas scheduled operation subjected her to continued starvation and consequently, to the
risk of acidosis,[40] or the condition of decreased alkalinity of the blood and tissues, marked by sickly sweet breath, headache, nausea
and vomiting, and visual disturbances.[41] The long period that Dr. Hosaka made Erlinda wait for him certainly aggravated the anxiety
that she must have been feeling at the time. It could be safely said that her anxiety adversely affected the administration of anesthesia
on her. As explained by Dr. Camagay, the patients anxiety usually causes the outpouring of adrenaline which in turn results in high
blood pressure or disturbances in the heart rhythm:

DR. CAMAGAY:

x x x Pre-operative medication has three main functions: One is to alleviate anxiety. Second is to dry up the secretions
and Third is to relieve pain. Now, it is very important to alleviate anxiety because anxiety is associated with the outpouring
of certain substances formed in the body called adrenalin. When a patient is anxious there is an outpouring of adrenalin which
would have adverse effect on the patient. One of it is high blood pressure, the other is that he opens himself to disturbances
in the heart rhythm, which would have adverse implications. So, we would like to alleviate patients anxiety mainly because
he will not be in control of his body there could be adverse results to surgery and he will be opened up; a knife is going to
open up his body. x x x[42]

Dr. Hosaka cannot now claim that he was entirely blameless of what happened to Erlinda. His conduct clearly constituted a breach
of his professional duties to Erlinda:

CHIEF JUSTICE:

Two other points. The first, Doctor, you were talking about anxiety, would you consider a patient's stay on the operating
table for three hours sufficient enough to aggravate or magnify his or her anxiety?

DR. CAMAGAY:

Yes.

CHIEF JUSTICE:

In other words, I understand that in this particular case that was the case, three hours waiting and the patient was already
on the operating table (interrupted)

DR. CAMAGAY:

Yes.

CHIEF JUSTICE:

Would you therefore conclude that the surgeon contributed to the aggravation of the anxiety of the patient?

DR. CAMAGAY:

That this operation did not take place as scheduled is already a source of anxiety and most operating tables are very narrow
and that patients are usually at risk of falling on the floor so there are restraints that are placed on them and they are
never, never left alone in the operating room by themselves specially if they are already pre-medicated because they may
not be aware of some of their movement that they make which would contribute to their injury.

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 CHIEF JUSTICE:

In other words due diligence would require a surgeon to come on time?

DR. CAMAGAY:

I think it is not even due diligence it is courtesy.

CHIEF JUSTICE:

Courtesy.

DR. CAMAGAY:

And care.

CHIEF JUSTICE:

Duty as a matter of fact?

DR. CAMAGAY:

Yes, Your Honor.[43]

Dr. Hosaka's irresponsible conduct of arriving very late for the scheduled operation of petitioner Erlinda is violative, not only of
his duty as a physician to serve the interest of his patients with the greatest solicitude, giving them always his best talent and
skill,[44] but also of Article 19 of the Civil Code which requires a person, in the performance of his duties, to act with justice and give
everyone his due.

Anent private respondent DLSMCs liability for the resulting injury to petitioner Erlinda, we held that respondent hospital is
solidarily liable with respondent doctors therefor under Article 2180 of the Civil Code[45] since there exists an employer-employee
relationship between private respondent DLSMC and Drs. Gutierrez and Hosaka:

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While
consultants are not, technically employees, x x x the control exercised, the hiring and the right to terminate consultants all fulfill the
important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. x x x[46]

DLSMC however contends that applying the four-fold test in determining whether such a relationship exists between it and the
respondent doctors, the inescapable conclusion is that DLSMC cannot be considered an employer of the respondent doctors.

It has been consistently held that in determining whether an employer-employee relationship exists between the parties, the
following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire;
and (4) the power to control not only the end to be achieved, but the means to be used in reaching such an end. [47]

DLSMC maintains that first, a hospital does not hire or engage the services of a consultant, but rather, accredits the latter and
grants him or her the privilege of maintaining a clinic and/or admitting patients in the hospital upon a showing by the consultant that
he or she possesses the necessary qualifications, such as accreditation by the appropriate board (diplomate), evidence of fellowship
and references.[48] Second, it is not the hospital but the patient who pays the consultants fee for services rendered by the
latter.[49] Third, a hospital does not dismiss a consultant; instead, the latter may lose his or her accreditation or privileges granted by
the hospital.[50] Lastly, DLSMC argues that when a doctor refers a patient for admission in a hospital, it is the doctor who prescribes
the treatment to be given to said patient. The hospitals obligation is limited to providing the patient with the preferred room
accommodation, the nutritional diet and medications prescribed by the doctor, the equipment and facilities necessary for the treatment
of the patient, as well as the services of the hospital staff who perform the ministerial tasks of ensuring that the doctors orders are
carried out strictly.[51]

After a careful consideration of the arguments raised by DLSMC, the Court finds that respondent hospitals position on this issue
is meritorious. There is no employer-employee relationship between DLSMC and Drs. Gutierrez and Hosaka which would hold DLSMC
solidarily liable for the injury suffered by petitioner Erlinda under Article 2180 of the Civil Code.

As explained by respondent hospital, that the admission of a physician to membership in DLSMCs medical staff as active or visiting
consultant is first decided upon by the Credentials Committee thereof, which is composed of the heads of the various specialty
departments such as the Department of Obstetrics and Gynecology, Pediatrics, Surgery with the department head of the particular
specialty applied for as chairman. The Credentials Committee then recommends to DLSMC's Medical Director or Hospital Administrator
the acceptance or rejection of the applicant physician, and said director or administrator validates the committee's
recommendation.[52] Similarly, in cases where a disciplinary action is lodged against a consultant, the same is initiated by the

Page 82 of 205
department to whom the consultant concerned belongs and filed with the Ethics Committee consisting of the department specialty
heads. The medical director/hospital administrator merely acts as ex-officio member of said committee.

Neither is there any showing that it is DLSMC which pays any of its consultants for medical services rendered by the latter to
their respective patients. Moreover, the contract between the consultant in respondent hospital and his patient is separate and distinct
from the contract between respondent hospital and said patient. The first has for its object the rendition of medical services by the
consultant to the patient, while the second concerns the provision by the hospital of facilities and services by its staff such as nurses
and laboratory personnel necessary for the proper treatment of the patient.

Further, no evidence was adduced to show that the injury suffered by petitioner Erlinda was due to a failure on the part of
respondent DLSMC to provide for hospital facilities and staff necessary for her treatment.

For these reasons, we reverse the finding of liability on the part of DLSMC for the injury suffered by petitioner Erlinda.

Finally, the Court also deems it necessary to modify the award of damages to petitioners in view of the supervening event of
petitioner Erlindas death. In the assailed Decision, the Court awarded actual damages of One Million Three Hundred Fifty Two Thousand
Pesos (P1,352,000.00) to cover the expenses for petitioner Erlindas treatment and care from the date of promulgation of the Decision
up to the time the patient expires or survives.[53] In addition thereto, the Court awarded temperate damages of One Million Five
Hundred Thousand Pesos (P1,500,000.00) in view of the chronic and continuing nature of petitioner Erlindas injury and the certainty
of further pecuniary loss by petitioners as a result of said injury, the amount of which, however, could not be made with certainty at
the time of the promulgation of the decision. The Court justified such award in this manner:

Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of
an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account
those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising
from the injury, while certain to occur, are difficult to predict.

In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury
caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet
pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty. In other words,
temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic
and continuing. And because of the unique nature of such cases, no incompatibility arises when both actual and temperate damages
are provided for. The reason is that these damages cover two distinct phases.

As it would not be equitableand certainly not in the best interests of the administration of justicefor the victim in such cases to
constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously
awardedtemperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative,
should take into account the cost of proper care.

In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that
condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the
onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would
allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be
compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be
grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate damages would therefore be reasonable.[54]

However, subsequent to the promulgation of the Decision, the Court was informed by petitioner Rogelio that petitioner Erlinda
died on August 3, 1999.[55] In view of this supervening event, the award of temperate damages in addition to the actual or
compensatory damages would no longer be justified since the actual damages awarded in the Decision are sufficient to cover the
medical expenses incurred by petitioners for the patient. Hence, only the amounts representing actual, moral and exemplary damages,
attorneys fees and costs of suit should be awarded to petitioners.

WHEREFORE, the assailed Decision is hereby modified as follows:

(1) Private respondent De Los Santos Medical Center is hereby absolved from liability arising from the injury suffered by petitioner
Erlinda Ramos on June 17, 1985;

(2) Private respondents Dr. Orlino Hosaka and Dr. Perfecta Gutierrez are hereby declared to be solidarily liable for the injury
suffered by petitioner Erlinda on June 17, 1985 and are ordered to pay petitioners

(a) P1,352,000.00 as actual damages;

Page 83 of 205
(b) P2,000,000.00 as moral damages;

(c) P100,000.00 as exemplary damages;

(d) P100,000.00 as attorneys fees; and

(e) the costs of the suit.

SO ORDERED.

G.R. No. L-69870 November 29, 1988

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,

vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND
EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents.

G.R. No. 70295 November 29,1988

EUGENIA C. CREDO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L. PEREZ, respondents.

The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.

Melchor R. Flores for petitioner Eugenia C. Credo.

PADILLA, J.:

Page 84 of 205
Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National Labor Relations
Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16 January 1985 denying motions for
reconsideration of said decision.

Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which provides security
guards as well as messengerial, janitorial and other similar manpower services to the Philippine National Bank (PNB) and its
agencies. She was first employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted to Clerk
Typist, then Personnel Clerk until she became Chief of Property and Records, on 10 March 1980. 1

Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance and Special Project
and Evaluation Department of NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11 October 1983,
regarding certain entry procedures in the company's Statement of Billings Adjustment. Said charges alleged that Credo "did not
comply with Lloren's instructions to place some corrections/additional remarks in the Statement of Billings Adjustment; and when
[Credo] was called by Lloren to his office to explain further the said instructions, [Credo] showed resentment and behaved in a
scandalous manner by shouting and uttering remarks of disrespect in the presence of her co-employees." 2

On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to explain her side before
Perez and NASECO's Committee on Personnel Affairs in connection with the administrative charges filed against her. After said
meeting, on the same date, Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3

Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as Case No. 114944-83, with
the Arbitration Branch, National Capital Region, Ministry of Labor and Employment, Manila, against NASECO for placing her on forced
leave, without due process. 4

Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on Personnel Affairs deliberated and
evaluated a number of past acts of misconduct or infractions attributed to her. 5 As a result of this deliberation, said committee
resolved:

1. That, respondent [Credo] committed the following offenses in the Code of Discipline, viz:

OFFENSE vs. Company Interest & Policies

No. 3 Any discourteous act to customer, officer and employee of client company or officer of the Corporation.

OFFENSE vs. Public Moral

No. 7 Exhibit marked discourtesy in the course of official duties or use of profane or insulting language to any
superior officer.

OFFENSE vs. Authority

No. 3 Failure to comply with any lawful order or any instructions of a superior officer.

2. That, Management has already given due consideration to respondent's [Credo] scandalous actuations for
several times in the past. Records also show that she was reprimanded for some offense and did not question it.
Management at this juncture, has already met its maximum tolerance point so it has decided to put an end to
respondent's [Credo] being an undesirable employee. 6

The committee recommended Credo's termination, with forfeiture of benefits. 7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she was being charged with certain offenses.
Notably, these offenses were those which NASECO's Committee on Personnel Affairs already resolved, on 22 November 1983 to have
been committed by Credo.

In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to explain her side in connection
with the charges filed against her; however, due to her failure to do so, 8 she was handed a Notice of Termination, dated 24
November 1983, and made effective 1 December 1983. 9 Hence, on 6 December 1983, Credo filed a supplemental complaint for
illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her dismissal and lack of opportunity to be
heard. 10

After both parties had submitted their respective position papers, affidavits and other documentary evidence in support of their
claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing
NASECO to pay Credo separation pay equivalent to one half month's pay for every year of service. 11

Page 85 of 205
Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November 1984, rendered a
decision: 1) directing NASECO to reinstate Credo to her former position, or substantially equivalent position, with six (6) months'
backwages and without loss of seniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim for
attorney's fees, moral and exemplary damages. As a consequence, both parties filed their respective motions for
reconsideration, 12 which the NLRC denied in a resolution of 16 January 1985. 13

Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of discretion the dispositive
portion of the 28 November 1984 decision which ordered Credo's reinstatement with backwages. 14Petitioners contend that in
arriving at said questioned order, the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated the
requirements mandated by law on termination, 2) petitioners failed in the burden of proving that the termination of Credo was for a
valid or authorized cause, 3) the alleged infractions committed by Credo were not proven or, even if proved, could be considered to
have been condoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause. 15

On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the dispositive portion of the 28
November 1984 decision which dismissed her claim for attorney's fees, moral and exemplary damages and limited her right to
backwages to only six (6) months. 16

As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides that:

Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice
stating the particular acts or omission constituting the grounds for his dismissal.

xxx xxx xxx

Section 5. Answer and Hearing. The worker may answer the allegations stated against him in the notice of
dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample
opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

Section 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss
him stating clearly the reasons therefor. 17

These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices of dismissal before
a termination of employment can be legally effected. These are the notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought and the subsequent notice which informs the employee of the employer's decision to
dismiss him.

Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to labor 18(which encompasses
the right to security of tenure) and the broader dictates of procedural due process necessarily mandate that notice of the employer's
decision to dismiss an employee, with reasons therefor, can only be issued after the employer has afforded the employee concerned
ample opportunity to be heard and to defend himself.

In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although she was apprised and
"given the chance to explain her side" of the charges filed against her, this chance was given so perfunctorily, thus rendering illusory
Credo's right to security of tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident from the
fact that the compliance with the injunction to apprise her of the charges filed against her and to afford her a chance to prepare for
her defense was dispensed in only a day. This is not effective compliance with the legal requirements aforementioned.

The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated 24 November 1983
and made effective 1 December 1983 shows that NASECO was already bent on terminating her services when she was informed on 1
December 1983 of the charges against her, and that any hearing which NASECO thought of affording her after 24 November 1983
would merely be pro forma or an exercise in futility.

Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the company's Statement of
Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC correctly held that:

... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that, "In the process
of her testimony/explanations she again exhibited a conduct unbecoming in front of NASECO Officers and argued to
Mr. S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact that she was inside the office of
the Acctg. General Manager." Let it be noted, however, that the Report did not even describe how the so called
"conduct unbecoming" or "discourteous manner" was done by complainant. Anent the "sarcastic" argument of
complainant, the purported transcript 19 of the meeting held on 7 November 1983 does not indicate any sarcasm
on the part of complainant. At the most, complainant may have sounded insistent or emphatic about her work
being more complete than the work of Ms. de Castro, yet, the complaining officer signed the work of Ms. de Castro
and did not sign hers.

Page 86 of 205
 As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failed to place same
corrections/additional remarks in the Statement of Billings Adjustments as instructed. However, under the
circumstances obtaining, where complainant strongly felt that she was being discriminated against by her superior
in relation to other employees, we are of the considered view and so hold, that a reprimand would have sufficed for
the infraction, but certainly not termination from services. 20

As this Court has ruled:

... where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be
visited with a consequence so severe. It is not only because of the law's concern for the working man. There is, in
addition, his family to consider. Unemployment brings untold hardships and sorrows on those dependent on the
wage-earner. 21

Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes for dismissal Credo's previous
and repeated acts of insubordination, discourtesy and sarcasm towards her superior officers, alleged to have been committed from
1980 to July 1983. 22

If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by NASECO. For instance,
sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised her voice" in a discussion with NASECO's Acting
head of the Personnel Administration 23 no disciplinary measure was taken or meted against her. Nor was she even reprimanded
when she allegedly talked 'in a shouting or yelling manner" with the Acting Manager of NASECO's Building Maintenance and Services
Department in 1980 24 or when she allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying
arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control Consultant in 1981. 25 But
then, in sharp contrast to NASECO's penchant for ignoring the aforesaid acts of misconduct, when Credo committed frequent
tardiness in August and September 1983, she was reprimanded. 26

Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's condonation thereof is
gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for having performed in the job "at least
[satisfactorily]" 27 and she was then rated "Very Satisfactory" 28as regards job performance, particularly in terms of quality of work,
quantity of work, dependability, cooperation, resourcefulness and attendance.

Considering that the acts or omissions for which Credo's employment was sought to be legally terminated were insufficiently proved,
as to justify dismissal, reinstatement is proper. For "absent the reason which gave rise to [the employee's] separation from
employment, there is no intention on the part of the employer to dismiss the employee concerned." 29 And, as a result of having
been wrongfully dismissed, Credo is entitled to three (3) years of backwages without deduction and qualification. 30

However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in her favor can only be
justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent manner. 31A judicious examination of the
record manifests no such conduct on the part of management. However, in view of the attendant circumstances in the case, i.e., lack
of due process in effecting her dismissal, it is reasonable to award her moral damages. And, for having been compelled to litigate
because of the unlawful actuations of NASECO, a reasonable award for attorney's fees in her favor is in order.

In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to order Credo's reinstatement.
NASECO claims that, as a government corporation (by virtue of its being a subsidiary of the National Investment and Development
Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in turn is a government owned
corporation), the terms and conditions of employment of its employees are governed by the Civil Service Law, rules and regulations.
In support of this argument, NASECO cites National Housing Corporation vs. JUCO, 33 where this Court held that "There should no
longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service
law and civil service rifles and regulations."

It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that is, to cases that
arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to Credo and other employees similarly
situated, because under the same 1973 Constitution ,but prior to the ruling in National Housing Corporation vs. Juco, this Court had
recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving terms
and conditions of employment in government owned or controlled corporations, among them, the National Service Corporation
(NASECO).<re||an1w> 34

Furthermore, in the matter of coverage by the civil service of government-owned or controlled corporations, the 1987 Constitution
starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is based. Under the 1973 Constitution,
it was provided that:

The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including
every government-owned or controlled corporation. ... 35

On the other hand, the 1987 Constitution provides that:

Page 87 of 205
 The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charter. 36 (Emphasis supplied)

Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing . Corporation
case in the following manner

The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article
XII-B of the constitution. It would be possible for a regular ministry of government to create a host of subsidiary
corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could
create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their
officials and employees would be privileged individuals, free from the strict accountability required by the Civil
Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the
competitive restrains of the open market nor to the terms and conditions of civil service employment. Conceivably,
all government-owned or controlled corporations could be created, no longer by special charters, but through
incorporations under the general law. The Constitutional amendment including such corporations in the embrace of
the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist. 37

appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned or
controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-
owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the
general corporation law.

The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and meaning in the use of the
phrase "with original charter." Thus

THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.

MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong provision.

I refer to Section 1, subparagraph I which reads:

The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including
government-owned or controlled corporations.

My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissioner please state his
previous question?

MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the Civil Service
Commission, says: "including government-owned or controlled corporations.' Does that include a
corporation, like the Philippine Airlines which is government-owned or controlled?

MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine Airlines
controlled by the government in the sense that the majority of stocks are owned by the
government?

MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiary corporation. The
GSIS is owned by the government. Would this be covered because the provision says "including
government-owned or controlled corporations."

MR. FOZ. The Philippine Airlines was established as a private corporation. Later on, the
government, through the GSIS, acquired the controlling stocks. Is that not the correct situation?

MR. ROMULO. That is true as Commissioner Ople is about to explain. There was apparently a
Supreme Court decision that destroyed that distinction between a government-owned corporation
created under the Corporation Law and a government-owned corporation created by its own
charter.

MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco to the effect that
all government corporations irrespective of the manner of creation, whether by special charter or
by the private Corporation Law, are deemed to be covered by the civil service because of the
wide-embracing definition made in this section of the existing 1973 Constitution. But we recall
the response to the question of Commissioner Ople that our intendment in this provision is just to
give a general description of the civil service. We are not here to make any declaration as to

Page 88 of 205
 whether employees of government-owned or controlled corporations are barred from the
operation of laws, such as the Labor Code of the Philippines.

MR. ROMULO. Yes.

MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been mentioned by
both sides.

MR. ROMULO. I yield part of my time.

THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.

MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1 (1), may I
volunteer some information that may be helpful both to the interpellator and to the Committee.
Following the proclamation of martial law on September 21, 1972, this issue of the coverage of
the Labor Code of the Philippines and of the Civil Service Law almost immediately arose. I am, in
particular, referring to the period following the coming into force and effect of the Constitution of
1973, where the Article on the Civil Service was supposed to take immediate force and effect. In
the case of LUZTEVECO, there was a strike at the time. This was a government-controlled and
government-owned corporation. I think it was owned by the PNOC with just the minuscule
private shares left. So, the Secretary of Justice at that time, Secretary Abad Santos, and myself
sat down, and the result of that meeting was an opinion of the Secretary of Justice which 9
became binding immediately on the government that government corporations with original
charters, such as the GSIS, were covered by the Civil Service Law and corporations spun off from
the GSIS, which we called second generation corporations functioning as private subsidiaries,
were covered by the Labor Code. Samples of such second generation corporations were the
Philippine Airlines, the Manila

Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these companies I have mentioned as
examples, except for the Manila Hotel, had collective bargaining agreements. In the Philippine Airlines, there were,
in fact, three collective bargaining agreements; one, for the ground people or the PALIA one, for the flight
attendants or the PASAC and one for the pilots of the ALPAC How then could a corporation like that be covered by
the Civil Service law? But, as the Chairman of the Committee pointed out, the Supreme Court decision in the case
of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the Hyatt are
now considered under that decision covered by the Civil Service Law. I also recall that in the emergency meeting of
the Cabinet convened for this purpose at the initiative of the Chairman of the Reorganization Commission, Armand
Fabella, they agreed to allow the CBA's to lapse before applying the full force and effect of the Supreme Court
decision. So, we were in the awkward situation when the new government took over. I can agree with
Commissioner Romulo when he said that this is a problem which I am not exactly sure we should address in the
deliberations on the Civil Service Law or whether we should be content with what the Chairman said that Section 1
(1) of the Article on the Civil Service is just a general description of the coverage of the Civil Service and no more.

Thank you, Mr. Presiding Officer.

MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if the Committee puts
on records that it is not their intent by this provision and the phrase "including government-
owned or controlled corporations" to cover such companies as the Philippine Airlines.

MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was made, my proposal
was really to eliminate, to drop from the provision, the phrase "including government- owned or
controlled corporations."

MR. ROMULO. Would the Committee indicate that is the intent of this provision?

MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make such a statement in
the face of an absolute exclusion of government-owned or controlled corporations. However, this
does not preclude the Civil Service Law to prescribe different rules and procedures, including
emoluments for employees of proprietary corporations, taking into consideration the nature of
their operations. So, it is a general coverage but it does not preclude a distinction of the rules
between the two types of enterprises.

MR. FOZ. In other words, it is something that should be left to the legislature to decide. As I said
before, this is just a general description and we are not making any declaration whatsoever.

Page 89 of 205
 MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive understanding of the
coverage and the Gentleman wants to exclude government-owned or controlled corporations like
Philippine Airlines, then the recourse is to offer an amendment as to the coverage, if the
Commissioner does not accept the explanation that there could be a distinction of the rules,
including salaries and emoluments.

MR. ROMULO. So as not to delay the proceedings, I will reserve my right to submit such an
amendment.

xxx xxx xxx

THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.

MR. ROMULO. On page 2, line 5, I suggest the following amendment after "corporations": Add a
comma (,) and the phrase EXCEPT THOSE EXERCISING PROPRIETARY FUNCTIONS.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?

SUSPENSION OF SESSION

MR. MONSOD. May we have a suspension of the session?

THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.

It was 7:16 p.m.

RESUMPTION OF SESSION

At 7:21 p.m., the session was resumed.

THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.

Commissioner Romulo is recognized.

MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now read as follows:
"including government-owned or controlled corporations WITH ORIGINAL CHARTERS." The purpose of this
amendment is to indicate that government corporations such as the GSIS and SSS, which have original charters,
fall within the ambit of the civil service. However, corporations which are subsidiaries of these chartered agencies
such as the Philippine Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil service.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?

MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what exactly
do we mean?

MR. ROMULO. We mean that they were created by law, by an act of Congress, or by special law.

MR. FOZ. And not under the general corporation law.

MR. ROMULO. That is correct. Mr. Presiding Officer.

MR. FOZ. With that understanding and clarification, the Committee accepts the amendment.

MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law are out.

MR. ROMULO. That is correct: 38

On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in place at the time of
decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary
of the PNB, the NASECO is a government-owned or controlled corporation without original charter.

Page 90 of 205
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion in Gomez vs. Government Insurance
Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on the effectivity of the principle of
social justice embodied in the 1935 Constitution, said:

Certainly, this principle of social justice in our Constitution as generously conceived and so tersely phrased, was
not included in the fundamental law as a mere popular gesture. It was meant to (be) a vital, articulate, compelling
principle of public policy. It should be observed in the interpretation not only of future legislation, but also of all
laws already existing on November 15, 1935. It was intended to change the spirit of our laws, present and future.
Thus, all the laws which on the great historic event when the Commonwealth of the Philippines was born, were
susceptible of two interpretations strict or liberal, against or in favor of social justice, now have to be construed
broadly in order to promote and achieve social justice. This may seem novel to our friends, the advocates of
legalism but it is the only way to give life and significance to the above-quoted principle of the Constitution. If it
was not designed to apply to these existing laws, then it would be necessary to wait for generations until all our
codes and all our statutes shall have been completely charred by removing every provision inimical to social
justice, before the policy of social justice can become really effective. That would be an absurd conclusion. It is
more reasonable to hold that this constitutional principle applies to all legislation in force on November 15, 1935,
and all laws thereafter passed.

WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with modifications. Petitioners in G.R. No.
69870, who are the private respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at
the time of her termination, or if such reinstatement is not possible, to place her in a substantially equivalent position, with three (3)
years backwages, from 1 December 1983, without qualification or deduction, and without loss of seniority rights and other privileges
appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees.

If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No. 69870, who are the private
respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in addition to her backwages and damages as above described,
separation pay equivalent to one-half month's salary for every year of service, to be computed on her monthly salary at the time of
her termination on 1 December 1983.

SO ORDERED.

Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ.,
concur.

Narvasa, J., is on leave.

Gutierrez, Jr., J., in the result.

Separate Opinions

CRUZ, J., concurring:

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my disappointment over still
another avoidable ambiguity in the 1987 Constitution.

It is clear now from the debates of the Constitutional Commission that the government-owned or controlled corporations included in
the Civil Service are those with legislative charters. Excluded are its subsidiaries organized under the Corporation Code.

If that was the intention, the logical thing, I should imagine, would have been to simply say so. This would have avoided the
suggestion that there are corporations with duplicate charters as distinguished from those with original charters.

All charters are original regardless of source unless they are amended. That is the acceptable distinction. Under the provision,
however, the charter is still and always original even if amended as long it was granted by the legislature.

It would have been clearer, I think, to say "including government owned or controlled corporations with legislative charters." Why
this thought did not occur to the Constitutional Commission places one again in needless puzzlement.

Page 91 of 205
Separate Opinions

CRUZ, J., concurring:

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my disappointment over still
another avoidable ambiguity in the 1987 Constitution.

It is clear now from the debates of the Constitutional Commission that the government-owned or controlled corporations included in
the Civil Service are those with legislative charters. Excluded are its subsidiaries organized under the Corporation Code.

If that was the intention, the logical thing, I should imagine, would have been to simply say so. This would have avoided the
suggestion that there are corporations with duplicate charters as distinguished from those with original charters.

All charters are original regardless of source unless they are amended. That is the acceptable distinction. Under the provision,
however, the charter is still and always original even if amended as long it was granted by the legislature.

It would have been clearer, I think, to say "including government owned or controlled corporations with legislative charters." Why
this thought did not occur to the Constitutional Commission places one again in needless puzzlement.

G.R. No. 100947 May 31, 1993

PNOC ENERGY DEVELOPMENT CORPORATION and MARCELINO TONGCO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA, respondents.

Alikpala, Gomez & Associates Law Office for petitioners.

Filomeno A. Zieta for private respondent.

NARVASA, C.J.:

Page 92 of 205
The applicability to private respondent Manuel S. Pineda of Section 66 of the Election Code is what is chiefly involved in the case at
bar. Said section reads as follows:

Sec. 66. Candidates holding appointive office or position. Any person holding a public appointive office or
position, including active members of the Armed Forces of the Philippines, and officers and employees in
government-owned or controlled corporations, shall be considered ipso facto resigned from his office upon the filing
of his certificate of candidacy.

Manuel S. Pineda was employed with the Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC), as subsidiary of the
Philippine National Oil Co., from September 17, 1981, when he was hired as clerk, to January 26, 1989, when his employment was
terminated. The events leading to his dismissal from his job are not disputed.

In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and Construction Department, at
Tongonan Geothermal Project, Ormoc City, Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local
elections scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position. Objection to Pineda's being
a candidate while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte.
The mayor communicated with the PNOC-EDC thru Engr. Ernesto Patanao, Resident Manager, Tongonan Geothermal Project to
express the view that Pineda could not actively participate in politics unless he officially resigned from PNOC-EDC.1 Nothing seems to
have resulted from this protest.

The local elections in Leyte, scheduled for January, 1988, were reset to and held on February 1, 1988. Pineda was among the official
candidates voted for, and eventually proclaimed elected to, the office of councilor. Some vacillation appears to have been evinced by
Pineda at about this time. On February 8, 1988, he wrote to the COMELEC Chairman, expressing his desire to withdraw from the
political contest on account of what he considered to be election irregularities;2 and on March 19, 1988, he wrote to the Secretary of
Justice seeking legal opinion on the question, among others, of whether or not he was "considered automatically resigned upon . . .
filing of . . . (his) certificate of candidacy," and whether or not, in case he was elected, he could "remain appointed to any corporate
offspring of a government-owned or controlled corporation."3 Nevertheless, Pineda took his oath of office in June, 1988 as councilor-
elect of the Municipality of Kananga, Leyte.4 And despite so qualifying as councilor, and assuming his duties as such, he continued
working for PNOC-EDC as the latter's Geothermal Construction Secretary, Engineering and Construction Department, at Tongonan
Geothermal Project, Ormoc City.

On June 7, 1988, Marcelino M. Tongco, Department Manager of the Engineering and Construction Department, PNOC-EDC,
addressed an inquiry to the latter's Legal Department regarding the status of Manuel S. Pineda as employee in view of his candidacy
for the office of municipal councilor.5 In response, the Legal Department rendered an opinion to the effect that Manuel S. Pineda
should be considered ipso facto resigned upon the filing of his Certificate of Candidacy in November, 1987, in accordance with
Section 66 of the Omnibus Election Code.6

Pineda appealed the PNOC-EDC Legal Department's ruling to N.C. Vasquez, the Vice-President of PNOC-EDC, on July 14, 1988. In his
letter of appeal,7 he invoked a "court ruling in the case of Caagusan and Donato vs. PNOC-Exploration Corp. . . . (to the effect that)
while the government-owned or controlled corporations are covered by the Civil Service Law (as is taken to mean in Sec. 66 of the
Omnibus Election Code of 1985) (sic), the subsidiaries or corporate offsprings are not." In the same letter he declared his wish to
continue resign from his position as councilor/member of the Sangguniang Bayan.

He also wrote a letter dated October 1, 1988 to the Department of Local Government inquiring about the status of his employment
with PNOC-EDC in relation to his election as member of the Sangguniang Bayan. He was advised by DLG Undersecretary Jacinto T.
Rubillo, Jr., by letter dated March 31, 1989, that there was no legal impediment to his continuing in his employment with PNOC-EDC
while holding at the same time the elective position of municipal councilor. Cited as basis by Undersecretary Rubillo was Section 2(1)
Article IX-B of the 1987 Constitution and this Court's ruling in NASECO vs. NLRC, 168 SCRA 122. Undersecretary Rubillo went on to
say that Pineda could receive his per diems as municipal councilor as well as the corresponding representation and transportation
allowance [RATA] "provided the PNOC-EDC charter does not provide otherwise and public shall not be prejudiced." 8

The PNOC-EDC did not, however, share the Undersecretary's views. On January 26, 1989, the PNOC-EDC, through Marcelino Tongco
(Manager, Engineering and Construction Department), notified Manuel S. Pineda in writing (1) that after having given him "ample
time" to make some major adjustments before . . . separation from the company," his employment was being terminated pursuant
to Section 66 of the Omnibus Election Code, effective upon receipt of notice, and (2) that he was entitled to "proper compensation"
for the services rendered by him from the time he filed his certificate of candidacy until his actual separation from the service.9

On October 16, 1989, Pineda lodged a complaint for illegal dismissal in the Regional Arbitration Branch No. VIII, NLRC, Tacloban
City. Impleaded as respondents were the PNOC-EDC and the Manager of its Engineering and Construction Department, Marcelino M.
Tongco.10

After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was assigned, rendered a decision on December 28,
1990,11 declaring Manuel S. Pineda's dismissal from the service illegal, and ordering his reinstatement to his former position without
loss of seniority rights and payment of full back wages corresponding to the period from his illegal dismissal up to the time of actual
reinstatement. The Arbiter pointed out that the ruling relied upon by PNOC-EDC to justify Pineda's dismissal from the service,
i.e., NHA v. Juco,12 had already been abandoned; and that "as early as November 29, 1988," the governing principle laid down by

Page 93 of 205
case law in light of Section 2 (1), Article IX-B of the 1987 Constitution13 has been that government-owned or controlled
corporations incorporated under the Corporation Code, the general law as distinguished from those created by special charter
are not deemed to be within the coverage of the Civil Service Law, and consequently their employees, like those of the PNOC-EDC,
are subject to the provisions of the Labor Code rather than the Civil Service Law.14

The PNOC-EDC filed an appeal with the National Labor Relations Commission. The latter dismissed the appeal for lack of merit in a
decision dated April 24, 1991. 15 PNOC-EDC sought reconsideration;16 its motion was denied by the Commission in a Resolution dated
June 21, 1991.17

It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the PNOC-EDC seeks to be annulled and set aside in the
special civil action for certiorari at bar. It contends that the respondent Commission gravely abused its discretion:

1) when it ruled that Manuel S. Pineda was not covered by the Civil Service Rules when he filed his candidacy for
the 1988 local government elections in November 1987;

2) when it ruled that Pineda was not covered by the Omnibus Election Code at the time he filed his certificate of
candidacy for the 1988 local elections;

3) when it ruled that Pineda was illegally dismissed despite the fact that he was considered automatically resigned
pursuant to Section 66 of the Omnibus Election Code; and

4) when it ruled that Pineda could occupy a local government position and be simultaneously employed in a
government-owned or controlled corporation, a situation patently violative of the constitutional prohibition on
additional compensation.

Acting on the petition, this Court issued a temporary restraining order enjoining the respondent NLRC from implementing or
enforcing its decision and resolution dated April 24, 1991 and June 21, 1991, respectively.

In the comment required of him by the Court, the Solicitor General expressed agreement with the respondent Commission's holding
that Manuel Pineda had indeed been illegally separated from his employment in the PNOC-EDC; in other words, that his running for
public office and his election thereto had no effect on his employment with the PNOC-EDC, a corporation not embraced within the
Civil Service.

Petitioner PNOC-EDC argues that at the time that Pineda filed his certificate of candidacy for municipal councilor in November, 1987,
the case law "applicable as far as coverage of government-owned or controlled corporations are concerned . . . ( was to the following
effect):18

As correctly pointed out by the Solicitor General, the issue of jurisdiction had been resolved in a string of cases
starting with the National Housing Authority vs. Juco (134 SCRA 172) followed by Metropolitan Waterworks and
Sewerage System vs. Hernandez (143 SCRA 602) and the comparatively recent case of Quimpo
vs. Sandiganbayan (G.R. No. 72553, Dec. 2, 1986) in which this Court squarely ruled that PNOC subsidiaries,
whether or not originally created as government-owned or controlled corporations are governed by the Civil Service
Law.

This doctrine, petitioner further argues, was not "automatically reversed" by the 1987 Constitution because not "amended or
repealed by the Supreme Court or the Congress;"19 and this Court's decision in November, 1988, in National Service Corporation
vs. NLRC, supra20 abandoning the Juco ruling "cannot be given retroactive effect . . . (in view of ) the time-honored principle . .
. that laws (judicial decisions included) shall have no retroactive effect, unless the contrary is provided (Articles 4 and 8 of the New
Civil Code of the Philippines)."

Section 2 (1), Article IX of the 1987 Constitution provides as follows:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters.

Implicit in the provision is that government-owned or controlled corporations without original charters i.e., organized under the
general law, the Corporation Code are not comprehended within the Civil Service Law. So has this Court construed the provision. 21

In National Service Corporation (NASECO), et al. v. NLRC, et al., etc.,22 decided on November 29, 1988, it was ruled that the 1987
Constitution "starkly varies" from the 1973 charter upon which the Juco doctrine rested in that unlike the latter, the present
constitution qualifies the term, "government-owned or controlled corporations," by the phrase, "with original charter;" hence, the
clear implication is that the Civil Service no longer includes government-owned or controlled corporations without original charters,
i.e., those organized under the general corporation law.23 NASECO further ruled that the Juco ruling should not apply retroactively,

Page 94 of 205
considering that prior to its promulgation on January 17, 1985, this Court had expressly recognized the applicability of the Labor
Code to government-owned or controlled corporations.24

Lumanta, et al. v. NLRC, et al.,25 decided on February 8, 1989, made the same pronouncement: that Juco had been superseded by
the 1987 Constitution for implicit in the language of Section 2 (1), Article IX thereof, is the proposition that government-owned or
controlled corporations without original charter do not fall under the Civil Service Law but under the Labor Code.

And in PNOC-EDC v. Leogardo, etc., et al.,26 promulgated on July 5, 1989, this Court ruled that conformably with the apparent
intendment of the NASECO case, supra, since the PNOC-EDC, a government-owned or controlled company had been incorporated
under the general Corporation Law, its employees are subject to the provisions of the Labor Code.

It is thus clear that the Juco doctrine prevailing at the time of the effectivity of the fundamental charter in 1987 i.e., that
government-owned or controlled corporations were part of the Civil Service and its employees subject to Civil Service laws and
regulations,27 regardless of the manner of the mode of their organization or incorporation is no longer good law, being at "stark
variance," to paraphrase NASECO, with the 1987 Constitution. In other words, and contrary to the petitioner's view, as of the
effectivity of the 1987 Constitution, government-owned or controlled corporations without original charters, or, as Mr. Justice Cruz
insists in his concurring opinion in NASECO v.NLRC,28 a legislative charter (i.e., those organized under the Corporation Code), ceased
to pertain to the Civil Service and its employees could no longer be considered as subject to Civil Service Laws, rules or regulations.

The basic question is whether an employee in a government-owned or controlled corporations without an original charter (and
therefore not covered by Civil Service Law) nevertheless falls within the scope of Section 66 of the Omnibus Election Code, viz.:

Sec. 66. Candidates holding appointive office or position. Any person holding a public appointive office or
position, including active members of the Armed Forces of the Philippines, and officers and employees in
government-owned or controlled corporations, shall be considered ipso facto resigned from his office upon the filing
of his certificate of candidacy.

When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in connection with its deliberations on and
subsequent enactment of related and repealing legislation i.e., Republic Acts Numbered 7166: "An Act Providing for Synchronized
National and Local Elections and for Electoral Reforms, Authorizing Appropriations Therefor, and for Other Purposes" (effective
November 26, 1991), 6646: "An Act Introducing Additional Reforms in the Electoral System and for Other Purposes" (effective
January 5, 1988) and 6636: "An Act Resetting the Local Elections, etc., (effective November 6, 1987), it was no doubt aware that in
light of Section 2 (1), Article IX of the 1987 Constitution: (a) government-owned or controlled corporations were of two (2)
categories those with original charters, and those organized under the general law and (b) employees of these corporations
were of two (2) kinds those covered by the Civil Service Law, rules and regulations because employed in corporations having
original charters, and those not subject to Civil Service Law but to the Labor Code because employed in said corporations organized
under the general law, or the Corporation Code. Yet Congress made no effort to distinguish between these two classes of
government-owned or controlled corporations or their employees in the Omnibus Election Code or subsequent related statutes,
particularly as regards the rule that any employee "in government-owned or controlled corporations, shall be considered ipso
facto resigned from his office upon the filing of his certificate of candidacy."29

Be this as it may, it seems obvious to the Court that a government-owned or controlled corporation does not lose its character as
such because not possessed of an original charter but organized under the general law. If a corporation's capital stock is owned by
the Government, or it is operated and managed by officers charged with the mission of fulfilling the public objectives for which it has
been organized, it is a government-owned or controlled corporation even if organized under the Corporation Code and not under a
special statute; and employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless "employees
in government-owned or controlled corporations," and come within the letter of Section 66 of the Omnibus Election Code, declaring
them "ipso facto resigned from . . . office upon the filing of . . . (their) certificate of candidacy."

What all this imports is that Section 66 of the Omnibus Election Code applies to officers and employees in government-owned or
controlled corporations, even those organized under the general laws on incorporation and therefore not having an original or
legislative charter, and even if they do not fall under the Civil Service Law but under the Labor Code. In other words, Section 66
constitutes just cause for termination of employment in addition to those set forth in the Labor Code, as amended.

The conclusions here reached make unnecessary discussion and resolution of the other issues raised in this case.

WHEREFORE, the petition is GRANTED; the decision of public respondent National Labor Relations Commission dated April 24, 1991
and its Resolution dated June 21, 1991 are NULLIFIED AND SET ASIDE; and the complaint of Manuel S. Pineda is DISMISSED. No
costs.

SO ORDERED.

Padilla, Regalado and Nocon, JJ., concur.

Page 95 of 205
 [G.R. No. 87676. December 20, 1989.]

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS DEVELOPMENT COMMITTEE, Petitioner, v. THE
HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT SUPERVISORY ASSOCIATION & THEIR
MEMBERS, Respondents.

Bienvenido D. Comia for Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; NATIONAL PARKS AND DEVELOPMENT COMMITTEE; RULED AS A GOVERNMENT AGENCY; EMPLOYEES
THEREOF COVERED BY CIVIL SERVICE RULES AND REGULATIONS. In Jesus P. Perlas, Jr. v. People of the Philippines, G.R. Nos.
84637-39, August 2, 1989, we ruled that the NPDC is an agency of the government, not a government-owned or controlled
corporation, hence, the Sandiganbayan had jurisdiction over its acting director who committed estafa. We held thus: "The National
Parks Development Committee was created originally as an Executive Committee on January 14, 1963, for the development of the
Quezon Memorial, Luneta and other national parks (Executive Order No. 30). It was later designated as the National Parks
Development Committee (NPDC) on February 7, 1974 (E.O. No. 69).0n January 9, 1966, Mrs. Imelda R. Marcos and Teodoro F.
Valencia were designated Chairman and Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of
Forest Development, Department of Natural Resources, on December 1, 1975 (Letter of Implementation No. 39, issued pursuant to
PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of the President (E.O. No. 709, dated July 27,
1981). "Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency under the Office of the
President and allotments for its maintenance and operating expenses were issued direct to NPDC (Exh. 10-A, Perlas, Item No. 2, 3)."
(Emphasis supplied.). Since NPDC is a government agency, its employees are covered by civil service rules and regulations (Sec. 2,
Article IX, 1987 Constitution). Its employees are civil service employees (Sec. 14, Executive Order No. 180).

2. LABOR LAW; EXECUTIVE ORDER NO. 180; LABOR DISPUTE BETWEEN THE EMPLOYEES AND THE GOVERNMENT COGNIZABLE BY
THE PUBLIC SECTOR LABOR MANAGEMENT COUNCIL. While NPDC employees are allowed under the 1987 Constitution to organize
and join unions of their choice, there is as yet no law permitting them to strike. In case of a labor dispute between the employees
and the government, Section 15 of Executive Order No. 180 dated June 1, 1987 provides that the Public Sector Labor-Management
Council, not the Department of Labor and Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court
erred in holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable by the Department of Labor
and Employment.

DECISION

GRIO-AQUINO, J.:

The Regional Trial Court of Manila, Branch LII, dismissed for lack of jurisdiction, the petitioners complaint in Civil Case No. 88-44048
praying for a declaration of illegality of the strike of the private respondents and to restrain the same. The Court of Appeals denied
the petitioners petition for certiorari, hence, this petition for review.

The key issue in this case is whether the petitioner, National Parks Development Committee (NPDC), is a government agency, or a
private corporation, for on this issue depends the right of its employees to strike.

This issue came about because although the NPDC was originally created in 1963 under Executive Order No. 30, as the Executive
Committee for the development of the Quezon Memorial, Luneta and other national parks, and later renamed as the National Parks
Development Committee under Executive Order No. 68, on September 21, 1967, it was registered in the Securities and Exchange
Commission (SEC) as a non-stock and non-profit corporation, known as "The National Parks Development Committee, Inc."

However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate of Registration should not be
suspended for: (a) failure to submit the General Information Sheet from 1981 to 1987; (b) failure to submit its Financial Statements
from 1981 to 1986; (c) failure to register its Corporate Books; and (d) failure to operate for a continuous period of at least five (5)
years since September 27, 1967.

Page 96 of 205
On August 18, 1987, the NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office had no objection to the suspension,
cancellation, or revocation of the Certificate of Registration of NPDC.

By virtue of Executive Order No. 120 dated January 30, 1989, the NPDC was attached to the Ministry (later Department) of Tourism
and provided with a separate budget subject to audit by the Commission on Audit.

On September 10, 1987, the Civil Service Commission notified NPDC that pursuant to Executive Order No. 120, all appointments and
other personnel actions shall be submitted through the Commission.

Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding supervisory positions in the different
areas of the parks, was organized and it affiliated with the Trade Union of the Philippines and Allied Services (TUPAS) under
Certificate No. 1206.

On June 15, 1987, two collective bargaining agreements were entered into between NPDC and NPDCEA (TUPAS local Chapter No.
967) and NPDC and NPDCSA (TUPAS Chapter No. 1206), for a period of two years or until June 30, 1989.

On March 20, 1988, these unions staged a strike at the Rizal Park, Fort Santiago, Paco Park, and Pook ni Mariang Makiling at Los
Baos, Laguna, alleging unfair labor practices by NPDC.

On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch LII, a complaint against the union to declare the strike
illegal and to restrain it on the ground that the strikers, being government employees, have no right to strike although they may
form a union.

On March 24, 1988, the lower court dismissed the complaint and lifted the restraining order for lack of jurisdiction. It held that the
case "properly falls under the jurisdiction of the Department of Labor," because "there exists an employer-employee relationship"
between NPDC and the strikers, and "that the acts complained of in the complaint, and which plaintiff seeks to enjoin in this action,
fall under paragraph 5 of Article 217 of the Labor Code, . . ., in relation to Art. 265 of the same Code, hence, jurisdiction over said
acts does not belong to this Court but to the Labor Arbiters of the Department of Labor." (p. 142, Rollo.) law library : red

Petitioner went to the Court of Appeals on certiorari (CA-G.R. SP No. 14204). On March 31, 1989, the Court of Appeals affirmed the
order of the trial court, hence, this petition for review. The petitioner alleges that the Court of Appeals erred: virtual 1aw library

1) in not holding that the NPDC employees are covered by the Civil Service Law; and

2) in ruling that petitioners labor dispute with its employees is cognizable by the Department of Labor.

We have considered the petition filed by the Solicitor General on behalf of NPDC and the comments thereto and are persuaded that it
is meritorious.

In Jesus P. Perlas, Jr. v. People of the Philippines, G.R. Nos. 84637-39, August 2, 1989, we ruled that the NPDC is an agency of the
government, not a government-owned or controlled corporation, hence, the Sandiganbayan had jurisdiction over its acting director
who committed estafa. We held thus:jgc:

"The National Parks Development Committee was created originally as an Executive Committee on January 14, 1963, for the
development of the Quezon Memorial, Luneta and other national parks (Executive Order No. 30). It was later designated as the
National Parks Development Committee (NPDC) on February 7, 1974 (E.O. No. 69).0n January 9, 1966, Mrs. Imelda R. Marcos and
Teodoro F. Valencia were designated Chairman and Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the
Bureau of Forest Development, Department of Natural Resources, on December 1, 1975 (Letter of Implementation No. 39, issued
pursuant to PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of the President (E.O. No. 709, dated
July 27, 1981).

"Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency under the Office of the
President and allotments for its maintenance and operating expenses were issued direct to NPDC (Exh. 10-A, Perlas, Item No. 2, 3)."
(Emphasis supplied.).

Since NPDC is a government agency, its employees are covered by civil service rules and regulations (Sec. 2, Article IX, 1987
Constitution). Its employees are civil service employees (Sec. 14, Executive Order No. 180).

While NPDC employees are allowed under the 1987 Constitution to organize and join unions of their choice, there is as yet no law
permitting them to strike. In case of a labor dispute between the employees and the government, Section 15 of Executive Order No.
180 dated June 1, 1987 provides that the Public Sector Labor-Management Council, not the Department of Labor and Employment,
shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in holding that the labor dispute between the NPDC
and the members of the NPDSA is cognizable by the Department of Labor and Employment.

WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CA-G.R. SP No. 14204 is hereby set aside.
The private respondents complaint should be filed in the Public Sector Labor-Management Council as provided in Section 15 of
Executive Order No. 180. Costs against the private respondents.

SO ORDERED.

Page 97 of 205
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

ANTONIO P. SALENGA and G.R. Nos. 174941

NATIONAL LABOR RELATIONS COMMISSION,

Petitioners, Present:

CARPIO, Chairperson,

- versus - BRION,

PORTUGAL PEREZ,

SERENO, and

COURT OF APPEALS and REYES, JJ.

CLARK DEVELOPMENT

CORPORATION, Promulgated:

Respondents.

February 1, 2012

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

DECISION

SERENO, J.:

Page 98 of 205
 The present Petition for Certiorari under Rule 65 assails the Decision[1] of the Court of Appeals (CA) promulgated on 13

September 2005, dismissing the Complaint for illegal dismissal filed by petitioner Antonio F. Salenga against respondent Clark

Development Corporation (CDC). The dispositive portion of the assailed Decision states:

WHEREFORE, premises considered, the original and supplemental petitions are GRANTED. The assailed
resolutions of the National Labor Relations Commission dated September 10, 2003 and January 21, 2004
are ANNULLED and SET ASIDE. The complaint filed by Antonio B. Salenga against Clark Development
is DISMISSED. Consequently, Antonio B. Salenga is ordered to restitute to Clark Development Corporation the
amount of P3,222,400.00, which was received by him as a consequence of the immediate execution of said
resolutions, plus interest thereon at the rate of 6% per annum from date of

such receipt until finality of this judgment, after which the interest shall be at the rate of 12% per annum until said
amount is fully restituted.

SO ORDERED.[2]

The undisputed facts are as follows:

On 22 September 1998, President/Chief Executive Officer (CEO) Rufo Colayco issued an Order informing petitioner that,

pursuant to the decision of the board of directors of respondent CDC, the position of head executive assistant the position held by

petitioner was declared redundant. Petitioner received a copy of the Order on the same day and immediately went to see Colayco. The

latter informed him that the Order had been issued as part of the reorganization scheme approved by the board of directors. Thus,

petitioners employment was to be terminated thirty (30) days from notice of the Order.

On 17 September 1999, petitioner filed a Complaint for illegal dismissal with a claim for reinstatement and payment of back

wages, benefits, and moral and exemplary damages against respondent CDC and Colayco. The Complaint was filed with the National

Labor Relations Commission-Regional Arbitration Branch (NLRC-RAB) III in San Fernando, Pampanga. In defense, respondents,

represented by the Office of the Government Corporate Counsel (OGCC), alleged that the NLRC had no jurisdiction to entertain the

case on the ground that petitioner was a corporate officer and, thus, his dismissal was an intra-corporate matter falling properly within

the jurisdiction of the Securities and Exchange Commission (SEC).

On 29 February 2000, labor arbiter (LA) Florentino R. Darlucio issued a Decision[3] in favor of petitioner Salenga. First, the LA

held that the NLRC had jurisdiction over the Complaint, considering that petitioner was not a corporate officer but a managerial

employee. He held the position of head executive assistant, categorized as a Job Level 12 position, not subject to election or

appointment by the board of directors.

Second, the LA pointed out that respondent CDC and Colayco failed to establish a valid cause for the termination of petitioners

employment. The evidence presented by respondent CDC failed to show that the position of petitioner was superfluous as to be

classified redundant. The LA further pointed out that respondent corporation had not disputed the argument of petitioner Salenga that

his position was that of a regular employee. Moreover, the LA found that petitioner had not been accorded the right to due process.

Instead, the latter was dismissed without the benefit of an explanation of the grounds for his termination, or an opportunity to be

heard and to defend himself.

Finally, considering petitioners reputation and contribution as a government employee for 40 years, the LA awarded moral

damages amounting to P2,000,000 and exemplary damages of P500,000. The dispositive portion of the LAs Decision reads:

Page 99 of 205
 WHEREFORE, premises considered, judgment is hereby rendered declaring respondent Clark Development
Corporation and Rufo Colayco guilty of illegal dismissal and for which they are ordered, as follows:

1. To reinstate complainant to his former or equivalent position without loss of seniority rights and
privileges;

2. To pay complainant his backwages reckoned from the date of his dismissal on September 22, 1998
until actual reinstatement or merely reinstatement in the payroll which as of this date is in the amount
of P722,400.00;

3. To pay complainant moral damages in the amount of P2,000,000.00; and,

4. To pay complainant exemplary damages in the amount of P500,000.00.

SO ORDERED.[4]

At the time the above Decision was rendered, respondent CDC was already under the leadership of Sergio T. Naguiat. When

he received the Decision on 10 March 2000, he subsequently instructed Atty. Monina C. Pineda, manager of the Corporate and Legal

Services Department and concurrent corporate board secretary, not to appeal the Decision and to so inform the OGCC. [5]

Despite these instructions, two separate appeals were filed before LA Darlucio on 20 March 2000. One appeal[6] was from the

OGCC on behalf of respondent CDC and Rufo Colayco. The OGCC reiterated its allegation that petitioner was a corporate officer, and

that the termination of his employment was an intra-corporate matter. The Memorandum of Appeal was verified and certified by Hilana

Timbol-Roman, the executive vice president of respondent CDC. The Memorandum was accompanied by a UCPB General Insurance

Co., Inc. supersedeas bond covering the amount due to petitioner as adjudged by LA Darlucio. Timbol-Roman and OGCC lawyer Roy

Christian Mallari also executed on 17 March 2000 a Joint Affidavit of Declaration wherein they swore that they were the respective

authorized representative and counsel of respondent corporation. However, the Memorandum of Appeal and the Joint Affidavit

of Declaration were not accompanied by a board resolution from respondents board of directors authorizing either

Timbol-Roman or Atty. Mallari, or both, to pursue the case or to file the appeal on behalf of respondent.

It is noteworthy that Naguiat, who was president/CEO of respondent CDC from 3 February 2000 to 5 July 2000, executed an

Affidavit on 20 March 2002,[7] wherein he stated that without his knowledge, consent or approval, Timbol-Roman and Atty. Mallari filed

the above-mentioned appeal. He further alleged that their statements were false.

The second appeal, meanwhile, was filed by former CDC President/CEO Rufo Colayco. Colayco alleged that petitioner was

dismissed not on 22 September 1998, but twice on 9 March 1999 and 23 March 1999. The dismissal was allegedly approved by

respondents CDC board of directors pursuant to a new organizational structure. Colayco likewise stated that he had posted

a supersedeas bond the same bond taken out by Timbol-Roman issued by the UCPB General Insurance Co. dated 17 March 2000 in

order to secure the monetary award, exclusive of moral and exemplary damages.

Petitioner thereafter opposed the two appeals on the grounds that both appellants, respondent CDC as allegedly represented

by Timbol-Roman and Atty. Mallari and Rufo Colayco had failed to observe Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure;

and that appellants had not been authorized by respondents board of directors to represent the corporation and, thus, they were not

the employer whom the Rules referred to. Petitioner also alleged that appellants failed to refute the findings of LA Darlucio in the

previous Decision.

In the meantime, while the appeal was pending, on 19 October 2000, respondents board chairperson and concurrent

President/CEO Rogelio L. Singson ordered the reinstatement of petitioner to the latters former position as head executive assistant,

effective 24 October 2000.[8]

Page 100 of 205
 On 28 May 2001, respondent CDCs new President/CEO Emmanuel Y. Angeles issued a Memorandum, which offered all

managers of respondent corporation an early separation/redundancy program. Those who wished to avail themselves of the program

were to be given the equivalent of their 1.25-month basic salary for every year of service and leave credits computed on the basis of

the same 1.25-month equivalent of their basic salary.[9]

In August 2001, respondent CDC offered another retirement plan granting higher benefits to the managerial employees. Thus,

on 12 September 2001, petitioner filed an application for the early retirement program, which Angeles approved on 3 December 2001.

Meanwhile, in the proceedings of the NLRC, petitioner received on 12 September 2001 its 30 July 2001 Decision[10] on the

appeal filed by Timbol-Roman and Colayco. It is worthy to note that the said Decision referred to the reports of reviewer arbiters

Cristeta D. Tamayo and Thelma M. Concepcion, who in turn found that petitioner Salenga was a corporate officer of CDC. Nevertheless,

the First Division of the NLRC upheld LA Darlucios ruling that petitioner Salenga was indeed a regular employee. It also found that

redundancy, as an authorized cause for dismissal, has not been sufficiently proven, rendering the dismissal illegal. However, the NLRC

held that the award of exemplary and moral damages were unsubstantiated. Moreover, it also dropped Colayco as a respondent to the

case, since LA Darlucio had failed to provide any ground on which to anchor the formers solidary liability.

Petitioner Salenga thereafter moved for a partial reconsideration of the above-mentioned Decision. He sought the

reinstatement of the award of exemplary and moral damages. He likewise insisted that the NLRC should not have entertained the

appeal on the following grounds: (1) respondent CDC did not file an appeal and did not post the required cash or surety bond; (2) both

Timbol-Roman and Colayco were admittedly not real parties-in-interest; (3) they were not the employer or the employers authorized

representative and, thus, had no right to appeal; and (4) both appeals had not been perfected for failure to post the required cash or

surety bond. In other words, petitioners theory revolved on the fact that neither Timbol-Roman nor Colayco was authorized to represent

the corporation, so the corporation itself did not appeal LA Darlucios Decision. As a result, that Decision should be considered as final

and executory.

For its part, the OGCC also filed a Motion for Reconsideration[11] of the NLRCs 30 July 2001 Decision insofar as the finding of

illegal dismissal was concerned. It no longer questioned the commissions finding that petitioner was a regular employee,

but instead insisted that he had been dismissed as a consequence of his redundant position. The motion, however, was not verified by

the duly authorized representative of respondent CDC.

On 5 December 2002, the NLRC denied petitioner Salengas Motion for Partial Reconsideration and dismissed the Complaint.

The dispositive portion of the Resolution[12]reads as follows:

WHEREFORE, complainants partial motion for reconsideration is denied. As recommended by Reviewer

Arbiters Cristeta D. Tamayo in her August 2, 2000 report and Thelma M. Concepcion in her November 25, 2002
report, the decision of Labor Arbiter Florentino R. Darlucio dated 29 February 2000 is set aside.

The complaint below is dismissed for being without merit.

SO ORDERED.[13]

Meanwhile, pending the Motions for Reconsideration of the NLRCs 30 July 2001 Decision, another issue arose with regard to

the computation of the retirement benefits of petitioner. Respondent CDC did not immediately give his requested retirement benefits,

pending clarification of the computation of these benefits. He claimed that the computation of his retirement benefits should also

include the forty (40) years he had been in government service in accordance with Republic Act No. (R.A.) 8291, or the GSIS Act, and

should not be limited to the length of his employment with respondent corporation only, as the latter insisted.

Page 101 of 205

 In a letter dated 14 March 2003, petitioner Salengas counsel wrote to the board of directors of respondent to follow up the

payment of the retirement benefits allegedly due to petitioner.[14]

Pursuant to the NLRCs dismissal of the Complaint of petitioner Salenga, Angeles subsequently denied the formers request for

his retirement benefits, to wit:[15]

Please be informed that we cannot favorably grant your clients claim for retirement benefits considering
that Clark Development Corporation's dismissal of Mr. Antonio B. Salenga had been upheld by the National Labor
Relations Commission through a Resolution dated December 5, 2002...

xxx xxx xxx

As it is, the said Resolution dismissed the Complaint filed by Mr. Salenga for being without merit.
Consequently, he is not entitled to receive any retirement pay from the corporation.

Meanwhile, petitioner Salenga filed a second Motion for Reconsideration of the 5 December 2002 Resolution of the NLRC,

reiterating his claim that it should not have entertained the imperfect appeal, absent a proper verification and certification against

forum-shopping from the duly authorized representative of respondent CDC. Without that authority, neither could the OGCC act on

behalf of the corporation.

The OGCC, meanwhile, resurrected its old defense that the NLRC had no jurisdiction over the case, because petitioner Salenga

was a corporate officer.

The parties underwent several hearings before the NLRC First Division. During these times, petitioner Salenga demanded from

the OGCC to present a board resolution authorizing it or any other person to represent the corporation in the proceedings. This, the

OGCC failed to do.

After giving due course to the Motion for Reconsideration filed by petitioner Salenga, the NLRC issued a Resolution [16] on 10

September 2003, partially granting the motion. This time, the First Division of the NLRC held that, absent a board resolution authorizing

Timbol-Roman to file the appeal on behalf of respondent CDC, the appeal was not perfected and was thus a mere scrap of paper. In

other words, the NLRC had no jurisdiction over the appeal filed before it.

The NLRC further held that respondent CDC had failed to show that petitioner Salengas dismissal was pursuant to a valid

corporate reorganization or board resolution. It also deemed respondent estopped from claiming that there was indeed a redundancy,

considering that petitioner Salenga had been reinstated to his position as head executive assistant. While it granted the award of moral

damages, it nevertheless denied exemplary damages. Thus, the dispositive portion of its Decision reads:

WHEREFORE, premises considered, the complainants Motion for Reconsideration is GRANTED and We set
aside our Resolution of December 5, 2002. The Decision of the Labor Arbiter dated February 29, 2000 is REINSTATED
with the MODIFICATION that:

1.) Being a nominal party, respondent Rufo Colayco is declared to be not jointly and severally liable with
respondent Clark Development Corporation;

2.) Respondent Clark Development Corporation is ordered to pay the complainant his full backwages and
other monetary claims to which he is entitled under the decision of the Labor Arbiter;

3.) Respondent CDC is likewise ordered to pay the complainant moral and exemplary damages as provided
under the Labor Arbiters Decision; and

4.) All other money claims are DENIED for lack of merit.

Page 102 of 205

 In the meantime, respondent CDC is ordered to pay the complainant his retirement benefits without further
delay.

SO ORDERED.[17]

On 3 October 2003, the OGCC filed a Motion for Reconsideration[18] despite the absence of a verification and the certification

against forum shopping.

On 21 January 2004, the motion was denied by the NLRC for lack of merit.[19]

On 5 February 2004, the executive clerk of the NLRC First Division entered the judgment on the foregoing case. Thereafter,

on 9 February 2004, the NLRC forwarded the entire records of the case to the NLRC-RAB III Office in San Fernando, Pampanga for

appropriate action.

On 4 March 2004, petitioner Salenga filed a Motion for Issuance of Writ of Execution before the NLRC-RAB III, Office of LA

Henry D. Isorena. The OGCC opposed the motion on the ground that it had filed with the CA a Petition for Certiorari seeking the

reversal of the NLRC Decision dated 30 July 2001 and the Resolutions dated 10 September 2003 and 21 January 2004, respectively.

It is noteworthy that, again, there was no board resolution attached to the Petition authorizing its filing.

Despite the pending Petition with the CA, LA Isorena issued a Writ of Execution enforcing the 10 September 2003 Resolution

of the NLRC. On 1 April 2004, the LA issued an Order[20] to the manager of the Philippine National Bank, Clark Branch, Angeles City,

Pampanga, to immediately release in the name of NLRC-RAB III the amount of P3,222,400 representing partial satisfaction of the

judgment award, including the execution fee of P31,720.

Respondent CDC filed with the CA in February 2004 a Petition for Certiorari with a prayer for the issuance of a temporary

restraining order and/or a writ of preliminary injunction. However, the Petition still lacked a board resolution from the board of directors

of respondent corporation authorizing its then President Angeles to verify and certify the Petition on behalf of the board. It was only

on 16 March 2004 that counsel for respondent filed a Manifestation/Motion[21] with an attached Secretarys Certificate containing the

boards Resolution No. 86, Series of 2001. The Resolution authorized Angeles to represent respondent corporation in prosecuting,

maintaining, or compromising any lawsuit in connection with its business.

Meanwhile, in the proceedings before LA Isorena, both respondent CDCs legal department and the OGCC on 6 April 2004 filed

their respective Motions to Quash Writ of Execution.[22] They both cited the failure to afford to respondent due process in the issuance

of the writ. They claimed that the pre-conference hearing on the execution of the judgment had not pushed through. They also

reiterated that the Petition for Certiorari dated 11 February 2004 was still pending with the CA.

Both motions were denied by LA Isorena for lack of factual and legal bases.

On 6 May 2004, respondent filed with LA Isorena another Motion to Quash Writ of Execution, again reiterating the pending

Petition with the CA.

This active exchange of pleadings and motions and the delay in the payment of his money claims eventually led petitioner

Salenga to file an Omnibus Motion[23] before LA Isorena. In his motion, he recomputed the amount due him representing back wages,

other benefits or allowances, legal interests and attorneys fees. He also prayed for the computation of his retirement benefits plus

interests in accordance with R.A. 8291[24] and R.A. 1616.[25] He insisted that since respondent CDC was a government-owned and -

Page 103 of 205

controlled corporation (GOCC), his previous government service totalling 40 years must also be credited in the computation of his

retirement pay. Thus, he demanded the payment of the total amount of P23,920,772.30, broken down as follows:

A. From the illegal dismissal suit: (In Philippine peso)

a. Recomputed award 3,758,786
b. Legal interest 5,089,342.58
c. Attorneys fees 1,196,052.80
d. Litigation expenses 250,000
B. Retirement pay
a. Retirement gratuity 6,987,944
b. Unused vacation and sick leave 1,440,328
c. Legal interest 4,050,544.96
d. Attorneys fees 1,147,781.90

On 11 May 2004, the CA issued a Resolution[26] ordering petitioner Salenga to comment on the Petition and holding in abeyance

the issuance of a temporary restraining order.

The parties thereafter filed their respective pleadings.

On 19 July 2004, the CA temporarily restrained the NLRC from enforcing the Decision dated 29 February 2000 for a period of

60 days.[27] After the lapse of the 60 days, LA Isorena issued a Notice of Hearing/Conference scheduled for 1 October 2004 on

petitioners Omnibus Motion dated 7 May 2004.

Meanwhile, on 24 September 2004, the CA issued another Resolution,[28] this time denying the application for the issuance of

a writ of preliminary injunction, after finding that the requisites for the issuance of the writ had not been met.

Respondent CDC subsequently filed a Supplemental Petition[29] with the CA, challenging the computation petitioner Salenga

made in his Omnibus Motion filed with the NLRC. Respondent alleged that the examiner had erred in including the other years of

government service in the computation of retirement benefits. It claimed that, since respondent corporation was created under the

Corporation Code, petitioner Salenga was not covered by civil service laws. Hence, his retirement benefits should only be limited to

the number of years he had been employed by respondent.

Subsequently, respondent CDC filed an Omnibus Motion[30] to admit the Supplemental Petition and to reconsider the CAs

Resolution denying the issuance of a writ of preliminary injunction. In the motion, respondent alleged that petitioner Salenga had been

more than sufficiently paid the amounts allegedly due him, including the award made by LA Darlucio. On 12 March 2002, respondent

CDC had issued a check amounting to P852,916.29, representing petitioners retirement pay and terminal pay. Meanwhile, on 2 April

2004, P3,254,120 representing the initial award was debited from the account of respondent CDC.

On 7 February 2005, respondent CDC filed a Motion[31] once again asking the CA to issue a writ of preliminary injunction in

the light of a scheduled 14 February 2005 conference called by LA Mariano Bactin, who had taken over the case from LA Isorena.

At the 14 February 2005 hearing, the parties failed to reach an amicable settlement and were thus required to submit their

relevant pleadings and documents in support of their respective cases.

On 16 February 2005, the CA issued a Resolution[32] admitting the Supplemental Petition filed by respondent, but denying the

prayer for the issuance of an injunctive writ.

Thereafter, on 8 March 2005, LA Bactin issued an Order[33] resolving the Omnibus Motion filed by petitioner Salenga for the

recomputation of the monetary claims due him. In the Order, LA Bactin denied petitioners Motion for the recomputation of the award

Page 104 of 205

of back wages, benefits, allowances and privileges based on the 29 February 2000 Decision of LA Darlucio. LA Bactin held that since

the Decision had become final and executory, he no longer had jurisdiction to amend or to alter the judgment.

Anent the second issue of the computation of retirement benefits, LA Bactin also denied the claim of petitioner Salenga,

considering that the latters retirement benefits had already been paid. The LA, however, did not rule on whether petitioner was entitled

to retirement benefits, either under the Government Service Insurance System (GSIS) or under the Social Security System (SSS), and

held that this issue was beyond the expertise and jurisdiction of a LA.

Petitioner Salenga thereafter appealed to the NLRC, which granted the appeal in a Resolution[34] dated 22 July 2005. First, it

was asked to resolve the issue of the propriety of having the Laguesma Law Office represent respondent CDC in the proceedings before

the LA. The said law firm entered its appearance as counsel for respondent during the pre-execution conference/hearing on 1 October

2004. On this issue, the NLRC held that respondent corporations legal department, which had previously been representing the

corporation, was not validly substituted by the Laguesma Law Office. In addition, the NLRC held that respondent had failed to comply

with Memorandum Circular No. 9, Series of 1998, which strictly prohibits the hiring of lawyers of private law firms by GOCCs without

the prior written conformity and acquiescence of the Office of Solicitor General, as the case may be, and the prior written concurrence

of the Commission on Audit (COA). Thus, the NLRC held that all actions and submissions undertaken by the Laguesma Law Office on

behalf of respondent were null and void.

The second issue raised before the NLRC was whether LA Bactin acted without jurisdiction in annulling and setting aside the

formers final and executory judgment contained in its 10 September 2003 Resolution, wherein it held that the appeal had not been

perfected, absent the necessary board resolution allowing or authorizing Timbol-Roman and Atty. Mallari to file the appeal. On this

issue, the NLRC stated:

The final and executory judgment in this case is clearly indicated in the dispositive portion of Our Resolution
promulgated on September 10, 2003 GRANTING complainants motion for reconsideration, SETTING ASIDE Our
Resolution of December 5, 2002, and REINSTATING the Decision of the Labor Arbiter dated February 29, 2000 with
the following modification[s]: (1) declaring respondent Rufo Colayco not jointly and severally liable with respondent
Clark Development Corporation; (2) ordering respondent CDC to pay the complainant his full backwages and other
monetary claims to which he is entitled under the decision of the Labor Arbiter; (3) ordering respondent CDC to pay
complainant moral and exemplary damages as provided under the Labor Arbiters Decision; and (4) ordering
respondent CDC to pay the complainant his retirement benefits without further delay. This was entered in the Book
of Entry of Judgment as final and executory effective as of February 2, 2004.

Implementing this final and executory judgment, Arbiter Isorena issued an Order dated May 24, 2004,
DENYING respondents Motion to Quash the Writ of Execution dated March 22, 2004, correctly stating thusly:

Let it be stressed that once a decision has become final and executory, it becomes the
ministerial duty of this Office to issue the corresponding writ of execution. The rationale behind it
is based on the fact that the winning party has suffered enough and it is the time for him to enjoy
the fruits of his labor with dispatch. The very purpose of the pre-execution conference is to explore
the possibility for the parties to arrive at an amicable settlement to satisfy the judgment award
speedily, not to delay or prolong its implementation.

Thus, when Arbiter Bactin, who took over from Arbiter Isorena upon the latters filing for leave of absence
due to poor health in January 2005, issued the appealed Order nullifying, instead of implementing, the final and
executory judgment of this Commission, the labor arbiter a quo acted WITHOUT JURISDICTION.[35]

xxx xxx xxx

WHEREFORE, premises considered, the appeal of herein complainant is hereby GRANTED, and We declare
NULL AND VOID the appealed Order of March 8, 2005 and SET ASIDE said Order; We direct the immediate issuance
of the corresponding Alias Writ of Execution to enforce the final and executory judgment of this Commission as
contained in Our September 10, 2003 Resolution.

SO ORDERED.[36]
Page 105 of 205
 Unwilling to accept the above Resolution of the NLRC, the Laguesma Law Office filed a Motion for Reconsideration dated 29

August 2005 with the NLRC. Again, the motion lacked proper verification and certification against non-forum shopping.

In the meantime, the OGCC also filed with the CA a Motion for the Issuance of a Writ of Preliminary Injunction dated 30

August 2005[37] against the NLRCs 22 July 2005 Resolution. The OGCC alleged that the issues in the Resolution addressed monetary

claims that were raised by petitioner Salenga only in his Omnibus Motion dated 7 May 2004 or after the issuance of the 10 September

2003 Decision of LA Darlucio. Thus, the OGCC insisted that the NLRC had no jurisdiction over the issue, for the matter was still pending

with the CA.

The OGCC likewise filed another Motion for Reconsideration[38] dated 31 August 2005 with the NLRC. The OGCC maintained

that it was only acting in a collaborative manner with the legal department of respondent CDC, for which the former remained the lead

counsel. The OGCC reiterated that, as the statutory counsel of GOCCs, it did not need authorization from them to maintain a case, and

thus, LA Bactin had jurisdiction over that case. Finally, it insisted that petitioner Salenga was not covered by civil service laws on

retirement, the CDC having been created under the Corporation Code.

On 13 September 2005, the CA promulgated the assailed Decision. Relying heavily on the reports of Reviewer Arbiters Cristeta

D. Tamayo and Thelma M. Concepcion, it held that petitioner Salenga was a corporate officer. Thus, the issue before the NLRC was an

intra-corporate dispute, which should have been lodged with the Securities and Exchange Commission (SEC), which had jurisdiction

over the case at the time the issue arose. The CA likewise held that the NLRC committed grave abuse of discretion when it allowed

and granted petitioner Salengas second Motion for Reconsideration, which was a prohibited pleading.

Petitioner subsequently filed a Motion for Reconsideration on 7 October 2005, alleging that the CA committed grave abuse of

discretion in reconsidering the findings of fact, which had already been found to be conclusive against respondent; and in taking

cognizance of the latters Petition which had not been properly verified.

The CA, finding no merit in petitioners allegations, denied the motion in its 17 August 2006 Resolution.

On 4 September 2006, petitioner Salenga filed a Motion for Extension of Time to File a Petition for Review on Certiorari under

Rule 45, praying for an extension of fifteen (15) days within which to file the Petition. The motion was granted through this Courts

Resolution dated 13 September 2006. The case was docketed as G.R. No. 174159.

On 25 September 2006, however, petitioner filed a Manifestation[39] withdrawing the motion. He manifested before us that he

would instead file a Petition for Certiorari under Rule 65, which was eventually docketed as G.R. No. 174941. On 7 July 2008, this

Court, through a Resolution, considered the Petition for Review in G.R. No. 174159 closed and terminated.

Petitioner raises the following issues for our resolution:

I.

The Court of Appeals acted without jurisdiction in reviving and re-litigating the factual issues and matters of
petitioners illegal dismissal and retirement benefits.

II.

The Court of Appeals had no jurisdiction to entertain the original Petition as a remedy for an appeal that had actually
not been filed, absent a board resolution allowing the appeal.

III.

The Court of Appeals acted with grave abuse of discretion when it did the following:
Page 106 of 205
 a. It failed to dismiss the original and supplemental Petitions despite the lack of a board resolution
authorizing the filing thereof.

b. It failed to dismiss the Petitions despite the absence of a proper verification and certification
against non-forum shopping.

c. It failed to dismiss the Petitions despite respondents failure to inform it of the pending
proceedings before the NLRC involving the same issues.

d. It failed to dismiss the Petitions on the ground of forum shopping.

e. It did not dismiss the Petition when respondent failed to attach to it certified true copies of the
assailed NLRC 30 July 2001 Decision; 10 September 2003 Resolution; 21 January 2004
Resolution; copies of material portions of the record as are referred to therein; and copies of
pleadings and documents relevant and pertinent thereto.

f. It did not act on respondents failure to serve on the Office of the Solicitor General a copy of
the pleadings, motions and manifestations the latter had filed before the Court of Appeals, as
well as copies of pertinent court resolutions and decisions, despite the NLRC being a party to the
present case.

g. It disregarded the findings of fact and conclusions of law arrived at by LA Darlucio, subjecting
them to a second analysis and evaluation and supplanting them with its own findings.

h. It granted the Petition despite respondents failure to show that the NLRC committed grave
abuse of discretion in rendering the latters 30 July 2001 Decision, 10 September 2003 Resolution
and 21 January 2004 Resolution.

i. It dismissed the complaint for illegal dismissal and ordered the restitution of the P3,222,400
already awarded to petitioner, plus interest thereon.

In its defense, private respondent insists that the present Petition for Certiorari under Rule 65 is an improper remedy to

question the Decision of the CA, and thus, the case should be dismissed outright. Nevertheless, it reiterates that private petitioner was

a corporate officer whose employment was dependent on board action. As such, private petitioners employment was an intra-corporate

controversy cognizable by the SEC, not the NLRC. Private respondent also asserts that it has persistently sought the reversal of LA

Darlucios Decision by referring to the letters sent to the OGCC, as well as Verification and Certificate against forum-shopping. However,

these documents were signed only during Angeles time as private respondents president/CEO, and not of the former presidents.

Moreover, private respondent contends that private petitioner is not covered by civil service laws, thus, his years in government service

are not creditable for the purpose of determining the total amount of retirement benefits due him. In relation to this, private respondent

enumerates the amounts already paid to private petitioner.

The Courts Ruling

The Petition has merit.

This Court deigns it proper to collapse the issues in this Petition to simplify the matters raised in what appears to be a

convoluted case. First, we need to determine whether the NLRC and the CA committed grave abuse of discretion amounting to lack or

excess of jurisdiction, when they entertained respondents so-called appeal of the 29 February 2000 Decision rendered by LA Darlucio.

Second, because of the turn of events, a second issue the computation of retirement benefits cropped up while the first case

for illegal dismissal was still pending. Although the second issue may be considered as separate and distinct from the illegal dismissal

case, the issue of the proper computation of the retirement benefits was nevertheless considered by the relevant administrative bodies,

adding more confusion to what should have been a simple case to begin with.

The NLRC had no jurisdiction

Page 107 of 205

to entertain the appeal filed by

Timbol-Roman and former

CDC CEO Colayco.

To recall, on 29 February 2000, LA Darlucio rendered a Decision in favor of petitioner, stating as follows:

xxxComplainant cannot be considered as a corporate officer because at the time of his termination, he was
holding the position of Head Executive Assistant which is categorized as a Job Level 12 position that is not subject to
the election or appointment by the Board of Directors. The approval of Board Resolution Nos. 200 and 214 by the
Board of Directors in its meeting held on February 11, 1998 and March 25, 1998 clearly refers to the New CDC Salary
Structure where the pay adjustment was based and not to complainants relief as Vice-President, Joint Ventures and
Special Projects. While it is true that his previous positions are classified as Job Level 13 which are subject to board
confirmation, the status of his appointment was permanent in nature. In fact, he had undergone a six-month
probationary period before having acquired the permanency of his appointment. However, due to the refusal of the
board under then Chairman Victorino Basco to confirm his appointment, he was demoted to the position of Head
Executive Assistant. Thus, complainant correctly postulated that he was not elected to his position and his tenure is
not dependent upon the whim of the boardxxx

xxx xxx xxx

Anent the second issue, this Office finds and so holds that respondents have miserably failed to show or
establish the valid cause in terminating the services of complainant.

Xxx xxx xxx

In the case at bar, respondents failed to adduce any evidence showing that the position of Head Executive
Assistant is superfluous. In fact, they never disputed the argument advanced by complainant that the position of
Head Executive Assistant was classified as a regular position in the Position Classification Study which is an essential
component of the Organizational Study that had been approved by the CDC board of directors in 1995 and still
remains intact as of the end of 1998. Likewise, studies made since 1994 by various management consultancy groups
have determined the need for the said position in the Office of the President/CEO in relation to the vision, mission,
plans, programs and overall corporate goals and objectives of respondent CDC. There is no evidence on record to
show that the position of Head Executive Assistant was abolished by the Board of Directors in its meeting held in the
morning of September 22, 1998. Theminutes of the meeting of the board on said date, as well as its other three
meetings held in the month of September 1998 (Annexes B, C, D and E, Complainants Reply), clearly reveal that no
abolition or reorganization plan was discussed by the board. Hence, the ground of redundancy is merely a device
made by respondent Colayco in order to ease out the complainant from the respondent corporation.

Moreover, the other ground for complainants dismissal is unclear and unknown to him as respondent did
not specify nor inform the complainant of the alleged recent developmentsxxx

This Office is also of the view that complainant was not accorded his right to due process prior to his
termination. The law requires that the employer must furnish the worker sought to be dismissed with two (2) written
notices before termination may be validly effected: first, a notice apprising the employee of the particular acts or
omissions for which his dismissal is sought and, second, a subsequent notice informing the employee of the decision
to dismiss him. In the case at bar, complainant was not apprised of the grounds of his termination. He was not given
the opportunity to be heard and defend himselfxxx[40]

The OGCC, representing respondent CDC and former CEO Colayco separately appealed from the above Decision. Both alleged

that they had filed the proper bond to cover the award granted by LA Darlucio.

It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-

in-interest themselves. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark

Development Corporation as the employer.

A corporation can only exercise its powers and transact its business through its board of directors and through its officers and

agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board

Page 108 of 205

of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly

authorized for the purpose by corporate bylaws or by a specific act of the board. The purpose of verification is to secure an assurance

that the allegations in the pleading are true and correct and have been filed in good faith.[41]

Thus, we agree with petitioner that, absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed

the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be considered as the

appellant and employer referred to by Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure, which state:

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

(b) The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was filed,
his answer or reply to appellant's memorandum of appeal, not later than ten (10) calendar days from receipt thereof.
Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his answer or reply
within the said period may be construed as a waiver on his part to file the same.

(c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the
Commission shall limit itself to reviewing and deciding specific issues that were elevated on appeal.

SECTION 5. APPEAL FEE. -The appellant shall pay an appeal fee of one hundred fifty pesos (P150.00) to
the Regional Arbitration Branch or Regional Office, and the official receipt of such payment shall be attached to the
records of the case.

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

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

(a) a joint declaration under oath by the employer, his counsel, and the bonding company, attesting
that the bond posted is genuine, and shall be in effect until final disposition of the case.

(b) a copy of the indemnity agreement between the employer-appellant and bonding company;
and

(c) a copy of security deposit or collateral securing the bond.

A certified true copy of the bond shall be furnished by the appellant to the appellee who shall verify the
regularity and genuineness thereof and immediately report to the Commission any irregularity.

Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause
the immediate dismissal of the appeal.

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

The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph
shall not stop the running of the period to perfect an appeal. (Emphasis supplied)

Page 109 of 205

 The OGCC failed to produce any valid authorization from the board of directors despite petitioner Salengas repeated demands.

It had been given more than enough opportunity and time to produce the appropriate board resolution, and yet it failed to do so. In

fact, many of its pleadings, representations, and submissions lacked board authorization.

We cannot agree with the OGCCs attempt to downplay this procedural flaw by claiming that, as the statutorily assigned

counsel for GOCCs, it does not need such authorization. In Constantino-David v. Pangandaman-Gania,[42] we exhaustively explained

why it was necessary for government agencies or instrumentalities to execute the verification and the certification against forum-

shopping through their duly authorized representatives. We ruled thereon as follows:

But the rule is different where the OSG is acting as counsel of record for a government agency. For in such
a case it becomes necessary to determine whether the petitioning government body has authorized the
filing of the petition and is espousing the same stand propounded by the OSG. Verily, it is not improbable
for government agencies to adopt a stand different from the position of the OSG since they weigh not
just legal considerations but policy repercussions as well. They have their respective mandates for which
they are to be held accountable, and the prerogative to determine whether further resort to a higher
court is desirable and indispensable under the circumstances.

The verification of a pleading, if signed by the proper officials of the client agency itself, would
fittingly serve the purpose of attesting that the allegations in the pleading are true and correct and not
the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. Of
course, the OSG may opt to file its own petition as a People's Tribune but the representation would not be for a client
office but for its own perceived best interest of the State.

The case of Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc., is not also a precedent that
may be invoked at all times to allow the OSG to sign the certificate of non-forum shopping in place of the real party-
in-interest. The ruling therein mentions merely that the certification of non-forum shopping executed by the OSG
constitutes substantial compliancewith the rule since the OSG is the only lawyer for the petitioner, which is a
government agency mandated under Section 35, Chapter 12, Title III, Book IV, of the 1987 Administrative Code
(Reiterated under Memorandum Circular No. 152 dated May 17, 1992) to be represented only by the Solicitor General.

By its very nature, substantial compliance is actually inadequate observance of the requirements of a rule
or regulation which are waived under equitable circumstances to facilitate the administration of justice there being no
damage or injury caused by such flawed compliance. This concept is expressed in the statement the rigidity of a
previous doctrine was thus subjected to an inroad under the concept of substantial compliance. In every inquiry on
whether to accept substantial compliance, the focus is always on the presence of equitable conditions to administer
justice effectively and efficiently without damage or injury to the spirit of the legal obligation.

xxx xxx xxx

The fact that the OSG under the 1987 Administrative Code is the only lawyer for a government
agency wanting to file a petition, or complaint for that matter, does not operate per se to vest the OSG
with the authority to execute in its name the certificate of non-forum shopping for a client office. For, in
many instances, client agencies of the OSG have legal departments which at times inadvertently take
legal matters requiring court representation into their own hands without the intervention of the OSG.
Consequently, the OSG would have no personal knowledge of the history of a particular case so as to
adequately execute the certificate of non-forum shopping; and even if the OSG does have the relevant
information, the courts on the other hand would have no way of ascertaining the accuracy of the OSG's
assertion without precise references in the record of the case. Thus, unless equitable circumstances
which are manifest from the record of a case prevail, it becomes necessary for the concerned government
agency or its authorized representatives to certify for non-forum shopping if only to be sure that no other
similar case or incident is pending before any other court.

We recognize the occasions when the OSG has difficulty in securing the attention and signatures of officials
in charge of government offices for the verification and certificate of non-forum shopping of an initiatory pleading.
This predicament is especially true where the period for filing such pleading is non-extendible or can no longer be
further extended for reasons of public interest such as in applications for the writ of habeas corpus, in election cases
or where sensitive issues are involved. This quandary is more pronounced where public officials have stations outside
Metro Manila.

But this difficult fact of life within the OSG, equitable as it may seem, does not excuse it
from wantonly executing by itself the verification and certificate of non-forum shopping. If the OSG is compelled by
circumstances to verify and certify the pleading in behalf of a client agency, the OSG should at least endeavor to

Page 110 of 205

 inform the courts of its reasons for doing so, beyond instinctively citing City Warden of the Manila City Jail v.
Estrella and Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc.

Henceforth, to be able to verify and certify an initiatory pleading for non-forum shopping when
acting as counsel of record for a client agency, the OSG must (a) allege under oath the circumstances
that make signatures of the concerned officials impossible to obtain within the period for filing the
initiatory pleading; (b) append to the petition or complaint such authentic document to prove that the
party-petitioner or complainant authorized the filing of the petition or complaint and understood and
adopted the allegations set forth therein, and an affirmation that no action or claim involving the same
issues has been filed or commenced in any court, tribunal or quasi-judicial agency; and, (c) undertake
to inform the court promptly and reasonably of any change in the stance of the client agency.

Anent the document that may be annexed to a petition or complaint under letter (b) hereof, the
letter-endorsement of the client agency to the OSG, or other correspondence to prove that the subject-
matter of the initiatory pleading had been previously discussed between the OSG and its client, is
satisfactory evidence of the facts under letter (b) above. In this exceptional situation where the OSG
signs the verification and certificate of non-forum shopping, the court reserves the authority to
determine the sufficiency of the OSG's action as measured by the equitable considerations discussed
herein. (Emphasis ours, italics provided)

The ruling cited above may have pertained only to the Office of the Solicitor Generals representation of government agencies

and instrumentalities, but we see no reason why this doctrine cannot be applied to the case at bar insofar as the OGCC is concerned.

While in previous decisions we have excused transgressions of these rules, it has always been in the context of upholding

justice and fairness under exceptional circumstances. In this case, though, respondent failed to provide any iota of rhyme or reason

to compel us to relax these requirements. Instead, what is clear to us is that the so-called appeal was done against the instructions of

then President/CEO Naguiat not to file an appeal. Timbol-Roman, who signed the Verification and the Certification against forum-

shopping, was not even an authorized representative of the corporation. The OGCC was equally remiss in its duty. It ought to have

advised respondent corporation, the proper procedure for pursuing an appeal. Instead, it maintained the appeal and failed to present

any valid authorization from respondent corporation even after petitioner had questioned OGCCs authority all throughout the

proceedings. Thus, it is evident that the appeal was made in bad faith.

The unauthorized and overzealous acts of officials of respondent CDC and the OGCC have led to a waste of the governments

time and resources. More alarmingly, they have contributed to the injustice done to petitioner Salenga. By taking matters into their

own hands, these officials let the case drag on for years, depriving him of the enjoyment of property rightfully his. What should have

been a simple case of illegal dismissal became an endless stream of motions and pleadings.

Time and again, we have said that the perfection of an appeal within the period prescribed by law is jurisdictional, and the

lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment.[43] Thus, there is no other recourse but to

respect the findings and ruling of the labor arbiter. Clearly, therefore, the CA committed grave abuse of discretion in entertaining the

Petition filed before it after the NLRC had dismissed the case based on lack of jurisdiction. The assailed CA Decision did not even resolve

petitioner Salengas consistent and persistent claim that the NLRC should not have taken cognizance of the appeal in the first place,

absent a board resolution. Thus, LA Darlucios Decision with respect to the liability of the corporation still stands.

However, we note from that Decision that Rufo Colayco was made solidarily liable with respondent corporation. Colayco

thereafter filed his separate appeal. As to him, the NLRC correctly held in its 30 July 2001 Decision that he may not be held solidarily

responsible to petitioner. As a result, it dropped him as respondent. Notably, in the case at bar, petitioner does not question that

ruling.

Page 111 of 205

 Based on the foregoing, all other subsequent proceedings regarding the issue of petitioners dismissal are null and void for

having been conducted without jurisdiction. Thus, it is no longer incumbent upon us to rule on the other errors assigned in the matter

of petitioner Salengas dismissal.

CDC is not under the civil service laws on retirement.

While the case was still persistently being pursued by the OGCC, a new issue arose when petitioner Salenga reached retirement

age: whether his retirement benefits should be computed according to civil service laws.

To recall, the issue of how to compute the retirement benefits of petitioner was raised in his Omnibus Motion dated 7 May

2004 filed before the NLRC after it had reinstated LA Darlucios original Decision. The issue was not covered by petitioners Complaint

for illegal dismissal, but was a different issue altogether and should have been properly addressed in a separate Complaint. We cannot

fault petitioner, though, for raising the issue while the case was still pending with the NLRC. If it were not for the appeal undertaken

by Timbol-Roman and the OGCC through Atty. Mallari, the issue would have taken its proper course and would have been raised in a

more appropriate time and manner. Thus, we deem it proper to resolve the matter at hand to put it to rest after a decade of litigation.

Petitioner Salenga contends that respondent CDC is covered by the GSIS Law. Thus, he says, the computation of his retirement

benefits should include all the years of actual government service, starting from the original appointment forty (40) years ago up to

his retirement.

Respondent CDC owes its existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the

implementing and operating arm of the Bases Conversion and Development Authority (BCDA) tasked to manage the Clark Special Economic

Zone (CSEZ). Expressly, respondent was formed in accordance with Philippine corporation laws and existing rules and regulations promulgated

by the SEC pursuant to Section 16 of Republic Act (R.A.) 7227.[44] CDC, a government-owned or -controlled corporation without an original

charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil service embraces only those government-

owned or -controlled corporations with original charter. As such, respondent CDC and its employees are covered by the Labor Code and

not by the Civil Service Law, consistent with our ruling in NASECO v. NLRC,[45] in which we established this distinction. Thus,

in Gamogamo v. PNOC Shipping and Transport Corp.,[46] we held:

Retirement results from a voluntary agreement between the employer and the employee whereby the latter
after reaching a certain age agrees to sever his employment with the former.
Since the retirement pay solely comes from Respondent's funds, it is but natural that Respondent shall
disregard petitioner's length of service in another company for the computation of his retirement benefits.
Petitioner was absorbed by Respondent from LUSTEVECO on 1 August 1979. Ordinarily, his creditable service
shall be reckoned from such date. However, since Respondent took over the shipping business of LUSTEVECO and
agreed to assume without interruption all the service credits of petitioner with LUSTEVECO, petitioner's creditable
service must start from 9 November 1977 when he started working with LUSTEVECO until his day of retirement on
1 April 1995. Thus, petitioner's creditable service is 17.3333 years.
We cannot uphold petitioner's contention that his fourteen years of service with the DOH should be
considered because his last two employers were government-owned and controlled corporations, and fall under the
Civil Service Law. Article IX(B), Section 2 paragraph 1 of the 1987 Constitution states
Sec. 2. (1)The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations with original
charters.
It is not at all disputed that while Respondent and LUSTEVECO are government-owned and
controlled corporations, they have no original charters; hence they are not under the Civil Service Law.

Page 112 of 205

 In Philippine National Oil Company-Energy Development Corporation v. National Labor Relations Commission, we
ruled:
xxx Thus under the present state of the law, the test in determining whether a government-owned
or controlled corporation is subject to the Civil Service Law are [sic] the manner of its creation,
such that government corporations created by special charter(s) are subject to its provisions while
those incorporated under the General Corporation Law are not within its coverage. (Emphasis
supplied)

Hence, petitioner Salenga is entitled to receive only his retirement benefits based only on the number of years he was

employed with the corporation under the conditions provided under its retirement plan, as well as other benefits given to him by

existing laws.

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 174941 is partially GRANTED. The Decision of LA Darlucio

is REINSTATED insofar as respondent corporations liability is concerned. Considering that petitioner did not maintain the action

against Rufo Colayco, the latter is not solidarily liable with respondent Clark Development Corporation.

The case is REMANDED to the labor arbiter for the computation of petitioners retirement benefits in accordance with the

Social Security Act of 1997 otherwise known as Republic Act No. 8282, deducting therefrom the sums already paid by respondent CDC.

If any, the remaining amount shall be subject to the legal interest of 6% per annum from the filing date of petitioners Omnibus Motion

on 11 May 2004 up to the time this judgment becomes final and executory. Henceforth, the rate of legal interest shall be 12% until

the satisfaction of judgment.

SO ORDERED.

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales & Olongapo City, Branch III and
SERAPIO ABUG, respondents.

CRUZ, J:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known as the Labor Code, reading as
follows:

(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting, 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.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City alleging that Serapio
Abug, private respondent herein, "without first securing a license from the Ministry of Labor as a holder of authority to operate a fee-
charging employment agency, did then and there wilfully, unlawfully and criminally operate a private fee charging employment
agency by charging fees and expenses (from) and promising employment in Saudi Arabia" to four separate individuals named
therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1

Page 113 of 205

Abug filed a motion to quash on the ground that the informations did not charge an offense because he was accused of illegally
recruiting only one person in each of the four informations. Under the proviso in Article 13(b), he claimed, there would be illegal
recruitment only "whenever two or more persons are in any manner promised or offered any employment for a fee. " 2

Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June 24 and September 17,
1981. The prosecution is now before us on certiorari. 3

The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation to Article 16 of the Labor
Code; hence, Article 13(b) is not applicable. However, as the first two cited articles penalize acts of recruitment and placement
without proper authority, which is the charge embodied in the informations, application of the definition of recruitment and
placement in Article 13(b) is unavoidable.

The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned in this article should
involve dealings with two or mre persons as an indispensable requirement. On the other hand, the petitioner argues that the
requirement of two or more persons is imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other acts mentioned in the body of the article may involve
even only one person and are not necessarily for profit.

Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of employment if the
purpose was to apply the requirement of two or more persons to all the acts mentioned in the basic rule. For its part, the petitioner
does not explain why dealings with two or more persons are needed where the recruitment and placement consists of an offer or
promise of employment but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
(of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely
to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it
is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of
the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) win constitute recruitment and placement even if only one prospective worker is involved.
The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to
two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment
and placement. The words "shall be deemed" create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of a public officer to
produce upon lawful demand funds or property entrusted to his custody. Such failure shall be prima facie evidence that he has put
them to personal use; in other words, he shall be deemed to have malversed such funds or property. In the instant case, the word
"shall be deemed" should by the same token be given the force of a disputable presumption or of prima facie evidence of engaging in
recruitment and placement. (Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of debates and
deliberations that would otherwise have been available if the Labor Code had been enacted as a statute rather than a presidential
decree. The trouble with presidential decrees is that they could be, and sometimes were, issued without previous public discussion or
consultation, the promulgator heeding only his own counsel or those of his close advisers in their lofty pinnacle of power. The not
infrequent results are rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain esoteric
provisions that one cannot read against the background facts usually reported in the legislative journals.

At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which
has victimized many Filipino workers seeking a better life in a foreign land, and investing hard- earned savings or even borrowed
funds in pursuit of their dream, only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four informations against the private
respondent reinstated. No costs.

SO ORDERED.

Teehankee, CJ, Abad Santos, Feria, Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr. and Paras, JJ., concur.

Page 114 of 205

 G.R. No. 84082 March 13, 1991

HELLENIC PHILIPPINE SHIPPING, INC., petitioner,

vs.
EPIFANIO C. SIETE and NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondents.

Prudencio Cruz for petitioner.

Robiso, Chavez & Romero for private respondent.

CRUZ, J.:

Challenged in this petition is the decision of the respondent NLRC holding Hellenic Philippine Shipping Company liable for the illegal
dismissal of Capt. Epifanio Siete, herein private respondent, and awarding him salaries and other benefits corresponding to the
unexpired portion of his employment contract. Enforcement of this decision has meanwhile been held in abeyance pursuant to our
temporary restraining order dated August 3, 1988.

Siete was employed on May 22, 1985, as Master of M/V Houda G by Sultan Shipping Co., Ltd., through its crewing agent, herein
petitioner. He boarded the vessel on May 24, 1985, at Cyprus. From there, it sailed on June 1, 1985, to El Ferrol, Spain, where it
loaded cargo that it subsequently discharged at Tripoli, Lebanon, from June 25-29, 1985. It then proceeded back to Cyprus, arriving
there on June 30, 1985.

On July 8, 1985, Capt. Wilfredo Lim boarded the vessel and advised Siete that he had instructions from the owners to take over its
command. These instructions were confirmed by a telex sent by Sultan Shipping to Siete on July 10, 1985. Neither Lim nor the telex
indicated the reason for his relief. The private respondent claims this information was also withheld from him by the petitioner upon
his repatriation to Manila.

On July 12, 1985, Siete filed a complaint against the petitioner for illegal dismissal and non-payment of his salary and other benefits
under their employment contract. On September 6, 1985, the petitioner alleged in its answer that the complainant had been
dismissed because of his failure to complete with the instruction of Sultan Shipping to erase the timber load line on the vessel and
for his negligence in the discharge of the cargo at Tripoli that endangered the vessel and stevedores. Siete denied these averments
in his reply dated September 23, 1985, and reiterated that he had not earlier been informed of the cause of his dismissal and
repatriation, either in Cyprus or later in Manila.

Page 115 of 205

After considering the position papers and documentary evidence of the parties, Administrator Tomas D. Achacoso of the Philippine
Overseas Employment Administration (POEA) dismissed the complaint, holding that there was valid cause for Siete's removal.2 The
decision placed much value on the various communications presented by the petitioner to show that Siete was indeed guilty of the
charges that justified his separation.

On January 4, 1988, the private respondent appealed to the NLRC, contending that the records presented by the petitioner were
prepared long after his dismissal and were especially suspect because they came from persons in the employ of Sultan Shipping. He
insisted that he was dismissed without even being informed of the charges against him or given an opportunity to refute them. He
added that, even assuming he was negligent in the unloading of the cargo at Tripoli, this shortcoming did not warrant such a severe
penalty as his dismissal.

In its decision dated June 27, 1988,3 the public respondent reversed the POEA Administrator, holding that the dismissal violated due
process and that the documents submitted by the petitioner were hearsay, self-serving, and not verified. Accordingly, it disposed as
follows:

A new decision is entered finding the dismissal of complainant as illegal. Respondent is hereby ordered to pay to the
complainant his salaries, wages and other benefits corresponding to the unexpired portion of his employment contract with
Sultan Shipping Company, Ltd., dated May 22, 1985.

The petitioner now faults this decision as having been reached with grave abuse of discretion. It contends that the private
respondent had been instructed to erase the timber load line on the vessel; that he had indeed been negligent in supervising the
unloading of the cargo at Tripoli, resulting in the replacement of certain damaged equipment; and that he had not been denied due
process, considering the summary nature of the proceedings that had to be taken in view of the nature of his position. Moreover,
assuming the awards were justified, there was a mistake in their computation because the amount of $400.90 previously collected
by Siete had not been deducted.

Certiorari is denied.

The findings of fact of public respondent are conclusive on this Court, there being no showing that they were reached arbitrarily.
Substantial evidence has established that the private respondent was indeed not notified of the charges against him and that no
investigation was conducted to justify his dismissal. Moreover, the petitioner has failed to prove that Siete had been instructed to
erase the timber load lines and that he had been negligent in the cargo unloading at Tripoli.

The Court notes that the reports submitted by the petitioner to prove its charges were all prepared after the fact of Siete's dismissal
and were signed by its own employees.4

Their motives are necessarily suspect. The mere fact that they have made such reports does not itself prove the charges, which were
investigated ex parte, if at all. It is not denied that Siete was not informed of the charges beforehand or that he was given an
opportunity to refute them. Even after his arrival in Manila, he was kept in the dark about the reason for his dismissal. The excuse of
the petitioner that it itself did not know why he was dismissed, being only a crewing agent of Sultan Shipping, deserves no comment.

The Labor Code provides as follows:

Sec. 1. Security of tenure and due process. No worker shall be dismissed except for a just or authorized cause provided
by law and after due process.

Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the
particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the worker's last known address.

xxx xxx xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated against him in the notice of dismissal within a
reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires.

Sec. 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss him stating
clearly the reasons therefor.

The petitioner argues that whatever defects might have tainted the private respondent's dismissal were subsequently cured when the
charges against him were specified and sufficiently discussed in the position papers submitted by the parties to the POEA. That
argument is unacceptable. The issue before the POEA was in fact the lack of due process in Siete's dismissal. The law requires that
the investigation be conducted before the dismissal, not after. That omission cannot be corrected by the investigation later

Page 116 of 205

conducted by the POEA. As the Solicitor General correctly maintained, the due process requirement in the dismissal process is
different from the due process requirement in the POEA proceeding. Both requirements must be separately observed.

While it is true that in Wenphil Corp. v. NLRC5 and Rubberworld (Phils.) v. NLRC6 the lack of due process before the dismissal of the
employee was deemed corrected by the subsequent administrative proceedings where the dismissed employee was given a chance
to be heard, those cases involved dismissals that were later proved to be for a valid cause. The doctrine in those cases is not
applicable to the case at bar because our findings here is that the dismissal was not justified.

The argument that the afore-quoted provisions are not applicable to the private respondent because he was a managerial employee
must also be rejected. It is not correct to say that managerial employees may be arbitrarily dismissed, at any time and without
cause as established in an appropriate investigation. Managerial employees, no less than rank-and-file laborers, are entitled to due
process. Loss of confidence, which is the usual ground for the removal of the managerial employee, must be established like any
other lawful cause.7 Even if it be assumed that Siete was a managerial employee an issue which, incidentally, was not earlier
raised or resolved the petitioner has not satisfactorily proved the reason for its supposed loss of confidence in him.

It is not true that the vessel would be left unattended if the captain were to be placed under investigation because he would not have
a ready replacement. The petitioner forgets that under Article 627 of the Code of Commerce:

Art. 627. The sailing mate, as the second chief of the vessel and unless the ship agent does not order otherwise, shall take
the place of the captain in case of absence, sickness or death and shall then assume all Ins powers, obligations and
liabilities.

let alone the fact that in the particular case of Siete, there was actually a ready replacement for him.1wphi1 This was Capt. Lim
who, on instruction of Sultan Shipping, boarded the vessel on July 8, 1985, purposely to take over its command from Capt. Siete.

The Court reiterates the ruling that private employment agencies are jointly and severally liable with the foreign-based employer for
any violation of the recruitment agreement or the contract of employment.8 As a requirement for the issuance to it of a license to
operate a private recruiting agency, a verified undertaking was made by the petitioner that it would "assume joint and solidary
liability with the employer for all claims and liabilities which (might) arise in connection with the implementation of the contract of
employment." It cannot now contend that as a mere crewing agent it cannot be made to answer for the liabilities of Sultan Shipping.

The reason for the above-mentioned requirement is obvious. Were the rule otherwise, employees with legitimate demands against
the employer would be helpless to enforce them because the latter has no office or properties in this jurisdiction. Violation of the
employment contract would remain unredressed. It was precisely to correct this difficulty that the recruiting agent is now required,
as a condition for the issuance to it of a license to operate, to assure the employee that he has remedies available in this country
even if the culpable employer is beyond the reach of our courts.

It need only be noted that there was a slight error in the computation of the award due the private respondent which he himself
acknowledges. This was the failure to deduct from his total award the amount of $400.90 he admitted having earlier collected in
Cyprus. As corrected, the computation of the total award should be as follows:

Monthly Basic Pay US$1,200.00

Monthly Allowance 500.00

Total Monthly Compensation US$1,700.00

One-Year Salary & Allowance

(US$1,700.00 x 12) US$20,400.00

Plus: One-Month Leave Pay 1,700.00

US$22,100.00

Less: Cash Advances:

Manila US$600.00

Spain 64.70

Lebanon 500.00

1,164.70

Slapchest 28.36

Page 117 of 205

 Bal. of ship
cash fund 400.90

Total Deductions
1,593.96

Total Amount Due US$20,506.04

We are not persuaded that the NLRC committed grave abuse of discretion in reversing the findings of the POEA sustaining the
petitioner and dismissing the private respondent's complaint. On the contrary, we agree that the private respondent was illegally
dismissed because, first, he was not accorded a fair investigation as required by law, and second, because the grounds invoked for
his separation have not been proved by the petitioner.

WHEREFORE, the challenged decision as above modified is AFFIRMED and the petition DISMISSED, with costs against the petitioner.
The temporary restraining order dated August 3,1988, is LIFTED.

SO ORDERED.

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. L-50734-37 February 20, 1981

WALLEM PHILIPPINES SHIPPING, INC., petitioner,

vs.
THE HON. MINISTER OF LABOR, in his capacity as Chairman of the National Seamen Board Proper, JAIME CAUNCA,
ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and RODOLFO PAGWAGAN, respondents.

DE CASTRO, J.:

Petition for certiorari with preliminary injunction with prayer that the Orders dated December 19, 1977 and April 3, 1979 of the
National Seamen Board (NSB) be declared null and void. Private respondents were hired by petitioner sometime in May 1975 to work
as seamen for a period of ten months on board the M/V Woermann Sanaga, a Dutch vessel owned and operated by petitioner's
European principals. While their employment contracts were still in force, private respondents were dismissed by their employer,
petitioner herein, and were discharged from the ship on charges that they instigated the International Transport Federation (ITF) to
demand the application of worldwide ITF seamen's rates to their crew.

Private respondents were repatriated to the Philippines on October 27, 1975 and upon their arrival in Manila, they instituted a
complaint against petitioner for illegal dismissal and recovery of wages and other benefits corresponding to the five months'
unexpired period of their shipboard employment contract.

In support of their complaint, private respondents submitted a Joint Affidavit 1 stating the circumstances surrounding their
employment and subsequent repatriation to the Philippines, material averments of which are herein below reproduced:

JOINTAFFIDAVIT

xxx xxx xxx

Page 118 of 205

5. That aside from our basic monthly salary we are entitled to two (2) months vacation leave, daily subsistence
allowance of US$8.14 each, daily food allowance of US$2.50. as well as overtime pay which we failed to receive
because our Shipboard Employment Contract was illegally terminated;

6. That while we were in Rotterdam, on or about July 9, 1975, representative of the ITF boarded our vessel and
talked with the Ship's Captain;

7. That the following day, the representatives of the ITF returned and was followed by Mr. M.S.K. Ogle who is the
Company's Administrative Manager, again went to see the Captain;

8. That at around 7:00 in the evening all the crew members were called in the Mess Hall where the ITF
representatives informed us that they have just entered into a "Special Agreement" with the Wallem Shipping
Management, Ltd., represented by Mr. M.S.K. Ogle, Administrative Manager, wherein new salary rates was agreed
upon and that we were going to be paid our salary differentials in view of the new rates;

9. That in the same meeting, Mr. M.S.K. Ogle also spoke where he told that a Special Agreement has been signed
and that we will be receiving new pay rate and enjoined us to work hard and be good boys;

10. That the same evening we received our salary differentials based on the new rates negotiated for us by the
ITF.

11. That while we were in the Port Dubai, Saudi Arabia, we were not receiving our pay, since the Ship's Captain
refused to implement the world-wide rates and insisted on paying us the Far East Rate;

12. That the Port Dubai is one that is within the Worldwide rates sphere.

13. That on October 22, 1975, Mr. Greg Nacional Operation Manager of respondent corporation, arrived in Dubai
Saudi Arabia and boarded our ship;

14. That on October 23, 1975, Mr. Nacional called all the crew members, including us to a meeting at the Mess Hall
and there he explained that the Company cannot accept the worldwide rate. The Special Agreement signed by Mr.
Ogle in behalf of the Company is nothing but a scrap of paper. Mr. Jaime Caunca then asked Mr. Nacional, in view
of what he was saying, whether the Company will honor the Special Agreement and Mr. Nacional answered "Yes".
That we must accept the Far East Rates which was put to a vote. Only two voted for accepting the Far East Rates;

15. That immediately thereafter Mr. Nacional left us;

16. That same evening, Mr. Nacional returned and threatened that he has received a cable from the Home Office
that if we do not accept the Far East Rate, our services will be terminated and there will be a change in crew;

17. That when Mr. Nacional left, we talked amongst ourselves and decided to accept the Far East Rates;

18. That in the meeting that evening because of the threat we informed Mr. Nacional we were accepting the Far
East Rate and he made us sign a document to that effect;

19. That we the complainants with the exception of Leopoldo Mamaril and Efren Garcia, were not able to sign as we
were at the time on work schedules, and Mr. Nacional did not bother anymore if we signed or not;

20. That after the meeting Mr. Nacional cabled the Home Office, informing them that we the complainants with the
exception of Messrs. Mamaril and Garcia were not accepting the Far East Rates;

21. That in the meeting of October 25, 1975, Mr. Nacional signed a document whereby he promised to give no
priority of first preference in "boarding a vessel and that we are not blacklisted";

22. That in spite of our having accepted the Far East Rate, our services were terminated and advised us that there
was a change in crew;

23. That on October 27, 1975, which was our scheduled flight home, nobody attended us, not even our clearance
for our group travel and consequently we were not able to board the plane, forcing us to sleep on the floor at the
airport in the evening of October 27, 1975;

Page 119 of 205

 24. That the following day we went back to the hotel in Dubai which was a two hours ride from the airport, where
we were to await another flight for home via Air France;

25. That we were finally able to leave for home on November 2, 1975 arriving here on the 3rd of November;

26. That we paid for all excess baggages;

27. That Mr. Nacional left us stranded, since he went ahead on October 27, 1975;

28. That immediately upon arriving in Manila, we went to respondent Company and saw Mr. Nacional, who
informed us that we were not blacklisted, however, Mr. Mckenzie, Administrative Manager did inform us that we
were all blacklisted;

29. That we were asking from the respondent Company our leave pay, which they refused to give, if we did not
agree to a US$100.00 deduction;

30. That with the exception of Messrs. Jaime Caunca Amado Manansala and Antonio Cabrera, we received our
leave pay with the US$100.00 deduction;

31. That in view of the written promise of Mr. Nacional in Dubai last October 23, 1975 to give us priority and
preference in boarding a vessel and that we were not blacklisted we have on several occasions approached him
regarding his promise, which up to the present he has refused to honor.

xxx xxx xxx

Answering the complaint, petitioner countered that when the vessel was in London, private respondents together with the other crew
insisted on worldwide ITF rate as per special agreement; that said employees threatened the ship authorities that unless they agreed
to the increased wages the vessel would not be able to leave port or would have been picketed and/or boycotted and declared a hot
ship by the ITF; that the Master of the ship was left with no alternative but to agree; that upon the vessel's arrival at the Asian port
of Dubai on October 22, 1975, a representative of petitioner went on board the ship and requested the crew together with private
respondents to desist from insisting worldwide ITF rate and instead accept the Far East rate; that said respondents refused to accept
Far East ITF rates while the rest of the Filipino crew members accepted the Far East rates; that private respondents were replaced at
the expense of petitioner and it was prayed that respondents be required to comply with their obligations under the contract by
requiring them to pay their repatriation expenses and all other incidental expenses incurred by the master and crew of the vessel.

After the hearing on the merits, the hearing Officer of the Secretariat rendered a decision 2 on March 14, 1977 finding private
respondents to have violated their contract of employment when they accepted salary rates different from their contract verified and
approved by the National Seamen Board. As to the issue raised by private respondents that the original contract has been novated, it
was held that:

xxx xxx xxx

For novation to be a valid defense, it is a legal requirement that all parties to the contract should give their
consent. In the instant case only the complainants and respondents gave their consent. The National Seamen
Board had no participation in the alleged novation of the previously approved employment contract. It would have
been different if the consent of the National Seamen Board was first secured before the alleged novation of the
approved contract was undertaken, hence, the defense of novation is not in order.

xxx xxx xxx

The Hearing Officer likewise rules that petitioner violated the contract when its representative signed the Special Agreement and he
signed the same at his own risk and must bear the consequence of such act, and since both parties are in paridelicto, complaint and
counterclaim were dismissed for lack of merit but petitioner was ordered to pay respondents Caunca and Cabrera their respective
leave pay for the period that they have served M/V Woermann Sanaga plus attorney's fees.

Private respondents filed a motion for reconsideration with the Board which modified the decision of the Secretariat in an Order 3 of
December 19, 1977 and ruled that petitioner is liable for breach of contract when it ordered the dismissal of private respondents and
their subsequent repatriation before the expiration of their respective employment contracts. The Chairman of the Board stressed
that "where the contract is for a definite period, the captain and the crew members may not be discharged until after the contract
shall have been performed" citing the case of Madrigal Shipping Co., Inc. vs. Ogilvie, et al. (104 Phil. 748). He directed petitioner to
pay private respondents the unexpired portion of their contracts and their leave pay, less the amount they received as differentials
by virtue of the special agreements entered in Rotterdam, and ten percent of the total amounts recovered as attorney's fees.

Page 120 of 205

Petitioner sought clarification and reconsideration of the said order and asked for a confrontation with private respondents to
determine the specific adjudications to be made. A series of conferences were conducted by the Board. It was claimed by petitioner
that it did not have in its possession the records necessary to determine the exact amount of the judgment since the records were in
the sole custody of the captain of the ship and demanded that private respondents produce the needed records. On this score,
counsel for respondents manifested that to require the master of the ship to produce the records would result to undue delay in the
disposition of the case to the detriment of his clients, some of whom are still unemployed.

Under the circumstances, the Board was left with no alternative but to issue an Order dated April 3, 1979 4 fixing the amount due
private respondents at their three (3) months' salary equivalent without qualifications or deduction. Hence,the instant petition before
Us alleging grave abuse of discretion on the part of the respondent official as Chairman of the Board, in issuing said order which
allegedly nullified the findings of the Secretariat and premised adjudication on imaginary conditions which were never taken up with
full evidence in the course of hearing on the merits.

The whole controversy is centered around the liability of petitioner when it ordered the dismissal of herein private respondents before
the expiration of their respective employment contracts.

In its Order of December 19, 1977 5 the Board, thru its Chairman, Minister Blas F. Ople, held that there is no showing that the
seamen conspired with the ITF in coercing the ship authorities to grant salary increases, and the Special Agreement was signed only
by petitioner and the ITF without any participation from the respondents who, accordingly, may not be charged as they were, by the
Secretariat, with violation of their employment contract. The Board likewise stressed that the crew members may not be discharged
until after the expiration of the contract which is for a definite period, and where the crew members are discharged without just
cause before the contract shall have been performed, they shall be entitled to collect from the owner or agent of the vessel their
unpaid salaries for the period they were engaged to render the services, applying the case of Madrigal Shipping Co., Inc. vs. Jesus
Ogilivie et al. 6

The findings and conclusion of the Board should be sustained. As already intimated above, there is no logic in the statement made by
the Secretariat's Hearing Officer that the private respondents are liable for breach of their employment contracts for accepting
salaries higher than their contracted rates. Said respondents are not signatories to the Special Agreement, nor was there any
showing that they instigated the execution thereof. Respondents should not be blamed for accepting higher salaries since it is but
human for them to grab every opportunity which would improve their working conditions and earning capacity. It is a basic right of
all workingmen to seek greater benefits not only for themselves but for their families as well, and this can be achieved through
collective bargaining or with the assistance of trade unions. The Constitution itself guarantees the promotion of social welfare and
protection to labor. It is therefore the Hearing Officer that gravely erred in disallowing the payment of the unexpired portion of the
seamen's respective contracts of employment.

Petitioner claims that the dismissal of private respondents was justified because the latter threatened the ship authorities in
acceeding to their demands, and this constitutes serious misconduct as contemplated by the Labor Code. This contention is not well-
taken. The records fail to establish clearly the commission of any threat. But even if there had been such a threat, respondents'
behavior should not be censured because it is but natural for them to employ some means of pressing their demands for petitioner,
who refused to abide with the terms of the Special Agreement, to honor and respect the same. They were only acting in the exercise
of their rights, and to deprive them of their freedom of expression is contrary to law and public policy. There is no serious
misconduct to speak of in the case at bar which would justify respondents' dismissal just because of their firmness in their demand
for the fulfillment by petitioner of its obligation it entered into without any coercion, specially on the part of private respondents.

On the other hand, it is petitioner who is guilty of breach of contract when they dismissed the respondents without just cause and
prior to the expiration of the employment contracts. As the records clearly show, petitioner voluntarily entered into the Special
Agreement with ITF and by virtue thereof the crew men were actually given their salary differentials in view of the new rates. It
cannot be said that it was because of respondents' fault that petitioner made a sudden turn-about and refused to honor the special
agreement.

In brief, We declare petitioner guilty of breach of contract and should therefore be made to comply with the directives contained in
the disputed Orders of December 19, 1977 and April 3, 1979.

WHEREFORE, premises considered, the decision dated March 14, 1977 of the Hearing Officer is SET ASIDE and the Orders dated
December 19, 1977 and April 3, 1979 of the National Seamen Board are AFFIRMED in toto. This decision is immediately executory.
Without costs.

SO ORDERED.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

Teehankee (Chairman), J., concur in the result.

Page 121 of 205

 ANTONIO M. SERRANO, G.R. No. 167614

Petitioner,

Present:

PUNO, C.J.,

QUISUMBING,

YNARES-SANTIAGO,

CARPIO,

AUSTRIA-MARTINEZ,

- versus - CORONA,

CARPIO MORALES,

TINGA,

CHICO-NAZARIO,

VELASCO, Jr.,

NACHURA,

LEONARDO-DE CASTRO,

BRION, and

GALLANT MARITIME SERVICES, PERALTA, JJ.

INC. and MARLOW NAVIGATION

CO., INC., Promulgated:

Respondents. March 24, 2009

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

DECISION

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have
built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the world by
transmitting ideas and knowledge from country to country. They have provided the dynamic human link between cultures, societies
and economies. Yet, only recently have we begun to understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-Moon

Global Forum on Migration and Development

Page 122 of 205

 Brussels, July 10, 2007[1]

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,[2] to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly

limiting their entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired portion of their employment contract or for three

months for every year of the unexpired term, whichever is less (subject clause).Petitioner claims that the last clause violates the OFWs' constitutional

rights in that it impairs the terms of their contract, deprives them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision[3] and April 1, 2005

Resolution[4] of the Court of Appeals (CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment

Administration (POEA)-approved Contract of Employment with the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month[5]

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of

Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the

end of April 1998.[6]

Respondents did not deliver on their promise to make petitioner Chief Officer.[7] Hence, petitioner refused to stay on as Second Officer and was

repatriated to the Philippines on May 26, 1998.[8]

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 Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation

on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-

three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for constructive dismissal and for payment of his money claims

in the total amount of US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

June 01/30, 1998 2,590.00

July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00

Nov. 01/30, 1998 2,590.00

Dec. 01/31, 1998 2,590.00

Jan. 01/31, 1999 2,590.00

Feb. 01/28, 1999 2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00

----------------------------
----------------------------
------------------------

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) + 1,060.50[10]

----------------------------
----------------------------
----------------------------
----------

TOTAL CLAIM US$ 26,442.73[11]

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the
respondents in the above-entitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly
and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of EIGHT
THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainants salary for three
(3) months of the unexpired portion of the aforesaid contract of employment.

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 The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the
rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),[12] representing the
complainants claim for a salary differential. In addition, the respondents are hereby ordered to pay the complainant, jointly and
severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the complainants (petitioner's) claim for
attorneys fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.[13] (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather

than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied

the salary rate of US$2,590.00, consisting of petitioner's [b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +

US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.[14]

Respondents appealed[15] to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally

dismissed.

Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services,

Inc. v. National Labor Relations Commission[17] that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their

contracts.[18]

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly
and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorneys fees 424.50
TOTAL US$4,669.50

The other findings are affirmed.

SO ORDERED.[19]

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00

to US$1,400.00 because R.A. No. 8042 does not provide for the award of overtime pay, which should be proven to have been actually performed, and

for vacation leave pay.[20]

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.[21] The NLRC denied

the motion.[22]

Petitioner filed a Petition for Certiorari[23] with the CA, reiterating the constitutional challenge against the subject clause.[24] After initially

dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which

granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.

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 In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted

the constitutional issue raised by petitioner.[25]

His Motion for Reconsideration[26] having been denied by the CA,[27] petitioner brings his cause to this Court on the following grounds:

I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the
Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his contract
of employment instead of limiting it to three (3) months

II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10
of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to
decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues
raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the award
for back wages of overseas workers to three (3) months.

III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely
erred in law in excluding from petitioners award the overtime pay and vacation pay provided in his contract since under the contract
they form part of his salary.[28]

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the

monetary award for his medical treatment and medication.[29] Required to comment, counsel for petitioner filed a motion, urging the court to allow partial

execution of the undisputed monetary award and, at the same time, praying that the constitutional question be resolved.[30]

Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme

importance of the constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary

differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to

petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering

the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the

CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his

employment contract, computed at the monthly rate of US$2,590.00.[31]

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in

their overseas employment contracts a determinate employment period and a fixed salary package.[32] It also impinges on the equal protection clause,

for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in

Page 126 of 205

case of illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared illegal; that the disparate

treatment is not reasonable as there is no substantial distinction between the two groups;[33] and that it defeats Section 18,[34] Article II of the Constitution

which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.[35]

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money

claims of illegally dismissed OFWs.Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected

OFWs.[36]

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement

agencies. He marks the statement made by the Solicitor General in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction
over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect
them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money
claims was reduced under Section 10 of R.A. No. 8042. [37] (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only

that, the provision makes foreign employers better off than local employers because in cases involving the illegal dismissal of employees, foreign

employers are liable for salaries covering a maximum of only three months of the unexpired employment contract while local employers are liable for the

full lump-sum salaries of their employees. As petitioner puts it:

In terms of practical application, the local employers are not limited to the amount of backwages they have to give their
employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the other hand,
foreign employers will only be limited to giving the illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more than three (3) months.[38]

Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is

entitled to under his fixed-period employment contract.[39]

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly

interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.[40]

The Arguments of the Solicitor General

The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's

1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms

of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon by the parties.[42]

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary

benefits must necessarily be treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local

workers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire

jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations

Page 127 of 205

Commission[43] and Millares v. National Labor Relations Commission,[44] OFWs are contractual employees who can never acquire regular employment

status, unlike local workers who are or can become regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local

workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject clause

of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of the

Constitution.[45]

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement

agencies for this redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement

agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.[46]

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when

these conditions obtain: (1) that there is an actual case or controversy involving a conflict of rights susceptible of judicial determination;[47] (2) that the

constitutional question is raised by a proper party[48] and at the earliest opportunity;[49] and (3) that the constitutional question is the very lis mota of the

case,[50] otherwise the Court will dismiss the case or decide the same on some other ground.[51]

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals

and the CA computed his monetary award based on the salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest

opportunity entails the interposition of the issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings before

that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal.[52] Records disclose that the

issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration

with said labor tribunal,[53] and reiterated in his Petition for Certiorari before the CA.[54] Nonetheless, the issue is deemed seasonably raised because it is

not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial

function its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to

resolving such questions in accordance with the standards laid down by the law itself;[55]thus, its foremost function is to administer and enforce R.A. No.

8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare

unconstitutional a law or a provision thereof, such as the subject clause.[56] Petitioner's interposition of the constitutional issue before the CA was

undoubtedly seasonable.The CA was therefore remiss in failing to take up the issue in its decision.

The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner

to his lump-sum salary for the entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the

very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

Does the subject clause violate Section 10,

Page 128 of 205

Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed

salary package he will receive[57] is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation,[58] and cannot affect acts or

contracts already perfected;[59] however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof.[60] Thus, the

non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts

or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner

and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the

parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No.

8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on

the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly

the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be

employed.[61] Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of

the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior

and legitimate measures taken by the State to promote public welfare.[62]

Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection
of the law.

Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the labor sector, without distinction as to place of deployment, full

protection of their rights and welfare.

Page 129 of 205

 To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary

benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should

be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.[65]

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its

legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the

purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.[66]

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or

rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest;[67] b)

the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and

that the classification is at least substantially related to serving that interest;[68] and c) strict judicial scrutiny[69] in which a legislative classification

which impermissibly interferes with the exercise of a fundamental right[70] or operates to the peculiar disadvantage of a suspect class[71] is

presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state

interest and that it is the least restrictive means to protect such interest.[72]

Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications[73] based on race[74] or gender[75] but not when the

classification is drawn along income categories.[76]

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng

Pilipinas,
[77]
the constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was

challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-and-file employees of other

GFIs had been exempted from the SSL by their respective charters. Finding that the disputed provision contained a suspect classification based on salary

grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More significantly, it

was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and
respect by the courts of justice except when they run afoul of the Constitution.The deference stops where the classification violates
a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this
Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence
to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a
stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions
and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to support
many of our decisions. We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches
without which we cannot come to our own decisions through the employment of our own endowments. We live in a different
ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies
as a people, and always with our own concept of law and justice. Our laws must be construed in accordance with the intention of our
own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related

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 thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our
laws. And it need not be stressed that our public interest is distinct and different from others.

xxxx

Further, the quest for a better and more equal world calls for the use of equal protection as a tool of effective judicial
intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims equality as
an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in Article II,
Section 10, in all phases of national development, further explicitated in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support
for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized
groups of society, including labor. Under the policy of social justice, the law bends over backward to accommodate
the interests of the working class on the humane justification that those with less privilege in life should have more
in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches
but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws
and the equalization of social and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.

xxxx

Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing
the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the rational basis test,
and the legislative discretion would be given deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice
against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak
and watered down view would call for the abdication of this Courts solemn duty to strike down any law repugnant to the Constitution
and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.

xxxx

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin
to a distinction based on economic class and status, with the higher grades as recipients of a benefit specifically
withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the
industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite
disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing
higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life
are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real
economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free the people from
poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all. Any act
of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can
pass muster. (Emphasis supplied)

Imbued with the same sense of obligation to afford protection to labor, the Court in the present case also employs the standard of strict judicial

scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

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 Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the

subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or
more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis--vis local workers with fixed-period employment;

OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more

As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission[79] (Second Division, 1999)

that the Court laid down the following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed
overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3)
months salary for every year of the unexpired term, whichever is less, comes into play only when the employment
contract concerned has a term of at least one (1) year or more. This is evident from the words for every year of the
unexpired term which follows the words salaries x x x for three months. To follow petitioners thinking that private
respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook
some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in
interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed
to know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam
pereat.[80] (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months

and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for

Career and Employment System and Services v. National Labor Relations Commission (Second Division, October 1998),[81] which involved an OFW who

was awarded a two-year employment contract, but was dismissed after working for one year and two months. The LA declared his dismissal illegal and

awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to

SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause
is entitled to his salary for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired
term, whichever is less.

In the case at bar, the unexpired portion of private respondents employment contract is eight (8) months. Private
respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600.[82]

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),[83] which involved

an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After

serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired

portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

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 Period Applied in the
Case Title Contract Period of Unexpired Period Computation of the
Period Service Monetary Award

Skippers v. 6 months 2 months 4 months 4 months

Maguad[84]
Bahia Shipping v. 9 months 8 months 4 months 4 months
Reynaldo Chua [85]
Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l[86]
Talidano v. 12 months 3 months 9 months 3 months
Falcon[87]
Univan v. 12 months 3 months 9 months 3 months
CA [88]
Oriental v. 12 months more than 2 10 months 3 months
CA [89] months
PCL v. NLRC[90] 12 months more than 2 more or less 9 3 months
months months
Olarte v. 12 months 21 days 11 months and 9 3 months
Nayona[91] days
JSS v. 12 months 16 days 11 months and 24 3 months
Ferrer[92] days
Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23 days
Adelantar[93] 7 days days
Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Paramio,
et al.[94]
Flourish Maritime 2 years 26 days 23 months and 4 6 months or 3 months
v. Almanzor [95] days for each year of
contract
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3 months
Manpower v. months and and 28 days for each year of
Villanos [96] 28 days contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period

employment contracts of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their

contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled

to monetary award equivalent to only 3 months of the unexpired portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of

his 6-month contract, but was awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also

worked for about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even

the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month contracts before being illegally dismissed

were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly

salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both

commenced work on the same day and under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-

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A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only

US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14

months of his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the effectivity of R.A. No. 8042

on July 14, 1995,[97] illegally dismissed OFWs, no matter how long the period of their employment contracts, were entitled to their salaries for the entire

unexpired portions of their contracts. The matrix below speaks for itself:

Case Title Contract Period of Unexpired Period Applied in the

Period Service Period Computation of the
Monetary Award
ATCI v. CA, 2 years 2 months 22 months 22 months
et al.[98]
Phil. Integrated v. 2 years 7 days 23 months and 23 23 months and 23 days
NLRC[99] days
JGB v. NLC[100] 2 years 9 months 15 months 15 months
Agoy v. NLRC[101] 2 years 2 months 22 months 22 months
EDI v. NLRC, et 2 years 5 months 19 months 19 months
al.[102]
Barros v. NLRC, et 12 months 4 months 8 months 8 months
al.[103]
Philippine 12 months 6 months and 5 months and 18 5 months and 18 days
Transmarine v. 22 days days
Carilla[104]

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of

the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries

multiplied by the entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed

OFWs based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more

and subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion

thereof, whichever is less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired contractsfall short of

one year.

Among OFWs With Employment

Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of

the Marsaman interpretation.

The Court notes that the subject clause or for three (3) months for every year of the unexpired term, whichever is less contains the qualifying

phrases every year and unexpired term. By its ordinary meaning, the word term means a limited or definite extent of time.[105] Corollarily, that every year

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is but part of an unexpired term is significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be

no occasion for such unexpired term to be measured by every year; and second, the original term must be more than one year, for otherwise, whatever

would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when the subject clause

for three (3) months for every year of the unexpired term, whichever is less shall apply is not the length of the original contract period as held

in Marsaman,[106] but the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the

contract period is at least one year, which arithmetically requires that the original contract period be more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one

year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion

thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their

monetary benefits limited to their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-

D, who each have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the

13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the

latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the

contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other

hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled

to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis--vis Local Workers

With Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in

place. This uniform system was applicable even to local workers with fixed-term employment.[107]

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888),[108] to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been
made of a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the
fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions
contained in the following articles.

In Reyes v. The Compaia Maritima,[109] the Court applied the foregoing provision to determine the liability of a shipping company for the illegal

discharge of its managers prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of

its managers for the remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or
voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters,
robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

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 Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,[110] in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired

portion of their employment contracts.

While Article 605 has remained good law up to the present,[111] Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil

Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain
work cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract.(Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan[112] read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local

workers who are employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel

de France Company.[113] And in both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on

Article 1586, local workers are entitled to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On

the computation of the amount of such damages, the Court in Aldaz v. Gay[114] held:

The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary
under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other employment of the same
kind in the same community, for the purpose of reducing the damages resulting from such wrongful discharge. However, while this
is the general rule, the burden of showing that he failed to make an effort to secure other employment of a like nature, and that
other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged under
a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in
such employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell
vs. School District No. 2, 98 Mich., 43.)[115] (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period),

Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.[116] Much like Article 1586 of the

Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally

discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,[117] the Court carried over the principles on the payment of damages

underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-period

employment contract was entered into in 1952, when the new Civil Code was already in effect.[118]

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were

illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,[119] involving seafarers who were illegally discharged. In Teknika Skills

and Trade Services, Inc. v. National Labor Relations Commission,[120] an OFW who was illegally dismissed prior to the expiration of her fixed-period

employment contract as a baby sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the same ruling

in Anderson v. National Labor Relations Commission,[121] which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who

was illegally dismissed after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired portion of his

contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,[122] a Filipino working as a security officer in 1989 in Angola was

awarded his salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National

Labor Relations Commission,[123] an OFW whose 12-month contract was illegally cut short in the second month was declared entitled to his salaries for

the remaining 10 months of his contract.

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 In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms

of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the

enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in

their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is

imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary

benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion

of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject

clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a

strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by

history.
[124]
It is akin to the paramount interest of the state[125] for which some individual liberties must give way, such as the public interest in safeguarding

health or maintaining medical standards,[126] or in maintaining access to information on matters of public concern.[127]

In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure designed to protect the employment of Filipino seafarers overseas x x x. By

limiting the liability to three months [sic], Filipino seafarers have better chance of getting hired by foreign employers. The limitation also protects the

interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in termination pay.[128]

The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction
over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect
them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money
are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The
survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are
employed under decent and humane conditions.[129] (Emphasis supplied)

However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served

by the subject clause.

The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from

which the law originated;[130] but the speech makes no reference to the underlying reason for the adoption of the subject clause. That is only natural for

none of the 29 provisions in HB 14314 resembles the subject clause.

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 On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of the complaint, the claim
arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
employment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint
and several.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this
Section shall not be less than fifty percent (50%) of such money claims: Provided, That any installment payments, if applicable, to
satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement
in violation of this paragraph shall be null and void.

Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible
officials to any or all of the following penalties:

(1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall
be, or caused to be, withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or

(3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may
have incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.

But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.

A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th paragraph of Section

10 of R.A. No. 8042. The Court examined the rationale of the subject clause in the transcripts of the Bicameral Conference Committee (Conference

Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314). However, the Court finds

no discernible state interest, let alone a compelling one, that is sought to be protected or advanced by the adoption of the subject clause.

In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the

perpetuation of the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary

liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government

action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private

businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution

commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals, there

are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

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 The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002,

imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their

Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations

Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring

foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary

liability of their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal

protection.

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective

that the clause directly violates state policy on labor under Section 3,[131] Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing,,[132] there are some which this Court has declared not judicially

enforceable, Article XIII being one,[133]particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations

Commission,[134] has described to be not self-actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the
sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that
the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals
therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are
facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-
but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these
guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well.
Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the
aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to
stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several
framers of the 1987 Constitution, the provisions on social justice require legislative enactments for their enforceability.[135] (Emphasis
added)

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause

may be declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of

so broad a concept as social justice for labor.

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 It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely

clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative action and judicial

recognition. Its utility is best limited to being an impetus not just for the executive and legislative departments, but for the judiciary as well, to

protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko

Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S.

Puno, formulated the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored

by the Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize the existence of a suspect

classification and subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the

significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article

XIII, by itself, without the application of the equal protection clause, has no life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it

deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose.[136]

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month

salary in case of illegal dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed,

there is nothing in the text of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that

there is an existing governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not

just petitioner's right to equal protection, but also her right to substantive due process under Section 1,[137] Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his

employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because

these are fixed benefits that have been stipulated into his contract.

Page 140 of 205

 Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33,

series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay

and other bonuses; whereas overtime pay is compensation for all work performed in excess of the regular eight hours, and holiday pay is compensation

for any work performed on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's

monetary award, unless there is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,[138]

However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National
Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said was actually performed
are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on
the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime
pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since
the same is given during the actual service of the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause or for three months for every year of the unexpired term, whichever is

less in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April

1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his

employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

Page 141 of 205

SKIPPERS UNITED G.R. NO. 148893

PACIFIC, INC.,

Petitioner,

Present:

PANGANIBAN, C.J.

(Chairperson)

YNARES-SANTIAGO,

- versus - AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

NATIONAL LABOR

RELATIONS COMMISSION,

GERVACIO ROSAROSO,

and COURT OF APPEALS, Promulgated:

Respondents. July 12, 2006

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

DECISION

AUSTRIA-MARTINEZ, J.:

Respondent Gervacio Rosaroso* was signed up as a Third Engineer with Nicolakis Shipping, S.A., a foreign firm, through its recruitment

and manning agency, herein petitioner Skippers United Pacific, Inc. The term of the contract was for one year, starting July 10,

1997 to July 8, 1998, and with a salary of US$800.00 and other benefits. Barely a month after boarding the vessel M/V Naval Gent on

July 15, 1997, respondent was ordered to disembark in Varna, Bulgaria, on August 7, 1997, and repatriated to the

Page 142 of 205

Philippines.Immediately after arriving in the Philippines, respondent filed a complaint for illegal dismissal and monetary claims

on August 18, 1997.[1]

In a Decision dated August 11, 1998, the Labor Arbiter found that respondent was illegally dismissed:

WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of complainant illegal. An order
is issued directing the respondents to pay complainant the amount of US$2,400.00 or its Philippine peso equivalent
of P100,000.00 as separation pay plus the amount of US$186.69 representing complainants unpaid salary for seven
(7) days or in the Philippine peso equivalent of P7,840.98 or the total amount of P108,640.98. On top of said amount,
attorneys fees of P5,000.00 is also awarded.

SO ORDERED.[2]

On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiters Decision and dismissed petitioners appeal per

its Decision dated February 26, 1999.[3]Petitioner sought reconsideration thereof but its motion was denied by the NLRC in its Resolution

dated May 27, 1999.[4]

Thus, petitioner filed with the Court of Appeals (CA) a special civil action for certiorari under Rule 65 of the Rules of Court,

docketed as CA-G.R. SP No. 53490.

On May 7, 2001, the CA[5] dismissed the petition and affirmed in toto the NLRC Decision dated February 26, 1999.[6] Petitioner

filed a motion for reconsideration which was denied by the CA in its Resolution dated July 3, 2001.[7]

Hence, the present petition for review under Rule 45 of the Rules of Court with the following assignment of errors:

FIRST ASSIGNMENT OF ERROR

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONER ILLEGALLY DISMISSED THE PRIVATE
RESPONDENT.

SECOND ASSIGNMENT OF ERROR

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN AWARDING PRIVATE RESPONDENT BACKWAGES
EQUIVALENT TO HIS THREE (3) MONTHS SALARY.[8]

Petitioners main contention is that the CA, the NLRC and the Labor Arbiter erred in not giving full evidentiary value to the telexed Chief

Engineers Report dated September 10, 1997, which specified the causes of respondents dismissal, quoted as follows:

TO: SKIPPERS MNL

CC: SKIPPERS PIRAEUS
FM: MV NAVAL GENT
DT: SEPT. 10, 1997

Page 143 of 205

 DURING SHIP REPAIR AT PERAMA DD. 18/07-31/07/97 OUR ATTENDING SUPT. ENGINEERS CONSTANTLY
OBSERVING ALL PERSONNELS ABILITY AND ATTITUDE WITH REGARDS TO OUR TECHNICAL CAPABILITY AND
BEHAVIOURS WITH EMPHASY [SIC] ON DISCIPLINE. IT IS ONLY UNFORTUNATE THAT THEY NOTICED 3/E G.
ROSAROSO AS BEING SLACK AND NOT CARING OF HIS JOB AND DUTIES BEING HIRED AS THIRD ENGR OFFICER,
TO THE FULLEST BEYOND THEIR EXPECTATION. AFTER TOO MUCH OF CONSIDERATION AND DELIBERATION
HAVING HIM CONSTANTLY ADVISED BY 2/E F. DIAMOS ASKING FOR HIS COOPERATION TO WORK AND HELP IN
THE ONGOING ENORMOUS REPAIRS. BUT FAILED TO HEED AND REFUSED TO BE MOTIVATED. WE HAVE SEEKED
[SIC] ADVISE FROM YOUR OFFICE VIA PHONE, SKIPPERS PIRAEUS THRU CAPT. KAMPANIS AND THE PORT CAPT
OF NICOLAKIS SHIPPING CAPT. PAPASTILIANOS, OF WHAT TO BE DONE. THE OWNERS RECOMMENDATION WAS
TO REPLACED [SIC] HIM ON THE FOLLOWING REASONS:

1) LACK OF DISCIPLINE HE RESENTED DISCIPLINE. HE IS SEEN BY SUPT. ENGRS. ON SEVERAL OCCASION

DURING WORKING HOURS STAYING ON PORTSIDE DECK SMOKING AND HAVING SNACKS. MANY TIMES HE IS
INSIDE THE GALLEY CHATTING WITH CHIEF COOK DURING WORKING HOURS AND HAVING SNACKS.HE TENDS TO
BE FREQUENTLY LATE FOR DUTY/WORK AND IS GENERALLY UNRELIABLE.

2) IRRESPONSIBLE - HE HAS NOT SHOWN A HIGH SENSE OF RESPONSIBILITY AS 3/ENGR. HE IS

CAREFREE IN DISCHARGING HIS DUTIES IN MAINTAINING THE ASSIGNED MACHINERIES, SUCH AS BOILER,
DIESEL GENERATORS, STARTING AIR COMPRESSORS AND VARIOUS PUMPS. HE CANNOT BE TRUSTED TO DO HIS
JOB UNLESS SUPERVISED PERPETUALLY.

3) LACK OF DILIGENCE - HE REQUIRES CONSTANT PUSHING AND HAS TO BE WATCHED MOST OF THE
TIME. LACK OF INITIATIVE REGARDLESS OF CONSTANT MOTIVATION.

SGD. JEROME A. RETARDO

CHIEF ENGR[9]

According to petitioner, the foregoing Report established that respondent was dismissed for just cause. The CA, the NLRC,

and the Labor Arbiter, however, refused to give credence to the Report. They are one in ruling that the Report cannot be given any

probative value as it is uncorroborated by other evidence and that it is merely hearsay, having come from a source, the Chief Engineer,

who did not have any personal knowledge of the events reported therein.

The Labor Arbiter ruled that the charges against respondent are bare allegations, unsupported by corroborating evidence. The

Labor Arbiter stated that if respondent indeed committed the alleged infractions, then these should have, at the very least, been

entered into the seamans book, or that a copy of the vessels logbook presented to prove the same.[10] The Labor Arbiters findings were

sustained by the NLRC.[11]

The CA upheld these findings, succinctly stating as follows:

Verily, the report of Chief Engineer Retardo is utterly bereft of probative value. It is not verified by an oath
and, therefore, lacks any guarantee of trustworthiness. It is furthermore and this is crucial not sourced from the
personal knowledge of Chief Engineer Retardo. It is rather based on the perception of ATTENDING SUPT. ENGINEERS
CONSTANTLY OBSERVING ALL PERSONNELS ABILITY AND ATTITUDE WITH REGARDS TO OUR TECHNICAL
CAPABILITY AND BEHAVIOURS WITH EMPHASY (sic) ON DISCIPLINE who NOTICED 3/E ROSAROSO AS BEING SLACK
AND NOT CARING OF HIS JOB AND DUTIES X X X . Accordingly, the report is plain hearsay. It is not backed up by
the affidavit of any of the Supt. Engineers who purportedly had first-hand knowledge of private respondents supposed
lack of discipline, irresponsibility and lack of diligence which caused him to lose his job. x x x [12]

The Court finds no reason to reverse the foregoing findings.

Page 144 of 205

 To begin with, the question of whether respondent was dismissed for just cause is a question of fact which is beyond the

province of a petition for review on certiorari. It is fundamental that the scope of the Supreme Courts judicial review under Rule 45 of

the Rules of Court is confined only to errors of law. It does not extend to questions of fact. More so in labor cases where the doctrine

applies with greater force.[13]

The Labor Arbiter and the NLRC have already determined the factual issues, and these were affirmed by the CA. Thus, they

are accorded not only great respect but also finality,[14] and are deemed binding upon this Court so long as they are supported by

substantial evidence.[15] A heavy burden rests upon petitioner to convince the Court that it should take exception from such a settled

rule.[16]

More importantly, the finding that respondent was illegally dismissed is supported, not only by the evidence on record, but

by jurisprudence as well.

The rule in labor cases is that the employer has the burden of proving that the dismissal was for a just cause; failure to show

this would necessarily mean that the dismissal was unjustified and, therefore, illegal.[17] The two-fold requirements for a valid dismissal

are as follows: (1) dismissal must be for a cause provided for in the Labor Code, which is substantive; and (2) the observance of notice

and hearing prior to the employees dismissal, which is procedural.[18]

The only evidence relied upon by petitioner in justifying respondents dismissal is the Chief Engineers Report dated September 10,

1997. The question that arises, therefore, is whether the Report constitutes substantial evidence proving that respondents dismissal

was for cause.

Substantial evidence is defined as that amount of relevant evidence which a reasonable mind might accept as adequate to

justify a conclusion.[19] As all three tribunals found, the Report cannot be given any weight or credibility because it is uncorroborated,

based purely on hearsay, and obviously merely an afterthought. While rules of evidence are not strictly observed in proceedings before

administrative bodies,[20] petitioner should have offered additional proof to corroborate the statements described therein. Thus,

in Ranises v. National Labor Relations Commission,[21] involving a seafarer who was repatriated to the Philippines for allegedly

committing illegal acts amounting to a breach of trust, as based on a telex dispatch by the Master of the M/V Southern Laurel, the

Court rejected the weight given by the NLRC on the telex, to wit:

Unfortunately, the veracity of the allegations contained in the aforecited telex was never proven by
respondent employer. Neither was it shown that respondent employer exerted any effort to even verify the
truthfulness of Capt. Sonodas report and establish petitioners culpability for his alleged illegal acts. Worse, no other
evidence was submitted to corroborate the charges against petitioner.

Page 145 of 205

 Similarly in this case, petitioner should have presented other evidence to corroborate its claim that respondents acts or

omissions aboard the vessel M/V Naval Gent warrant his immediate repatriation. Moreover, the fact that the Report was accomplished

on September 10, 1999, or more than a month after respondent was repatriated, makes it all the more suspect, and was obviously

made to make it appear that there were valid reasons for respondents dismissal.

Another analogous case worth citing is Pacific Maritime Services, Inc. v. Ranay.[22] This case involved two seafarers repatriated

to the Philippines for committing acts on board the vessel M/V Star Princess, which acts amounted to serious misconduct,

insubordination, non-observance of proper hours of work and damage to the laundry of the vessels crew and passengers. In support

of its claim that the respondents were validly dismissed, the petitioners presented its lone evidence, a telefax transmission purportedly

executed and signed by a certain Armando Villegas, detailing the incidents which prompted the termination of private respondents

services. The Court, however, ruled that the telefax transmission is not sufficient evidence, viz.:

Petitioners reliance on the telefax transmission signed by Armando Villegas is woefully inadequate in meeting
the required quantum of proof which is substantial evidence. For one thing, the same is uncorroborated. Although
substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of
the instant case demand that something more should have been proffered. According to the account of Villegas, it
appears that the incidents he was referring to transpired with the knowledge of some crew members. The alleged
assault by Gerardo Ranay on Villegas, for instance, was supposedly witnessed by at least four other crew
members. Surprisingly, none of them was called upon to testify, either in person or through sworn
statements. Worse, Villegas himself who omitted some vital details in his report, such as the time and date of the
incidents referred to, was not even presented as witness so that private respondents and the POEA hearing officer
could have been given an opportunity to cross-examine and propound clarificatory questions regarding matters
averred by him in the telefax transmission. Moreover, although signed, the same was not under oath and, therefore,
of dubious veracity and reliability although admissible. Likewise, the motive is suspect and the account of the
incidents dangerously susceptible to bias since it came from a person with whom private respondents were at
odds. All told, petitioners failed to make up for the weakness of the evidence upon which they confidently anchored
the merits of their case.

Likewise, the belated submission of the report by Villegas, long after the incidents referred to had taken
place and after the complaint had been lodged by private respondents, weighsheavily against its credibility.
Petitioners did not show any convincing reason why said report was only accomplished on September 22, 1989. They
merely argued that as in criminal cases, the witness is usually
reluctant to report an incident. At any rate, with present technology, a ship out at sea is not so isolated that its
captain cannot instantly communicate with its office. It would appear that the report, filed several months later, is
but an afterthought.

Therefore, the CA was correct in affirming the findings and conclusions of both the Labor Arbiter and the NLRC.

Petitioner maintains that it complied with the requisites of procedural due process. According to petitioner, respondent was constantly

reprimanded and rebuked for his acts.Petitioner also contends that the ships Master is allowed to dismiss an erring seafarer without

hearing under Section 17, paragraph D of the Philippine Overseas Employment Administration (POEA) Standard Employment Conditions

Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels. Paragraph D, Section 17, however, is not applicable

in respondents case.

Page 146 of 205

 Section 17 sets forth the disciplinary procedures against erring seafarers, to wit:

Section 17. DISCIPLINARY PROCEDURES

The Master shall comply with the following disciplinary procedures against an erring seafarer:

A. The Master shall furnish the seafarer with a written notice containing the following:

1. Grounds for the charges as listed in Section 31 of this Contract.

2. Date, time and place for a formal investigation of the charges against the seafarer concerned.

B. The Master or his authorized representative shall conduct the investigation or hearing, giving the seafarer the
opportunity to explain or defend himself against the charges. An entry on the investigation shall be entered into the
ships logbook.

C. If, after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the Master
shall issue a written notice of penalty and the reasons for it to the seafarer, with copies furnished to the Philippine
agent.

D. Dismissal for just cause may be effected by the Master without furnishing the seafarer with a notice of dismissal
if doing so will prejudice the safety of the crew or the vessel. This information shall be entered in the ships logbook.
The Master shall send a complete report to the manning agency substantiated by witnesses, testimonies and any
other documents in support thereof.

The foregoing provision was explained in Skippers Pacific, Inc. v. Mira,[23] as follows:

Note that under Section 17 of what is termed the Standard Format, the two - notice rule is indicated. An
erring seaman is given a written notice of the charge against him and is afforded an opportunity to explain or defend
himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be furnished the
erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew or
vessel that the required notices are dispensed with; but just the same, a complete report should be sent
to the manning agency, supported by substantial evidence of the findings. (Emphasis supplied)

There is nothing on record that shows that furnishing respondent with a notice of dismissal will pose a clear and present danger to the

vessel and its crew. And even if the Master was justified in dispensing with the required notice, still, it was essential that a complete

report, substantiated by witnesses, testimonies and any other documents in support thereof, was sent to the manning agency. The

record of this case is bereft of any such report and supporting documents. Instead, respondent was verbally ordered to disembark the

vessel and repatriated to the Philippines without being told of the reasons why.[24] Clearly, respondent was not accorded due process.

Finally, petitioner laments the award of backwages equivalent to three months salary in favor of respondent. Petitioner argues that

there is no basis for such award. The Court is not persuaded.

A seafarer is not a regular employee as defined in Article 280 of the Labor Code. Hence, he is not entitled to full backwages and

separation pay in lieu of reinstatement as provided in Article 279 of the Labor Code.[25] Seafarers are contractual employees whose

rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen, the Rules and

Page 147 of 205

Regulations Governing Overseas Employment, and, more importantly, by Republic Act (R.A.) No. 8042, or the Migrant

Workers and Overseas Filipinos Act of 1995.[26] While the POEA Standard Employment Contract for Filipino Seamen and the Rules and

Regulations Governing Overseas Employment do not provide for the award of separation or termination pay, [27] Section 10 of R.A.

8042 provides for the award of money claims in cases of illegal dismissals, thus:

Section 10. Money Claims. x x x

xxx

In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

xxx

The award of salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired
term, whichever is less, is not an award of backwages or separation pay, but a form of indemnity for the worker who was illegally
dismissed. The Labor Arbiter may have mislabeled it as separation pay, nonetheless, the award was made in conformity with law.

However, in the interest of substantial justice and to avoid further litigation on the matter,[28] it must be stressed that the peso amounts
equivalent to the dollar awards of the Labor Arbiter can not be enforced for being contrary to law. The peso equivalent of the monetary
award should be computed at the peso to dollar exchange rate prevailing at the time of payment,[29] as provided in Republic Act No.
8183, entitled An Act Repealing Republic Act Numbered Five Hundred Twenty-Nine, As Amended, Entitled An Act to Assure the Uniform
Value of Philippine Coin and Currency, which provides:

SECTION 1. All monetary obligations shall be settled in the Philippine currency which is legal tender in
the Philippines. However, the parties may agree that the obligation or transaction shall be settled in any other
currency at the time of payment.

Except for the foregoing clarification, the Court finds no cogent reason to grant this petition.

WHEREFORE, the petition is DENIED. The Decision dated May 7, 2001 and Resolution dated July 3, 2001 rendered by the Court of
Appeals in CA-G.R. SP No. 53490 are AFFIRMED with the MODIFICATION that the monetary awards of US$2,400.00 and US$186.69
made by the Labor Arbiter in its Decision dated August 11, 1998, should be payable in its equivalent in Philippine currency computed
at the prevailing rate of exchange at the time of payment.

Let the heirs of deceased respondent represented by his surviving wife, Carmen M. Rosaroso, residing at Hills
View, Mohon II, Tisa, Cebu City, who are hereby deemed substituted as respondents, be sent a copy of herein Decision.

SO ORDERED.

G.R. No. 170139, August 05, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C. CABILES, Respondent.

DECISION

Page 148 of 205

 LEONEN, J.:

This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts and the law, to approximate
justice for her.

We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals decision2dated June 27, 2005. This decision
partially affirmed the National Labor Relations Commissions resolution dated March 31, 2004, 3 declaring respondents dismissal
illegal, directing petitioner to pay respondents three-month salary equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it
to reimburse the NT$3,000.00 withheld from respondent, and pay her NT$300.00 attorneys fees.4cralawred

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.5Responding to an ad it published,
respondent, Joy C. Cabiles, submitted her application for a quality control job in Taiwan. 6cralawred

Joys application was accepted.7 Joy was later asked to sign a one-year employment contract for a monthly salary of
NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00 when she signed the
employment contract.9cralawred

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She alleged that in her employment contract,
she agreed to work as quality control for one year.11 In Taiwan, she was asked to work as a cutter.12cralawred

Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior
notice, that she was terminated and that she should immediately report to their office to get her salary and passport. 13 She was
asked to prepare for immediate repatriation.14cralawred

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT$9,000. 15According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.16cralawred

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations Commission against petitioner and Wacoal. She
claimed that she was illegally dismissed.18 She asked for the return of her placement fee, the withheld amount for repatriation costs,
payment of her salary for 23 months as well as moral and exemplary damages.19 She identified Wacoal as Sameer Overseas
Placement Agencys foreign principal.20cralawred

Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency, negligence in her duties, and
her failure to comply with the work requirements [of] her foreign [employer]. 21 The agency also claimed that it did not ask for a
placement fee of ?70,000.00.22 As evidence, it showed Official Receipt No. 14860 dated June 10, 1997, bearing the amount of
?20,360.00.23 Petitioner added that Wacoal's accreditation with petitioner had already been transferred to the Pacific Manpower &
Management Services, Inc. (Pacific) as of August 6, 1997.24 Thus, petitioner asserts that it was already substituted by Pacific
Manpower.25cralawred

Pacific Manpower moved for the dismissal of petitioners claims against it.26 It alleged that there was no employer-employee
relationship between them.27 Therefore, the claims against it were outside the jurisdiction of the Labor Arbiter.28 Pacific Manpower
argued that the employment contract should first be presented so that the employers contractual obligations might be identified.29 It
further denied that it assumed liability for petitioners illegal acts.30cralawred

On July 29, 1998, the Labor Arbiter dismissed Joys complaint.31 Acting Executive Labor Arbiter Pedro C. Ramos ruled that her
complaint was based on mere allegations.32 The Labor Arbiter found that there was no excess payment of placement fees, based on
the official receipt presented by petitioner.33 The Labor Arbiter found unnecessary a discussion on petitioners transfer of obligations
to Pacific34 and considered the matter immaterial in view of the dismissal of respondents complaint.35cralawred

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that Joy was illegally dismissed. 38 It
reiterated the doctrine that the burden of proof to show that the dismissal was based on a just or valid cause belongs to the
employer.39 It found that Sameer Overseas Placement Agency failed to prove that there were just causes for termination.40 There
was no sufficient proof to show that respondent was inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process was not observed in terminating respondent.42cralawred

The National Labor Relations Commission did not rule on the issue of reimbursement of placement fees for lack of jurisdiction.43 It
refused to entertain the issue of the alleged transfer of obligations to Pacific.44 It did not acquire jurisdiction over that issue because
Sameer Overseas Placement Agency failed to appeal the Labor Arbiters decision not to rule on the matter.45cralawred

The National Labor Relations Commission awarded respondent only three (3) months worth of salary in the amount of NT$46,080,
the reimbursement of the NT$3,000 withheld from her, and attorneys fees of NT$300.46cralawred

The Commission denied the agencys motion for reconsideration47 dated May 12, 2004 through a resolution48 dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition49 for certiorari with the Court of Appeals
assailing the National Labor Relations Commissions resolutions dated March 31, 2004 and July 2, 2004.

The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with respect to the finding of illegal

Page 149 of 205

dismissal, Joys entitlement to the equivalent of three months worth of salary, reimbursement of withheld repatriation expense, and
attorneys fees.51 The Court of Appeals remanded the case to the National Labor Relations Commission to address the validity of
petitioner's allegations against Pacific.52 The Court of Appeals held, thus:

Although the public respondent found the dismissal of the complainant-respondent illegal, we should point out that the NLRC merely
awarded her three (3) months backwages or the amount of NT$46,080.00, which was based upon its finding that she was dismissed
without due process, a finding that we uphold, given petitioners lack of worthwhile discussion upon the same in the proceedings
below or before us. Likewise we sustain NLRCs finding in regard to the reimbursement of her fare, which is squarely based on the
law; as well as the award of attorneys fees.

But we do find it necessary to remand the instant case to the public respondent for further proceedings, for the purpose of
addressing the validity or propriety of petitioners third-party complaint against the transferee agent or the Pacific Manpower &
Management Services, Inc. and Lea G. Manabat. We should emphasize that as far as the decision of the NLRC on the claims of Joy
Cabiles, is concerned, the same is hereby affirmed with finality, and we hold petitioner liable thereon, but without prejudice to
further hearings on its third party complaint against Pacific for reimbursement.

WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in accordance with the foregoing
discussion, but subject to the caveat embodied in the last sentence. No costs.

SO ORDERED.53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.54cralawred

We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the National Labor Relations
Commission finding respondent illegally dismissed and awarding her three months worth of salary, the reimbursement of the cost of
her repatriation, and attorneys fees despite the alleged existence of just causes of termination.

Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal that respondent was inefficient
in her work.55 Therefore, it claims that respondents dismissal was valid.56cralawred

Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at the time respondent filed her
complaint, it should be Pacific that should now assume responsibility for Wacoals contractual obligations to the workers originally
recruited by petitioner.57cralawred

Sameer Overseas Placement Agencys petition is without merit. We find for respondent.

Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys dismissal. The employer, Wacoal, also
failed to accord her due process of law.

Indeed, employers have the prerogative to impose productivity and quality standards at work. 58 They may also impose reasonable
rules to ensure that the employees comply with these standards.59 Failure to comply may be a just cause for their
dismissal.60 Certainly, employers cannot be compelled to retain the services of an employee who is guilty of acts that are inimical to
the interest of the employer.61While the law acknowledges the plight and vulnerability of workers, it does not authorize the
oppression or self-destruction of the employer.62 Management prerogative is recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is tempered with the employees right to security of tenure.63 Workers are
entitled to substantive and procedural due process before termination. They may not be removed from employment without a valid
or just cause as determined by law and without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution.64cralawred

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect to the rights of
overseas Filipino workers, we follow the principle of lex loci contractus.

Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court noted:

Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was working in Saudi
Arabia, her employment was subject to the laws of the host country. Apparently, petitioner hopes to make it appear that the labor
laws of Saudi Arabia do not require any certification by a competent public health authority in the dismissal of employees due to
illness.

Again, petitioners argument is without merit.

First, established is the rule that lex loci contractus (the law of the place where the contract is made) governs in this
jurisdiction. There is no question that the contract of employment in this case was perfected here in the Philippines.
Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor apply in this case.
Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the forums public policy.

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Here in the Philippines, employment agreements are more than contractual in nature. The Constitution itself, in Article XIII, Section
3, guarantees the special protection of workers, to wit:

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

....
This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves
whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal or arbitrary pre-termination
of employment contracts.66 (Emphasis supplied, citation omitted)

Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping Philippines, Inc. v. NLRC,67 to wit:

Petitioners admit that they did not inform private respondent in writing of the charges against him and that they failed to conduct a
formal investigation to give him opportunity to air his side. However, petitioners contend that the twin requirements of notice and
hearing applies strictly only when the employment is within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford protection to labor
apply to Filipino employees whether working within the Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made) governs in this jurisdiction. In the present case, it is not
disputed that the Contract of Employment entered into by and between petitioners and private respondent was executed here in the
Philippines with the approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor Code together with its
implementing rules and regulations and other laws affecting labor apply in this case.68 (Emphasis supplied, citations omitted)

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after compliance with
procedural due process requirements.

Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:

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

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

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or
his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

Petitioners allegation that respondent was inefficient in her work and negligent in her duties 69 may, therefore, constitute a just cause
for termination under Article 282(b), but only if petitioner was able to prove it.

The burden of proving that there is just cause for termination is on the employer. The employer must affirmatively show rationally
adequate evidence that the dismissal was for a justifiable cause.70 Failure to show that there was valid or just cause for termination
would necessarily mean that the dismissal was illegal.71cralawred

To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the employer has set standards of
conduct and workmanship against which the employee will be judged; 2) the standards of conduct and workmanship must have been
communicated to the employee; and 3) the communication was made at a reasonable time prior to the employees performance
assessment.

This is similar to the law and jurisprudence on probationary employees, which allow termination of the employee only when there is
just cause or when [the probationary employee] fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his [or her] engagement. 72cralawred

However, we do not see why the application of that ruling should be limited to probationary employment. That rule is basic to the
idea of security of tenure and due process, which are guaranteed to all employees, whether their employment is probationary or
regular.

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The pre-determined standards that the employer sets are the bases for determining the probationary employees fitness, propriety,
efficiency, and qualifications as a regular employee. Due process requires that the probationary employee be informed of such
standards at the time of his or her engagement so he or she can adjust his or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employees qualifications will be evaluated will increase ones chances of being
positively assessed for regularization by his or her employer.

Assessing an employees work performance does not stop after regularization. The employer, on a regular basis, determines if an
employee is still qualified and efficient, based on work standards. Based on that determination, and after complying with the due
process requirements of notice and hearing, the employer may exercise its management prerogative of terminating the employee
found unqualified.

The regular employee must constantly attempt to prove to his or her employer that he or she meets all the standards for
employment. This time, however, the standards to be met are set for the purpose of retaining employment or promotion. The
employee cannot be expected to meet any standard of character or workmanship if such standards were not communicated to him or
her. Courts should remain vigilant on allegations of the employers failure to communicate work standards that would govern ones
employment if [these are] to discharge in good faith [their] duty to adjudicate.73cralawred

In this case, petitioner merely alleged that respondent failed to comply with her foreign employers work requirements and was
inefficient in her work.74No evidence was shown to support such allegations. Petitioner did not even bother to specify what
requirements were not met, what efficiency standards were violated, or what particular acts of respondent constituted inefficiency.

There was also no showing that respondent was sufficiently informed of the standards against which her work efficiency and
performance were judged. The parties conflict as to the position held by respondent showed that even the matter as
basic as the job title was not clear.

The bare allegations of petitioner are not sufficient to support a claim that there is just cause for termination. There is no proof that
respondent was legally terminated.

Petitioner failed to comply with

the due process requirements

Respondents dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of
petitioner to comply with the requirement of the existence of just cause for termination. They patently show that the employers did
not comply with the due process requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. 75 The employer is required to give
the charged employee at least two written notices before termination.76One of the written notices must inform the employee of the
particular acts that may cause his or her dismissal.77 The other notice must [inform] the employee of the employers
decision.78 Aside from the notice requirement, the employee must also be given an opportunity to be heard. 79cralawred

Petitioner failed to comply with the twin notices and hearing requirements. Respondent started working on June 26, 1997. She was
told that she was terminated on July 14, 1997 effective on the same day and barely a month from her first workday. She was also
repatriated on the same day that she was informed of her termination. The abruptness of the termination negated any finding that
she was properly notified and given the opportunity to be heard. Her constitutional right to due process of law was violated.

II

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion of the employment
contract that was violated together with attorneys fees and reimbursement of amounts withheld from her salary.

Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, states that
overseas workers who were terminated without just, valid, or authorized cause shall be entitled to the full reimbursement of his
placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.

Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing
of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint
and several. This provisions [sic] shall be incorporated in the contract for overseas employment and shall be a condition precedent
for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for
all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of the said contract.

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Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid
within four (4) months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers
shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

....

(Emphasis supplied)

Section 15 of Republic Act No. 8042 states that repatriation of the worker and the transport of his [or her] personal belongings shall
be the primary responsibility of the agency which recruited or deployed the worker overseas. The exception is when termination of
employment is due solely to the fault of the worker,80 which as we have established, is not the case. It reads:

SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. The repatriation of the worker and the transport of his
personal belongings shall be the primary responsibility of the agency which recruited or deployed the worker overseas. All costs
attendant to repatriation shall be borne by or charged to the agency concerned and/or its principal. Likewise, the repatriation of
remains and transport of the personal belongings of a deceased worker and all costs attendant thereto shall be borne by the principal
and/or local agency. However, in cases where the termination of employment is due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the repatriation of the former and/or his belongings.

....

The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorneys fees when the withholding is
unlawful.

The Court of Appeals affirmed the National Labor Relations Commissions decision to award respondent NT$46,080.00 or the three-
month equivalent of her salary, attorneys fees of NT$300.00, and the reimbursement of the withheld NT$3,000.00 salary, which
answered for her repatriation.

We uphold the finding that respondent is entitled to all of these awards. The award of the three-month equivalent of
respondents salary should, however, be increased to the amount equivalent to the unexpired term of the employment
contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court ruled that the clause or for three (3)
months for every year of the unexpired term, whichever is less83 is unconstitutional for violating the equal protection clause and
substantive due process.84cralawred

A statute or provision which was declared unconstitutional is not a law. It confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is inoperative as if it has not been passed at all. 85cralawred

We are aware that the clause or for three (3) months for every year of the unexpired term, whichever is less was reinstated in
Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic Act No. 10022 provides:

Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:

SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with
this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint
and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its
approval. The performance bond to de [sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for
all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid
within thirty (30) days from approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant workers salary, the worker shall be entitled to the full reimbursement if [sic] his
placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion

Page 153 of 205

of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until
and unless it fully satisfies the judgement award.

Noncompliance with the mandatory periods for resolutions of case provided under this section shall subject the responsible officials
to any or all of the following penalties:cralawlawlibrary

(a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have
incured [sic] under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.
(Emphasis supplied)

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the clause in Republic Act No.
8042 was not yet in effect at the time of respondents termination from work in 1997.86 Republic Act No. 8042 before it was
amended by Republic Act No. 10022 governs this case.

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in their proper context before
considering a prayer to declare it as unconstitutional.

However, we are confronted with a unique situation. The law passed incorporates the exact clause already declared as
unconstitutional, without any perceived substantial change in the circumstances.

This may cause confusion on the part of the National Labor Relations Commission and the Court of Appeals. At minimum, the
existence of Republic Act No. 10022 may delay the execution of the judgment in this case, further frustrating remedies to assuage
the wrong done to petitioner. Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to [p]romulgate rules concerning the protection and enforcement of
constitutional rights.87 When cases become moot and academic, we do not hesitate to provide for guidance to bench and bar in
situations where the same violations are capable of repetition but will evade review. This is analogous to cases where there are
millions of Filipinos working abroad who are bound to suffer from the lack of protection because of the restoration of an identical
clause in a provision previously declared as unconstitutional.

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise its powers in any manner
inconsistent with the Constitution, regardless of the existence of any law that supports such exercise. The Constitution cannot be
trumped by any other law. All laws must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision. A law or provision of law that was already declared
unconstitutional remains as such unless circumstances have so changed as to warrant a reverse conclusion.

We are not convinced by the pleadings submitted by the parties that the situation has so changed so as to cause us to reverse
binding precedent.

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.

The new law puts our overseas workers in the same vulnerable position as they were prior to Serrano. Failure to reiterate the very
ratio decidendi of that case will result in the same untold economic hardships that our reading of the Constitution intended to avoid.
Obviously, we cannot countenance added expenses for further litigation that will reduce their hard-earned wages as well as add to
the indignity of having been deprived of the protection of our laws simply because our precedents have not been followed. There is
no constitutional doctrine that causes injustice in the face of empty procedural niceties. Constitutional interpretation is complex, but
it is never unreasonable.

Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the Solicitor General to comment on the
constitutionality of the reinstated clause in Republic Act No. 10022.

In its comment,89 petitioner argued that the clause was constitutional.90 The legislators intended a balance between the employers
and the employees rights by not unduly burdening the local recruitment agency.91 Petitioner is also of the view that the clause was
already declared as constitutional in Serrano.92cralawred

The Office of the Solicitor General also argued that the clause was valid and constitutional.93 However, since the parties never raised
the issue of the constitutionality of the clause as reinstated in Republic Act No. 10022, its contention is that it is beyond judicial
review.94cralawred

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On the other hand, respondent argued that the clause was unconstitutional because it infringed on workers right to
contract.95cralawred

We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the constitutional rights to equal
protection and due process.96 Petitioner as well as the Solicitor General have failed to show any compelling change in the
circumstances that would warrant us to revisit the precedent.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally
dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the
Constitution.

Equal protection of the law is a guarantee that persons under like circumstances and falling within the same class are treated alike,
in terms of privileges conferred and liabilities enforced.97 It is a guarantee against undue favor and individual or class privilege, as
well as hostile discrimination or the oppression of inequality.98cralawred

In creating laws, the legislature has the power to make distinctions and classifications.99 In exercising such power, it has a wide
discretion.100cralawred

The equal protection clause does not infringe on this legislative power.101 A law is void on this basis, only if classifications are made
arbitrarily.102 There is no violation of the equal protection clause if the law applies equally to persons within the same class and if
there are reasonable grounds for distinguishing between those falling within the class and those who do not fall within the class.103 A
law that does not violate the equal protection clause prescribes a reasonable classification.104cralawred

A reasonable classification (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not
be limited to existing conditions only; and (4) must apply equally to all members of the same class. 105cralawred

The reinstated clause does not satisfy the requirement of reasonable classification.

In Serrano, we identified the classifications made by the reinstated clause. It distinguished between fixed-period overseas workers
and fixed-period local workers.106 It also distinguished between overseas workers with employment contracts of less than one year
and overseas workers with employment contracts of at least one year.107 Within the class of overseas workers with at least one-year
employment contracts, there was a distinction between those with at least a year left in their contracts and those with less than a
year left in their contracts when they were illegally dismissed.108cralawred

The Congress classification may be subjected to judicial review. In Serrano, there is a legislative classification which impermissibly
interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class. 109cralawred

Under the Constitution, labor is afforded special protection.110 Thus, this court in Serrano, [i]mbued with the same sense of
obligation to afford protection to labor, . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d] in the subject
clause a suspect classification prejudicial to OFWs.111cralawred

We also noted in Serrano that before the passage of Republic Act No. 8042, the money claims of illegally terminated overseas and
local workers with fixed-term employment were computed in the same manner.112 Their money claims were computed based on the
unexpired portions of their contracts.113The adoption of the reinstated clause in Republic Act No. 8042 subjected the money claims
of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of three months worth of their
salary.114 There was no such limitation on the money claims of illegally terminated local workers with fixed-term
employment.115cralawred

We observed that illegally dismissed overseas workers whose employment contracts had a term of less than one year were granted
the amount equivalent to the unexpired portion of their employment contracts.116 Meanwhile, illegally dismissed overseas workers
with employment terms of at least a year were granted a cap equivalent to three months of their salary for the unexpired portions of
their contracts.117cralawred

Observing the terminologies used in the clause, we also found that the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally dismissed with less than one year left in their
contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one
year or more remaining in their contracts shall be covered by the reinstated clause, and their monetary benefits limited to their
salaries for three months only.118cralawred

We do not need strict scrutiny to conclude that these classifications do not rest on any real or substantial distinctions that would
justify different treatments in terms of the computation of money claims resulting from illegal termination.

Overseas workers regardless of their classifications are entitled to security of tenure, at least for the period agreed upon in their
contracts. This means that they cannot be dismissed before the end of their contract terms without due process. If they were illegally
dismissed, the workers right to security of tenure is violated.

The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater than nor less than the rights
violated when a fixed-period overseas worker is illegally terminated. It is state policy to protect the rights of workers without
qualification as to the place of employment.119 In both cases, the workers are deprived of their expected salary, which they could
have earned had they not been illegally dismissed. For both workers, this deprivation translates to economic insecurity and
Page 155 of 205
disparity.120 The same is true for the distinctions between overseas workers with an employment contract of less than one year and
overseas workers with at least one year of employment contract, and between overseas workers with at least a year left in their
contracts and overseas workers with less than a year left in their contracts when they were illegally dismissed.

For this reason, we cannot subscribe to the argument that [overseas workers] are contractual employees who can never acquire
regular employment status, unlike local workers121 because it already justifies differentiated treatment in terms of the computation
of money claims.122cralawred

Likewise, the jurisdictional and enforcement issues on overseas workers money claims do not justify a differentiated treatment in
the computation of their money claims.123 If anything, these issues justify an equal, if not greater protection and assistance to
overseas workers who generally are more prone to exploitation given their physical distance from our government.

We also find that the classifications are not relevant to the purpose of the law, which is to establish a higher standard of protection
and promotion of the welfare of migrant workers, their families and overseas Filipinos in distress, and for other purposes. 124 Further,
we find specious the argument that reducing the liability of placement agencies redounds to the benefit of the [overseas]
workers.125cralawred

Putting a cap on the money claims of certain overseas workers does not increase the standard of protection afforded to them. On the
other hand, foreign employers are more incentivized by the reinstated clause to enter into contracts of at least a year because it
gives them more flexibility to violate our overseas workers rights. Their liability for arbitrarily terminating overseas workers is
decreased at the expense of the workers whose rights they violated. Meanwhile, these overseas workers who are impressed with an
expectation of a stable job overseas for the longer contract period disregard other opportunities only to be terminated earlier. They
are left with claims that are less than what others in the same situation would receive. The reinstated clause, therefore, creates a
situation where the law meant to protect them makes violation of rights easier and simply benign to the violator.

As Justice Brion said in his concurring opinion in Serrano:

Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden twist affecting the
principal/employers liability. While intended as an incentive accruing to recruitment/manning agencies, the law, as worded, simply
limits the OFWs recovery in wrongful dismissal situations. Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer the direct employer primarily liable for the wrongful dismissal. In this sense, Section 10 read as a grant of
incentives to recruitment/manning agencies oversteps what it aims to do by effectively limiting what is otherwise the full liability of
the foreign principals/employers. Section 10, in short, really operates to benefit the wrong party and allows that party, without
justifiable reason, to mitigate its liability for wrongful dismissals. Because of this hidden twist, the limitation of liability under Section
10 cannot be an appropriate incentive, to borrow the term that R.A. No. 8042 itself uses to describe the incentive it envisions
under its purpose clause.

What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to encourage greater efforts at
recruitment, is directly related to extra efforts undertaken, the law simply limits their liability for the wrongful dismissals of already
deployed OFWs. This is effectively a legally-imposed partial condonation of their liability to OFWs, justified solely by the laws intent
to encourage greater deployment efforts. Thus, the incentive, from a more practical and realistic view, is really part of a scheme to
sell Filipino overseas labor at a bargain for purposes solely of attracting the market. . . .

The so-called incentive is rendered particularly odious by its effect on the OFWs the benefits accruing to the recruitment/manning
agencies and their principals are taken from the pockets of the OFWs to whom the full salaries for the unexpired portion of the
contract rightfully belong. Thus, the principals/employers and the recruitment/manning agencies even profit from their violation of
the security of tenure that an employment contract embodies. Conversely, lesser protection is afforded the OFW, not only because of
the lessened recovery afforded him or her by operation of law, but also because this same lessened recovery renders a wrongful
dismissal easier and less onerous to undertake; the lesser cost of dismissing a Filipino will always be a consideration a foreign
employer will take into account in termination of employment decisions. . . .126

Further, [t]here can never be a justification for any form of government action that alleviates the burden of one sector, but imposes
the same burden on another sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea
that private business interest can be elevated to the level of a compelling state interest is odious.127cralawred

Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary as it deprives overseas workers of
their monetary claims without any discernable valid purpose.128cralawred

Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance with Section 10 of Republic
Act No. 8042. The award of the three-month equivalence of respondents salary must be modified accordingly. Since she started
working on June 26, 1997 and was terminated on July 14, 1997, respondent is entitled to her salary from July 15, 1997 to June 25,
1998. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an OFWs security of tenure which an employment contract
embodies and actually profit from such violation based on an unconstitutional provision of law. 129cralawred

III

On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which revised the interest rate for loan or

Page 156 of 205

forbearance from 12% to 6% in the absence of stipulation, applies in this case. The pertinent portions of Circular No. 799, Series of
2013, read:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in
the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the
absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in computing legal interest in Nacar v. Gallery
Frames:130cralawred

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well
as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from
such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed therein.131

Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in judgments when there is no
stipulation on the applicable interest rate. Further, it is only applicable if the judgment did not become final and executory before
July 1, 2013.132cralawred

We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the Bangko Sentral ng Pilipinas has
the power to set or limit interest rates,133 these interest rates do not apply when the law provides that a different interest rate shall
be applied. [A] Central Bank Circular cannot repeal a law. Only a law can repeal another law. 134cralawred

For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas workers are entitled to the
reimbursement of his or her placement fee with an interest of 12% per annum. Since Bangko Sentral ng Pilipinas circulars cannot
repeal Republic Act No. 8042, the issuance of Circular No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799, which provides that the 6% interest
rate applies even to judgments.

Moreover, laws are deemed incorporated in contracts. The contracting parties need not repeat them. They do not even have to be
referred to. Every contract, thus, contains not only what has been explicitly stipulated, but the statutory provisions that have any
bearing on the matter.135 There is, therefore, an implied stipulation in contracts between the placement agency and the overseas
worker that in case the overseas worker is adjudged as entitled to reimbursement of his or her placement fees, the amount shall be
subject to a 12% interest per annum. This implied stipulation has the effect of removing awards for reimbursement of placement
fees from Circular No. 799s coverage.

The same cannot be said for awards of salary for the unexpired portion of the employment contract under Republic Act No. 8042.
These awards are covered by Circular No. 799 because the law does not provide for a specific interest rate that should apply.

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In sum, if judgment did not become final and executory before July 1, 2013 and there was no stipulation in the contract providing for
a different interest rate, other money claims under Section 10 of Republic Act No. 8042 shall be subject to the 6% interest per
annum in accordance with Circular No. 799.

This means that respondent is also entitled to an interest of 6% per annum on her money claims from the finality of this judgment.

IV

Finally, we clarify the liabilities of Wacoal as principal and petitioner as the employment agency that facilitated respondents overseas
employment.

Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign employer and the local employment
agency are jointly and severally liable for money claims including claims arising out of an employer-employee relationship and/or
damages. This section also provides that the performance bond filed by the local agency shall be answerable for such money claims
or damages if they were awarded to the employee.

This provision is in line with the states policy of affording protection to labor and alleviating workers plight.136cralawred

In overseas employment, the filing of money claims against the foreign employer is attended by practical and legal complications.
The distance of the foreign employer alone makes it difficult for an overseas worker to reach it and make it liable for violations of the
Labor Code. There are also possible conflict of laws, jurisdictional issues, and procedural rules that may be raised to frustrate an
overseas workers attempt to advance his or her claims.

It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an indispensable party without
which no final determination can be had of an action.137cralawred

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995 assures overseas workers that
their rights will not be frustrated with these complications.

The fundamental effect of joint and several liability is that each of the debtors is liable for the entire obligation. 138 A final
determination may, therefore, be achieved even if only one of the joint and several debtors are impleaded in an action. Hence, in the
case of overseas employment, either the local agency or the foreign employer may be sued for all claims arising from the foreign
employers labor law violations. This way, the overseas workers are assured that someone the foreign employers local agent
may be made to answer for violations that the foreign employer may have committed.

The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have recourse in law despite the
circumstances of their employment. By providing that the liability of the foreign employer may be enforced to the full
extent139 against the local agent, the overseas worker is assured of immediate and sufficient payment of what is due
them.140cralawred

Corollary to the assurance of immediate recourse in law, the provision on joint and several liability in the Migrant Workers and
Overseas Filipinos Act of 1995 shifts the burden of going after the foreign employer from the overseas worker to the local
employment agency. However, it must be emphasized that the local agency that is held to answer for the overseas workers money
claims is not left without remedy. The law does not preclude it from going after the foreign employer for reimbursement of whatever
payment it has made to the employee to answer for the money claims against the foreign employer.

A further implication of making local agencies jointly and severally liable with the foreign employer is that an additional layer of
protection is afforded to overseas workers. Local agencies, which are businesses by nature, are inoculated with interest in being
always on the lookout against foreign employers that tend to violate labor law. Lest they risk their reputation or finances, local
agencies must already have mechanisms for guarding against unscrupulous foreign employers even at the level prior to overseas
employment applications.

With the present state of the pleadings, it is not possible to determine whether there was indeed a transfer of obligations from
petitioner to Pacific. This should not be an obstacle for the respondent overseas worker to proceed with the enforcement of this
judgment. Petitioner is possessed with the resources to determine the proper legal remedies to enforce its rights against Pacific, if
any.

Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and most difficult reaches of our
planet to provide for their families. In Prieto v. NLRC:141cralawred

The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land where they have ventured,
usually with heavy hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment, rape, insufficient nourishment,
sub-human lodgings, insults and other forms of debasement, are only a few of the inhumane acts to which they are subjected by
their foreign employers, who probably feel they can do as they please in their own country. While these workers may indeed have
relatively little defense against exploitation while they are abroad, that disadvantage must not continue to burden them when they
return to their own territory to voice their muted complaint. There is no reason why, in their very own land, the protection of our
own laws cannot be extended to them in full measure for the redress of their grievances.142

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But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over; each of their stories as real as any
other. Overseas Filipino workers brave alien cultures and the heartbreak of families left behind daily. They would count the minutes,
hours, days, months, and years yearning to see their sons and daughters. We all know of the joy and sadness when they come home
to see them all grown up and, being so, they remember what their work has cost them. Twitter accounts, Facetime, and many other
gadgets and online applications will never substitute for their lost physical presence.

Unknown to them, they keep our economy afloat through the ebb and flow of political and economic crises. They are our true
diplomats, they who show the world the resilience, patience, and creativity of our people. Indeed, we are a people who contribute
much to the provision of material creations of this world.

This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default by limiting the contractual wages that
should be paid to our workers when their contracts are breached by the foreign employers. While we sit, this court will ensure that
our laws will reward our overseas workers with what they deserve: their dignity.

Inevitably, their dignity is ours as well.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with modification. Petitioner Sameer
Overseas Placement Agency is ORDERED to pay respondent Joy C. Cabiles the amount equivalent to her salary for the unexpired
portion of her employment contract at an interest of 6% per annum from the finality of this judgment. Petitioner is also ORDERED to
reimburse respondent the withheld NT$3,000.00 salary and pay respondent attorneys fees of NT$300.00 at an interest of 6% per
annum from the finality of this judgment.

The clause, or for three (3) months for every year of the unexpired term, whichever is less in Section 7 of Republic Act No. 10022
amending Section 10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null and void.

SO ORDERED.

Carpio, Acting C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza,
Reyes, and Perlas-Bernabe, JJ., concur.
Sereno, C.J., on Leave.
Brion, J., see dissenting opinion.

CONCURRING AND DISSENTING OPINION

BRION, J.:

I concur with the ponencias conclusion that respondent Joy C. Cabiles was illegally dismissed for lack of valid cause and due
process.

I likewise concur with the conclusion that Section 10 of Republic Act (R.A.) No. 8042 (Migrant Workers and Overseas Filipino Act of
1995),1 as reinstated by R.A. No. 10022,2 is unconstitutional in so far as it provides that:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall
be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever
is less. [Emphasis and italics ours]

My conclusion on the constitutionality of the above-quoted clause (subject clause) of Section 10, R.A. No. 8042, however, proceeds
from a different reason and constitutional basis. I maintain the view that the subject clause should be struck down for
violation of the constitutional provisions in favor of labor, under Section 3, Article XIII, and of the substantive aspect
of the due process clause, under Section 1, Article III.

Thus, I take exception to the ponencias full adoption of the ruling in Serrano v. Gallant Maritime Services, Inc., et al.3 to the extent
that it applies the strict scrutiny standard in invoking the equal protection guarantee. To my mind, the circumstances of this case do
not justify the ponencias approach of extending and expanding the use of the strict scrutiny standard in invalidating the subject
clause (as reinstated in R.A. No. 8042 by R.A. No. 10022). The conclusion that the subject clause created a suspect classification
is simply misplaced.

The approach, sadly, only unnecessarily shifted the burden to the government to prove: (1) a compelling state interest; and (2) that

Page 159 of 205

the legislation is narrowly tailored to achieve the intended result. It also unnecessarily undermines the presumed
constitutionality of statutes and of the respect that the Court accords to the acts of a co-equal branch. The differential or
rational basis scrutiny, i.e., where the challenged classification needs only be shown to be rationally related to serving a legitimate
state interest, would have undoubtedly served the purpose without bringing these unnecessary implications.

As I maintain the same view and legal reasoning, and if only to emphasize my position in the present case, I quote below portions of
my Concurring Opinion in Serrano v. Gallant Maritime Services, Inc., et al. (Serrano Opinion)4 rejecting the validity of using the strict
scrutiny standard to test the validity of the subject clause under the equal protection guarantee. I invoke the same legal reasoning
as basis, mutatis mutandis, of my stance in the present case.

A suspect classification is one where distinctions are made based on the most invidious bases for classification that violate the most
basic human rights, i.e., on the basis of race, national origin, alien status, religious affiliation, and to a certain extent, sex and sexual
orientation. With a suspect classification, the scrutiny of the classification is raised to its highest level: the ordinary presumption of
constitutionality is reversed and government carries the burden of proving that its challenged policy is constitutional. To withstand
strict scrutiny, the government must show that its policy is necessary to achieve a compelling state interest; if this is proven, the state
must then demonstrate that the legislation is narrowly tailored to achieve the intended result.

In the present case, I do not see the slightest indication that Congress actually intended to classify OFWs between and among
themselves, and in relation with local workers when it adopted the disputed portion of Section 10. The congressional intent was to
merely grant recruitment and manning agencies an incentive and thereby encourage them into greater deployment efforts, although,
as discussed above, the incentive really works for the foreign principals benefit at the expense of the OFWs.

Even assuming that a classification resulted from the law, the classification should not immediately be characterized as a suspect
classification that would invite the application of the strict scrutiny standard. The disputed portion of Section 10 does not, on its
face, restrict or curtail the civil and human rights of any single group of OFWs. At best, the disputed portion limits the
monetary award for wrongful termination of employment a tort situation affecting an OFWs economic interest. This
characterization and the unintended classification that unwittingly results from the incentive scheme under Section 10, to my mind,
render a strict scrutiny disproportionate to the circumstances to which it is applied.

I believe, too, that we should tread lightly in further expanding the concept of suspect classification after we have done
so in Central Bank, where we held that classifications that result in prejudice to persons accorded special protection by
the Constitution requires a stricter judicial scrutiny. The use of a suspect classification label cannot depend solely on whether the
Constitution has accorded special protection to a specified sector. While the Constitution specially mentions labor as a sector that
needs special protection, the involvement of or relationship to labor, by itself, cannot automatically trigger a suspect classification and
the accompanying strict scrutiny; much should depend on the circumstances of the case, on the impact of the illegal differential
treatment on the sector involved, on the needed protection, and on the impact of recognizing a suspect classification on future
situations. In other words, we should carefully calibrate our moves when faced with an equal protection situation so that we do
not misappreciate the essence of what a suspect classification is, and thereby lessen its jurisprudential impact and value. Reserving
this approach to the worst cases of unacceptable classification and discrimination highlights the importance of striking at these types
of unequal treatment and is a lesson that will not be lost on all concerned, particularly the larger public. There is the added reason,
too, that the reverse onus that a strict scrutiny brings directly strikes, in the most glaring manner, at the regularity of the performance
of functions of a co-equal branch of government; inter-government harmony and courtesy demand that we reserve this type of
treatment to the worst violations of the Constitution.

Incidentally, I believe that we can arrive at the same conclusion and similarly strike down the disputed Section 10 by using
the lowest level of scrutiny, thereby rendering the use of the strict scrutiny unnecessary. Given the OSGs positions, the
resulting differential treatment the law fosters between Philippine-based workers and OFWs in illegal dismissal situations does not rest
on substantial distinctions that are germane to the purpose of the law. No reasonable basis for classification exists since the distinctions
the OSG pointed out do not justify the different treatment of OFWs and Philippine-based workers, specifically, why one class should be
excepted from the consequences of illegal termination under the Labor Code, while the other is not.

To be sure, the difference in work locations and working conditions that the OSG pointed out are not valid grounds for distinctions that
should matter in the enforcement of employment contracts. Whether in the Philippines or elsewhere, the integrity of contracts be
they labor, commercial or political is a zealously guarded value that we in the Philippines should not demean by allowing a breach of
OFW contracts easy to undertake. This is true whatever may be the duration or character of employment; employment contracts,
whatever their term and conditions may be subject only to their consistency with the law, must be respected during the whole
contracted term and under the conditions agreed upon.

Significantly, the OSG could not even point to any reason other than the protection of recruitment agencies and the expansion of the
Philippine overseas program as justification for the limitation of liability that has effectively distinguished OFWs from locally-based
workers. These reasons, unfortunately, are not on the same plane as protection to labor in our constitutional hierarchy of values. Even
RA 8042 repeats that the State does not promote overseas employment as a means to sustain economic growth and national
development. Under RA 8042s own terms, the overseas employment program exists only for OFW protection. Thus viewed, the
expansion of the Philippine overseas deployment program and the need for incentives to achieve results are simply not valid reasons
to justify a classification, particularly when the incentive is in the form of oppressive and confiscatory limitation of liability detrimental
to labor. No valid basis for classification thus exists to justify the differential treatment that resulted from the disputed Section 10.5

In this regard, I likewise reiterate my reasons and explanation for striking down the subject clause on the ground that it violates
the constitutional provisions in favor of labor and the substantive aspect of the due process clause.

Page 160 of 205

For proper perspective, I quote below the pertinent constitutional provision that secures a special status and treatment in favor of
labor.

Article XIII

x x x x

Section 18. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by
law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

This constitutional protection afforded to labor articulates in clearer and more concrete terms the constitutional policy under Section
18, Article II that declares and affirms labor as a primary social economic force aimed at protecting the rights of workers and
promoting their welfare.

On the other hand, R.A. No. 8042 provides, among others:

(b) The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all. Towards this end, the State shall provide adequate and timely social, economic and legal
services to Filipino migrant workers.

xxxx

(e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of
poverty. In this regard, it is imperative that an effective mechanism be instituted to ensure that the rights and interests of distressed
overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and
safeguarded.

Under these terms, R.A. No. 8042 is discernibly a piece of social legislation that the State enacted in the exercise of its police power,
precisely to give teeth and arms to the constitutional provisions on labor under its aim to establish a higher standard of
protection and promotion of the welfare of migrant worker, their families and of overseas Filipinos in
distress.6 Otherwise stated, it draws power and life from the constitutional provisions that it seeks to concretize and implement.

As I pointed out in my Serrano Opinion, the express policy declarations of R.A. No. 8042 show that its purposes are reiterations of
the very same policies enshrined in the Constitution x x x [They] patently characterize R.A. No. 8042 as a direct implementation of
the constitutional objectives on Filipino overseas work so that it must be read and understood in terms of these policy
objectives. Under this interpretative guide, any provision in R.A. No. 8042 inimical to the interest of an overseas Filipino worker
(OFW) cannot have any place in the law.7 [Underscoring supplied]

Note also (again, as I reflected in my Serrano Opinion) that while R.A. No. 8042 acknowledges that the State shall promote full
employment, it likewise provides that the State does not promote overseas employment as a means to sustain economic growth
and national development. The existence of overseas employment program rests solely on the assurance that the dignity and
fundamental human rights and freedom of Filipino citizens shall not, at any time, be compromised and violated.8 The Act, however,
concludes its Declaration of Policies by stating that [n]onetheless, the deployment of Filipino overseas workers, whether land-
based or sea-based, by local service contractors and manning agencies employing them shall be encouraged. Appropriate incentives
may be extended to them.9 [Underscoring supplied]

Thus, the Act recognizes that to encourage greater deployment efforts, incentives can be given, BUT, to service contractors
and manning agencies ONLY.10 Contractors and agencies principals, i.e., the foreign employers in whose behalf the contractors
and agencies recruit OFWs are not among those to whom incentives can be given as they are not mentioned at all in the
Act.11cralawred

Of particular importance to the present case is Section 10 of R.A. No. 8042 which governs the OFWs money claims. 12 Pursuant to its
terms, the Act obviously protects the OFW as against the employer and the recruitment agency in cases of unlawful termination of

Page 161 of 205

service. Unfortunately, it limits the liability to the reimbursement of the placement fee and interest, and the payment of his salaries
for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is
less.13cralawred

This limitation is a step backward as it imposes a cap on the liability of the foreign principal/employer and the contractor/recruitment
agency even as it earlier declared their liability joint and solidary.14 To be an appropriate incentive, this limitation of liability can
only be justified under the terms of the law, i.e., the incentive must necessarily relate to the laws purpose with reasonable
expectation that it would serve this purpose; it must also accrue to its intended beneficiaries (the
recruitment/placement agencies), and not to parties to whom the reason for the grant does not apply.15cralawred

Viewed in this light, the subject clause can only pass constitutional muster if it shows: (1) a lawful purpose; and (2) lawful means to
achieve the lawful purpose.

On the lawful purpose requirement, the policy of extending incentives to local service contractors and manning agencies to
encourage greater efforts at securing work for OFWs is, undeniably, constitutionally valid. There is nothing inherently
unconstitutional in providing such incentives for not only are local service contractors and manning agencies
significant stakeholders in the governments overseas employment program;16 the Constitution itself also expressly
recognizes the right of labor to its just share in the fruits of production and the right to reasonable returns on
investments, and expansion and growth.17 [Underscoring supplied]

On the lawful means requirement, i.e., whether the means employed to achieve the purpose of encouraging recruitment efforts
(through the incentive granted of limiting the liability of recruitment/manning agencies for illegal dismissals) is reasonable, the
subject clause obviously fails.

First, as I pointed out in my Serrano Opinion, Section 10 of R.A. No. 8042 provides measures that collectively protect OFWs, i.e., by
ensuring the integrity of their contracts; by establishing the responsible parties; and by providing the mechanisms for their
enforcement that imposes direct and primary liability to the foreign principal employer.18 Yet, Section 10 presents a hidden twist
affecting the principal/employers liability. As worded, the Act simply limits the OFWs recovery in wrongful dismissal
situations. Thus, it redounds to the benefit of whoever may be liable, including the principal/employer the direct employer
primarily liable for the wrongful dismissal.19cralawred

From this perspective, Section 10 actually limits what is otherwise the foreign principal/employers full liability under the Act and
exceeds what the Act intended to grant incentives to recruitment/manning agencies.20 Section 10, in short, really operates to
benefit the wrong party and allows that party, without justifiable reason, to mitigate its liability for wrongful
dismissals.21 [Emphasis supplied] Because of this hidden twist, the limitation of liability under Section 10 cannot be an
appropriate incentive.22 [Underscoring supplied]

Second, the chosen mode of granting the incentive, i.e., the liability limitation for wrongful dismissals of already deployed
OFWs, effectively imposed, with legal sanction, a partial condonation of the foreign principal/employers liability to
OFWs.23 The incentive, therefore, from a more practical and realistic view, is really part of a scheme to sell Filipino overseas
labor at a bargain for purposes solely of attracting the market,24 a scheme that sadly reduces our OFWs to mere cash cows.

And third, the incentive scheme effectively benefits the recruitment/manning agencies and foreign
principal/employer at the expense of the OFWs from whom the salaries for the unexpired portion of the contract are
taken and to whom these salaries rightfully belong.25 In effect, the principals/employers and the recruitment/manning
agencies profit from their violation of the security of tenure that an employment contract embodies. 26 The OFWs, on the other
hand, are afforded lesser protection because: (1) they are afforded reduced recovery by operation of law; (2) the reduced recovery
renders wrongful dismissal situations more alluring, easier to facilitate and less onerous to undertake which foreign employers will
most certainly consider in termination of employment decisions.27cralawred

These inimical effects obviously will remain as long as the subject clause remains in Section 10 of R.A. No. 8042, this time as
reinstated by R.A. No. 10022. The inherently oppressive, arbitrary, confiscatory and inimical provision [under Section 10 of R.A.
No. 8042 should, therefore,] be struck down for its conflict with the substantive aspect of the constitutional due process
guarantee.28 Thus, I vote to declare as unconstitutional the phrase for three (3) months for every year of the unexpired
terms, whichever is less in the fifth and final paragraph of Section 10 of R.A. 8042.

In sum, given these considerations and conclusions, further testing the validity of the assailed clause under the equal protection
guarantee, particularly under the strict scrutiny standard that the ponencia in the present case deemed appropriate to employ, is
clearly unnecessary.

Page 162 of 205

PEOPLE OF THE PHILIPPINES, G.R. No. 168445

Appellee,
Present:
Davide, Jr., C.J. (Chairman),*
- versus - Quisumbing, **

Ynares-Santiago,

Carpio, and

Azcuna, JJ.

CAPT. FLORENCIO O. GASACAO,

Appellant. Promulgated:

November 11, 2005

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

DECISION

YNARES-SANTIAGO, J.:

Page 163 of 205

 This is an appeal from the May 18, 2005 Decision[1] of the Court of Appeals in CA-G.R. CR No. 00800 dismissing the appeal of

appellant, Florencio O. Gasacao and affirming the March 5, 2001 Joint Decision[2] of the Regional Trial Court (RTC) of Quezon City,

Branch 218, finding appellant guilty beyond reasonable doubt of Large Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and

acquitting him of the charge in Crim. Case No. Q-00-94241.

The factual antecedents are as follows:

Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a licensed local manning agency, while his nephew

and co-accused, Jose Gasacao, was the President. As the crewing manager, appellants duties included receiving job applications,

interviewing the applicants and informing them of the agencys requirement of payment of performance or cash bond prior to

deployment.

On August 4, 2000, appellant and Jose Gasacao were charged with Large Scale Illegal Recruitment defined under Section 6,

paragraphs (a), (l) and (m) of Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and penalized

under Section 7 (b) of the same law, before the RTC of Quezon City.

The informations read:

In Criminal Case No. Q-00-94240

That sometime in the months of May to December, 1999 or thereabout, in Quezon City, Metro Manila,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating
and mutually helping one another, did then and there willfully, unlawfully and criminally recruit, enlist and promise
overseas employment to the private complainants, namely, Lindy M. Villamor, Dennis Cabangahan, Erencio C. Alaba,
Victorino U. Caderao, Rommel B. Patolen, Joseph A. Demetria and Louie A. Arca, as overseas seamen/seafarers, the
said accused thereby charging, exacting and collecting from the said private complainants cash bonds and/or
performance bonds in amounts ranging from P10,000.00 to P20,000.00 without any authority to do so and despite
the fact that the same is prohibited by the POEA Rules and Regulations, which amount is greater than that specified
in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, and despite the payment of
the said fees, the said accused failed to actually deploy the private complainants without valid reasons as determined
by the Department of Labor and Employment and despite the failure of deployment, the said accused failed to
reimburse the expenses incurred by the said private complainants in connection with their documentation and
processing for the purpose of their supposed deployment.

CONTRARY TO LAW.[3]

In Criminal Case No. Q-00-94241

That sometime in the months of September to November 1999 or thereabout, in Quezon City, Metro Manila,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating
and mutually helping one another, did then and there willfully, unlawfully and criminally recruit, enlist and promise
overseas employment to the private complainants, namely, Melvin I. Yadao, Frederick Calambro and Andy Bandiola,
as overseas seamen/seafarers, the said accused thereby charging, exacting and collecting from the said private
complainants cash bonds and/or performance bonds in amounts ranging from P10,000.00 to P20,000.00 without any
authority to do so and despite the fact that the same is prohibited by the POEA Rules and Regulations, which amount
is greater that that specified in the schedule of allowable fees prescribed by the Secretary Labor and Employment,
and despite the payment of said fees, the said accused failed to actually deploy the private complainants without
valid reasons as determined by the Department of Labor and Employment and despite the failure of deployment, the

Page 164 of 205

 said accused failed to reimburse the expenses incurred by the said private complainants in connection with their
documentation and processing for the purpose of their supposed deployment.

SO ORDERED.[4]

Only the appellant was arrested while Jose Gasacao remained at large. When arraigned, appellant pleaded not guilty to the

offense charged. Thereafter, trial on the merits ensued. On March 5, 2001, the RTC of Quezon City, Branch 218, rendered its Joint

Decision convicting appellant of Large Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and acquitting him of the charge in

Crim. Case No. Q-00-94241. The dispositive portion of the joint decision reads:

WHEREFORE, judgment is hereby rendered as follows:

1. In Crim. Case No. Q-00-94240, the prosecution having established the guilt of the accused beyond reasonable
doubt, the Court finds Florencio O. Gasacao GUILTY of Large Scale Illegal Recruitment punishable under
Section 7, (b) of R.A. 8042. He is sentenced to suffer life imprisonment and a fine of P500,000.00. He shall
also indemnify Dennis C. Cabangahan in the amount of P8,750.00; Lindy M. Villamor for P20,000.00;
Victorino U. Caderao for P20,000.00; Rommel B. Patolen for P20,000.00; and Erencio C. Alaba for
P20,000.00. Complainants Louie A. Arca and Joseph A. Demetria did not testify.

2. In Crim. Case No. Q-00-94241, complainants Melvin I. Yadao, Frederick Calambro and Andy Bandiola did not
testify. Moreover, the Court believes all these complainants should have been grouped in just one (1)
information. Hence, for failure of the prosecution to prove the guilt of the accused beyond reasonable doubt,
the Court finds Florencio O. Gasacao NOT GUILTY of the offense charged.

SO ORDERED.[5]

Conformably with our pronouncement in People v. Mateo,[6] which modified pertinent provisions of the Rules of Court insofar

as they provide for direct appeals from the RTC to the Supreme Court in cases where the penalty imposed is death, reclusion

perpetua or life imprisonment, as in this case, as well as this Courts Resolution dated September 19, 1995, we resolved on February

2, 2005 to transfer the case to the Court of Appeals for appropriate action and disposition. [7]

On May 18, 2005, the Court of Appeals promulgated the assailed Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the present appeal is hereby DISMISSED for lack of merit. The appealed
Joint Decision dated March 5, 2001 of the trial court in Criminal Case No. Q-00-94240 is hereby AFFIRMED and
UPHELD.

With costs against the accused-appellant.

SO ORDERED.[8]

Hence, this appeal.

The core issue for resolution is whether error attended the trial courts findings, as affirmed by the Court of Appeals, that

appellant was guilty beyond reasonable doubt of the crime of large scale illegal recruitment.

RA No. 8042 defines illegal recruitment as follows:

II. ILLEGAL RECRUITMENT

Page 165 of 205
 Sec. 6. DEFINITIONS. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, 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 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. It shall likewise include the
following acts, whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of
authority.

(a) To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable
fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that
actually received by him as a loan or advance;

....

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment;
and

(m) Failure to reimburse expenses incurred by the workers in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense
involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3)
or more persons individually or as a group.

A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate

a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in

recruitment and placement activities as a private recruitment entity. However, it appears that even licensees or holders of authority

can be held liable for illegal recruitment should they commit any of the above-enumerated acts.

Thus, it is inconsequential that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc.

was holding a valid authority. We thus find that the court below committed no reversible error in not appreciating that the manning

agency was a holder of a valid authority when appellant recruited the private complainants.

There is no merit in appellants contention that he could not be held liable for illegal recruitment since he was a mere employee

of the manning agency, pursuant to Section 6 of RA No. 8042 which provides:

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of
juridical persons, the officers having control, management or direction of their business shall be liable.

Contrary to appellants claim, he is not a mere employee of the manning agency but the crewing manager. As such, he receives

job applications, interviews applicants and informs them of the agencys requirement of payment of performance or cash bond prior to

the applicants deployment. As the crewing manager, he was at the forefront of the companys recruitment activities.

Page 166 of 205

 Private complainant Lindy Villamor testified that it was appellant who informed him that if he will give a cash bond of

P20,000.00, he will be included in the first batch of applicants to be deployed. Notwithstanding the payment of the cash bond as

evidenced by a receipt dated December 15, 1999 and issued by the appellant, Villamor was not deployed overseas. He further testified

that when he found out that appellant was no longer connected with Great Eastern Shipping Agency Inc., he confronted Jose Gasacao

and showed to him a photocopy of the receipt. Jose Gasacao gave him the address of the appellant but he failed to recover the amount

from the latter.

Another private complainant, Erencio C. Alaba testified that he applied as a seaman with Great Eastern Shipping Agency Inc.

in May 1999 and submitted all the requirements to appellant. The latter told Alaba that after payment of a cash bond, he will be

deployed within three months. On June 3, 1999, Alaba gave P10,000.00 to the appellant as evidenced by a cash voucher which was

approved and signed by the appellant in the presence of Alaba.

Afterwards, appellant asked Alaba to have his medical examination. He was also informed that those who had completed

paying the P20,000.00 cash bond will have priority in deployment. Thus, Alaba gave another P10,000.00 to appellant on August 2,

1999 and was again informed that he will be deployed in a dredging or supply boat within three months from August 1999. Despite

appellants representations, Alaba was never deployed and was also unable to recover the amount of the cash bond that he paid.

Private complainant Dennis Cabangahan testified that he applied as a seaman with Great Eastern Shipping Agency Inc. on

July 27, 1999 and paid the cash bond of P19,000.00 as evidenced by a receipt issued by appellant. The latter informed him that he

will be deployed abroad within three months. As what had happened to the other complainants, Cabangahan was never deployed

overseas nor did he recover his money.

Victoriano Cadirao[9] also testified that on August 1, 1999, he applied with the manning agency for the position of mess man.

He submitted his application to appellant who told him to come back when he has the money to cover the cash bond of P20,000.00.

Appellant told him that the payment of the cash bond is optional, but that his deployment will be fast-tracked if he pays the cash bond.

On August 10, 1999, he gave P20,000.00 to appellant who issued a receipt. When the promised employment failed to materialize, the

appellant told Cadirao to wait for another dredging vessel. In December 1999, he found out that appellant was no longer connected

with Great Eastern Shipping Agency Inc. so he went to his residence and demanded the return of his money. Appellant however refused

to return the amount of the cash bond.

On the other hand, Rommel B. Patolen testified that he applied with Great Eastern Shipping Agency Inc. as an ordinary

seaman in May 1999. After complying with the requirements, appellant told him to report to the agency thrice a week. From May to

December 1999, Patolen reported to the agency as instructed. On December 11, 1999, he gave P20,000.00 to appellant who
Page 167 of 205
acknowledged its receipt. Patolen further testified that he paid the cash bond because appellant told him that his prospective employer

will arrive in December 1999 from Saudi Arabia with a vessel to accommodate him. He was further advised that he could leave within

three months if he paid the cash bond. However, Patolen was never deployed and when he found out that appellant was no longer

connected with Great Eastern Shipping Agency Inc., he went to the house of the latter and informed him that he was withdrawing his

application. Appellant asked him to wait for his new agency, Ocean Grandeur, which has no license yet.

The foregoing testimonies of the private complainants clearly established that appellant is not a mere employee of Great

Eastern Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private complainants that

he can secure overseas employment for them upon payment of the cash bond.

It is well settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression

that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in

order to be employed.[10] Appellants act of promising the private complainants that they will be deployed abroad within three months

after they have paid the cash bond clearly shows that he is engaged in illegal recruitment.

The trial courts appreciation of the complainants testimonies deserves the highest respect since it was in a better position to

asses their credibility.

Even assuming that appellant was a mere employee, such fact is not a shield against his conviction for large scale illegal

recruitment. In the case of People v. Cabais,[11]we have held that an employee of a company or corporation engaged in illegal

recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in

the recruitment process. We further stated that:

In this case, evidence showed that accused-appellant was the one who informed complainant of job prospects in
Korea and the requirements for deployment. She also received money from them as placement fees. All of the
complainants testified that they personally met the accused-appellant and transacted with her regarding the overseas
job placement offers. Complainants parted with their money, evidenced by receipts signed by accused Cabais and
accused Forneas. Thus, accused-appellant actively participated in the recruitment of the complainants.[12]

Clearly, the acts of appellant vis--vis the private complainants, either as the crewing manager of Great Eastern Shipping

Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should not be countenanced.

We find no reason to deviate from the findings of the trial court that appellant is guilty beyond reasonable doubt of large scale

illegal recruitment. It was established that he promised overseas employment to five applicants, herein private complainants. He

interviewed and required them to complete and submit documents purportedly needed for their employment. Although he informed

them that it is optional, he collected cash bonds and promised their deployment notwithstanding the proscription against its collection

under Section 60 of the Omnibus Rules and Regulations Implementing R.A. No. 8042[13] which state that:

Page 168 of 205

 SEC. 60. Prohibition on Bonds and Deposits. In no case shall an employment agency require any bond
or cash deposit from the worker to guarantee performance under the contract or his/her repatriation.

We find as flimsy and self serving appellants assertion that he was unaware of the prohibition against the collection of bonds

or cash deposits from applicants. It is an established dictum that ignorance of the law excuses no one from compliance therewith.[14] The

defense of good faith is neither available.

It is also undisputed that appellant failed to deploy the private complainants without any valid reason, this notwithstanding

his promise to them that those who can pay the cash bond will be deployed within three months from payment of the same. Such

failure to deploy constitutes a violation of Section 6 (l) of RA No. 8042. Worse, when it became clear that appellant cannot deploy the

private complainants without their fault, he failed to return the amount of the cash bond paid by them.

Illegal recruitment is deemed committed in large scale if committed against three or more persons individually or as a group.

In this case, five complainants testified against appellants acts of illegal recruitment, thereby rendering his acts tantamount to economic

sabotage. Under Section 7 (b) of RA No. 8042, the penalty of life imprisonment and a fine of not less than P500,000.00 nor more than

P1,000.000.00 shall be imposed if illegal recruitment constitutes economic sabotage.

Verily, the trial court and the Court of Appeals correctly found appellant guilty beyond reasonable of large scale illegal

recruitment.

WHEREFORE, the May 18, 2005 Decision of the Court of Appeals in CA-G.R. CR No. 00800 is AFFIRMED.

SO ORDERED.

[G.R. No. 125044. July 13, 1998]

IMELDA DARVIN, petitioner, vs. HON. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

DECISION
Page 169 of 205
ROMERO, J.:

Before us is a petition for review of the decision of the Court of Appeals in C.A.-G.R. CR. No. 15624 dated January 31,
1996,[1] which affirmed in toto the judgment of the Regional Trial Court, Branch 19, Bacoor, Cavite, convicting accused-appellant,
Imelda Darvin for simple illegal recruitment under Article 38 and Article 39, in relation to Article 13 (b) and (c), of the Labor Code, as
amended.

Accused-appellant was charged under the following information:

That on or about the 13th day of April 1992, in the Municipality of Bacoor, Province of Cavite, Philippines and within the jurisdiction of
this Honorable Court, the above-named accused, through fraudulent representation to one Macaria Toledo to the effect that she has
the authority to recruit workers and employees for abroad and can facilitate the necessary papers in connection thereof, did, then
and there, wilfully, unlawfully and feloniously, hire, recruit and promise a job abroad to one Macaria Toledo, without first securing the
necessary license and permit from the Philippine Overseas Employment Administration to do so, thereby causing damage and
prejudice to the aforesaid Macaria Toledo.

Contrary to law.[2]

The evidence for the prosecution, based on the testimony of private respondent, Macaria Toledo, shows that sometime in March,
1992, she met accused-appellant Darvin in the latters residence at Dimasalang, Imus, Cavite, through the introduction of their common
friends, Florencio Jake Rivera and Leonila Rivera. In said meeting, accused-appellant allegedly convinced Toledo that by giving her
P150,000.00, the latter can immediately leave for the United States without any appearance before the U.S. embassy.[3] Thus, on April
13, 1992, Toledo gave Darvin the amount of P150,000.00, as evidenced by a receipt stating that the amount of P150,000.00 was for
U.S. Visa and Air fare.[4] After receiving the money, Darvin assured Toledo that she can leave within one week. However, when after a
week, there was no word from Darvin, Toledo went to her residence to inquire about any development, but could not find
Darvin.Thereafter, on May 7, 1992, Toledo filed a complaint with the Bacoor Police Station against Imelda Darvin. Upon further
investigation, a certification was issued by the Philippine Overseas Employment Administration (POEA) stating that Imelda Darvin is
neither licensed nor authorized to recruit workers for overseas employment.[5] Accused-appellant was then charged for estafa and
illegal recruitment by the Office of the Provincial Prosecutor of Cavite.

Accused-appellant, on the other hand, testified that she used to be connected with Dale Travel Agency and that in 1992, or
thereabouts, she was assisting individuals in securing passports, visa, and airline tickets. She came to know Toledo through Florencio
Jake Rivera, Jr. and Leonila Rivera, alleging that Toledo sought her help to secure a passport, US visa and airline tickets to the
States. She claims that she did not promise any employment in the U.S. to Toledo. She, however, admits receiving the amount of
P150,000.00 from the latter on April 13, 1992 but contends that it was used for necessary expenses of an intended trip to the United
States of Toledo and her friend, Florencio Rivera[6] as follows: P45,000.00 for plane fare for one person; P1,500.00 for passport,
documentation and other incidental expenses for each person; P20,000.00 for visa application cost for each person; and P17,000.00
for services.[7]After receiving the money, she allegedly told Toledo that the papers will be released within 45 days. She likewise testified
that she was able to secure Toledos passport on April 20, 1992 and even set up a date for an interview with the US embassy. Accused
alleged that she was not engaged in illegal recruitment but merely acted as a travel agent in assisting individuals to secure passports
and visa.

In its judgment rendered on June 17, 1993, the Bacoor, Cavite RTC found accused-appellant guilty of the crime of simple illegal
recruitment but acquitted her of the crime of estafa. The dispositive portion of the judgment reads as follows:

WHEREFORE, premises considered, accused Imelda Darvin is hereby found guilty beyond reasonable doubt of the crime of Simple
Illegal Recruitment for having committed the prohibited practice as defined by paragraph (b) of Article 34 and punished by
paragraph (c) of Article 39 of the Labor Code, as amended by PD 2018.

Accused Imelda Darvin is hereby ordered to suffer the prison term of Four (4) years, as minimum, to Eight (8) years, as maximum;
and to pay the fine of P25,000.00.

Regarding her civil liability, she is hereby ordered to reimburse the private complainant the sum of P150,000.00 and attorneys fees
of P10,000.00.

She is hereby acquitted of the crime of Estafa.

SO ORDERED.[8]

On appeal, the Court of Appeals affirmed the decision of the trial court in toto, hence this petition.

Before this Court, accused-appellant assails the decision of the trial and appellate courts in convicting her of the crime of simple
illegal recruitment. She contends that based on the evidence presented by the prosecution, her guilt was not proven beyond reasonable
doubt.

We find the appeal impressed with merit.

Article 13 of the Labor Code, as amended, provides the definition of recruitment and placement as:
Page 170 of 205
x x x; b) 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.

On the other hand, Article 38 of the Labor Code provides:

a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by
non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry
of Labor and Employment or any law enforcement officer may initiate complaints under this Article.

x x x x x x x x x.

Applied to the present case, to uphold the conviction of accused-appellant, two elements need to be shown: (1) the person
charged with the crime must have undertaken recruitment activities; and (2) the said person does not have a license or authority to
do so.[9]

In this case, private respondent, Macaria Toledo alleged that she was offered a job in the United States as nursing aide [10] by
accused-appellant. In her direct examination, she testified as follows:

Atty Alejandro:

Q : How did you come to know the accused?

Witness : I was introduced by my two friends. One of whom is my best friend. That according to them, this accused has connections
and authorizations, that she can make people leave for abroad, sir.

Court : What connections?

Witness : That she has connections with the Embassy and with people whom she can approach regarding work abroad, your Honor.

xxxxxxxxx

Q : When you came to meet for the first time in Imus, Cavite, what transpired in that meeting of yours?

A : When I came to her house, the accused convinced me that by means of P150,000.00, I will be able to leave immediately without
any appearance to any embassy, non-appearance, Sir.

Q : When you mentioned non-appearance, as told to you by the accused, precisely, what do you mean by that?

A : I was told by the accused that non-appearance, means without working personally for my papers and through her efforts
considering that she is capacitated as according to her I will be able to leave the country, Sir.

xxxxxxxxx

Atty. Alejandro : What transpired after the accused told you all these things that you will be able to secure all the documents
without appearing to anybody or to any embassy and that you will be able to work abroad?

Witness : She told me to get ready with my P150,000.00, that is if I want to leave immediately, Sir.

Atty. Alejandro : When you mentioned kaagad, how many days or week?

Witness : She said that if I will able to part with my P150,000.00. I will be able to leave in just one week time, Sir.

x x x x x x x x x.[11]

The prosecution, as evidence, presented the certification issued by the POEA that accused-appellant Imelda Darvin is not licensed
to recruit workers abroad.

It is not disputed that accused-appellant does not have a license or authority to engage in recruitment activities. The pivotal issue
to be determined, therefore, is whether the accused-appellant indeed engaged in recruitment activities, as defined under the Labor
Code. Applying the rule laid down in the case of People v. Goce,[12] to prove that accused-appellant was engaged in recruitment
activities as to commit the crime of illegal recruitment, it must be shown that the accused appellant gave private respondent the
distinct impression that she had the power or ability to send the private respondent abroad for work such that the latter was convinced
to part with her money in order to be so employed.

In this case, we find no sufficient evidence to prove that accused-appellant offered a job to private respondent. It is not clear that
accused gave the impression that she was capable of providing the private respondent work abroad. What is established, however, is
that the private respondent gave accused-appellant P150,000.00. The claim of the accused that the P150,000.00 was for payment of
private respondents air fare and US visa and other expenses cannot be ignored because the receipt for the P150,000.00, which was
presented by both parties during the trial of the case, stated that it was for Air Fare and Visa to USA.[13] Had the amount been for
something else in addition to air fare and visa expenses, such as work placement abroad, the receipt should have so stated.

By themselves, procuring a passport, airline tickets and foreign visa for another individual, without more, can hardly qualify as
recruitment activities. Aside from the testimony of private respondent, there is nothing to show that accused-appellant engaged in

Page 171 of 205

recruitment activities. We also note that the prosecution did not present the testimonies of witnesses who could have corroborated the
charge of illegal recruitment, such as Florencio Rivera, and Leonila Rivera, when it had the opportunity to do so. As it stands, the claim
of private respondent that accused-appellant promised her employment abroad is uncorroborated. All these, taken collectively, cast
reasonable doubt on the guilt of the accused.

This Court can hardly rely on the bare allegations of private respondent that she was offered by accused-appellant employment
abroad, nor on mere presumptions and conjectures, to convict the latter. No sufficient evidence was shown to sustain the conviction,
as the burden of proof lies with the prosecution to establish that accused-appellant indeed engaged in recruitment activities, thus
committing the crime of illegal recruitment.

In criminal cases, the burden is on the prosecution to prove, beyond reasonable doubt, the essential elements of the offense with
which the accused is charged; and if the proof fails to establish any of the essential elements necessary to constitute a crime, the
defendant is entitled to an acquittal. Proof beyond reasonable doubt does not mean such a degree of proof as, excluding the possibility
of error, produces absolute certainty. Moral certainty only is required, or that degree of proof which produces conviction in an
unprejudiced mind.[14]

At best, the evidence proffered by the prosecution only goes so far as to create a suspicion that accused-appellant probably
perpetrated the crime charged. But suspicion alone is insufficient, the required quantum of evidence being proof beyond reasonable
doubt. When the Peoples evidence fail to indubitably prove the accuseds authorship of the crime of which he stands accused, then it
is the Courts duty, and the accuseds right, to proclaim his innocence. Acquittal, therefore, is in order.[15]

WHEREFORE, the appeal is hereby GRANTED and the decision of the Court of Appeals in CA-G.R. CR No. 15624 dated January
31, 1996, is REVERSED and SET ASIDE. Accused-appellant Imelda Darvin is hereby ACQUITTED on ground of reasonable
doubt. Accordingly, let the accused be immediately released from her place of confinement unless there is reason to detain her further
for any other legal or valid cause. No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., (Chairman), Kapunan, and Purisima, JJ., concur.

PEOPLE OF THE PHILIPPINES, G.R. No. 180926

Plaintiff-Appellee,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.

LOURDES VALENCIANO y Promulgated:

DACUBA,
Accused-Appellant. December 10, 2008
x-----------------------------------------------------------------------------------------x
Page 172 of 205
 DECISION

VELASCO, JR., J.:

This is an appeal from the Decision[1] dated July 24, 2007 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 01390 which upheld

the Decision[2] of the Regional Trial Court (RTC), Branch 116 in Pasay City in Criminal Case No. 97-9851. The RTC convicted Lourdes

Valenciano of the crime of Illegal Recruitment in Large Scale.

The Facts

In May 1996, Lourdes Valenciano, claiming to be an employee of Middle East International Manpower Resources, Inc., went with one

Susie Caraeg to the house of Agapito De Luna, and told him he could apply for a job in Taiwan. A week later, De Luna went to

Valencianos house, there to be told to undergo a medical examination, with the assurance that if there were a job order abroad, he

would be able to leave. He was also told that the placement fee for his employment as a factory worker in Taiwan was PhP 70,000.

After passing the medical examination, De Luna paid Valenciano at the latters residence the following amounts: PhP 20,000 on June

21, 1996; PhP 20,000 on July 12, 1996; and PhP 30,000 on August 21, 1996. The first and last payments were turned over by

Valenciano to Teresita Imperial, who issued the corresponding receipts, and the second payment was turned over by Valenciano to

Rodante Imperial, who also issued a receipt.

Also in May 1996, Valenciano visited the house of Allan De Villa, accompanied by Euziel N. Dela Cuesta, Eusebio T. Candelaria, and De

Luna, to recruit De Villa as a factory worker in Taiwan. De Villa was also asked for PhP 70,000 as placement fee. He paid Valenciano

the following amounts: PhP 20,000 on May 16, 1996 at Valencianos residence; PhP 20,000 on May 30, 1996 at the Rural Bank of

Calaca, Batangas; PhP 20,000 on July 8, 1996 at Valencianos residence; and PhP 10,000 on August 14, 1996, also at her

residence. Valenciano turned over the amounts to either Teresita or Rodante. Teresita issued receipts for the May 16, July 8, and August

14, 1996 payments, while Rodante issued a receipt for the payment made on May 30, 1996.

On May 20, 1996, Valenciano, accompanied by Rodante and Puring Caraeg, went to the house of Dela Cuesta to recruit her for

employment as a factory worker in Taiwan. Dela Cuesta paid Valenciano PhP 20,000 as initial payment on May 20, 1996. On May 30,

1996, she paid Valenciano another PhP 20,000. On August 12, 1996, she paid PhP 15,000, and on August 21, 1996, she paid PhP

7,000. Valenciano turned the May 20 and 30, 1996 payments over to Rodante, who issued receipts for these payments. The payments

made on August 12 and 21, 1996 were turned over to Teresita, who also issued receipts for them. These payments were to cover the

placement fee and other expenses for the processing of the requirements for the employment of Dela Cuesta in Taiwan.

On May 1, 1996, Valenciano, with Rodante, Teresita, and Rommel Imperial, went to Lian, Batangas to recruit workers for employment

abroad. Candelaria applied for a job as a factory worker in Taiwan when Valenciano went to his residence in Lian. Valenciano asked

him for an initial payment of PhP 20,000. On May 30, 1996, Candelaria paid Valenciano PhP 20,000 when she returned to Lian. He

then paid PhP 20,000 on June 24, 1996 and PhP 29,000 on July 17, 1996 at Valencianos residence in Manila. These payments were to

Page 173 of 205

cover the placement fee and the expenses for the processing of his passport and other papers connected with his application for

employment as a factory worker in Taiwan. The payments made on May 30 and July 17, 1996 were turned over to Rodante, who issued

a receipt for the said payments. The payment made on June 24, 1996 was turned over by Valenciano to Teresita.

After the payments were made, Valenciano brought the prospective workers to the office of Middle East International Manpower

Resources, Inc. in Pasay City, where they were made to fill out application forms for their employment as factory workers

in Taiwan. The complainants were introduced to Romeo Marquez, alias Rodante Imperial, Teresita Marquez, alias Teresita Imperial,

and Rommel Marquez, alias Rommel Imperial, whom Valenciano made to appear as the owners of the employment agency. She assured

the prospective workers that they could leave for Taiwan within one month from the filing of their applications. During the period

material, they have not yet found employment as factory workers in Taiwan.

Valenciano, Rodante, Teresita, and Rommel were charged with the offense of illegal recruitment in large scale, as defined under Article

13(b) of Presidential Decree No. (PD) 442, otherwise known as the Labor Code of the Philippines, as amended, in relation to Art. 38(a),

and penalized under Art. 39(c) of the Code, as amended by PD 1920 and PD 2018. The Information reads as follows:
That sometime in May, 1996 to August, 1996, or thereabout, in the City of Pasay, Metro Manila, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused, representing to have the capacity, authority
or license to contract, enlist and deploy or transport workers for overseas employment, conspiring, confederating,
and mutually helping each other, did then and there, wilfully, unlawfully and criminally recruit and promise to deploy
the herein complainants, namely, Agapito R. De Luna, Allan Ilagan De Villa, Euziel N. Dela Cuesta and Eusebio T.
Candelaria, as factory workers in Taiwan, in exchange for placement, processing and other fees ranging from
P62,000.00 to P70,000.00 or a total of P271,000.00, without first obtaining the required license and/or authority
from the Philippine Overseas Employment Administration (POEA).

CONTRARY TO LAW.[3]

Accused-appellant Valenciano pleaded not guilty and waived the pre-trial. The other three accused remained at large.

The RTC found accused-appellant guilty, the dispositive portion of the decision reading as follows:
WHEREFORE, accused Lourdes Valenciano y Dacuba is found guilty beyond reasonable doubt of the offense of illegal
recruitment in large scale as charged in the aforequoted Information; and she is sentenced to suffer the penalty of
life imprisonment and to pay a fine of P100,000.00.

She is also ordered to indemnify complainants Agapito R. de Luna, Allan Ilagan de Villa, Euziel N. dela Cuesta and
Eusebio T. Candelaria the amounts of P70,000.00, P70,000.00, P62,000.00 and P69,000.00, respectively, as
reparation of the damage caused.

No other civil liability may be adjudged against the accused for lack of any factual or legal basis therefor.

SO ORDERED.[4]

Accused-appellant appealed to this Court, but the case was transferred to the CA through a Resolution dated September 6,

2004, following People v. Mateo.[5]

The CA, in CA-G.R. CR-H.C. No. 01390, affirmed the decision of the trial court finding accused-appellant guilty of the offense

charged.

Hence, we have this appeal.

The Issues

Page 174 of 205

Accused-appellant raises the following assignment of errors: (1) the lower court gravely erred in not acquitting accused-appellant on

reasonable doubt; and (2) the lower court gravely erred in holding that a conspiracy exists between accused-appellant and her co-

accused.

The Courts Ruling

The appeal is without merit.

In her defense, accused-appellant claims that she was an ordinary employee of Middle East International Manpower Resources, Inc.,

where her other co-accused were the owners and managers. She also denies receiving payment from the complainants; that had she

promised employment in Taiwan, this promise was made in the performance of her duties as a clerk in the company. She denies too

having knowledge of the criminal intent of her co-accused, adding that she might even be regarded as a victim in the present case, as

she was in good faith when she made the promise.

Art. 13(b) of the Labor Code reads:

Recruitment 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.

Art. 38(a) and (b) of the Labor Code reads as follows:

(a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code,
to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under
Article 39 of this Code. x x x

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense
involving economic sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons
conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise
or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale
if committed against three (3) or more persons individually or as a group.

Art. 39(a) provides that the penalty of life imprisonment and a fine of PhP 100,000 shall be imposed if illegal recruitment

constitutes economic sabotage as defined above.

The claim of accused-appellant that she was a mere employee of her other co-accused does not relieve her of liability. An

employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it

is shown that the employee actively and consciously participated in illegal recruitment.[6]As testified to by the complainants, accused-

appellant was among those who met and transacted with them regarding the job placement offers. In some instances, she made the

effort to go to their houses to recruit them. She even gave assurances that they would be able to find employment abroad and leave

for Taiwan after the filing of their applications.Accused-appellant was clearly engaged in recruitment activities, notwithstanding her

gratuitous protestation that her actions were merely done in the course of her employment as a clerk.

Page 175 of 205

 Accused-appellant cannot claim to be merely following the dictates of her employers and use good faith as a shield against

criminal liability. As held in People v. Gutierrez:

Appellant cannot escape liability by claiming that she was not aware that before working for her employer
in the recruitment agency, she should first be registered with the POEA.Illegal recruitment in large scale is malum
prohibitum, not malum in se. Good faith is not a defense.[7]

The claim of accused-appellant that she received no payment and that the payments were handed directly over to her co-

accused fails in the face of the testimony of the complainants that accused-appellant was the one who received the money. In spite of

the receipts having been issued by her co-accused, the trial court found that payments were directly made to accused-appellant, and

this finding was upheld by the CA. Nothing is more entrenched than the rule that where, as here, the findings of fact of the trial court

are affirmed by the CA, these are final and conclusive upon this Court.[8] And even if it were true that no money changed hands, money

is not material to a prosecution for illegal recruitment, as the definition of recruitment and placement in the Labor Code includes the

phrase, whether for profit or not. We held in People v. Jamilosa that it was sufficient that the accused promises or offers for a fee

employment to warrant conviction for illegal recruitment.[9] Accused-appellant made representations that complainants would receive

employment abroad, and this suffices for her conviction, even if her name does not appear on the receipts issued to complainants as

evidence that payment was made.

Neither accused-appellant nor her co-accused had authority to recruit workers for overseas employment. The Philippine

Overseas Employment Administration (POEA), through its employee, Corazon Aquino, issued on July 8, 1997 the following certification

to that effect:
This is to certify that per available records of this Office, MIDDLE EAST INTERNATIONAL MANPOWER
RESOURCES INC., with office address at 2119 P. Burgos St., cor. Gil Puyat Ave., Pasay City represented by SAPHIA
CALAMATA ASAAD is a licensed landbased agency whose license expired on October 13, 1996. Per record, said agency
has not filed any application for renewal of license.

Per available records, the names of RODANTE IMPERIAL a.k.a. ROMEO MARQUEZ, TERESITA IMPERIAL
a.k.a. TERESITA MARQUEZ, ROMMEL MARQUEZ a.k.a. ROMMEL IMPERIAL and LOURDES VALENCIANO do not appear
on the list of employees submitted by agency.

This certification is being issued for whatever legal purpose it may serve.[10]

Another certification dated July 9, 1997 stated that accused-appellant in her personal capacity was not licensed or authorized

to recruit workers for overseas employment and that any recruitment activities undertaken by her are illegal.[11] Accused-appellant

could thus point to no authority allowing her to recruit complainants, as she was not an employee of Middle East International Manpower

Resources, Inc. nor was she allowed to do so in her personal capacity. Furthermore, she undertook recruitment activities outside the

premises of the office of a licensed recruitment agency, which can only be done with the prior approval of the POEA, and neither she

nor her co-accused had permission to do so, as testified by Aquino of the POEA.[12]

Accused-appellant was convicted of Illegal Recruitment in Large Scale, and there could be no other result. As held in Jamilosa:
To 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.[13] x x x

Page 176 of 205

 The RTC found accused-appellant to have undertaken recruitment activities, and this was affirmed by the CA. A POEA

certification was submitted stating that accused-appellant was not authorized to recruit applicants for overseas employment, and she

did not contest this certification. In the present case, there are four complainants: De Luna, De Villa, Dela Cuesta, and Candelaria. The

three essential elements for illegal recruitment in large scale are present. Thus, there can be no other conclusion in this case but to

uphold the conviction of accused-appellant and apply the penalty as imposed by law.

WHEREFORE, premises considered, we AFFIRM the appealed CA Decision dated July 24, 2007 in CA-G.R. CR-H.C. No.

01390, with no costs.

SO ORDERED.

PEOPLE OF THE PHILIPPINES, G.R. No. 170834

Plaintiff-Appellee,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
VELASCO, JR.,* and
REYES, JJ.

ANTONIO NOGRA, Promulgated:

Accused-Appellant. August 29, 2008
x----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is an appeal from the Decision[1] dated August 31, 2005 of the Court of Appeals (CA) in CA-G.R. C.R. No. 00244

affirming the Judgment of the Regional Trial Court (RTC), Branch 19, Naga City in Criminal Case No. 98-7182, convicting

Page 177 of 205

Antonio Nogra (appellant) of large scale illegal recruitment under Section 6(m) in relation to Section 7(b) of Republic Act No. 8042

(R.A. No. 8042),[2] otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.[3]

The inculpatory portion of the Information charging one Lorna G. Orciga and appellant with large scale illegal recruitment reads as

follows:

That sometime during the period of March 1997 to November, 1997 in the City of Naga, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, being the General Manager and Operations Manager
of LORAN INTERNATIONAL OVERSEAS RECRUITMENT CO., LTD., with office at Concepcion Grande, Naga City,
conspiring, confederating together and mutually helping each other, representing themselves to have the capacity
to contract, enlist, hire and transport Filipino workers for employment abroad, did then and there willfully, unlawfully
and criminally, for a fee, recruit and promise employment/job placement to the herein complaining witnesses RENATO
ALDEN, OLIVER SARMIENTO, FE ZABALLA, TEOFILA LUALHATI, PILIPINA MENDOZA and KERWIN DONACAO, but
failed to actually deploy them without valid reason, as well as to reimburse their documentation, placement and
processing expenses for purposes of deployment despite their repeated demands for the return of the same, to their
damage and prejudice in the amounts as may be proven in court.

CONTRARY TO LAW.[4]

Only appellant was brought to the jurisdiction of the trial court since Lorna G. Orciga was then and still is at large. Arraigned with the

assistance of counsel, appellant entered a plea of NOT GUILTY to the crime charged. Thereafter, trial of the case ensued.

Of the six complainants, the prosecution was able to present five of them, namely: Renato Alden, Fe Zaballa, Teofila Lualhati, Filipina

Mendoza and Kerwin Donacao. AnaielynSarmiento, wife of complainant Oliver Sarmiento, also testified for the prosecution.

The facts, as established by the prosecution, are aptly summarized by the Office of the Solicitor General (OSG), as follows:

Appellant held office at Loran International Overseas Recruitment Co., (Loran) in Concepcion Grande, Naga City (p.
4, TSN, October 19, 1998). A nameplate on his table prominently displayed his name and position as operations
manager (p. 11, TSN, November 17, 1998; p. 4, TSN, January 12, 1999; p. 21, TSN, November 19, 1998). The
license of Loran also indicated appellant as the operations manager (p. 5, TSN, February 10, 1999). The POEA files
also reflect his position as operations manager of Loran (Exhibit L to L-4, pp. 5-9, TSN, November 19, 1998).

Sometime in December 1996, Renato Alden went to Loran to apply for a job as hotel worker for Saipan. He was
interviewed by appellant, who required Alden to submit an NBI clearance and medical certificate and to pay the
placement fee. Alden paid the amount of P31,000.00. The additional amount of P4,000.00 was to be paid prior to his
departure to Saipan (pp. 5-6, TSN, November 17, 1998). Appellant promised Alden that he would leave within a
period of three to four months. After one year of waiting Alden was not able to leave. Alden filed a complaint with
the NBI when he was not able to recover the amount and could no longer talk with appellant (p. 6, TSN, November
17, 1998).

On April 18, 1997, Teofila Lualhati applied for employment as hotel worker for Saipan with Loran (pp. 1-3, 10,
TSN, November 19, 1998). Appellant required her to submit an NBI clearance and medical certificate and to pay the
processing fee in the amount of P35,000.00 so she could leave immediately. She paid the amount of P35,000.00 to
Loran's secretary in the presence of appellant. She was promised that within 120 days or 4 months she would be
able to leave (pp. 11-13, TSN, November 19, 1998). Despite repeated follow-ups, Lualhati was unable to work
in Saipan. She demanded the refund of the processing fee. When the amount was not returned to her, she filed a
complaint with the NBI (pp. 14-15, TSN, November 19, 1998).

Sometime in April 1998, Filipina Mendoza went to Loran to apply for employment as hotel worker (p. 4, TSN, July
12, 1999). She paid the amount of P35,000.00 as placement fee. When she was not able to work abroad, she went
to Loran and sought the return of P35,000.00 from appellant (p. 7, TSN, January 21, 1999).

Sometime in October 1997, Kerwin Donacao went to Loran to apply for employment as purchaser in Saipan (p. 4,
TSN, February 10, 1999). He was required to submit NBI clearance, police clearance, previous employment certificate
and his passport. He paid the placement fee of P35,000.00 (pp.4-5, TSN, February 10, 1999). After paying the
amount, he was told to wait for two to three months. When he was not able to leave for Saipan, he demanded the
return of the placement fee, which was not refunded (pp. 6-7, TSN, February 10, 1999).

During the first week of November 1997, Annelyn Sarmiento and her husband, Oliver Sarmiento, applied for overseas
employment. For the application of Oliver Sarmiento, they submitted his medical certificate and certification of
previous employment. They were also made to pay the amount of P27,000.00 as processing
Page 178 of 205
 fee. Oliver Sarmiento was promised that within 1 month, he would be able to leave. Initially, Oliver Sarmiento was
told that allegedly his visa was yet to be obtained. When he was not able to leave and what he paid was not refunded,
he filed a complaint with the NBI (pp. 4-6, TSN, April 23, 1999).

Sometime in May 1997, Fe Zaballa applied for overseas employment in Saipan with Loran (p. 4, TSN, May 21,
1999). She was required to submit her medical certificate, original copy of her birth certificate, NBI clearance and
police clearance. She was also required to pay the amount of P35,000.00 as placement fee. When she could not be
deployed, she sought to recover the amount she paid, which was not returned (pp. 7-8, TSN, May 2, 1999).[5]

On the other hand, appellant presented the following evidence:

The defense presented [appellant] Antonio Nogra and the agency's secretary and cashier, Maritess Mesina.

From their testimonies it was established that LORAN INTERNATIONAL OVERSEAS RECRUITMENT CO., LTD., (LORAN,
for brevity) was owned by accused Lorna Orciga and Japanese national Kataru Tanaka (TSN, September 30, 2000,
p. 7). Sometime in July 1994, [appellant] Antonio Nogra read from outside the agency's main office
at Libertad, Mandaluyong City that it was in need of a liaison officer. He applied for the position. The part-owner and
co-accused, Lorna Orciga, hired him instead as Operations Manager as the agency was then still in the process of
completing the list of personnel to be submitted to the POEA. (TSN, January 31, 2001, p. 5).

[Appellant] Nogra started working with LORAN in October 1994. In 1995, he was transferred to Naga City when the
agency opened a branch office thereat. Although he was designated as the Operations Manager,
[appellant] Nogra was a mere employee of the agency. He was receiving a monthly salary of P5,000.00 and
additional P2,000.00 monthly meal allowance. He was in-charge of the advertisement of the company. He also drove
for the company. He fetched from the airport the agency's visitors and guests and drove them to hotels and other
places. (TSN, May 3, 2000, pp. 2-9).

Although part-owner Lorna Orciga was stationed in Manila, she, however, actually remained in control of the branch
office in Naga City. She conducted the final interview of the applicants and transacted with the foreign
employers. She also controlled the financial matters and assessment fees of the agency in Naga City (TSN,
September 20, 2000, pp. 8-9). The placement and processing fees collected by the agency in Naga City were all
deposited in the bank account of Lorna Orciga and not a single centavo went to the benefit of [appellant] Nogra (TSN,
January 10, 2000, pp. 14-22).[6]

On March 26, 2003, the RTC rendered Judgment[7] finding appellant guilty beyond reasonable doubt of the crime charged. The fallo of

the decision reads:

WHEREFORE, the Court finds the accused ANTONIO NOGRA guilty beyond reasonable doubt of the crime of Illegal
Recruitment Committed in Large Scale defined under Sections 6(m) and 7(b) of RA 8042, otherwise known as The
Migrant Workers and Overseas Filipinos Act of 1995 and, accordingly, hereby imposes upon him the penalty of life
imprisonment and a fine of Five hundred thousand pesos (P500,000.00).

SO ORDERED.[8]

On April 10, 2003, appellant filed a Notice of Appeal.[9] The RTC ordered the transmittal of the entire records of the case to this Court.

Conformably to the ruling in People v. Mateo,[10] the case was referred to the CA for intermediate review.[11]

On August 31, 2005, the CA rendered a Decision[12] affirming the decision of the RTC. The CA held that being an employee is not a

valid defense since employees who have knowledge and active participation in the recruitment activities may be criminally liable for

illegal recruitment activities, based upon this Court's ruling in People v. Chowdury[13] and People v. Corpuz;[14] that appellant had

knowledge of and active participation in the recruitment activities since all the prosecution witnesses pinpointedappellant as the one

whom they initially approached regarding their plans of working overseas and he was the one who told them about the fees they had

to pay, as well as the papers that they had to submit; that the mere fact that appellant was not issued special authority to recruit does

not exculpate him from any liability but rather strongly suggests his guilt; that appellant's invocation of non-flight cannot be weighed

in his favor since there is no established rule that non-flight is, in every instance, an indication of innocence.

Page 179 of 205

A Notice of Appeal[15] having been timely filed by appellant, the CA forwarded the records of the case to this Court for further review.

In his Brief, appellant assigns as errors the following:

I
THE TRIAL COURT ERRED IN NOT FINDING THAT THE ACCUSED-APPELLANT WAS A MERE EMPLOYEE OF THE
RECRUITMENT AGENCY DESPITE HIS DESIGNATION AS ITS OPERATIONS MANAGER.

II
THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT OF THE OFFENSE-CHARGED DESPITE THE
FACT THAT UNDER THE LAW, HE WAS NOT CRIMINALY LIABLE FOR HIS AGENCY'S TRANSACTIONS. [16]

Appellant argues that the agency was under the management and control of Orciga, and that he was a mere employee; that he could

not be held personally liable for illegal recruitment in the absence of any showing that he was validly issued special authority to recruit

workers, which was approved by the Philippine Overseas Employment Administration (POEA); that his non-flight is indicative of his

innocence.

Appellee, through the OSG, counters that appellant is not a mere clerk or secretary of Loran, but its Operations Manager who directly

participated in the recruitment scheme by promising private complainants work abroad, but failed to deploy them and refused to

reimburse the applicants' placement fees when demanded.

The appeal fails. The CA did not commit any error in affirming the decision of the RTC.

R.A. No. 8042 broadened the concept of illegal recruitment under the

Labor Code[17] and provided stiffer penalties, especially those that constitute economic sabotage, i.e., Illegal Recruitment in Large Scale

and Illegal Recruitment Committed by a Syndicate.

Section 6 of R.A. No. 8042 defined when recruitment is illegal:

SEC. 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. It shall likewise
include the following acts, whether committed by any person, whether a non-licensee, non-holder,
licensee or holder of authority:

xxxx

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment; and

(m) Failure to reimburse expenses incurred by the workers in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered
as offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed committed in largescale if committed against three (3)
or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices, and
accessories. In case
Page 180 of 205
 of juridical persons, the officers having control, management or direction of their business shall be liabl
e. (Emphasis and underscoring supplied)

In the present case, evidence for the prosecution showed that Loran

International Overseas Recruitment Co., Ltd. is a duly licensed recruitment agency with authority to establish a branch office. However,

under R.A. No. 8042, even a licensee or holder of authority can be held liable for illegal recruitment, should he commit or omit to do

any of the acts enumerated in Section 6.

Appellant was charged with illegal recruitment in large scale under Section 6 (l) and (m) of R.A. No. 8042. Section 6 (l) refers to the

failure to actually deploy without valid reason, as determined by the Department of Labor and Employment (DOLE). Section 6 (m)

involves the failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes

of deployment, in cases in which the deployment does not actually take place without the workers fault.

A thorough scrutiny of the prosecution's evidence reveals that it failed to prove appellant's liability under Section 6 (l) of R.A. No.

8042. The law requires not only that the failure to deploy be without valid reason as determined by the Department of Labor and

Employment. The law envisions that there be independent evidence from the DOLE to establish the reason for non-deployment, such

as the absence of a proper job order. No document from the DOLE was presented in the present case to establish the reason for

the accused's failure to actually deploy private complainants. Thus, appellant cannot be held liable under Section 6 (l) of R.A. No. 8042.

As to Section 6 (m) of R.A. No. 8042, the prosecution has proven beyond reasonable doubt that private complainants made payments

to Loran, and appellant failed to reimburse the amounts paid by private complainants when they were not deployed. The prosecution

presented the receipts issued by Loran to private complainants evidencing payment of placement fees ranging

from P27,000.00 to P35,000.00.

Appellant does not dispute that private complainants were not deployed for overseas work, and that the placement fees they paid were

not returned to them despite demand. However, he seeks to exculpate himself on the ground that he is a mere employee of Loran.

The Court is unswayed by appellant's contention.

The penultimate paragraph of Section 6 of R.A. No. 8042 explicitly states that those criminally liable are the principals, accomplices,

and accessories. In case

of juridical persons, the officers having control, management or direction of their business shall be liable. Contrary to appellant's

claim, the testimonies of the complaining witnesses and the documentary evidence for the prosecution clearly established that he was

not a mere employee of Loran, but its Operations Manager. The license of Loran, the files of the POEA and the nameplate prominently

displayed on his office desk reflected his position as Operations Manager. As such, he received private complainants' job applications;

and interviewed and informed them of the agencys requirements prior to their deployment, such as NBI clearance, police clearance,

medical certificate, previous employment certificate and the payment of placement fee. He was also responsible for the radio

advertisements and leaflets, which enticed complaining witnesses to apply for employment with the agency. Clearly, as Operations

Manager, he was in the forefront of the recruitment activities.

Page 181 of 205

 The defense of being a mere employee is not a shield against his conviction for large scale illegal recruitment. In People

v. Gasacao[18] and People v. Sagayaga,[19] the Court reiterated the ruling in People v. Cabais,[20] People v. Chowdury[21] and People

v. Corpuz[22] that an employee of a company or corporation engaged in illegal recruitment may be held liable as principal by direct

participation, together with its employer, if it is shown that he actively and consciously participated in the recruitment process.

In the present case, it was clearly established that appellant dealt directly with the private complainants. He interviewed and

informed them of the documentary requirements and placement fee. He promised deployment within a three or four month-period

upon payment of the fee, but failed to deploy them and to reimburse, upon demand, the placement fees paid.

The Court is not persuaded by appellant's argument that his non-flight is indicative of his innocence. Unlike the flight of an

accused, which is competent evidence against him tending to establish his guilt, non-flight is simply inaction, which may be due to

several factors. It may not be construed as an indication of innocence.[23]

Of marked relevance is the absence of any showing that the private complainants had any ill motive against appellant other

than to bring him to the bar of justice to answer for the crime of illegal recruitment. Besides, for strangers to conspire and accuse

another stranger of a most serious crime just to mollify their hurt feelings would certainly be against human nature and

experience.[24] Where there is nothing to show that the witnesses for the prosecution were actuated by improper motive, their positive

and categorical declarations on the witness stand under the solemnity of an oath deserve full faith and credence.[25]

It is a settled rule that factual findings of the trial courts, including their assessment of the witnesses credibility, are entitled

to great weight and respect by the Supreme Court, particularly when the CA affirmed such findings.[26] After all, the trial court is in the

best position to determine the value and weight of the testimonies of witnesses.[27]The absence of any showing that the trial court

plainly overlooked certain facts of substance and value that, if considered, might affect the result of the case, or that its assessment

was arbitrary, impels the Court to defer to the trial courts determination according credibility to the prosecution evidence.

Under the last paragraph of Section 6 of R.A. No. 8042, illegal recruitment shall be considered an offense involving economic

sabotage if committed in large scale, viz, committed against three or more persons individually or as a group. In the present case, five

complainants testified against appellants acts of illegal recruitment, thereby rendering his acts tantamount to economic

sabotage. Under Section 7 (b) of R.A. No. 8042, the penalty of life imprisonment and a fine of not less than P500,000.00 nor more

than P1,000.000.00 shall be imposed if illegal recruitment constitutes economic sabotage.

Thus, the RTC and the CA correctly found appellant guilty beyond reasonable doubt of large scale illegal recruitment.

WHEREFORE, the appeal is DISMISSED. The Decision dated August 31, 2995 of the Court of Appeals affirming the conviction of

appellant Antonio Nogra for large scale illegal recruitment under Sections 6 (m) and 7 (b) of Republic Act No. 8042 is AFFIRMED.

SO ORDERED.

Page 182 of 205

G.R. No. 91552-55 March 10, 1994

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
FERNANDO MANUNGAS, JR. y GO @ "PERCY", accused-appellant.

The Solicitor General for plaintiff-appellee.

Rolando Gamalinda for accused-appellant.

NOCON, J.:

This is an appeal by accused-appellant Fernando Manungas, Jr. alias "Percy" from the decision1 dated October 31, 1989 of the
Regional Trial Court of Lingayen, Pangasisnan, Branch 38 in Criminal Cases Nos. L-3993, L-3994,
L-3996 and L-4000 finding him guilty beyond reasonable doubt of the crimes of ESTAFA and ILLEGAL RECRUITMENT, the dispositive
portion of which reads:

In the light of what has been stated and discussed above, the court finds and holds the accused Fernando
Manungas y Go alias "Percy" guilty beyond peradventure of doubt of the crimes filed against him and conformable
thereto, hereby pronounces judgment as follows:

In Criminal Case No. L-3993, the court declares accused, Fernando Manungas y Go alias "Percy" guilty of estafa for
the sum of P16,800.00 as alleged in the information filed against him and there being no aggravating nor
mitigating circumstance, and applying the Indeterminate Sentence Law in his favor, said accused is hereby
sentenced to suffer the prison term from two (2) years, eleven (11) months and ten years (10) days
as minimum to five (5) years, five (5) months and eleven (11) days of prision correccional as maximum and to pay
the costs of the proceedings.

The court further orders the accused to reimburse the offended party, Wilfrey Mabalot, the sum of sixteen
thousand eight hundred (P16,800.00) pesos which is the amount of money paid and delivered to him by said
complaining witness without subsidiary imprisonment in case of insolvency.

In Criminal Case No. L-3994, the court likewise declares the accused, Fernando Manungas y Go alias "Percy" guilty
of estafa for the sum of P17,550.00 as charged in the information. And there being no aggravating nor mitigating
circumstance present, and applying the Indeterminate Sentence Law in his favor, the accused is hereby sentenced
to suffer an indeterminate prison term from two (2) years, eleven (11) months and ten (10) days as minimum to
five (5) years, five (5) months and (11) days of prision correccional as maximum and to pay the costs of the
proceedings.
Page 183 of 205
 The court further directs the accused to reimburse the offended party, Danilo Ramirez the sum of seventeen
thousand five hundred fifty (P17,550.00) pesos which the accused took from the complaint without subsidiary
imprisonment in case of insolvency.

In Criminal Case No. L-3996, the court also declares the accused, Fernando Manungas y Go alias "Percy" guilty of
estafa for eighteen thousand six hundred (P18,600.00) pesos as charged in the information filed against him. There
being no aggravating nor mitigating circumstance present, and applying the Indeterminate Law in his favor, said
accused is hereby sentenced to suffer an indeterminate prison term from two (2) years, eleven months (11)
months and ten (10) days asminimum to five (5) years, five (5) months and eleven (11) days of prision
correccional as maximum and to pay the costs of the proceedings.

The court also directs the accused to reimburse the offended party the sum of eighteen thousand six hundred
(P18,600.00) pesos which is the amount paid and delivered by the offended party to him without subsidiary
imprisonment in case of insolvency.

In Criminal Case No. L-4000, the court likewise holds the accused, Fernando Manungas y Go alias "Precy" guilty of
the crime of Illegal Recruitment on Large Scale as charged in the information filed against him, defined and
penalized under the provisions of Article 39, par. (a) of Presidential Decree No. 2018 amending Articles 38 and 39
of P.D. No. 442, otherwise known as the Labor Code of the Philippines, and conformable thereto, hereby sentences
the said accused to suffer the penalty of Life Imprisonment and to pay a fine of One Hundred Thousand
(P100,000.00) pesos without subsidiary imprisonment in case of insolvency pursuant to law.

The accused shall serve the penalties herein imposed against him successively or one after the other according to
their severity.2

Based on the evidence adduced before the trial court, the facts of the case are as follows:

Sometime in April of 1987, accused-appellant Fernando Manungas, Jr. went to Barangay Legaspi, Tayug, Pangasinan where he
stayed in the house of Arturo and Lilia de Vera to recruit workers for employment abroad. During his stay, accused-appellant was
able to convince complainants Wilfrey Mabalot, Danilo Ramirez, Leonardo Estanoco and Crisanto Collado to apply as janitors in Saudi
Arabia. He told them to bring all the necessary documents for the processing of their applications to his office in Manila.

On April 29, 1987, complainants went to accused-appellant's office located at Room 611, L and S Bldg., 1414 Roxas Blvd., Ermita,
Manila and paid accused-appellant P250.00 each for their medical examination. Thereafter, accused-appellant required the
complainants to pay, on various occasions, placement fees and other expenses incurred in the processing of their papers and issued
corresponding receipts for said amounts. The total amount paid by the complainants to accused-appellant are the following: Wilfrey
Mabalot P16,800.00; Danilo Ramirez P17,550.00, Leonardo Estanoco 18,600.00, and Crisanto Collado 13,300.00

When complainants failed to leave for Saudi Arabia, they requested Luis "Jing" Ramirez, to verify with the Philippine Overseas
Employment Administration (POEA) whether accused-appellant was licensed to recruit workers for abroad. They subsequently
learned that he was not as shown by the Certification issued by the POEA.3

Thereafter, complaints filed against accused-appellant complaints for Estafa defined under par. 2(a), Article 315 of the Revised Penal
Code and Illegal Recruitment on a Large Scale. In due course, informations fro three (3) counts of Estafa (Criminal Cases Nos. L-
3993, L-3994 and L-3996) and Illegal Recruitment on a Large Scale (Criminal Case No. L-4000) were filed against accused-appellant
before the Regional Trial Court of Lingayen, Pangasinan.

On the other hand, accused-appellant maintained that he was the operations manager of the ZG Recruitment and Placement Agency,
a duly licensed recruitment agency. Sometime in April 1987, he went to Barangay Legaspi, Tayug, Pangasinan and recruited
complainants to work in Saudi Arabia as janitors. Unfortunately, the job order for the janitorial services was awarded to Express
Placement Agency instead of ZG Recruitment and Placement agency. Thereafter, accused-appellant transferred complainants'
application for overseas employment to Nora Cunanan of Express Placement Agency. Accused-appellant also turned over the fees
paid by the complainants to Nora Cunanan as evidenced by the receipts4 issued by the latter. When Nora Cunanan absconded with
the money of the complainants, accused-appellant filed an estafa case against Nora Cunanan after securing a Special Power of
Attorney from the complainants to prosecute and collect their money. However, he was not able to attend the hearing as he was
arrested in connection with the these cases.

Accused-appellant maintains that he did not make false representations to the complainants when he requited the latter for
employment abroad as he had told complainants that he is only an employee of a licensed recruitment agency in Manila. He further
claims that he was not motivated by any deceitful intentions and had not caused any damage to the complainants because the
amounts of money given to him by the latter were actually spent for their medical tests and other documents necessary for their
overseas employment.

Article 13 (b) of the Labor Code defines "Recruitment and Placement" as:

Page 184 of 205

 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.

In the instant case, accused-appellant told complainants to submit to him their pictures, birth certificates, NBI clearances and the
necessary documents for the processing of their employment in Saudi Arabia. Thereafter, accused-appellant collected from each of
the complainants payment for the their respective passport, training fee, placement fee, medical tests and other sundry expenses
which unquestionably constitutes acts of recruitment within the meaning of the law. Besides, there is illegal recruitment when one
gives the impression of his ability to send a worker abroad5 and there is evidence that accused-appellant had represented to the
complainants that he could send them abroad as janitors in Saudi Arabia. And because of his representation, complainants gave their
hard-earned money to accused-appellant in consideration of the same representation. As pointed out by the Solicitor General in his
brief:

It may be that at the time appellant recruited private complainants, he was then the operations manager of the
ZGR Placement Agency, a duly licensed recruitment agency. But, as amply established by the evidence, the
recruitment of private complainants was appellant's own personal undertaking. He did not do it for the agency. This
is clearly shown by the sequence of events that led to the consum[m]ation of the transaction in question. Thus: it
was appellant who talked private complainants into applying for employment abroad; when private complainants
signified their interest, he alone was the one who informed them of the documents that they have to secure; he
too was the one who demanded and received from them the fees for medical examination, passport,
authentication, training, placement and psycho and AIDS test; also, he was the one who assured them of
employment abroad and of the return of their money in the event of their non-deployment; moreover, it was he
who undertook to inform private complainants of their departure.

But that is not all. When private complainants failed to receive notice of their departure as promised them by
appellant, they had somebody verify with the POEA if appellant was a licensed recruiter. This circumstance shows
all the more that indeed appellant represented himself to be the recruiter, otherwise it would have been the status
of the agency with which he allegedly worked for, that private complainants would have requested to be verified.6

As to accused-appellant's claim that he did not misappropriate the money given to him by the complainants as he had turned over
the latters' placement fees to Nora Cunanan, who subsequently absconded with the complainant's money, the trial court correctly
held that:

The version of the defense has the nature of a cock and bull story which is difficult and hard to accept. It is
something that is fantastic and ridiculous. It is within the realm of fiction and patently a mere fabrication to
exculpate the accused from the consequences of his nefarious and deceitful activities. If it is really true that the
complainants were transferred and accommodated by the agency of Nora Cunanan, why did not the accused and
Mrs. Lydia Zamora who appear to be both intelligent take the necessary prudence and caution of putting the
supposed agreement to transfer in writing considering the amounts of funds involved in the alleged transfer. Logic
and common sense dictate that under such a situation, the accused and Mrs. Zamora take ordinary care of their
concerns. To impress the court that there was really a transfer made, the accused claimed that there was a estafa
case filed against Mrs. Cunanan before the City Fiscal's Office in Manila. It is however surprising why Atty. Jose
Torrefranca who was engaged by the accused to file the estafa case did not present any letter-complaint or any
charged sheet filed against Mrs. Cunanan. He did not even mention the Fiscal who investigated the case. More
intriguing is the fact that counsel does not know what happened to the alleged case of estafa after he filed the
same. Likewise, when Mrs. Lydia Zamora declared, she claimed that the case filed against Nora Cunanan was
before the Regional Trial Court and not in the City Fiscal's Office.

Defense also made capital of the special power of atty. executed by the complainants (exhibit 4) and their letters
sent to the accused (exhibits 5, 6, 7 and 8) to convince the court that the real culprit in the whole mess in Nora
Cunanan. The complainants made convincing explanation why they signed the special power of attorney. Wilfrey
Mabalot declared that when the accused asked him to sign the document, he was told that its purpose is to
facilitate their departure and when he signed the letter exhibit "6" he was just told to sign by the accused and
because the latter was in [a] hurry, he signed without knowing its contents. He likewise explained that being a
mere high school graduate he was not able to understand the imports of its contents. Danilo Ramirez explained
that when he signed the special power of attorney, he did not read the contents because the accused was in [a]
hurry in returning to Manila and that he sent the three letters to the accused while he was confined in jail because
Manungas asked him to help him (accused) recover the money given to Mrs. Cunanan. Leonardo Estanoco
declared, that he signed exhibit "4" because the accused told him that the document will be used to facilitate the
processing of their papers. He did not understand its contents because he only understands little English.7

Thus accused-appellant is guilty of the crimes of Estafa and Illegal Recruitment. Under Article 38 of the Labor Code, as amended, the
crime of illegal recruitment is qualified when the same is committed against three (3) or more persons.

A person who violates any of the provisions under Article 13(b) and Article 34 of the Labor Code can be charged and convicted
separately of illegal recruitment and estafa [Revised Penal Code, Article 315, 2(a)] because illegal recruitment is a malum

Page 185 of 205

prohibitum where the criminal intent of the accused is not necessary for a conviction while estafa is a malum in se where criminal
intent of the accused is necessary for a conviction.

WHEREFORE, finding the accused-appellant guilty of the crimes of estafa and illegal recruitment in a large scale, decision of the trial
court is hereby AFFIRMED.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

[G.R. NO. 132029 : July 30, 2004]

PEOPLE OF THE PHILIPPINES, Appellee, v. MARIO ALZONA, Appellant.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is the Decision1 of the Court of Appeals dated July 28, 1997 rendered in CA-G.R. CR No. 17228, the dispositive portion of
which reads:

WHEREFORE, the joint decision of the trial court finding appellant MARIO ALZONA guilty beyond reasonable doubt of illegal
recruitment in large scale and sentencing him to suffer the penalty of life imprisonment and to pay a fine of P100,000.00 (Criminal
Case No. 92-113702) and estafa (Criminal Case Nos. 92-113706 to 92-113709) is AFFIRMED with modification in the sense that the
penalty which should be imposed upon herein appellant in Criminal Case No. 92-113709 is the indeterminate penalty of 4 years and
2 months of prision correccional, as minimum, to 9 years of prision mayor, as maximum.

Pursuant to Section 13(2), Rule 124 of the 1985 Rules of Criminal Procedure, as amended, let this case be certified and the entire
records thereof be elevated to the Supreme Court for review.

Costs against the appellant.

SO ORDERED.

On December 4, 1996, an Information for Large Scale Illegal Recruitment against appellant Mario Alzona, docketed as Criminal Case
No. 92-113702 and seven Informations for Estafa against appellant and his wife, Miranda Alzona, docketed as Criminal Cases Nos.
92-113703 to 92-113709, were filed before Branch 1 of the Regional Trial Court of Manila (RTC for brevity). All eight cases were
consolidated and jointly tried by the RTC. However, due to the failure of private complainants to testify and present their evidence,
Criminal Cases Nos. 92-113703 to 92-113705 were dismissed but only as against appellant Mario Alzona.

In Criminal Case No. 92-113702, the Information charges appellant as follows:

That in (sic) or about and during the period comprised between August 2, 1991 and March 30, 1992, inclusive, in the City of Manila,
Philippines, the said accused, representing himself to have the capacity to contract, enlist and transport Filipino workers for
employment abroad, did then and there willfully, and unlawfully, for a fee, recruit and promise employment/job placement abroad to
the following persons, namely: LYDIA C. RAMOS, MELINDA P. GONZALES, MARCELA R. MERCADO, FERNANDO P. DELA CRUZ,
LEONARDO C. MERCURIO, MARIO REGINO P. DECENA and JAMES M. MAZON, without first having secured the required license or
authority from the Department of Labor.

CONTRARY TO LAW.

In Criminal Cases Nos. 92-113706 to 92-113709, the Informations allege that appellant, conspiring and confederating with his wife,
Miranda Alzona, defrauded private complainants Fernando Dela Cruz, James Mazon, Leonardo Mercurio and Mario Regino Decena, by
means of false manifestations and fraudulent representation that they had the power and capacity to recruit and employ the private
complainants and could facilitate the processing of the pertinent papers if given the necessary amount to meet the requirements
thereof, and by means of other similar deceits, induced and succeeded in inducing said private complainants to give and deliver, as
in fact private complainants delivered sums of money to appellant and his wife, the latter well knowing that their representations
were false and fraudulent and were made solely to obtain sums of money from private complainants, which money, once in their
possession, they misappropriated, misapplied and converted to their own personal use and benefit, to the damage and prejudice of
the private complainants.

Upon arraignment, appellant pleaded not guilty to the foregoing charges. Trial ensued. Accused Miranda Alzona remains at-large.

Page 186 of 205

The facts of the case, as established by the prosecution, are as follows.

Private complainant Mario Regino Decena came to know of appellant because a friend of his, Goring Rodil, was able to work abroad
through the facilitation of appellant. Decena met appellant at the latters house at 1532 Hizon St., Sta. Cruz, Manila, where appellant
asked him to prepare P38,000.00, inclusive of the P1,000.00 for the passport, so he can leave within one month.Said amount was
supposed to pay for his fare going to Korea where appellant said he would be employed as a factory worker with a monthly salary of
$450.00. Both appellant and Miranda convinced him to apply for work abroad.He then paid the P1,000.00 for the passport and on
February 10, 1992, he paid another P33,000.00, received by appellant himself. The latter refused to give him a receipt for the
amounts he paid. Despite having paid the total of P34,000.00, appellant failed to send him to work in Korea and also failed to return
his money.2 cralawred

Another private complainant, Leonardo Mercurio, also went to appellants house in Sta. Cruz, Manila and applied to appellant and his
wife for work abroad. Mercurio and his brother-in-law, Fernando Dela Cruz, were accompanied by Decena who had also applied to
the spouses Alzona for overseas work. Mercurio talked mainly to appellants wife, Miranda, in the presence of appellant. She asked
him to pay P1,000.00 for the passport. Appellant was seated around the same table where he and Miranda were talking. Appellant
and Miranda asked Mercurio and his brother-in-law to pay P20,000.00 each on March 30, 1992. Thus, on March 30, 1992, Mercurio
delivered to appellant the amount of P20,000.00 and despite his request for a receipt, appellant refused to issue one. The total fees
being asked for by appellant was P38,000.00. After receiving the P20,000.00, appellant reminded Mercurio to pay the balance so he
can depart within a week for Korea where appellant promised him employment as a factory worker with a monthly salary of at least
$450.00. Appellant instructed Mercurio to buy an attach case and a coat and tie. Mercurio was not able to depart by the first week of
April as promised by appellant but he continued to follow-up his application. Sometime in July of 1992, Mercurio became impatient
and demanded from appellant for the return of his money. On August 21, 1992, Mercurio filed a complaint with the police against
appellant.3 cralawred

Private complainant Fernando Dela Cruz corroborated the testimony of Mercurio on all material points. On some of the occasions that
he and Mercurio followed-up their applications, Dela Cruz talked to appellant himself who would always tell him to prepare because
they will soon be leaving for Korea. The last time they went to appellants house, the Barangay Captain of the place informed them
that appellant had already been apprehended.4 cralawred

Private complainant James Mazon had a similar experience with appellant and Miranda. After having heard that appellant and
Miranda were accepting applicants for employment abroad, Mazon went to appellants residence during the first week of January,
1992. Appellant and Miranda promised that he would be deployed to Korea where he will be employed as a factory worker. He was
told to pay the placement fee of P38,000.00 inclusive of charges for the passport. Appellant told Mazon that he was in-charge of
booking and procuring tickets, while Miranda was the one who made arrangements with regard to the application for a job abroad.
On January 10, 1992, he gave P15,000.00 to appellant who did not issue a receipt. Upon receiving such partial payment, appellant
promised him that he would be deployed within one to two months. He was never deployed to Korea and he heard from the other
private complainants who were also from Mulanay, Quezon, that appellant was already in jail.5 cralawred

Risa Balverde, a Licensure Officer III of the Philippine Overseas Employment Administration (POEA) testified that appellant was
neither licensed nor authorized by the POEA to recruit workers for overseas employment.6 cralawred

For his defense, appellant merely denied that he ever met, talked to or received money from the aforementioned four private
complainants; nor had he been involved in illegal recruitment. He presented the alibi that he, being a jeepney driver, was out of their
house everyday from 7 o clock in the morning to around 9 oclock in the evening, so private complainants could not have talked to
him at his house at 1532 Hizon St., Sta. Cruz, Manila. He, however, admitted that in 1989, he found out that his wife was engaged in
recruiting workers for abroad. In fact, his wife had been going back and forth to Korea around six times a year since 1990, to
accompany people. He stopped being a jeepney driver on July 15, 1992, because so many people were going to their
house.7 cralawred

Appellants daughter, Marites Alzona, corroborated her fathers testimony that he is a jeepney driver and is out of their house
everyday from 6 oclock in the morning to 10 oclock in the evening, and therefore, private complainants could not have met her
father. She admitted that she had seen private complainants talking to her mother at their house beginning August 1991 but she
was unaware as to what their purpose was for coming to their house. She would see them at their house around four times a month,
but the last time she saw them was in July 1992. Her mother left for Korea on July 15, 1992 and thereafter, every time private
complainants would come looking for her mother, she would be the one to talk to them. When she told them that her mother had left
for Korea, private complainants became angry. On August 5, 1992, she and her father were arrested at their house. 8 cralawred

Appellants sister, Esther Panday, testified that she owns the jeepney being driven by appellant everyday, twelve hours a day. Such
being the case, she believed appellant could not have engaged in any other sideline such as recruiting workers for abroad. 9 cralawred

After both parties had rested their case, the trial court rendered judgment,10 the dispositive portion of which read as follows:

WHEREFORE, this court finds the accused Mario Alzona GUILTY beyond reasonable doubt of Illegal Recruitment in large scale in
Criminal Case No. 92-113702 and of four (4) separate crimes of estafa in Criminal Cases Nos. 92-113706, 92-113707, 92-113708
and 92-113709 and, as a consequence thereof, sentences him as follows:

Page 187 of 205

(1) In Criminal Case No. 92-113702, to suffer the penalty of life imprisonment and to pay a fine of P100,000.00; andcralawlibrary

(2) In Criminal Cases Nos. 92-113706, 92-113707, 92-113708 and 92-113709, to suffer in each case the indeterminate penalty of
one (1) year and eight (8) months of prision correccional minimum as minimum to five (5) months and eleven (11) days of prision
correccional maximum as maximum.

Further, the accused shall indemnify the private complainants Fernando dela Cruz, James Mazon, Leonardo Mercurio and Mario
Regino P. Decena the respective sums of P21,000.00, P15,000.00, P21,000.00, and P34,000.00, with interest thereon at the legal
rate from judicial demand until fully paid.

Costs against the accused in all the above-mentioned cases.

Anent Criminal Cases No. 92-113703, 92-113704 and 92-113705, the same are hereby ordered dismissed as against accused Mario
Alzona for lack of evidence.

No costs.

SO ORDERED.11 cralawred

Appellant appealed the criminal cases to the Court of Appeals with the following Assignment of Errors:

THE TRIAL COURT ERRED IN FINDING THAT ACCUSED-APPELLANT ILLEGALLY RECRUITED THE COMPLAINANTS.

II

THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT OF 4 COUNTS OF ESTAFA DESPITE PROSECUTIONS FAILURE
TO PROVE THAT HE CONSPIRED WITH HIS WIFE IN DEFRAUDING THE COMPLAINANTS.

Appellant points out that the testimonies of Mercurio, Dela Cruz and Mazon showed that it was actually only Miranda who transacted
with private complainants. Therefore, argues appellant, there was no sufficient evidence to prove that appellant was acting in
confederation with his wife. Furthermore, appellant claims that private complainants merely implicated him because they could no
longer find Miranda who was the one who recruited private complainants for overseas employment.

On July 28, 1997, the Court of Appeals rendered its Decision, the decretal portion of which has been quoted earlier.

First, we tackle the charge of Illegal Recruitment against appellant. Pertinent provisions of the Labor Code state thus:

Article 13. Definitions. -

.. .

(b) Recruitment 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.

. ..

Article 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this
Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this
Code. The Department of Labor or any law enforcement officer may initiate complaints under this Article.

(b) Illegal Recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage
and shall be penalized in accordance with Article 39 hereof

Illegal Recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first
paragraph hereof. Illegal Recruitment is deemed committed in large scale if committed against three (3) or more persons individually
or as a group,. ..

Page 188 of 205

Article 39. Penalties. (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00) shall be imposed
if illegal recruitment constitutes economic sabotage as defined herein;. ..

Pursuant to the foregoing, the prosecution must prove the following elements of the crime of illegal recruitment in large scale, to wit:

(1) the person undertakes any recruitment activity defined under Article 13, paragraph (b), or any prohibited practice enumerated
under Article 34 of the Labor Code; (2) said person does not have a license or authority to engage in the recruitment and placement
of workers; and (3) the act is committed against three or more persons, individually or as a group.12 cralawred

The testimonies of prosecution witnesses, namely: private complainants Decena, Mercurio, Dela Cruz, and Mazon and Licensure
Officer III Balverde, of the POEA, prove that appellant and his wife Miranda promised overseas employment to private complainants
upon payment of placement fees, without the necessary license therefor. Appellant maintains that he could not have transacted with
private complainants as he was out of their house as a jeepney driver from 6 oclock in the morning to 9 oclock in the evening, seven
days a week. With these conflicting versions of the parties, it is quite clear that the resolution of this case revolves around the
credibility of witnesses.

We are constrained to scrutinize the entire records of the case and determine whether the prosecution evidence has proven the
existence of all the elements of the crimes of Illegal Recruitment and Estafa.

It is important to keep in mind the oft-repeated rule that:

.. . where the issue is on credibility, the findings of the trial court will generally not be disturbed. The trial court has the advantage of
hearing the witnesses and observing their conduct during the trial, circumstances that carry great weight in appreciating credibility.
The trial court is thus in a better position to settle such an issue.13 cralawred

We have carefully reviewed the records of the case and find no cogent reason to overturn the factual findings of the trial court,
especially its evaluation of the credibility of the prosecution witnesses, thus: the testimonies of private complainants. .. given in
clear, logical and straightforward manner, mentioning details of the incidents that could not have been merely concocted, reflecting
spontaneity and sincerity in the narration of events, are indicative of the truth of what actually happened. 14 cralawred

The testimonies of the four private complainants, viewed in their totality, have indeed established that appellant and Miranda
cooperated with each other in convincing private complainants to pay them a placement fee of P38,000.00 for employment as
factory workers in Korea, despite the absence of the required license therefor.The alleged segmented portions of the testimonies of
Mercurio, Dela Cruz, and Mazon, quoted by appellant in his appellants brief, that supposedly would show that only his wife Miranda
was involved in illegal recruitment, were obviously taken out of context.A scrutiny of the entirety of all four private complainants
testimonies would show that sometimes, it would be appellant who would transact business with private complainants and at other
times, it would be appellants wife Miranda. Most damning for appellant, however, is the fact that all the private complainants
categorically stated that it was appellant who received sums of money from them and refused to issue a receipt. Such fact shows
that he actively engaged in the recruitment of three or more workers for employment abroad despite the lack of the necessary
license from the POEA, which act constitutes the crime of illegal recruitment in large scale.

Next, we come to the charges of four separate counts of estafa against appellant. Article 315, paragraph 2 (a) of the Revised Penal
Code provides thus:

ART. 315. Swindling (estafa) . Any person who shall defraud another by any of the means mentioned hereinbelow shall be punished
by:

1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is
over 12,000 but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided in this paragraph
shall be imposed in its maximum period, adding one year for each additional 10,000.00; but the total penalty which may be imposed
shall not exceed twenty years. In such case, and in connection with the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.

... .. .. ..

2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the
fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or
imaginary transactions, or by means of other similar deceits.

.. .

Page 189 of 205

Verily, the very same evidence proving appellants commission of the crime of illegal recruitment in large scale also established that
appellant and Miranda acted with unity of purpose in defrauding private complainants by misrepresenting that they (appellant and
Miranda) had the power, influence, agency and business to obtain overseas employment for private complainants upon payment of a
placement fee, which complainants did pay and deliver to appellant. Thus, private complainants suffered damages to the extent of
the various sums of money they delivered to appellant, i.e., P34,000.00 from Decena, P21,000.00 each from Mercurio and Dela
Cruz, and P15,000.00 from Mazon. The prosecution has established beyond reasonable doubt that appellant is guilty of the four
counts of estafa.

The Court of Appeals was correct in modifying the penalty imposed on appellant with regard to Criminal Case No. 92-113709,
competently explaining thus:

We note, however, that the trial court imposed the wrong penalty in Criminal Case No 92-113709. .. involving the amount
of P34,000.00. Pursuant to Article 315 of the Revised Penal Code, if the amount defrauded exceeds P22,000.00, the penalty
of prision correccional in its maximum period to prision mayor in the minimum period shall be imposed in its maximum period (6
years, 8 months and 21 days to 8 years) adding one year for each additional P10,000.00; but the total penalty shall not exceed 20
years.

The amount defrauded, as stated above, is P34,000.00. Hence, the penalty should be imposed in the maximum period (6 years, 8
months and 21 days to 8 years) plus one year, there being only one P10,000.00 in excess of P22,000.00. Applying the Indeterminate
Sentence Law, the maximum penalty should be taken from the aforementioned maximum period, while the minimum term shall be
within the range of the penalty next lower in degree, i.e., prision correccional in its minimum and medium period which has a
duration of 6 months and 1 day to 4 years and 2 months. Accordingly, the correct penalty should be 4 years and 2 months of prision
correccional, as minimum, to 9 years of prision mayor as maximum.

An appeal in a criminal case opens the entire case for review.15 The typographical error in the dispositive portion of the decision
rendered by the RTC regarding the penalty to be imposed on appellant in Criminal Cases Nos. 92-113706 to 92-113708 should be
corrected from one (1) year and eight (8) months of prision correccional minimum as minimum to five (5) months and eleven (11)
days of prision correccional maximum as maximum to one (1) year and eight (8) months of prision correccional as minimum to five
(5) years and eleven (11) days of prision correccional as maximum.

WHEREFORE, the Decision of the Court of Appeals dated July 28, 1997 in CA-G.R. CR No. 17228 is AFFIRMED with MODIFICATION
only as to Criminal Cases Nos. 92-113706 to 92-113708 where appellant is hereby sentenced in each case, to suffer the
indeterminate penalty of one (1) year and eight (8) months of prision correccional as minimum to five (5) years and eleven (11)
days of prision correccionalas maximum.

SO ORDERED.

G.R. No. 101361 November 8, 1993

Page 190 of 205

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
MARY ROSE ONDO @ BABY and SIMEON ORTEGA, accused. MARY ROSE ONDO @ BABY, accused-appellant.

The Solicitor General for plaintiff-appellee.

Eriberto S. Guerrero, Jr. for accused-appellant.

QUIASON, J.:

This is an appeal from the decision of the Regional Trial Court, Branch 109, Pasay City, in Criminal Case No-89-3949, convicting Mary
Rose Ondo @ Baby of illegal recruitment.

Appellant and Simeon Ortega were charged with violation of Article 38 of the Labor Code, committed as follows:

That on or about and sometime from the month of December 1988 to August 1989, in Pasay City, Metro Manila,
Philippines, and within the jurisdiction of the Honorable Court, the above-named accused, conspiring and
confederating together and mutually helping one another, by falsely representing themselves to have the power
and capacity to contract, enlist and transport workers for employment abroad, did then and there, willfully,
unlawfully and felonously recruit Erlinda Cortez, Fidela Engada, Myra Siguenza, Dulce Garcia and Emilinda Padua
and charged them placement fees and processing fees and promising said persons non-existing jobs abroad, thus
participating to the recruitment, placement of deployment of said worders under false pretenses. (Rollo, p. 22).

The court a quo accepted, as established by the evidence on record, the version of the prosecution, which was summarized in the
brief of the Solicitor General, as follows:

On January 9, 1989, Perfecta Calderon, the sister and cousin of private complainants Frederico Calderon and
Erlinda Cortez, respectively, received a call from her sister Angelita Calderon who was in Italy. Angelita instructed
her to wait for the call of appellant regarding the recruitment of her brother Frederico and cousin Erlinda Cortez for
jobs in Italy. A few days thereafter, she received a call from appellant who asked for the passports, pictures and
birth certificates of Frederico and Erlinda so that appellant could process the requisite documentations for their
departure to Italy. Likewise, appellant also demanded the amount of 5,000 US Dollars (sic) as payment for the
plane tickets of both applicants (tsn., pp. 3-4, may 10, 1990).

On January 15, 1989, appellant called her up telling her to bring the documents (passports, pictures and Birth
Certificates) to appellant's residence at 1754 Lacaba Compound, Tramo Street, Pasay City, which she did.

At the residence of appellant, Perfecta handed over the documents and the 5,000 US Dollars (sic) to Simeon
Ortega who signed a receipt (Exhs. "J" and "J-1") to evidence payment. Ortega then handed the money to
appellant. Before leaving appellant's residence, Perfecta inquired for the date of departure of her brother and
cousin, but was told by appellant to wait for her call (tsn., pp. 5-8, may 10, 1989). The call, however, never came,
so she demanded for the return of the money and the documents. Only the documents were returned (tsn., p. 9,
May 10, 1990).

Her brother and cousin though were able to leave for and are already working in Italy through the assistance of
another travel agency (tsn., ibid.)

Sometime in December 1988, private complainant Fidela Engada was introduced by her brother Wilfredo to
appellant through a letter. Wilfredo Engada instructed her auntie Lucy Engada by phone to bring complainant to
appellant for the latter to process her papers for abroad.

On December 28, 1988, private complainant and Lucy Engada went to appellant's residence in 1754 Lacaba
Compound, Tramo Street, Pasay City, where she was introduced to appellant. Private complainant manifested he
desire to go abroad through the help of appellant per her brother's recommendation. Appellant then intimated to
her that the amount P65,000.00 was needed to defray for all the expenses. Outright, she handed a down payment
of P30,000.00 which was duly receipted ([Exhs. "A" to "A-1"] tsn., pp. 5-8, May 2, 1990). Appellant asked for her
passport for processing and told her to get in touch with appellant to ascertain the date of her departure.

After numerous follow-ups, private complainant was informed by appellant of her departure on August 18, 1989
and appellant demanded another amount of 200 US Dollars (sic) for the purchase of her plane ticket for Italy. This
event was duly acknowledged by appellant (Exhs. "B" to "B-1", tsn., pp. 10-11, May 2, 1990).

Page 191 of 205

 On August 18, 1989, however, private complainant was not able to depart for Italy. She then tried to see appellant
at her residence but to no avail; appellant could no longer be located. For four more times she went to appellant's
place but with the same result. In her last attempt though, private complainant met the other victims of appellant
and it was then that they decided to file their complaints with the Pasay City Prosecutor's Office against appellant
through a "Magkasanib na Pahayag" ([Exh. "C"], tsn., pp. 12-14, May 2, 1990).

Private complainant, Dulce Garcia was introduced to appellant through a letter from appellant's friend, Lilia
Gonzales. On the last week of April 1989, appellant called her about 11:00 o'clock (sic) in the evening and
introduced herself as a balikbayan from Italy and a recruiter who could deploy workers for abroad. Private
complainant, desirous of trying her luck abroad, asked what the requirements were. Appellant told her that the
amount of P65,000.00 was needed to pay for the package-deal-arrangement in processing her travel documents
i.e. passports, plan ticket and placement fees (tsn., pp. 14-15, May 10, 1990).

Three days after, appellant called her up again and told her to prepare the necessary requirements and to go to her
(appellant's) address at 1754-A Lacaba Compound, Tramo Street, Pasay City with the P65,000.00. While at the
appellant's residence, she was told that she could depart on the first week of June 1989. On May 10, 1989,
appellant called her up anew and told her to her (appellant) again at her said residence and bring with her the
necessary documents and the P65,000.00.

In the afternoon of the next day (May 11, 1989), private complainant went to appellant's residence where she
handed the documents and the amount of P53,000.00 in the presence of Emmanuel Balboa, appellant's boyfriend.
Appellant issued a receipt in acknowledgment therefor (Exhs. "K" to "K-1"), with the entry appearing thereat
"received the amount of Fifty-three Thousand Pesos Payment for plane ticket in going to Italy" (Exh. "K-2").
Appellant then told her to wait for another call yet. Five days after, appellant called her up and told her to bring
along her Birth Certificate and ID pictures so that she could accompany her to the Passport Division of the
department of Foreign Affairs at the Film center. Private complainant was further told that her personal appearance
at the Passport Division was important. (tsn., pp. 16-19, May 10, 1990).

At the Passport Division, private complainant was interviewed, after which appellant told her to give the balance of
the P65,000.00 In the morning of May 22, 1989, she went to appellant's residence and paid the amount of
P11,500.00, which payment was duly receipted (Exhs. "L" to "L-2") with the entry: "received from Dulce Garcia,
P11,510.00 payment for travel abroad." Appellant then showed private complainant her passport which was never
handed over to her up to now. She was assured though that her departure would be on June 6, 1989 (tsn., pp. 20-
21, May 10, 1990). June 6, 1989 came but private complainant was not able to depart because a day before (June
5, 1989), appellant called her up and told her that she (appellant) was hospitalized. Her departure was, however,
rescheduled for August 8, 1989. On this said scheduled date (August 8, 1989), she was not able to leave because
appellant told her that nobody would fetch her at the airport in Italy. Thus the departure was again reset for any
other day of August. The month of August 1989 passed, but she was not able to leave. So she demanded for the
return of the entire amount of P64,510.00 but appellant failed to return the money. She, together with the other
"victims" of appellant, decided to file complaints against the latter with the Pasay Fiscal's Office in a "Sinumpaan
Salaysay" (Exhs. "M" to "M-2", tsn., pp. 21-23, May 10, 1990)" (Rollo, pp. 72-79).

After convicting appellant of illegal recruitment, the court a quo sentenced her to life imprisonment and to pay a fine of P100,000.00
in accordance with Article 39 of the Labor Code (Decision, p. 19; Rollo, p. 40).

In her appeal, appellant questions the findings of the trial court that she had committed acts constituting a violation of Article 38 of
the Labor Code (Appellant's Brief, pp. 6-7; Rollo, p. 57).

The evidence on record shows that the complainants positively identified appellant as the one who recruited them for jobs in Italy as
domestic helpers and who demanded P65,000.00 from each of them as payment for the facilitation of their travel documents. It was
appellant's promise to complainants of job opportunities abroad that lured them to part with their money.

In the absence of any proof that the decision of the trial court was based on conjectures or surmises, the same must be upheld on
appeal. The trial court is in a better position to observe and evaluate the demeanor of the witnesses (People v. Pido, 200 SCRA 45
[1991]).

Devoid of merit is the defense of the appellant that the Felixim Travel Agency was the one which recruited the complainants. No
proof whatsoever was adduced to show that the officers or employees of said agency had personally transacted with private
complainants in connection with their overseas employment. The complainants themselves had testified that the Felixim Travel
Agency had nothing to do with their transaction with appellant.

We agree with the findings of the court a quo that appellant is guilty of illegal recruitment.

Article 38 of the Labor Code, as amended, provides that:

Page 192 of 205

 Illegal Recruitment. (a) Any recruitment activities, including the prohibited practices enumerated under Article
34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of this Code.

Article 13 (b) of the Labor, Code, defines recruitment and placement as "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.

As can be gleaned from the aforementioned provisions, illegal recruitment has two essential elements, to wit: (1) the accused must
be engaged in the recruitment and placement of workers, whether locally or overseas and; (2) the accused has not complied with
such guidelines, rules and regulations issued by the Secretary of Labor and Employment, particularly with respect to the securing of
license or authority to recruit and deploy workers either locally or overseas.

These essential elements are present in the case at bench. Appellant promised overseas employment to the complainants for a fee,
which the latter paid. In fact, appellant admitted that the money she received from the complainants was in connection with the
processing of their visas, passports and plane tickets. She also admitted that she failed to make good her promise to send them
abroad (TSN, October 5, 1990, p. 6).

Appellant is neither licensed nor authorized to recruit workers for overseas employment as testified by Virginia Santiago of the
Inspection Division of the Licensing Board of the Philippine Overseas Employment Administration (POEA).

Appellant insists that being a minor, she should be placed under custody of the barangay official of Sambol, Lemery, Batangas as
provided for by Article 191 of P.D. No. 603.

Article 191 of P.D. 603 provides:

Care of Youthful Offender Held for Examination or Trial. A youthful offender held for physical and mental
examination or trial or pending appeal, if unable to furnish bail, shall be from the time of his arrest be committed
to the care of the Department of Social Services and Development or the local rehabilitation center or a detention
home in the province or city which shall be responsible for his appearance in court whenever required: Provided,
That in the absence of any such center or agency within a reasonable distance from the venue of the trial, the
provincial, city or municipal jail shall provide quarters for youthful offenders separate from other detainees. The
court may, in its discretion, upon recommendation of the Department of Social Services and Development or other
agency or agencies authorized by the court, release a youthful offender on recognizance, to the custody of his
parents or other suitable person who shall be responsible for his appearance whenever required. However, in case
of those whose cases fall under the exclusive jurisdiction of the Military Tribunals, they may be committed at any
military detention or rehabilitation center. (Emphasis supplied)

This issue is mooted in view of the fact that the trial of the appellant was terminated while her appeal was resolved with this
decision. As can be inferred from its wordings, the provision is operative only during the trial or pending the appeal of the minor-
accused.

Nevertheless, the law uses the word "may," which denotes that it is directory in nature and implies discretion on the part of the trial
court to place the minor under the custody of his or her parents or any suitable person.

Appellant further invokes the provisions of Article192, which she alleges the court a quo failed to apply to her benefit. Under said
Article, the trial court shall suspend the sentencing and commitment of youthful offenders and instead commit them to the custody
of the Department of Social Services and Development or to any training institution until they shall have reached 21 years of age.

Again, appellant's contention cannot be sustained.

Said Article provides that it ". . . . shall not apply to a youthful offender who has once enjoyed suspension of sentence under its
provisions or to one who is convicted of an offense punishable by death or life imprisonment." (Emphasis supplied).

Appellant was convicted by the court a quo of illegal recruitment and was sentenced to suffer the penalty of life imprisonment.
Clearly, her case. falls under the exception provided for by the Child and Youth Welfare Code.

Under Section 39 of the Labor Code, as amended, the penalty of life imprisonment is correctly imposed where illegal recruitment is
committed in "large scale," which means that it is committed against three or more persons (People v. Duque, 212 SCRA 607
[1992]). In this case,appellant victimized Erlinda Cortez, Fidela Engada, Myra Siguenza, Dulce Garcia and Emilinda Padua.

We noted that appellant was only 16 years of age at the time she committed the offense (TSN, October 5, 1990, p. 2). If she
prosecuted under, the Revised Penal Code, appellant is entitled to a reduction of the penalty imposed by law by one degree because
of the attendance of the privileged mitigating circumstance of minority (Article 68, Revised Penal Code). But the benign provisions of

Page 193 of 205

the Revised Penal Code are not applicable to offenders prosecuted and punished under special laws. Likewise, appellant is not
entitled to the benefits of the Indeterminate Sentence Law, which requires the sentencing court to fix a minimum term within the
range of the penalty next lower to that prescribed by law, because the penalty imposed on her is "life imprisonment" (Act 4103 as
amended by Act 4225, Sec. 2).

Under the circumstances, we can only recommend that executive clemency be extended to her (People v. Beralde, 139 SCRA 426
[1985]; People v. Lagasca, 148 SCRA 264 [1987]; People v. Mangusan, 189 SCRA 624 [1990]).

WHEREFORE, the appealed decision is AFFIRMED in toto but in view of the minority of appellant at the time she committed the
offense, we recommend to the Secretary of Justice that a case study of appellant be undertaken to determine whether she is
deserving of executive clemency. Costs de oficio.

SO ORDERED.

Cruz, Davide, Jr. and Bellosillo, JJ., concur.

PEOPLE OF THE PHILIPPINES, G.R. No. 187730

Petitioner,

Present:

- versus -
CORONA, C.J., Chairperson,

VELASCO, JR.,

LEONARDO-DE CASTRO,
RODOLFO GALLO y GADOT,
DEL CASTILLO, and
Accused-Appellant,
PEREZ, JJ.

FIDES PACARDO y JUNGCO and PILAR MANTA y

DUNGO, Promulgated:
Accused. June 29, 2010

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

DECISION

VELASCO, JR., J.:

Page 194 of 205

 The Case

This is an appeal from the Decision[1] dated December 24, 2008 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02764

entitled People of the Philippines v. Rodolfo Gallo y Gadot (accused-appellant), Fides Pacardo y Jungco and Pilar Manta y Dungo

(accused), which affirmed the Decision[2] dated March 15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which convicted

the accused-appellant Rodolfo Gallo y Gadot (accused-appellant) of syndicated illegal recruitment in Criminal Case No. 02-206293

and estafa in Criminal Case No. 02-206297.

The Facts

Originally, accused-appellant Gallo and accused Fides Pacardo (Pacardo) and Pilar Manta (Manta), together with Mardeolyn

Martir (Mardeolyn) and nine (9) others, were charged with syndicated illegal recruitment and eighteen (18) counts of estafa committed

against eighteen complainants, including Edgardo V. Dela Caza (Dela Caza), Sandy Guantero (Guantero) and Danilo Sare (Sare). The

cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311. However, records reveal that only Criminal Case

No. 02-206293, which was filed against accused-appellant Gallo, Pacardo and Manta for syndicated illegal recruitment, and Criminal

Case Nos. 02-206297, 02-206300 and 02-206308, which were filed against accused-appellant Gallo, Pacardo and Manta for estafa,

proceeded to trial due to the fact that the rest of the accused remained at large. Further, the other cases, Criminal Case Nos. 02-

206294 to 02-206296, 02-206298 to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311 were

likewise provisionally dismissed upon motion of Pacardo, Manta and accused-appellant for failure of the respective complainants in said

cases to appear and testify during trial.

It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case Nos. 02-206293, 02-206297, 02-

206300 and 02-206308 for insufficiency of evidence. Likewise, accused-appellant Gallo was similarly acquitted in Criminal Case Nos.

02-206300, the case filed by Guantero, and 02-206308, the case filed by Sare. However, accused-appellant was found guilty beyond

reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both filed by Dela Caza, for syndicated illegal recruitment

and estafa, respectively.

Thus, the present appeal concerns solely accused-appellants conviction for syndicated illegal recruitment in Criminal Case No.

02-206293 and for estafa in Criminal Case No. 02-206297.

In Criminal Case No. 02-206293, the information charges the accused-appellant, together with the others, as follows:

The undersigned accuses MARDEOLYN MARTIR, ISMAEL GALANZA, NELMAR MARTIR, MARCELINO MARTIR,
NORMAN MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU MENDANES, FIDES PACARDO y
JUNGCO, RODOLFO GALLO y GADOT, PILAR MANTA y DUNGO, ELEONOR PANUNCIO and YEO SIN UNG of a
violation of Section 6(a), (l) and (m) of Republic Act 8042, otherwise known as the Migrant Workers and Overseas
Filipino Workers Act of 1995, committed by a syndicate and in large scale, as follows:

Page 195 of 205

 That in or about and during the period comprised between November 2000 and December, 2001, inclusive,
in the City of Manila, Philippines, the said accused conspiring and confederating together and helping with one
another, representing themselves to have the capacity to contract, enlist and transport Filipino workers for
employment abroad, did then and there willfully and unlawfully, for a fee, recruit and promise employment/job
placement abroad to FERDINAND ASISTIN, ENTICE BRENDO, REYMOND G. CENA, EDGARDO V. DELA CAZA,
RAYMUND EDAYA, SANDY O. GUANTENO, RENATO V. HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V. MENOR,
ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR RAMIREZ, MARISOL L. SABALDAN, DANILO SARE, MARY BETH
SARDON, JOHNNY SOLATORIO and JOEL TINIO in Korea as factory workers and charge or accept directly or indirectly
from said FERDINAND ASISTIN the amount of P45,000.00; ENTICE BRENDO P35,000.00; REYMOND G. CENA
P30,000.00; EDGARDO V. DELA CAZA P45,000.00; RAYMUND EDAYA P100,000.00; SANDY O. GUANTENO
P35,000.00; RENATO V. HUFALAR P70,000.00; ELENA JUBICO P30,000.00; LUPO A. MANALO P75,000.00; ALMA V.
MENOR P45,000.00; ROGELIO S. MORON P70,000.00; FEDILA G. NAIPA P45,000.00; OSCAR RAMIREZ P45,000.00;
MARISOL L. SABALDAN P75,000.00; DANILO SARE P100,000.00; MARY BETH SARDON P25,000.00; JOHNNY
SOLATORIO P35,000.00; and JOEL TINIO P120,000.00 as placement fees in connection with their overseas
employment, which amounts are in excess of or greater than those specified in the schedule of allowable fees
prescribed by the POEA Board Resolution No. 02, Series 1998, and without valid reasons and without the fault of the
said complainants failed to actually deploy them and failed to reimburse the expenses incurred by the said
complainants in connection with their documentation and processing for purposes of their deployment.[3] (Emphasis
supplied)

In Criminal Case No. 02-206297, the information reads:

That on or about May 28, 2001, in the City of Manila, Philippines, the said accused conspiring and
confederating together and helping with [sic] one another, did then and there willfully, unlawfully and feloniously
defraud EDGARDO V. DELA CAZA, in the following manner, to wit: the said accused by means of false manifestations
and fraudulent representations which they made to the latter, prior to and even simultaneous with the commission
of the fraud, to the effect that they had the power and capacity to recruit and employ said EDGARDO V. DELA CAZA
in Korea as factory worker and could facilitate the processing of the pertinent papers if given the necessary amount
to meet the requirements thereof; induced and succeeded in inducing said EDGARDO V. DELA CAZA to give and
deliver, as in fact, he gave and delivered to said accused the amount of P45,000.00 on the strength of said
manifestations and representations, said accused well knowing that the same were false and untrue and were made
[solely] for the purpose of obtaining, as in fact they did obtain the said amount of P45,000.00 which amount once in
their possession, with intent to defraud said [EDGARDO] V. DELA CAZA, they willfully, unlawfully and feloniously
misappropriated, misapplied and converted the said amount of P45,000.00 to their own personal use and benefit, to
the damage and prejudice of the said EDGARDO V. DELA CAZA in the aforesaid amount of P45,000.00, Philippine
currency.

CONTRARY TO LAW.[4]

When arraigned on January 19, 2004, accused-appellant Gallo entered a plea of not guilty to all charges.

On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.

During the trial, the prosecution presented as their witnesses, Armando Albines Roa, the Philippine Overseas Employment

Administration (POEA) representative and private complainants Dela Caza, Guanteno and Sare. On the other hand, the defense

presented as its witnesses, accused-appellant Gallo, Pacardo and Manta.

Version of the Prosecution

Page 196 of 205

 On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu

Mendanes, Yeo Sin Ung and another Korean national at the office of MPM International Recruitment and Promotion Agency (MPM

Agency) located in Malate, Manila.

Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one of the incorporators. Also,

that Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members. Lulu Mendanes acted as the

cashier and accountant, while Pacardo acted as the agencys employee who was in charge of the records of the applicants. Manta, on

the other hand, was also an employee who was tasked to deliver documents to the Korean embassy.

Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able

to send many workers abroad. Together with Pacardo and Manta, he also told Dela Caza about the placement fee of One Hundred Fifty

Thousand Pesos (PhP 150,000) with a down payment of Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through

salary deduction.

Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of their application papers for

job placement in Korea as a factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing about the business and

what to expect from the company and the salary.

With accused-appellants assurance that many workers have been sent abroad, as well as the presence of the two (2) Korean

nationals and upon being shown the visas procured for the deployed workers, Dela Caza was convinced to part with his money. Thus,

on May 29, 2001, he paid Forty-Five Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in the

presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No. 401.

Two (2) weeks after paying MPM Agency, Dela Caza went back to the agencys office in Malate, Manila only to discover that

the office had moved to a new location at Batangas Street, Brgy. San Isidro, Makati. He proceeded to the new address and found out

that the agency was renamed to New Filipino Manpower Development & Services, Inc. (New Filipino). At the new office, he talked to

Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was informed that the transfer was done for easy

accessibility to clients and for the purpose of changing the name of the agency.

Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn, Pacardo, Manta and Lulu

Mendanes talked him out from pursuing his decision. On the other hand, accused-appellant Gallo even denied any knowledge about

the money.

After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take action. The

first attempt was unsuccessful because the agency again moved to another place. However, with the help of the Office of Ambassador

Seeres and the Western Police District, they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The
Page 197 of 205
agency explained that it had to move in order to separate those who are applying as entertainers from those applying as factory

workers. Accused-appellant Gallo, together with Pacardo and Manta, were then arrested.

The testimony of prosecution witness Armando Albines Roa, a POEA employee, was dispensed with after the prosecution and

defense stipulated and admitted to the existence of the following documents:

1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the effect that New Filipino
Manpower Development & Services, Inc., with office address at 1256 Batangas St., Brgy. San Isidro, Makati City,
was a licensed landbased agency whose license expired on December 10, 2001 and was delisted from the roster
of licensed agencies on December 14, 2001. It further certified that Fides J. Pacardo was the agencys
Recruitment Officer;

2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International Recruitment and
Promotion is not licensed by the POEA to recruit workers for overseas employment;

3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999 regarding placement fee ceiling for
landbased workers.

4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the placement fee ceiling
for Taiwan and Korean markets, and

5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.

Version of the Defense

For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact, he testified that he also

applied with MPM Agency for deployment to Korea as a factory worker. According to him, he gave his application directly with Mardeolyn

because she was his town mate and he was allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing fee. Further, in order

to facilitate the processing of his papers, he agreed to perform some tasks for the agency, such as taking photographs of the visa and

passport of applicants, running errands and performing such other tasks assigned to him, without salary except for some allowance.

He said that he only saw Dela Caza one or twice at the agencys office when he applied for work abroad. Lastly, that he was also

promised deployment abroad but it never materialized.

Ruling of the Trial Court

On March 15, 2007, the RTC rendered its Decision convicting the accused of syndicated illegal recruitment and estafa. The

dispositive portion reads:

WHEREFORE, judgment is hereby rendered as follows:

I. Accused FIDES PACARDO y JUNGO and PILAR MANTA y DUNGO are hereby ACQUITTED of
the crimes charged in Criminal Cases Nos. 02-206293, 02-206297, 02-206300 and 02-206308;

II. Accused RODOLFO GALLO y GADOT is found guilty beyond reasonable doubt in Criminal Case
No. 02-206293 of the crime of Illegal Recruitment committed by a syndicate and is hereby
sentenced to suffer the penalty of life imprisonment and to pay a fine of ONE MILLION
(Php1,000,000.00) PESOS. He is also ordered to indemnify EDGARDO DELA CAZA of the sum of

Page 198 of 205

 FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal interest from the filing of the information
on September 18, 2002 until fully paid.

III. Accused RODOLFO GALLO y GADOT in Criminal Case No. 02-206297 is likewise found guilty
and is hereby sentenced to suffer the indeterminate penalty of FOUR (4) years of prision
correccional as minimum to NINE (9) years of prision mayor as maximum.

IV. Accused RODOLFO GALLO y GADOT is hereby ACQUITTED of the crime charged in Criminal
Cases Nos. 02-206300 and 02-206308.

Let alias warrants for the arrest of the other accused be issued anew in all the criminal cases. Pending their
arrest, the cases are sent to the archives.

The immediate release of accused Fides Pacardo and Pilar Manta is hereby ordered unless detained for other
lawful cause or charge.

SO ORDERED.[5]

Ruling of the Appellate Court

On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case as follows:

WHEREFORE, the appealed Decision of the Regional Trial Court of Manila, Branch 30, in Criminal Cases Nos. 02-
206293 and 02-206297, dated March 15, 2007, is AFFIRMED with the MODIFICATION that in Criminal Case No. 02-
206297, for estafa, appellant is sentenced to four (4) years of prision correccional to ten (10) years of prision mayor.

SO ORDERED.[6]

The CA held the totality of the prosecutions evidence showed that the accused-appellant, together with others, engaged in the

recruitment of Dela Caza. His actions and representations to Dela Caza can hardly be construed as the actions of a mere errand boy.

As determined by the appellate court, the offense is considered economic sabotage having been committed by more than three (3)

persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of

illegal recruitment may also be convicted of estafa.[7] The same evidence proving accused-appellants commission of the crime of illegal

recruitment in large scale also establishes his liability for estafa under paragragh 2(a) of Article 315 of the Revised Penal Code (RPC).

On January 15, 2009, the accused-appellant filed a timely appeal before this Court.

The Issues

Accused-appellant interposes in the present appeal the following assignment of errors:

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 The court a quo gravely erred in finding the accused-appellant guilty of illegal recruitment committed by a syndicate
despite the failure of the prosecution to prove the same beyond reasonable doubt.

II

The court a quo gravely erred in finding the accused-appellant guilty of estafa despite the failure of the prosecution
to prove the same beyond reasonable doubt.

Our Ruling

The appeal has no merit.

Evidence supports conviction of the crime of Syndicated Illegal

Recruitment

Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he was neither an officer nor

an employee of the recruitment agency. He alleges that the trial court erred in adopting the asseveration of the private complainant

that he was indeed an employee because such was not duly supported by competent evidence. According to him, even assuming that

he was an employee, such cannot warrant his outright conviction sans evidence that he acted in conspiracy with the officers of the

agency.

We disagree.

To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity

within the meaning of recruitment and placement defined under Article 13(b), or any of the prohibited practices enumerated under

Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and

placement of workers;[8] and (3) the illegal recruitment is committed by a group of three (3) or more persons conspiring or

confederating with one another.[9] When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against

three (3) or more persons individually or as a group, it is considered an offense involving economic sabotage. [10]

Under Art. 13(b) of the Labor Code, recruitment 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.

After a thorough review of the records, we believe that the prosecution was able to establish the elements of the offense

sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment.

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 Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 (R.A.

8042), otherwise known as the Migrants and Overseas Filipinos Act of 1995, viz:

Sec. 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. It shall, likewise, include
the following act, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of
authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any
amount greater than that actually received by him as a loan or advance;

xxxx

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if committed against
three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case
of juridical persons, the officers having control, management or direction of their business shall be liable.

In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented

by the prosecution clearly shows that, in consideration of a promise of foreign employment, accused-appellant received the amount of

Php 45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agencys purported power and

authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly

committed acts constitutive of illegal recruitment.[11] Such acts were accurately described in the testimony of prosecution witness, Dela

Caza, to wit:

PROS. MAGABLIN

Q: How about this Rodolfo Gallo?

A: He was the one who received my money.

Q: Aside from receiving your money, was there any other representations or acts made by Rodolfo Gallo?

A: He introduced himself to me as relative of Mardeolyn Martir and he even intimated to me that their
agency has sent so many workers abroad.

xxxx

PROS. MAGABLIN

Q: Mr. Witness, as you claimed you tried to withdraw your application at the agency. Was there any instance
that you were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar Manta?

A: Yes, maam.

Q: What was the conversation that transpired among you before you demanded the return of your money
and documents?

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A: When I tried to withdraw my application as well as my money, Mr. Gallo told me I know nothing about
your money while Pilar Manta and Fides Pacardo told me, why should I withdraw my application
and my money when I was about to be [deployed] or I was about to leave.

xxxx

Q: And what transpired at that office after this Panuncio introduced you to those persons whom you just
mentioned?

A: The three of them including Rodolfo Gallo told me that the placement fee in that agency is Php 150,000.00
and then I should deposit the amount of Php 45,000.00. After I have deposited said amount, I
would just wait for few days

xxxx

Q: They were the one (sic) who told you that you have to pay Php 45,000.00 for deposit only?

A: Yes, maam, I was told by them to deposit Php 45,000.00 and then I would pay the remaining balance of
Php105,000.00, payment of it would be through salary deduction.

Q: That is for what Mr. Witness again?

A: For placement fee.

Q: Now did you believe to (sic) them?

A: Yes, maam.

Q: Why, why did you believe?

A: Because of the presence of the two Korean nationals and they keep on telling me that they have sent
abroad several workers and they even showed visas of the records that they have already deployed
abroad.

Q: Aside from that, was there any other representations which have been made upon you or make you
believe that they can deploy you?

A: At first I was adamant but they told me If you do not want to believe us, then we could do nothing. But
once they showed me the [visas] of the people whom they have deployed abroad, that was the
time I believe them.

Q: So after believing on the representations, what did you do next Mr. Witness?

A: That was the time that I decided to give the money.

xxxx

PROS. MAGABLIN

Q: Do you have proof that you gave the money?

A: Yes, maam.

Q: Where is your proof that you gave the money?

A: I have it here.

PROS. MAGABLIN:

Witness is producing to this court a Receipt dated May 28, 2001 in the amount of Php45,000.00 which for
purposes of record Your Honor, may I request that the same be marked in the evidence as our Exhibit F.

xxxx

PROS. MAGABLIN

Q: There appears a signature appearing at the left bottom portion of this receipt. Do you know whose
signature is this?

A: Yes, maam, signature of Rodolfo Gallo.

PROS. MAGABLIN

Q: Why do you say that that is his signature?

A: Rodolfo Gallos signature Your Honor because he was the one who received the money and he was the
one who filled up this O.R. and while he was doing it, he was flanked by Fides Pacardo, Pilar Manta
and Mardeolyn Martir.

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 xxxx

Q: So it was Gallo who received your money?

A: Yes, maam.

PROS. MAGABLIN

Q: And after that, what did this Gallo do after he received your money?

A: They told me maam just to call up and make a follow up with our agency.

xxxx

Q: Now Mr. Witness, after you gave your money to the accused, what happened with the application, with
the promise of employment that he promised?

A: Two (2) weeks after giving them the money, they moved to a new office in Makati, Brgy. San Isidro.

xxxx

Q: And were they able to deploy you as promised by them?

A: No, maam, they were not able to send us abroad.[12]

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant as one of those who

induced him and the other applicants to part with their money. His testimony showed that accused-appellant made false

misrepresentations and promises in assuring them that after they paid the placement fee, jobs in Korea as factory workers were waiting

for them and that they would be deployed soon. In fact, Dela Caza personally talked to accused-appellant and gave him the money

and saw him sign and issue an official receipt as proof of his payment. Without a doubt, accused-appellants actions constituted illegal

recruitment.

Additionally, accused-appellant cannot argue that the trial court erred in finding that he was indeed an employee of the

recruitment agency. On the contrary, his active participation in the illegal recruitment is unmistakable. The fact that he was the one

who issued and signed the official receipt belies his profession of innocence.

This Court likewise finds the existence of a conspiracy between the accused-appellant and the other persons in the agency

who are currently at large, resulting in the commission of the crime of syndicated illegal recruitment.

In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the rest of the officers and employees

of MPM Agency participated in a network of deception. Verily, the active involvement of each in the recruitment scam was directed at

one single purpose to divest complainants with their money on the pretext of guaranteed employment abroad. The prosecution

evidence shows that complainants were briefed by Mardeolyn about the processing of their papers for a possible job opportunity

in Korea, as well as their possible salary. Likewise, Yeo Sin Ung, a Korean national, gave a briefing about the business and what to

expect from the company. Then, here comes accused-appellant who introduced himself as Mardeolyns relative and specifically told

Dela Caza of the fact that the agency was able to send many workers abroad. Dela Caza was even showed several workers visas who

were already allegedly deployed abroad. Later on, accused-appellant signed and issued an official receipt acknowledging the down

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payment of Dela Caza. Without a doubt, the nature and extent of the actions of accused-appellant, as well as with the other persons

in MPM Agency clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently present.

In People v. Gamboa,[13] this Court discussed the nature of conspiracy in the context of illegal recruitment, viz:

Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the malefactors
whose conduct before, during and after the commission of the crime clearly indicated that they were one in purpose
and united in its execution. Direct proof of previous agreement to commit a crime is not necessary as it may be
deduced from the mode and manner in which the offense was perpetrated or inferred from the acts of the accused
pointing to a joint purpose and design, concerted action and community of interest. As such, all the accused, including
accused-appellant, are equally guilty of the crime of illegal recruitment since in a conspiracy the act of one is the act
of all.

To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all the conspirators took a direct part

in every act. It is sufficient that they acted in concert pursuant to the same objective. [14]

Estafa

The prosecution likewise established that accused-appellant is guilty of the crime of estafa as defined under Article 315

paragraph 2(a) of the Revised Penal Code, viz:

Art. 315. Swindling (estafa). Any person who shall defraud another by any means mentioned hereinbelow

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously
with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions; or by means of other similar deceits.

The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of confidence, or (b) by means

of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person. [15] Deceit

is the false representation of a matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of

that which should have been disclosed; and which deceives or is intended to deceive another so that he shall act upon it, to his legal

injury.

All these elements are present in the instant case: the accused-appellant, together with the other accused at large, deceived

the complainants into believing that the agency had the power and capability to send them abroad for employment; that there were

available jobs for them in Korea as factory workers; that by reason or on the strength of such assurance, the complainants parted with

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their money in payment of the placement fees; that after receiving the money, accused-appellant and his co-accused went into hiding

by changing their office locations without informing complainants; and that complainants were never deployed abroad. As all these

representations of the accused-appellant proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.

Defense of Denial Cannot Prevail

over Positive Identification

Indubitably, accused-appellants denial of the crimes charged crumbles in the face of the positive identification made by Dela

Caza and his co-complainants as one of the perpetrators of the crimes charged. As enunciated by this Court in People v.

Abolidor,[16] [p]ositive identification where categorical and consistent and not attended by any showing of ill motive on the part of the

eyewitnesses on the matter prevails over alibi and denial.

The defense has miserably failed to show any evidence of ill motive on the part of the prosecution witnesses as to falsely

testify against him.

Therefore, between the categorical statements of the prosecution witnesses, on the one hand, and bare denials of the accused,

on the other hand, the former must prevail.[17]

Moreover, this Court accords the trial courts findings with the probative weight it deserves in the absence of any compelling

reason to discredit the same. It is a fundamental judicial dictum that the findings of fact of the trial court are not disturbed on appeal

except when it overlooked, misunderstood or misapplied some facts or circumstances of weight and substance that would have

materially affected the outcome of the case. We find that the trial court did not err in convicting the accused-appellant.

WHEREFORE, the appeal is DENIED for failure to sufficiently show reversible error in the assailed decision. The Decision

dated December 24, 2008 of the CA in CA-G.R. CR-H.C. No. 02764 is AFFIRMED.

No costs.

SO ORDERED.

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