STAR PAPER CORPORATION, G.R. No. 164774 Comia was hired by the company on February 5, 1997.
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-
JOSEPHINE ONGSITCO &
SEBASTIAN CHUA,
Petitioners, Present:
PUNO, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
-versus- GARCIA, JJ.
Promulgated:
RONALDO D. SIMBOL, April 12, 2006
WILFREDA N. COMIA &
LORNA E. ESTRELLA,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of the employer
banning spouses from working in the same company violates the rights of the employee
under the Constitution and the Labor Code or is a valid exercise of management
prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of
Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the decision of the
National Labor Relations Commission (NLRC) which affirmed the ruling of the Labor
Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading
principally of paper products. Josephine Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian Chua is its Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol),
Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees
of the company.[1]
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also
an employee of the company, whom he married on June 27, 1998. Prior to the
marriage, Ongsitco advised the couple that should they decide to get married, one of
them should resign pursuant to a company policy promulgated in 1995,[2] viz.:
1. New applicants will not be allowed to be hired if in case he/she
has [a] relative, up to [the] 3rd degree of relationship, already
employed by the company.
2. In case of two of our employees (both singles
[sic], one male and another female) developed a friendly relationship
during the course of their employment and then decided to get
married, one of them should resign to preserve the policy stated
above.[3]
Simbol resigned on June 20, 1998 pursuant to the company policy.[4]
employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that
pursuant to company policy, one must resign should they decide to get married. Comia
resigned on June 30, 2000.[5]
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker.
Petitioners stated that Zuiga, a married man, got Estrella pregnant. The company
allegedly could have terminated her services due to immorality but she opted to resign
on December 21, 1999.[6]
The respondents each signed a Release and Confirmation Agreement. They stated
therein that they have no money and property accountabilities in the company and that
they release the latter of any claim or demand of whatever nature. [7]
Respondents offer a different version of their dismissal. Simbol and Comia allege that
they did not resign voluntarily; they were compelled to resign in view of an illegal
company policy. As to respondent Estrella, she alleges that she had a relationship with
co-worker Zuiga who misrepresented himself as a married but separated man. After he
got her pregnant, she discovered that he was not separated. Thus, she severed her
relationship with him to avoid dismissal due to the company policy. On November 30,
1999, she met an accident and was advised by the doctor at the Orthopedic Hospital to
recuperate for twenty-one (21) days. She returned to work on December 21, 1999 but
she found out that her name was on-hold at the gate. She was denied entry. She was
directed to proceed to the personnel office where one of the staff handed her a
memorandum. The memorandum stated that she was being dismissed for immoral
conduct. She refused to sign the memorandum because she was on leave for twenty-
one (21) days and has not been given a chance to explain. The management asked
her to write an explanation. However, after submission of the explanation, she was
nonetheless dismissed by the company. Due to her urgent need for money, she later
submitted a letter of resignation in exchange for her thirteenth month pay. [8]
Respondents later filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They averred that the aforementioned company
policy is illegal and contravenes Article 136 of the Labor Code. They also contended
that they were dismissed due to their union membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint
for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the
respondent corporation perceived as management prerogative. This
management prerogative is quite broad and encompassing for it
covers hiring, work assignment, working method, time, place and
manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and
recall of workers. Except as provided for or limited by special law, an
employer is free to regulate, according to his own discretion and
judgment all the aspects of employment.[9] (Citations omitted.)
On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter
on January 11, 2002. [10]
Respondents filed a Motion for Reconsideration but was denied by the NLRC in a
Resolution[11] dated August 8, 2002. They appealed to respondent court via Petition for
Certiorari.
In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision, viz.:
WHEREFORE, premises considered, the May 31, 2002
(sic)[12] Decision of the National Labor Relations Commission is
hereby REVERSED and SET ASIDE and a new one is entered as
follows:
(1) Declaring illegal, the petitioners dismissal from
employment and ordering private respondents to
reinstate petitioners to their former positions
without loss of seniority rights with full backwages
from the time of their dismissal until actual
reinstatement; and
(2) Ordering private respondents to pay petitioners
attorneys fees amounting to 10% of the award and
the cost of this suit.[13]
On appeal to this Court, petitioners contend that the Court of Appeals erred in holding
that:
1. X X X THE SUBJECT 1995 POLICY/REGULATION IS
VIOLATIVE OF THE CONSTITUTIONAL RIGHTS TOWARDS
MARRIAGE AND THE FAMILY OF EMPLOYEES AND OF
ARTICLE 136 OF THE LABOR CODE; AND
2. X X X RESPONDENTS RESIGNATIONS WERE FAR FROM
VOLUNTARY.[14]
We affirm.
The 1987 Constitution[15] states our policy towards the protection of labor
under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote
their welfare.
xxx
Article XIII, Sec. 3. 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, recognizing the right of labor to its
just share in the fruits of production and the right of enterprises to
reasonable returns on investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such contracts
are subject to the special laws on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages, working conditions, hours
of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the
laborer.
The Labor Code is the most comprehensive piece of legislation protecting labor. The
case at bar involves Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman
employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned
or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her
marriage.
Respondents submit that their dismissal violates the above provision. Petitioners allege
that its policy may appear to be contrary to Article 136 of the Labor Code but it assumes
a new meaning if read together with the first paragraph of the rule. The rule does not
require the woman employee to resign. The employee spouses have the right to choose
who between them should resign. Further, they are free to marry persons other than
co-employees. Hence, it is not the marital status of the employee, per se, that is being
discriminated. It is only intended to carry out its no-employment-for-relatives-within-the-
third-degree-policy which is within the ambit of the prerogatives of management. [16]
It is true that the policy of petitioners prohibiting close relatives from working in the
same company takes the nature of an anti-nepotism employment policy. Companies
adopt these policies to prevent the hiring of unqualified persons based on their status
as a relative, rather than upon their ability. [17] These policies focus upon the potential
employment problems arising from the perception of favoritism exhibited towards
relatives.
With more women entering the workforce, employers are also enacting employment
policies specifically prohibiting spouses from working for the same company. We note
that two types of employment policies involve spouses: policies banning only spouses
from working in the same company (no-spouse employment policies), and those
banning all immediate family members, including spouses, from working in the same
company (anti-nepotism employment policies).[18]
Unlike in our jurisdiction where there is no express prohibition on marital
discrimination,[19] there are twenty state statutes[20] in the United States prohibiting
marital discrimination. Some state courts [21] have been confronted with the issue of
whether no-spouse policies violate their laws prohibiting both marital status and sex
discrimination.
In challenging the anti-nepotism employment policies in the United States,
complainants utilize two theories of employment discrimination:
the disparate treatment and the disparate impact. Under the disparate treatment
analysis, the plaintiff must prove that an employment policy is discriminatory on its
face. No-spouse employment policies requiring an employee of a particular sex to
either quit, transfer, or be fired are facially discriminatory. For example, an employment
policy prohibiting the employer from hiring wives of male employees, but not husbands
of female employees, is discriminatory on its face.[22]
On the other hand, to establish disparate impact, the complainants must prove that a
facially neutral policy has a disproportionate effect on a particular class. For example,
although most employment policies do not expressly indicate which spouse will be
required to transfer or leave the company, the policy often disproportionately affects
one sex.[23]
The state courts rulings on the issue depend on their interpretation of the scope of
marital status discrimination within the meaning of their respective civil rights acts.
Though they agree that the term marital status encompasses discrimination based on
a person's status as either married, single, divorced, or widowed, they are divided on
whether the term has a broader meaning. Thus, their decisions vary.[24]
The courts narrowly[25] interpreting marital status to refer only to a person's status as
married, single, divorced, or widowed reason that if the legislature intended a broader
definition it would have either chosen different language or specified its intent. They
hold that the relevant inquiry is if one is married rather than to whom one is
married. They construe marital status discrimination to include only whether a person
is single, married, divorced, or widowed and not the identity, occupation, and place of
employment of one's spouse. These courts have upheld the questioned policies and
ruled that they did not violate the marital status discrimination provision of their
respective state statutes.
The courts that have broadly[26] construed the term marital status rule that it
encompassed the identity, occupation and employment of one's spouse. They strike
down the no-spouse employment policies based on the broad legislative intent of the
state statute. They reason that the no-spouse employment policy violate the marital
status provision because it arbitrarily discriminates against all spouses of present
employees without regard to the actual effect on the individual's qualifications or work
performance.[27] These courts also find the no-spouse employment policy invalid for
failure of the employer to present any evidence of business necessity other than the
general perception that spouses in the same workplace might adversely affect the
business.[28] They hold that the absence of such a bona fide occupational
qualification[29] invalidates a rule denying employment to one spouse due to the
current employment of the other spouse in the same office. [30] Thus, they rule that
unless the employer can prove that the reasonable demands of the business require a
distinction based on marital status and there is no better available or acceptable policy
which would better accomplish the business purpose, an employer may not
discriminate against an employee based on the identity of the employees
spouse.[31] This is known as the bona fide occupational qualification exception.
We note that since the finding of a bona fide occupational qualification justifies an
employers no-spouse rule, the exception is interpreted strictly and narrowly by these
state courts. There must be a compelling business necessity for which no alternative
exists other than the discriminatory practice.[32] To justify a bona fide occupational
qualification, the employer must prove two factors: (1) that the employment qualification
is reasonably related to the essential operation of the job involved; and, (2) that there
is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.[33]
The concept of a bona fide occupational qualification is not foreign in our jurisdiction.
We employ the standard of reasonableness of the company policy which is parallel to
the bona fide occupational qualification requirement. In the recent case ofDuncan
Association of Detailman-PTGWO and
Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,[34] we passed on the validity of
the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company. We held that Glaxo has a right to guard its
trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors. We considered the prohibition against
personal or marital relationships with employees of competitor companies
upon Glaxos employees reasonable under the circumstances because relationships
of that nature might compromise the interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxoonly aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.[35]
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was also at
issue in the 1997 case of Philippine Telegraph and Telephone Company v.
NLRC.[36]In said case, the employee was dismissed in violation of petitioners policy of
disqualifying from work any woman worker who contracts marriage. We held that the
company policy violates the right against discrimination afforded all women workers
under Article 136 of the Labor Code, but established a permissible exception, viz.:
[A] requirement that a woman employee must remain unmarried
could be justified as a bona fide occupational qualification, or
BFOQ, where the particular requirements of the job would justify the
same, but not on the ground of a general principle, such as the
desirability of spreading work in the workplace. A requirement of that
nature would be valid provided it reflects an inherent
quality reasonably necessary for satisfactory job
performance.[37] (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of
reasonableness must be clearly established to uphold the questioned employment
policy. The employer has the burden to prove the existence of a reasonable business
necessity. The burden was successfully discharged in Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar.
Petitioners sole contention that the company did not just want to have two (2)
or more of its employees related between the third degree by affinity and/or
consanguinity[38] is lame. That the second paragraph was meant to give teeth to the
first paragraph of the questioned rule[39] is evidently not the valid reasonable business
necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after
they were found fit for the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could
be detrimental to its business operations. Neither did petitioners explain how this
detriment will happen in the case of Wilfreda Comia, then a Production Helper in the
Selecting Department, who married Howard Comia, then a helper in the cutter-
machine. The policy is premised on the mere fear that employees married to each other IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No.
will be less efficient. If we uphold the questioned rule without valid justification, the 73477 dated August 3, 2004 is AFFIRMED.
employer can create policies based on an unproven presumption of a perceived danger
at the expense of an employees right to security of tenure. SO ORDERED.
MA. LOURDES T. DOMINGO, G.R. No. 155831
Petitioners contend that their policy will apply only when one employee Petitioner,
marries a co-employee, but they are free to marry persons other than co-
employees. The questioned policy may not facially violate Article 136 of the Labor Code - versus -
but it creates a disproportionate effect and under the disparate impact theory, the only
way it could pass judicial scrutiny is a showing that it is reasonable despite the ROGELIO I. RAYALA,
discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a Respondent.
legitimate business concern in imposing the questioned policy cannot prejudice the x-------------------------x
employees right to be free from arbitrary discrimination based upon stereotypes of ROGELIO I. RAYALA, G.R. No. 155840
married persons working together in one company.[40] Petitioner,
Lastly, the absence of a statute expressly prohibiting marital discrimination in - versus -
our jurisdiction cannot benefit the petitioners. The protection given to labor in our
jurisdiction is vast and extensive that we cannot prudently draw inferences from the OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in his
legislatures silence[41] that married persons are not protected under our Constitution capacity as Executive Secretary; ROY V. SENERES, in his
and declare valid a policy based on a prejudice or stereotype. Thus, for failure of capacity as Chairman of the National Labor Relations
petitioners to present undisputed proof of a reasonable business necessity, we rule that Commission (in lieu of RAUL T. AQUINO, in his capacity as
the questioned policy is an invalid exercise of management prerogative. Corollarily, the Acting Chairman of the National labor Relations
issue as to whether respondents Simbol and Comia resigned voluntarily has become Commission); and MA. LOURDES T. DOMINGO,
moot and academic. Respondents.
As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling x-------------------------x
on the singular fact that her resignation letter was written in her own handwriting. Both The REPUBLIC OF THE PHILIPPINES, represented by the
ruled that her resignation was voluntary and thus valid. The respondent court failed to OFFICE OF THE PRESIDENT; and ALBERTO G. ROMULO, in
categorically rule whether Estrella voluntarily resigned but ordered that she be his capacity as Executive Secretary, G.R. No. 158700
reinstated along with Simbol and Comia. Petitioners,
Present:
Estrella claims that she was pressured to submit a resignation letter because
she was in dire need of money. We examined the records of the case and - versus - YNARES-SANTIAGO, J.,
find Estrellas contention to be more in accord with the evidence. While findings of fact Chairperson,
by administrative tribunals like the NLRC are generally given not only respect but, at AUSTRIA-MARTINEZ,
times, finality, this rule admits of exceptions,[42] as in the case at bar. CORONA,*
NACHURA, and
Estrella avers that she went back to work on December 21, 1999 but was ROGELIO I. RAYALA, REYES, JJ.
dismissed due to her alleged immoral conduct. At first, she did not want to sign the Respondent.
termination papers but she was forced to tender her resignation letter in exchange for Promulgated:
her thirteenth month pay.
February 18, 2008
The contention of petitioners that Estrella was pressured to resign because x------------------------------------------------------------------------------------x
she got impregnated by a married man and she could not stand being looked upon or
talked about as immoral[43] is incredulous. If she really wanted to avoid embarrassment
and humiliation, she would not have gone back to work at all. Nor would she have filed DECISION
a suit for illegal dismissal and pleaded for reinstatement. We have held that in voluntary
resignation, the employee is compelled by personal reason(s) to dissociate himself NACHURA, J.:
from employment. It is done with the intention of relinquishing an office, accompanied
by the act of abandonment. [44] Thus, it is illogical for Estrella to resign and then file a
complaint for illegal dismissal. Given the lack of sufficient evidence on the part of
petitioners that the resignation was voluntary, Estrellas dismissal is declared illegal.
 Lourdes: Dati nagkaroon po.
Sexual harassment is an imposition of misplaced superiority which is enough Chairman: Nasaan na siya?
to dampen an employees spirit and her capacity for advancement. It affects her sense Lourdes: Nag-asawa na ho.
of judgment; it changes her life.[1] Chairman: Bakit hindi kayo nagkatuluyan?
Lourdes: Nainip po.
Before this Court are three Petitions for Review on Certiorari assailing the Chairman: Pagkatapos mo ng kurso mo ay
October 18, 2002 Resolution of the CAs Former Ninth Division [2] in CA-G.R. SP No. kumuha ka ng Law at ako ang
61026. The Resolution modified the December 14, 2001 Decision [3] of the Court of bahala sa iyo, hanggang ako pa
Appeals Eleventh Division, which had affirmed the Decision of the Office of the ang Chairman dito.
President (OP) dismissing from the service then National Labor Relations Commission
(NLRC) Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral conduct. Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at
inaabot sa akin.
All three petitions stem from the same factual antecedents.
Chairman: Kuhanin mo ito.
On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Lourdes: Huwag na ho hindi ko kailangan.
Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment against Chairman: Hindi sige, kuhanin mo. Ayusin mo ang
Rayala before Secretary Bienvenido Laguesma of the Department of Labor and dapat ayusin.
Employment (DOLE).
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at
To support the Complaint, Domingo executed an Affidavit narrating the kinakabahan na kapag hindi ko tinanggap ang pera ay baka siya
incidences of sexual harassment complained of, thus: magagalit kasabay na rito ang pagtapon sa akin kung saan-saan
opisina o kaya ay tanggalin ako sa posisyon.
xxxx
Chairman: Paglabas mo itago mo ang pera. Ayaw
4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman ko ng may makaka-alam nito. Just
Rayala ng mga salitang Lot, gumaganda ka yata? the two of us.
Lourdes: Bakit naman, Sir?
5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at Chairman: Basta. Maraming tsismosa diyan sa
hahawakan ang aking balikat sabay pisil sa mga ito habang labas. But I dont give them a
ako ay nagta-type at habang nagbibigay siya ng damn. Hindi ako mamatay sa
diktasyon. Sa mga pagkakataong ito, kinakabahan kanila.
ako. Natatakot na baka mangyari sa akin ang mga
napapabalitang insidente na nangyari na noon tungkol sa Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at
mga sekretarya niyang nagbitiw gawa ng mga mahahalay pumunta ako sa officemate ko na si Agnes Magdaet. Ikinwento ko
na panghihipo ni Chairman. ang nangyari sa akin sa opisina ni Chairman. Habang kinikwento ko
ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng
6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8 th Floor, tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang
may nagsabi sa akin na kailangan akong bumaba sa pera, pero ang sabi ko ay natatakot ako baka magalit si Sir. Nagsabi
7th Floor kung nasaan ang aming opisina dahil sa may agad kami kay EC Perlita Velasco at sinalaysay ko ang nangyari.
koreksyon daw na gagawin sa mga papel na tinayp Sinabi niya na isauli ko ang pera at noong araw ding iyon ay
ko. Bumaba naman ako para gawin ito. Habang ginagawa nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng
ko ito, lumabas si Chairman Rayala sa silid ni Mr. Alex pagkakataon dahil marami siyang naging bisita. Isinauli ko nga ang
Lopez. Inutusan ako ni Chairman na sumunod sa kaniyang pera noong Lunes, Setyembre 14, 1998.
silid. Nang nasa silid na kami, sinabi niya sa akin:
7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa
Chairman: Lot, I like you a lot. Naiiba ka sa lahat. akin si Chairman Rayala na hindi ko masikmura, at sa aking palagay
at tahasang pambabastos sa akin.
At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na
bagay sa aking buhay. Ang ilan dito ay tungkol sa aking mga Chairman: Lot, may ka live-in ka ba?
magulang, kapatid, pag-aaral at kung may boyfriend na raw ba ako. Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Chairman: May boyfriend ka na ba?
 Lourdes: Kayo, Sir ha! Masama sa amin ang may
ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman
Rayala. Ito ay sa kadahilanang ang fax machine ay nasa loob ng
kaniyang kwarto. Ang nag-aasikaso nito, si Riza Ocampo, ay naka-
leave kaya ako ang nag-asikaso nito noong araw na iyon. Nang
mabigyan ko na ng fax tone yung kausap ko, pagharap ko sa kanan
ay nakaharang sa dadaanan ko si Chairman Rayala. Tinitingnan ako
sa mata at ang titig niya ay umuusad mula ulo hanggang dibdib tapos
ay ngumiti na may mahalay na pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na
sekretarya sa opisina, sinabi ko ito kay Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-
papainterview po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna
siya
Chairman: O sige, i-refer mo kay Alex. (Alex
Lopez, Chief of Staff).
10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala
sa kaniyang opisina upang kuhanin ko ang diktasyon niya para kay
ELA Oscar Uy. Hindi pa kami nakakatapos ng unang talata, may
pumasok na bisita si Chairman, si Baby Pangilinan na sinamahan ni
Riza Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na
si Ms. Pangilinan, pinapasok na niya ako ulit. Umupo ako. Lumapit
sa likuran ko si Chairman, hinawakan ang kaliwang balikat ko na
pinipisil ng kanang kamay niya at sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto
siya pagkatapos, at nilagay niya ang kanang kamay niya sa aking
kanang balikat at pinisil-pisil ito pagkatapos ay pinagapang niya ito
sa kanang bahagi ng aking leeg, at pinagapang hanggang kanang
tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na
maintindihan ang na-isulat ko dahil sa takot at inis na nararamdaman
ko.[4]
After the last incident narrated, Domingo filed for leave of absence and asked
to be immediately transferred. Thereafter, she filed the Complaint for sexual
harassment on the basis of Administrative Order No. 250, the Rules and Regulations
Implementing RA 7877 in the Department of Labor and Employment.
Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to
the OP, Rayala being a presidential appointee. The OP, through then Executive
Secretary Ronaldo Zamora, ordered Secretary Laguesma to investigate the allegations
in the Complaint and create a committee for such purpose. On December 4, 1998,
Secretary Laguesma issued Administrative Order (AO) No. 280, Series of
1998,[5] constituting a Committee on Decorum and Investigation (Committee) in
accordance with Republic Act (RA) 7877, the Anti-Sexual Harassment Act of 1995.[6]
The Committee heard the parties and received their respective evidence. On
March 2, 2000, the Committee submitted its report and recommendation to Secretary
Laguesma. It found Rayala guilty of the offense charged and recommended the
imposition of the minimum penalty provided under AO 250, which it erroneously stated
as suspension for six (6) months.
The following day, Secretary Laguesma submitted a copy of the Committee
Report and Recommendation to the OP, but with the recommendation that the penalty
should be suspension for six (6) months and one (1) day, in accordance with AO 250.
On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO
119,[7] the pertinent portions of which read:
Upon a careful scrutiny of the evidence on record, I concur
with the findings of the Committee as to the culpability of the
respondent [Rayala], the same having been established by clear and
convincing evidence. However, I disagree with the recommendation
that respondent be meted only the penalty of suspension for six (6)
months and one (1) day considering the circumstances of the case.
What aggravates respondents situation is the undeniable
circumstance that he took advantage of his position as the superior
of the complainant. Respondent occupies the highest position in the
NLRC, being its Chairman. As head of said office, it was incumbent
upon respondent to set an example to the others as to how they
should conduct themselves in public office, to see to it that his
subordinates work efficiently in accordance with Civil Service Rules
and Regulations, and to provide them with healthy working
atmosphere wherein co-workers treat each other with respect,
courtesy and cooperation, so that in the end the public interest will
be benefited (City Mayor of Zamboanga vs. Court of Appeals, 182
SCRA 785 [1990]).
What is more, public service requires the utmost integrity
and strictest discipline (Gano vs. Leonen, 232 SCRA 99 [1994]).
Thus, a public servant must exhibit at all times the highest sense of
honesty and integrity, and utmost devotion and dedication to duty
(Sec. 4 (g), RA 6713), respect the rights of others and shall refrain
from doing acts contrary to law, and good morals (Sec. 4(c)). No less
 than the Constitution sanctifies the principle that a public office is a
public trust, and enjoins all public officers and employees to serve
with the highest degree of responsibility, integrity, loyalty and
efficiency (Section 1, Article XI, 1987 Constitution).
Given these established standards, I see respondents acts
not just [as] a failure to give due courtesy and respect to his co-
employees (subordinates) or to maintain good conduct and behavior
but defiance of the basic norms or virtues which a government official
must at all times uphold, one that is contrary to law and public sense
of morality. Otherwise stated, respondent to whom stricter standards
must apply being the highest official [of] the NLRC had shown an
attitude, a frame of mind, a disgraceful conduct, which renders him
unfit to remain in the service.
WHEREFORE, in view of the foregoing, respondent
Rogelio I. Rayala, Chairman, National Labor Relations Commission,
is found guilty of the grave offense of disgraceful and immoral
conduct and is hereby DISMISSED from the service effective upon
receipt of this Order.
SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution [8] dated
May 24, 2000. He then filed a Petition for Certiorari and Prohibition with Prayer for
Temporary Restraining Order under Rule 65 of the Revised Rules on Civil Procedure
before this Court on June 14, 2000.[9] However, the same was dismissed in a
Resolution dated June 26, 2000 for
disregarding the hierarchy of courts.[10] Rayala filed a Motion for
Reconsideration[11] on August 15, 2000. In its Resolution[12] dated September 4, 2000,
the Court recalled its June 26 Resolution and referred the petition to the Court of
Appeals (CA) for appropriate action.
The CA rendered its Decision[13] on December 14, 2001. It held that there was
sufficient evidence on record to create moral certainty that Rayala committed the acts
he was charged with. It said:
The complainant narrated her story complete with details. Her
straightforward and uninhibited testimony was not emasculated by
the declarations of Commissioner Rayala or his witnesses. x x x
Moreover, Commissioner Rayala has not proven any
vicious motive for Domingo and her witnesses to invent their stories.
It is very unlikely that they would perjure themselves only to
accommodate the alleged conspiracy to oust petitioner from office.
Save for his empty conjectures and speculations, Rayala failed to
substantiate his contrived conspiracy. It is a hornbook doctrine that
conspiracy must be proved by positive and convincing evidence
(People v. Noroa, 329 SCRA 502 [2000]). Besides, it is improbable
that the complainant would concoct a story of sexual harassment
against the highest official of the NLRC and thereby expose herself
to the possibility of losing her job, or be the subject of reprisal from
her superiors and perhaps public ridicule if she was not telling the
truth.
It also held that Rayalas dismissal was proper. The CA pointed out that Rayala
was dismissed for disgraceful and immoral conduct in violation of RA 6713, the Code
of Conduct and Ethical Standards for Public Officials and Employees. It held that the
OP was correct in concluding that Rayalas acts violated RA 6713:
Indeed, [Rayala] was a public official, holding the
Chairmanship of the National Labor Relations Commission,
entrusted with the sacred duty of administering justice. Occupying as
he does such an exalted position, Commissioner Rayala must pay a
high price for the honor bestowed upon him. He must comport
himself at all times in such a manner that the conduct of his everyday
life should be beyond reproach and free from any impropriety. That
the acts complained of were committed within the sanctuary of [his]
office compounded the objectionable nature of his wrongdoing. By
daring to violate the complainant within the solitude of his chambers,
Commissioner Rayala placed the integrity of his office in disrepute.
His disgraceful and immoral conduct warrants his removal from
office.[14]
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is
hereby DISMISSED and Administrative Order No. 119 as well [as]
the Resolution of the Office of the President in O.P. Case No. 00-E-
9118 dated May 24, 2000 are AFFIRMED IN TOTO. No cost.
SO ORDERED.[15]
Rayala timely filed a Motion for Reconsideration. Justices Vasquez and
Tolentino voted to affirm the December 14 Decision. However, Justice Reyes dissented
mainly because AO 250 states that the penalty imposable is suspension for six (6)
months and one (1) day.[16] Pursuant to the internal rules of the CA, a Special Division
of Five was constituted.[17] In its October 18, 2002 Resolution, the CA modified its
earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001
is MODIFIED to the effect that the penalty of dismissal is DELETED
and instead the penalty of suspension from service for the maximum
period of one (1) year is HEREBY IMPOSED upon the petitioner. The
rest of the challenged decision stands.
SO ORDERED.
 Domingo filed a Petition for Review[18] before this Court, which we denied in
our February 19, 2003 Resolution for having a defective verification. She filed a Motion
for Reconsideration, which the Court granted; hence, the petition was reinstated.
Rayala likewise filed a Petition for Review[19] with this Court essentially
arguing that he is not guilty of any act of sexual harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of the CAs
October 18, 2002 Resolution. The CA denied the same in its June 3, 2003 Resolution,
the dispositive portion of which reads:
ACCORDINGLY, by a majority vote, public respondents
Motion for Reconsideration, (sic) is DENIED.
SO ORDERED.
The Republic then filed its own Petition for Review.[20]
On June 28, 2004, the Court directed the consolidation of the three (3)
petitions.
G.R. No. 155831
Domingo assails the CAs resolution modifying the penalty imposed by the
Office of the President. She raises this issue:
The Court of Appeals erred in modifying the penalty for the
respondent from dismissal to suspension from service for the
maximum period of one year. The President has the prerogative to
determine the proper penalty to be imposed on an erring Presidential
appointee. The President was well within his power when he fittingly
used that prerogative in deciding to dismiss the respondent from the
service.[21]
She argues that the power to remove Rayala, a presidential appointee, is
lodged with the President who has control of the entire Executive Department, its
bureaus and offices. The OPs decision was arrived at after affording Rayala due
process. Hence, his dismissal from the service is a prerogative that is entirely with the
President.[22]
As to the applicability of AO No. 250, she argues that the same was not
intended to cover cases against presidential appointees. AO No. 250 refers only to the
instances wherein the DOLE Secretary is the disciplining authority, and thus, the AO
does not circumscribe the power of the President to dismiss an erring presidential
appointee.
G.R. No. 155840
In his petition, Rayala raises the following issues:
I. CONTRARY TO THE FINDINGS OF THE COURT OF
APPEALS, THE ACTS OF HEREIN PETITIONER DO NOT
CONSTITUTE SEXUAL HARASSMENT AS LAID DOWN
BY THE En Banc RULING IN THE CASE OF AQUINO vs.
ACOSTA, ibid., AS WELL AS IN THE APPLICATION OF
EXISTING LAWS.
II. CONTRARY TO THE FINDINGS OF THE
HONORABLE COURT OF APPEALS, INTENT IS AN
INDISPENSABLE ELEMENT IN A CASE FOR SEXUAL
HARASSMENT. THE HONORABLE COURT ERRED IN
ITS FINDING THAT IT IS AN OFFENSE THAT IS MALUM
PROHIBITUM.
III. THE INVESTIGATION COMMITTEE, THE OFFICE OF
THE PRESIDENT, AND NOW, THE HONORABLE
COURT OF APPEALS, HAS MISAPPLIED AND
EXPANDED THE DEFINITION OF SEXUAL
HARASSMENT IN THE WORKPLACE UNDER R.A. No.
7877, BY APPLYING DOLE A.O. 250, WHICH RUNS
COUNTER TO THE RECENT PRONOUNCEMENTS OF
THIS HONORABLE SUPREME COURT.[23]
Invoking Aquino v. Acosta,[24] Rayala argues that the case is the definitive
ruling on what constitutes sexual harassment. Thus, he posits that for sexual
harassment to exist under RA 7877, there must be: (a) demand, request, or
requirement of a sexual favor; (b) the same is made a pre-condition to hiring, re-
employment, or continued employment; or (c) the denial thereof results in
discrimination against the employee.
Rayala asserts that Domingo has failed to allege and establish any sexual
favor, demand, or request from petitioner in exchange for her continued employment
or for her promotion. According to Rayala, the acts imputed to him are without malice
or ulterior motive. It was merely Domingos perception of malice in his alleged acts a
product of her own imagination[25] that led her to file the sexual harassment complaint.
Likewise, Rayala assails the OPs interpretation, as upheld by the CA, that RA
7877 is malum prohibitum such that the defense of absence of malice is unavailing. He
argues that sexual harassment is considered an offense against a particular person,
not against society as a whole. Thus, he claims that intent is an essential element of
the offense because the law requires as a conditio sine qua non that a sexual favor be
first sought by the offender in order to achieve certain specific results. Sexual
harassment is committed with the perpetrators deliberate intent to commit the
offense.[26]
Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In
particular, he assails the definition of the forms of sexual harassment:
Rule IV
FORMS OF SEXUAL HARASSMENT

Section 1. Forms of Sexual Harassment. Sexual
harassment may be committed in any of the following forms:
a) Overt sexual advances;
b) Unwelcome or improper gestures of affection;
c) Request or demand for sexual favors including but not
limited to going out on dates, outings or the like for the same
purpose;
d) Any other act or conduct of a sexual nature or for
purposes of sexual gratification which is generally annoying,
disgusting or offensive to the victim.[27]
He posits that these acts alone without corresponding demand, request, or
requirement do not constitute sexual harassment as contemplated by the law. [28] He
alleges that the rule-making power granted to the employer in Section 4(a) of RA 7877
is limited only to procedural matters. The law did not delegate to the employer the power
to promulgate rules which would provide other or additional forms of sexual
harassment, or to come up with its own definition of sexual harassment. [29]
G.R. No. 158700
The Republic raises this issue:
Whether or not the President of the Philippines may validly
dismiss respondent Rayala as Chairman of the NLRC for
committing acts of sexual harassment.[30]
The Republic argues that Rayalas acts constitute sexual harassment under
AO 250. His acts constitute unwelcome or improper gestures of affection and are acts
or conduct of a sexual nature, which are generally annoying or offensive to the victim. [31]
It also contends that there is no legal basis for the CAs reduction of the penalty
imposed by the OP. Rayalas dismissal is valid and warranted under the circumstances.
The power to remove the NLRC Chairman solely rests upon the President, limited only
by the requirements under the law and the due process clause.
The Republic further claims that, although AO 250 provides only a one (1)
year suspension, it will not prevent the OP from validly imposing the penalty of dismissal
on Rayala. It argues that even though Rayala is a presidential appointee, he is still
subject to the Civil Service Law. Under the Civil Service Law, disgraceful and immoral
conduct, the acts imputed to Rayala, constitute grave misconduct punishable by
dismissal from the service.[32] The Republic adds that Rayalas position is invested with
public trust and his acts violated that trust; thus, he should be dismissed from the
service.
This argument, according to the Republic, is also supported by Article 215 of
the Labor Code, which states that the Chairman of the NLRC holds office until he
reaches the age of 65 only during good behavior. [33] Since Rayalas security of tenure
is conditioned upon his good behavior, he may be removed from office if it is proven
that he has failed to live up to this standard.
All the issues raised in these three cases can be summed up in two ultimate
questions, namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised by Rayala. He
accuses the Office of the Solicitor General (OSG), as counsel for the Republic, of forum
shopping because it filed a motion for reconsideration of the decision in CA-G.R. SP
No. 61026 and then filed a comment in G.R. No. 155840 before this Court.
We do not agree.
Forum shopping is an act of a party, against whom an adverse judgment or
order has been rendered in one forum, of seeking and possibly securing a favorable
opinion in another forum, other than by appeal or special civil action for certiorari.[34]It
consists of filing multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable
judgment.[35]
There is forum shopping when the following elements concur: (1) identity of
the parties or, at least, of the parties who represent the same interest in both actions;
(2) identity of the rights asserted and relief prayed for, as the latter is founded on the
same set of facts; and (3) identity of the two preceding particulars such that any
judgment rendered in the other action will amount to res judicata in the action under
consideration or will constitute litis pendentia.[36]
Reviewing the antecedents of these consolidated cases, we note that the CA
rendered the assailed Resolution on October 18, 2002. The Republic filed its Motion
for Reconsideration on November 22, 2002. On the other hand, Rayala filed his petition
before this Court on November 21, 2002. While the Republics Motion for
Reconsideration was pending resolution before the CA, on December 2, 2002, it was
directed by this Court to file its Comment on Rayalas petition, which it submitted on
June 16, 2003.
When the CA denied the Motion for Reconsideration, the Republic filed its own
Petition for Review with this Court on July 3, 2003. It cited in its Certification and
Verification of a Non-Forum Shopping (sic), that there was a case involving the same
facts pending before this Court denominated as G.R. No. 155840. With respect to
Domingos petition, the same had already been dismissed on February 19, 2003.
Domingos petition was reinstated on June 16, 2003 but the resolution was received by
the OSG only on July 25, 2003, or after it had filed its own petition. [37]
Based on the foregoing, it cannot be said that the OSG is guilty of forum
shopping. We must point out that it was Rayala who filed the petition in the CA, with
the Republic as the adverse party. Rayala himself filed a motion for reconsideration of
the CAs December 21, 2001 Decision, which led to a more favorable ruling, i.e., the
lowering of the penalty from dismissal to one-year suspension. The parties adversely
affected by this ruling (Domingo and the Republic) had the right to question the same
on motion for reconsideration. But Domingo directly filed a Petition for Review with this
Court, as did Rayala. When the Republic opted to file a motion for reconsideration, it
was merely exercising a right. That Rayala and Domingo had by then already filed
cases before the SC did not take away this right. Thus, when this Court directed the
Republic to file its Comment on Rayalas petition, it had to comply, even if it had an
unresolved motion for reconsideration with the CA, lest it be cited for contempt.
Accordingly, it cannot be said that the OSG file[d] multiple suits involving the
same parties for the same cause of action, either simultaneously or successively, for
the purpose of obtaining a favorable judgment.
We now proceed to discuss the substantive issues.
It is noteworthy that the five CA Justices who deliberated on the case were
unanimous in upholding the findings of the Committee and the OP. They found the
assessment made by the Committee and the OP to be a meticulous and dispassionate
analysis of the testimonies of the complainant (Domingo), the respondent (Rayala), and
their respective witnesses. [38] They differed only on the appropriate imposable penalty.
That Rayala committed the acts complained of and was guilty of sexual
harassment is, therefore, the common factual finding of not just one, but three
independent bodies: the Committee, the OP and the CA. It should be remembered that
when supported by substantial evidence, factual findings made by quasi-judicial and
administrative bodies are accorded great respect and even finality by the courts. [39] The
principle, therefore, dictates that such findings should bind us. [40]
Indeed, we find no reason to deviate from this rule. There appears no valid
ground for this Court to review the factual findings of the CA, the OP, and the
Investigating Committee. These findings are now conclusive on the Court. And quite
significantly, Rayala himself admits to having committed some of the acts imputed to
him.
He insists, however, that these acts do not constitute sexual harassment,
because Domingo did not allege in her complaint that there was a demand, request, or
requirement of a sexual favor as a condition for her continued employment or for her
promotion to a higher position.[41] Rayala urges us to apply to his case our ruling
in Aquino v. Acosta.[42]
We find respondents insistence unconvincing.
Basic in the law of public officers is the three-fold liability rule, which states
that the wrongful acts or omissions of a public officer may give rise to civil, criminal and
administrative liability. An action for each can proceed independently of the
others.[43] This rule applies with full force to sexual harassment.
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section
3 thereof defines work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual
Harassment Defined. Work, education or training-related sexual
harassment is committed by an employer, manager, supervisor,
agent of the employer, teacher, instructor, professor, coach, trainor,
or any other person who, having authority, influence or moral
ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual
favor from the other, regardless of whether the demand, request or
requirement for submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual
harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or
in the employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
employee which in a way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employees rights or
privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile,
or offensive environment for the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect of the
unlawful act of sexual harassment. The same section, in relation to Section 6,
authorizes the institution of an independent civil action for damages and other
affirmative relief.
Section 4, also in relation to Section 3, governs the procedure for administrative
cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-
related, Education or Training Environment. It shall be the duty of the
employer or the head of the work-related, educational or training
environment or institution, to prevent or deter the commission of acts
of sexual harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual harassment.
Towards this end, the employer or head of office shall:
(a) Promulgate appropriate
rules and regulations in
consultation with and jointly
approved by the employees or
students or trainees, through
their duly designated
representatives, prescribing the
 procedure for the investigation The CA, thus, correctly ruled that Rayalas culpability is not to be determined
or sexual harassment cases solely on the basis of Section 3, RA 7877, because he is charged with the administrative
and the administrative offense, not the criminal infraction, of sexual harassment. [44] It should be enough that
sanctions therefor. the CA, along with the Investigating Committee and the Office of the President, found
substantial evidence to support the administrative charge.
Administrative
sanctions shall not be a bar to Yet, even if we were to test Rayalas acts strictly by the standards set in
prosecution in the proper courts Section 3, RA 7877, he would still be administratively liable. It is true that this provision
for unlawful acts of sexual calls for a demand, request or requirement of a sexual favor. But it is not necessary
harassment. that the demand, request or requirement of a sexual favor be articulated in a categorical
oral or written statement. It may be discerned, with equal certitude, from the acts of the
The said rules and offender. Holding and squeezing Domingos shoulders, running his fingers across her
regulations issued pursuant to neck and tickling her ear, having inappropriate conversations with her, giving her
this section (a) shall include, money allegedly for school expenses with a promise of future privileges, and making
among others, guidelines on statements with unmistakable sexual overtones all these acts of Rayala resound with
proper decorum in the deafening clarity the unspoken request for a sexual favor.
workplace and educational or
training institutions. Likewise, contrary to Rayalas claim, it is not essential that the demand,
request or requirement be made as a condition for continued employment or for
(b) Create a committee on promotion to a higher position. It is enough that the respondents acts result in creating
decorum and investigation of an intimidating, hostile or offensive environment for the employee.[45] That the acts of
cases on sexual harassment. Rayala generated an intimidating and hostile environment for Domingo is clearly shown
The committee shall conduct by the common factual finding of the Investigating Committee, the OP and the CA that
meetings, as the case may be, Domingo reported the matter to an officemate and, after the last incident, filed for a
with other officers and leave of absence and requested transfer to another unit.
employees, teachers,
instructors, professors, Rayalas invocation of Aquino v. Acosta[46] is misplaced, because the factual
coaches, trainors and students setting in that case is different from that in the case at bench. In Aquino, Atty. Susan
or trainees to increase Aquino, Chief of the Legal and Technical Staff of the Court of Tax Appeals (CTA),
understanding and prevent charged then CTA Presiding Judge (now Presiding Justice) Ernesto Acosta of sexual
incidents of sexual harassment. harassment. She complained of several incidents when Judge Acosta allegedly kissed
It shall also conduct the her, embraced her, and put his arm around her shoulder. The case was referred to CA
investigation of the alleged Justice Josefina G. Salonga for investigation. In her report, Justice Salonga found that
cases constituting sexual the complainant failed to show by convincing evidence that the acts of Judge Acosta in
harassment. greeting her with a kiss on the cheek, in a `beso-beso fashion, were carried out with
lustful and lascivious desires or were motivated by malice or ill motive. It is clear from
In the case of a work-related environment, the committee the circumstances that most of the kissing incidents were done on festive and special
shall be composed of at least one (1) representative each from the occasions, and they took place in the presence of other people and the same was by
management, the union, if any, the employees from the supervisory reason of the exaltation or happiness of the moment. Thus, Justice Salonga concluded:
rank, and from the rank and file employees.
In all the incidents complained of, the respondent's pecks
In the case of the educational or training institution, the on the cheeks of the complainant should be understood in the
committee shall be composed of at least one (1) representative from context of having been done on the occasion of some festivities, and
the administration, the trainors, teachers, instructors, professors or not the assertion of the latter that she was singled out by Judge
coaches and students or trainees, as the case maybe. Acosta in his kissing escapades. The busses on her cheeks were
simply friendly and innocent, bereft of malice and lewd design. The
The employer or head of office, educational or training fact that respondent judge kisses other people on the cheeks in the
institution shall disseminate or post a copy of this Act for the 'beso-beso' fashion, without malice, was corroborated by Atty.
information of all concerned. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili,
who stated that they usually practice 'beso-beso' or kissing on the
cheeks, as a form of greeting on occasions when they meet each
other, like birthdays, Christmas, New Year's Day and even
 Valentine's Day, and it does not matter whether it is Judge Acosta's
birthday or their birthdays. Theresa Cinco Bactat, a lawyer who
belongs to complainant's department, further attested that on
occasions like birthdays, respondent judge would likewise greet her
with a peck on the cheek in a 'beso-beso' manner. Interestingly, in
one of several festive occasions, female employees of the CTA
pecked respondent judge on the cheek where Atty. Aquino was one
of Judge Acosta's well wishers.
In sum, no sexual harassment had indeed transpired on
those six occasions. Judge Acosta's acts of bussing Atty. Aquino on
her cheek were merely forms of greetings, casual and customary in
nature. No evidence of intent to sexually harass complainant was
apparent, only that the innocent acts of 'beso-beso' were given
malicious connotations by the complainant. In fact, she did not even
relate to anyone what happened to her. Undeniably, there is no
manifest sexual undertone in all those incidents. [47]
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.
To repeat, this factual milieu in Aquino does not obtain in the case at bench. While
in Aquino, the Court interpreted the acts (of Judge Acosta) as casual gestures of
friendship and camaraderie, done during festive or special occasions and with other
people present, in the instant case, Rayalas acts of holding and squeezing Domingos
shoulders, running his fingers across her neck and tickling her ear, and the
inappropriate comments, were all made in the confines of Rayalas office when no other
members of his staff were around. More importantly, and a circumstance absent
in Aquino, Rayalas acts, as already adverted to above, produced a hostile work
environment for Domingo, as shown by her having reported the matter to an officemate
and, after the last incident, filing for a leave of absence and requesting transfer to
another unit.
Rayala also argues that AO 250 does not apply to him. First, he argues that
AO 250 does not cover the NLRC, which, at the time of the incident, was under the
DOLE only for purposes of program and policy coordination. Second, he posits that
even assuming AO 250 is applicable to the NLRC, he is not within its coverage because
he is a presidential appointee.
We find, however, that the question of whether or not AO 250 covers Rayala
is of no real consequence. The events of this case unmistakably show that the
administrative charges against Rayala were for violation of RA 7877; that the OP
properly assumed jurisdiction over the administrative case; that the participation of the
DOLE, through the Committee created by the Secretary, was limited to initiating the
investigation process, reception of evidence of the parties, preparation of the
investigation report, and recommending the appropriate action to be taken by the
OP. AO 250 had never really been applied to Rayala. If it was used at all, it was to
serve merely as an auxiliary procedural guide to aid the Committee in the orderly
conduct of the investigation.
Next, Rayala alleges that the CA erred in holding that sexual harassment is
an offense malum prohibitum. He argues that intent is an essential element in sexual
harassment, and since the acts imputed to him were done allegedly without malice, he
should be absolved of the charges against him.
We reiterate that what is before us is an administrative case for sexual
harassment. Thus, whether the crime of sexual harassment is malum in se or malum
prohibitum is immaterial.
We also reject Rayalas allegations that the charges were filed because of a
conspiracy to get him out of office and thus constitute merely political harassment. A
conspiracy must be proved by clear and convincing evidence. His bare assertions
cannot stand against the evidence presented by Domingo. As we have already ruled,
the acts imputed to Rayala have been proven as fact. Moreover, he has not proven any
ill motive on the part of Domingo and her witnesses which would be ample reason for
her to conjure stories about him. On the contrary, ill motive is belied by the fact that
Domingo and her witnesses all employees of the NLRC at that time stood to lose their
jobs or suffer unpleasant consequences for coming forward and charging their boss
with sexual harassment.
Furthermore, Rayala decries the alleged violation of his right to due process.
He accuses the Committee on Decorum of railroading his trial for violation of RA 7877.
He also scored the OPs decision finding him guilty of disgraceful and immoral conduct
under the Revised Administrative Code and not for violation of RA 7877. Considering
that he was not tried for disgraceful and immoral conduct, he argues that the verdict is
a sham and total nullity.
We hold that Rayala was properly accorded due process. In previous cases,
this Court held that:
[i]n administrative proceedings, due process has been
recognized to include the following: (1) the right to actual or
constructive notice of the institution of proceedings which may affect
a respondents legal rights; (2) a real opportunity to be heard
personally or with the assistance of counsel, to present witnesses
and evidence in ones favor, and to defend ones rights; (3) a tribunal
vested with competent jurisdiction and so constituted as to afford a
person charged administratively a reasonable guarantee of honesty
as well as impartiality; and (4) a finding by said tribunal which
is supported by substantial evidence submitted for consideration
during the hearing or contained in the records or made known to the
parties affected.[48]
The records of the case indicate that Rayala was afforded all these procedural
due process safeguards. Although in the beginning he questioned the authority of the
Committee to try him,[49] he appeared, personally and with counsel, and participated in
the proceedings.
On the other point raised, this Court has held that, even in criminal cases, the
designation of the offense is not controlling, thus:
What is controlling is not the title of the complaint, nor the
designation of the offense charged or the particular law or part
 thereof allegedly violated, these being mere conclusions of law made
by the prosecutor, but the description of the crime charged and the
particular facts therein recited. The acts or omissions complained of
must be alleged in such form as is sufficient to enable a person of
common understanding to know what offense is intended to be
charged, and enable the court to pronounce proper judgment. No
information for a crime will be sufficient if it does not accurately and
clearly allege the elements of the crime charged. Every element of
the offense must be stated in the information. What facts and
circumstances are necessary to be included therein must be
determined by reference to the definitions and essentials of the
specified crimes. The requirement of alleging the elements of a crime
in the information is to inform the accused of the nature of the
accusation against him so as to enable him to suitably prepare his
defense.[50]
It is noteworthy that under AO 250, sexual harassment amounts to disgraceful
and immoral conduct.[51] Thus, any finding of liability for sexual harassment may also
be the basis of culpability for disgraceful and immoral conduct.
With the foregoing disquisitions affirming the finding that Rayala committed
sexual harassment, we now determine the proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that under the
pertinent Civil Service Rules, disgraceful and immoral conduct is punishable by
suspension for a period of six (6) months and one (1) day to one (1) year. He also
argues that since he is charged administratively, aggravating or mitigating
circumstances cannot be appreciated for purposes of imposing the penalty.
Under AO 250, the penalty for the first offense is suspension for six (6) months
and one (1) day to one (1) year, while the penalty for the second offense is
dismissal.[52] On the other hand, Section 22(o), Rule XVI of the Omnibus Rules
Implementing Book V of the Administrative Code of 1987[53] and Section 52 A(15) of
the Revised Uniform Rules on Administrative Cases in the Civil Service [54] both provide
that the first offense of disgraceful and immoral conduct is punishable by suspension
of six (6) months and one (1) day to one (1) year. A second offense is punishable by
dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold office during
good behavior until he or she reaches the age of sixty-five, unless sooner removed
for cause as provided by law or becomes incapacitated to discharge the duties of the
office.[55]
In this case, it is the President of the Philippines, as the proper disciplining
authority, who would determine whether there is a valid cause for the removal of Rayala
as NLRC Chairman. This power, however, is qualified by the phrase for cause as
provided by law. Thus, when the President found that Rayala was indeed guilty of
disgraceful and immoral conduct, the Chief Executive did not have unfettered discretion
to impose a penalty other than the penalty provided by law for such offense. As cited
above, the imposable penalty for the first offense of either the administrative offense of
sexual harassment or for disgraceful and immoral conduct is suspension of six (6)
months and one (1) day to one (1) year. Accordingly, it was error for the Office of the
President to impose upon Rayala the penalty of dismissal from the service, a penalty
which can only be imposed upon commission of a second offense.
Even if the OP properly considered the fact that Rayala took advantage of his
high government position, it still could not validly dismiss him from the service. Under
the Revised Uniform Rules on Administrative Cases in the Civil Service,[56]taking undue
advantage of a subordinate may be considered as an aggravating circumstance [57] and
where only aggravating and no mitigating circumstances are present, the maximum
penalty shall be imposed.[58] Hence, the maximum penalty that can be imposed on
Rayala is suspension for one (1) year.
Rayala holds the exalted position of NLRC Chairman, with the rank equivalent
to a CA Justice. Thus, it is not unavailing that rigid standards of conduct may be
demanded of him. In Talens-Dabon v. Judge Arceo,[59] this Court, in upholding the
liability of therein respondent Judge, said:
The actuations of respondent are aggravated by the fact
that complainant is one of his subordinates over whom he exercises
control and supervision, he being the executive judge. He took
advantage of his position and power in order to carry out his lustful
and lascivious desires. Instead of he being in loco parentis over his
subordinate employees, respondent was the one who preyed on
them, taking advantage of his superior position.
In yet another case, this Court declared:
As a managerial employee, petitioner is bound by more
exacting work ethics. He failed to live up to his higher standard of
responsibility when he succumbed to his moral perversity. And when
such moral perversity is perpetrated against his subordinate, he
provides a justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every employer to protect
its employees from oversexed superiors.[60]
It is incumbent upon the head of office to set an example on how his
employees should conduct themselves in public office, so that they may work efficiently
in a healthy working atmosphere. Courtesy demands that he should set a good
example.[61]
Rayala has thrown every argument in the book in a vain effort to effect his
exoneration. He even puts Domingos character in question and casts doubt on the
morality of the former President who ordered, albeit erroneously, his dismissal from the
service. Unfortunately for him, these are not significant factors in the disposition of the
case. It is his character that is in question here and sadly, the inquiry showed that he
has been found wanting.
WHEREFORE, the foregoing premises considered, the October 18, 2002
Resolution of the Court of Appeals in CA-G.R. SP No. 61026
is AFFIRMED. Consequently, the petitions in G.R. Nos. 155831, 155840, and 158700
are DENIED. No pronouncement as to costs.

SO ORDERED.
SECOND DIVISION
[G.R. No. 162994. September 17, 2004]
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC. respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional
overtones, involving the validity of the policy of a pharmaceutical company prohibiting
its employees from marrying employees of any competitor company.
This is a Petition for Review on Certiorari assailing the Decision[1] dated May 19,
2003 and the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP
No. 62434.[2]
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome
Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after Tecson
had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among
others, that he agrees to study and abide by existing company rules; to disclose to
management any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and should management find
that such relationship poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is
expected to inform management of any existing or future relationship by consanguinity
or affinity with co-employees or employees of competing drug companies. If
management perceives a conflict of interest or a potential conflict between such
relationship and the employees employment with the company, the management and
the employee will explore the possibility of a transfer to another department in a non-
counterchecking position or preparation for employment outside the company after six
months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-
Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals[3] (Astra), a competitor of Glaxo. Bettsy was Astras
Branch Coordinator in Albay. She supervised the district managers and medical
representatives of her company and prepared marketing strategies for Astra in that
area.
Even before they got married, Tecson received several reminders from his District
Manager regarding the conflict of interest which his relationship with Bettsy might
engender. Still, love prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave
rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy should
decide which one of them would resign from their jobs, although they told him that they
wanted to retain him as much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering
into a relationship with an employee of a competitor company. He explained that Astra,
Bettsys employer, was planning to merge with Zeneca, another drug company; and
Bettsy was planning to avail of the redundancy package to be offered by Astra. With
Bettsys separation from her company, the potential conflict of interest would be
eliminated. At the same time, they would be able to avail of the attractive redundancy
package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In
September 1999, Tecson applied for a transfer in Glaxos milk division, thinking that
since Astra did not have a milk division, the potential conflict of interest would be
eliminated. His application was denied in view of Glaxos least-movement-possible
policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-
Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his
request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought the
matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its decision
and gave Tescon until February 7, 2000 to comply with the transfer order. Tecson
defied the transfer order and continued acting as medical representative in the
Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary,
but was not issued samples of products which were competing with similar products
manufactured by Astra. He was also not included in product conferences regarding
such products.
Because the parties failed to resolve the issue at the grievance machinery level,
they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation
pay of one-half () month pay for every year of service, or a total of P50,000.00 but he
declined the offer. On November 15, 2000, the National Conciliation and Mediation
Board (NCMB) rendered its Decision declaring as valid Glaxos policy on relationships
between its employees and persons employed with competitor companies, and
affirming Glaxos right to transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing
the NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review on the ground that the NCMB did not err in rendering
its Decision. The appellate court held that Glaxos policy prohibiting its employees from
having personal relationships with employees of competitor companies is a valid
exercise of its management prerogatives.[4]
Tecson filed a Motion for Reconsideration of the appellate courts Decision, but
the motion was denied by the appellate court in its Resolution dated March 26, 2004.[5]
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals
erred in affirming the NCMBs finding that the Glaxos policy prohibiting its employees
from marrying an employee of a competitor company is valid; and (ii) the Court of
Appeals also erred in not finding that Tecson was constructively dismissed when he
was transferred to a new sales territory, and deprived of the opportunity to attend
products seminars and training sessions.[6]
Petitioners contend that Glaxos policy against employees marrying employees of
competitor companies violates the equal protection clause of the Constitution because
it creates invalid distinctions among employees on account only of marriage. They
claim that the policy restricts the employees right to marry. [7]
They also argue that Tecson was constructively dismissed as shown by the
following circumstances: (1) he was transferred from the Camarines Sur-Camarines
Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution
in pay, (3) he was excluded from attending seminars and training sessions for medical
representatives, and (4) he was prohibited from promoting respondents products which
were competing with Astras products.[8]
 In its Comment on the petition, Glaxo argues that the company policy prohibiting
its employees from having a relationship with and/or marrying an employee of a
competitor company is a valid exercise of its management prerogatives and does not
violate the equal protection clause; and that Tecsons reassignment from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur
sales area does not amount to constructive dismissal.[9]
Glaxo insists that as a company engaged in the promotion and sale of
pharmaceutical products, it has a genuine interest in ensuring that its employees avoid
any activity, relationship or interest that may conflict with their responsibilities to the
company. Thus, it expects its employees to avoid having personal or family interests in
any competitor company which may influence their actions and decisions and
consequently deprive Glaxo of legitimate profits. The policy is also aimed at preventing
a competitor company from gaining access to its secrets, procedures and policies. [10]
It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor companies,
and is therefore not violative of the equal protection clause. It maintains that
considering the nature of its business, the prohibition is based on valid grounds. [11]
According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a
real and potential conflict of interest. Astras products were in direct competition with
67% of the products sold by Glaxo. Hence, Glaxos enforcement of the foregoing policy
in Tecsons case was a valid exercise of its management prerogatives. [12] In any case,
Tecson was given several months to remedy the situation, and was even encouraged
not to resign but to ask his wife to resign from Astra instead.[13]
Glaxo also points out that Tecson can no longer question the assailed company
policy because when he signed his contract of employment, he was aware that such
policy was stipulated therein. In said contract, he also agreed to resign from respondent
if the management finds that his relationship with an employee of a competitor company
would be detrimental to the interests of Glaxo.[14]
Glaxo likewise insists that Tecsons reassignment to another sales area and his
exclusion from seminars regarding respondents new products did not amount to
constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from the
Camarines Sur-Camarines Norte sales area to the Butuan City-Surigao City and
Agusan del Sur sales area. Glaxo asserts that in effecting the reassignment, it also
considered the welfare of Tecsons family. Since Tecsons hometown was in Agusan del
Sur and his wife traces her roots to Butuan City, Glaxo assumed that his transfer from
the Bicol region to the Butuan City sales area would be favorable to him and his family
as he would be relocating to a familiar territory and minimizing his travel expenses. [15]
In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the
new anti-asthma drug was due to the fact that said product was in direct competition
with a drug which was soon to be sold by Astra, and hence, would pose a potential
conflict of interest for him. Lastly, the delay in Tecsons receipt of his sales
paraphernalia was due to the mix-up created by his refusal to transfer to
the Butuan City sales area (his paraphernalia was delivered to his new sales area
instead of Naga City because the supplier thought he already transferred to Butuan).[16]
The Court is tasked to resolve the following issues: (1) Whether the Court of
Appeals erred in ruling that Glaxos policy against its employees marrying employees
from competitor companies is valid, and in not holding that said policy violates the equal
protection clause of the Constitution; (2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being questioned
by petitioners provides:
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management
discretion, you agree to resign voluntarily from the Company as a matter of Company
policy.
[17]
The same contract also stipulates that Tecson agrees to abide by the existing
company rules of Glaxo, and to study and become acquainted with such policies. [18] In
this regard, the Employee Handbook of Glaxo expressly informs its employees of its
rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would impair their
effective job performance.
d. To consult with Management on such activities or relationships that may lead to
conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with
co-employees of competing drug companies are expected to disclose such relationship
to the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-counter
checking position, or by career preparation toward outside employment after Glaxo
Wellcome. Employees must be prepared for possible resignation within six (6) months,
if no other solution is feasible.[19]
No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxos policy prohibiting an employee from having a relationship with an employee of
a competitor company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors, especially
so that it and Astra are rival companies in the highly competitive pharmaceutical
industry.
The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the circumstances
because relationships of that nature might compromise the interests of the company. In
laying down the assailed company policy, Glaxo only aims to protect its interests
against the possibility that a competitor company will gain access to its secrets and
procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied.
No less than the Constitution recognizes the right of enterprises to adopt and enforce
such a policy to protect its right to reasonable returns on investments and to expansion
and growth.[20] Indeed, while our laws endeavor to give life to the constitutional policy
on social justice and the protection of labor, it does not mean that every labor dispute
will be decided in favor of the workers. The law also recognizes that management has
rights which are also entitled to respect and enforcement in the interest of fair play. [21]
As held in a Georgia, U.S.A case,[22] it is a legitimate business practice to guard
business confidentiality and protect a competitive position by even-handedly
disqualifying from jobs male and female applicants or employees who are married to a
competitor.Consequently, the court ruled than an employer that discharged an
employee who was married to an employee of an active competitor did not violate Title
VII of the Civil Rights Act of 1964.[23] The Court pointed out that the policy was applied
to men and women equally, and noted that the employers business was highly
competitive and that gaining inside information would constitute a competitive
advantage.
The challenged company policy does not violate the equal protection clause of
the Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.[24] Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal protection clause erects no shield against
merely private conduct, however, discriminatory or wrongful. [25] The only exception
occurs when the state[26] in any of its manifestations or actions has been found to have
become entwined or involved in the wrongful private conduct. [27] Obviously, however,
the exception is not present in this case. Significantly, the company actually enforced
the policy after repeated requests to the employee to comply with the policy. Indeed,
the application of the policy was made in an impartial and even-handed manner, with
due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its
employee handbook, it is clear that Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such relationships. As succinctly
explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the individual. However, an
employees personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . . [28]
The Court of Appeals also correctly noted that the assailed company policy which
forms part of respondents Employee Code of Conduct and of its contracts with its
employees, such as that signed by Tecson, was made known to him prior to his
employment.Tecson, therefore, was aware of that restriction when he signed his
employment contract and when he entered into a relationship with Bettsy. Since Tecson
knowingly and voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should be complied
with in good faith.[29] He is therefore estopped from questioning said policy.
The Court finds no merit in petitioners contention that Tecson was constructively
dismissed when he was transferred from the Camarines Norte-Camarines Sur sales
area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was
excluded from attending the companys seminar on new products which were directly
competing with similar products manufactured by Astra. Constructive dismissal is
defined as a quitting, an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or unlikely; when there is a demotion
in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee. [30] None of these conditions are
present in the instant case. The record does not show that Tecson was demoted or
unduly discriminated upon by reason of such transfer. As found by the appellate court,
Glaxo properly exercised its management prerogative in reassigning Tecson to
the Butuan City sales area:
. . . In this case, petitioners transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring
sales of Astra products, conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and managing Astras inventoryshe
therefore takes an active participation in the market war characterized as it is by stiff
competition among pharmaceutical companies. Moreover, and this is significant,
petitioners sales territory covers Camarines Sur and Camarines Norte while his wife is
supervising a branch of her employer in Albay. The proximity of their areas of
responsibility, all in the same Bicol Region, renders the conflict of interest not only
possible, but actual, as learning by one spouse of the others market strategies in the
region would be inevitable. [Managements] appreciation of a conflict of interest is
therefore not merely illusory and wanting in factual basis [31]
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations
Commission,[32] which involved a complaint filed by a medical representative against
his employer drug company for illegal dismissal for allegedly terminating his
employment when he refused to accept his reassignment to a new area, the Court
upheld the right of the drug company to transfer or reassign its employee in accordance
with its operational demands and requirements. The ruling of the Court therein, quoted
hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.[33]
As noted earlier, the challenged policy has been implemented by Glaxo impartially
and disinterestedly for a long period of time. In the case at bar, the record shows that
Glaxo gave Tecson several chances to eliminate the conflict of interest brought about
by his relationship with Bettsy. When their relationship was still in its initial stage,
Tecsons supervisors at Glaxo constantly reminded him about its effects on his
employment with the company and on the companys interests. After Tecson married
Bettsy, Glaxo gave him time to resolve the conflict by either resigning from the company
or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson
in its employ because of his satisfactory performance and suggested that he ask Bettsy
to resign from her company instead. Glaxo likewise acceded to his repeated requests
for more time to resolve the conflict of interest. When the problem could not be resolved
after several years of waiting, Glaxo was constrained to reassign Tecson to a sales
area different from that handled by his wife for Astra. Notably, the Court did not
terminate Tecson from employment but only reassigned him to another area where his
home province, Agusan del Sur, was included. In effecting Tecsons transfer, Glaxo
even considered the welfare of Tecsons family.Clearly, the foregoing dispels any
suspicion of unfairness and bad faith on the part of Glaxo.[34]
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
Austria-Martinez and Callejo, Sr., JJ., concur.
 Puno (Chairman), J., in the result. Not satisfied therewith, petitioner appealed to the public respondent National Labor
Chico-Nazario, J., on leave. Relations Commission (NLRC), wherein in due course a decision was rendered by the
Republic of the Philippines Fifth Division thereof on July 20, 1989 dismissing the appeal for lack of merit and
SUPREME COURT affirming the appealed decision. A motion for reconsideration thereof was denied in a
Manila resolution of the NLRC dated June 29, 1990.
FIRST DIVISION Hence, the herein petition for review by certiorari, which appopriately should be a
G.R. No. 94951 April 22, 1991 special civil action for certiorari, and which in the interest of justice, is hereby treated
APEX MINING COMPANY, INC., petitioner, as such.2 The main thrust of the petition is that private respondent should be treated as
vs. a mere househelper or domestic servant and not as a regular employee of petitioner.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA The petition is devoid of merit.
CANDIDO, respondents. Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms
Bernabe B. Alabastro for petitioner. "househelper" or "domestic servant" are defined as follows:
Angel Fernandez for private respondent. The term "househelper" as used herein is synonymous to the term "domestic
servant" and shall refer to any person, whether male or female, who renders
services in and about the employer's home and which services are usually
GANCAYCO, J.: necessary or desirable for the maintenance and enjoyment thereof, and
Is the househelper in the staff houses of an industrial company a domestic helper or a ministers exclusively to the personal comfort and enjoyment of the employer's
regular employee of the said firm? This is the novel issue raised in this petition. family.3
Private respondent Sinclita Candida was employed by petitioner Apex Mining The foregoing definition clearly contemplates such househelper or domestic servant
Company, Inc. on May 18, 1973 to perform laundry services at its staff house located who is employed in the employer's home to minister exclusively to the personal comfort
at Masara, Maco, Davao del Norte. In the beginning, she was paid on a piece rate and enjoyment of the employer's family. Such definition covers family drivers, domestic
basis. However, on January 17, 1982, she was paid on a monthly basis at P250.00 a servants, laundry women, yayas, gardeners, houseboys and other similar househelps.
month which was ultimately increased to P575.00 a month. The definition cannot be interpreted to include househelp or laundrywomen working in
On December 18, 1987, while she was attending to her assigned task and she was staffhouses of a company, like petitioner who attends to the needs of the company's
hanging her laundry, she accidentally slipped and hit her back on a stone. She reported guest and other persons availing of said facilities. By the same token, it cannot be
the accident to her immediate supervisor Mila de la Rosa and to the personnel officer, considered to extend to then driver, houseboy, or gardener exclusively working in the
Florendo D. Asirit. As a result of the accident she was not able to continue with her company, the staffhouses and its premises. They may not be considered as within the
work. She was permitted to go on leave for medication. De la Rosa offered her the meaning of a "househelper" or "domestic servant" as above-defined by law.
amount of P 2,000.00 which was eventually increased to P5,000.00 to persuade her to The criteria is the personal comfort and enjoyment of the family of the employer in the
quit her job, but she refused the offer and preferred to return to work. Petitioner did not home of said employer. While it may be true that the nature of the work of a
allow her to return to work and dismissed her on February 4, 1988. househelper, domestic servant or laundrywoman in a home or in a company staffhouse
On March 11, 1988, private respondent filed a request for assistance with the may be similar in nature, the difference in their circumstances is that in the former
Department of Labor and Employment. After the parties submitted their position papers instance they are actually serving the family while in the latter case, whether it is a
as required by the labor arbiter assigned to the case on August 24, 1988 the latter corporation or a single proprietorship engaged in business or industry or any other
rendered a decision, the dispositive part of which reads as follows: agricultural or similar pursuit, service is being rendered in the staffhouses or within the
WHEREFORE, Conformably With The Foregoing, judgment is hereby premises of the business of the employer. In such instance, they are employees of the
rendered ordering the respondent, Apex Mining Company, Inc., Masara, company or employer in the business concerned entitled to the privileges of a regular
Davao del Norte, to pay the complainant, to wit: employee.
1 Salary Petitioner contends that it is only when the househelper or domestic servant is assigned
Differential –– P16,289.20 to certain aspects of the business of the employer that such househelper or domestic
2. Emergency Living servant may be considered as such as employee. The Court finds no merit in making
Allowance –– 12,430.00 any such distinction. The mere fact that the househelper or domestic servant is working
3. 13th Month Pay within the premises of the business of the employer and in relation to or in connection
Differential –– 1,322.32 with its business, as in its staffhouses for its guest or even for its officers and
4. Separation Pay employees, warrants the conclusion that such househelper or domestic servant is and
(One-month for should be considered as a regular employee of the employer and not as a mere family
every year of househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book 3 of
service [1973-19881) –– 25,119.30 the Labor Code, as amended.
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE Petitioner denies having illegally dismissed private respondent and maintains that
PESOS AND 42/100 (P55,161.42). respondent abandoned her work.1âwphi1 This argument notwithstanding, there is
SO ORDERED.1 enough evidence to show that because of an accident which took place while private
respondent was performing her laundry services, she was not able to work and was
ultimately separated from the service. She is, therefore, entitled to appropriate relief as for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium
a regular employee of petitioner. Inasmuch as private respondent appears not to be pay for holiday and rest day and illegal diminution of benefits, delayed payment of
interested in returning to her work for valid reasons, the payment of separation pay to wages and noncoverage of SSS, PAG-IBIG and Philhealth.[1] After the conduct of
her is in order. summary investigations, and after the parties submitted their position papers, the DOLE
WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of Regional Director found that private respondent was an employee of petitioner, and
public respondent NLRC are hereby AFFIRMED. No pronouncement as to costs. was entitled to his money claims.[2] Petitioner sought reconsideration of the Directors
SO ORDERED. Order, but failed. The Acting DOLE Secretary dismissed petitioners appeal on the
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur. ground that petitioner submitted a Deed of Assignment of Bank Deposit instead of
Republic of the Philippines posting a cash or surety bond. When the matter was brought before the CA, where
SUPREME COURT petitioner claimed that it had been denied due process, it was held that petitioner was
Manila accorded due process as it had been given the opportunity to be heard, and that the
DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed
EN BANC by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b)
of the Code had been repealed by Republic Act No. (RA) 7730. [3]

PEOPLES BROADCASTING SERVICE G.R. No. 179652 In the Decision of this Court, the CA Decision was reversed and set aside, and the
(BOMBO RADYO PHILS., INC.), complaint against petitioner was dismissed. The dispositive portion of the Decision
Petitioner, Present: reads as follows:

CORONA, C.J., WHEREFORE, the petition is GRANTED. The Decision

CARPIO, dated 26 October 2006 and the Resolution dated 26 June 2007 of
- versus - VELASCO, JR., the Court of Appeals in C.A. G.R. CEB-SP No. 00855
LEONARDO-DE CASTRO, are REVERSED and SET ASIDE. The Order of the then Acting
BRION, Secretary of the Department of Labor and Employment dated 27
PERALTA, January 2005 denying petitioners appeal, and the Orders of the
THE SECRETARY OF THE DEPARTMENT OF BERSAMIN, Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27
LABOR AND EMPLOYMENT, THE REGIONAL DEL CASTILLO,* February 2004, respectively, are ANNULLED. The complaint
DIRECTOR, DOLE REGION VII, and ABAD, against petitioner is DISMISSED.[4]
JANDELEON JUEZAN, VILLARAMA, JR., The Court found that there was no employer-employee relationship between
Respondents. PEREZ, petitioner and private respondent. It was held that while the DOLE may make a
MENDOZA, determination of the existence of an employer-employee relationship, this function
SERENO, could not be co-extensive with the visitorial and enforcement power provided in Art.
REYES, and 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations
PERLAS-BERNABE, JJ. Commission (NLRC) was held to be the primary agency in determining the existence
of an employer-employee relationship. This was the interpretation of the Court of the
Promulgated: clause in cases where the relationship of employer-employee still exists in Art. 128(b).[5]
March 6, 2012
x-----------------------------------------------------------------------------------------x From this Decision, the Public Attorneys Office (PAO) filed a Motion for
Clarification of Decision (with Leave of Court). The PAO sought to clarify as to when
the visitorial and enforcement power of the DOLE be not considered as co-extensive
RESOLUTION with the power to determine the existence of an employer-employee relationship.[6] In
its Comment,[7] the DOLE sought clarification as well, as to the extent of its visitorial
VELASCO, JR., J.: and enforcement power under the Labor Code, as amended.

In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service, Inc. The Court treated the Motion for Clarification as a second motion for
(Bombo Radyo Phils., Inc.) questioned the Decision and Resolution of the Court of reconsideration, granting said motion and reinstating the petition.[8] It is apparent that
Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis that of the
CEB-SP No. 00855. NLRC.

Private respondent Jandeleon Juezan filed a complaint against petitioner with Under Art. 129 of the Labor Code, the power of the DOLE and its duly
the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, authorized hearing officers to hear and decide any matter involving the recovery of
wages and other monetary claims and benefits was qualified by the proviso that the
complaint not include a claim for reinstatement, or that the aggregate money claims not
exceed PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and
Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation,
allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims
beyond PhP 5,000. The only qualification to this expanded power of the DOLE was
only that there still be an existing employer-employee relationship.
It is conceded that if there is no employer-employee relationship, whether it
has been terminated or it has not existed from the start, the DOLE has no
jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first
sentence reads, Notwithstanding the provisions of Articles 129 and 217 of this Code to
the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have
the power to issue compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. It
is clear and beyond debate that an employer-employee relationship must exist for the
exercise of the visitorial and enforcement power of the DOLE. The question now arises,
may the DOLE make a determination of whether or not an employer-employee
relationship exists, and if so, to what extent?
The first portion of the question must be answered in the affirmative.
The prior decision of this Court in the present case accepts such answer, but
places a limitation upon the power of the DOLE, that is, the determination of the
existence of an employer-employee relationship cannot be co-extensive with the
visitorial and enforcement power of the DOLE. But even in conceding the power of the
DOLE to determine the existence of an employer-employee relationship, the Court held
that the determination of the existence of an employer-employee relationship is still
primarily within the power of the NLRC, that any finding by the DOLE is merely
preliminary.
This conclusion must be revisited.
No limitation in the law was placed upon the power of the DOLE to determine
the existence of an employer-employee relationship. No procedure was laid down
where the DOLE would only make a preliminary finding, that the power was primarily
held by the NLRC. The law did not say that the DOLE would first seek the NLRCs
determination of the existence of an employer-employee relationship, or that should the
existence of the employer-employee relationship be disputed, the DOLE would refer
the matter to the NLRC. The DOLE must have the power to determine whether or not
an employer-employee relationship exists, and from there to decide whether or not to
issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended
by RA 7730.
The DOLE, in determining the existence of an employer-employee
relationship, has a ready set of guidelines to follow, the same guide the courts
themselves use. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; (4) the employers power to control the employees
conduct.[9] The use of this test is not solely limited to the NLRC. The DOLE Secretary,
or his or her representatives, can utilize the same test, even in the course of inspection,
making use of the same evidence that would have been presented before the NLRC.
The determination of the existence of an employer-employee relationship by
the DOLE must be respected. The expanded visitorial and enforcement power of the
DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could,
by the simple expedient of disputing the employer-employee relationship, force the
referral of the matter to the NLRC. The Court issued the declaration that at least a prima
facie showing of the absence of an employer-employee relationship be made to oust
the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that
evidence, and it is the DOLE that will weigh it, to see if the same does successfully
refute the existence of an employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee
relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE
would have no jurisdiction only if the employer-employee relationship has already been
terminated, or it appears, upon review, that no employer-employee relationship existed
in the first place.
The Court, in limiting the power of the DOLE, gave the rationale that such
limitation would eliminate the prospect of competing conclusions between the DOLE
and the NLRC. The prospect of competing conclusions could just as well have been
eliminated by according respect to the DOLE findings, to the exclusion of the NLRC,
and this We believe is the more prudent course of action to take.
This is not to say that the determination by the DOLE is beyond question or
review. Suffice it to say, there are judicial remedies such as a petition for certiorari
under Rule 65 that may be availed of, should a party wish to dispute the findings of the
DOLE.
It must also be remembered that the power of the DOLE to determine the
existence of an employer-employee relationship need not necessarily result in an
affirmative finding. The DOLE may well make the determination that no employer-
employee relationship exists, thus divesting itself of jurisdiction over the case. It must
not be precluded from being able to reach its own conclusions, not by the parties, and
certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is
fully empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial
review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA
7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor Code when
money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is
with the regional director of the DOLE, under Art. 129, and if the amount involved
exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view
states that despite the wording of Art. 128(b), this would only apply in the course of
regular inspections undertaken by the DOLE, as differentiated from cases under Arts.
129 and 217, which originate from complaints. There are several cases, however,
where the Court has ruled that Art. 128(b) has been amended to expand the powers of
the DOLE Secretary and his duly authorized representatives by RA 7730. In these
cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the
money claims involved. Furthermore, in these cases, the inspection held by the DOLE
regional director was prompted specifically by a complaint. Therefore, the initiation of
a case through a complaint does not divest the DOLE Secretary or his duly authorized
representative of jurisdiction under Art. 128(b).
To recapitulate, if a complaint is brought before the DOLE to give effect to the
labor standards provisions of the Labor Code or other labor legislation, and there is a
finding by the DOLE that there is an existing employer-employee relationship, the
DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there
is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement,
the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code,
which provides that the Labor Arbiter has original and exclusive jurisdiction over those
cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a complaint is filed with
the NLRC, and there is still an existing employer-employee relationship, the jurisdiction
is properly with the DOLE. The findings of the DOLE, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there was
an employer-employee relationship has been subjected to review by this Court, with
the finding being that there was no employer-employee relationship between petitioner
and private respondent, based on the evidence presented. Private respondent
presented self-serving allegations as well as self-defeating evidence.[10] The findings of
the Regional Director were not based on substantial evidence, and private respondent
failed to prove the existence of an employer-employee relationship. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship
present. Thus, the dismissal of the complaint against petitioner is proper.
WHEREFORE, the Decision of this Court in G.R. No. 179652 is
hereby AFFIRMED, with the MODIFICATION that in the exercise of the DOLEs
visitorial and enforcement power, the Labor Secretary or the latters authorized
representative shall have the power to determine the existence of an employer-
employee relationship, to the exclusion of the NLRC.
SO ORDERED.
FIRST DIVISION
ANGELINA FRANCISCO, G.R. No. 170087
Petitioner,
Present:
Panganiban, C.J.
(Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA Promulgated:
and RAMON ESCUETA,
Respondents.
August 31, 2006
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul
and set aside the Decision and Resolution of the Court of Appeals dated October 29,
2004[1] and October 7, 2005,[2] respectively, in CA-G.R. SP No. 78515 dismissing the
complaint for constructive dismissal filed by herein petitioner Angelina Francisco. The
appellate court reversed and set aside the Decision of the National Labor Relations
Commission (NLRC) dated April 15, 2003,[3] in NLRC NCR CA No. 032766-02 which
affirmed with modification the decision of the Labor Arbiter dated July 31, 2002, [4] in
NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents were liable for
constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She
was designated as Accountant and Corporate Secretary and was assigned to handle
all the accounting needs of the company. She was also designated as Liaison Officer
to the City of Makati to secure business permits, construction permits and other
licenses for the initial operation of the company.[5]
Although she was designated as Corporate Secretary, she was not entrusted
with the corporate documents; neither did she attend any board meeting nor required
to do so. She never prepared any legal document and never represented the company
as its Corporate Secretary. However, on some occasions, she was prevailed upon to
sign documentation for the company.[6]
In 1996, petitioner was designated Acting Manager. The corporation also
hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was
assigned to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with government
agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System
(SSS) and in the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei
Corporation.[7]
For five years, petitioner performed the duties of Acting Manager. As of
December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and
a 10% share in the profit of Kasei Corporation.[8]
In January 2001, petitioner was replaced by Liza R. Fuentes as
Manager. Petitioner alleged that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be connected with Kasei
Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all
employees of Kasei Corporation and announced that nothing had changed and that
petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji
Kamura and in charge of all BIR matters.[9]
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month
beginning January up to September 2001 for a total reduction of P22,500.00 as of
September 2001. Petitioner was not paid her mid-year bonus allegedly because the
company was not earning well. On October 2001, petitioner did not receive her salary
from the company. She made repeated follow-ups with the company cashier but she
was advised that the company was not earning well.[10]
On October 15, 2001, petitioner asked for her salary from Acedo and the rest
of the officers but she was informed that she is no longer connected with the
company.[11]
Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei
Corporation. They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate Secretary. As
technical consultant, petitioner performed her work at her own discretion without control
and supervision of Kasei Corporation. Petitioner had no daily time record and she came
to the office any time she wanted. The company never interfered with her work except
that from time to time, the management would ask her opinion on matters relating to
her profession. Petitioner did not go through the usual procedure of selection of
employees, but her services were engaged through a Board Resolution designating
her as technical consultant. The money received by petitioner from the corporation was
her professional fee subject to the 10% expanded withholding tax on professionals, and
that she was not one of those reported to the BIR or SSS as one of the companys
employees.[12]
Petitioners designation as technical consultant depended solely upon the will
of management. As such, her consultancy may be terminated any time considering that
her services were only temporary in nature and dependent on the needs of the
corporation.
To prove that petitioner was not an employee of the corporation, private
respondents submitted a list of employees for the years 1999 and 2000 duly received
by the BIR showing that petitioner was not among the employees reported to the BIR,
as well as a list of payees subject to expanded withholding tax which included
petitioner. SSS records were also submitted showing that petitioners latest employer
was Seiji Corporation.[13]
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered
as follows:
1. finding complainant an employee of respondent
corporation;
2. declaring complainants dismissal as illegal;
3. ordering respondents to reinstate complainant to her
former position without loss of seniority rights and jointly and
severally pay complainant her money claims in accordance with the
following computation:
a. Backwages 10/2001 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorneys fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to pay
complainant separation pay with additional backwages that would
accrue up to actual payment of separation pay.
SO ORDERED.[14]
On April 15, 2003, the NLRC affirmed with modification the Decision of the
Labor Arbiter, the dispositive portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002
is hereby MODIFIED as follows:
1) Respondents are directed to pay complainant separation
pay computed at one month per year of service in addition to full
backwages from October 2001 to July 31, 2002;
2) The awards representing moral and exemplary damages
and 10% share in profit in the respective accounts of P100,000.00
and P361,175.00 are deleted;
3) The award of 10% attorneys fees shall be based on
salary differential award only;
4) The awards representing salary differentials, housing
allowance, mid year bonus and 13th month pay are AFFIRMED.
SO ORDERED.[15]
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The
decision of the National Labor Relations Commissions dated April
15, 2003 is hereby REVERSED and SET ASIDE and a new one is
hereby rendered dismissing the complaint filed by private respondent
against Kasei Corporation, et al. for constructive dismissal.

SO ORDERED.[16]
The appellate court denied petitioners motion for reconsideration, hence, the present
recourse.
The core issues to be resolved in this case are (1) whether there was an
employer-employee relationship between petitioner and private respondent Kasei
Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National
Labor Relations Commission on one hand, and the Court of Appeals on the other, there
is a need to reexamine the records to determine which of the propositions espoused by
the contending parties is supported by substantial evidence. [17]
We held in Sevilla v. Court of Appeals[18] that in this jurisdiction, there has
been no uniform test to determine the existence of an employer-employee
relation. Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not only the end
to be achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the
existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a complete
picture of the relationship between the parties, owing to the complexity of such a
relationship where several positions have been held by the worker. There are instances
when, aside from the employers power to control the employee with respect to the
means and methods by which the work is to be accomplished, economic realities of the
employment relations help provide a comprehensive analysis of the true classification
of the individual, whether as employee, independent contractor, corporate officer or
some other capacity.
The better approach would therefore be to adopt a two-tiered test involving:
(1) the putative employers power to control the employee with respect to the means
and methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which
would take into consideration the totality of circumstances surrounding the true nature
of the relationship between the parties. This is especially appropriate in this case where
there is no written agreement or terms of reference to base the relationship on; and
due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latters employment.
The control test initially found application in the case of Viaa v. Al-Lagadan
and Piga,[19] and lately in Leonardo v. Court of Appeals,[20] where we held that there is
an employer-employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the manner
and means used to achieve that end.
In Sevilla v. Court of Appeals,[21] we observed the need to consider the
existing economic conditions prevailing between the parties, in addition to the standard
of right-of-control like the inclusion of the employee in the payrolls, to give a clearer
picture in determining the existence of an employer-employee relationship based on an
analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity,[22] such as: (1) the
extent to which the services performed are an integral part of the employers business;
(2) the extent of the workers investment in equipment and facilities; (3) the nature and
degree of control exercised by the employer; (4) the workers opportunity for profit and
loss; (5) the amount of initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of dependency
of the worker upon the employer for his continued employment in that line of
business.[23]
The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of
business.[24] In the United States, the touchstone of economic reality in analyzing
possible employment relationships for purposes of the Federal Labor Standards Act is
dependency.[25] By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee
of Kasei Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporations Technical Consultant. She reported for work regularly and
served in various capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the same job functions,
that is, rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to
be an employee of respondent corporation because she had served the company for
six years before her dismissal, receiving check vouchers indicating her salaries/wages,
benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December 18, 2000. [26] When petitioner
was designated General Manager, respondent corporation made a report to the SSS
signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the President of Kasei
Corporation and the inclusion of her name in the on-line inquiry system of the SSS
evinces the existence of an employer-employee relationship between petitioner and
respondent corporation.[27]
It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of business.
In Domasig v. National Labor Relations Commission,[28] we held that in a
business establishment, an identification card is provided not only as a security
measure but mainly to identify the holder thereof as a bona fide employee of the firm
that issues it. Together with the cash vouchers covering petitioners salaries for the
months stated therein, these matters constitute substantial evidence adequate to
support a conclusion that petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro[29] that a corporation who registers its
workers with the SSS is proof that the latter were the formers employees. The coverage
of Social Security Law is predicated on the existence of an employer-employee
relationship.
discrimination, insensibility or disdain by an employer becomes unbearable to an
employee.[35] In Globe Telecom, Inc. v. Florendo-Flores,[36] we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay, an
unreasonable situation arises which creates an adverse working environment
rendering it impossible for such employee to continue working for her employer. Hence,
her severance from the company was not of her own making and therefore amounted
to an illegal termination of employment.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly In affording full protection to labor, this Court must ensure equal work
established that petitioner never acted as Corporate Secretary and that her designation opportunities regardless of sex, race or creed. Even as we, in every case, attempt to
as such was only for convenience. The actual nature of petitioners job was as Kamuras carefully balance the fragile relationship between employees and employers, we are
direct assistant with the duty of acting as Liaison Officer in representing the company mindful of the fact that the policy of the law is to apply the Labor Code to a greater
to secure construction permits, license to operate and other requirements imposed by number of employees. This would enable employees to avail of the benefits accorded
government agencies. Petitioner was never entrusted with corporate documents of the to them by law, in line with the constitutional mandate giving maximum aid and
company, nor required to attend the meeting of the corporation. She was never privy protection to labor, promoting their welfare and reaffirming it as a primary social
to the preparation of any document for the corporation, although once in a while she economic force in furtherance of social justice and national development.
was required to sign prepared documentation for the company. [30]
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the
The second affidavit of Kamura dated March 7, 2002 which repudiated the Court of Appeals dated October 29, 2004 and October 7, 2005, respectively, in CA-
December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself from the G.R. SP No. 78515 are ANNULLED and SET ASIDE. The Decision of the National
records of the case.[31] Regardless of this fact, we are convinced that the allegations in Labor Relations Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02,
the first affidavit are sufficient to establish that petitioner is an employee of Kasei is REINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation
Corporation. of petitioner Angelina Franciscos full backwages from the time she was illegally
terminated until the date of finality of this decision, and separation pay representing
Granting arguendo, that the second affidavit validly repudiated the first one, one-half month pay for every year of service, where a fraction of at least six months
courts do not generally look with favor on any retraction or recanted testimony, for it shall be considered as one whole year.
could have been secured by considerations other than to tell the truth and would make
solemn trials a mockery and place the investigation of the truth at the mercy of SO ORDERED.
unscrupulous witnesses.[32] A recantation does not necessarily cancel an earlier Republic of the Philippines
declaration, but like any other testimony the same is subject to the test of credibility and Supreme Court
should be received with caution.[33] Manila
Based on the foregoing, there can be no other conclusion that petitioner is an THIRD DIVISION
employee of respondent Kasei Corporation. She was selected and engaged by the
company for compensation, and is economically dependent upon respondent for her
continued employment in that line of business. Her main job function involved BITOY JAVIER G.R. No. 192558
accounting and tax services rendered to respondent corporation on a regular basis over (DANILO P. JAVIER),
an indefinite period of engagement. Respondent corporation hired and engaged Petitioner, Present:
petitioner for compensation, with the power to dismiss her for cause. More importantly,
respondent corporation had the power to control petitioner with the means and methods CARPIO,* J.,
by which the work is to be accomplished. PERALTA,** Acting Chairperson,
ABAD,
The corporation constructively dismissed petitioner when it reduced her salary - versus - PEREZ,*** and
by P2,500 a month from January to September 2001. This amounts to an illegal MENDOZA, JJ.
termination of employment, where the petitioner is entitled to full backwages. Since the
position of petitioner as accountant is one of trust and confidence, and under the
principle of strained relations, petitioner is further entitled to separation pay, in lieu of
reinstatement.[34] FLY ACE CORPORATION/ Promulgated:
A diminution of pay is prejudicial to the employee and amounts to constructive FLORDELYN CASTILLO,
dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of Respondents. February 15, 2012
work resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear

x ----------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the
March 18, 2010 Decision[1] of the Court of Appeals (CA) and its June 7, 2010
Resolution,[2] in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision[3]of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo,[4] holding that petitioner Bitoy
Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment
of salaries and other labor standard benefits. He alleged that he was an employee of
Fly Ace since September 2007, performing various tasks at the respondents
warehouse such as cleaning and arranging the canned items before their delivery to
certain locations, except in instances when he would be ordered to accompany the
companys delivery vehicles, as pahinante; that he reported for work from Monday to
Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that during
his employment, he was not issued an identification card and payslips by the
company; that on May 6, 2008, he reported for work but he was no longer allowed to
enter the company premises by the security guard upon the instruction of Ruben
Ong (Mr. Ong), his superior;[5] that after several minutes of begging to the guard to
allow him to enter, he saw Ong whom he approached and asked why he was being
barred from entering the premises; that Ong replied by saying, Tanungin mo anak
mo; [6] that he then went home and discussed the matter with his family; that he
discovered that Ong had been courting his daughter Annalyn after the two met at a
fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince him
to spare her father from trouble but he refused to accede; that thereafter, Javier was
terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie
Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from
September 2007 to January 2008. The said affidavit was subscribed before the Labor
Arbiter (LA).[7]
For its part, Fly Ace averred that it was engaged in the business of importation
and sales of groceries. Sometime in December 2007, Javier was contracted by its
employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of ₱300.00
per trip, which was later increased to ₱325.00 in January 2008. Mr. Ong contracted
Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler,
Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no longer
needed the services of Javier. Denying that he was their employee, Fly Ace insisted
that there was no illegal dismissal.[8] Fly Ace submitted a copy of its agreement with
Milmar Hauling Services and copies of acknowledgment receipts evidencing payment
to Javier for his contracted services bearing the words, daily manpower (pakyaw/piece
rate pay) and the latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on
the ground that Javier failed to present proof that he was a regular employee of Fly
Ace. He wrote:
Complainant has no employee ID showing his employment
with the Respondent nor any document showing that he received
the benefits accorded to regular employees of the Respondents. His
contention that Respondent failed to give him said ID and payslips
implies that indeed he was not a regular employee of Fly Ace
considering that complainant was a helper and that Respondent
company has contracted a regular trucking for the delivery of its
products.
Respondent Fly Ace is not engaged in trucking business but
in the importation and sales of groceries. Since there is a regular
hauler to deliver its products, we give credence to Respondents
claim that complainant was contracted on pakiao basis.
As to the claim for underpayment of salaries, the payroll
presented by the Respondents showing salaries of workers on
pakiao basis has evidentiary weight because although the signature
of the complainant appearing thereon are not uniform, they
appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as
shown by the above described payrolls, Respondents are not liable
for salary differentials. [9]
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the
argument of Javier and immediately concluded that he was not a regular employee
simply because he failed to present proof. It was of the view that a pakyaw-basis
arrangement did not preclude the existence of employer-employee relationship.
Payment by result x x x is a method of compensation and does not define the essence
of the relation. It is a mere method of computing compensation, not a basis for
determining the existence or absence of an employer-employee relationship.[10] The
NLRC further averred that it did not follow that a worker was a job contractor and not
an employee, just because the work he was doing was not directly related to the
employers trade or business or the work may be considered as extra helper as in this
case; and that the relationship of an employer and an employee was determined by
law and the same would prevail whatever the parties may call it. In this case, the NLRC
held that substantial evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee of Fly Ace because
there was reasonable connection between the particular activity performed by the
employee (as a pahinante) in relation to the usual business or trade of the employer
(importation, sales and delivery of groceries). He may not be considered as an
independent contractor because he could not exercise any judgment in the delivery of
company products. He was only engaged as a helper.

Finding Javier to be a regular employee, the NLRC ruled that he was entitled
to a security of tenure. For failing to present proof of a valid cause for his termination,
Fly Ace was found to be liable for illegal dismissal of Javier who was likewise entitled
to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainants appeal
is partially GRANTED. The assailed Decision of the labor arbiter is
VACATED and a new one is hereby entered holding respondent
FLY ACE CORPORATION guilty of illegal dismissal and non-
payment of 13th month pay. Consequently, it is hereby ordered to
pay complainant DANILO Bitoy JAVIER the following:
1. Backwages -₱45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -₱59,854.16
All other claims are dismissed for lack of merit.
SO ORDERED.[11]
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was
indeed a former employee of Fly Ace and reinstated the dismissal of Javiers complaint
as ordered by the LA. The CA exercised its authority to make its own factual
determination anent the issue of the existence of an employer-employee relationship
between the parties. According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the
employer to prove that its dismissal was for a valid cause. However,
before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established. x x x it is incumbent
upon private respondent to prove the employee-employer
relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by
substantial evidence, that he is an employee of petitioners, but he
failed to discharge his burden. The non-issuance of a company-
issued identification card to private respondent supports petitioners
contention that private respondent was not its employee. [12]
The CA likewise added that Javiers failure to present salary vouchers, payslips, or
other pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers work
was not necessary and desirable to the business or trade of the company, as it was
only when there were scheduled deliveries, which a regular hauling service could not
deliver, that Fly Ace would contract the services of Javier as an extra helper. Lastly,
the CA declared that the facts alleged by Javier did not pass the control test.
He contracted work outside the company premises; he was not required to observe
definite hours of work; he was not required to report daily; and he was free to accept
other work elsewhere as there was no exclusivity of his contracted service to the
company, the same being co-terminous with the trip only.[13] Since no substantial
evidence was presented to establish an employer-employee relationship, the case for
illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER WAS NOT A REGULAR
EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS.[14]
The petitioner contends that other than its bare allegations and self-serving
affidavits of the other employees, Fly Ace has nothing to substantiate its claim that
Javier was engaged on a pakyaw basis. Assuming that Javier was indeed hired on
a pakyaw basis, it does not preclude his regular employment with the company. Even
the acknowledgment receipts bearing his signature and the confirming receipt of his
salaries will not show the true nature of his employment as they do not reflect the
necessary details of the commissioned task. Besides, Javiers tasks as pahinante are
related, necessary and desirable to the line of business by Fly Ace which is engaged
in the importation and sale of grocery items. On days when there were no scheduled
deliveries, he worked in petitioners warehouse, arranging and cleaning the stored cans
for delivery to clients.[15] More importantly, Javier was subject to the control and
supervision of the company, as he was made to report to the office from Monday to
Saturday, from 7:00 oclock in the morning until 5:00 oclock in the afternoon. The list of
deliverable goods, together with the corresponding clients and their respective
purchases and addresses, would necessarily have been prepared by Fly Ace. Clearly,
he was subjected to compliance with company rules and regulations as regards
working hours, delivery schedule and output, and his other duties in the warehouse.[16]
The petitioner chiefly relied on Chavez v. NLRC,[17] where the Court ruled that
payment to a worker on a per trip basis is not significant because this is merely a
method of computing compensation and not a basis for determining the existence of
employer-employee relationship. Javier likewise invokes the rule that, in controversies
between a laborer and his master, x x x doubts reasonably arising from the evidence
should be resolved in the formers favour. The policy is reflected is no less than the
Constitution, Labor Code and Civil Code.[18]
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally
dismissed by the latters failure to observe substantive and procedural due process.
Since his dismissal was not based on any of the causes recognized by law, and was
implemented without notice, Javier is entitled to separation pay and backwages.
In its Comment,[19] Fly Ace insists that there was no substantial evidence to
prove employer-employee relationship. Having a service contract with Milmar Hauling
Services for the purpose of transporting and delivering company products to customers,
Fly Ace contracted Javier as an extra helper or pahinante on a mere per trip
basis. Javier, who was actually a loiterer in the area, only accompanied and assisted
the company driver when Milmar could not deliver or when the exigency of extra
deliveries arises for roughly five to six times a month. Before making a delivery, Fly Ace
would turn over to the driver and Javier the delivery vehicle with its loaded company
products. With the vehicle and products in their custody, the driver and Javier would
leave the company premises using their own means, method, best judgment and
discretion on how to deliver, time to deliver, where and [when] to start, and manner of
delivering the products.[20]
Fly Ace dismisses Javiers claims of employment as baseless assertions.
Aside from his bare allegations, he presented nothing to substantiate his status as an
employee. It is a basic rule of evidence that each party must prove his affirmative
allegation. If he claims a right granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence and not upon the weakness of
his opponent.[21] Invoking the case of Lopez v. Bodega City,[22] Fly Ace insists that in
an illegal dismissal case, the burden of proof is upon the complainant who claims to be
an employee. It is essential that an employer-employee relationship be proved by
substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee was for a valid
cause. However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an
employee of Fly Ace, which are unfortunately not supported by proof, documentary or
otherwise.[23] Javier simply assumed that he was an employee of Fly Ace, absent any
competent or relevant evidence to support it. He performed his contracted work outside
the premises of the respondent; he was not even required to report to work at regular
hours; he was not made to register his time in and time out every time he was contracted
to work; he was not subjected to any disciplinary sanction imposed to other employees
for company violations; he was not issued a company I.D.; he was not accorded the
same benefits given to other employees; he was not registered with the Social Security
System (SSS) as petitioners employee; and, he was free to leave, accept and engage
in other means of livelihood as there is no exclusivity of his contracted services with the
petitioner, his services being co-terminus with the trip only. All these lead to the
conclusion that petitioner is not an employee of the respondents. [24]
Moreover, Fly Ace claims that it had no right to control the result, means,
manner and methods by which Javier would perform his work or by which the same is
to be accomplished.[25] In other words, Javier and the company driver were given a free
hand as to how they would perform their contracted services and neither were they
subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly
related or necessary to its principal business of importation and sales of groceries. Even
without Javier, the business could operate its usual course as it did not involve the
business of inland transportation. Lastly, the acknowledgment receipts bearing Javiers
signature and words pakiao rate, referring to his earned salaries on a per trip basis,
have evidentiary weight that the LA correctly considered in arriving at the conclusion
that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal is anchored
on the existence of an employer-employee relationship between him and Fly Ace. This
is essentially a question of fact. Generally, the Court does not review errors that raise
factual questions. However, when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the CA, it is proper, in the
exercise of Our equity jurisdiction, to review and re-evaluate the factual issues and to
look into the records of the case and re-examine the questioned findings.[26] In dealing
with factual issues in labor cases, substantial evidence that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion is
sufficient.[27]
As the records bear out, the LA and the CA found Javiers claim of employment
with Fly Ace as wanting and deficient. The Court is constrained to agree. Although
Section 10, Rule VII of the New Rules of Procedure of the NLRC[28] allows a relaxation
of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable
means to ascertain the facts speedily and objectively with little regard to technicalities
or formalities but nowhere in the rules are they provided a license to completely
discount evidence, or the lack of it. The quantum of proof required, however, must still
be satisfied. Hence, when confronted with conflicting versions on factual matters, it is
for them in the exercise of discretion to determine which party deserves credence on
the basis of evidence received, subject only to the requirement that their decision must
be supported by substantial evidence.[29] Accordingly, the petitioner needs to show by
substantial evidence that he was indeed an employee of the company against which
he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations
as different as chalk and cheese. It is, therefore, incumbent upon the Court to determine
whether the party on whom the burden to prove lies was able to hurdle the same.No
particular form of evidence is required to prove the existence of such employer-
employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted. Hence, while no particular form of evidence is required, a finding that
such relationship exists must still rest on some substantial evidence. Moreover, the
substantiality of the evidence depends on its quantitative as well as
its qualitative aspects.[30] Although substantial evidence is not a function of quantity but
rather of quality, the x x x circumstances of the instant case demand that something
more should have been proffered. Had there been other proofs of employment, such
as x x x inclusion in petitioners payroll, or a clear exercise of control, the Court would
have affirmed the finding of employer-employee relationship.[31]
 In sum, the rule of thumb remains: the onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of evidence. [32] Whoever
claims entitlement to the benefits provided by law should establish his or her right
thereto x x x.[33] Sadly, Javier failed to adduce substantial evidence as basis for the
grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish
his employment with Fly Ace. By way of evidence on this point, all that Javier presented
were his self-serving statements purportedly showing his activities as an employee of
Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his
claim. Hence, the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly
Ace, he was made to work in the company premises during weekdays arranging and
cleaning grocery items for delivery to clients, no other proof was submitted to fortify his
claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javiers cause. In said document, all Valenzuela attested to was that he
would frequently see Javier at the workplace where the latter was also hired as
stevedore.[34] Certainly, in gauging the evidence presented by Javier, the Court cannot
ignore the inescapable conclusion that his mere presence at the workplace falls short
in proving employment therein. The supporting affidavit could have, to an extent,
bolstered Javiers claim of being tasked to clean grocery items when there were no
scheduled delivery trips, but no information was offered in this subject simply because
the witness had no personal knowledge of Javiers employment status in the company.
Verily, the Court cannot accept Javiers statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass
the well-settled tests to determine the existence of an employer-employee
relationship, viz: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct. Of these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as to the result of
the work but also as to the means and methods by which the result is to be
accomplished.[35]
In this case, Javier was not able to persuade the Court that the above
elements exist in his case. He could not submit competent proof that Fly Ace engaged
his services as a regular employee; that Fly Ace paid his wages as an employee, or
that Fly Ace could dictate what his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship with Fly Ace had the attributes
of an employer-employee relationship on the basis of the above-mentioned four-fold
test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement
with a hauling company to undertake the delivery of its goods. It was also baffling to
realize that Javier did not dispute Fly Aces denial of his services exclusivity to the
company. In short, all that Javier laid down were bare allegations without corroborative
proof.
Fly Ace does not dispute having contracted Javier and paid him on a per trip
rate as a stevedore, albeit on a pakyaw basis. The Court cannot fail to note that Fly
Ace presented documentary proof that Javier was indeed paid on a pakyaw basis per
the acknowledgment receipts admitted as competent evidence by the
LA. Unfortunately for Javier, his mere denial of the signatures affixed therein cannot
automatically sway us to ignore the documents because forgery cannot be presumed
and must be proved by clear, positive and convincing evidence and the burden of proof
lies on the party alleging forgery.[36]
Considering the above findings, the Court does not see the necessity to
resolve the second issue presented.
One final note. The Courts decision does not contradict the settled rule that
payment by the piece is just a method of compensation and does not define the
essence of the relation.[37] Payment on a piece-rate basis does not negate regular
employment. The term wage is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether fixed
or ascertained on a time, task, piece or commission basis. Payment by the piece is just
a method of compensation and does not define the essence of the relations. Nor does
the fact that the petitioner is not covered by the SSS affect the employer-employee
relationship. However, in determining whether the relationship is that of employer and
employee or one of an independent contractor, each case must be determined on its
own facts and all the features of the relationship are to be considered.[38] Unfortunately
for Javier, the attendant facts and circumstances of the instant case do not provide the
Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute will
be automatically decided in favor of labor. Management also has its rights which are
entitled to respect and enforcement in the interest of simple fair play. Out of its concern
for the less privileged in life, the Court has inclined, more often than not, toward the
worker and upheld his cause in his conflicts with the employer. Such favoritism,
however, has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law
and doctrine.[39]
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the
Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975, are
hereby AFFIRMED.
SO ORDERED.
SECOND DIVISION
[G.R. No. 155207. April 29, 2005]
WILHELMINA S. OROZCO, petitioner, vs. THE FIFTH DIVISION OF THE
HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, AND
LETICIA JIMENEZ MAGSANOC, respondents.
RESOLUTION
TINGA, J.:
Ostensibly, the question raised in this present petition is of general interest to
students of lawwhether a newspaper columnist is an employee of the newspaper which
publishes the columns. However, for failure to file the appeal bond required by law, the
Court is impelled to defer the settlement of the above issue until the jurisdictional
requirement has been duly complied with.
This Petition for Review under Rule 45 of the Rules of Court assails
the Resolution[1] of the Court of Appeals Fifth Division denying the Motion for
Reconsideration filed by Wilhelmina Orozco (Orozco) and the Decision[2] of the same
division in CA-G.R. SP No. 50970, the dispositive portion of which provides:
WHEREFORE, based on the foregoing, the petition is hereby GRANTED. The assailed
decision of the public respondent NLRC affirming the decision of the Labor Arbiter that
private respondent Wilhelmina Orozco is an employee of petitioner PDI is hereby SET
ASIDE. Private respondent Orozcos complaint is hereby DISMISSED for lack of merit.
SO ORDERED.[3]
The above ruling of the Court of Appeals reversed the Decision[4] of the National
Labor Relations Commission (NLRC) which affirmed the Decision[5] of the Labor
Arbiter,[6] the decretal portion of which stated:
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.[7]
This case arose out of the complaint filed by Orozco against private respondents
Philippine Daily Inquirer (PDI) and Leticia Jimenez-Magsanoc (Magsanoc), the editor-
in-chief of the PDI at that time, for illegal dismissal, underpayment, non-payment of
allowance, separation pay, retirement pay, service incentive leave pay, 13th month pay,
moral and exemplary damages, discrimination in pay and for attorneys fees [8] with the
Arbitration Branch of the NLRC on 1 June 1993.[9]
Based on the records of this case, Orozco was engaged as a columnist by PDI
on 8 March 1990. She penned the column Feminist Reflections which appeared in the
Lifestyle Section under the editorship of Lolita T. Logarta.[10]
Orozco worked by submitting weekly columns with a per article wage of Two
Hundred Fifty Pesos (P250.00) which was later increased to Three hundred Pesos
(P300.00).[11]
In June 1991, Magsanoc as editor-in-chief of PDI discussed how to improve the
Lifestyle section of the newspaper with the Lifestyle editor. They agreed to cut down
the number of columnists and for this reason, PDI decided to drop or terminate Orozcos
column in November 1992.[12]
Orozcos column thus appeared in PDI for the last time on 7 November 1992.
Upon inquiry at the office of Magsanoc as to why her column was stopped, the secretary
told Orozco that it was Eugenia Apostol (Apostol), the chairperson of PDI, who had
decided to stop her column.[13]
Apostol was out of the country at that time so Orozco waited until February 1993
to talk to her. In a telephone conversation with Orozco, Apostol stated that she had
been told by Magsanoc that there were too many columnists in the Lifestyle Section. [14]
Aggrieved at the stoppage of her column, Orozco filed the instant case against
private respondents before the NLRC. The PDI raised as primary defense the claim
that Orozco was not an employee of the newspaper. However, in a Decision dated 29
October 1993, Labor Arbiter Arthur L. Amansec ruled that Orozco had been illegally
dismissed, after concluding that Orozco had indeed been an employee of the PDI.
The PDI, through counsel, received a copy of the Labor Arbiters Decision on 16
December 1993.[15] It timely filed a Notice and Memorandum dated 24 December 1993,
but it did not lodge a cash or surety bond in the amount equivalent to the monetary
award in the judgment appealed from. PDI adverted to such failure on its part before
the NLRC but justified the same on the ground that the Decision of the Labor Arbiter
did not fix any amount but merely stated that Orozco was entitled to backwages.
The NLRC dismissed the appeal in its Decision dated 23 August 1994. In
this Decision, it made note of the failure of PDI to perfect the appeal by filing the cash
or surety bond. Nonetheless, the NLRC ventured to delve on the merits, and thereupon,
affirmed the finding of the Labor Arbiter that Orozco was an employee of PDI.
Private respondents elevated the case to the Supreme Court by way of the special
civil action of certiorari. Pursuant to the ruling in St. Martin Funeral Homes v.
NLRC,[16] this Court referred the case to the Court of Appeals.
On 11 July 2002, the Court of Appeals reversed the decision of the NLRC by
holding that Orozco is not an employee of PDI. The reversal was grounded on factual
premises, the appellate court concluding that the NLRC had misappreciated the facts
and rendered a ruling wanting in substantial evidence. It thereby dismissed Orozcos
complaint for lack of merit. The Court of Appeals likewise dismissed Orozcos motion
for reconsideration on 11 September 2002. Hence, this petition.
In her Memorandum, Orozco posits that the Court of Appeals should have
dismissed outright the private respondents petition for certiorari for their failure to file a
cash bond or a surety bond as provided for in Article 223 of the Labor Code.
In support of the argument, Orozco contends that a grievous error tantamount to
grave abuse of discretion was committed by the Court of Appeals when it failed to
appreciate the observation of the NLRC that private respondents did not perfect their
appeal as they did not deposit on time any cash or surety bond in compliance with the
provision of Art. 223 of the Labor Code when they filed an appeal of the Labor Arbiters
decision at the NLRC. Orozco argues that the posting of the cash or surety bond is
mandatory and must be made by the employer within the reglementary period of ten
(10) days from receipt of the Labor Arbiters decision so as to perfect his appeal. Failing
to do so, the employer loses the right to appeal, and the Labor Arbiters decision
becomes final and executory, regardless of whether or not the NLRC declares it so, by
operation of law.[17]
The NLRC in its decision concluded that it had no jurisdiction over PDIs appeal
but proceeded nonetheless to discuss the merits of the case. On the other hand, the
Court of Appeals made no mention at all of the jurisdictional defect, whether in its recital
of facts or discussion of the arguments.
The novelty of the argument on the merits aside, it is essential not to lose sight of
the jurisdictional issue, as it determines whether or not an appeal had indeed been
perfected.
The provisions of the Labor Code are quite clear cut on the matter. The relevant
portion of Article 223 states:
ART. 223. Appeal. - Decisions, awards or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. . .
In case of a judgment involving a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (emphasis supplied)
By explicit provision of law, an appeal is perfected only upon the posting of a cash
or surety bond. The reason behind the imposition of this requirement is not difficult to
divine. As the Court said in Viron Garments Mftg., Co., Inc. v. NLRC:[18]
The requirement that the employer post a cash or surety bond to perfect its/his appeal
is apparently intended to assure the workers that if they prevail in the case, they will
receive the money judgment in their favor upon the dismissal of the employer's appeal.
It was intended to discourage employers from using an appeal to delay, or even evade,
their obligation to satisfy their employees' just and lawful claims.[19]
 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.
In Olacao v. NLRC[20] for example, the NLRC had discovered that the separation
pay awarded by the Labor Arbiter had already been paid by the employer. Since a
modification of the Labor Arbiters Decision was the only way to forestall the grant of
separation pay twice, the NLRC allowed the appeal perfected only on the twelfth (12th)
day.[21] In Cosico, Jr. v. NLRC,[22] the employer timely posted the bond based on the
monetary award for back wages and thirteenth month pay, but excluding the exorbitant
award for moral and exemplary damages. The Court ruled that there was substantial
compliance, owing to the fact that the NLRC had since excluded the award of damages
from the computation of the surety bond.[23] And in Star Angel Handicraft v.
NLRC,[24] the Court noted that a motion for reduction of the appeal bond had been filed
within the reglementary period, and that the appeal should not be deemed perfected
until the NLRC has acted on the motion and the appellant has filed the bond as fixed
by the NLRC.[25]
In YBL v. NLRC,[26] the appeal was interposed by the employers on 11 September
1989, or only six (6) days from the effectivity of the Interim Rules on Appeals which
incorporated for the first time the appeal bond requirement imposed by Republic Act
No. 6715, an amendatory law to the Labor Code. The Court therein considered the
apparent fact that neither the counsel for the employer nor that for the employee was
already aware of the then new requirement requiring the posting of a bond on
appeal.[27] The same justification was cited with approval by the Court in Blancaflor v.
NLRC,[28] and the same circumstance is likewise apparent in Rada v. NLRC.[29]
In the case of Taberrah v. NLRC,[30] 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 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.[31]
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. As the private respondents asserted
in their motion for reconsideration anent the NLRC decision:
III. NO BOND WAS FILED BECAUSE OF THE VAGUENESS OF THE
AWARD
The award as contained in the appealed 29 October 1993 decision did not state the
exact amount to be awarded. In particular, while it may be assumed, as stated in the
decision subject of this motion, the award be based on the P300.00 per column/article
basis, this is not clear in the decision which likewise mentioned an award for thirteenth
(13th) month pay and service incentive leave pay. Noteworthy is the fact that the
complainant, not being an employee, was not being paid a fixed salary. Hence, herein
respondents-appellants requested in their memorandum on appeal that the
Commission fixes (sic) the amount of the bond, if it finds the same necessary in
exceptional cases like the present case, to wit:
xxx Respondents-appellants however manifest that they are able and willing to post a
bond that this Commission may fix if the latter finds it necessary. (Notice and
Memorandum on Appeal dated 24 December 1993, p. 7).[32] (Emphasis in the original)
In the case of NFLU v. Ladrido III,[33] 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.[34] 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,[35] 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. [36] But while this Court
may relax the observance of reglementary periods and technical rules to achieve
substantial justice,[37] 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.
WHEREFORE, without giving due course to the petition, the Labor Arbiter is
hereby ordered to clarify the amount of the award due the petitioner. Private
respondents are ordered to post the requisite bond in accordance with Article 223 of
the Labor Code, whereupon, the petition will be given due course. No pronouncement
as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
Republic of the Philippines
SUPREME COURT
Baguio City
EN BANC
G.R. No. 192571 April 22, 2014
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D.
FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN
G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration
dated August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said motion sufficient
for the Court to depart from the pronouncements made in the initial ruling. But if only to
address Akaraz's novel assertions, and to so placate any doubt or misconception in the
resolution of this case, the Court proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing of evidence
since a petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is
limited to the review of questions of law. She submits that since what was under review
was a ruling of the Court of Appeals (CA) rendered via a petition for certiorari under
Rule 65 of the Rules, the Court should only determine whether or not the CA properly
determined that the National Labor Relations Commission (NLRC) committed a grave
abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court actually resolved
the controversy under the above-stated framework of analysis. Essentially, the Court
found the CA to have committed an error in holding that no grave abuse of discretion
can be ascribed to the NLRC since the latter arbitrarily disregarded the legal implication
of the attendant circumstances in this case which should have simply resulted in the
finding that Alcaraz was apprised of the performance standards for her regularization
and hence, was properly a probationary employee. As the Court observed, an
employee’s failure to perform the duties and responsibilities which have been clearly
made known to him constitutes a justifiable basis for a probationary employee’s non-
regularization. As detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the
publication in a major broadsheet newspaper of its need for a Regulatory
Affairs Manager, indicating therein the job description for as well as the duties
and responsibilities attendant to the aforesaid position; this prompted Alcaraz
to submit her application to Abbott on October 4, 2004;
(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was
to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract which
specifically stated, inter alia, that she was to be placed on probation for a
period of six (6) months beginning February 15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent
her copies of Abbott’s organizational structure and her job description through
e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where [Allan
G. Almazar] informed her that she had to implement Abbott’s Code of Conduct
and office policies on human resources and finance and that she would be
reporting directly to [Kelly Walsh];
(f) Alcaraz was also required to undergo a training program as part of her
orientation;
(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance
Modules from [Maria Olivia T. Yabut-Misa] who explained to her the procedure
for evaluating the performance of probationary employees; she was further
notified that Abbott had only one evaluation system for all of its employees;
and
(h) Moreover, Alcaraz had previously worked for another pharmaceutical
company and had admitted to have an "extensive training and background" to
acquire the necessary skills for her job.2
Considering the foregoing incidents which were readily observable from the records,
the Court reached the conclusion that the NLRC committed grave abuse of discretion,
viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not
a probationary employee, the Court finds that the NLRC committed a grave abuse of
discretion.
To elucidate, records show that the NLRC based its decision on the premise that
Alcaraz’s receipt of her job description and Abbott’s Code of Conduct and Performance
Modules was not equivalent to being actually informed of the performance standards
upon which she should have been evaluated on. It, however, overlooked the legal
implication of the other attendant circumstances as detailed herein which should have
warranted a contrary finding that Alcaraz was indeed a probationary and not a regular
employee – more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would lead to her
non-regularization and eventually, her termination.3
Consequently, since the CA found that the NLRC did not commit grave abuse of
discretion and denied the certiorari petition before it, the reversal of its ruling was thus
in order.
At this juncture, it bears exposition that while NLRC decisions are, by their nature, final
and executory4 and, hence, not subject to appellate review,5 the Court is not precluded
from considering other questions of law aside from the CA’s finding on the NLRC’s
grave abuse of discretion. While the focal point of analysis revolves on this issue, the
Court may deal with ancillary issues – such as, in this case, the question of how a
probationary employee is deemed to have been informed of the standards of his
regularization – if only to determine if the concepts and principles of labor law were
correctly applied or misapplied by the NLRC in its decision. In other words, the Court’s
analysis of the NLRC’s interpretation of the environmental principles and concepts of
labor law is not completely prohibited in – as it is complementary to – a Rule 45 review
of labor cases.
Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was
reviewed, it bears pointing out that no "factual appellate review" was conducted by the
Court in the Decision. Rather, the Court proceeded to interpret the relevant rules on
probationary employment as applied to settled factual findings. Besides, even on the
assumption that a scrutiny of facts was undertaken, the Court is not altogether barred
from conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of
witnesses, or substitute the findings of fact of the NLRC, an administrative body that
has expertise in its specialized field. Nor do we substitute our "own judgment for that of
the tribunal in determining where the weight of evidence lies or what evidence is
credible." The factual findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues raised in a
Rule 45 petition. For instance, when the petitioner persuasively alleges that there is
insufficient or insubstantial evidence on record to support the factual findings of the
tribunal or court a quo, as Section 5, Rule 133 of the Rules of Court states in express
terms that in cases filed before administrative or quasi-judicial bodies, a fact may be
deemed established only if supported by substantial evidence. 7 (Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by
and of itself be treated as a standard for regularization as a standard denotes a
measure of quantity or quality. By way of example, Alcaraz cites the case of a
probationary salesperson and asks how does such employee achieve regular status if
he does not know how much he needs to sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary
employee’s job description but the adequate performance of his duties and
responsibilities which constitutes the inherent and implied standard for regularization.
To echo the fundamental point of the Decision, if the probationary employee had been
fully apprised by his employer of these duties and responsibilities, then basic
knowledge and common sense dictate that he must adequately perform the same, else
he fails to pass the probationary trial and may therefore be subject to termination. 8
The determination of "adequate performance" is not, in all cases, measurable by
quantitative specification, such as that of a sales quota in Alcaraz’s example. It is also
hinged on the qualitative assessment of the employee’s work; by its nature, this largely
rests on the reasonable exercise of the employer’s management prerogative. While in
some instances the standards used in measuring the quality of work may be conveyed
– such as workers who construct tangible products which follow particular metrics, not
all standards of quality measurement may be reducible to hard figures or are readily
articulable in specific pre-engagement descriptions. A good example would be the case
of probationary employees whose tasks involve the application of discretion and
intellect, such as – to name a few – lawyers, artists, and journalists. In these kinds of
occupation, the best that the employer can do at the time of engagement is to inform
the probationary employee of his duties and responsibilities and to orient him on how
to properly proceed with the same. The employer cannot bear out in exacting detail at
the beginning of the engagement what he deems as "quality work" especially since the
probationary employee has yet to submit the required output. In the ultimate analysis,
the communication of performance standards should be perceived within the context
of the nature of the probationary employee’s duties and responsibilities.
The same logic applies to a probationary managerial employee who is tasked to
supervise a particular department, as Alcaraz in this case.1âwphi1 It is hardly possible
for the employer, at the time of the employee’s engagement, to map into technical
indicators, or convey in precise detail the quality standards by which the latter should
effectively manage the department. Factors which gauge the ability of the managerial
employee to either deal with his subordinates (e.g., how to spur their performance, or
command respect and obedience from them), or to organize office policies, are hardly
conveyable at the outset of the engagement since the employee has yet to be
immersed into the work itself. Given that a managerial role essentially connotes an
exercise of discretion, the quality of effective management can only be determined
through subsequent assessment. While at the time of engagement, reason dictates that
the employer can only inform the probationary managerial employee of his duties and
responsibilities as such and provide the allowable parameters for the same. Verily, as
stated in the Decision, the adequate performance of such duties and responsibilities is,
by and of itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard contemplated by law
should not, in all cases, be contained in a specialized system of feedbacks or
evaluation. The Court takes judicial notice of the fact that not all employers, such as
simple businesses or small-scale enterprises, have a sophisticated form of human
resource management, so much so that the adoption of technical indicators as utilized
through "comment cards" or "appraisal" tools should not be treated as a prerequisite
for every case of probationary engagement. In fact, even if a system of such kind is
employed and the procedures for its implementation are not followed, once an
employer determines that the probationary employee fails to meet the standards
required for his regularization, the former is not precluded from dismissing the latter.
The rule is that when a valid cause for termination exists, the procedural infirmity
attending the termination only warrants the payment of nominal damages. This was the
principle laid down in the landmark cases of Agabon v. NLRC 9 (Agabon) and Jaka Food
Processing Corporation v. Pacot10 (Jaka). In the assailed Decision, the Court actually
extended the application of the Agabon and Jaka rulings to breaches of company
procedure, notwithstanding the employer’s compliance with the statutory requirements
under the Labor Code.11 Hence, although Abbott did not comply with its own
termination procedure, its non-compliance thereof would not detract from the finding
that there subsists a valid cause to terminate Alcaraz’s employment. Abbott, however,
was penalized for its contractual breach and thereby ordered to pay nominal damages.
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling) since the
same is not squarely applicable to the case at bar. The employee in Aliling, a sales
executive, was belatedly informed of his quota requirement. Thus, considering the
nature of his position, the fact that he was not informed of his sales quota at the time
of his engagement changed the complexion of his employment. Contrarily, the nature
of Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates the
application of the foregoing. Records show that Alcaraz was terminated because she
(a) did not manage her time effectively; (b) failed to gain the trust of her staff and to
build an effective rapport with them; (c) failed to train her staff effectively; and (d) was
not able to obtain the knowledge and ability to make sound judgments on case
processing and article review which were necessary for the proper performance of her
duties.13 Due to the nature and variety of these managerial functions, the best that
Abbott could have done, at the time of Alcaraz's engagement, was to inform her of her
duties and responsibilities, the adequate performance of which, to repeat, is an inherent
and implied standard for regularization; this is unlike the circumstance in Aliling where
a quantitative regularization standard, in the term of a sales quota, was readily
articulable to the employee at the outset. Hence, since the reasonableness of Alcaraz's
assessment clearly appears from the records, her termination was justified. Bear in
mind that the quantum of proof which the employer must discharge is only substantial
evidence which, as defined in case law, means that amount of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other
minds, equally reasonable, might conceivably opine otherwise. 14 To the Court's mind,
this threshold of evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and thereby
upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's
Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 184903 October 10, 2012
DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner,
vs.
DIGITEL EMPLOYEES UNION (DEU), ARCELO RAFAEL A. ESPLANA, ALAN D.
LICANDO, FELICITO C. ROMERO, JR., ARNOLD D. GONZALES, REYNEL
FRANCISCO B. GARCIA, ZOSIMO B. PERALTA, REGINO T. UNIDAD and JIM L.
JAVIER, Respondents.
DECISION
PEREZ, J.:
This treats of the petition for review filed by Digital Telecommunications Philippines,
Inc. (Digitel) assailing the 18 June 2008 Decision1 and 9 October 2008 Resolution of
the Court of Appeals 10th Division in CA-G.R. SP No. 91719, which affirms the Order
of the Secretary of Labor and Employment directing Digitel to commence Collective
Bargaining Agreement (CBA) negotiations and in CA-G.R. SP No. 94825, which
declares the dismissal of affected Digitel employees as illegal.
The facts, as borne by the records, follow.
By virtue of a certification election, Digitel Employees Union (Union) became the
exclusive bargaining agent of all rank and file employees of Digitel in 1994. The Union
and Digitel then commenced collective bargaining negotiations which resulted in a
bargaining deadlock. The Union threatened to go on strike, but then Acting Labor
Secretary Bienvenido E. Laguesma assumed jurisdiction over the dispute and
eventually directed the parties to execute a CBA.2
However, no CBA was forged between Digitel and the Union. Some Union members
abandoned their employment with Digitel. The Union later became dormant.
Ten (10) years thereafter or on 28 September 2004, Digitel received from Arceo Rafael
A. Esplana (Esplana), who identified himself as President of the Union, a letter
containing the list of officers, CBA proposals and ground rules. 3 The officers were
respondents Esplana, Alan D. Licando (Vice-President), Felicito C. Romero, Jr.
(Secretary), Arnold D. Gonzales (Treasurer), Reynel Francisco B. Garcia (Auditor),
Zosimo B. Peralta (PRO), Regino T. Unidad (Sgt. at Arms), and Jim L. Javier (Sgt. at
Arms).
Digitel was reluctant to negotiate with the Union and demanded that the latter show
compliance with the provisions of the Union’s Constitution and By-laws on union
membership and election of officers.
On 4 November 2004, Esplana and his group filed a case for Preventive Mediation
before the National Conciliation and Mediation Board based on Digitel’s violation of the
duty to bargain. On 25 November 2004, Esplana filed a notice of strike.
On 10 March 2005, then Labor Secretary Patricia A. Sto. Tomas issued an
Order4 assuming jurisdiction over the labor dispute.
During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit
enterprise engaged in call center servicing, filed with the Department of Labor and
Employment (DOLE) an Establishment Termination Report stating that it will cease its
business operation. The closure affected at least 100 employees, 42 of whom are
members of the herein respondent Union.
Alleging that the affected employees are its members and in reaction to Digiserv’s
action, Esplana and his group filed another Notice of Strike for union busting, illegal
lock-out, and violation of the assumption order.
On 23 May 2005, the Secretary of Labor ordered the second notice of strike subsumed
by the previous Assumption Order.5
Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations
(BLR) seeking cancellation of the Union’s registration on the following grounds: 1)
failure to file the required reports from 1994-2004; 2) misrepresentation of its alleged
officers; 3) membership of the Union is composed of rank and file, supervisory and
managerial employees; and 4) substantial number of union members are not Digitel
employees.6
In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the
petition for cancellation of union registration for lack of merit. The Regional Director
ruled that it does not have jurisdiction over the issue of non-compliance with the
reportorial requirements. He also held that Digitel failed to adduce substantial evidence
to prove misrepresentation and the mixing of non-Digitel employees with the Union.
Finally, he declared that the inclusion of supervisory and managerial employees with
the rank and file employees is no longer a ground for cancellation of the Union’s
certificate of registration.7
The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a
Resolution dated 9 March 2007, thereby affirming the 11 May 2005 Decision of the
Regional Director.
CA-G.R. SP No. 91719
In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence
the CBA negotiation with the Union. Thus:
WHEREFORE, all the foregoing premises considered, this Office hereby orders:
1. DIGITEL to commence collective bargaining negotiation with DEU without further
delay; and,
2. The issue of unfair labor practice, consisting of union-busting, illegal
termination/lockout and violation of the assumption of jurisdiction, specifically the
return-to-work aspect of the 10 March 2005 and 03 June 2005 orders, be CERTIFIED
for compulsory arbitration to the NLRC.8
Digitel moved for reconsideration on the contention that the pendency of the petition
for cancellation of the Union’s certificate of registration is a prejudicial question that
should first be settled before the DOLE could order the parties to bargain collectively.
On 19 August 2005, then Acting Secretary Manuel G. Imson of DOLE denied the motion
for reconsideration, affirmed the 13 July 2005 Order and reiterated the order directing
parties to commence collective bargaining negotiations.9
On 14 October 2005, Digitel filed a petition, docketed as CA-G.R. SP No. 91719, before
the Court of Appeals assailing the 13 July and 19 August 2005 Orders of the DOLE
Secretary and attributing grave abuse of discretion on the part of the DOLE Secretary
for ordering Digitel to commence bargaining negotiations with the Union despite the
pendency of the issue of union legitimacy.
CA-G.R. SP No. 94825
In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor
practice issue was certified for compulsory arbitration before the NLRC, which, on 31
January 2006, rendered a Decision dismissing the unfair labor practice charge against
Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and
ordering their reinstatement. The Union manifested that out of 42 employees, only 13
remained, as most had already accepted separation pay. The dispositive portion of the
Decision reads:
WHEREFORE, premises considered, the charge of unfair labor practice is hereby
DISMISSED for lack of merit. However, the dismissal of the remaining thirteen (13)
affected employees is hereby declared illegal and DIGITEL is hereby ORDERED to
reinstate them to their former position with full backwages up to the time they are
reinstated, computed as follows:
x x x x.10
Upon motion for reconsideration filed by Digitel, four (4) affected employees, namely
Ma. Loreta Eser, Marites Jereza, Leonore Tuliao and Aline G. Quillopras, were
removed from entitlement to the awards pursuant to the deed of quitclaim and release
which they all signed.11
In view of this unfavorable decision, Digitel filed another petition on 9 June 2006 in CA-
G.R. SP No. 94825 before the Court of Appeals, challenging the above NLRC Decision
and Resolution and arguing mainly that Digiserv employees are not employees of
Digitel.
Ruling of the Court of Appeals
On 18 June 2008, the Tenth Division of the Court of Appeals consolidated the two
petitions in CA-G.R. SP No. 91719 and CA-G.R. SP No. 94825, and disposed as
follows:
WHEREFORE, the petition in CA-G.R. SP No. 91719 is DISMISSED. The July 13,
2005 Order and the August 19, 2005 Resolution of the DOLE Secretary
are AFFIRMED in toto. With costs.
The petition in CA-G.R. SP No. 94825 is partially GRANTED, with the effect that the
assailed dispositions must be MODIFIED, as follows:
1) In addition to the order directing reinstatement and payment of full backwages to the
nine (9) affected employees, Digital Telecommunications Philippines, Inc. is
furthered ORDERED, should reinstatement is no longer feasible, to pay separation pay
equivalent to one (1) month pay, or one-half (1/2) month pay for every year of service,
whichever is higher.
2) The one hundred thousand (PhP 100,000.00) peso-fine imposed on Digital
Telecommunications Philippines, Inc. is DELETED. No costs.12
The Court of Appeals upheld the Secretary of Labor’s Order for Digitel to commence
CBA negotiations with the Union and emphasized that the pendency of a petition for
the cancellation of a union’s registration does not bar the holding of negotiations for a
CBA. The Court of Appeals sustained the finding that Digiserv is engaged in labor-only
contracting and that its employees are actually employees of Digitel.
Digitel filed a motion for reconsideration but was denied in a Resolution dated 9 October
2008.
Hence, this petition for review on certiorari.
Digitel argues that the Court of Appeals seriously erred when it condoned the act of the
Secretary of Labor in issuing an assumption order despite the pendency of an appeal
on the issue of union registration. Digitel maintains that it cannot be compelled to
negotiate with a union for purposes of collective bargaining when the very status of the
same as the exclusive bargaining agent is in question.
Digitel insists that had the Court of Appeals considered the nature of the activities
performed by Digiserv, it would reach the conclusion that Digiserv is a legitimate
contractor. To bolster its claim, Digitel asserts that the affected employees are
registered with the Social Security System, Pag-ibig, Bureau of Internal Revenue and
Philhealth with Digiserv as their employer. Digitel further contends that assuming that
the affected Digiserv employees are employees of Digitel, they were nevertheless
validly dismissed on the ground of closure of a department or a part of Digitel’s business
operation.
The three issues raised in this petition are: 1) whether the Secretary of Labor erred in
issuing the assumption order despite the pendency of the petition for cancellation of
union registration; 2) whether Digiserv is a legitimate contractor; and 3) whether there
was a valid dismissal.
The pendency of a petition
for cancellation of union
registration does not preclude
collective bargaining.
The first issue raised by Digitel is not novel. It is well-settled that the pendency of a
petition for cancellation of union registration does not preclude collective bargaining.
The 2005 case of Capitol Medical Center, Inc. v. Hon. Trajano13 is apropos. The
respondent union therein sent a letter to petitioner requesting a negotiation of their
CBA. Petitioner refused to bargain and instead filed a petition for cancellation of the
union’s certificate of registration. Petitioner’s refusal to bargain forced the union to file
a notice of strike. They eventually staged a strike. The Secretary of Labor assumed
jurisdiction over the labor dispute and ordered all striking workers to return to work.
Petitioner challenged said order by contending that its petition for cancellation of
union’s certificate of registration involves a prejudicial question that should first be
settled before the Secretary of Labor could order the parties to bargain collectively.
When the case eventually reached this Court, we agreed with the Secretary of Labor
that the pendency of a petition for cancellation of union registration does not preclude
collective bargaining, thus:
That there is a pending cancellation proceeding against the respondent Union is not a
bar to set in motion the mechanics of collective bargaining. If a certification election
may still be ordered despite the pendency of a petition to cancel the union’s registration
certificate (National Union of Bank Employees vs. Minister of Labor, 110 SCRA 274),
more so should the collective bargaining process continue despite its pendency. We
must emphasize that the majority status of the respondent Union is not affected by the
pendency of the Petition for Cancellation pending against it. Unless its certificate of
registration and its status as the certified bargaining agent are revoked, the Hospital is,
by express provision of the law, duty bound to collectively bargain with the Union. 14
Trajano was reiterated in Legend International Resorts Limited v. Kilusang
Manggagawa ng Legenda (KML-Independent).15 Legend International Resorts
reiterated the rationale for allowing the continuation of either a CBA process or a
certification election even during the pendency of proceedings for the cancellation of
the union’s certificate of registration. Citing the cases of Association of Court of Appeals
Employees v. Ferrer- Calleja16 and Samahan ng Manggagawa sa Pacific Plastic v.
Hon. Laguesma,17 it was pointed out at the time of the filing of the petition for
certification election – or a CBA process as in the instant case – the union still had the
personality to file a petition for certification − or to ask for a CBA negotiation – as in the
present case.
Digiserv is a labor-only contractor.
Labor-only contracting is expressly prohibited by our labor laws. Article 106 of the Labor
Code defines labor-only contracting as "supplying workers to an employer [who] does
not have substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others, and the workers recruited and placed by such person
are performing activities which are directly related to the principal business of such
employer."
Section 5, Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code
(Implementing Rules), as amended by Department Order No. 18-02, expounds on the
prohibition against labor-only contracting, thus:
Section 5. Prohibition against labor-only contracting. − Labor-only contracting is hereby
declared prohibited. For this purpose, labor-only contracting shall refer to an
arrangement where the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any of the following
elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the performance of the
work of the contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (c)
of the Labor Code, as amended.
xxxx
The "right to control" shall refer to the right reserved to the person for whom, the
services of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end.
The law and its implementing rules allow contracting arrangements for the performance
of specific jobs, works or services. Indeed, it is management prerogative to farm out
any of its activities, regardless of whether such activity is peripheral or core in nature.
However, in order for such outsourcing to be valid, it must be made to an independent
contractor because the current labor rules expressly prohibit labor-only contracting.18
After an exhaustive review of the records, there is no showing that first, Digiserv has
substantial investment in the form of capital, equipment or tools. Under the
Implementing Rules, substantial capital or investment refers to "capital stocks and
subscribed capitalization in the case of corporations, tools, equipment, implements,
machineries and work premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job, work or service contracted
out." The NLRC, as echoed by the Court of Appeals, did not find substantial Digiserv’s
authorized capital stock of One Million Pesos (P 1,000,000.00). It pointed out that only
Two Hundred Fifty Thousand Pesos (P 250,000.00) of the authorized capital stock had
been subscribed and only Sixty-Two Thousand Five Hundred Pesos (P 62,500.00) had
been paid up. There was no increase in capitalization for the last ten (10) years.19
Moreover, in the Amended Articles of Incorporation, as well as in the General
Information Sheets for the years 1994, 2001 and 2005, the primary purpose of Digiserv
is to provide manpower services. In PCI Automation Center, Inc. v. National Labor
Relations Commission,20 the Court made the following distinction: "the legitimate job
contractor provides services while the labor-only contractor provides only manpower.
The legitimate job contractor undertakes to perform a specific job for the principal
employer while the labor-only contractor merely provides the personnel to work for the
principal employer." The services provided by employees of Digiserv are directly related
to the business of Digitel, as rationalized by the NLRC in this wise:
It is undisputed that as early as March 1994, the affected employees, except for two,
were already performing their job as Traffic Operator which was later renamed as
Customer Service Representative (CSR). It is equally undisputed that all throughout
their employment, their function as CSR remains the same until they were terminated
effective May 30, 2005. Their long period of employment as such is an indication that
their job is directly related to the main business of DIGITEL which is
telecommunications. Because, if it was not, DIGITEL would not have allowed them to
render services as Customer Service Representative for such a long period of time. 21
Furthermore, Digiserv does not exercise control over the affected employees. The
NLRC highlighted the fact that Digiserv shared the same Human Resources,
Accounting, Audit and Legal Departments with Digitel which manifested that it was
Digitel who exercised control over the performance of the affected employees. The
NLRC also relied on the letters of commendation, plaques of appreciation and
certification issued by Digitel to the Customer Service Representatives as evidence of
control.
Considering that Digiserv has been found to be engaged in labor-only contracting, the
dismissed employees are deemed employees of Digitel.
Section 7 of the Implementing Rules holds that labor-only contracting would give rise
to: (1) the creation of an employer-employee relationship between the principal and the
employees of the contractor or sub-contractor; and (2) the solidary liability of the
principal and the contractor to the employees in the event of any violation of the Labor
Code.
Accordingly, Digitel is considered the principal employer of respondent employees.
The affected employees were
illegally dismissed.
In addition to finding that Digiserv is a labor-only contractor, records teem with proof
that its dismissed employees are in fact employees of Digitel. The NLRC enumerated
these evidences, thus:
That the remaining thirteen (13) affected employees are indeed employees of DIGITEL
is sufficiently established by the facts and evidence on record.
It is undisputed that the remaining affected employees, except for two (2), were already
hired by DIGITEL even before the existence of DIGISERV. (The other two (2) were
hired after the existence of DIGISERV). The UNION submitted a sample copy of their
appointment paper (Annex "A" of UNION’s Position Paper, Records, Vol. 1, p. 100)
showing that they were appointed on March 1, 1994, almost three (3) months before
DIGISERV came into existence on May 30, 1994 (Annex "B", Ibid, Records, Vol. 1, p.
101). On the other hand, not a single appointment paper was submitted by DIGITEL
showing that these remaining affected employees were hired by DIGISERV.
It is equally undisputed that the remaining, affected employees continuously held the
position of Customer Service Representative, which was earlier known as Traffic
Operator, from the time they were appointed on March 1, 1994 until they were
terminated on May 30, 2005. The UNION alleges that these Customer Service
Representatives were under the Customer Service Division of DIGITEL. The UNION’s
allegation is correct. Sample of letter of commendations issued to Customer Service
Representatives (Annexes "C" and "C-1" of UNION’s Position Paper, Records, p. 100
and 111) indeed show that DIGITEL has a Customer Service Division which handles
its Call Center operations.
Further, the Certificates issued to Customer Service Representative likewise show that
they are employees of DIGITEL (Annexes "C-5", "C-6" - "C-7" of UNION’s Position
Paper, Records, Vol. 1, pp. 115 to 117), Take for example the "Service Award" issued
to Ma. Loretta C. Esen, one of the remaining affected employees (Annex "C-5", Supra).
The "Service Award" was signed by the officers of DIGITEL – the VP-Customer
Services Division, the VP-Human Resources Division and the Group Head-Human
Resources Division. It was issued by DIGITEL to Esen thru the above named officers
"In recognition of her seven (7) years continuous and valuable contributions to the
achievement of Digitel’s organization objectives". It cannot be gainsaid that it is only
the employer that issues service award to its employees. 22 (Emphasis not supplied)
As a matter of fact, even before the incorporation of Digiserv, the affected employees
were already employed by Digitel as Traffic Operators, later renamed as Customer
Service Representatives.
As an alternative argument, Digitel maintains that the affected employees were validly
dismissed on the grounds of closure of Digiserv, a department within Digitel.
In the recent case of Waterfront Cebu City Hotel v. Jimenez,23 we referred to the
closure of a department or division of a company as retrenchment. The dismissed
employees were undoubtedly retrenched with the closure of Digiserv.
For a valid retrenchment, the following elements must be present:
(1) That retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual
and real, or if only expected, are reasonably imminent as perceived objectively and in
good faith by the employer;
(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one
(1) month pay or at least ½ month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees’ right to
security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers. 24
Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is
management prerogative to close a department of the company. Digitel’s decision to
outsource the call center operation of the company is a valid reason to close down the
operations of a department under which the affected employees were employed. Digitel
cited the decline in the volume of transaction of operator-assisted call services as
supported by Financial Statements for the years 2003 and 2004, during which Digiserv
incurred a deficit of P 163,624.00 and P 164,055.00, respectively.25 All affected
employees working under Digiserv were served with individual notices of termination.
DOLE was likewise served with the corresponding notice. All affected employees were
offered separation pay. Only 9 out of the 45 employees refused to accept the separation
pay and chose to contest their dismissal before this Court.
The fifth element regarding the criteria to be observed by Digitel clearly does not apply
because all employees under Digiserv were dismissed. The instant case is all about
the fourth element, that is, whether or not the affected employees were dismissed in
good faith. We find that there was no good faith in the retrenchment.
Prior to the cessation of Digiserv’s operations, the Secretary of Labor had issued the
first assumption order to enjoin an impending strike. When Digiserv effected the
dismissal of the affected employees, the Union filed another notice of strike.
Significantly, the Secretary of Labor ordered that the second notice of strike be
subsumed by the previous assumption order. Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and
Employment may assume jurisdiction over the dispute and decide it or certify the same
to the Commission for compulsory arbitration. Such assumption or certification shall
have the effect of automatically enjoining the intended or impending strike or lockout
as specified in the assumption or certification order. If one has already taken place at
the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and
readmit all workers under the same terms and conditions prevailing before the strike or
lockout. The Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure the compliance with this provision
as well as with such orders as he may issue to enforce the same.
The effects of the assumption order issued by the Secretary of Labor are two-fold. It
enjoins an impending strike on the part of the employees and orders the employer to
maintain the status quo.
There is no doubt that Digitel defied the assumption order by abruptly closing down
Digiserv. The closure of a department is not illegal per se. What makes it unlawful is
when the closure is undertaken in bad faith. In St. John Colleges, Inc. v. St. John
Academy Faculty and Employees Union,26 bad faith was evidenced by the timing of
and reasons for the closure and the timing of and reasons for the subsequent opening.
There, the collective bargaining negotiations between St. John and the Union resulted
in a bargaining deadlock that led to the filing of a notice of strike. The labor dispute was
referred to the Secretary of Labor who assumed jurisdiction.
Pending resolution of the dispute, St. John closed the school prompting the Union to
file a complaint for illegal dismissal and unfair labor practice. The Union members
alleged that the closure of the high school was done in bad faith in order to get rid of
the Union and render useless any decision of the SOLE on the CBA deadlocked issues.
We held that closure was done to defeat the affected employees’ security of tenure,
thus:
The determination of whether SJCI acted in bad faith depends on the particular facts
as established by the evidence on record. Bad faith is, after all, an inference which
must be drawn from the peculiar circumstances of a case. The two decisive factors in
determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the
closure of the high school, and (2) the timing of, and the reasons for the subsequent
opening of a college and elementary department, and, ultimately, the reopening of the
high school department by SJCI after only one year from its closure.
Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997
CBA deadlock to the SOLE for assumption of jurisdiction under Article 263 of the Labor
Code. As a result, the strike ended and classes resumed. After the SOLE assumed
jurisdiction, it required the parties to submit their respective position papers. However,
instead of filing its position paper, SJCI closed its high school, allegedly because of the
"irreconcilable differences between the school management and the Academy’s Union
particularly the safety of our students and the financial aspect of the ongoing CBA
negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the
SOLE contending that it had become moot because of the closure. Nevertheless, a
year after said closure, SJCI reopened its high school and did not rehire the previously
terminated employees.
Under these circumstances, it is not difficult to discern that the closure was done to
defeat the parties’ agreement to refer the labor dispute to the SOLE; to unilaterally end
the bargaining deadlock; to render nugatory any decision of the SOLE; and to
circumvent the Union’s right to collective bargaining and its members’ right to security
of tenure. By admitting that the closure was due to irreconcilable differences between
the Union and school management, specifically, the financial aspect of the ongoing
CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining deadlock
and eliminate the problem of dealing with the demands of the Union. This is precisely
what the Labor Code abhors and punishes as unfair labor practice since the net effect
is to defeat the Union’s right to collective bargaining. 27 (Emphasis not supplied)
As in St. John, bad faith was manifested by the timing of the closure of Digiserv and
the rehiring of some employees to Interactive Technology Solutions, Inc. (I-tech), a
corporate arm of Digitel. The assumption order directs employees to return to work,
and the employer to reinstate the employees. The existence of the assumption order
should have prompted Digitel to observe the status quo. Instead, Digitel proceeded to
close down Digiserv. The Secretary of Labor had to subsume the second notice of
strike in the assumption order. This order notwithstanding, Digitel proceeded to dismiss
the employees.
The timing of the creation of I-tech is dubious. It was incorporated on 18 January 2005
while the labor dispute within Digitel was pending. I-tech’s primary purpose was to
provide call center/customer contact service, the same service provided by Digiserv. It
conducts its business inside the Digitel office at 110 E. Rodriguez Jr. Avenue,
Bagumbayan, Quezon City. The former head of Digiserv, Ms. Teresa Taniega, is also
an officer of I-tech. Thus, when Digiserv was closed down, some of the employees
presumably non-union members were rehired by I-tech.
Thus, the closure of Digiserv pending the existence of an assumption order coupled
with the creation of a new corporation performing similar functions as Digiserv leaves
no iota of doubt that the target of the closure are the union member-employees. These
factual circumstances prove that Digitel terminated the services of the affected
employees to defeat their security of tenure. The termination of service was not a valid
retrenchment; it was an illegal dismissal of employees.
It needs to be mentioned too that the dismissal constitutes an unfair labor practice
under Article 248(c) of the Labor Code which refers to contracting 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. At the height of the
labor dispute, occasioned by Digitel’s reluctance to negotiate with the Union, I-tech was
formed to provide, as it did provide, the same services performed by Digiserv, the Union
members’ nominal employer.
Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to
backwages and reinstatement. Where reinstatement is no longer viable as an option,
as in this case where Digiserv no longer exists, separation pay equivalent to one (1)
month salary, or one-half (1/2) month pay for every year of service, whichever is higher,
should be awarded as an alternative.28 The payment of separation pay is in addition to
payment of backwages.29
Indeed, while we have found that the closure of Digiserv was undertaken in bad faith,
badges thereof evident in the timing of Digiserv’s closure, hand in hand, with I-tech’s
creation, the closure remains a foregone conclusion. There is no finding, and the Union In the recent case of Purefoods Corporation v. Nagkakaisang Samahang Manggagawa
makes no such assertion, that Digiserv and I-tech are one and the same corporation. ng Purefoods Rank-and-File,37 we awarded the aggregate amount of P 500,000.00 as
The timing of Digiserv’s closure and I-tech’s ensuing creation is doubted, not the moral and exemplary damages to the illegally dismissed union member-employees
legitimacy of I-tech as a business process outsourcing corporation providing both which exact number was undetermined.
inbound and outbound services to an expanded local and international clientele. 30 In the case at hand, with the Union’s manifestation that only 13 employees remain as
The finding of unfair labor practice hinges on Digitel’s contracting-out certain services respondents, as most had already accepted separation pay, and consistent with our
performed by union member-employees to interfere with, restrain or coerce them in the finding that Digitel committed an unfair labor practice in violation of the employees’
exercise of their right to self-organization. constitutional right to self-organization, we deem it proper to award each of the illegally
We have no basis to direct reinstatement of the affected employees to an ostensibly dismissed union member-employees the amount of P 10,000.00 and P 5,000.00 as
different corporation. The surrounding circumstance of the creation of I-tech point to moral and exemplary damages, respectively.
bad faith on the part of Digitel, as well as constitutive of unfair labor practice in targeting WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-
the dismissal of the union member-employees. However, this bad faith does not G.R. SP No. 91719 is AFFIRMED, while the Decision in CA-G.R. SP No. 94825
contradict, much less negate, the impossibility of the employees’ reinstatement declaring the dismissal of affected union member-employees as illegal is MODIFIED to
because Digiserv has been closed and no longer exists. include the payment of moral and exemplary damages in amount of P 10,000.00
Even if it is a possibility that I-tech, as though Digitel, can absorb the dismissed union and P 5,000.00, respectively, to each of the thirteen (13) illegally dismissed union-
member-employees as I-tech was incorporated during the time of the controversy with member employees.
the same primary purpose as Digiserv, we would be hard pressed to mandate the Petitioner Digital Telecommunications Philippines, Inc. is ORDERED to pay the
dismissed employees’ reinstatement given the lapse of more than seven (7) years. affected employees backwages and separation pay equivalent to one (1) month salary,
This length of time from the date the incident occurred to its Resolution31 coupled with or one-half (1/2) month pay for every year of service, whichever is higher.
the demonstrated litigiousness of the disputants: (1) with all sorts of allegations thrown Let this case be REMANDED to the Labor Arbiter for the computation of monetary
by either party against the other; (2) the two separate filings of a notice of strike by the claims due to the affected employees.
Union; (3) the Assumption Orders of the DOLE; (4) our own finding of unfair labor SO ORDERED.
practice by Digitel in targeting the union member-employees, abundantly show that the
relationship between Digitel and the union member-employees is strained. Indeed,
such discordance between the parties can very well be a necessary consequence of
the protracted and branched out litigation. We adhere to the oft-quoted doctrine that
separation pay may avail in lieu of reinstatement if reinstatement is no longer practical
or in the best interest of the parties.32
Under the doctrine of strained relations, the payment of separation pay is considered
an acceptable alternative to reinstatement when the latter option is no longer desirable
or viable. On one hand, such payment liberates the employee from what could be a
highly oppressive work environment. On the other hand, it releases the employer from
the grossly unpalatable obligation of maintaining in its employ a worker it could no
longer trust.33
Finally, an illegally dismissed employee should be awarded moral and exemplary
damages as their dismissal was tainted with unfair labor practice. 34 Depending on the
factual milieu, jurisprudence has awarded varying amounts as moral and exemplary
damages to illegally dismissed employees when the dismissal is attended by bad faith
or fraud; or constitutes an act oppressive to labor; or is done in a manner contrary to
good morals, good customs or public policy; or if the dismissal is effected in a wanton,
oppressive or malevolent manner.351âwphi1
In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association v.
National Labor Relations Commission, we intoned:
Unfair labor practices violate the constitutional rights of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the
government, it is the Court’s sworn duty to ensure that none trifles with labor rights. 36
We awarded moral damages in the amount of P 10,000.00 and likewise
awarded P 5,000.00 as exemplary damages for each dismissed employee.