Republic of the Philippines
SUPREME COURT
THIRD DIVISION
G.R. No. 155098 September 16, 2005
CAPITOL MEDICAL CENTER, INC. and DR. THELMA NAVARETTE-
CLEMENTE, Petitioners,
vs.
DR. CESAR E. MERIS, Respondent.
DECISION
CARPIO MORALES, J.:
Subject of the present appeal is the Court of Appeals Decision1 dated February
15, 2002 reversing the NLRC Resolution2 dated January 19, 1999 and Labor
Arbiter Decision3 dated April 28, 1998 which both held that the closure of the
Industrial Service Unit of the
Capitol Medical Center, Inc., resulting to the termination of the services of
herein respondent Dr. Cesar Meris as Chief thereof, was valid.
On January 16, 1974, petitioner Capitol Medical Center, Inc. (Capitol) hired
Dr. Cesar Meris (Dr. Meris),4 one of its stockholders,5 as in charge of its
Industrial Service Unit (ISU) at a monthly salary of ₱10,270.00.
Until the closure of the ISU on April 30, 1992,6 Dr. Meris performed dual
functions of providing medical services to Capitol’s more than 500 employees
and health workers as well as to employees and workers of companies having
retainer contracts with it.7
On March 31, 1992, Dr. Meris received from Capitol’s president and chairman
of the board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice advising
him of the management’s decision to close or abolish the ISU and the
consequent termination of his services as Chief thereof, effective April 30,
1992.8 The notice reads as follows:
March 31, 1992
Dr. Cesar E. Meris
Chief, Industrial Service Unit
Capitol Medical Center
Dear Dr. Meris:
Greetings!
Please be formally advised that the hospital management has decided to
abolish CMC’s Industrial Service Unit as of April 30, 1992 in view of the almost
extinct demand for direct medical services by the private and semi-government
corporations in providing health care for their employees. Such a decision was
arrived at, after considering the existing trend of industrial companies
allocating their health care requirements to Health Maintenance
Organizations (HMOs) or thru a tripartite arrangement with medical insurance
carriers and designated hospitals.
As a consequence thereof, all positions in the unit will be decommissioned at
the same time industrial services [are] deactivated. In that event, you shall be
entitled to return to your private practice as a consultant staff of the
institution and will become eligible to receive your retirement benefits as a
former hospital employee. Miss Jane Telan on the other hand will be
transferred back to Nursing Service for reassignment at the CSR.
We wish to thank you for your long and faithful service to the institution and
hope that our partnership in health care delivery to our people will continue
throughout the future. Best regards.
Very truly yours,
(SGD.) DR. THELMA NAVARETTE-CLEMENTE9 (Emphasis and underscoring
supplied)
Dr. Meris, doubting the reason behind the management’s decision to close the
ISU and believing that the ISU was not in fact abolished as it continued to
operate and offer services to the client companies with Dr. Clemente as its
head and the notice of closure was a mere ploy for his ouster in view of his
refusal to retire despite Dr. Clemente’s previous prodding for him to do so,10
sought his reinstatement but it was unheeded.
Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and
Dr. Clemente for illegal dismissal and reinstatement with claims for
backwages, moral and exemplary damages, plus attorney’s fees.11
Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the abolition
of the ISU was a valid and lawful exercise of management prerogatives and
there was convincing evidence to show that ISU was being operated at a
loss.12 The decretal text of the decision reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint.
Respondents are however ordered to pay complainant all sums due him under
the hospital retirement plan.
SO ORDERED.13 (Emphasis supplied)
On appeal by Dr. Meris, the National Labor Relations Commission (NLRC)
modified the Labor Arbiter’s decision. It held that in the exercise of Capitol’s
management prerogatives, it had the right to close the ISU even if it was not
suffering business losses in light of Article 283 of the Labor Code and
jurisprudence.14
And the NLRC set aside the Labor Arbiter’s directive for the payment of
retirement benefits to Dr. Meris because he did not retire. Instead, it ordered
the payment of separation pay as provided under Article 283 as he was
discharged due to closure of ISU, to be charged against the retirement fund.15
Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition for
review16 which, in the interest of substantial justice, was treated as one for
certiorari.17
Discrediting Capitol’s assertion that the ISU was operating at a loss as the
evidence showed a continuous trend of increase in its revenue for three years
immediately preceding Dr. Meris’s dismissal on April 30, 1992,18 and finding
that the ISU’s "Analysis of Income and Expenses" which was prepared long
after Dr. Meris’s dismissal, hence, not yet available, on or before April 1992,
was tainted with irregular entries, the appellate court held that Capitol’s
evidence failed to meet the standard of a sufficient and adequate proof of loss
necessary to justify the abolition of the ISU.19
The appellate court went on to hold that the ISU was not in fact abolished, its
operation and management having merely changed hands from Dr. Meris to
Dr. Clemente; and that there was a procedural lapse in terminating the
services of Dr. Meris, no written notice to the Department of Labor and
Employment (DOLE) of the ISU abolition having been made, thereby violating
the requirement embodied in Article 283.20
The appellate court, concluding that Capitol failed to strictly comply with both
procedural and substantive due process, a condition sine qua non for the
validity of a case of termination,21 held that Dr. Meris was illegally dismissed.
It accordingly reversed the NLRC Resolution and disposed as follows:
IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the NLRC are
hereby set aside, and another one entered –
1 – declaring illegal the dismissal of petitioner as Chief of the Industrial Service
Unit of respondent Medical Center;
2 – ordering respondents to pay petitioner
a) backwages from the date of his separation in April 1992 until this decision
has attained finality;
b) separation pay in lieu of reinstatement computed at the rate of one (1)
month salary for every year of service with a fraction of at least six (6) months
being considered as one year;
c) other benefits due him or their money equivalent;
d) moral damages in the sum of ₱50,000.00;
e) exemplary damages in the sum of ₱50,000.00; and
f) attorney’s fees of 10% of the total monetary award payable to petitioner.
SO ORDERED.22
Hence, the present petition for review assigning to the appellate court the
following errors:
I coincide with those of the Labor Arbiter, as in the present case, should be
. . . IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF
BOTH THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND THE
LABOR ARBITER.
II
. . . IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION, THAT THE
INDUSTRIAL UNIT (ISU) WAS NOT INCURRING LOSSES AND THAT IT WAS
NOT IN FACT ABOLISHED.
III
. . . IN NOT UPHOLDING PETITIONERS’ MANAGEMENT PREROGATIVE TO
ABOLISH THE INDUSTRIAL SERVICE UNIT (ISU).
IV
. . . IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES AS
WELL AS DAMAGES AND ATTORNEY’S FEES.23
Capitol questions the appellate court’s deciding of the petition of Dr. Meris on
the merits, instead of merely determining whether the administrative bodies
acted with grave abuse of discretion amounting to lack or excess of
jurisdiction.
The province of a special civil action for certiorari under Rule 65, no doubt the
appropriate mode of review by the Court of Appeals of the NLRC decision,24
is limited only to correct errors of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction.25 In light of the merits of Dr.
Meris’ claim, however, the relaxation by the appellate court of procedural
technicality to give way to a substantive determination of a case, as this Court
has held in several cases,26 to subserve the interest of justice, is in order.
Capitol argues that the factual findings of the NLRC, particularly when they
accorded respect, even finality.27
For factual findings of the NLRC which affirm those of the Labor Arbiter to be
accorded respect, if not finality, however, the same must be sufficiently
supported by evidence on record.28 Where there is a showing that such
findings are devoid of support, or that the judgment is based on a
misapprehension of facts,29 the lower tribunals’ factual findings will not be
upheld.
As will be reflected in the following discussions, this Court finds that the Labor
Arbiter and the NLRC overlooked some material facts decisive of the instant
controversy.
Capitol further argues that the appellate court’s conclusion that the ISU was
not incurring losses is arbitrary as it was based solely on the supposed
increase in revenues of the unit from 1989-1991, without taking into account
the "Analysis of Income and Expenses" of ISU from July 1, 1990 to July 1,
1991 which shows that the unit operated at a loss;30 and that the demand
for the services of ISU became almost extinct in view of the affiliation of
industrial establishments with HMOs such as Fortunecare, Maxicare, Health
Maintenance, Inc. and Philamcare and of tripartite arrangements with medical
insurance carriers and designated hospitals,31 and the trend resulted in
losses in the operation of the ISU.
Besides, Capitol stresses, the health care needs of the hospital employees had
been taken over by other units without added expense to it;32 the appellate
court’s decision is at best an undue interference with, and curtailment of, the
exercise by an employer of its management prerogatives;33 at the time of the
closure of the ISU, Dr. Meris was already eligible for retirement under the
Capitol’s retirement plan; and the appellate court adverted to the alleged lack
of notice to the DOLE regarding Dr. Meris’s dismissal but the latter never
raised such issue in his appeal to the NLRC or even in his petition for review
before the Court of Appeals, hence, the latter did not have authority to pass
on the matter.34
Work is a necessity that has economic significance deserving legal protection.
The social justice and protection to labor provisions in the Constitution dictate
so.
Employers are also accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This mass
of privileges comprises the so-called management prerogatives. Although they
may be broad and unlimited in scope, the State has the right to determine
whether an employer’s privilege is exercised in a manner that complies with
the legal requirements and does not offend the protected rights of labor. One
of the rights accorded an employer is the right to close an establishment or
undertaking.
The right to close the operation of an establishment or undertaking is explicitly
recognized under the Labor Code as one of the authorized causes in
terminating employment of workers, the only limitation being that the closure
must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.
ART. 283. Closure of establishment and reduction of personnel. – The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case retrenchment to
prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole
year. (Emphasis and underscoring supplied)
The phrase "closures or cessation of operations of establishment or
undertaking" includes a partial or total closure or cessation.35
x x x Ordinarily, the closing of a warehouse facility and the termination of the
services of employees there assigned is a matter that is left to the
determination of the employer in the good faith exercise of its management
prerogatives. The applicable law in such a case is Article 283 of the Labor Code
which permits ‘closure or cessation of operation of an establishment or
undertaking not due to serious business losses or financial reverses,’ which,
in our reading includes both the complete cessation of operations and the
cessation of only part of a company’s business. (Emphasis supplied)
And the phrase "closures or cessation x x x not due to serious business losses
or financial reverses" recognizes the right of the employer to close or cease his
business operations or undertaking even if he is not suffering from serious
business losses or financial reverses, as long as he pays his employees their
termination pay in the amount corresponding to their length of service.36
It would indeed be stretching the intent and spirit of the law if a court were to
unjustly interfere in management’s prerogative to close or cease its business
operations just because said business operation or undertaking is not
suffering from any loss.37 As long as the company’s exercise of the same is in
good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid agreement,
such exercise will be upheld.38
Clearly then, the right to close an establishment or undertaking may be
justified on grounds other than business losses but it cannot be an unbridled
prerogative to suit the whims of the employer.
The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character.39 And the burden of
proving such falls upon the employer.40
In the case at bar, Capitol failed to sufficiently prove its good faith in closing
the ISU.
From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition
of the ISU was due to the "almost extinct demand for
direct medical service by the private and semi-government corporations in
providing health care for their employees;" and that such extinct demand was
brought about by "the existing trend of industrial companies allocating their
health care requirements to Health Maintenance Organizations (HMOs) or
thru a tripartite arrangement with medical insurance carriers and designated
hospitals."
The records of the case, however, fail to impress that there was indeed extinct
demand for the medical services rendered by the ISU. The ISU’s Annual Report
for the fiscal years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente, and
uncontroverted by Capitol, shows the following:
Fiscal Year No. of Industrial No of No. of Capitol
Patients Companies Employees
1986-1987 466 11 1445
1987-1988 580 17 1707
1988-1989 676 14 1888
1989-1990 571 16 2731
1990-1991 759 18 232041
If there was extinct demand for the ISU medical services as what Capitol and
Dr. Clemente purport to convey, why the number of client companies of the
ISU increased from 11 to 18 from 1986 to 1991, as well as the number of
patients from both industrial corporations and Capitol employees, they did
not explain.
The "Analysis of Income and Expenses" adduced by Capitol showing that the
ISU incurred losses from July 1990 to February 1992, to wit:
July 1, 1990 to July 1, 1991 to
June 30, 1991 February 29, 1992
INCOME ₱16, 772.00 ₱35, 236.00
TOTAL EXPENSES ₱225, 583.70 ₱169,244.34
NET LOSS ₱(208,811.70) ₱(134,008.34),42
was prepared by its internal auditor Vicenta Fernandez,43 a relative of Dr.
Clemente, and not by an independent external auditor, hence, not beyond
doubt. It is the financial statements audited by independent external auditors
which constitute the normal method of proof of the profit and loss performance
of a company.44
At all events, the claimed losses are contradicted by the accounting records of
Capitol itself which show that ISU had increasing revenue from 1989 to 1991.
Year In-Patient Out-Patient Total Income
1989 ₱230,316.38 ₱ 79,477.50 ₱309,793.88
1990 ₱278,438.10 ₱124,256.65 ₱402,694.75
1991 ₱305,126.35 ₱152,920.15 ₱458,046.5045
The foregoing disquisition notwithstanding, as reflected above, the existence
of business losses is not required to justify the closure or cessation of
establishment or undertaking as a ground to terminate employment of
employees. Even if the ISU were not incurring losses, its abolition or closure
could be justified on other grounds like that proffered by Capitol – extinct
demand. Capitol failed, however, to present sufficient and convincing evidence
to support such claim of extinct demand. In fact, the employees of Capitol
submitted a petition46 dated April 21, 1992 addressed to Dr. Clemente
opposing the abolition of the ISU.
The closure of ISU then surfaces to be contrary to the provisions of the Labor
Code on termination of employment.
The termination of the services of Dr. Meris not having been premised on a
just or authorized cause, he is entitled to either reinstatement or separation
pay if reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-
employee relationship or when the work or position formerly held by the
dismissed employee no longer exists, as in the instant case.47 Dr. Meris is
thus entitled to payment of separation pay at the rate of one (1) month salary
for every year of his employment, with a fraction of at least six (6) months
being considered as one(1) year,48 and full backwages from the time of his
dismissal from April 30, 1992 until the expiration of his term as Chief of ISU
or his mandatory retirement, whichever comes first.
The award by the appellate court of moral damages,49 however, cannot be
sustained, solely upon the premise that the employer fired his employee
without just cause or due process. Additional facts must be pleaded and
proven to warrant the grant of moral damages under the Civil Code, such as
that the act of dismissal was attended by bad faith or fraud, or was oppressive
to labor, or done in a manner contrary to morals, good customs, or public
policy; and of course, that social humiliation, wounded feelings, grave anxiety,
etc., resulted therefrom.50 Such circumstances, however, do not obtain in the
instant case. More specifically on bad faith, lack of it is mirrored in Dr.
Clemente’s offer to Dr. Meris to be a consultant of Capitol, despite the abolition
of the ISU.
There being no moral damages, the award of exemplary damages does not
lie.51
The award for attorney’s fees, however, remains.52
WHEREFORE, the decision of the Court of Appeals dated February 15, 2002
is hereby AFFIRMED with MODIFICATION. As modified, judgment is hereby
rendered ordering Capitol Medical Center, Inc. to pay Dr. Cesar Meris
separation pay at the rate of One (1) Month salary for every year of his
employment, with a fraction of at least Six (6) Months being considered as One
(1) Year, full backwages from the time of his dismissal from April 30, 1992
until the expiration of his term as Chief of the ISU or his mandatory
retirement, whichever comes first; other benefits due him or their money
equivalent; and attorney’s fees.
Costs against petitioners.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
G.R. No. 194969
CONVOY MARKETING CORPORATION and/or ARNOLD LAAB, Petitioners
vs.
OLIVER B. ALBIA,* Respondent
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court,
seeking to nullify and set aside the Court of Appeals (CA) Decision1 dated May
31, 2010 and the Resolution2 dated December 28, 20 10 in CA-G.R. SP No.
98958.
The factual antecedents, as found by the CA, are as follows:
Based on his sinumpaang salaysay, it appears that the petitioner Oliver Alvia
started working as a common laborer for the respondent Convoy Marketing, a
distributor of bottled wines, liquor and bottled water, in 2001. He was
assigned the job of a pahinante, or one who loads and unloads cargoes
transported to customers by the delivery vehicles of the company. A year later,
he was promoted to delivery van driver.
As a driver, he was paid a fixed salary of P290 per trip regardless of route. The
delivery van he drove belonged to the company which shouldered its
maintenance and gasoline costs. He was on the road from Mondays to
Saturdays, observing working hours that often exceeded the usual 8 hours,
and despite his perseverance, he was not given holiday pay, vacation leave
with pay, service incentive leave pay and 13th month pay.
On July 22, 2004, he did something that cost him his job. He smelled of liquor
upon his arrival from the delivery route. He gave the explanation that after
completing the delivery, he and his two pahinantes decided to rest a little in a
store outside the company compound. They drank several bottles of beer
before going back to the compound to start loading for the next morning's
delivery.
It was, however, reported to the logistics manager, the respondent Arnold
Laab, that he was under the influence of liquor. As a result, he received his
marching orders. In a memo on July 23, the next day, he was told - we regret
to inform that management decided to terminate your delivery agency
agreement with Convoy Marketing Corporation effective July 23, 2004. The
petition was addressed in the communication signed by Laab as a per trip
driver with notice to the HRAD manager, the present- day title for the company
official who supervises the company's rank-and- file, the personnel manager.
The petitioner did not delay in protesting his dismissal, filing on July 26, 2004,
only days later, a complaint for illegal dismissal and non- payment of wage
benefits. The respondents Convoy Marketing and Laab joined issue by
contending in substance that the petitioner was not an employee of the
company but an independent contractor, and presenting papers to document
it. x x x
The respondents came forward with a series of delivery agency agreements
signed by the petitioner to correspond to particular periods of service. There
are, on record, four of these agreements relating to the periods November 22,
2002 to April 22, 2003, May 29, 2003 to October 29, 2003, November 11, 2003
to April 10, 2004, and April 13, 2004 to September 13, 2004. In all these
documents, it was made to appear that the respondent company would
furnish the delivery vehicle and take care of its maintenance and upkeep and
pay the petitioner a fixed per trip fee to drive the vehicle according to a
schedule prepared by it. The petitioner, in turn, would post a cash bond of
P3,000 to answer for damages to the vehicle and be responsible for such
payments to the government as SSS premiums and Pag-IBIG contributions.
The agreement ends with this stipulation - under no circumstance shall the
driver be deemed an employee of the principal, and the driver shall not
represent himself as an employee of the principal to any person, it being
clearly understood that the driver is an independent service contractor for a
fixed period.
Indeed, at the end of every service period stated in the contracts, the petitioner
was studiedly made to sign a quitclaim and release in which he acknowledged
receiving a certain sum, at most P5, 172.28, in satisfaction of all claims that
he may have against the company, and confirmed the termination of the
agreement due to the expiration of the stated period. x x x
The petitioner signed his last two quitclaims and releases in April and August
2004. The April 2004 quitclaim saw him receiving P2,716.42 for releasing the
respondents forever from liability in connection with the contract ending April
10, 2004. When the petitioner signed the August 2004 quitclaim, on the other
hand, his case against the respondents was already on-going. During the
conference held that month before the Labor Arbiter, the petitioner was
recorded as having admitted that his claim for non-payment of salaries and
refund of the cash bond deposit were already settled. The minutes of the
conference read - Non-payment of salaries and cash bond deposit as per
manifestation of the complainant was already settled. The minutes also stated
- By agreement of the parties, case reset on August 24, 2004 at 10 AM.
In the same month, the petitioner executed the quitclaim and release in
connection with the termination of his agreement on July 23, 2004 accepting
payment of the sum of Pl,805.72. In spite of this development, the case went
on to its conclusion.3
On January 10, 2006, the Labor Arbiter rendered a Decision4 dismissing
Albia's complaint for lack of merit, thus:
Be it pointed out and emphasized that the record shows that herein
complainant signed a Quitclaim and Release in favor of the respondent
corporation on 19 April 2004. That during one of the settings herein (on 17
August 2004), complainant manifested in open proceedings that his claims for
unpaid salaries and cash bond had already been settled.
Indeed, although waivers[,] releases and quitclaims are generally looked down
with disfavor as the workers concerned either are unaware of the
consequences thereof or have signed the same under factors tending to vitiate
consent, not all waivers and quitclaims are to be considered invalid. It is to be
pointed out that absent any pellucid showing of the above- mentioned factors
or variables surrounding the execution of said documents, the same must be
deemed valid and binding between and among the parties.
In the case at bench, there is absolutely nothing on record tending to show
the existence of such factors or variables which may have the tendency of
invalidating or affecting the validity and binding effect of the quitclaim and
release executed by herein complainant in respondents' favor.
All told, complainant's cause for illegal dismissal must necessarily fail.5
Aggrieved, Albia appealed to the National Labor Relations Commission (NLRC).
On November 28, 2006, the NLRC dismissed the appeal and affirmed the
Labor Arbiter's Decision, thus:
An examination of the minutes of the August 17, 2004 proceedings indeed
shows that the admission by complainant as to the settlement of his claims
merely referred to non-payment of salaries and refund of cash bond. However,
the Quitclaim and Release executed by the complainant on August 4, 2004
clearly contained an admission of his engagement as an "independent service
contractor" and the termination of the said contract on July 23, 2004. Such
admission of the nature of complainant's work accords credence to the claim
of the respondents that they acted upon complainant's representation as an
independent contractor as he conducted his own business on his own account
and free from their supervision and control. This is further supported by a
contract otherwise being referred to as a "Delivery Agency Agreements."
It is, therefore, incorrect for the complainant to state that the quitclaim only
covered his money claims. Said quitclaim specifically made reference to the
termination of the juridical relationship between the parties on July 23, 2004
which was the same date when complainant alleged that he was dismissed
from employment. And, there being no contest raised by the complainant with
respect to the genuineness and due execution of the said quitclaim, the
presumption to that effect accorded to a public document, it being notarized,
mu[s]t be acknowledged.6
Albia filed a motion for reconsideration which the NLRC denied in a
Resolution7 dated March 30, 2007.
Unfazed, Albia filed a petition for certiorari before the Court of Appeals.

On May 31, 2010, the CA reversed and set aside the NLRC's Resolutions, and
ruled as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the assailed NLRC resolutions
of November 28, 2006 and March 30, 2007 are set aside. The private
respondent Convoy Marketing Corporation is ordered to reinstate the
petitioner to his former position and pay him full backwages from the date of
his termination on July 23, 2004 until (sic) payment,8plus 10% of the
monetary award of attorney's fees. This case is remanded to the NLRC for
computation of the award.
SO ORDERED.9
Petitioners filed a motion for reconsideration, but the CA denied it in a
Resolution dated December 28, 2010.
Hence, this petition for review on certiorari wherein petitioners raised two
issues:
I.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION AND
RESOLUTION OF BOTH THE HONORABLE LABOR ARBITER AND THE
HONORABLE COMMISSION.
II.
WITH ALL DUE RESPECT, THE DECISION DATED 31 MAY 2010, AND THE
RESOLUTION DATED 28 DECEMBER 2010, OF THE HONORABLE COURT
OF APPEALS, ARE CONTRARY TO LAW AND WELL-SETTLED
JURISPRUDENCE.10
Petitioners insist that Albia was not a regular employee of Convoy, but merely
a contractual one whose services ended upon the expiration of the period
agreed upon. They aver that the activities which he was called upon to
undertake are not necessary and/or desirable in the company business. They
point out that Albia was only an on-call driver who did not have to report for
work every day, but only when excess deliveries could no longer be made by
Convoy's fifteen (15) regular drivers; that he was not even included in the
company payroll because he was paid on a per trip basis; and that Convoy did
not have control over him and his helpers.
To substantiate their claim that Albia was a mere contractual employee of
Convoy, petitioners presented the affidavit of Ofelia B. Miranda, Convoy's
Human Resources Administration Manager, and the Delivery Agency
Agreements (For Driver)11 executed between him and Convoy. Stating that
such agreements are valid fixed-period employment contracts, they assert that
Albia knowingly and voluntarily entered into them, without any force, duress
or improper pressure or moral dominance brought upon him.
Petitioners also contend that Albia was dismissed for senous misconduct after
admittedly having been caught under the influence of alcohol while in the
discharge of his official functions.
Petitioners further argue that the quitclaims and releases executed by Albia
on various occasions are valid and binding, and the fact that he executed one
of such quitclaims after he had filed the illegal dismissal complaint on July
26, 2004 only shows that he was not forced to sign it nor was his consent
thereto vitiated. Moreover, not having assailed the genuineness and
authenticity of such quitclaim, Albia's bare allegation that he was constrained
to sign it because he was in dire need of money and employment, will not
suffice to invalidate the same.
Petitioners fault the CA for not giving weight to the fact that the quitclaim was
voluntarily executed by Albia after he filed an illegal dismissal complaint. They
argue that the issue of whether or not he is an employee of Convoy should
have been laid to rest, since the validity of the quitclaim where he had
admitted to be a mere independent contractor, was upheld by the Labor
Arbiter and the NLRC. Noting that Albia even manifested in the proceedings
before the Labor Arbiter that his claim for unpaid salaries and cash bond had
already been settled, they claim that such act shows that he signed the
quitclaim voluntarily and with the intention of fully discharging Convoy from
any and all of his claims. In support of their contentions, they invoke the
principle that factual findings of the NLRC affirming those of the Labor Arbiter
- both bodies being deemed to have acquired expertise in matters within their
jurisdictions - when supported by evidence on record, are accorded respect if
not finality and are considered binding on the CA.
The core issues are: (1) whether Albia is a regular or a fixed-term employee of
Convoy; (2) whether he was dismissed for a just cause; and (3) whether the
quitclaims and releases he executed are valid.
The petition lacks merit.
It is well settled that the Court is not a trier of facts, and the scope of its
authority under Rule 45 of the Rules of Court is confined only to errors of law
and doesextendnot to questions of fact, which are for labor tribunals to
resolve.12 However, the rule is not cast in stone and admits of recognized
exceptions, such as when the factual findings and conclusion of the labor
tribunals are contradictory or inconsistent with those of the CA.13 When there
is such a variance in the factual findings, as in this case, it is incumbent upon
the Court to re-examine the facts.14
On the first issue, it bears emphasis that the existence of an employer-
employee relationship cannot be negated by expressly repudiating it in a
contract and providing therein that the employee is an independent contractor
when the facts clearly show otherwise.15 This is because the employment
status of a person is defined and prescribed by law and not by what the parties
say it should be.16 Article 280 of the Labor Code, as amended, pertinently
provides:
Art. 280. Regular and casual employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertakingor
the completion termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.17
Contrary to petitioners' claim, the fact that Convoy has fifteen (15) regular
drivers only underscores that indeed, having been hired as a driver, Albia was
engaged to perform an activity which is necessary or desirable in the usual
company business of marketing and distribution of bottled wines, liquor and
bottled water. No less than Convoy's daily trip summary breakdowns18
contradict petitioners' allegation that Albia is only an on-call driver who does
not have for to report work daily.
That Albia has become a regular employee is evident from the Delivery Agency
Agreements (For Driver)19 - executed for the periods of November 22, 2002 to
April 22, 2003, May 29, 2003 to October 29, 2003, November 11, 2003 to April
10, 2004, and April 13, 2004 to September 13, 2004 - which indicate that he
had rendered at least one year of broken service with respect to the same
activity in which he was employed from the time he was hired as a driver on
November 22, 2002 until he was terminated on July 23, 2004.
The Court cannot likewise sustain petitioners' claim that Albia is an
independent contractor. The test of independent contractorship is whether
one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.20 The criteria m
determining the existence of an independent and permissible contractor
relationship are as follows:
x x x [W]hether or not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration of
the relationship; the right to assign the performance of a specified piece of
work; the control and supervision of the work to another; the employer's power
with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises, tools, appliances,
materials, and labor; and the mode, manner and terms of payment.21
Applying the foregoing criteria, Albia cannot be considered as in independent
contractor. There is no dispute that it was Convoy who engaged the services
of Albia as a driver without the intervention of a third party, paid his wages
on a per trip basis, and abruptly terminated his services the next day after
admitting to have consumed three bottles of beer after finishing his deliveries
on July 22, 2004. There is, likewise, no question that Convoy controls or has
reserved its right to control Albia's conduct, not only as to the result of his
work but also as to the means and methods by which such result is to be
accomplished.22 This is evident from the following express provisions of the
Delivery Agency Agreements (For Driver)23 executed between Convoy and
Albia:
1.The truck/s being driven by Albia belongs to Convoy;
2.The gasoline and fuel expenses, maintenance, repair and spare parts for the
upkeep of the delivery truck, provided they are not abnormal and patently
disproportionate to his gross sales for the month, are for the account of
Convoy; but if the expenses and repair on the vehicle are caused by his
carelessness or that of his helper, then he must assume full responsibility
therefor;
3.The truck assigned to him shall be used solely and exclusively to carry the
products of Convoy, and that he cannot directly or indirectly handle/deliver
products other than those which it is handling; and
4.Any violation of the said agreement, and any act of Albia against Convoy, its
officers, employees and properties which shall result to harm or damage,
directly or indirectly, shall be constituted as a violation thereof and shall give
the company the right to unilaterally terminate him.
Further, as aptly ruled by the CA:
The petitioner [Albia] is not an independent contractor of the respondent
[Convoy] but only a regular rank-and-file employee. He has been hired for a
fixed wage, and the means and methods of his work are absolutely controlled
by the respondent which exercises full power to discipline and terminate him.
He has none of the qualifications of an independent contractor. He is only a
paid hand. He has no independent resources to conduct the business of
contracting, and, in fact, works for no one else but the respondent. The vehicle
he operates belongs and is maintained by the respondent, and his pahinantes
are the respondents' admitted employees.24
Neither could be Albia deemed a fixed-term contractual employee, as the
Delivery Agency Agreements executed between him and Convoy fall short of
the requisites for such fixed-term contracts to be valid.
Considered to be legitimate under the Labor Code,25 fixed-term employment
contracts terminate by their own terms at the end of a definite period.26 The
fact that the service rendered by the employees is usually necessary and
desirable in the business operations of the employer will not impair the validity
of such contracts.27 For, the decisive determinant in the term employment is
not the activities that the employee is called to perform, but the day certain
agreed upon by the parties for the commencement and termination of their
employment relationship.28
Aware of the possible abuse of fixed-term employment contracts, the Court
stressed in Brent School, Inc. v. Zamora that where from the circumstances it
is apparent that the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down as contrary to
public policy or morals.29 The Court thus laid down indications or criteria
under which the term "employment" cannot be said to be in circumvention of
the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed upon
by the parties without any force, duress, or improper pressure being brought
to bear upon the employee and absent any other circumstances vitiating his
consent; or
2) It satisfactorily appears that the employer and the employee dealt with

each other on more or less equal terms with no moral dominance exercised by
the former or the latter.30
In GMA Network, Inc. v. Pabriga,31 the Court stated that "these indications,
which must be read
together, make the Brent doctrine applicable only in a few special cases
whereinand the employer employee are on more or less in equal footing in
entering into the contract. The reason for this is evident: when a prospective
employee, on account of special skills or market forces, is in a position to make
demands upon the prospective employer, such prospective employee needs
less protection than the ordinary worker. Lesser limitations on the paiiies'
freedom of contract are thus required for the protection of the employee."32
Neither of the said two indications was proven in this case. Petitioners failed
to show that Convoy and Albia dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the
latter who, as a plain wage earner with low educational attainment, having
only reached grade 4 in the elementary level,33 cannot be presumed to be fully
aware of the effects of the pro forma and English-written Delivery Agency
Agreements (For Driver).34
On the second issue, the Court agrees with the CA that Albia was dismissed
without a just cause.
While an employee's right to security of tenure does not give him such a vested
right to his position, it bears stressing that employment is not merely a
contractual relationship. In the life of most workers, it assumes the nature of
a property right which may spell the difference of whether or not a family will
have food on their table, roof over their heads and education for their
children.35 In termination cases, therefore, the burden of proof rests upon the
employer to show that the dismissal is for a just and valid cause, and failure
to do so would necessarily mean that the dismissal was illegal.36 For an
employee's dismissal to be valid, it must comply with both procedural and
substantive due process, viz.:37
For a worker's dismissal to be considered valid, it must comply with both
procedural and substantive due process. The legality of the manner of
dismissal constitutes procedural due process, while the legality of the act of
dismissal constitutes substantive due process.
Procedural due process in dismissal cases consists of the twin requirements
of notice and hearing.1âwphi1 The employer must furnish the employee with
two written notices before the termination of employment can be effected: (1)
the first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the second notice informs the employee
of the employer's decision to dismiss him. Before the issuance of the second
notice, the requirement of a hearing must be complied with by giving the
worker an opportunity to be heard. It is not necessary that an actual hearing
be conducted.
Substantive due process, on the other hand, requires that dismissal by the
employer be made under a just or authorized cause under Articles 282 to 284
of the Labor Code.38
Serious misconduct is a valid ground for termination of the services of an
employee as provided for under Article 282 (a) of the Labor Code, as amended,
to wit:
ART. 282. Termination by employer. - An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work; x x x
Misconduct is defined as the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment.39 In order for a
misconduct to justify dismissal, these requisites must be present:
(1) it must be serious; (2) it must relate to the performance of the employee's
duties; and (3) it must show that the employee has become unfit to continue
working for the employer.40 Petitioners failed to establish these requisites.

It must be noted that Albia's termination came as a result of a lone incident
on July 22, 2004 when he admitted that after finishing their deliveries, he and
his helpers decided to drink bottles of beer at a store outside the company
compound before returning to work to finish loading the deliveries for the next
day. While an employer is given a wide latitude of discretion in managing its
own affairs, in the promulgation of policies, rules and regulations on work-
related activities of its employees, and in the imposition of disciplinary
measures on them, the exercise of disciplining and imposing appropriate
penalties on erring employees must be practiced in good faith and for the
advancement of the employer's interest and not for the purpose of defeating
or circumventing the rights of employees under special laws or under valid
agreements.41 While it is true that under Convoy's code on employee
discipline, the penalty for "performing work while under the influence of
liquor"42 is "suspension to dismissal depending upon the gravity of the
offense,"43 nothing in the records would support the imposition of the
supreme penalty of dismissal against Albia. Having finished his driving duty
when he was reported at about 6:20 p.m.44 of July 22, 2004 to have admitted
drinking beer, Albia cannot be faulted with gross misconduct on account of
"the danger that he may cause to himself, to his passengers and to the goods
he is transporting."45 Thus, the Court finds no compelling reason to disturb
the CA ruling:
It is also clear that there was no valid grounds for the termination of petitioner.
His misconduct was not gross. He was not guilty of any seriously offensive
conduct, nor was there any untoward incident that occurred. The penalty of
dismissal was certainly not commensurate to the infraction committed. It has
not been shown that he has by his conduct become unfit to continue working
for the respondents.46
Aside from its failure to accord Albia his right to substantive due process,
petitioners were also unable to show that his right to procedural due process
was observed. In Realda v. New Age Graphics, Inc.,47 the Court explained the
manner by which the procedural due requirements of due process can be
satisfied:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation
within a reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This should
be construed as a period of at least five (5) calendar days from receipt of the
notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity
to: (1) explain and clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to to
come an amicable settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination indicating
that: (1) all circumstances involving the charge against the employees have
been considered; and (2) grounds have been established to justify the
severance of their employment.
Convoy terminated Albia without the requisite first notice apprising him of the
particular acts or omissions for which his dismissal is sought, as well as the
requisite hearing or conference. Convoy thus failed to afford Albia with a
reasonable opportunity and to be heard defend himself he when was issued a
termination letter on July 23, 2004, the following day after he admitted having
consumed bottles of beer after finishing his driving duty before the security
department and the logistics manager, Laab.
On the third issue, the Court finds that the quitclaims and releases Albia
executed are invalid.
Cases abound where the Court gave effect to quitclaims executed by the
employees when the employer is able to prove the following requisites, to wit:
(1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud
or deceit on the part of any of the parties; (3) the consideration of the quitclaim
is credible and reasonable; and (4) the contract is not contrary to law, public
order, public policy, morals or good customs, or prejudicial to a third person
with a right recognized by law.48
In this case, however, petitioners failed to prove that the P 1,805.72
consideration for the Quitclaim and Release49 dated August 4, 2004 is
credible and reasonable vis-a-vis what Albia should receive in full as a regular
employee who was illegally dismissed. The same holds true with respect to the
Quitclaim and Release50 dated November 21, 2003 and April 19, 2004 with
considerations of PS,712.28 and P 2,716.42, respectively. That all the said
waivers and quitclaims are agreements between two (2) intelligent parties who
are, more or less, in the same footing cannot also be sustained because of
Albia' s low educational attainment, having finished only grade 4 in the
elementary level,51 as well as his status as a plain wage earner.
Moreover, all the quitclaims and releases executed by Albia upon the
termination of the five-month Delivery Agency Agreements (For Driver)52 are
contrary to law and public policy, as they preclude him from becoming a
regular employee and acquiring tenurial security. As correctly observed by the
CA:
Indeed, at the end of every service period stated in the contracts, the petitioner
[Albia] was studiedly made to sign a quitclaim and release in which he
acknowledged receiving a certain sum, at most PS,712.28, in satisfaction of
all claims that he may have against the company, and confirmed the
termination of the agreement due to the expiration of the stated period. On
overview, the quitclaim was nothing but a formality, because as soon as one
delivery agency agreement terminates, another is signed to replace it and
reflect the continuity of the petitioner's service.53
It may not be amiss to state that a deed of release or quitclaim, like those
executed between Convoy and Albia, does not bar an employee from
demanding benefits to which he is legally entitled. Employees who received
their separation pay are, in fact, not barred from contesting the legality of their
dismissal, and the acceptance of such benefits would not amount to estoppel.
As held in Sari-Sari Group of Companies v. Piglas Kamao, et al. :54
Acceptance of those benefits would not amount to estoppel. The reason is
plain.1âwphi1 Employer and employee, obviously, do not stand on the same
footing. The employer drove the employee to the wall. The latter must have to
get hold of money. Because, out of job, he had to face the harsh necessities of
life. He thus found himself in no position to resist money proffered. His, then,
is a case of adherence, not of choice. x x x55
Having been illegally dismissed from work, Albia is entitled to reinstatement
without loss of seniority rights, and other privileges, as well as to full
backwages, inclusive of allowances, and to other benefits or their monetary
equivalentfrom computed the time his compensation was withheld from him
up to the time of his actual reinstatement.56 Backwages include the whole
amount of salaries plus all other benefits and bonuses and general increases
to which Albia would have been normally entitled had he not been illegally
dismissed,57 such as the legally-mandated Emergency Cost of Living
Allowance (ECOLA), 13th month pay, and service incentive leave pay, as well
as the unpaid holiday pay for such holidays that he worked based on Convoy's
daily trip summary breakdowns.58 Hence, the Court upholds the CA in
ordering Convoy to reinstate Albia and pay his full backwages from the date
of his termination on July 23, 2004 until his actual reinstatement.
Finally, the Court sustains the CA in holding Albia entitled to attorney's fees
in the amount of ten percent (10%) of the total monetary award, pursuant to
Article 11159 of the Labor Code. Where an employee was forced to litigate and
incur expenses to protect his rights and interest, the awardfeesof such is
legally and morally justifiable.60

WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated

May 31, 2010 and the Resolution dated December 28, 2010 in CA-G.R. SP No.
98958, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA**
Associate Justice
Constitutional Provisions:
ARTICLE II
Declaration of Principles and State Policies
Principles
SECTION 1. The Philippines is a democratic and republican State. Sovereignty
resides in the people and all government authority emanates from them.
SECTION 2. The Philippines renounces war as an instrument of national
policy, adopts the generally accepted principles of international law as part of
the law of the land and adheres to the policy of peace, equality, justice,
freedom, cooperation, and amity with all nations.
SECTION 3. Civilian authority is, at all times, supreme over the military. The
Armed Forces of the Philippines is the protector of the people and the State.
Its goal is to secure the sovereignty of the State and the integrity of the national
territory.
SECTION 4. The prime duty of the Government is to serve and protect the
people. The Government may call upon the people to defend the State and, in
the fulfillment thereof, all citizens may be required, under conditions provided
by law, to render personal military or civil service.
SECTION 5. The maintenance of peace and order, the protection of life, liberty,
and property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.
SECTION 6. The separation of Church and State shall be inviolable.
State Policies
SECTION 7. The State shall pursue an independent foreign policy. In its
relations with other states the paramount consideration shall be national
sovereignty, territorial integrity, national interest, and the right to self-
determination.
SECTION 8. The Philippines, consistent with the national interest, adopts and
pursues a policy of freedom from nuclear weapons in its territory.
SECTION 9. The State shall promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free the people from
poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.
SECTION 10. The State shall promote social justice in all phases of national
development.
SECTION 11. The State values the dignity of every human person and
guarantees full respect for human rights.
SECTION 12. The State recognizes the sanctity of family life and shall protect
and strengthen the family as a basic autonomous social institution. It shall
equally protect the life of the mother and the life of the unborn from
conception. The natural and primary right and duty of parents in the rearing
of the youth for civic efficiency and the development of moral character shall
receive the support of the Government.
SECTION 13. The State recognizes the vital role of the youth in nation-building
and shall promote and protect their physical, moral, spiritual, intellectual, and
social well-being. It shall inculcate in the youth patriotism and nationalism,
and encourage their involvement in public and civic affairs.
SECTION 14. The State recognizes the role of women in nation-building, and
shall ensure the fundamental equality before the law of women and men.
SECTION 15. The State shall protect and promote the right to health of the
people and instill health consciousness among them.
SECTION 16. The State shall protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm and harmony of
nature.
SECTION 17. The State shall give priority to education, science and
technology, arts, culture, and sports to foster patriotism and nationalism,
accelerate social progress, and promote total human liberation and
development.
SECTION 18. The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their welfare.
SECTION 19. The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos.
SECTION 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
SECTION 21. The State shall promote comprehensive rural development and
agrarian reform.
SECTION 22. The State recognizes and promotes the rights of indigenous
cultural communities within the framework of national unity and
development.
SECTION 23. The State shall encourage non-governmental, community-
based, or sectoral organizations that promote the welfare of the nation.
SECTION 24. The State recognizes the vital role of communication and
information in nation-building.
SECTION 25. The State shall ensure the autonomy of local governments.
SECTION 26. The State shall guarantee equal access to opportunities for
public service, and prohibit political dynasties as may be defined by law.
SECTION 27. The State shall maintain honesty and integrity in the public
service and take positive and effective measures against graft and corruption.
SECTION 28. Subject to reasonable conditions prescribed by law, the State
adopts and implements a policy of full public disclosure of all its transactions
involving public interest.
ARTICLE III
Bill of Rights
SECTION 1. No person shall be deprived of life, liberty, or property without
due process of law, nor shall any person be denied the equal protection of the
laws.
SECTION 2. The right of the people to be secure in their persons, houses,
papers, and effects against unreasonable searches and seizures of whatever
nature and for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing
the place to be searched and the persons or things to be seized.
SECTION 3. (1) The privacy of communication and correspondence shall be
inviolable except upon lawful order of the court, or when public safety or order
requires otherwise as prescribed by law.
(2) Any evidence obtained in violation of this or the preceding section shall be
inadmissible for any purpose in any proceeding.
SECTION 4. No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to assemble
and petition the government for redress of grievances.
SECTION 5. No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof. The free exercise and enjoyment of
religious profession and worship, without discrimination or preference, shall
forever be allowed. No religious test shall be required for the exercise of civil
or political rights.
SECTION 6. The liberty of abode and of changing the same within the limits
prescribed by law shall not be impaired except upon lawful order of the court.
Neither shall the right to travel be impaired except in the interest of national
security, public safety, or public health, as may be provided by law.
SECTION 7. The right of the people to information on matters of public concern
shall be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.
SECTION 8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.
SECTION 9. Private property shall not be taken for public use without just
compensation.
SECTION 10. No law impairing the obligation of contracts shall be passed.
SECTION 11. Free access to the courts and quasi-judicial bodies and adequate
legal assistance shall not be denied to any person by reason of poverty.
SECTION 12. (1) Any person under investigation for the commission of an
offense shall have the right to be informed of his right to remain silent and to
have competent and independent counsel preferably of his own choice. If the
person cannot afford the services of counsel, he must be provided with one.
These rights cannot be waived except in writing and in the presence of counsel.
(2) No torture, force, violence, threat, intimidation, or any other means which
vitiate the free will shall be used against him. Secret detention places, solitary,
incommunicado, or other similar forms of detention are prohibited.
(3) Any confession or admission obtained in violation of this or Section 17
hereof shall be inadmissible in evidence against him.
(4) The law shall provide for penal and civil sanctions for violations of this
section as well as compensation to and rehabilitation of victims of torture or
similar practices, and their families.
SECTION 13. All persons, except those charged with offenses punishable by
reclusion perpetua when evidence of guilt is strong, shall, before conviction,
be bailable by sufficient sureties, or be released on recognizance as may be
provided by law. The right to bail shall not be impaired even when the privilege
of the writ of habeas corpus is suspended. Excessive bail shall not be required.
SECTION 14. (1) No person shall be held to answer for a criminal offense
without due process of law.
(2) In all criminal prosecutions, the accused shall be presumed innocent until
the contrary is proved, and shall enjoy the right to be heard by himself and
counsel, to be informed of the nature and cause of the accusation against him,
to have a speedy, impartial, and public trial, to meet the witnesses face to face,
and to have compulsory process to secure the attendance of witnesses and the
production of evidence in his behalf. However, after arraignment, trial may
proceed notwithstanding the absence of the accused provided that he has been
duly notified and his failure to appear is unjustifiable.
SECTION 15. The privilege of the writ of habeas corpus shall not be suspended
except in cases of invasion or rebellion when the public safety requires it.
SECTION 16. All persons shall have the right to a speedy disposition of their
cases before all judicial, quasi-judicial, or administrative bodies.
SECTION 17. No person shall be compelled to be a witness against himself.
SECTION 18. (1) No person shall be detained solely by reason of his political
beliefs and aspirations.
(2) No involuntary servitude in any form shall exist except as a punishment
for a crime whereof the party shall have been duly convicted.
SECTION 19. (1) Excessive fines shall not be imposed, nor cruel, degrading or
inhuman punishment inflicted. Neither shall death penalty be imposed,
unless, for compelling reasons involving heinous crimes, the Congress
hereafter provides for it. Any death penalty already imposed shall be reduced
to reclusion perpetua.
(2) The employment of physical, psychological, or degrading punishment
against any prisoner or detainee or the use of substandard or inadequate
penal facilities under subhuman conditions shall be dealt with by law.
SECTION 20. No person shall be imprisoned for debt or non-payment of a poll
tax.
SECTION 21. No person shall be twice put in jeopardy of punishment for the
same offense. If an act is punished by a law and an ordinance, conviction or
acquittal under either shall constitute a bar to another prosecution for the
same act.
SECTION 22. No ex post facto law or bill of attainder shall be enacted.
ARTICLE XIII
Social Justice and Human Rights
SECTION 1. The Congress shall give highest priority to the enactment of
measures that protect and enhance the right of all the people to human
dignity, reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power for the
common good.
To this end, the State shall regulate the acquisition, ownership, use, and
disposition of property and its increments.
SECTION 2. The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-reliance.
Labor
SECTION 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 and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to
expansion and growth.
EMPLOER-EMPLOYEE RELATIONSHIP
"Employer" includes any person acting in the interest of an employer, directly
or indirectly. The term shall not include any labor organization or any of its
officers or agents except when acting as employer.
"Employee" includes any person in the employ of an employer. The term shall
not be limited to the employees of a particular employer, unless the Code so
explicitly states. It shall include any individual whose work has ceased as a
result of or in connection with any current labor dispute or because of any
unfair labor practice if he has not obtained any other substantially equivalent
and regular employment.
Who has jurisdiction to determine ER-EE relationship: Secretary of
Labor or the National Labor Relations Commission?
People’s Broadcasting (Bombo Radyo Phils) vs. Secretary of Labor, G.R.
No. 179652, 08 May 2009
Ruling/Doctrine:
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 NLRC’s 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 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 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.
Reasonable causal connection:
Indophil Textile Mills Vs. Adviento, G.R. No. 171212, 04 August 2014
Ruling/Doctrine:
Indeed, jurisprudence has evolved the rule that claims for damages under
Article 217(a)(4) of the Labor Code, to be cognizable by the LA, must have a
reasonable causal connection withany of the claims provided for in that article.
Only if there is such a connection with the other claims can a claim for
damages be considered as arising from employer-employee relations.
When, as here, the cause of action is based on a quasi-delictor tort, which has
no reasonable causal connection with any of the claims provided for in Article
217, jurisdiction over the action is with the regular courts.
Extent of liability of corporate officers: General rule and exception
The Coffee Bean and Tea Leaf Philippines, Inc. vs. Rolly P. Arenas, G.R.
No. 208908, 11 March 2015.
Ruling/Doctrine:
As a final remark, we note that petitioner Walden Chu (Chu) should not be To reiterate, not all conflicts between the stockholders and the corporation are
held jointly and severally liable with CBTL for Arenas’ adjudged monetary classified as intra-corporate. There are other factors to consider in determining
awards.1âwphi1 The LA and the NLRC ruled for their solidary liability but the whether the dispute involves corporate matters as to consider them as intra-
CA failed to dispose this issue in its decision. corporate controversies.

A corporation is a juridical entity with a legal personality separate and distinct

from those acting for and in its behalf and, in general, from the people
comprising it. Thus, as a general rule, an officer may not be held liable for
the corporation's labor obligations unless he acted with evident malice and/or
bad faith in dismissing an employee.

Corporate officer or employee?

Renato Real vs. Sangu Philippines, Inc. G.R. No.168757, 19 January 2011

Ruling/Doctrine:

‘To determine whether a case involves an intra-corporate controversy, and is

to be heard and decided by the branches of the RTC specifically designated by
the Court to try and decide such cases, two elements must concur: (a) the
status or relationship of the parties, and (2) the nature of the question that is
the subject of their controversy.

The first element requires that the controversy must arise out of intra-
corporate or partnership relations between any or all of the parties and the
corporation, partnership, or association of which they are not stockholders,
members or associates, between any or all of them and the corporation,
partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership, or
association and the State insofar as it concerns the individual franchises. The
second element requires that the dispute among the parties be intrinsically
connected with the regulation of the corporation. If the nature of the
controversy involves matters that are purely civil in character, necessarily, the
case does not involve an intra-corporate controversy.’