I.

Interpretation of Labor Laws,

Statutes, Etc.

[G.R. No. 139455. March 28, 2003]

REPUBLIC OF THE PHILIPPINES represented
by EMPLOYEES COMPENSATION
COMMISSION, petitioner, vs.PEDRO
MARIANO, respondent.
DECISION
QUISUMBING, J.:
Subject
of
this
petition
for
review
on certiorari is the decision,[1] dated July 26,
1999, of the Court of Appeals in CA-GR SP No.
UDK-2898. It reversed the decision of the
Employees Compensation Commission (ECC),
dated October 23, 1998, in ECC Case No. MS9677-498, which had affirmed the ruling of the
Social Security System (SSS) denying herein
respondent
Pedro
Marianos
claim
for
compensation benefits under Presidential Decree
No. 626.[2]
The pertinent facts, as summarized by the
Office of the Solicitor General (OSG), are as
follows:
For an eleven-year period starting January
1983, respondent Pedro Mariano was an
employee of LGP Printing Press. During his
employment,
Mariano
worked
in
various
capacities, including that of a machine operator,
paper
cutter,
monotype
composer,
film
developer, and supervisor of the printing press.[3]
Sometime in February 1994, Marianos service
abruptly ended when he could no longer perform
any work due to a heart ailment. An
electrocardiograph test revealed that he was
suffering from Incomplete Right Bundle Branch
Block.[4]
Mariano filed a claim for employees
compensation benefit with the SSS. In its medical
evaluation dated April 15, 1997, SSS denied his
claim on the ground that there was no causal
connection between his ailment and his job as
film developer.[5]
On July 1, 1997, the SSS forwarded the record
of respondents case to the ECC. In a letter dated
September 12, 1997, the ECC remanded
respondents case to the SSS for reception of
additional documentary evidence.
On February 9, 1998, the SSS directed
respondent to submit the following: (1) complete
clinical abstract if he was confined; and (2)
records of consultation due to hypertension.[6]
Meanwhile, respondent had consulted Dr.
Rogelio Mariano, whose diagnosis showed he was
suffering
from
Parkinsons
disease
and
hypertension, as per the medical certificate dated
April 20, 1998.[7]
The SSS once again submitted respondents
case records to the ECC for review.

On October 23, 1998, the ECC, through

Executive Director Teofilo E. Hebron, dismissed
respondents claim. Hebron ruled that the
respondent had failed to establish a causal
connection between Parkinsons Disease and the
working conditions at the printing press. [8] On
respondents claim for compensation for Essential
Hypertension, the ECC found that respondent had
failed to adduce sufficient evidence to establish
that his ailment had caused impairment of any of
his body organs, which in turn could permanently
prevent him from engaging in a gainful
occupation.
Aggrieved, respondent elevated the matter
to the Court of Appeals in CA-G.R. SP No. UDK2898.
On July 26, 1999, the appellate court
rendered a judgment reversing the decision of
the ECC, decreeing as follows:
WHEREFORE, the decision appealed from is
hereby REVERSED and SET ASIDE. Accordingly,
respondents Employees Compensation
Commission (ECC) and Social Security System
(SSS) are ordered to pay petitioners claim for
compensation benefits under P.D. 626.[9]
In holding for the respondent, the Court of
Appeals found that the nature of petitioners work
at LGP resulted in his exposure to various toxic
chemicals, which is a possible cause of
Parkinsons Disease. As to his hypertension, the
appellate court ruled that the respondents duties
as machine operator and paper cutter involved
physical pressure and restlessness, since he was
required to meet urgent deadlines for rush print
orders. This in turn caused respondent to suffer
from stress and anxiety. In sum, the appellate
court held that respondent had substantially
established the connection between the cause of
his ailments and the nature of his work.
Hence, the instant petition, anchored on the
following assignment of errors:
I.
THE DECISION OF THE COURT OF APPEALS
SOUGHT TO BE REVIEWED IS NOT IN
ACCORDANCE WITH LAW, PARTICULARLY SECTION
1 (B), RULE III OF THE RULES IMPLEMENTING THE
PROVISIONS OF TITLE II, BOOK IV OF THE LABOR
CODE.
II.
THE COURT OF APPEALS ERRED IN RULING THAT
THERE EXISTS A CAUSAL CONNECTION BETWEEN
RESPONDENTS PARKINSONS DISEASE AND THE
WORKING CONDITIONS AT THE PRINTING PRESS.
[10]

The sole issue for our resolution is: Did the

Court of Appeals err in reversing the ECC decision
and in ordering petitioner to pay respondent his
claim for compensation benefits?
For the petitioner, the OSG contends that the
rule implementing P.D. No. 626 does not list
Parkinsons Disease as an occupational ailment,
hence, it is not compensable. The OSG takes the
view that the evidence on record does not

establish that the risk of contracting said ailment

was increased by the nature of respondents
work. Thus, said the OSG, it was error for the
Court of Appeals to declare the ailment
compensable. Additionally, the OSG avers that
private respondent failed to submit the
documents that the ECC required to support his
claim for disability benefits.
Respondent counters that the nature of his
functions at LGP clearly brought about the onset of
Parkinsons Disease. Moreover, assumingarguendo,
that Parkinsons Disease is non-compensable, his
other ailment - Essential Hypertension is covered
by P.D. No. 626. He contends that the risk of
contracting Essential Hypertension was increased
by his job at LGP.[11]
Workmens Compensation cases are governed
by the law in force at the time the claimant
contracted his illness.[12] In the instant case, the
applicable rule is Section 1 (b), [13] Rule III, of the
Rules Implementing P.D. No. 626. Under said Rule,
for the sickness to be compensable, the same
must be an occupational disease included in the
list provided, with the conditions set therein
satisfied; otherwise, the claimant must show
proof that the risk of contracting it is increased by
the
working
conditions.[14] What kind
and
quantum of evidence would constitute an
adequate basis for a reasonable man (not
necessarily a medical scientist) to reach one or
the
other conclusion,
can obviously
be
determined only on a case-to-case basis. [15] For
reasons herein elaborated, we agree with the
appellate court that respondent Pedro Mariano
has
substantially
proved
his
claim
to
compensability.
First, as to Parkinsons disease, while it is true
that this disease is not included in the list of
compensable diseases under the law then
prevailing, it was found by the Court of Appeals
that the conditions prevailing at LGP largely led to
the progression of the ailment. The respondents
functions
entailed
constant
exposure
to
hazardous or toxic chemicals such as carbon
disulfate, carbon monoxide, or manganese. As
the ECC itself admitted in its judgment, the
exposure to these toxic substances is among the
possible causes of this disease.[16] Where it was
established that the claimants ailment occurred
during and in the course of his employment, it
must be presumed that the nature of the
claimants employment is the cause of the
disease.[17]
Second, even if we were to assume that
Parkinsons Disease is not compensable, there can
be no question that Essential Hypertension is a
compensable
illness,
following
our
ruling
in Government Service Insurance System v.
Gabriel,[18] that hypertension and heart ailments
are compensable illnesses. The respondent herein
was diagnosed to have developed Incomplete
Right Bundle Branch Block,[19] a disease caused
by a delay in the depolarization of the right
ventricle.[20] Right Bundle Branch Block is an
intraventricular conduction defect common in
individuals with otherwise normal hearts as well
as in many diseased processes, including
ischemic heart disease, inflammatory disease,
infiltrative
disease,
cardiomyopathy,
and
postcardiotomy.[21] We note that respondent was

also diagnosed as having hypertension and a

medical certification was issued to that effect.
In Ijares v. Court of Appeals,[22] which
involved a claim for disability benefits due to
hypertension, this Court gave probative value to
the medical findings of the examining physician.
A doctors certification as to the nature of the
claimants disability normally deserves full
credence. No medical practitioner will, in the
normal course of things, issue certifications
indiscriminately,
considering
the
doctors
awareness of the serious and far-reaching effects
that a false certification would have on a claim
filed with a government agency and of its
implications upon his own interests as a
professional.[23]
In upholding respondent Marianos claim, the
Court of Appeals found that among the various
jobs the respondent performed were those of a
machine operator, paper cutter, monotype
composer,[24] and later as supervisor, most of
which are physical and stressful in character. In
established cases of Essential Hypertension, the
blood pressure fluctuates widely in response to
emotional stress and physical activity.[25]Given the
nature of his assigned job and the printing
business, with its tight deadlines entailing large
amounts of rush work, indeed the emotional and
physical stress of respondents work at the
printing press caused, and then exacerbated, his
hypertension. On this score, we hold that the
Court of Appeals did not err in liberally construing
the rules implementing P.D. No. 626. In matters of
labor and social legislation, it is well established
that doubts in the interpretation and application
of the law are resolved liberally in favor of the
worker and strictly against the employer.
While the SSS and ECC may be commended
for their vigilance against sustaining unjustified
claims that would only drain funds meant for
deserving
disabled
employees,
respondent
Marianos case does not fall in that class. Said
agencies ought to realize, in our view, that strict
interpretation of the rules should not result in the
denial of assistance to those in need and qualified
therefor. Workers whose capabilities have been
diminished, if not completely impaired, as a
consequence of their service, ought to be given
benefits they deserve under the law. Compassion
for them is not a dole-out, but a right.[26]
WHEREFORE, the
instant
petition
is
DENIED. The assailed decision of the Court of
Appeals, dated July 26, 1999, in CA-G.R. SP No.
UDK-2898 is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 148241. September 27, 2002]

HANTEX TRADING CO., INC., and/or
MARIANO CHUA, petitioners, vs. COURT OF
APPEALS, Special Former Tenth Division,
and BERNARDO SINGSON, respondents.
DECISION
BELLOSILLO, J.:

This petition seeks to review the Decision of

the Court of Appeals[1] affirming in toto the
decision of the National Labor Relations
Commission (NLRC), which in turn sustained the
Labor Arbiter's finding that respondent was
illegally dismissed and therefore entitled to
reinstatement, backwages and 13th month pay.
Private respondent Bernardo Singson was
employed by petitioner Hantex Trading Co., Inc.
(HANTEX) on 8 November 1994 as sales
representative. HANTEX was engaged in selling
laminating machines and ID supplies. He was
paid a regular salary of P165.00/day in addition
to P500.00 travelling allowance and a 3% - 5%
commission from his sales. Sometime in February
1996 the management of HANTEX called the
attention of Singson regarding his deteriorating
sales performance. Despite thereof, Singson's
performance showed no sign of improvement as
it remained inadequate and unsatisfactory. Thus,
HANTEX, through its president, petitioner Mariano
Chua, held a"one-on-one" conference with him on
5 August 1996.
The parties presented conflicting versions of
what
actually
transpired
during
the
conference. Singson
alleged that
petitioner
Mariano Chua asked for his resignation from the
company, and required him to submit a
resignation letter otherwise his separation pay,
13th month pay and other monetary benefits
would not be paid. When he refused, petitioner
Mariano Chua ejected him from the premises of
HANTEX and left instructions to the guards onduty to refuse him admittance.
On the other hand, petitioners denied that
they dismissed Singson and maintained that the
conference was merely intended to motivate him
"to exert more effort in his job and mend his work
attitude;" and that Singson apparently resented
petitioner Chua for it that he never reported back
for work after the conference.
On 8 August 1996 Singson filed a complaint
with the Labor Arbiter for illegal dismissal with
prayer for reinstatement asserting that he was
dismissed from his employment without prior
notice and hearing.[2] On the contrary, HANTEX
averred that Singson was not dismissed but
abandoned his job after he was reprimanded.
On 5 May 1998 the Labor Arbiter rendered a
decision finding private respondent Singson to
have been illegally dismissed and ordering
HANTEX to reinstate him to his former or
substantially equivalent position, as well as to
pay
him P234,848.38
as
backwages
and P8,992.60 as 13th month pay.[3]
HANTEX appealed to the National Labor
Relations Commission (NLRC), which affirmed the
Labor Arbiter's finding of illegal dismissal but
ordered the reduction of backwages, holding that
the computation thereof should start not from the
date complainant was hired in 1994 as held by
the Labor Arbiter, but from the date he was
illegally dismissed in 1996. The NLRC observed The respondents would want us to believe that
on August 5, 1996, they merely reprimanded
complainant for his poor performance (p. 10,
Appeal, p. 109, Record). However, they have not
submitted any proof thereon, unlike on
November 21, 1995 when they sent him a

memorandum, which he duly received, calling

attention to his work deportment x x x x Just
because respondent asked him to assume duties
during the hearing before the Labor Arbiter on
September 30, 1996 (p. 7, Record) does not
necessarily prove that they in fact did not dismiss
him in the first place. On the contrary, that offer
could be a tacit admission of respondents that
they erred in dismissing him verbally and without
observance of both substantive and procedural
due process x x x xOn the matter of
complainants alleged abandonment x x x
x suffice it to say that his mere filing of a case for
illegal dismissal already negates the theory of
abandonment x x x x However, we find merit in
respondents argument regarding the award of
backwages. Indeed, it was glaring error to base
the computation thereof from the date
complainant was hired in 1994. Rather, the
computation should
start from the date he was found to have been ill
egallydismissed x x x x [4]
On 8 June 2000 HANTEX and/or Mariano
Chua, undaunted by reverses, elevated the case
to the Court of Appeals on a petition for
certiorari[5] arguing that: (a) the complaint for
illegal dismissal was a mere ploy of private
respondent to get back at them; (b) there was no
termination letter which is the best evidence of
the alleged illegal dismissal, consequently, the
NLRC should have adjudged that private
respondent was not dismissed but had voluntarily
abandoned his employment; and, (c) private
respondent's rejection of petitioners' offer for him
to resume his employment during the preliminary
conference before the Labor Arbiter was an overt
act of abandonment. The appellate court,
however, likewise ruled against petitioners An ordinary member of the working class will not
put at stake his primary source of income just to
satisfy his egoistic feeling of revenge. The
expense of a protracted legal battle against a
well-equipped employer coupled with the
uncertainty of winning and the prospect of a
prolonged unemployment are factors that negate
petitioners supposition. Furthermore, a letter of
dismissal is not the only material evidence to
establish the fact of termination. For in cases of
constructive dismissal, as when the employee
was compelled to resign because continued
employment has become impossible,
unreasonable and unlikely, his quitting his job
amounts to constructive discharge or illegal
dismissal. Likewise, we find petitioners argument
in support of their abandonment theory as
misplaced x x x that offer could be a tacit
admission of petitioners that they erred in dismis
sing him verbally and
withoutobservance of both substantive and proce
dural due process x x x x
Its motion for reconsideration having been
denied by the Court of Appeals on 10 May 2001,
petitioners now hope to secure relief from this
Court. Relying once more on their defense of
abandonment, petitioners insist that other than
the bare allegations of private respondent that he
was illegally dismissed, the records are bereft of
any evidence to prove that petitioners indeed
terminated his services; that moreover, no notice
or letter of dismissal was ever issued by

petitioners to private respondent, as there was no

intent to dismiss him when he was called to a
conference on 5 August 1996; and, that he was
not prevented from returning to work as in fact he
was asked repeatedly to return to work, but he
defiantly refused to do so.
To avoid delay in the disposition of the case,
it appearing from the records that the parties had
already fully ventilated and exhaustively argued
their respective positions before the Labor
Arbiter, the NLRC and the Court of Appeals, and
even before this Court, through their respective
petition, comment and reply, we dispensed with
the usual practice of requiring the parties to
submit their memoranda and would now proceed
to decide the case.
The pivotal issue in the present recourse is
whether private respondent Bernardo Singson
deliberately abandoned his employment, or was
illegally dismissed by the management of
petitioner HANTEX.
We deny the petition. Plainly, the petition
raises a fundamentally factual issue, which we
are not at liberty to review because our
jurisdiction is limited to reviewing errors of law
that may have been committed by the lower
court. The resolution of factual questions is the
primary and often the final task of lower
courts. This Court is not a trier of facts and it is
not our function to examine and evaluate all over
again the probative value of all evidence
presented to the concerned tribunal which
formed the basis of its impugned decision,
resolution or order.[6]
We reiterate time and again the muchrepeated but not so well-heeded rule that findings
of fact of the Court of Appeals, particularly where
it is in absolute agreement with that of the NLRC
and the Labor Arbiter, as in this case, are
accorded not only respect but even finality and
are deemed binding upon this Court so long as
they are supported by substantial evidence.[7]
In any event, we waded into the records of
this case and found no compelling reason to
disturb the unanimous findings and conclusions
of the Court of Appeals, NLRC and the Labor
Arbiter. Indeed, petitioners' persistent refrain, ad
nauseam, that private respondent Singson was
not dismissed but voluntarily abandoned his
employment, fails to persuade.
Considering the hard times in which we are
in, it is incongruous for respondent to simply give
up his work after receiving a mere reprimand
from his employer. No employee would recklessly
abandon his job knowing fully well the acute
unemployment problem and the difficulty of
looking for a means of livelihood nowadays. With
a family to support, we doubt very much
that respondent would so easilysacrifice his only
source of income and unduly expose his family to
hunger and untold hardships. Certainly, no man
in his right mind would do such thing.
What is more telling is that on 8 June 1996,
or three (3) days after his employment was
terminated, respondent immediately instituted
the instant case for illegal dismissal with a prayer
for reinstatement against his employer. An
employee who loses no time in protesting his
layoff cannot by any reasoning be said to have

abandoned his work, for it is already a wellsettled doctrine that the filing by an employee of
a complaint for illegal dismissal with a prayer for
reinstatement is proof enough of his desire to
return to work, thus negating the employer's
charge of abandonment. Verily, it would be
illogical for respondent Singson to have left his
job and thereafter file the complaint against his
employer. As we held in Villar v. National Labor
Relations Commission[8] x x x x It is clear from the records that sometime
in August 1994, immediately after petitioners
supposedly refused to work having lost earlier in
the certification election, several complaints for
illegal dismissal against HI-TECH were filed by
petitioners. These are sufficient proofs that they
were never guilty of leaving their jobs. The
concept of abandonment of work is inconsistent
with the immediate filing of complaints for illegal
dismissal. An employee who took steps to protest
his layoff could not by any logic be said to have
abandoned his work.
Abandonment is a matter of intention and
cannot lightly be presumed from certain
equivocal acts. For abandonment to exist, it is
essential (a) that the employee must have failed
to report for work or must have been absent
without valid or justifiable reason; and, (b) that
there must have been a clear intention to sever
the employer-employee relationship manifested
by some overt acts - the second element is the
more determinative factor. Mere absence of the
employee is not sufficient. The burden of proof is
on the employer to show a clear and deliberate
intent on the part of the employee to discontinue
employment without any intention of returning.
Petitioners dismally failed to discharge their
burden. Their
evidence,
consisting
entirely
of cash vouchers of respondent SINGSON and his
co-salesman Raul Hista, for the months of May,
June and July 1996,[9] is grossly anemic - if not
totally irrelevant - to establish that respondent
Singson indeed deliberately and unjustifiably
abandoned
his
job. At
best,
these cash
vouchers merely show respondent's lackluster
performance during those months, and that he
paled in comparison with his co-salesman Raul
Hista in terms of sales output. As astutely
observed by the Court of Appeals x x x x Neither can we see any evidentiary
relevance of the vouchers of Raul Hista in
comparison with that of private respondent. They
do not in any way vouch petitioners claim of
abandonment nor do they refute the fact that
private respondent was illegally dismissed
because of petitioners failure to observe the
substantive as well as the procedural
requirements of the law. If at all, they merely
show the unsatisfactory performance of private
respondent which does not in any way authorizes
the abrupt dismissal of private respondent sans
observance of due process.
At any rate, petitioners undoubtedly could
have presented better evidence to buttress their
claim of abandonment. After all, being the
employers, they are in possession of documents
relevant to this case. For instance, they could
have at least presented in evidence copies of

respondent's daily time records, which are on-file

in its office, to prove the dates respondent was on
AWOL (absence without leave); or any letter
wherein they required respondent to report for
work and explain his unauthorized absences. But,
as it is, petitioners' defense of abandonment
cannot be given credence for lack of evidentiary
support.
Petitioners maintain that during the initial
hearing before Labor Arbiter Bugarin on 30
September 1996 they made an offer to reinstate
private respondent to his former position, but
he "defiantly" refused the offer despite the fact
that in his complaint he was asking for
reinstatement. Again, petitioners extended the
offer in their position paper filed with the Labor
Arbiter
but
was
likewise
rejected
by
respondent. They assert that these circumstances
are clear indications of respondent's lack of
further interest to work and effectively negate
respondent's claim of illegal dismissal.
We hold otherwise. As we see it, respondent's
refusal to be reinstated is more of a symptom of
strained relations between the parties, rather
than an indicium of abandonment of work as
obstinately
insisted
by
petitioners. While
respondent desires to have his job back, it must
have later dawned on him that the filing of the
complaint for illegal dismissal and the bitter
incidents that followed have sundered the
erstwhile harmonious relationship between the
parties. Respondent must have surely realized
that even if reinstated, he will find it
uncomfortable to continue working under the
hostile eyes of the employer who had been forced
to reinstate him. He had every reason to fear that
if he accepted petitioners' offer, their watchful
eyes would thereafter be focused on him, to
detect every small shortcoming of his as a ground
for vindictive disciplinary action.[10] In such
instance, reinstatement would no longer be
beneficial to him.
Neither does the fact that petitioners
made offers to reinstate respondent legally
disproves illegal dismissal. We agree with the
observation of the Court of Appeals that the offer
may very well be "a tacit admission of petitioners
that they erred in dismissing him verbally and
without observance of both substantive and
procedural due process." Curiously, petitioners'
offer of reinstatement was made only after more
than one (1) month from the date of the filing of
the illegal dismissal case. Their belated gesture of
goodwill is highly suspect. If petitioners were
indeed sincere in inviting respondent back to
work in the company, they could have made the
offer much sooner. In any case, their intentions in
making the offer are immaterial, for the offer to
re-employ respondent could not have the effect
of validating an otherwise arbitrary dismissal.
In sum, we are convinced that respondent did
not quit his job as insisted by petitioners, but was
unceremoniously dismissed therefrom without
observing the twin requirements of due process,
i.e., due notice and hearing. While we recognize
the right of the employer to terminate the
services of an employee for a just or authorized
cause, nevertheless, the dismissal of employees
must be made within the parameters of law and
pursuant to the tenets of equity and fair
play. Truly, the employer's power to discipline its

workers may not be exercised in an arbitrary

manner as to erode the constitutional guarantee
of security of tenure.
Whatever
doubts,
uncertainties
or
ambiguities remain in this case should ultimately
be resolved in favor of the worker in line with the
social justice policy of our labor laws and the
Constitution. The consistent rule is that the
employer must affirmatively show rationally
adequate evidence that the dismissal was for a
justifiable cause, failing in which makes the
termination illegal.
Upon the foregoing considerations, the
normal consequences of respondent's illegal
dismissal are reinstatement without loss of
seniority rights, and payment of back wages
computed from the time his compensation was
withheld from him, that is, 5 August 1996, up to
the date of his actual reinstatement. These
remedies give life to the workers' constitutional
right to security of tenure. However, under the
circumstances,
reinstatement
would
be
impractical and would hardly promote the best
interest of the parties. As heretofore discussed,
the resentment and enmity between HANTEX and
Singson
which
culminated
in
and
was
compounded by the illegal dismissal suit
necessarily strained the relationship between
them
or
even
provoked
antipathy
and
antagonism. Where reinstatement is no longer
viable as an option,separation pay equivalent to
one (1) month salary for every year of service
should be awarded as an alternative. This has
been our consistent ruling in the award of
separation pay to illegally dismissed employees
in lieu of reinstatement. [11]
WHEREFORE, the petition is DENIED and the
assailed decision dated 23 October 2000 of the
Court of Appeals is AFFIRMED.Petitioners Hantex
Trading Co., Inc., and Mariano Chua are directed
jointly and severally to pay respondent Bernardo
Singson separation pay in lieu of reinstatement in
the amount equivalent to one (1) month pay for
every year of service, backwages computed from
5 August 2002, the time his compensation was
withheld from him, up to the finality of this
decision, plus the accrued 13th month pay.
SO ORDERED.

II.

Employment

[G.R. No. 151228. August 15, 2002]

ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO
LAGRAMA and THE HONORABLE COURT OF
APPEALS,respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of
the decision,[1] dated May 31, 2001, and the
resolution,[2] dated November 27, 2001, of the
Court of Appeals in C.A.-G.R. SP. No. 63160,
annulling the resolutions of the National Labor
Relations Commission (NLRC) and reinstating the
ruling of the Labor Arbiter which found petitioner
Rolando Tan guilty of illegally dismissing private
respondent Leovigildo Lagrama and ordering him

to pay the latter the amount of P136,849.99 by

way of separation pay, backwages, and damages.
The following are the facts.
Petitioner Rolando Tan is the president of
Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan
City. Private respondent Leovigildo Lagrama is a
painter, making ad billboards and murals for the
motion pictures shown at the Empress, Supreme,
and Crown Theaters for more than 10 years, from
September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent
Lagrama
was
summoned
by
Tan
and
upbraided: Nangihi na naman ka sulod sa imong
drawinganan. (You again urinated inside your
work area.) When Lagrama asked what Tan was
saying, Tan told him, Ayaw daghang estorya.Dili
ko gusto nga mo-drawing ka pa. Guikan karon,
wala nay drawing. Gawas. (Dont say anything
further. I dont want you to draw anymore.From
now on, no more drawing. Get out.)
Lagrama denied the charge against him. He
claimed that he was not the only one who
entered the drawing area and that, even if the
charge was true, it was a minor infraction to
warrant his dismissal. However, everytime he
spoke, Tan shouted Gawas (Get out), leaving him
with no other choice but to leave the premises.
Lagrama filed a complaint with the SubRegional Arbitration Branch No. X of the National
Labor Relations Commission (NLRC) in Butuan
City. He alleged that he had been illegally
dismissed and sought reinvestigation and
payment of 13th month pay, service incentive
leave pay, salary differential, and damages.
Petitioner Tan denied that Lagrama was his
employee. He asserted that Lagrama was an
independent contractor who did his work
according to his methods, while he (petitioner)
was only interested in the result thereof. He cited
the admission of Lagrama during the conferences
before the Labor Arbiter that he was paid on a
fixed piece-work basis, i.e., that he was paid for
every painting turned out as ad billboard or mural
for the pictures shown in the three theaters, on
the basis of a no mural/billboard drawn, no pay
policy. He submitted the affidavits of other
cinema owners, an amusement park owner, and
those supervising the construction of a church to
prove that the services of Lagrama were
contracted by them. He denied having dismissed
Lagrama and alleged that it was the latter who
refused to paint for him after he was scolded for
his habits.
As no amicable settlement had been
reached, Labor Arbiter Rogelio P. Legaspi directed
the parties to file their position papers. On June
17, 1999, he rendered a decision, the dispositive
portion of which reads:
WHEREFORE, premises considered judgment is
hereby ordered:
1. Declaring complainants
dismissal illegal and

[Lagramas]

2. Ordering respondents [Tan] to pay

complainant the following:

A. Separation Pay - P 59,000.00

B. Backwages - 47,200.00
(from 17 October 1998 to 17
June 1999)
C. 13th month pay (3
years) - 17,700.00
D. Service Incentive Leave
Pay (3 years) - 2, 949.99
E. Damages - 10,000.00
TOTAL [P136,849.99]
Complainants other claims are dismissed for lack
of merit.[3]
Petitioner Rolando Tan appealed to the NLRC
Fifth Division, Cagayan de Oro City, which, on
June 30, 2000, rendered a decision [4]finding
Lagrama to be an independent contractor, and
for this reason reversing the decision of the Labor
Arbiter.
Respondent Lagrama filed a motion for
reconsideration, but it was denied for lack of
merit by the NLRC in a resolution of September
29, 2000. He then filed a petition for certiorari
under Rule 65 before the Court of Appeals.
The Court of Appeals found that petitioner
exercised control over Lagramas work by
dictating the time when Lagrama should submit
his billboards and murals and setting rules on the
use of the work area and rest room. Although it
found that Lagrama did work for other cinema
owners, the appeals court held it to be a mere
sideline insufficient to prove that he was not an
employee of Tan. The appeals court also found no
evidence of any intention on the part of Lagrama
to leave his job or sever his employment
relationship with Tan. Accordingly, on May 31,
2001, the Court of Appeals rendered a decision,
the dispositive portion of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the
Petition is hereby GRANTED. The Resolutions of
the Public Respondent issued on June 30, 2000
and September 29, 2000 are ANNULLED. The
Decision of the Honorable Labor Arbiter Rogelio P.
Legaspi on June 17, 1999 is hereby REINSTATED.
Petitioner moved for a reconsideration, but
the Court of Appeals found no reason to reverse
its decision and so denied his motion for lack of
merit.[5] Hence, this petition for review on
certiorari based on the following assignments of
errors:
I. With all due respect, the decision of respondent
Court of Appeals in CA-G.R. SP NO. 63160 is
bereft of any finding that Public Respondent
NLRC, 5th Division, had no jurisdiction or
exceeded it or otherwise gravely abused its
discretion in its Resolution of 30 June 2000 in
NLRC CA-NO. M-004950-99.
II. With all due respect, respondent Court of
Appeals, absent any positive finding on its part
that the Resolution of 30 June 2000 of the NLRC is
not supported by substantial evidence, is without
authority to substitute its conclusion for that of
said NLRC.
III. With all due respect, respondent Court of
Appeals discourse on freelance artists and

painters in the decision in question is misplaced

or has no factual or legal basis in the record.
IV. With all due respect, respondent Court of
Appeals opening statement in its decision as to
employment, monthly salary of P1,475.00 and
work schedule from Monday to Saturday, from
8:00 oclock in the morning up to 5:00 oclock in
the afternoon as facts is not supported by the
evidence on record.
V. With all due respect, the case of Lambo, et al.,
v. NLRC, et al., 317 SCRA 420 [G.R. No. 111042
October 26, 1999] relied upon by respondent
Court of Appeals is not applicable to the peculiar
circumstances of this case.[6]
The issues raised boil down to whether or not
an employer-employee
relationship
existed
between petitioner and private respondent, and
whether petitioner is guilty of illegally dismissing
private respondent. We find the answers to these
issues to be in the affirmative.
I.
In determining whether there is an employeremployee relationship, we have applied a fourfold test, to wit: (1) whether the alleged employer
has the power of selection and engagement of
employees; (2) whether he has control of the
employee with respect to the means and
methods by which work is to be accomplished; (3)
whether he has the power to dismiss; and (4)
whether the employee was paid wages.[7] These
elements of the employer-employee relationship
are present in this case.
First. The existence in this case of the first
element is undisputed. It was petitioner who
engaged the services of Lagrama without the
intervention of a third party. It is the existence of
the second element, the power of control, that
requires discussion here.
Of the four elements of the employeremployee relationship, the control test is the
most important. Compared to an employee, an
independent contractor is one who carries on a
distinct
and
independent
business
and
undertakes to perform the job, work, or service
on its own account and under its own
responsibility according to its own manner and
method, free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the results
thereof.[8] Hence, while an independent contractor
enjoys independence and freedom from the
control and supervision of his principal, an
employee is subject to the employers power to
control the means and methods by which the
employees work is to be performed and
accomplished.
In the case at bar, albeit petitioner Tan claims
that private respondent Lagrama was an
independent contractor and never his employee,
the evidence shows that the latter performed his
work as painter under the supervision and control
of petitioner. Lagrama worked in a designated
work area inside the Crown Theater of petitioner,
for the use of which petitioner prescribed rules.
The rules included the observance of cleanliness
and hygiene and a prohibition against urinating in
the work area and any place other than the toilet

or the rest rooms.[9] Petitioners control over

Lagramas work extended not only to the use of
the work area, but also to the result of Lagramas
work, and the manner and means by which the
work was to be accomplished.
Moreover, it would appear that petitioner not
only provided the workplace, but supplied as well
the materials used for the paintings, because he
admitted that he paid Lagrama only for the
latters services.[10]
Private respondent Lagrama claimed that he
worked daily, from 8 oclock in the morning to 5
oclock in the afternoon. Petitioner disputed this
allegation and maintained that he paid
Lagrama P1,475.00 per week for the murals for
the three theaters which the latter usually
finished in 3 to 4 days in one week. [11] Even
assuming this to be true, the fact that Lagrama
worked for at least 3 to 4 days a week proves
regularity in his employment by petitioner.
Second. That petitioner had the right to hire
and fire was admitted by him in his position paper
submitted to the NLRC, the pertinent portions of
which stated:
Complainant did not know how to use the
available comfort rooms or toilets in and about
his work premises. He was urinating right at
the place where he was working when it was so
easy for him, as everybody else did and had he
only wanted to, to go to the comfort rooms. But
no, the complainant had to make a virtual urinal
out of his work place! The place then stunk to
high heavens, naturally, to the consternation of
respondents and everyone who could smell the
malodor.
...
Given such circumstances, the respondents had
every right, nay all the compelling reason, to fire
him from his painting job upon discovery and his
admission of such acts. Nonetheless, though
thoroughly scolded, he was not fired. It was he
who stopped to paint for respondents.[12]
By stating that he had the right to fire
Lagrama, petitioner in effect acknowledged
Lagrama to be his employee. For the right to hire
and fire is another important element of the
employer-employee relationship.[13] Indeed, the
fact that, as petitioner himself said, he waited for
Lagrama to report for work but the latter simply
stopped reporting for work reinforces the
conviction that Lagrama was indeed an employee
of petitioner. For only an employee can nurture
such an expectancy, the frustration of which,
unless satisfactorily explained, can bring about
some disciplinary action on the part of the
employer.
Third. Payment of wages is one of the four
factors to be considered in determining the
existence of employer-employee relation. Wages
are defined as remuneration or earnings, however
designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method
of calculating the same, which is payable by an
employer to an employee under a written or
unwritten contract of employment for work done

or to be done, or for services rendered or to be

rendered.[14] That Lagrama worked for Tan on a
fixed piece-work basis is of no moment. Payment
by result is a method of compensation and does
not define the essence of the relation. [15] It is a
method of computing compensation, not a basis
for determining the existence or absence of
employer-employee relationship. One may be
paid on the basis of results or time expended on
the work, and may or may not acquire an
employment status, depending on whether the
elements of an employer-employee relationship
are present or not.[16]
The Rules Implementing the Labor Code
require every employer to pay his employees by
means of payroll.[17] The payroll should show
among other things, the employees rate of pay,
deductions made, and the amount actually paid
to the employee. In the case at bar, petitioner did
not present the payroll to support his claim that
Lagrama was not his employee, raising
speculations whether his failure to do so proves
that its presentation would be adverse to his
case.[18]
The primary standard for determining regular
employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual trade or
business of the employer.[19] In this case, there is
such a connection between the job of Lagrama
painting billboards and murals and the business
of petitioner. To let the people know what movie
was to be shown in a movie theater requires
billboards. Petitioner in fact admits that the
billboards are important to his business.[20]
The fact that Lagrama was not reported as an
employee to the SSS is not conclusive on the
question of whether he was an employee of
petitioner.[21] Otherwise, an employer would be
rewarded for his failure or even neglect to
perform his obligation.[22]
Neither does the fact that Lagrama painted
for other persons affect or alter his employment
relationship with petitioner. That he did so only
during weekends has not been denied by
petitioner. On the other hand, Samuel Villalba, for
whom Lagrama had rendered service, admitted in
a sworn statement that he was told by Lagrama
that the latter worked for petitioner.[23]
Lagrama had been employed by petitioner
since 1988. Under the law, therefore, he is
deemed a regular employee and is thus entitled
to security of tenure, as provided in Art. 279 of
Labor Code:
ART. 279. Security of Tenure. In cases of regular
employment, the employer shall not terminate
the services of an employee except for a just
cause or when authorized by this Title. An
employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent
computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement.
This Court has held that if the employee has
been performing the job for at least one year,

even if not continuously but intermittently, the

repeated and continuing need for its performance
is sufficient evidence of the necessity, if not
indispensability, of that activity to the business of
his employer. Hence, the employment is also
considered regular, although with respect only to
such activity, and while such activity exists. [24]
It is claimed that Lagrama abandoned his
work. There is no evidence to show this.
Abandonment requires two elements: (1) the
failure to report for work or absence without valid
or justifiable reason, and (2) a clear intention to
sever the employer-employee relationship, with
the second element as the more determinative
factor and being manifested by some overt acts.
[25]
Mere absence is not sufficient. What is more,
the burden is on the employer to show a
deliberate and unjustified refusal on the part of
the employee to resume his employment without
any intention of returning. [26] In the case at bar,
the Court of Appeals correctly ruled:
Neither do we agree that Petitioner abandoned
his job. In order for abandonment to be a just and
valid ground for dismissal, the employer must
show, by clear proof, the intention of the
employee to abandon his job. . . .
In the present recourse, the Private Respondent
has not established clear proof of the intention of
the Petitioner to abandon his job or to sever the
employment relationship between him and the
Private Respondent. On the contrary, it was
Private Respondent who told Petitioner that he
did not want the latter to draw for him and
thereafter refused to give him work to do or any
mural or billboard to paint or draw on.
More, after the repeated refusal of the Private
Respondent to give Petitioner murals or billboards
to work on, the Petitioner filed, with the SubRegional Arbitration Branch No. X of the National
Labor Relations Commission, a Complaint for
Illegal Dismissal and Money Claims. Such act has,
as the Supreme Court declared, negate any
intention to sever employment relationship. . . .[27]
II.
The second issue is whether private
respondent Lagrama was illegally dismissed. To
begin, the employer has the burden of proving
the lawfulness of his employees dismissal. [28] The
validity of the charge must be clearly established
in a manner consistent with due process.The
Implementing Rules of the Labor Code[29] provide
that no worker shall be dismissed except for a
just or authorized cause provided by law and
after due process. This provision has two aspects:
(1) the legality of the act of dismissal, that is,
dismissal under the grounds provided for under
Article 282 of the Labor Code and (2) the legality
in the manner of dismissal. The illegality of the
act of dismissal constitutes discharge without just
cause, while illegality in the manner of dismissal
is dismissal without due process.[30]
In this case, by his refusal to give Lagrama
work to do and ordering Lagrama to get out of his
sight as the latter tried to explain his side,
petitioner made it plain that Lagrama was
dismissed. Urinating in a work place other than
the one designated for the purpose by the

employer constitutes violation of reasonable

regulations intended to promote a healthy
environment under Art. 282(1) of the Labor Code
for purposes of terminating employment, but the
same must be shown by evidence. Here there is
no evidence that Lagrama did urinate in a place
other than a rest room in the premises of his
work.

National
Labor
Relations
Commission
promulgated on June 20, 1996 in NLRC NCR CA
No. 010526-96. Petitioners also pray for the
reinstatement of the decision[4] of the Labor
Arbiter in NLRC NCR Case No. 00-09-06717-94.

Instead of ordering his reinstatement as

provided in Art. 279 of the Labor Code, the Labor
Arbiter found that the relationship between the
employer and the employee has been so strained
that the latters reinstatement would no longer
serve any purpose. The parties do not dispute
this finding. Hence, the grant of separation pay in
lieu of reinstatement is appropriate. This is of
course in addition to the payment of backwages
which,
in
accordance
with
the
ruling
in Bustamante v. NLRC,[31] should be computed
from the time of Lagramas dismissal up to the
time of the finality of this decision, without any
deduction or qualification.

Sometime in 1958, private respondent Jaime

Sahot[5] started working as a truck helper for
petitioners
family-owned
trucking
business
named Vicente Sy Trucking. In 1965, he became a
truck driver of the same family business,
renamed T. Paulino Trucking Service, later 6Bs
Trucking Corporation in 1985, and thereafter
known as SBT Trucking Corporation since
1994. Throughout all these changes in names and
for 36 years, private respondent continuously
served the trucking business of petitioners.

The
Bureau
of
Working
Conditions[32] classifies workers paid by results
into two groups, namely; (1) those whose time
and performance is supervised by the employer,
and (2) those whose time and performance is
unsupervised by the employer. The first involves
an element of control and supervision over the
manner the work is to be performed, while the
second does not. If a piece worker is supervised,
there is an employer-employee relationship, as in
this case. However, such an employee is not
entitled to service incentive leave pay since, as
pointed
out
in Makati
Haberdashery
v.
NLRC[33] and Mark Roche International v. NLRC,
[34]
he is paid a fixed amount for work done,
regardless of the time he spent in accomplishing
such work.
WHEREFORE, based on the foregoing, the
petition is DENIED for lack of showing that the
Court of Appeals committed any reversible
error. The decision of the Court of Appeals,
reversing the decision of the National Labor
Relations Commission and reinstating the
decision of the Labor Arbiter, is AFFIRMED with
the MODIFICATION that the backwages and other
benefits
awarded
to
private
respondent
Leovigildo Lagrama should be computed from the
time of his dismissal up to the time of the finality
of this decision, without any deduction and
qualification. However, the service incentive
leave pay awarded to him is DELETED.
SO ORDERED.

[G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS
TRUCKING CORPORATION, and
SBT[1] TRUCKING
CORPORATION,petitioners, vs. HON. COURT
OF APPEALS and JAIME SAHOT, respondents.
DECISION
QUISUMBING, J.:
This petition for review seeks the reversal of
the decision[2] of the Court of Appeals dated
February 29, 2000, in CA-G.R. SP No. 52671,
affirming with modification the decision[3] of the

Culled from the records are the following

facts of this case:

In April 1994, Sahot was already 59 years

old. He had been incurring absences as he was
suffering from various ailments. Particularly
causing him pain was his left thigh, which greatly
affected the performance of his task as a
driver. He inquired about his medical and
retirement benefits with the Social Security
System (SSS) on April 25, 1994, but discovered
that his premium payments had not been
remitted by his employer.
Sahot had filed a week-long leave sometime
in May 1994. On May 27th, he was medically
examined and treated for EOR, presleyopia,
hypertensive retinopathy G II (Annexes G-5 and
G-3, pp. 48, 104, respectively), [6] HPM, UTI,
Osteoarthritis (Annex G-4, p. 105),[7] and heart
enlargement (Annex G, p. 107).[8] On said
grounds, Belen Paulino of the SBT Trucking
Service management told him to file a formal
request for extension of his leave. At the end of
his week-long absence, Sahot applied for
extension of his leave for the whole month of
June, 1994.It was at this time when petitioners
allegedly
threatened
to
terminate
his
employment should he refuse to go back to work.
At this point, Sahot found himself in a
dilemma. He was facing dismissal if he refused to
work, But he could not retire on pension because
petitioners never paid his correct SSS premiums.
The fact remained he could no longer work as his
left thigh hurt abominably. Petitioners ended his
dilemma. They carried out their threat and
dismissed him from work, effective June 30, 1994.
He ended up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the
NLRC NCR Arbitration Branch, a complaint for
illegal dismissal, docketed as NLRC NCR Case No.
00-09-06717-94. He prayed for the recovery of
separation pay and attorneys fees against
Vicente Sy and Trinidad Paulino-Sy, Belen Paulino,
Vicente Sy Trucking, T. Paulino Trucking Service,
6Bs Trucking and SBT Trucking, herein petitioners.
For their part, petitioners admitted they had
a trucking business in the 1950s but denied
employing helpers and drivers. They contend that
private respondent was not illegally dismissed as
a driver because he was in fact petitioners
industrial partner. They add that it was not until
the year 1994, when SBT Trucking Corporation
was established, and only then did respondent
Sahot become an employee of the company, with

a monthly salary that reached P4,160.00 at the

time of his separation.
Petitioners further claimed that sometime
prior to June 1, 1994, Sahot went on leave and
was not able to report for work for almost seven
days. On June 1, 1994, Sahot asked permission to
extend his leave of absence until June 30, 1994. It
appeared that from the expiration of his leave,
private respondent never reported back to work
nor did he file an extension of his leave. Instead,
he filed the complaint for illegal dismissal against
the trucking company and its owners.
Petitioners add that due to Sahots refusal to
work after the expiration of his authorized leave
of absence, he should be deemed to have
voluntarily
resigned
from
his
work. They
contended that Sahot had all the time to extend
his leave or at least inform petitioners of his
health condition. Lastly, they cited NLRC Case No.
RE-4997-76, entitled Manuelito Jimenez et al. vs.
T. Paulino Trucking Service, as a defense in view
of the alleged similarity in the factual milieu and
issues of said case to that of Sahots, hence they
are in pari material and Sahots complaint ought
also to be dismissed.
The NLRC NCR Arbitration Branch, through
Labor Arbiter Ariel Cadiente Santos, ruled that
there was no illegal dismissal in Sahots case.
Private respondent had failed to report to work.
Moreover, said the Labor Arbiter, petitioners and
private respondent were industrial partners
before January 1994. The Labor Arbiter concluded
by ordering petitioners to pay financial assistance
of P15,000 to Sahot for having served the
company as a regular employee since January
1994 only.
On appeal, the National Labor Relations
Commission modified the judgment of the Labor
Arbiter. It declared that private respondent was
an employee, not an industrial partner, since the
start. Private respondent Sahot did not abandon
his job but his employment was terminated on
account of his illness, pursuant to Article 284[9] of
the Labor Code. Accordingly, the NLRC ordered
petitioners to pay private respondent separation
pay in the amount of P60,320.00, at the rate of
P2,080.00 per year for 29 years of service.
Petitioners assailed the decision of the NLRC
before the Court of Appeals. In its decision dated
February 29, 2000, the appellate court affirmed
with modification the judgment of the NLRC. It
held that private respondent was indeed an
employee of petitioners since 1958. It also
increased the amount of separation pay awarded
to private respondent to P74,880, computed at
the rate of P2,080 per year for 36 years of service
from 1958 to 1994. It decreed:
WHEREFORE, the assailed decision is hereby
AFFIRMED with MODIFICATION. SB Trucking
Corporation is hereby directed to pay
complainant Jaime Sahot the sum of SEVENTYFOUR THOUSAND EIGHT HUNDRED EIGHTY
(P74,880.00) PESOS as and for his separation pay.
[10]

Hence, the instant petition anchored on the

following contentions:
I

RESPONDENT COURT OF APPEALS IN

PROMULGATING THE QUESTION[ED] DECISION
AFFIRMING WITH MODIFICATION THE DECISION
OF NATIONAL LABOR RELATIONS COMMISSION
DECIDED NOT IN ACCORD WITH LAW AND PUT AT
NAUGHT ARTICLE 402 OF THE CIVIL CODE.[11]
II
RESPONDENT COURT OF APPEALS VIOLATED
SUPREME COURT RULING THAT THE NATIONAL
LABOR RELATIONS COMMISSION IS BOUND BY
THE FACTUAL FINDINGS OF THE LABOR ARBITER
AS THE LATTER WAS IN A BETTER POSITION TO
OBSERVE THE DEMEANOR AND DEPORTMENT OF
THE WITNESSES IN THE CASE OF ASSOCIATION
OF INDEPENDENT UNIONS IN THE PHILIPPINES
VERSUS NATIONAL CAPITAL REGION (305 SCRA
233).[12]
III
PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY
RESPONDENT SBT TRUCKING CORPORATION.[13]
Three issues are to be resolved: (1) Whether
or not an employer-employee relationship existed
between petitioners and respondent Sahot; (2)
Whether or not there was valid dismissal; and (3)
Whether or not respondent Sahot is entitled to
separation pay.
Crucial to the resolution of this case is the
determination of the first issue. Before a case for
illegal dismissal can prosper, an employeremployee relationship must first be established.
[14]

Petitioners invoke the decision of the Labor

Arbiter Ariel Cadiente Santos which found that
respondent Sahot was not an employee but was
in fact, petitioners industrial partner. [15] It is
contended that it was the Labor Arbiter who
heard the case and had the opportunity to
observe the demeanor and deportment of the
parties. The same conclusion, aver petitioners, is
supported by substantial evidence.[16]Moreover, it
is argued that the findings of fact of the Labor
Arbiter was wrongly overturned by the NLRC
when
the
latter
made
the
following
pronouncement:
We agree with complainant that there was error
committed by the Labor Arbiter when he
concluded that complainant was an industrial
partner prior to 1994. A computation of the age
of complainant shows that he was only twentythree (23) years when he started working with
respondent as truck helper. How can we entertain
in our mind that a twenty-three (23) year old
man, working as a truck helper, be considered an
industrial partner. Hence we rule that
complainant was only an employee, not a partner
of respondents from the time complainant started
working for respondent. [17]
Because the Court of Appeals also found that
an employer-employee relationship existed,
petitioners aver that the appellate courts decision
gives an imprimatur to the illegal finding and
conclusion of the NLRC.

Private respondent, for his part, denies that

he was ever an industrial partner of petitioners.
There was no written agreement, no proof that he
received a share in petitioners profits, nor was
there anything to show he had any participation
with respect to the running of the business. [18]
The elements to determine the existence of
an employment relationship are: (a) the selection
and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal;
and (d) the employers power to control the
employees conduct. The most important element
is the employers control of the employees
conduct, not only as to the result of the work to
be done, but also as to the means and methods
to accomplish it.[19]
As found by the appellate court, petitioners
owned and operated a trucking business since
the 1950s and by their own allegations, they
determined private respondents wages and rest
day.[20] Records of the case show that private
respondent actually engaged in work as an
employee. During the entire course of his
employment he did not have the freedom to
determine where he would go, what he would do,
and how he would do it. He merely followed
instructions of petitioners and was content to do
so, as long as he was paid his wages. Indeed, said
the CA, private respondent had worked as a truck
helper and driver of petitioners not for his own
pleasure but under the latters control.
Article 1767[21] of the Civil Code states that in
a contract of partnership two or more persons
bind themselves to contribute money, property or
industry to a common fund, with the intention of
dividing the profits among themselves.[22] Not one
of these circumstances is present in this case. No
written agreement exists to prove the partnership
between the parties. Private respondent did not
contribute money, property or industry for the
purpose of engaging in the supposed business.
There is no proof that he was receiving a share in
the profits as a matter of course, during the
period when the trucking business was under
operation. Neither is there any proof that he had
actively participated in the management,
administration and adoption of policies of the
business. Thus, the NLRC and the CA did not err
in reversing the finding of the Labor Arbiter that
private respondent was an industrial partner from
1958 to 1994.
On this point, we affirm the findings of the
appellate court and the NLRC. Private respondent
Jaime Sahot was not an industrial partner but an
employee of petitioners from 1958 to 1994. The
existence of an employer-employee relationship
is ultimately a question of fact [23]and the findings
thereon by the NLRC, as affirmed by the Court of
Appeals, deserve not only respect but finality
when supported by substantial evidence.
Substantial evidence is such amount of relevant
evidence which a reasonable mind might accept
as adequate to justify a conclusion.[24]
Time and again this Court has said that if
doubt exists between the evidence presented by
the employer and the employee, the scales of
justice must be tilted in favor of the latter.
[25]
Here,
we
entertain
no
doubt. Private
respondent since the beginning was an employee
of, not an industrial partner in, the trucking
business.

Coming now to the second issue, was private

respondent validly dismissed by petitioners?
Petitioners contend that it was private
respondent who refused to go back to work. The
decision of the Labor Arbiter pointed out that
during the conciliation proceedings, petitioners
requested respondent Sahot to report back for
work. However, in the same proceedings, Sahot
stated that he was no longer fit to continue
working, and instead he demanded separation
pay. Petitioners then retorted that if Sahot did not
like to work as a driver anymore, then he could
be given a job that was less strenuous, such as
working as a checker. However, Sahot declined
that suggestion. Based on the foregoing recitals,
petitioners assert that it is clear that Sahot was
not dismissed but it was of his own volition that
he did not report for work anymore.
In his decision, the Labor Arbiter concluded
that:
While it may be true that respondents insisted
that complainant continue working with
respondents despite his alleged illness, there is
no direct evidence that will prove that
complainants illness prevents or incapacitates
him from performing the function of a driver. The
fact remains that complainant suddenly stopped
working due to boredom or otherwise when he
refused to work as a checker which certainly is a
much less strenuous job than a driver.[26]
But dealing the Labor Arbiter a reversal on
this score the NLRC, concurred in by the Court of
Appeals, held that:
While it was very obvious that complainant did
not have any intention to report back to work due
to his illness which incapacitated him to perform
his job, such intention cannot be construed to be
an abandonment. Instead, the same should have
been considered as one of those falling under the
just causes of terminating an employment. The
insistence of respondent in making complainant
work did not change the scenario.
It is worthy to note that respondent is engaged in
the trucking business where physical strength is
of utmost requirement (sic). Complainant started
working with respondent as truck helper at age
twenty-three (23), then as truck driver since
1965. Complainant was already fifty-nine
(59) when the complaint was filed and suffering
from various illness triggered by his work and
age.
x x x[27]
In termination cases, the burden is upon the
employer to show by substantial evidence that
the termination was for lawful cause and validly
made.[28] Article 277(b) of the Labor Code puts
the burden of proving that the dismissal of an
employee was for a valid or authorized cause on
the employer, without distinction whether the
employer admits or does not admit the dismissal.
[29]
For an employees dismissal to be valid, (a) the
dismissal must be for a valid cause and (b) the
employee must be afforded due process.[30]

Article 284 of the Labor Code authorizes an

employer to terminate an employee on the
ground of disease, viz:
Art. 284. Disease as a ground for termination- An
employer may terminate the services of an
employee who has been found to be suffering
from any disease and whose continued
employment is prohibited by law or prejudicial to
his health as well as the health of his coemployees: xxx
However, in order to validly terminate
employment on this ground, Book VI, Rule I,
Section 8 of the Omnibus Implementing Rules of
the Labor Code requires:
Sec. 8. Disease as a ground for dismissal- Where
the employee suffers from a disease and his
continued employment is prohibited by law or
prejudicial to his health or to the health of his coemployees, the employer shall not terminate his
employment unless there is a certification by
competent public health authority that the
disease is of such nature or at such a stage that
it cannot be cured within a period of six (6)
months even with proper medical treatment. If
the disease or ailment can be cured within the
period, the employer shall not terminate the
employee but shall ask the employee to take a
leave. The employer shall reinstate such
employee to his former position immediately
upon the restoration of his normal health. (Italics
supplied).
As this Court stated in Triple Eight integrated
Services, Inc. vs. NLRC,[31] the requirement for a
medical certificate under Article 284 of the Labor
Code cannot be dispensed with; otherwise, it
would sanction the unilateral and arbitrary
determination by the employer of the gravity or
extent of the employees illness and thus defeat
the public policy in the protection of labor.
In the case at bar, the employer clearly did
not comply with the medical certificate
requirement before Sahots dismissal was
effected. In the same case of Sevillana vs. I.T.
(International) Corp., we ruled:
Since the burden of proving the validity of the
dismissal of the employee rests on the employer,
the latter should likewise bear the burden of
showing that the requisites for a valid dismissal
due to a disease have been complied with. In the
absence of the required certification by a
competent public health authority, this Court has
ruled against the validity of the employees
dismissal. It is therefore incumbent upon the
private respondents to prove by the quantum of
evidence required by law that petitioner was not
dismissed, or if dismissed, that the dismissal was
not illegal; otherwise, the dismissal would be
unjustified. This Court will not sanction a
dismissal premised on mere conjectures and
suspicions, the evidence must be substantial and
not arbitrary and must be founded on clearly
established facts sufficient to warrant his
separation from work.[32]
In addition, we must likewise determine if the
procedural aspect of due process had been
complied with by the employer.

From the records, it clearly appears that

procedural due process was not observed in the
separation of private respondent by the
management of the trucking company. The
employer is required to furnish an employee with
two written notices before the latter is dismissed:
(1) the notice to apprise the employee of the
particular acts or omissions for which his
dismissal is sought, which is the equivalent of a
charge; and (2) the notice informing the
employee of his dismissal, to be issued after the
employee has been given reasonable opportunity
to answer and to be heard on his defense.
[33]
These, the petitioners failed to do, even only
for record purposes. What management did was
to threaten the employee with dismissal, then
actually implement the threat when the occasion
presented itself because of private respondents
painful left thigh.
All told, both the substantive and procedural
aspects of due process were violated. Clearly,
therefore, Sahots dismissal is tainted with
invalidity.
On the last issue, as held by the Court of
Appeals, respondent Jaime Sahot is entitled to
separation pay. The law is clear on the matter. An
employee who is terminated because of disease
is entitled to separation pay equivalent to at least
one month salary or to one-half month salary for
every year of service, whichever is greater xxx.
[34]
Following the formula set in Art. 284 of the
Labor Code, his separation pay was computed by
the appellate court at P2,080 times 36 years
(1958 to 1994) or P74,880. We agree with the
computation, after noting that his last monthly
salary was P4,160.00 so that one-half thereof is
P2,080.00. Finding no reversible error nor grave
abuse of discretion on the part of appellate court,
we are constrained to sustain its decision. To
avoid further delay in the payment due the
separated worker, whose claim was filed way
back in 1994, this decision is immediately
executory. Otherwise, six percent (6%) interest
per annum should be charged thereon, for any
delay, pursuant to provisions of the Civil Code.
WHEREFORE, the petition is DENIED and the
decision of the Court of Appeals dated February
29, 2000 is AFFIRMED. Petitioners must pay
private respondent Jaime Sahot his separation
pay for 36 years of service at the rate of one-half
monthly pay for every year of service, amounting
to P74,880.00, with interest of six per centum
(6%) per annum from finality of this decision until
fully paid.
Costs against petitioners.
SO ORDERED.

[G.R. No. 110524. July 29, 2002]

DOUGLAS MILLARES and ROGELIO
LAGDA, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, TRANS-GLOBAL
MARITIME AGENCY, INC. and ESSO
INTERNATIONAL SHIPPING CO.,
LTD. respondents.
RESOLUTION
KAPUNAN, J.:

On March 14, 2000, the Court promulgated

its decision in the above-entitled case, ruling in
favor of the petitioners. The dispositive portion
reads, as follows:
WHEREFORE, premises considered, the assailed
Decision, dated June 1, 1993, of the National
Labor Relations Commission is
hereby REVERSED andSET ASIDE and a new
judgment is hereby rendered ordering the private
respondents to:
(1) Reinstate petitioners Millares and Lagda to
their former positions without loss of seniority
rights, and to pay full backwages computed from
the time of illegal dismissal to the time of actual
reinstatement;
(2) Alternatively, if reinstatement is not possible,
pay petitioners Millares and Lagda separation pay
equivalent to one months salary for every year of
service; and,
(3) Jointly and severally pay petitioners One
Hundred Percent (100%) of their total credited
contributions as provided under the Consecutive
Enlistment Incentive Plan.
SO ORDERED.[1]
A
motion
for
reconsideration
was
consequently filed[2] by the private respondents
to which petitioners filed an Opposition thereto.[3]
In a Minute Resolution dated June 28, 2000,
the Court resolved to deny the motion for
reconsideration with finality.[4]
Subsequently, the Filipino Association for
Mariners Employment, Inc. (FAME) filed a Motion
for Leave to Intervene and to Admit a Motion for
Reconsideration in Intervention.
Private respondents, meanwhile, also filed a
Motion for Leave to File a Second Motion for
Reconsideration of our decision.
In both motions, the private respondents and
FAME respectively pray in the main that the Court
reconsider its ruling that Filipino seafarers are
considered regular employees within the context
of Article 280 of the Labor Code. They claim that
the decision may establish a precedent that will
adversely affect the maritime industry.
The Court resolved to set the case for oral
arguments to enable the parties to present their
sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by
private respondent ESSO International Shipping
Company LTD. (Esso International, for brevity)
through its local manning agency, private
respondent Trans-Global Maritime Agency, Inc.
(Trans-Global, for brevity) on November 16, 1968
as a machinist. In 1975, he was promoted as
Chief Engineer which position he occupied until
he opted to retire in 1989. He was then receiving
a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a
leave of absence for the period July 9 to August 7,

1989. In a letter dated June 14, 1989, Michael J.

Estaniel, President of private respondent TransGlobal, approved the request for leave of
absence. On June 21, 1989, petitioner Millares
wrote G.S. Hanly, Operations Manager of Exxon
International Co., (now Esso International)
through Michael J. Estaniel, informing him of his
intention to avail of the optional retirement plan
under the Consecutive Enlistment Incentive Plan
(CEIP) considering that he had already rendered
more than twenty (20) years of continuous
service. On July 13, 1989 respondent Esso
International, through W.J. Vrints, Employee
Relations Manager, denied petitioner Millares
request for optional retirement on the following
grounds, to wit: (1) he was employed on a
contractual basis; (2) his contract of enlistment
(COE) did not provide for retirement before the
age of sixty (60) years; and (3) he did not comply
with the requirement for claiming benefits under
the CEIP, i.e., to submit a written advice to the
company of his intention to terminate his
employment within thirty (30) days from his last
disembarkation date.
On August 9, 1989, petitioner Millares requested
for an extension of his leave of absence from
August 9 to 24, 1989. On August 19, 1989, Roy C.
Palomar, Crewing Manager, Ship Group A, Transglobal, wrote petitioner Millares advising him that
respondent Esso International has corrected the
deficiency in its manpower requirement
specifically in the Chief Engineer rank by
promoting a First Assistant Engineer to this
position as a result of (his) previous leave of
absence which expired last August 8, 1989. The
adjustment in said rank was required in order to
meet manpower schedules as a result of (his)
inability.
On September 26, 1989, respondent Esso
International, through H. Regenboog, Personnel
Administrator, advised petitioner Millares that in
view of his absence without leave, which is
equivalent to abandonment of his position, he
had been dropped from the roster of crew
members effective September 1, 1989.
On the other hand, petitioner Lagda was
employed by private respondent Esso
International as wiper/oiler in June 1969. He was
promoted as Chief Engineer in 1980, a position he
continued to occupy until his last COE expired on
April 10, 1989. He was then receiving a monthly
salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a
leave of absence from June 19, 1989 up to the
whole month of August 1989. On June 14, 1989,
respondent Trans-Globals President, Michael J.
Estaniel, approved petitioner Lagdas leave of
absence from June 22, 1989 to July 20, 1989 and
advised him to report for re-assignment on July
21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter
to G.S. Stanley, Operations Manager of
respondent Esso International, through
respondent Trans-Globals President Michael J.
Estaniel, informing him of his intention to avail of
the optional early retirement plan in view of his
twenty (20) years continuous service in the
complaint.

On July 13, 1989, respondent Trans-global denied

petitioner Lagdas request for availment of the
optional early retirement scheme on the same
grounds upon which petitioner Millares request
was denied.
On August 3, 1989, he requested for an extension
of his leave of absence up to August 26, 1989
and the same was approved. However, on
September 27, 1989, respondent Esso
International, through H. Regenboog, Personnel
Administrator, advised petitioner Lagda that in
view of his unavailability for contractual sea
service, he had been dropped from the roster of
crew members effective September 1, 1989.
On October 5, 1989, petitioners Millares and
Lagda filed a complaint-affidavit, docketed as
POEA (M) 89-10-9671, for illegal dismissal and
non-payment of employee benefits against
private respondents Esso International and TransGlobal, before the POEA.[5]
On July 17, 1991, the POEA rendered a
decision dismissing the complaint for lack of
merit.
On appeal to the NLRC, the decision of the
POEA was affirmed on June 1, 1993 with the
following disquisition:
The first issue must be decided in the
negative. Complainants-appellants, as seamen
and overseas contract workers are not covered by
the term regular employment as defined under
Article 280 of the Labor Code. The POEA, which is
tasked with protecting the rights of the Filipino
workers for overseas employment to fair and
equitable recruitment and employment practices
and to ensure their welfare, prescribes a standard
employment contract for seamen on board
ocean-going vessels for a fixed period but in no
case to exceed twelve (12) months (Part 1, Sec.
C). This POEA policy appears to be in consonance
with the international maritime
practice. Moreover, the Supreme Court in Brent
School, Inc. vs. Zamora, 181 SCRA 702, had held
that a fixed term is essential and natural
appurtenance of overseas employment contracts
to which the concept of regular employment with
all that it implies is not applicable, Article 280 of
the Labor Code notwithstanding. There is,
therefore, no reason to disturb the POEA
Administrators finding that complainantsappellants were hired on a contractual basis and
for a definite period. Their employment is thus
governed by the contracts they sign each time
they are re-hired and is terminated at the
expiration of the contract period.[6]
Undaunted, the petitioners elevated their
case to this Court[7] and successfully obtained the
favorable action, which is now vehemently being
assailed.
At the hearing on November 15, 2000, the
Court defined the issues for resolution in this
case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL
EMPLOYEES WHOSE EMPLOYMENTS ARE
TERMINATED EVERYTIME THEIR CONTRACTS OF
EMPLOYMENT EXPIRE?

II. ASSUMING THAT PETITIONERS ARE REGULAR

EMPLOYEES, WERE THEY DISMISSED WITHOUT
JUST CAUSE SO AS TO BE ENTITLED TO
REINSTATEMENT AND BACKWAGES, INCLUDING
PAYMENT OF 100% OF THEIR TOTAL CREDITED
CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA
STANDARD CONTRACT FOR SEAFARERS ON
BOARD FOREIGN VESSELS (SEC. C., DURATION OF
CONTRACT) PRECLUDE THE ATTAINMENT BY
SEAMEN OF THE STATUS OF REGULAR
EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R.
NO. 110524 CONTRAVENE INTERNATIONAL
MARITIME LAW, ALLEGEDLY PART OF THE LAW OF
THE LAND UNDER SECTION 2, ARTICLE II OF THE
CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT
CONSTITUTE A DEPARTURE FROM ITS RULING
IN COYOCA VS. NLRC (G.R. NO. 113658, March
31, 1995)?[8]
In answer to the private respondents Second
Motion for Reconsideration and to FAMEs Motion
for Reconsideration in Intervention, petitioners
maintain that they are regular employees as
found by the Court in the March 14, 2000
Decision. Considering that petitioners performed
activities which are usually necessary or desirable
in the usual business or trade of private
respondents, they should be considered as
regular employees pursuant to Article 280, Par. 1
of the Labor Code.[9] Other justifications for this
ruling include the fact that petitioners have
rendered over twenty (20) years of service, as
admitted by the private respondents; [10] that they
were recipients of Merit Pay which is an express
acknowledgment by the private respondents that
petitioners are regular and not just contractual
employees;[11] that petitioners were registered
under the Social Security System (SSS).
The petitioners further state that the case
of Coyoca
v.
NLRC[12] which
the
private
respondents invoke is not applicable to the case
at bar as the factual milieu in that case is not the
same. Furthermore, private respondents fear that
our judicial pronouncement will spell the death of
the manning industry is far from real. Instead,
with the valuable contribution of the manning
industry to our economy, these seafarers are
supposed to be considered as Heroes of the
Republic whose rights must be protected.
[13]
Finally, the first motion for reconsideration has
already been denied with finality by this Court
and it is about time that the Court should
write finis to this case.
The private respondents, on the other hand,
contend that: (a) the ruling holding petitioners as
regular employees was not in accord with the
decision in Coyoca v. NLRC, 243 SCRA 190; (b)
Art. 280 is not applicable as what applies is the
POEA Rules and Regulations Governing Overseas
Employment; (c) seafarers are not regular
employees based on international maritime
practice; (d) grave consequences would result on
the future of seafarers and manning agencies if
the ruling is not reconsidered; (e) there was no
dismissal committed; (f) a dismissed seafarer is

not entitled to back wages and reinstatement,

that being not allowed under the POEA rules and
the Migrant Workers Act; and, (g) petitioners are
not entitled to claim the total amount credited to
their account under the CEIP.[14]
Meanwhile, Intervenor Filipino Association of
Mariners Employment (FAME) avers that our
decision, if not reconsidered, will have negative
consequences in the employment of Filipino
Seafarers overseas which, in turn, might lead to
the demise of the manning industry in the
Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for
alternative sources for seafarers to man their
ships. AS reported by the BIMCO/ISF study, there
is an expectancy that there will be an increasing
demand for (and supply of) Chinese seafarers,
with some commentators suggesting that this
may be a long-term alternative to the
Philippines. Moreover, the political changes within
the former Eastern Bloc have made new sources
of supply available to the international
market. Intervenors recent survey among its
members shows that 50 Philippine manning
companies had already lost some 6,300 slots to
other Asian, East Europe and Chinese competition
for the last two years;
7.2 The Philippine stands to lose an annual
foreign income estimated at U.S. DOLLARS TWO
HUNDRED SEVENTY FOUR MILLION FIVE
HUNDRED FORTY NINE THOUSAND (US$
274,549,000.00) from the manning industry and
another US DOLLARS FOUR BILLION SIX
HUNDRED FIFTY MILLION SEVEN HUNDRED SIX
THOUSAND (US$ 4,650,760,000.00) from the
land-based sector if seafarers and equally
situated land-based contract workers will be
declared regular employees;
7.3 Some 195,917 (as of 1998) deployed
overseas Filipino seafarers will be rendered
jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June
2000) whose principals may no longer be doing
business with them will close their shops;
7.5 The contribution to the Overseas Workers
Welfare Administration by the sector, which is
USD 25.00 per contract and translates to US
DOLLARS FOUR MILLION (US$
4,000,000.00)annually, will be drastically
reduced. This is not to mention the processing
fees paid to POEA, Philippine Regulatory
Commission (PRC), Department of Foreign Affairs
(DFA) and Maritime Industry Authority (MARINA)
for the documentation of these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will
suffer socially and economically, as their
breadwinners will be rendered jobless; and
7.7 It will considerably slow down the
governments program of employment generation,
considering that, as expected foreign employers
will now avoid hiring Filipino overseas contract

workers as they will become regular employees

with all its concomitant effects.[15]
Significantly, the Office of the Solicitor
General, in a departure from its original position
in this case, has now taken the opposite view. It
has expressed its apprehension in sustaining our
decision and has called for a re-examination of
our ruling.[16]
Considering all the arguments presented by
the private respondents, the Intervenor FAME and
the OSG, we agree that there is a need to
reconsider our position with respect to the status
of seafarers which we considered as regular
employees under Article 280 of the Labor
Code. We, therefore, partially grant the second
motion for reconsideration.
In Brent School Inc. v. Zamora,[17] the
Supreme Court stated that Article 280 of the
Labor Code does not apply to overseas
employment.
In the light of the foregoing description of the
development of the provisions of the Labor Code
bearing on term or fixed-period employment that
the question posed in the opening paragraph of
this opinion should now be addressed. Is it then
the legislative intention to outlaw stipulations in
employment contracts laying down a definite
period therefor? Are such stipulations in essence
contrary to public policy and should not on this
account be accorded legitimacy?
On the other hand, there is the gradual and
progressive elimination of references to term or
fixed-period employment in the Labor Code, and
the specific statement of the rule that:
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 undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee or
where the work or service to be employee 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 actually exists.
There is, on the other hand, the Civil Code, which
has always recognized, and continues to
recognize, the validity and propriety of contracts
and obligations with a fixed or definite period,
and imposes no restraints on the freedom of the
parties to fix the duration of a contract, whatever
its object, be it specific, goods or services, except
the general admonition against stipulations

contrary to law, morals, good customs, public

order or public policy.Under the Civil code,
therefore, and as a general proposition, fixedterm employment contracts are not limited, as
they are under the present Labor Code, to those
by natural seasonal or for specific projects with
predetermined dates of completion; they also
include those to which the parties by free choice
have assigned a specific date of termination.
Some familiar examples may be cited of
employment contract which may be neither
for seasonal work nor for specific projects,
but to which a fixed term is an essential and
natural appurtenance: overseas
employment contracts, for one, to which,
whatever the nature of the engagement,
the concept of regular employment with all
that it implies does not appear ever to have
been applied. Article 280 of the Labor Code
notwithstanding also appointments to the
positions of dean, assistant dean, college
secretary, principal, and other administrative
offices in educational institutions, which are by
practice or tradition rotated among the faculty
members, and where fixed terms are a necessity
without which no reasonable rotation would be
possible. Similarly, despite the provisions of
Article 280, Policy Instructions. No. 8 of the
Minister of Labor implicitly recognize that certain
company officials may be elected for what would
amount to fix periods, at the expiration of which
they would have to stand down, in providing that
these officials, xxx may lose their jobs as
president, executive vice-president or vicepresident, etc. because the stockholders or the
board of directors for one reason or another did
not reelect them.
There can of course be no quarrel with the
proposition that where from the circumstances it
is apparent that periods have been imposed to
preclude acquisition of tenurial security by the
employee, they should be struck down or
disregard as contrary to public policy, morals,
etc. But where no such intent to circumvent the
law is shown, or stated otherwise, where the
reason for the law does not exists, e.g., where it
is indeed the employee himself who insists upon
a period or where the nature of the engagement
is such that, without being seasonal or for a
specific project, a definite date of termination is a
sine qua non, would an agreement fixing a period
be essentially evil or illicit, therefore
anathema? Would such an agreement come
within the scope of Article 280 which admittedly
was enacted to prevent the circumvention of the
right of the employee to be secured in xxx his
employment
As it is evident from even only the three
examples already given that Article 280 of the
Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut
of employment contracts to which the lack of a
fixed period would be an anomaly, but would also
appear to restrict, without reasonable
distinctions, the right of an employee to freely
stipulate within his employer the duration of his
engagement, it logically follows that such a literal
interpretation should be eschewed or
avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its

application. Outlawing the whole concept of term

employment and subverting to boot the principle
of freedom of contract to remedy the evil of
employers using it as a means to prevent their
employees from obtaining security of tenure is
like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping of the
head.
It is a salutary principle in statutory construction
that there exists a valid presumption that
undesirable consequences were never intended
by a legislative measure, and that a construction
of which the statute is fairly susceptible is
favored, which will avoid all objectionable,
mischievous, indefensible, wrongful, evil, and
injurious consequences.
Nothing is better settled than that courts are not
to give words a meaning which would lead to
absurd or unreasonable consequences. That is a
principle that goes back to In re Allen decided on
October 27, 1902, where it was held that a literal
interpretation is to be rejected if it would be
unjust or lead to absurd results. That is a strong
argument against its adoption. The words of
Justice Laurel are particularly apt. Thus: the
appellants would lead to an absurdity is another
argument for rejecting it.
Xxx We have, here, then a case where the true
intent of the law is clear that calls for the
application of the cardinal rule of statutory
construction that such intent of spirit must prevail
over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since
adherence to the letter would result in absurdity,
injustice and contradictions and would defeat the
plain and vital purpose of the statute.
Accordingly, and since the entire purpose
behind the development of legislation
culminating in the present Article 280 of the
Labor code clearly appears to have been, as
already observed, to prevent circumvention
of the employees right to be secure in his
tenure, the clause in said article
indiscriminately and completely ruling out
all written or oral agreements conflicting
with the concept of regular employment as
defined therein should be construed to refer
to the substantive evil that the Code itself
has singled out; agreements entered into
precisely to circumvent security of
tenure. It should have no application to
instances where a fixed period of
employment was agreed upon knowingly
and voluntarily 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 where it satisfactorily appears
that the employer and employee dealt with
each other on more or less equal terms with
no moral dominance whatever being
exercised by the former over the
latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than
those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended
consequences.

Again, in Pablo Coyoca v. NLRC,[18] the Court

also held that a seafarer is not a regular
employee and is not entitled to separation
pay.His employment is governed by the POEA
Standard Employment Contract for Filipino
Seamen.
XXX. In this connection, it is important to note
that neither does the POEA standard employment
contract for Filipino seamen provide for such
benefits.
As a Filipino seaman, petitioner is governed
by the Rules and Regulations Governing
Overseas Employment and the said Rules do
not provide for separation or termination
pay. What is embodied in petitioners contract is
the payment of compensation arising from
permanent partial disability during the period of
employment. We find that private respondent
complied with the terms of contract when it paid
petitioner P42,315.00 which, in our opinion, is a
reasonable amount, as compensation for his
illness.
Lastly, petitioner claims that he eventually
became a regular employee of private
respondent and thus falls within the purview of
Articles 284 and 95 of the Labor Code. In support
of this contention, petitioner cites the case
of Worth Shipping Service, Inc., et al. v. NLRC, et
al., wherein we held that the crew members of
the shipping company had attained regular status
and thus, were entitled to separation
pay. However, the facts of said case differ from
the present. In Worth, we held that the principal
and agent had operational control and
management over the MV Orient Carrier and
thus, were the actual employers of their crew
members.
From the foregoing cases, it is clear that
seafarers
are
considered
contractual
employees. They can not be considered as
regular employees under Article 280 of the Labor
Code. Their employment is governed by the
contracts they sign everytime they are rehired
and their employment is terminated when the
contract
expires. Their
employment
is
contractually fixed for a certain period of
time. They fall under the exception of Article 280
whose employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at the
time of engagement of the employee or where
the work or services to be performed is seasonal
in nature and the employment is for the duration
of the season.[19] We need not depart from the
rulings of the Court in the two aforementioned
cases which indeed constitute stare decisis with
respect to the employment status of seafarers.
Petitioners insist that they should be
considered regular employees, since they have
rendered services which are usually necessary
and desirable to the business of their employer,
and that they have rendered more than
twenty(20) years of service. While this may be
true, the Brent case has, however, held that there
are certain forms of employment which also
require the performance of usual and desirable
functions and which exceed one year but do not
necessarily attain regular employment status

under Article 280.[20] Overseas workers including

seafarers fall under this type of employment
which are governed by the mutual agreements of
the parties.
In this jurisdiction and as clearly stated in
the Coyoca case, Filipino seamen are governed by
the Rules and Regulations of the POEA.The
Standard Employment Contract governing the
employment of All Filipino seamen on Board
Ocean-Going Vessels of the POEA, particularly in
Part I, Sec. C specifically provides that the
contract of seamen shall be for a fixed
period. And in no case should the contract of
seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed
period but in no case to exceed 12 months and
shall be stated in the Crew Contract. Any
extension of the Contract period shall be subject
to the mutual consent of the parties.
Moreover, it is an accepted maritime industry
practice that employment of seafarers are for a
fixed period only. Constrained by the nature of
their employment which is quite peculiar and
unique in itself, it is for the mutual interest of
both the seafarer and the employer why the
employment status must be contractual only or
for a certain period of time. Seafarers spend most
of their time at sea and understandably, they can
not stay for a long and an indefinite period of
time at sea.[21] Limited access to shore society
during the employment will have an adverse
impact on the seafarer. The national, cultural and
lingual diversity among the crew during the COE
is a reality that necessitates the limitation of its
period.[22]
Petitioners make much of the fact that they
have been continually re-hired or their contracts
renewed before the contracts expired (which has
admittedly been going on for twenty (20)
years). By such circumstance they claim to have
acquired regular status with all the rights and
benefits appurtenant to it.
Such contention is untenable. Undeniably,
this circumstance of continuous re-hiring was
dictated
by
practical
considerations
that
experienced
crew
members
are
more
preferred. Petitioners were only given priority or
preference because of their experience and
qualifications but this does not detract the fact
that
herein
petitioners
are
contractual
employees. They can not be considered regular
employees. We quote with favor the explanation
of the NLRC in this wise:
Xxx The reference to permanent and
probationary masters and employees in these
papers is a misnomer and does not alter the fact
that the contracts for enlistment between
complainants-appellants and respondent-appellee
Esso International were for a definite periods of
time, ranging from 8 to 12 months.Although the
use of the terms permanent and probationary is
unfortunate, what is really meant is eligible for-rehire. This is the only logical conclusion possible
because the parties cannot and should not violate
POEAs requirement that a contract of enlistment

shall be for a limited period only; not exceeding

twelve (12)months.[23]
From all the foregoing, we hereby state that
petitioners are not considered regular or
permanent employees under Article 280 of the
Labor
Code. Petitioners
employment
have
automatically ceased upon the expiration of their
contracts of enlistment (COE). Since there was no
dismissal to speak of, it follows that petitioners
are not entitled to reinstatement or payment of
separation pay or backwages, as provided by law.
With respect to the benefits under the
Consecutive Enlistment Incentive Plan (CEIP), we
hold that the petitioners are still entitled to
receive 100% of the total amount credited to him
under the CEIP. Considering that we have
declared
that
petitioners
are
contractual
employees, their compensation and benefits are
covered by the contracts they signed and the
CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to
stay long in the company. As the name implies,
the program serves as an incentive for the
employees to renew their contracts with the
same company for as long as their services were
needed. For those who remained loyal to them,
they were duly rewarded with this additional
remuneration under the CEIP, if eligible. While
this is an act of benevolence on the part of the
employer, it can not, however, be denied that this
is part of the benefits accorded to the employees
for services rendered. Such right to the benefits is
vested upon them upon their eligibility to the
program.
The CEIP provides that an employee becomes
covered under the Plan when he completes thirtysix (36) months or an equivalent of three (3)
years of credited service with respect to
employment after June 30, 1973.[24] Upon
eligibility, an amount shall be credited to his
account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an
employee terminates because of his
retirement, death or permanent and
total disability, a percentage of the
total amount credited to his account
will be distributed to him (or his
eligible survivor(s) in accordance
with the following:
Reason for Termination Percentage
a) Attainment of mandatory retire- 100%
ment age of 60.
b) Permanent and total disability, 100%
while under contract,
that is
not due to accident or misconduct.
c) Permanent and total disability, 100%
while under contract,
that is

misconduct.

due to accident, and

not due to

xxx
B. Voluntary Termination
When an employee voluntary terminates his
employment with at least 36 months of credited
service without any misconduct on his part, 18
percent of the total amount credited to his
account, plus an additional of one percent for
each month (up to a maximum of 164 months of
credited service in excess of 36, will be
distributed to him provided (1) the employee has
completed his last Contract of Enlistment and (2)
employee advises the company in writing, within
30 days, from his last disembarkation date, of his
intention to terminate his employment. (To advise
the Company in writing means that the original
letter must be sent to the Companys agent in the
Philippines, a copy sent to the Company in New
York).
xxx
C. Other Terminations
When the employment of an
employee is terminated by the
Company for a reason other than
one in A and B above, without any
misconduct on his part, a
percentage of the total amount
credited to his account will be
distributed to him in accordance
with the following.
Credited Service Percentage
36 months 50%
48 75%
60 100%
When the employment of an
employee is terminated due to his
poor-performance, misconduct,
unavailability, etc., or if employee is
not offered re-engagement for
similar reasons, no distribution of
any portion of employees account
will ever be made to him (or his
eligible survivor[s]).
It must be recalled that on June 21, 1989,
Millares wrote a letter to his employer informing
his intention to avail of the optional retirement
plan under the CEIP considering that he has
rendered more than twenty (20) years of
continuous service. Lagda, likewise, manifested
the same intention in a letter dated June 26,
1989. Private respondent, however, denied their
requests for benefits under the CEIP since: (1) the
contract of enlistment (COE) did not provide for
retirement before 60 years of age; and that (2)
petitioners failed to submit a written notice of
their intention to terminate their employment
within
thirty
(30)
days
from
the
last
disembarkation date pursuant to the provision on
Voluntary Termination of the CEIP. Petitioners
were eventually dropped from the roster of crew

members and on grounds of abandonment and

unavailability for contractual sea service,
respectively,
they
were
disqualified
from
receiving any benefits under the CEIP. [25]
In our March 14, 2000 Decision, we, however,
found that petitioners Millares and Lagda were
not guilty of abandonment or unavailability for
contractual sea service, as we have stated:
The absence of petitioners was justified by the
fact that they secured the approval of private
respondents to take a leave of absence after the
termination of their last contracts of
enlistment. Subsequently, petitioners sought for
extensions of their respective leaves of
absence. Granting arguendo that their
subsequent requests for extensions were not
approved, it cannot be said that petitioners were
unavailable or had abandoned their work when
they failed to report back for assignment as they
were still questioning the denial of private
respondents of their desire to avail of the optional
early retirement policy, which they believed in
good faith to exist.[26]
Neither can we consider petitioners guilty of
poor performance or misconduct since they were
recipients of Merit Pay Awards for their exemplary
performances in the company.
Anent the letters dated June 21, 1989 (for
Millares) and June 26, 1989 (for Lagda) which
private respondent considered as belated written
notices of termination, we find such assertion
specious. Notwithstanding, we could conveniently
consider the petitioners eligible under Section IIIB of the CEIP (Voluntary Termination), but this
would, however, award them only a measly
amount of benefits which to our mind, the
petitioners do not rightfully deserve under the
facts and circumstances of the case. As the CEIP
provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions
that would qualify for a distribution of more than
one specified in A, B or C above, the largest
single amount, only, will be distributed.
Since petitioners termination of employment
under the CEIP do not fall under Section III-A
(Retirement, Death and Disability) or Section III-B
(Voluntary Termination), nor could they be
considered under the second paragraph of
Section III-C, as earlier discussed; it follows that
their termination falls under the first paragraph of
Section III-C for which they are entitled to 100%
of the
total
amount
credited
to their
accounts. The private respondents can not now
renege on their commitment under the CEIP to
reward deserving and loyal employees as the
petitioners in this case.
In taking cognizance of private respondents
Second Motion for Reconsideration, the Court
hereby suspends the rules to make them

conformable to law and justice and to subserve

an overriding public interest.
IN VIEW OF THE FOREGOING, THE COURT
Resolved
to Partially
GRANT Private
Respondents Second Motion for Reconsideration
and Intervenor FAMES Motion for Reconsideration
in Intervention. The Decision of the National
Labor Relations Commission dated June 1, 1993 is
hereby REINSTATED with MODIFICATION. The
Private Respondents, Trans-Global Maritime
Agency, Inc. and Esso International Shipping
Co.,Ltd. are hereby jointly and severally
ORDERED to pay petitioners One Hundred
Percent
(100%)
of
their
total
credited
contributions as provided under the Consecutive
Enlistment Incentive Plan(CEIP).
SO ORDERED.

[G.R. No. 122791. February 19, 2003]

PLACIDO O. URBANES, JR., doing business
under the name & style of CATALINA
SECURITY AGENCY,petitioner, vs. THE
HONORABLE SECRETARY OF LABOR AND
EMPLOYMENT and SOCIAL SECURITY
SYSTEM, respondents.
DECISION
CARPIO-MORALES, J.:
Before
this
Court
is
a
Petition
for Certiorari under Rule 65 of the Revised Rules
of Court assailing the June 22, 1995 Order of the
Department of Labor and Employment (DOLE)
Secretary which set aside the September 16,
1994 Order of the Regional Director, National
Capital Region (NCR).
The antecedent facts of the case are as
follows:
Petitioner Placido O. Urbanes, Jr., doing
business under the name and style of Catalina
Security Agency, entered into an agreement [1]to
provide security services to respondent Social
Security System (SSS).
During the effectivity of the agreement,
petitioner, by letter of May 16, 1994,[2] requested
the SSS for the upward adjustment of their
contract rate in view of Wage Order No. NCR-03
which was issued by the Regional Tripartite
Wages and Productivity Board-NCR pursuant to
Republic Act 6727 otherwise known as the Wage
Rationalization Act, the pertinent provision of
which wage order reads:
Section 9. In the case of contracts for
construction projects and for security, janitorial
and similar services, the prescribed amount
set forth herein for covered workers shall
be borne by the principals or the clients of
the construction/service contractors and the
contract shall be deemed amended
accordingly. In the event, however, that the
principal or client failed to pay the
prescribed increase, the
construction/service contractors shall be
jointly and severally liable with the
principal or client. (Emphasis and underscoring
supplied.)

As his May 16, 1994 letter to the SSS

remained unheeded, petitioner sent another
letter,[3] dated June 7, 1994, reiterating the
request, which was followed by still another
letter,[4] dated June 8, 1994.
On June 24, 1994, petitioner pulled out his
agencys services from the premises of the SSS
and another security agency, Jaguar, took over. [5]
On June 29, 1994, petitioner filed a
complaint[6] with the DOLE-NCR against the SSS
seeking the implementation of Wage Order No.
NCR-03.
In its position paper,[7] the SSS prayed for the
dismissal of the complaint on the ground that
petitioner is not the real party in interest and has
no legal capacity to file the same. In any event, it
argued that if it had any obligation, it was to the
security guards.
On the other hand, petitioner in his position
paper,[8] citing Eagle Security Agency, Inc. v.
NLRC,[9] contended that the security guards
assigned to the SSS do not have any legal basis
to file a complaint against it for lack of
contractual privity.
Finding for petitioner, the Regional Director of
the DOLE-NCR issued an Order[10] of September
16, 1994, the dispositive portion of which reads,
quoted verbatim:
WHEREFORE, premises considered, the
respondent Social Security System (SSS) is
hereby Ordered to pay Complainant the total sum
of ONE MILLION SIX HUNDRED THOUSAND EIGHT
HUNDRED FIFTY EIGHT AND 46/100 (P
1,600,858.46) representing the wage differentials
under Wage Order No. NCR-03 of the ONE
HUNDRED SIXTY EIGHT (168) Security Guards of
Catalina Security Agency covering the period
fromDecember 16, 1993 to June 24, 1994,
inclusive within ten (10) days from receipt hereof,
otherwise a writ of execution shall be issued to
enforce this Order.
The claims for the payment of interest and
Attorneys fees are hereby ordered dismissed for
want of jurisdiction.
SO ORDERED.
The SSS moved to reconsider the September
16, 1994 Order of the Regional Director, praying
that the computation be revised.[11]
By Order[12] of December 9, 1994, the
Regional Director modified his September 16,
1994 Order by reducing the amount payable by
the SSS to petitioner. The dispositive portion of
the Regional Directors Order of December 9, 1994
reads:
WHEREFORE, premises considered, the Order of
this Office dated September 16, 1994 is hereby
modified. Respondent Social Security System is
hereby ordered to pay complainant the amount of
ONE MILLION TWO HUNDRED THIRTY SEVEN
THOUSAND SEVEN HUNDRED FORTY PESOS
(P1,237,740.00) representing the wage
differentials under Wage Order No. NCR-03 of the
one hundred sixty-eight (168) security guards of
Catalina Security Agency covering the period

from December 16, 1993 to June 20, 1994,

inclusive, within ten (10) days from receipt of this
Order, otherwise, execution shall issue.
The SSS appealed[13] to the Secretary of
Labor upon the following assigned errors,
quoted verbatim:
A. THE REGIONAL DIRECTOR HAS NO
JURISDICTION OF THE CASE AT BAR.
B. THE HONORABLE REGIONAL DIRECTOR ERRED
IN FINDING THAT COMPLAINANT IS THE REAL
PARTY IN INTEREST AND HAS LEGAL CAPACITY TO
FILE THE CASE.
C. THE HONORABLE REGIONAL DIRECTOR ERRED
IN ADOPTING COMPLAINANTS COMPUTATION FOR
WAGE ADJUSTMENT UNDER WAGE ORDER NO.
NCR-03 AS BASIS OF RESPONDENTS LIABILITY.[14]
The Secretary of Labor, by Order[15] of June
22, 1995, set aside the order of the Regional
Director and remanded the records of the case for
recomputation
of
the
wage
differentials
using P 5,281.00 as the basis of the wage
adjustment. And the Secretary held petitioners
security agency JOINTLY AND SEVERALLY liable for
wage differentials, the amount of which should be
paid DIRECTLY to the security guards concerned.
Petitioners Motion for Reconsideration of the
DOLE Secretarys Order of June 22, 1995 having
been denied by Order[16] of October 10, 1995, the
present petition was filed, petitioner contending
that the DOLE Secretary committed grave abuse
of discretion when he:
1. . . . TOTALLY IGNORED THE PROVISION OF
ARTICLE 129 OF THE LABOR CODE FOR
PERFECTING AN APPEAL FROM THE DECISION OF
THE REGIONAL DIRECTOR UNDER ARTICLE 129
INVOKED BY RESPONDENT SSS;
2. . . . DISREGARDED THE PROVISION ON
APPEALS FROM THE DECISIONS OR RESOLUTIONS
OF THE REGIONAL DIRECTOR, DOLE, UNDER
ARTICLE 129 OF THE LABOR CODE, AS AMENDED
BY REPUBLIC ACT NO. 6715;
3. . . . TOTALLY OVERLOOKED THE LAW AND
PREVAILING JURISPRUDENCE WHEN IT ACTED ON
THE APPEAL OF RESPONDENT SSS.[17]
Petitioner asserts that the Secretary of Labor
does not have jurisdiction to review appeals from
decisions of the Regional Directors in complaints
filed under Article 129 of the Labor Code [18] which
provides:
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY
CLAIMS AND OTHER BENEFITS. Upon complaint of
any interested party, the regional director of the
Department of Labor and Employment or any
duly authorized hearing officers of the
Department is empowered, through summary
proceeding and after due notice, to hear and
decide any matter involving the recovery of
wages and other monetary claims and benefits,
including legal interest, owing to an employee or
person employed in domestic or household
service or househelper under this Code, arising

from employer-employee relations: Provided, That

such complaint does not include a claim for
reinstatement; Provided, further, That the
aggregate money claim of each employee or
househelper does not exceed Five Thousand
pesos (P5,000.00). The regional director or
hearing officer shall decide or resolve the
complaint within thirty (30) calendar days from
the date of the filing of the same. Any sum thus
recovered on behalf of any employee or
househelper pursuant to this Article shall be held
in a special deposit account by, and shall be paid
on order of, the Secretary of Labor and
Employment or the regional director directly to
the employee or househelper concerned. Any
such sum not paid to the employee or
househelper, because he cannot be located after
diligent and reasonable effort to locate him within
a period of three (3) years, shall be held as a
special fund of the Department of Labor and
Employment to be used exclusively for the
amelioration and benefit of workers.
Any decision or resolution of the regional
director or officer pursuant to this provision
may be appealed on the same grounds
provided in Article 223 of this Code, within five
(5) calendar days from receipt of a copy of said
decision or resolution, to the National Labor
Relations Commission which shall resolve the
appeal within ten (10) calendar days from
submission of the last pleading required or
allowed under its rules.
x x x (Emphasis supplied).
Petitioner thus contends that as the appeal of
SSS was filed with the wrong forum, it should
have been dismissed.[19]
The SSS, on the other hand, contends that
Article 128, not Article 129, is applicable to the
case. Article 128 provides:
ART. 128. VISITORIAL AND ENFORCEMENT
POWERS
xxx
(b) Notwithstanding the provisions of Article
129 and 217 of this Code to the contrary, and
in cases where the relationship of employeremployee 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 labor legislation based on
the findings of labor employment and
enforcement officers or industrial safety
engineers made in the course of
inspection.
xxx
An order issued by the duly authorized
representative of the Secretary of Labor
and Employment under this article may be
appealed to the latter.
x x x (Emphasis supplied).

Neither the petitioners contention nor the

SSSs
is
impressed
with
merit. Lapanday
Agricultural Development Corporation v. Court of
Appeals[20] instructs so. In that case, the security
agency filed a complaint before the Regional Trial
Court (RTC) against the principal or client
Lapanday for the upward adjustment of the
contract rate in accordance with Wage Order Nos.
5 and 6. Lapanday argued that it is the National
Labor Relations Commission, not the civil courts,
which has jurisdiction to resolve the issue in the
case, it involving the enforcement of wage
adjustment and other benefits due the agencys
security guards as mandated by several wage
orders. Holding that the RTC has jurisdiction over
the controversy, this Court ruled:
We agree with the respondent that the RTC has
jurisdiction over the subject matter of the present
case. It is well settled in law and
jurisprudence that where no employeremployee relationship exists between the
parties and no issue is involved which may
be resolved by reference to the Labor Code,
other labor statutes or any collective
bargaining agreement, it is the Regional
Trial Court that has jurisdiction. In its
complaint, private respondent is not
seeking any relief under the Labor Code
but seeks payment of a sum of money and
damages on account of petitioner's alleged
breach of its obligation under their Guard
Service Contract. The action is within the
realm of civil law hence jurisdiction over the
case belongs to the regular courts. While
the resolution of the issue involves the
application of labor laws, reference to the
labor code was only for the determination
of the solidary liability of the petitioner to
the respondent where no employeremployee relation exists.[21]
x x x (Emphasis and underscoring supplied).
In the case at bar, even if petitioner filed the
complaint on his and also on behalf of the
security guards,[22] the relief sought has to do
with the enforcement of the contract between
him and the SSS which was deemed amended by
virtue of Wage Order No. NCR-03. The
controversy subject of the case at bar is thus a
civil dispute, the proper forum for the resolution
of which is the civil courts.
But even assuming arguendo that petitioners
complaint were filed with the proper forum, for
lack of cause of action it must be dismissed.
Articles 106, 107 and 109 of the Labor Code
provide:
ART. 106. CONTRACTOR OR SUBCONTRACTOR.
Whenever an employer enters into contract with
another person for the performance of the
formers work, the employees of the contractor
and of the latters subcontractor, if any, shall be
paid in accordance with the provisions of this
Code.
In the event that the contractor or
subcontractor fails to pay the wage of his
employees in accordance with this
Code, the employer shall be jointly and

severally liable with his contractor or

subcontractor to such employees to the
extent of the work performed under the
contract, in the same manner and extent
that he is liable to employees directly
employed by him.
xxx (Emphasis and underscoring supplied)
ART. 107 INDIRECT EMPLOYER. The provisions of
the immediately preceding Article shall likewise
apply to any person, partnership, association or
corporation which, not being an employer,
contracts with an independent contractor for the
performance of any work, task, job or project.
ART. 109. SOLIDARY LIABILTY. The provisions of
existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held
responsible with his contractor or subcontractor
for any violation of any provision of this Code. For
purposes of determining the extent of their civil
liability under this Chapter, they shall be
considered as direct employers.(Emphasis
supplied.)
In the case of Eagle Security Agency, Inc. v.
NLRC,[23] this Court held:
The Wage Orders are explicit that payment
of the increases are "to be borne" by the
principal or client. "To be borne", however,
does not mean that the principal, PTSI in this
case, would directly pay the security guards the
wage and allowance increases because there is
no privity of contract between them. The security
guards' contractual relationship is with their
immediate employer, EAGLE. As an employer,
EAGLE is tasked, among others, with the payment
of their wages [See Article VII Sec. 3 of the
Contract for Security Services, supra and Bautista
v. Inciong, G.R. No. 52824, March 16, 1988, 158
SCRA 665].
On the other hand, there existed a contractual
agreement between PTSI and EAGLE wherein the
former availed of the security services provided
by the latter. In return, the security agency
collects from its client payment for its security
services. This payment covers the wages for the
security guards and also expenses for their
supervision and training, the guards' bonds,
firearms with ammunitions, uniforms and other
equipments, accessories, tools, materials and
supplies necessary for the maintenance of a
security force.
Premises considered, the security guards'
immediate recourse for the payment of the
increases is with their direct employer,
EAGLE. However, in order for the security agency
to comply with the new wage and allowance rates
it has to pay the security guards, the Wage
Orders made specific provision to amend existing
contracts for security services by allowing the
adjustment of the consideration paid by the
principal to the security agency concerned. What
the Wage Orders require, therefore, is the
amendment of the contract as to the
consideration to cover the service contractor's
payment of the increases mandated. In the end,

therefore, ultimate liability for the payment

of the increases rests with the principal.
In view of the foregoing, the security
guards should claim the amount of the
increases from EAGLE. Under the Labor
Code, in case the agency fails to pay them
the amounts claimed, PTSI should be held
solidarily liable with EAGLE [Articles 106,
107 and 109]. Should EAGLE pay, it can
claim an adjustment from PTSI for an
increase in consideration to cover the
increases payable to the security guards.
x x x (Emphasis and underscoring supplied).
Passing on the foregoing disquisition in Eagle,
this Court, in Lapanday,[24] held:
It is clear also from the foregoing that it is only
when [the] contractor pays the increases
mandated that it can claim an adjustment from
the principal to cover the increases payable to
the security guards. The conclusion that the
right of the contractor (as principal debtor)
to recover from the principal (as solidary
co-debtor) arises only if he has paid the
amounts for which both of them are jointly
and severally liable is in line with Article
1217 of the Civil Code which provides:
Art. 1217. Payment made by one the solidary
debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor
may choose which offer to accept.
He who made payment make claim from his codebtors only the share which corresponds to
each, with interest for the payment already
made. If the payment is made before the debt is
due, no interest for the intervening period may be
demanded. x x x[25] (Emphasis and underscoring
supplied).
In fine, the liability of the SSS to reimburse
petitioner arises only if and when petitioner pays
his employee-security guards the increases
mandated by Wage Order No. NCR-03.
The records do not show that petitioner has
paid the mandated increases to the security
guards. The security guards in fact have filed a
complaint[26] with the NLRC against petitioner
relative to, among other things, underpayment of
wages.
WHEREFORE, the present petition is
hereby DISMISSED, and petitioners complaint
before the Regional Director is dismissed for lack
of jurisdiction and cause of action.
SO ORDERED.

III.

Illegal Recruitment

[G.R. No. 123146. June 17, 2003]

PEOPLE OF THE PHILIPPINES, appellee,
vs. ALONA BULI-E and JOSEFINA (JOSIE)
ALOLINO, appellants.
DECISION

AZCUNA, J.:
Appellants Alona Buli-e and Josefina Alolino
assail the decision of the Regional Trial Court of
Baguio City, Branch 15, finding them guilty
beyond reasonable doubt of illegal recruitment
committed in large scale and eight counts of
estafa.
On March 16, 1993, the following information
was filed against Jose Alolino and appellants,
Alona Buli-e and Josefina Alolino:
The undersigned accuses ALONA BULI-E,
JOSEFINA (JOSIE) ALOLINO and JOSE ALOLINO
for VIOLATION OF ARTICLE 38 (b), PRESIDENTIAL
DECREE NO. 442, AS AMENDED BY P.D. 1920
FURTHER AMENDED BY P.D. 2018, committed in
large scale, which is an act of economic
sabotage, and by a syndicate, committed as
follows:
That during the period from March 1991 to July
1992, in the City of Baguio, Philippines, and
within the jurisdiction of this Honorable Court, the
above-named accused representing themselves
to have the capacity to contract, enlist and hire
and transport Filipino workers for employment
abroad did then and there willfully and
unlawfully, for a fee, recruit and promise
employment / job placement to the following
persons:
1. Constancio Macli-ing
2. Jesssica Estay
3. Sidolia Fias-eo
4. John Mangili
5. Nieva Lampoyas
6. Sabado Agapito
7. Joseph Oratil and
8. Joel Oratil
in Taiwan without first obtaining or securing
license or authority from the proper government
agency
CONTRARY TO LAW.[1]
On
the
same
day,
eight
separate
informations for estafa were also filed against
Jose Alolino and appellants Alona Buli-e (Buli-e for
brevity) and Josefina Alolino (Josefina, for
brevity). Except as to the dates, amounts
involved[2] and the names of complainants, the
following information in Criminal Case No. 11123R typified the seven other informations for the
crime of estafa:
That on or about the 12th day of July, 1992, in the
City of Baguio, Philippines, and within the
jurisdiction of this Honorable court, the abovenamed accused, conspiring, confederating and
mutually aiding one another, did then and there
willfully, unlawfully and feloniously defraud one

Constancio Macli-ing by way of false pretenses,

which are executed prior to or simultaneously
with the commission of the fraud, as follows, to
wit: the accused knowing fully well that they are
not authorized job recruiters for persons
intending to secure work abroad convinced
said Constancio Macli-ing and pretended that
they could secure a job for him/her abroad, for
and in consideration of the sum
of P15,000.00 when in truth and in fact they
could not; the said Constancio Macliing, deceived and convinced by the false
pretenses employed by the accused, parted away
the total sum of P15,000.00 in favor of the
accused, to the damage and prejudice of the said
Constancio Macli-ing in the aforementioned
amount of FIFTEEN THOUSAND
PESOS(P15,000.00), Philippine Currency.[3]
Jose Alolino was never apprehended and
remains at large. Upon arraignment, appellants
pleaded not guilty to each of the nine
informations filed against them. A joint trial
ensued since the cases involved the same factual
milieu.
Evidence for the prosecution showed that on
various dates from June 1990 to July 1992,
complainants went to the house of appellant Bulie at No. 63 Sanitary Camp, Baguio City upon
learning that she was recruiting workers for
overseas employment. A cousin of complainant
Lampoyas, whom Buli-e helped deploy abroad,
introduced Lampoyas to Buli-e in 1990. [4] The
brothers Oratil went to see Buli-e about possible
overseas employment in April 1992.[5] Mangili
inquired from Buli-e if she was recruiting workers
for overseas employment also in April 1992.
[6]
Sabado and Macli-ing approached Buli-e for
possible overseas work in May 1992,[7] while
Estay, accompanied by her sister, went to see
Buli-e on June 17, 1992.[8] Fias-eo approached
Buli-e on July 13, 1992, accompanied by
Lampoyas.[9]
Buli-e confirmed to complainants that she
was, in fact, recruiting contract workers for
Taiwan and that, although she did not have a
license of her own to recruit, her boss in Manila
who was a licensed recruiter, was in the process
of getting her one which would soon be issued.
[10]
Buli-e identified her superiors in Manila to be
the spouses Jose[11] and Josefina Alolino. Josefina
was connected with Rodolfo S. Ibuna Employment
Agency (RSI for brevity), a private employment
agency licensed to recruit overseas contract
workers. Buli-e
informed
complainants
that
requirements
for
application
of
overseas
work included submission of bio-data, passport,
NBI
clearance,
and
medical
examination
clearance to show that the applicant is physically
and mentally fit. There was also a placement fee
of P40,000 of whichP15,000 must be paid in
advance. Buli-e told complainants that if they
were interested in applying, they may submit to
her said requirements which she, in turn, will
submit to her boss who was in charge of
processing the necessary documents.
In the case of complainant Lampoyas who
originally applied with Buli-e for employment in
Kuwait, she was informed by Buli-e that the latter
was working for a certain Jessie Agtarep.
[12]
Lampoyas gave Buli-e P4,000 on March 14,
1991 as downpayment for the placement fee

and P5,000 on August 24, 1991. Lampoyas

application papers were processed by Jamal
Enterprises in Makati, Metro Manila but in 1992 ,
Buli-e transferred Lampoyas application to
appellant Josefina, whom Buli-e referred to as her
new boss.[13] Lampoyas was enticed to work in
Taiwan instead of Kuwait and was assured that
her deployment papers would be processed more
quickly.[14]
From March to August 1992, Buli-e
accompanied complainants,
on
separate
occasions, to Manila where they had their medical
check-up at Saints Peter and Paul Medical Clinic
in Ermita. Lampoyas had her medical check-up in
March 1992[15] while Mangili and Joseph Oratil had
their medical check-up in May 1992. [16] On June
20, 1992, Estay had her medical check-up,
[17]
while Agapito and Macli-ing had their medical
examination on July 5, 1992.[18] Fias-eo had her
medical examination on July 20, 1992 while Joel
Oratil had his medical examination in August
1992. Complainants
paid
for
the
medical
examination, the results of which were given to
Buli-e.
Immediately
after
complainants
had
undergone medical examination, Buli-e brought
them to No. 11 Concorde Street, Airmans Village,
Las Pias, Metro Manila purportedly to introduce
them to her boss, the spouses Alolino.
Complainants, except for Macli-ing and Agapito,
were able to meet only Jose Alolino on the same
day
that
they
had
undergone
medical
examination. Jose
Alolino
allegedly
told
complainants that his wife, Josefina, was in
Taiwan following up applications but he assured
them that they too would be deployed abroad in
a matter of months.[19] Mangili, Estay, and the
brothers Oratil were able to meet Josefina
personally when they returned to the residence of
the Alolinos in Manila to follow up their
applications.[20] Fias-eo and Lampoyas, on the
other hand, never met Josefina personally
although they were able to talk to her over the
telephone several times when they were
following up the status of their applications. [21] It
was during these telephone conversations that
Josefina instructed Fias-eo and Lampoyas to have
their medical examinations and secure their NBI
clearance in Manila accompanied by Buli-e whom
she identified as her agent.[22]
Complainants were assured by one or both of
the spouses that they were licensed to recruit
overseas contract workers and that they can
deploy workers within two to three months.
[23]
Complainants were informed by Buli-e and
Josefina that deployment for Taiwan is on a firstcome, first-served basis and that those who can
comply with the requirements, particularly the
advance payment of P15,000, shall be deployed
first.[24]
On different dates from May 1992 to July
1992, complainants handed to Buli-e at Sanitary
Camp, Baguio City their advance payments of
P15,000 for which they were issued receipts.
[25]
Mangili paid P11,000 on May 22, 1992
and P4,000 on June 18, 1992.[26] The Oratil
brothers paid P15,000 each in installments from
May 1992 to July 15, 1992.[27] Macli-ing
paid P15,000 on July 12, 1992.[28] Fias-eo gave
Buli-e P15,000 on July 13, 1992.[29] In addition to
her previous payments amounting to P9,000,

Lampoyas paid Buli-e P5,000 also on July 13,

1992.[30] Estay
gave P15,000
on
July
21,
1992[31] while Agapito paid Buli-e P15,000 on July
22, 1992.[32] Buli-e assured complainants that she
delivered the payments to Josefina. Aside from
giving the downpayment of the placement fee,
complainants complied with the rest of the
requirements which included submission of
pictures, bio-data, passports, NBI clearances and
medical examination reports.
After months of waiting and despite
compliance
with
all
the
requirements,
complainants were not deployed abroad as
promised by appellants. From August 1992 to
February 1993, complainants trooped to Buli-es
house but Buli-e merely kept on telling them to
wait. When complainants called up Josefina by
long distance telephone, they were also told just
to wait.
Weary
of
the
interminable
waiting,
complainants went to the POEA office in Baguio
City on February 2, 1993, to check whether
appellants were indeed licensed to recruit
overseas contract workers. They were dismayed
to find out that appellants had no license to
recruit in Baguio City or any part of the Cordillera
Administrative Region (CAR). On the same day,
complainants filed their complaints with the
POEA-CAR and the Prosecutors Office of Baguio
City.
After appellants were apprehended and
during their detention at the Baguio City Jail,
Josefina, through counsel, refunded complainant
Fias-eo P15,000 for his downpayment on the
placement
fee.[33] Complainant
Mangili
also
demanded a refund and he was paid by Josefina,
again through her counsel, the sum of P25,000
for his advance payment of P15,000 and
as reimbursement of the actual expenses he
incurred for his application.[34]
During trial, Buli-e testified that she worked
for RSI and had been referring applicants to the
agency before 1991. She met Josefina a year
after she resigned from RSI.[35] In 1990, Buli-e had
an applicant for Singapore, a certain Prescilla
Laoayan from Baguio City. Buli-e referred Prescilla
to RSI which, through Mrs. Fe Go, handled the
processing of her application. As part of the
requirements of the agency, Prescilla had to
undergo training at the house of Josefina, who
was then the Marketing Director of RSI. In 1991,
Josefina sent Buli-e a note, through Prescilla,
telling her to go to the house of Josefina at
No.11 Concorde Street, Airmans Village, Las
Pias, Metro Manila to discuss matters about
recruitment of workers. Buli-e went to the house
of Josefina as requested and it was then that she
was appointed as an agent of Josefina. [36] Buli-e
was tasked to find job applicants for Taiwan,
Korea or Singapore whom she can refer to
RSI through Josefina. Buli-e would then be paid
for each referral. When Buli-e asked Josefina if the
latter was authorized or had any license to recruit
for overseas placement, Josefina answered in the
affirmative.[37]
Thereafter, Buli-e started recruiting job
applicants for Taiwan, Singapore and Korea at her
house in No. 63 Sanitary Camp, Baguio
City.Complainants sought her of their own accord
and Buli-e informed them of the requirements for
job application which consisted of submission of

bio-data, passport, NBI clearance and placement

fee of P40,000 of which P15,000 must be paid in
advance upon instructions of Josefina. Josefina
allegedly instructed
Buli-e to accompany
complainants to Sts. Peter and Paul Medical Clinic
in Ermita, Manila for medical check-up. [38] Buli-e
was likewise instructed by Josefina to accompany
some of the complainants in securing their NBI
clearance and to receive whatever documents
complainants will be submitting including
the P15,000 advance payment, all of which
should be submitted to Josefina. Buli-e said that
she submitted the documents and the payments
either to Jose Alolino or to Josefina. [39] She
clarified that she did not have a hand in securing
the passports of complainants[40] and received
instructions from Josefina only when she
communicated
with
Josefina
through
the
telephone or went to Manila. She averred that she
and several members of her family also tried to
apply for overseas work with Josefina and paid
the latter P100,000. [41]
Buli-e presented Mrs. Nonette LegaspiVillanueva, Unit Coordinator of POEA-CAR, to
testify that RSI was a licensed employment
agency and that Josefina was a licensed recruiter
at the time that Buli-e had dealings with her coappellant. Mrs. Villanueva testified that she has
been with the POEA since 1985. Part of her
functions included administrative and technical
supervision of the staff regarding employment,
facilitation,
licensing,
investigation
and
monitoring of the provincial recruitment authority
as well as issuance of authorization to personnel
to conduct inspection of licensed agencies in the
City of Baguio.[42] Mrs.Villanueva said that, as per
the certification of the Chief of the Licensing
Branch of the POEA, RSI was a private
employment agency with a license which expired
on July 14, 1992. Josefina Alolino was included in
the list of the personnel submitted by the agency
in July 1990 as Marketing Consultant. [43] Mrs.
Villanueva, however, clarified that licenses or
permits to recruit workers are territorial in nature
so that an agency licensed in Manila can only
engage in recruitment activities within the place
specified in the license although the applicants
may be non-residents of Metro Manila. She
further testified that she cannot remember if Bulie was given any authority to recruit in Baguio
City.[44]
Josefina, on the other hand, testified that on
September 16, 1987, she was appointed as one
of the four Marketing Directors of RSI which was
located in 408 Jovan Condominium, Shaw
Boulevard, Mandaluyong, Metro Manila. RSI,
represented by Rodolfo S. Ibuna as proprietor,
was a private employment agency with a license
which expired on July 14, 1992. As Overseas
Marketing Director of RSI, Josefina was tasked to
represent the agency in negotiating with
employers in Taiwan, Malaysia, United States and
Singapore[45] for said employers to avail of the
services of RSI in recruiting, hiring, processing
and deploying Filipino contract workers. She was
also authorized to solicit applicants for overseas
placement through advertisements, referrals,
walk-ins, etc., and to undertake screening,
evaluation and final selection of applicants. As
per agreement with RSI, Josefina was entitled to a
certain share for each successful negotiation with
a foreign employer.[46]

Josefina denied that Buli-e was her agent and

insisted that she never gave Buli-e authority to
recruit for RSI. On the contrary, Buli-e allegedly
informed Josefina that she was an agent of Mrs.
Fe Go, another marketing Director of RSI.
Sometime in 1991, Mrs. Go referred to Josefina a
certain Prescilla Laoayan, who wanted to apply as
a domestic helper in Taiwan. Upon being told that
she could not be deployed unless she would give
a downpayment of P15,000 for the placement
fee, Prescilla informed Josefina that she already
gave P15,000 to an agent whom she identified to
be Buli-e. Josefina then wrote a note for Buli-e
informing her that there was a problem regarding
the processing of Prescillas application. Prescilla
delivered the note to Buli-e who in turn went to
see Josefina at her house in No. 11 Concorde
Street, Airmans Village, Las Pias, Metro Manila.
Josefina said that she and Buli-e merely talked
about Prescillas application and that was the first
time that Josefina met and talked with Buli-e
although she had already seen her before in the
office of Mrs. Fe Go.[47]
Josefina testified that herein complainants
were originally referred by Buli-e to Mrs. Fe Go
who, in turn, referred them to her. Josefina said
that she accepted referrals from Buli-e even
though the latter was not her agent nor
connected with RSI because their agency accepts
referrals from everyone. In 1992, Buli-e, claiming
that complainants authorized and designated her
to act as their spokesperson, went to the house of
Josefina several times to follow up the progress of
their applications.[48]
Josefina
denied
having
given
Buli-e
instructions to accompany complainants to Saints
Peter and Paul Medical Clinic in Ermita, Manila.
She also denied having an understanding with
Buli-e to receive payments from each of
complainants and to bring them to her house in
Las Pias, Metro Manila.[49] Josefina explained that
the deployment of complainants was delayed
because the Taiwanese government changed its
previous policy of allowing foreign employment
agencies like RSI to negotiate directly with
prospective employers in Taiwan. Foreign
employment agencies were instead allowed to
negotiate only with local employment agencies in
Taiwan, which, in turn, were responsible for
negotiating with the Taiwanese employers. The
change in the policy caused delay in the
deployment of complainants since the local
employment agencies in Taiwan demanded
additional requirements such as additional fees.
Josefina said she informed complainants of the
delay and the reason for it but complainants
could not wait to be deployed and, instead,
demanded the refund of their payments.[50]
On March 2, 1993, Josefina allegedly gave
Buli-e P75,000 with the instruction that she was
to give complainant Lampoyas P5,000 as
refund, and P10,000 each to complainants Macliing, Estay, Fias-eo, Mangili, Agapito, and the
Oratil brothers. Upon having been approached by
complainants for the refund of their money,
Josefina informed them that she already gave
their
refunds
through
Buli-e.Complainants,
however, claimed that they did not receive their
refunds from Buli-e. When complainants could not
wait for the refund of their payments and failed to
see Josefina who was always out of the country
due to her work, they filed the present cases.[51]

Emelita Racelis testified that she was an

employee of RSI from 1989 to 1992 and was one
of the two persons assigned to Josefina.[52]Ms.
Racelis said that Buli-e frequently went to the RSI,
bringing applicants with her three times a month.
Among the applicants whom Buli-e referred to RSI
through one of the marketing directors, Mrs. Fe
Go, was a certain Prescilla Laoayan. Racelis said
that Laoayan was endorsed by Mrs. Go to Josefina
because it is the practice that when the applicant
of one of the marketing directors cannot be
deployed, the applicant will be endorsed to
another marketing director with a job opening.
Josefina, however, had trouble deploying Ms.
Laoayan whose placement fee had not been
forwarded by Buli-e to RSI.[53]
On July 4, 1995, the trial court rendered a
decision, the dispositive portion of which reads,
as follows:
WHEREFORE, judgment is rendered as follows:
1. In Criminal Case No. 11122-R, the
Court finds the accused Alona Bulie and Josefina (Josie) Alolino guilty
beyond reasonable doubt, by direct
participation and in conspiracy with
each other, of the crime of illegal
recruitment in a large scale as
defined and penalized under Article
38(b) in relation to Article 39 of PD
442 as amended by PD 2018 and
sentences each of them to life
imprisonment and to pay a fine
ofP100,000.00 each, and to pay
the costs.
2. In Criminal case No. 11123-R to
11130-R (8 counts), the court finds
the accused Alona Buli-e and
Josefina (Josie) Alolino guilty
beyond reasonable doubt by direct
participation and in conspiracy with
each other of the crime of Estafa
as charged in the Informations in
the aforesaid 8 cases as defined
and penalized under Article 315
first paragraph in relation to No. 2
(a) of the same article and
sentences each of them, applying
the indeterminate sentence law, to
an imprisonment ranging from six
(6) months and one (1) day
of prision correccional as minimum
to six (6) years, eight (8) months
and twenty (20) days of prision
mayor as maximum in each of the
aforesaid 8 cases; to indemnify
jointly and severally the offended
parties Constancio Macli-ing,
Jessica Estay, Sidolia Fias-eo, John
Mangili, Sabado Agapito, Joseph
Oratil and Joel Oratil the sum
of P15,000.00 each and Nieva
Lampoyas the sum of P14,000.00
as actual damages without
subsidiary imprisonment in case of
insolvency and to pay the costs.
The accused Alona Buli-e and
Josefina (Josie) Alolino being
detention prisoners are entitled to

be credited 4/5 of their preventive

imprisonment in the service of
their sentence in accordance with
Article 29 of the Revised Penal
Code.
SO ORDERED.[54]
In rendering the decision, the trial court ruled
that by their acts, Buli-e and Josefina, conspired
and confederated with one another in the illegal
recruitment of complainants for overseas
employment. Buli-e performed the recruitment
activities in Baguio and Josefina, in Manila. The
trial court specifically noted Buli-es acts of
accompanying the complainants to Manila for
their
medical
examinations,
securingcomplainants NBI clearances and passpo
rts
as
well
as
receiving
complainants
downpayments for the purported placement fee
as an indication that she directly participated in
the recruitment of all complainants. The trial
court observed that Buli-e practically confessed
her acts of recruitment in open court and justified
the same by claiming that she was just acting as
an agent of Josefina or was authorized to act in
behalf of the latter.
As regards Josefina, the trial court held that
she directly participated in the recruitment of
complainants even if she did not personally go to
Baguio City since she received the applications
and other requirements such as NBI clearances,
passports, bio-data as well as the advanced
payments of complainants from Buli-e. Either she
or her husband Jose, or both of them, entertained
complainants who were brought by Buli-e to their
home at No. 11 Concorde Street, Airmans Village,
Las Pias, Metro Manila. The spouses repeatedly
promised to work or make arrangements for
complainants deployment abroad.
The trial court ruled that the authority given
to Josefina as Overseas Marketing Director of RSI,
a duly licensed employment agency, was
confined to negotiating with foreign employers in
Taiwan and she was not supposed to recruit
overseas Filipino workers. The court stressed that
assuming Josefina was authorized to recruit in
Manila, she had no authority to do so in Baguio
City. Citing Article 29 of the Labor Code which
states that no license or authority shall be used
directly or indirectly by any person other than the
one in whose favor it was issued or at any place
other than that stated in the license or authority,
nor may such license or authority be transferred
or conveyed to any other person or entity, the
trial court ruled that appellants could not use the
RSI license in Manila to recruit overseas contract
workers inBaguio City.
The trial court further noted that the license
of RSI employment office was already suspended
on June 8, 1992 and expired on July 14, 1992.
Consequently, the authority given by RSI to
Josefina was likewise suspended on June 8,
1992 and expired on July 14, 1992.
Finally, the trial court said that Josefinas act
of returning the advanced payments of some of
complainants would not exculpate her and only
proved that she had in fact received money from
complainants who were made to believe that they
would be deployed abroad at the soonest
possible time.

With regard to the eight charges of estafa

filed against appellants, the trial court convicted
them on the ground that all the elements of
estafa were present under each of the eight
charges filed. The trial court held that appellants
through false pretenses and fraudulent acts
represented to complainants that they had the
power, authority and capacity to deploy workers
abroad for a fee of P40,000, of whichP15,000
should be paid as advance payment. The false
pretenses and fraudulent acts were executed
prior to or simultaneous with appellants taking
the sum of P15,000 as advance payment from
each of private complainants [55] which were
received by Buli-e in Baguio City and turned over
by her to Josefina in Manila. Complainants relied
on the pretenses and misrepresentations of
appellants and parted with substantial sums of
money as advance payments of their placement
fees. As a result of the false pretenses and
misrepresentations, complainants were damaged
and prejudiced to the extent of the sums they
had given as downpayment since appellants
failed to send them abroad as promised.
In her appeal before us, appellant Buli-e
contends that the trial court erred:
I. IN FAILING TO APPRECIATE THE
DEFENSE OF THE CO-ACCUSED
ALONA BULI-E THAT SHE MERELY
REFERRED THE PRIVATE OFFENDED
PARTIES TO CO-ACCUSED SPOUSES
JOSE AND JOSEFINA ALOLINO,
WHOM SHE HONESTLY BELIEVED
TO BE BONA FIDE OVERSEAS JOB
RECRUITERS;
II. IN HOLDING THAT THERE WAS
CONSPIRACY BETWEEN HEREIN
APPELLANT BULI-E AND SPOUSES
ALOLINO IN THE COMMISSION OF
THE CRIMES OF LARGE SCALE
ILLEGAL RECRUITMENT AND
ESTAFA; AND
III. HOLDING CO-ACCUSED ALONA BULI-E
LIABLE FOR ESTAFA WHEN THERE
WAS NO SHOWING THAT SAID
ACCUSED BENEFITED FROM THE
ALLEGED MISREPRESENTATION.
Appellant Josefina, on the other hand,
presents the following assignments of error:
I. THE COURT A QUO ERRED IN FINDING
JOSEFINA ALOLINO GUILTY BEYOND
REASONABLE DOUBT BY DIRECT
PARTICIPATION AND IN CONSPIRACY
WITH CO-ACCUSED ALONA BULI-E
OF THE CRIME OF ILLEGAL
RECRUITMENT IN LARGE SCALE AS
DEFINED AND PENALIZED UNDER
ARTICLE 38[b] IN RELATION TO
ARTICLE 39 OF P.D. 442 AS
AMENDED BY P.D. 2018 AND IN
SENTENCING EACH OF THEM TO
LIFE IMPRISONMENT AND TO PAY A
FINE OF P100,000.
II. THE COURT A QUO ERRED IN FINDING
THE ACCUSED JOSEFINA ALOLINO
GUILTY BEYOND REASONABLE

DOUBT BY DIRECT PARTICIPATION

AND IN CONSPIRACY WITH COACCUSED ALONA BULI-E OF THE
CRIME OF ESTAFA AS CHARGED IN
THE INFORMATION IN THE
AFORESAID 8 CASES AS DEFINED
AND PENALIZED UNDER ARTICLE
315 FIRST PARAGRAPH IN RELATION
TO NO. 2[A] OF THE SAME ARTICLE.
We shall discuss the interrelated issues
together.
Under Article 13(b) of the Labor Code,
recruitment and placement refer to any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and include
referrals,
contract
services,
promising
or
advertising for employment, locally or abroad,
whether for profit or not; provided that any
person or entity which, in any manner, offers or
promises for a fee employment to two or more
persons shall be deemed engaged in recruitment
or placement.
The essential elements of the crime of illegal
recruitment in large scale are (1) the accused
engages in acts of recruitment and placement of
workers defined under Article 13(b) or in any
prohibited activities under Article 34 of the Labor
Code; (2) the accused has not complied with the
guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the
securing of a license or an authority to recruit and
deploy workers, either locally or overseas; and (3)
the accused commits the unlawful acts against
three or more persons, individually or as a group.
[56]
When illegal recruitment is committed in large
scale or when it is committed by a syndicate, i.e.,
if it is carried out by a group of three or more
persons conspiring and/or confederating with one
another, it is considered as an offense involving
economic sabotage.
The factual backdrop shows that appellants
engaged in recruitment activities involving eight
persons. The recruitment activities were made by
appellants without having the license or authority
to do so as evidenced by the certification issued
by Legal Officer of the POEA Regional Extension
Unit, Cordillera Administrative Region, which
stated that Alona Buli-e, Hilario Antonio, [57] Josie
Alolino and Jose Alolino were not licensed nor
authorized to recruit workers for overseas
employment in the City of Baguio or in any part
of the region.[58]
Appellant Buli-e herself does not deny that
she had no license or authority to recruit workers
for overseas employment. She, however, insists
that she had never directly participated in
recruiting complainants since it was in fact
complainants who sought her help in applying for
overseas employment. Buli-e explained that she
merely referred complainants to the spouses
Alolino whom she honestly believed to bebona
fide overseas job recruiters and, since she,
herself, had intentions of applying for overseas
work, she tagged along with complainants to
Manila to see the spouses Alolino. Inasmuch as
she and complainants were all from Baguio City,
complainants allegedly designated her to conduct
all negotiations and follow up of their applications
with the spouses.

Buli-es claim deserves scant consideration. It

is true that Buli-e did not actively seek
complainants to recruit them for overseas
employment. It was complainants who sought her
out. Nevertheless,
when
complainants
approached her, Buli-e gave complainants the
impression that she had the ability to send
workers abroad by saying that although she did
not have a license of her own to recruit, her boss,
who was a licensed recruiter, was already in the
process of securing her a license.[59] She not only
informed complainants of the requirements in
applying for overseas employment and even
accompanied them to Manila to procure the
necessary documents such as passport, medical
and NBI clearances.[60] It was she who brought
them to the house of the spouses Alolino and it
was also she who received from complainants
advanced payments for placement fee which she
handed over to the spouses. Her claim that she
and her relatives were also victims of illegal
recruitment by the spouses Alolino is not
substantiated.
We also find no reason to disturb the findings
of the trial court that Josefina Alolino conspired
and confederated with Buli-e in recruiting
applicants for overseas employment from Baguio
City although neither she nor Buli-e had license or
authority to do so. Her claim that she did not
have a direct participation in the recruitment in
Baguio City and that she merely assisted the
complainants by referring them to RSI to facilitate
their papers does not merit credence. There is no
showing that complainants ever set foot in the
RSI office. They were always brought by Buli-e to
the house of the spouses Alolino in Las Pias after
their medical check up. Complainants, who were
with other applicants, were entertained and
generously fed breakfast or dinner by one or both
of the spouses who assured them that they would
be able to fly to Taiwan in just a matter of
months.[61] Although Josefina alleged that the
documents and payments were handed by Buli-e
to the RSI office, Josefina could show no proof to
substantiate her claim. It is significant to note
that after the informations for illegal recruitment
and eight counts of estafa were already filed in
court, some of the complainants were given a
refund of their advances for the placement
fees by Josefina herself, through counsel, and not
by RSI.
Josefinas acts clearly show that she and Bulie acted in concert towards the accomplishment of
a common felonious purpose which was to recruit
workers for overseas employment even though
they had no license to do so. Settled is the rule
that if it is proved that two or more persons,
aimed, by their acts, at the accomplishment of
the same unlawful object, each doing a part so
that their acts, although apparently independent,
were in fact connected and cooperative,
indicating a closeness of personal association and
a concurrence of sentiment, a conspiracy may be
inferred even though no actual meeting between
or among them to coordinate ways and means is
proved.[62]
Josefina,
however,
maintains
that
as
Overseas Marketing Director for RSI, she was
authorized to solicit applicants for overseas
placement through advertisements, referrals,
walk-ins, etc. and to undertake screening,
evaluation and final selection of applicants.

Apart from her bare testimony, there is

nothing on record to corroborate Josefinas claim
that as Marketing Director she was authorized to
solicit applicants for overseas placement through
advertisements, referrals, walk-ins, etc. Josefina
did not bother to formally offer as evidence the
document allegedly supporting her claim that
part of her duties as Marketing Director included
recruitment of overseas contract workers. The
document not having been formally offered in
court cannot be considered, pursuant to
Section 34, Rule 132 of the Rules of Court.
Moreover, the Licensing Branch of the POEA
confirmed that the license of RSI had already
been suspended on June 8, 1992 and expired on
July 14, 1992.[63] Consequently, even if Josefina
was licensed to recruit workers for overseas
employment, her authority to do so ceased when
the license of her agency, RSI, was suspended
and when it eventually expired. Josefina,
however, despite the suspension and expiration
of the RSI license, continued to engage in
recruitment
activities
for
overseas
employment. Except for Lampoyas who met Jose
Alolino at the latters house in March 1992,
and Mangili and Joseph Oratil who met Jose
Alolino in May 1992, complainants were
entertained at the house of the Alolinos after the
license of RSI had already been suspended.
Lampoyas, Macli-ing and Mangili completed
the P15,000 downpayment of the placement fee
after the license of RSI had already been
suspended. The rest of complainants gave
payments for the placement fee after the license
of RSI had already expired.
Furthermore, Josefinas alleged authority to
recruit applicants for overseas employment as
Marketing Director of RSI was only confined to
Metro Manila. Article 29 of the Labor Code
provides:
Art. 29. Non-transferability of license or authority
No license or authority shall be used directly or
indirectly by any person other than the one in
whose favor it was issued or at any place other
than that stated in the license or authority, nor
may such license or authority be transferred,
conveyed or assigned to any other person or
entity. Any transfer of business address,
appointment or designation of any agent or
representative including the establishment of
additional offices anywhere shall be subject to
the prior approval of the Secretary of Labor.
We are not persuaded by Josefinas claim that
no recruitment activity was being done outside of
the territorial permit of RSI and it was only
incidental that complainants who were referred to
her by Buli-e were residents of Baguio City. As
earlier discussed, there is no indication that
complainants ever set foot in the RSI office. They
were always brought by Buli-e to Las Pias, Metro
Manila where they were entertained by one or
both of the spouses Alolino who repeatedly
assured them that they would be able to fly to
Taiwan in a matter of months. Josefina, who
claims to have authority to recruit applicants for
overseas employment in behalf of RSI, should
have known that licensed agencies are prohibited
from conducting any provincial recruitment, job
fairs or recruitment activities of any form outside
of
the
address
stated
in
the
license,

acknowledged branch or extension office, without

securing prior authority from the POEA.
[64]
Pursuant to the POEA rules and regulations,
Josefina could recruit applicants for overseas
employment and process their applications only
at the RSI office in Mandaluyong, Metro Manila
since there was no showing that RSI had an
acknowledged branch or extension office in
Baguio City or thatthe prior approval of the POEA
for provincial recruitment or recruitment activities
outside the RSI office was obtained.
Finally, the trial court did not err in finding
appellants guilty of eight (8) counts of estafa. It is
settled that a person convicted of illegal
recruitment under the Labor Code can also be
convicted of violation of the Revised Penal Code
provisions on estafa provided that the elements
of the crime are present. [65] The elements for
estafa are: (a) that the accused defrauded
another by abuse of confidence or by means of
deceit, and (b) that damage or prejudice capable
of pecuniary estimation is caused to the offended
party or third person.[66]
Appellants
deceived
complainants
into
believing that they had the authority and
capability to send them to Taiwan for
employment. By reason or on the strength of
such assurance, complainants parted with their
money in payment of the placement fees. Since
the representations of appellants proved to be
false, paragraph 2(a), Article 315 of the Revised
Penal Code is applicable. Buli-es claim that she
did not benefit from the money collected from
complainants since she gave the payments to
Josefina is of no moment. It was clearly
established that she acted in connivance with
Josefina in defrauding complainants. As regards
Josefina, the fact that she returned the payment
of some of the complainants will not exculpate
her from criminal liability. Criminal liability for
estafa is not affected by compromise or novation,
for it is a public offense which must be
prosecuted and punished by the government on
its own motion even though complete reparation
has been made of the damage suffered by the
offended party.[67]
The actual damages in the sum of P15,000
awarded to each of complainants Fias-eo and
Mangili, however, should be deleted inasmuch as
said amounts have already been reimbursed by
Josefina during her detention.
WHEREFORE, the decision of the Regional
Trial Court of Baguio City, Branch 15, is AFFIRMED
with the MODIFICATION that the actual damages
awarded to Fias-eo and Mangili in Criminal Cases
Nos. 11125-R and 11126-R are deleted. Costs de
oficio.
SO ORDERED.

[G.R. NO. 148137. January 16, 2003]

PEOPLE OF THE PHILIPPINES, appellee, vs.
DOMINGA CORRALES FORTUNA, appellant.
DECISION
VITUG, J.:
On 29 September 1998, Dominga Corrales
Fortuna, herein appellant, was charged with

illegal recruitment in large scale under Section 6,

paragraph (m), of Republic Act No. 8042, said to
have been committed thusly:
That sometime in the month of July, 1998, in the
City of Cabanatuan, Republic of the Philippines
and within the jurisdiction of this Honorable
Court, the above-named accused who is neither a
licensee nor holder of authority in the overseas
private recruitment or placements activities, did
then and there, willfully, unlawfully and
feloniously undertake a recruitment activity by
inducing and convincing REBECCA P. DE LEON,
ANNIE M. NUQUE, NENITA A. ANDASAN, ANGELYN
N. MAGPAYO, LINA N. GANOT and EDGARDO C.
SALVADOR, that she could secure for them a job
in Taiwan, and as a result of such enticement,
said Rebecca P. De Leon, Annie M. Nuque, Nenita
A. Andasan, Angolan N. Magpayo, Lina N. Ganot
and Edgardo C. Salvador, who were interested to
have such employment, gave and delivered to
the accused the total sum of THIRTY TWO
THOUSAND FOUR HUNDRED PESOS (P32,400.00),
Philippine Currency, representing medical fees in
connection thereof, to the latters damage and
prejudice as they were not able to get a job in
Taiwan through no fault of their own as promised
by the accused, who likewise failed to reimburse
to herein complainants the aforementioned
amount despite repeated demands; that
considering that there are six (6) or more
complainants prejudiced by the unlawful acts of
the accused, the same is deemed committed in
large scale and considered an offense involving
economic sabotage.[1]
When arraigned on 29 February 2000,
appellant Dominga Fortuna, with the assistance
of counsel, pleaded not guilty to the crime
charged; trial then ensued.
Taking the witness stand for the prosecution
were private complainants Lina Ganot, Nenita
Andasan and Angelyn Magpayo.
Lina N. Ganot, Angelyn N. Magpayo, Nenita A.
Andasan, Rebecca P. De Leon, Annie M. Nuque
and Edgardo L. Salvador met Dominga Fortuna y
Corrales in a seminar on Tupperware products
being then promoted for sale in Cabanatuan
City. Fortuna took the occasion to converse with
private complainants, along with some of the
attendees,
offering
job
placements
in
Taiwan. Convinced that Fortuna could actually
provide them with jobs abroad, private
complainants, on 06 July 1998, each gave her the
amount of P5,400.00 to take care of the
processing fee for medical examination and other
expenses
for
securing
their
respective
passports. On 13 July 1998, private complainants
took the medical examination in Manila. Weeks
went by but the promised departure had not
materialized. Suspecting that something was not
right, they finally demanded that Fortuna return
their money. Fortuna, in the meanwhile, went into
hiding. After having later learned that Fortuna
had neither a license nor an authority to
undertake recruiting activities, Angelyn Magpayo
filed a complaint which, in due time, ultimately
resulted in the indictment of Fortuna for illegal
recruitment. During the preliminary investigation,
as well as later at the trial, Fortuna gave
assurance to have the money she had received
from private complainants returned to them but,

except for the amount of P1,250.00 paid to

Angelyn Magpayo, Fortuna was unable to make
good her promise.

impression is given to thereupon part with their

money in order to be assured of that
employment.[4]

Dominga Fortuna, in her testimony, admitted

having attended the seminar on June 1998 where
she then met Annie Nuque, Rebecca De Leon,
Nenita Andasan, Edgardo Salvador, Angelyn
Magpayo and Lina Ganot. During the seminar,
she purchased Tupperware products from private
complainants after she was convinced to be their
sub-agent. Initially, she was able to remit
payments to private complainants on her sales
but, when she failed to make subsequent
remittances, she was threatened with criminal
prosecution. In order to settle the matter, she
executed separate promissory notes. When she
again failed to pay, private complainants filed the
case for illegal recruitment against her. Originally,
there were six private complainants but
eventually only three of them pursued the case
because the others were finally able to leave for
abroad.

Verily, the testimony presented at the trial by

the
complaining
witnesses
adequately
established the commission of the offense.

In its decision, dated 02 January 2001, the

Regional Trial Court, Branch 27, Cabanatuan City,
held Dominga Corrales Fortuna guilty of Illegal
Recruitment in Large Scale. The trial court held:

Q. Was there ever an occasion that you

tried to be a seller of Tupperware
products?

WHEREFORE, the Court finds the accused

Dominga Fortuna GUILTY beyond reasonable
doubt of Illegal Recruitment in Large Scale and
hereby imposes upon her the penalty of life
imprisonment and a fine of Five Hundred
Thousand (P500,000.00) pesos, as the same
involves economic sabotage.

Q. Please tell us in connection with this

intention of yours to sell Tupperware
products, did you ever attend a
seminar?

She is likewise ordered to reimburse five

thousand four hundred (P5,400.00) each to Lina
Ganot, Nenita Andasan representing the amount
they gave to the accused as processing fee and
the amount of four thousand one hundred fifty
(P4,150.00) pesos in favor of Angelyn Magpayo,
as there was a partial restitution during the trial
of the original five thousand four hundred
(P5,400.00) pesos she delivered to the accused. [2]

A. At Burgos Avenue, Cabanatuan City,

sir.

Seeking a reversal of her conviction,

appellant Fortuna, in her assignment of errors,
would now have the Court conclude that -

A. At the seminar of the Tupperware, sir.

I. The court a quo erred in convicting the

accused-appellant on an information wherein the
facts alleged therein do not constitute an offense;

A. She recruited us and told us that she

will give us good jobs, sir.

II. The court a quo erred in finding that accusedappellant violated Section 6, par. (m) of R.A. 8042
when it did not reimburse the alleged amounts
received from private complainants;

Q. Where is she now?

III. The court a quo erred standing its finding that

the accused-appellant was guilty of illegal
recruitment.[3]
The appeal is bereft of merit.
The crime of illegal recruitment is committed
when, among other things, a person who, without
being duly authorized according to law,
represents or gives the distinct impression that
he or she has the power or the ability to provide
work abroad convincing those to whom the
representation is made or to whom the

Testimony of complainant Lina Ganot

Q. Mrs. Witness, where were you in the
month of June, 1998?
A. At Macatbong, Cabanatuan City, sir.
Q. Were you gainfully employed at that
time?
A. No, sir.
Q. On that particular month, June, 1998,
having been unemployed at that
time, was there ever an occasion
that you tried to look for a job?
A. Yes, sir, I [tried] to look for a job.

A. Yes, sir.

A. Yes, sir.
Q. Where?

Q. Have you ever come across this

particular name Dominga Corrales
Fortuna?
A. Yes, sir.
Q. And where were you able to meet this
particular person?

Q. What transpired with respect to this

particular meeting?

COURT

A. There, sir (witness pointing to a

person who, when asked, answered
by the name of Dominga Corrales
Fortuna).
FISCAL
Q. How was this accused able to relate to
you that job placement will be
available for you in Taiwan?
A. She told me [to give] her P5,400.00
for processing fee and she went to
our house and I gave the said
amount, sir.
Q. Upon
hearing
this
particular
proposition, what was your reaction?

A. I believe[d] and I thought that I [could]

really work, sir.

A. I said I [was] willing because I already

have a passport, sir.

Q. Aside from the processing fee of

P5,400.00, were there any other
financial matter that was given by
you?

Q. Aside from that particular question,

what other matters that you and the
accused talked [about]?

A. None, sir; when we went to Manila, we

shouldered our expenses.
Q. When did you go to Manila?
A. July 13, 1998, sir.
Q. What was the purpose why you went
there?
A. For medical purpose, according to her,
sir.
Q. And who was with you?
A. The accused, sir.
Q. Aside from you and the accused, were
there any other persons?
A. We were accompanied by my cocomplainants, sir, aside from the
accused.[5]

A. She asked me if I [had] P5,400.00 for

the processing of necessary papers,
sir.
Q. And what was your response to this
question?
A. I said I will raise [the] money, sir.
Q. [Were] you able to raise [the] money?
A. Yes, sir.
Q. When was the appointed time that
you [would] have to hand or give the
money to the accused?
A. July 6, 1998, sir.
Q. And were you able to actually give the
money, the P5,400.00?
A. Yes, sir.

Testimony of Angelyn Magpayo -

Q. Was there a receipt of this particular

payment?

COURT:

A. None, sir.

Q. Do you know the accused?

A. Yes, Your Honor.

Q. Could you please tell us why there

was no receipt for this particular
payment?

Q. Point to her now.

A. Because I trusted her, sir.

A. Shes the one, sir. (Witness pointing to

a person whom when asked of her
name answered Dominga Fortuna y
Corrales.)

Q. And after the payment of P5,400.00

what happened next?

Q. How did you come to know her?

A. I came to know her during the seminar
of Tupperware, Your Honor.
FISCAL MACARAIG:
Q. Why did you have to attend this
seminar
in
the
selling
of
Tupperware?
A. As an additional business, sir.
Q. Could you please tell us, where this
seminar [was] being held at that
time?

A. She brought us to Manila for medical

purposes, sir.
Q. And what happened thereafter?
A. I was not able to get the result of the
medical examination, sir.
Q. By the way, what country was
mentioned to you by the accused
where you were going to work?
A. Taiwan, sir.
Q. And were you able to go to Taiwan?
A. No, sir.

A. At Burgos St., Cabanatuan City, sir.

Q. Could you please tell us why there

was a failure in going to Taiwan?

Q. And when did you meet the accused

for the first time?

A. After the medical examination, she

never showed herself, sir.[6]

A. At the seminar in Tupperware, sir.

Testimony of Nenita Andasan -

Q. Could you please tell us what

transpired during the first meeting
with the accused?

Q. Do you know a certain Dominga

Fortuna y Corrales?

A. She introduced herself to us, sir.

Q. Afterwards, what happened next?

A. Yes, sir.
Q. In what capacity were you able to
know this Dominga Fortuna?

A. She conversed with us and asked if we

want[ed] to work outside the
Philippines, sir.

A. During the seminar of Tupperware, sir.

Q. And what was your response to the

offer of the accused?

A. About selling Tupperware products, sir.

Q. And what is this seminar all about?

Q. And where was this

Tupperware held?

seminar

of

A. At Burgos Avenue, Cabanatuan City,

sir.

Q. And when was the time that you had

to actually pay or tender this
P5,400.00?
A. In July, 1998, sir.

Q. Do you know who [was] the one

conducting this seminar?

Q. Were you able to comply with this

particular requirement?

A. No, sir.

A. Yes, sir.

Q. Why did you attend this particular

seminar of Tupperware products?

Q. And when did you actually comply

with this requirement?

A. Because I was invited, sir.

A. On July 6, 1998, sir.

Q. How many persons attended that

seminar?

Q. To whom did you personally tender

this P5,400.00?

A. I cannot recall how many persons

there were, sir.

A. In the house of Mrs. Ganot, sir.

Q. When was this seminar held?

Q. And where is the house of this Mrs.

Ganot?

A. In the month of June, 1998, sir.

A. At Macatbong, Cabanatuan City, sir.

Q. June of what year?

Q. By the way, who is this Mrs. Ganot?

A. 1998, sir.

A. She is the one heading us, sir,

Q. You mentioned awhile ago that it was

during the seminar of Tupperware
products that you were able to meet
Dominga Fortuna, will you please tell
us what transpired during that
particular meeting?

Q. Do you have knowledge whether this

Mrs. Ganot [was] also interested in
working abroad?

A. We [had] conversation and then she

asked us if we wanted to go abroad,
sir.
Q. Who was the one [who] asked you
that?
A. The accused Dominga Fortuna, sir.
Q. And
what
response?

was

your

particular

A. I said to her yes, sir, because I

want[ed] to have a job.
Q. Were you the only one [who] was
present
at
the
seminar
of
Tupperware that was offered this
job?
A. Also my co-complainants, sir.
Q. What happened afterwards, after you
told her that you were interested in
working abroad?

A. Yes, sir.
Q. How many were you who were
present when you actually tendered
the P5,400.00?
A. We were six (6), sir.
Q. Do you know the names of the others?
A. Yes, sir.
Q. Will you please tell us the names of
those other persons who were
present when you actually tender
the P5,400.00 to the accused?
A. Rebecca de Leon, Annie Nuque, Nenita
Andasan, Angelyn Magpayo, Lina
Ganot and Edgardo Salvador, sir.
Q. At that point in time after you had
given the amount of P5,400.00 to
the accused, was there an official
receipt that was issued or given to
you by the accused?
A. None, sir.

A. We set the date in order to fix our

papers, sir.

Q. Do you know of any reason why there

was no receipt?

Q. By the way, were those the only

matters told to you by the accused
at that point in time?

A. Because we trusted her, sir, because

we were barriomates.

A. She also told us to prepare money

needed for that, sir.
Q. And how much would that money be
to be prepared by you?
A. P5,400.00, sir.
Q. And did she tell you
P5,400.00 is all about?

what

this

A. For processing of papers needed, sir.

Q. At that point in time that you actually

handed the P5,400.00, where was
Dominga Fortuna?
A. She was present, sir.
Q. Did she tell you anything before and
after the giving of this P5,400.00?
A. She said that we will be going to
Manila to process our papers and
passport and we will have a medical
examination, sir.[7]

The narration made by the complaining

witnesses does appear to be straightforward,
credible and convincing, and there scarcely is any
reason for ignoring the trial court in its evaluation
of their credibility. Indeed, the trial court has
additionally observed:

(b) The penalty of life imprisonment and a fine of

not less than Five hundred thousand pesos
(P500,000.00) nor more than One million pesos
(P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as
defined herein.

x x x. There is no showing that any of the

complainants had ill-motives against accused
Dominga Fortuna other than to bring her to the
bar of justice.Furthermore, appellant was a
stranger to private complainants before the
recruitment. It is contrary to human nature and
experience for persons to conspire and accuse a
stranger of such a serious crime like this that
would take the latters liberty and send him or her
to prison. Against the prosecutions overwhelming
evidence, accused could only offer a bare denial
and an obviously concocted story.

Provided, however, That the maximum penalty

shall be imposed if the person illegally recruited
is less than eighteen (18) years of age or
committed by a non-licensee or non-holder of
authority.

Doctrinally, the assessment made on

testimonial evidence by the trial judge is
accorded the highest respect for it is he who has
the distinct opportunity to directly perceive the
demeanor of witnesses and personally ascertain
their reliability. The rule has been said that a
person charged with illegal recruitment may be
convicted on the strength of the testimony of the
complainants, if found to be credible and
convincing, and that the absence of receipts to
evidence payment to the recruiter would not
warrant an acquittal, a receipt not being fatal to
the prosecution's cause.[8]
The pertinent provisions of Republic Act No.
8042 state:
SEC. 6. Definition. For purposes of this act, illegal
recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing,
hiring, or procuring workers and includes
referring, contract of services, promising or
advertising for employment abroad, whether for
profit or not, when undertaken by a non-license or
non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of
the Philippines: Provided, that any such nonlicensee or non-holder who, in any manner, offers
or promises for a fee employment abroad to two
or more persons shall be deemed so engaged.
x x x x x x x x x.
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with
one another. It is deemed committed in large
scale if committed against three (3) or more
persons individually or as a group.
Sec. 7. Penalties.
(a) Any person found guilty of illegal recruitment
shall suffer the penalty of imprisonment of not
less than six (6) years and one (1) day but not
more than twelve (12) years and a fine of not less
than Two hundred thousand pesos (P200,000.00)
nor more than Five hundred thousand pesos
(P500,000.00).

This Court finds the information which has

charged appellant with the offense of Illegal
Recruitment in Large Scale, defined and
penalized in Republic Act No. 8042, to be
sufficient in form and substance. While the
information cited Section 6, paragraph (m), of
Republic Act No. 8042, its factual averments,
however, are sufficient to constitute the crime of
Illegal Recruitment in Large Scale under the
aforequoted provisions of the law. It is not the
specific designation of the offense in the
information that controls but it is the allegations
therein contained directly apprising the accused
of the nature and cause of the accusation against
him that matter.[9] The requisites constituting the
offense of Illegal Recruitment in Large Scale have
sufficiently
been
proven
by
the
prosecution. First, appellant, undeniably, has not
been duly licensed to engage in recruitment
activities; second, she has engaged in illegal
recruitment
activities,
offering
private
complainants employment abroad for a fee;
and third, she has committed the questioned
illegal recruitment activities against three or
more persons. Illegal recruitment in large scale
(when committed against three or more persons),
like illegal recruitment committed by a syndicate
(when carried out by a group of three or more
persons), would be deemed constitutive of
economic sabotage[10] carrying a penalty, under
section 7, paragraph (b), of Republic Act 8042, of
life imprisonment and a fine of not less than five
hundred thousand (P500,000.00) pesos nor more
than one million (P1,000,000.00) pesos. The
sentence imposed by the trial court thus accords
with the penalty prescribed by law.
A word in passing. No two cases are exactly
alike;
almost
invariably,
surrounding
circumstances vary from case to case. It is this
reality that must have compelled the adoption by
the Revised Penal Code of the scheme of
graduated penalties providing, correspondingly,
for the circumstances that affect criminal
liability. The system allows the judge to have a
good latitude in the sentencing process. Indeed,
in other jurisdictions, a bifurcated proceeding is
prescribed in order to help make certain that the
penalty is commensurate to the wrong
done. Under this procedure, the guilt and the
innocence of the accused is first determined and
then, after a verdict of plea or guilt, a presentence hearing is conducted where the judge
or a jury would hear argument and receive
additional evidence on such matters as the
nature of the offense, manner of its commission,
the milieu of time and place, as well as the
education, religion, physical and mental state of
the accused, along with still other conditions or
circumstances, that may find relevance in either
mitigating or aggravating the punishment to be

meted,[11]all calculated to enhance a fair

judgment. Statutory provisions for a single
penalty, like those prescribed in Republic Act No.
8042, virtually ignore these safeguards that help
obviate the danger of imposing either too great
or too little a punishment for the offense.

Ana Liza Aquino, Marie Purificacion Abenoja,

Florence Bacoco and Lorna Domingo, without said
accused having first secured the necessary
license or authority from the Department of Labor
and Employment.

It is in the above light and given the factual

circumstances of the case at bar, that Congress
might see it fit to revisit Republic Act No. 8042
towards adopting the provisions of the Revised
Penal Code on penalties, including its traditional
nomenclatures, that could pave the way for the
proper appreciation of the various circumstances
long
tested
that
affect
criminal
liability. Meanwhile,
the
Court
respectfully
recommends to the President of the Philippines a
possible commutation of sentence.

Criminal Case No. 15323-R (Estafa)[3]

WHEREFORE, the appealed decision of the

Regional Trial Court, Cabanatuan City, in Criminal
Case No. 8589 for Illegal Recruitment in Large
Scale against appellant Dominga Corrales is
AFFIRMED.
Let copies of this decision be forwarded to
the Office of the President and to the Congress of
the Philippines.
SO ORDERED.

[G.R. Nos. 140067-71. August 29, 2002]

PEOPLE OF THE PHILIPPINES, plaintiffappellee, vs. NENITA MARIA OLIVIA
GALLARDO (at large), and REMEDIOS
MALAPIT, accused,
REMEDIOS MALAPIT, accused-appellant.
DECISION
YNARES-SANTIAGO, J.:
Remedios Malapit and Nenita Maria Olivia
Gallardo were charged with one (1) count of
illegal recruitment committed in large-scale,
three (3) counts of estafa, and one (1) count of
simple illegal recruitment before the Regional
Trial Court of Baguio City, Branch 3.[1] The
Informations read as follows:
Criminal Case No. 15320-R (Illegal Recruitment
Committed in Large Scale)[2]
The undersigned (Public Prosecutor) accuses
NENITA MARIA OLIVIA GALLARDO and REMEDIOS
MALAPIT of the crime of ILLEGAL RECRUITMENT
COMMITTED IN LARGE SCALE, defined and
penalized under Article 13(b) in relation to Article
38(b), 34, and 39 of P.D. No. 442, otherwise
known as the New Labor Code of the Philippines,
as amended by P.D. No. 1693, 1920, 2018 and
R.A. No. 8042, committed as follows:
That during the period from January 1997 to June,
1997, in the City of Baguio, Philippines, and
within the jurisdiction of this Honorable Court, the
above-named accused, conspiring, confederating
and mutually aiding one another, did then and
there willfully, unlawfully and feloniously for a
fee, recruit and promise employment as contract
workers in Canada, to the herein complainants,
namely: Rommel Suni, Myrna Castro, Marilyn
Mariano, Bryna Paul Wong, Mary Grace Lanozo,

That in March 1997 in the City of Baguio,

Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused,
conspiring, confederating and mutually aiding
one another did then and there willfully,
unlawfully and feloniously defraud one MARILYN
MARIANO by way of false pretenses, which are
executed prior to or simultaneously with the
commission of the fraud, as follows; to wit: the
accused knowing fully well that he/she they is/are
not authorized job recruiters for persons
intending to secure work abroad convinced said
Marilyn Mariano and pretended that he/she/they
could secure a job for him/her abroad, for and in
consideration of the sum of P36,500.00, when in
truth and in fact they could not; the said Marilyn
Mariano deceived and convinced by the false
pretenses employed by the accused parted away
the total sum of P36,500.00, in favor of the
accused, to the damage and prejudice of the said
Marilyn Mariano in the aforementioned amount of
THIRTY SIX THOUSAND FIVE HUNDRED PESOS
(P36,500.00), Philippine Currency.
Criminal Case No. 15327-R (Estafa)[4]
That on June 6, 1997 in the City of Baguio,
Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused,
conspiring, confederating and mutually aiding
one another, did then and there willfully,
unlawfully and feloniously defraud one MARIE
PURIFICACION ABENOJA by way of false
pretenses, which are executed prior to or
simultaneously with the commission of the fraud,
as follows, to wit: the accused knowing fully well
that he/she they is/are not authorized job
recruiters for persons intending to secure work
abroad convinced said Marie Purificacion Abenoja
and pretended that he/she/they could secure a
job for him/her abroad, for and in consideration of
the sum of P36,500.00, when in truth and in fact
they could not; the said Marie Purificacion
Abenoja deceived and convinced by the false
pretenses employed by the accused parted away
the total sum of P36,500.00 in favor of the
accused, to the damage and prejudice of the said
Marie Purificacion Abenoja in the aforementioned
amount of THIRTY SIX THOUSAND FIVE HUNDRED
PESOS (P36,500.00), Philippine currency.
Criminal Case No. 15570-R (Illegal Recruitment) [5]
The under signed (Public Prosecutor) accuses
NENITA MARIA OLIVIA-GALLARDO and REMEDIOS
MALAPIT of the crime of ILLEGAL RECRUITMENT,
defined and penalized under Article 13(b) in
relation to Article 38(b), 34, and 39 of Presidential
Decree No. 442, otherwise known as the New
Labor Code of the Philippines, as amended by
R.A. No. 8042, committed as follows:
That on or about the 6th day of June, 1997, in the
City of Baguio, Philippines, and within the

jurisdiction of this Honorable Court, the abovenamed accused, conspiring, confederating and
mutually aiding one another, did then and there
willfully, unlawfully and feloniously for a fee,
recruit and promise employment as contract
worker in Canada, to the herein complainant
ARACELI D. ABENOJA, without said accused
having first secured the necessary license or
authority from the Department of Labor and
Employment.
Criminal Case No. 15571-R (Estafa)[6]
That on or about the 11th day of June, 1997 in the
City of Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the abovenamed accused, conspiring, confederating &
mutually aiding one another, did then and there
willfully, unlawfully and feloniously defraud one
ARACELI D. ABENOJA by way of false pretenses,
which are executed prior to or simultaneously
with the commission of the fraud, as follows; to
wit: the accused knowing fully well that
he/she/they is/are not authorized job recruiters
for persons intending to secure work abroad
convinced said Araceli D. Abenoja and pretended
that he/she/they could secure a job for him/her
abroad, for and in consideration of the sum of
P35,000.00, when in truth and in fact they could
not; the said Araceli D. Abenoja deceived and
convinced by the false pretenses employed by
the accused parted away the total sum of
P35,000.00 in favor of the accused, to the
damage and prejudice of the said Araceli D.
Abenoja in the aforementioned amount of THIRTY
FIVE THOUSAND PESOS (P35,000.00), Philippine
currency.
Only accused-appellant Remedios Malapit
was brought to the jurisdiction of the trial
court. Her co-accused, Nenita Maria Olivia
Gallardo, remained at large.
Upon
arraignment,
accused-appellant
pleaded not guilty to all charges. The five (5)
cases were consolidated and tried jointly.
Marie Purificacion Abenoja and Marilyn
Mariano met accused-appellant at her beauty
parlor in Lopez Building, Session Road, Baguio
City. Marie met accused-appellant sometime in
January 1997 through her friend, Florence
Bacoco. A month later, Marilyn was introduced to
accused-appellant by Grace Lanozo, a fellow
nurse at the PMA Hospital.
Marie claims that accused-appellant enticed
her to apply for work as a caregiver in
Canada. Accused-appellant showed her a piece of
paper containing a job order saying that Canada
was in need of ten (10) caregivers and some
messengers. Accused-appellant also promised
her that she will be receiving a salary of
CN$2,700.00 (Canadian Dollars) and will be able
to leave for Canada in a months time.Heeding
accused-appellants guaranty, Marie eventually
applied for the overseas job opportunity.
On
June
6,
1997,
accused-appellant
introduced Marie to co-accused Nenita Maria
Olivia-Gallardo in Tandang Sora, Quezon City. On
the same day, Marie submitted herself to a
physical examination and personally handed to
Gallardo a partial payment of P18,000.00, for
which the latter issued a receipt. [7] Marie made

another payment in the amount of P52,000.00,

for which accused-appellant issued a provisional
receipt.[8] This amount included the placement
fee of her sister, Araceli Abenoja, who became
interested
in
the
opportunity
to
work
abroad. Accused-appellant issued to Marie the
receipt[9] for Araceli in the amount of P35,000.00,
signed by Gallardo.
Three months lapsed without any news on
Maries deployment to Canada. Her sister, Araceli,
had already left for work abroad through the
efforts of their other town-mate. The weekly
follow-ups made by Marie to accused-appellant
pertaining to her application and that of Aracelis
were to no avail. Accused-appellant just promised
Marie that she will return her money. Realizing
that she had been hoodwinked, Marie decided to
file a complaint against the accused-appellant
and Gallardo with the National Bureau of
Investigation. She no longer verified the authority
of both accused-appellant and Gallardo in
recruiting workers overseas because she was told
by Gallardo that she is a direct recruiter. [10]
Marilyn Mariano, on the other hand, was told
by accused-appellant that she was recruiting
nurses from Baguio City and was looking for one
more applicant to complete the first batch to fly
to Canada. After giving her all the information
about the job opportunity in Canada, accusedappellant encouraged her to meet Gallardo. Not
long after, Grace Lanozo accompanied her to
meet Gallardo at the latters house in Quezon City.
Gallardo required her to undergo a medical
check-up, to complete her application papers
within the soonest possible time and to prepare
money to defray the expenses for her
deployment to Canada. Upon the instruction of
accused-appellant, Marilyn paid a total amount of
P36,000.00 to Gallardo, which was evidenced by
a receipt. Of this amount, the P1,500.00[11] was
for
her
medical
check-up,P20,000.00[12] for
processing of papers and P15,000.00[13] for her
visa.
Marilyn was further made to accomplish a
form, prepared by both accused-appellant and
Gallardo, at the residence of accused-appellant in
Baguio City. Thereafter, she was informed that
the processing of her papers abroad shall
commence within the next three months. She
was also made to attend a meeting conducted by
both accused-appellant and Gallardo at the
formers house in Baguio City, together with other
interested applicants.
After three months of waiting with no
forthcoming employment abroad, Marilyn and the
other applicants proceeded to the Philippine
Overseas
Employment
Agency,
Regional
Administrative
Unit,
of
the
Cordillera
Administrative Region in Baguio City, where they
learned that accused-appellant and Gallardo were
not authorized recruiters.[14] Marilyn confronted
accused-appellant about this, whereupon the
latter assured her that it was a direct hiring
scheme. Thereafter, Marilyn reported accusedappellant and Gallardo to the NBI. [15]
After trial on the merits, accused-appellant
was found guilty of the crimes of Illegal
Recruitment in Large Scale and Estafa on three
(3) counts. The dispositive portion of the decision
reads:

WHEREFORE, the Court finds accused Remedios

Malapit GUILTY beyond reasonable doubt with the
crimes of Illegal Recruitment in Large Scale, and
Estafa in three (3) counts, and she is hereby
sentenced as follows:
1. To suffer Life Imprisonment at the
Correctional Institution for Women,
Mandaluyong City in Criminal Cases
Nos. 15320-R and 15770-R for Illegal
Recruitment in Large Scale; to pay a
Fine to the Government in the amount
of
One
Hundred
Thousand
(P100,000.00) Pesos; and to pay
private
complainants,
Marie
Purificacion Abenoja, the amount of
Thirty Five Thousand (P35,000.00)
Pesos; Araceli Abenoja also the
amount of Thirty Five Thousand
(P35,000.00) Pesos; and Marilyn
Mariano, the amount of Thirty Six
Thousand Five Hundred (P36,500.00)
Pesos, all amounts with legal interest.
2. To suffer Imprisonment at the same
Institution from Six (6) Years, Five (5)
Months, and Eleven (11) Days as
Minimum to Seven (7) Years, Eight (8)
Months, and Twenty (20) Days as
Maximum of Prision Mayor for each
Estafa case in Criminal Cases Nos.
15323-R, 15327-R, and 15571-R.
3. To pay costs of suit.[16]
Accused-appellant is now before us on the
following assignment of errors:
I
THE TRIAL COURT ERRED IN CONCLUDING THAT
THE PROSECUTION SUCCEEDED IN PROVING THE
GUILT OF ACCUSED-APPELLANT BEYOND
REASONABLE DOUBT FOR THE CRIME OF ILLEGAL
RECRUITMENT.
II
THE TRIAL COURT ERRED IN CONCLUDING THAT
THE PROSECUTION SUCCEEDED IN PROVING THE
GUILT OF ACCUSED-APPELLANT BEYOND
REASONABLE DOUBT FOR THREE COUNTS OF
ESTAFA.
III
THE TRIAL COURT ERRED IN NOT DISMISSING
CRIMINAL CASES NOS. 15570-R AND 15571-R
FOR ABSENCE OF EVIDENCE RESULTING FROM
THE FAILURE OF THE COMPLAINING WITNESS TO
APPEAR AND SUBSTANTIATE HER COMPLAINT.
IV
GRANTING ARGUENDO THAT ACCUSEDAPPELLANT COMMITTED ILLEGAL RECRUITMENT,
THE TRIAL COURT ERRED IN CONVICTING HER OF
ILLEGAL RECRUITMENT IN LARGE SCALE.
Accused-appellant maintains that she did not
commit any of the activities enumerated in the
Labor Code on illegal recruitment in connection
with
the
applications
of
the
private

complainants. It was Nenita Maria Olivia Gallardo

who
convinced
and
promised
private
complainants employment overseas. It was also
Gallardo who received and misappropriated the
money of private complainants.Accordingly, she
cannot be convicted of estafa.
We do not agree.
Illegal recruitment is committed when two (2)
essential elements concur:
(1) that the offender has no valid license
or authority required by law to enable
him to lawfully engage in the
recruitment
and
placement
of
workers, and
(2) that the offender undertakes any
activity within the meaning of
recruitment and placement defined
under Article 13(b), or any prohibited
practices enumerated under Article 34
of the Labor Code.[17]
Article
13(b)
of
the
Labor
defines recruitment and placement as:

Code

Any act of canvassing, enlisting, contracting,

transporting, utilizing, hiring, or procuring
workers, and includes referrals, contract services,
promising or advertising for employment, locally
or abroad, whether for profit or not: Provided,
that any person or entity which, in any manner,
offers or promises for a fee employment to two or
more persons shall be deemed engaged in
recruitment and placement.
In the case at bar, the first element is
present. Nonette Legaspi-Villanueva, the Overall
Supervisor of the Regional Office of the POEA in
Baguio City, testified that per records, neither
accused-appellant nor Gallardo were licensed or
authorized to recruit workers for overseas
employment in the City of Baguio or in any part
of the Cordillera Region.
The second essential element is likewise
present. Accused-appellant purported to have the
ability to send Marie Purificacion Abenoja, Araceli
Abenoja and Marilyn Mariano for employment
abroad through the help of her co-accused
Gallardo, although without any authority or
license to do so. Accused-appellant was the one
who persuaded them to apply for work as a
caregiver in Canada by making representations
that there was a job market therefor. [18] She was
also the one who helped them meet Gallardo in
order to process their working papers and
personally assisted Marie, Araceli and Marilyn in
the completion of the alleged requirements.
[19]
Accused-appellant even provided her house in
Baguio City as venue for a meeting with other
applicants that she and Gallardo conducted in
connection
with
the
purported
overseas
employment in Canada. [20] Accused-appellant,
therefore, acted as an indispensable participant
and effective collaborator of co-accused Gallardo,
who at one time received placement fees [21] on
behalf of the latter from both Marie and Araceli
Abenoja. The totality of the evidence shows that
accused-appellant
was
engaged
in
the
recruitment and placement of workers for
overseas employment under the above-quoted
Article 13 (b) of the Labor Code. Hence, she

cannot now feign ignorance on the consequences

of her unlawful acts.
Accused-appellants claim that the other
private complainants in Criminal Case No. 15320R, for illegal recruitment in large scale, have
executed their individual affidavits of desistance
pointing to Gallardo as the actual recruiter,
deserves
scant
consideration. The
several
Orders[22] issued by the trial court show that the
dismissal of the complaints of the other private
complainants were based on their failure to
substantiate and prosecute their individual
complaints despite due notice.*
The foregoing notwithstanding, the existence
of the adverted affidavits of desistance does not
appear in the records of this case and, thus, may
not be given any probative weight by this
Court. Any evidence that a party desires to
submit for the consideration of the court must be
formally offered by him, otherwise, it is excluded
and rejected.[23] Evidence not formally offered
before the trial court cannot be considered on
appeal, for to consider them at such stage will
deny the other parties their right to rebut them.
[24]
By opting not to present them in court, such
affidavits of desistance are generally hearsay and
have no probative value since the affiants thereof
were not placed on the witness stand to testify
thereon.[25] The reason for the rule prohibiting the
admission of evidence that has not been formally
offered is to afford the other party the chance to
object to their admissibility. [26]
All told, the evidence against accusedappellant has established beyond a shadow of
doubt that she actively collaborated with coaccused Gallardo in illegally recruiting the
complainants in this case. As correctly pointed
out by the trial court, the private complainants in
this case would not have been induced to apply
for a job in Canada were it not for accusedappellants
information,
recruitment,
and
introduction of the private complainants to her
co-accused Gallardo.
Likewise untenable are accused-appellants
claims that she did not represent herself as a
licensed recruiter,[27] and that she merely helped
complainants avail of the job opportunity. It is
enough that she gave the impression of having
had the authority to recruit workers for
deployment abroad. In fact, even without
consideration for accused-appellants services,
she will still be deemed as having engaged in
recruitment activities, since it was sufficiently
demonstrated that she promised overseas
employment to private complainants. [28] Illegal
recruitment is committed when it is shown that
the
accused-appellant
gave
the
private
complainants the distinct impression that she had
the power or ability to send complainants abroad
for work such that the latter were convinced to
part with their money in order to be employed.
[29]
To be engaged in the practice and placement,
it is plain that there must at least be a promise or
offer of an employment from the person posing
as a recruiter whether locally or abroad. [30]
Undoubtedly, the acts of accused-appellant
showed unity of purpose with those of co-accused
Gallardo. All these acts establish a common
criminal design mutually deliberated upon and
accomplished through coordinated moves. There
being conspiracy, accused-appellant shall be

equally liable for the acts of her co-accused even

if she herself did not personally reap the fruits of
their execution.
While accused-appellant is guilty of illegal
recruitment, we do not agree with the trial court
that the same qualifies as large scale.
Accused-appellants conviction of the illegal
recruitment in large scale was based on her
recruitment of Marie Purificacion Abenoja and
Marilyn Mariano, private complainants in Criminal
Case No. 15320-R, and Araceli Abenoja, private
complainant in Criminal Case No. 15570-R. It was
error for the trial court to consider the three
private complainants in the two criminal cases
when it convicted accused-appellant of illegal
recruitment committed in large scale. The
conviction of illegal recruitment in large scale
must be based on a finding in each case of illegal
recruitment of three or more persons, whether
individually or as a group. In People v. Reichl, et
al.,[31] we reiterated the rule we laid down
in People v. Reyes[32] that:
x x x When the Labor Code speaks of illegal
recruitment committed against three (3) or more
persons individually or as a group, it must be
understood as referring to the number of
complainants in each case who are complainants
therein, otherwise, prosecutions for single crimes
of illegal recruitment can be cumulated to make
out a case of large scale illegal recruitment. In
other words, a conviction for large-scale illegal
recruitment must be based on a finding in each
case of illegal recruitment of three or more
persons whether individually or as a
group. (Underscoring ours)
Accused-appellant
likewise
assails
the
decision of the trial court in Criminal Cases Nos.
15570-R and 15571-R for simple illegal
recruitment and estafa, respectively, saying that
these two criminal cases should have been
dismissed for lack of evidence. The only evidence
presented in these cases was the testimony of
Marie Purificacion Abenoja, Araceli Abenojas
sister, on her alleged payment of the placement
fees for Aracelis application. By Aracelis failure to
testify, she failed to prove the facts and
circumstances
surrounding
her
alleged
recruitment and the person accountable therefor.
[33]

We are not persuaded. In People v. Gallarde,

we held:

Direct evidence of the commission of a crime is

not the only matrix wherefrom a trial court may
draw its conclusion and finding of guilt. The
prosecution is not always tasked to present direct
evidence to sustain a judgment of conviction; the
absence of direct evidence does not necessarily
absolve an accused from any criminal
liability. Even in the absence of direct evidence,
conviction can be had on the basis of
circumstantial evidence, provided that the
established circumstances constitute an unbroken
chain which leads one to one fair and reasonable
conclusion which points to the accused, to the
exclusion of all others, as the guilty person, i.e.,
the circumstances proved must be consistent
with each other, consistent with the hypothesis
that the accused is guilty, and at the same time

inconsistent with any other hypothesis except

that of guilty.
The rules on evidence and precedents sustain the
conviction of an accused through circumstantial
evidence, as long as the following requisites are
present: (1) there must be more than one
circumstance; (2) the inference must be based on
proven facts; and (3) the combination of all
circumstances produces a conviction beyond
reasonable doubt of the guilt of the accused.
The circumstantial evidence in the case at
bar, when scrutinized and taken together, leads
to no other conclusion than that accusedappellant and co-accused Gallardo conspired in
recruiting and promising a job overseas to Araceli
Abenoja. Moreover, Marie Purificacion Abenoja
had personal knowledge of the facts and
circumstances surrounding the charges filed by
her sister, Araceli, for simple illegal recruitment
and estafa. Marie was privy to the recruitment of
Araceli as she was with her when both accusedappellant and Gallardo required Araceli to
undergo physical examination to find out whether
the latter was fit for the job abroad. [34] Accusedappellant even admitted that she was the one
who introduced Marie and Araceli to Gallardo
when they went to the latters house. [35] Marie was
the one who shouldered the placement fee of her
sister Araceli.[36]
Furthermore, the private complainants in this
case did not harbor any ill motive to testify falsely
against accused-appellant and Gallardo.Accusedappellant failed to show any animosity or illfeeling on the part of the prosecution witnesses
which could have motivated them to falsely
accuse her and Gallardo. It would be against
human nature and experience for strangers to
conspire and accuse another stranger of a most
serious crime just to mollify their hurt feelings.
[37]
As such, the testimony of private complainants
that accused-appellant was the person who
transacted with them, promised them jobs and
received money therefor, was correctly given
credence and regarded as trustworthy by the trial
court.

an offense under a special law wherein the

penalty imposed was not taken from and is
without reference to the Revised Penal Code, as
discussed in the preceding illustrations, such that
it may be said that the offense is punished under
that law.
Guided by the foregoing principle, accusedappellant shall be made to suffer a prison term of
six (6) years and one (1) day, as minimum, to
twelve (12) years, as maximum, and to pay a fine
of P200,000.00, for each count of illegal
recruitment.
The Court likewise affirms the conviction of
accused-appellant for estafa on three (3)
counts. It is settled that a person may be charged
and convicted separately of illegal recruitment
under the Labor Code and estafa under the
Revised Penal Code, Article 315, paragraph
2(a).As we held in People v. Yabut:[40]
In this jurisdiction, it is settled that a person who
commits illegal recruitment may be charged and
convicted separately of illegal recruitment under
the Labor Code and estafa under par. 2 (a) of Art.
315 of the Revised Penal Code. The offense of
illegal recruitment is malum prohibitum where
the criminal intent of the accused is not
necessary for conviction, while estafa is malum in
se where the criminal intent of the accused is
crucial for conviction. Conviction for offenses
under the Labor Code does not bar conviction for
offenses punishable by other laws. Conversely,
conviction for estafa under par. 2 (a) of Art. 315
of the Revised Penal Code does not bar a
conviction for illegal recruitment under the Labor
Code. It follows that ones acquittal of the crime of
estafa will not necessarily result in his acquittal of
the crime of illegal recruitment in large scale, and
vice versa.
The
prosecution
has
proven
beyond
reasonable doubt that accused-appellant was
guilty of estafa under the Revised Penal Code,
Article 315 paragraph (2) (a), which provides that
estafa is committed:

In sum, accused-appellant is only guilty of

two (2) counts of illegal recruitment. Under
Section 7 of Republic Act No. 8042 [38] otherwise
known as the Migrant Workers Act of 1995, any
person found guilty of illegal recruitment shall
suffer the penalty of imprisonment of not less
than six (6) years and one (1) day but not more
than twelve (12) years and a fine of not less than
two hundred thousand pesos (P200,000.00) nor
more than five hundred thousand pesos
(P500,000.00).

2. By means of any of the following false

pretenses or fraudulent acts executed prior to or
simultaneously with the commission of fraud:

The provisions of the Indeterminate Sentence

Law are applicable, as held in People v. Simon:[39]

The evidence is clear that in falsely

pretending to possess the power to deploy
persons for overseas placement, accusedappellant deceived Marie, Araceli and Marilyn into
believing that the recruitment would give them
greener
opportunities
as
caregivers
in
Canada.Accused-appellants
assurance
constrained the private complainants to part with
their hard-earned money in exchange for a slot in
the overseas job in Canada. The elements of
deceit and damage for this form of estafa are
indisputably present. Hence, the conviction of
accused-appellant for three (3) counts of estafa in

It is true that Section 1 of said law, after providing

for indeterminate sentence for an offense under
the Revised Penal Code, states that if the offense
is punished by any other law, the court shall
sentence the accused to an indeterminate
sentence, the maximum term of which shall not
exceed the maximum fixed by said law and the
minimum shall not be less than the minimum
term prescribed by the same. We hold that this
quoted portion of the section indubitably refers to

(a) By using fictitious name or falsely

pretending to possess power,
influence, qualifications, property,
credit, agency, business or
imaginary transactions, or by
means of other similar deceits.

Criminal Cases Nos. 15323-R,

15571-R should be upheld.

15327-R

and

Under the Revised Penal Code, an accused

found guilty of estafa shall be sentenced to:
x x x The penalty of prision correccional in its
maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000
but does not exceed 22,000 pesos, and if such
amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its
maximum period, adding one year for each
additional 10,000 pesos; x x x.
In
applying
the
provisions
of
the
Indeterminate Sentence Law, we had occasion to
reiterate our ruling in People v. Ordono[41] in the
very recent case of People v. Angeles,[42] to wit:
Under the Indeterminate Sentence Law, the
maximum term of the penalty shall be that which,
in view of the attending circumstances, could be
properly imposed under the Revised Penal Code,
and the minimum shall be within the range of the
penalty next lower to that prescribed for the
offense. The penalty next lower should be based
on the penalty prescribed by the Code for the
offense, without first considering any modifying
circumstances attendant to the commission of
the crime. The determination of the minimum
penalty is left by law to the sound discretion of
the court and it can be anywhere within the range
of the penalty next lower without any reference
to the periods into which it might be
subdivided. The modifying circumstances are
considered only in the imposition of the
maximum term of the indeterminate sentence.
Similarly, in People v. Saulo,[43] we further
elucidated on how to apply the Indeterminate
Sentence Law for the charge of estafa:
Since the penalty prescribed by law for the estafa
charge against accused-appellant is prision
correccional maximum to prision
mayor minimum, the penalty next lower in
degree is prision correccional minimum to
medium. Thus, the minimum term of the
indeterminate sentence should be anywhere
within six (6) months and one (1) day to four (4)
years and two (2) months.
In fixing the maximum term, the prescribed
penalty of prision correccional maximum
to prision mayor minimum should be divided into
three equal portions of time, each of which
portion shall be deemed to form one period, as
follows
Minimum Period: From 4 years, 2
months and 1 day to 5 years, 5
months and 10 days
Medium Period: From 5 years, 5
months and 11 days to 6 years,
8 months and 20 days
Maximum Period: From 6 years, 8
months and 21 days to 8 years

pursuant to Article 65, in relation to Article 64, of

the Revised Penal Code.
When the amounts involved in the offense
exceeds P22,000, the penalty prescribed in
Article 315 of the Revised Penal Code shall be
imposed in its maximum period, adding one year
for each additional P10,000.00, although the total
penalty which may be imposed shall not exceed
twenty (20) years.
In Criminal Case No. 15323-R, Marilyn
Mariano testified that upon instruction of
accused-appellant she gave accused Gallardo a
total of P36,500.00.
In Criminal Case Nos. 15327-R and 15571-R,
Marie Purificacion Abenoja testified that she gave
the amounts of P18,000.00 and P52,000.00 to
accused Gallardo and accused-appellant. Out of
the amount of P52,000.00, P35,000.00 was
intended to answer for the placement fee of her
sister Araceli Abenoja, the private complainant
in Criminal Case No. 15571-R. The remaining
P17,000.00 formed part of the balance of Maries
placement fee. Accordingly, accused-appellant
shall be criminally liable for the amount of
P35,000.00 in Criminal Cases No. 15327-R and
P35,000.00 in Criminal Case No. 15571-R.
WHEREFORE, in view of the foregoing, the
appealed Decision of the Regional Trial Court of
Baguio City, Branch 3 is AFFIRMED with the
following MODIFICATIONS:
(1) In Criminal Case No. 15320-R,
accused-appellant Remedios Malapit
is found GUILTY beyond reasonable
doubt of the crime of Simple Illegal
Recruitment only, and is sentenced to
suffer a prison term of six (6) years
and one (1) day, as minimum, to
twelve (12) years, as maximum, and
to pay a fine of P200,000.00.
(2) In Criminal Case No. 15323-R,
accused-appellant Remedios Malapit
is found GUILTY beyond reasonable
doubt of the crime of Estafa and
sentenced to suffer a prison term of
four (4) years and two (2) months
of prision correccional, as minimum,
to nine (9) years and four (4) months
of prision mayor, as maximum, and is
ORDERED
to
indemnify
Marilyn
Mariano the amount of P36,500.00.
(3) In Criminal Case No. 15327-R,
accused-appellant Remedios Malapit
is found GUILTY beyond reasonable
doubt of the crime of Estafa and
sentenced to suffer a prison term of
four (4) years and two (2) months
of prision correccional, as minimum,
to nine (9) years and four (4) months
of prision mayor, as maximum, and is
ORDERED
to
indemnify
Marie
Purificacion Abenoja the amount of
P35,000.00.
(4) In Criminal Case No. 15570-R,
accused-appellant Remedios Malapit
is found GUILTY beyond reasonable
doubt of the crime of Simple Illegal
Recruitment and is sentenced to
suffer a prison term of six (6) years

and one (1) day, as minimum, to

twelve (12) years, as maximum, and
to pay a fine of P200,000.00.
(5) In Criminal Case No. 15571-R,
accused-appellant Remedios Malapit
is found GUILTY beyond reasonable
doubt of the crime of Estafa and
sentenced to suffer a prison term of
four (4) years and two (2) months
of prision correccional, as minimum,
to nine (9) years and four (4) months
of prision mayor, as maximum, and is
ORDERED
to
indemnify
Araceli
Abenoja the amount of P35,000.00
SO ORDERED.

[G.R. Nos. 145734-35. October 15, 2002]

PEOPLE OF THE PHILIPPINES, appellee, vs.
VICENTA MEDINA LAPIS, ANGEL MATEO,
AIDA DE LEON (at large) and JEAN AMAMLAW (at large), appellants.
DECISION
PANGANIBAN, J.:
Illegal recruiters prey on our gullible and
impoverished people by inveigling them with
false or fraudulent promises of attractive
employment in foreign shores. Such vultures
deserve the full sanction of the law.

The Case
Vicenta Medina Lapis and Angel Mateo
appeal the March 6, 2000 Joint Decision[1] of the
Regional Trial Court (RTC) of Makati City (Branch
138), finding them guilty beyond reasonable
doubt of illegal recruitment and estafa. The
dispositive portion of the Decision reads as
follows:
WHEREFORE, the Court rules
1. In Criminal Case No. 99-1112[,] accused
Vicenta Medina Lapis and Angel Mateo are
pronounced guilty of violating Section 6, of
Republic Act No. 8042, the Migrant Workers and
Overseas Filipinos Act of 1995 and they are both
sentenced to suffer life imprisonment.Pursuant to
the last paragraph of Section 7, Republic Act No.
8042, considering that both accused are nonlicensers or non-holders of authority, they are
both sentenced to pay fines of One Million Pesos
(P1,000,000.00) each. Both accused are ordered
to indemnify both complainants jointly and
severally of the amount of P118,000.00, the net
amount
after
deducting
the
recovery
of P40,000.00. They are likewise ordered to pay
both complainants jointly and severally the
amounts of P24,000.00 as reimbursement for
traveling expenses;P4,000.00 as rental for
boarding house, and P100,000.00 as unrealized
income;
2. In Criminal Case No. 99-1113[,] accused
Vicenta Medina Lapis and Angel Mateo are guilty
of violating Article 315 (2) (a) of the Revised
Penal Code and they are both sentenced to suffer

imprisonment of twenty (20) years of reclusion

temporal.
No civil liability need be imposed considering
that in Criminal Case No. 99-1112 the same was
already provided.
Let the case as against Jane Am-amlao and
Aida de Leon be sent to the archives to be
revived upon arrest, surrender or acquisition of
jurisdiction over their person.
SO ORDERED.[2]
Two separate Informations,[3] both dated April
20, 1999, charged appellants with syndicated
illegal recruitment under Republic Act (RA)
8042[4] and estafa under paragraph 2 (a) of
Article 315 of the Revised Penal Code.[5]
In Criminal Case No. 99-1112, they were
charged as follows:
That on or about March, 1998 and thereafter in
Makati City, Metro Manila, Philippines, and within
the jurisdiction of this Honorable Court, the
above-named accused, conspiring and
confederating with each other, did then and there
willfully, unlawfully and feloniously recruit the
herein complainants, MELCHOR F. DEGSI and
PERPETUA L. DEGSI for employment as an office
worker and as a cook or mechanic in Japan, for
and in consideration thereof, they were required
to pay the amount of P158,600.00 as alleged
placement and processing fees, which the
complainants delivered and paid the amount
of P158,600.00 Philippine Currency, without the
accused having deployed the complainants
despite the lapse of several months, to their
damage and prejudice.[6]
In Criminal Case No. 99-1113, the Information
reads:
That on or about March, 1998 and thereafter in
Makati City, Metro Manila, Philippines, and within
the jurisdiction of this Honorable Court, the
above-named accused, conspiring and
confederating with each other, did then and
there, willfully, unlawfully and feloniously recruit
and promise employment to spouses MELCHOR
and PERPETUA DEGSI in Japan for a total
consideration of one hundred fifty eight thousand
and six hundred pesos (P158,600.00) as
placement and processing fees, knowing that
they have no capacity whatsoever and with no
intention to fulfill their promise, but merely as a
pretext, scheme or excuse to get or exact money
from said complainant as they in fact collected
and received the amount of P158,600.00 from
said MELCHOR and PERPETUA DEGSI to their
damage, loss and prejudice for the aforesaid
amount.[7]
With the assistance of their counsel de oficio,
appellants pleaded not guilty to the charges
during their arraignment on July 27, 1999.[9]
[8]

The Facts

Version of the Prosecution

The Office of the Solicitor General (OSG)

relates how appellants, despite their lack of
authority or license, represented themselves as
persons who had the capacity to send the victims
abroad for employment. We quote its version of
the facts as follows:
The prosecution presented three witnesses,
namely, Melchor Degsi and Perpetua Degsi
(Complainants for brevity) and Priscilla Marreo (or
Priscilla Marelo).
The prosecution and appellants stipulated that
appellants are not licensed or authorized to
recruit workers for employment abroad, in lieu of
the testimony of Senior Labor Researcher Johnson
Bolivar of the Philippine Overseas Employment
Administration (POEA).
Complainants are husband and wife, residents of
Baguio City. They made a living earning an
average of P20,000.00 a month by selling fish
and vegetables in a rented stall in said City, at
least until March 24, 1998 when they closed shop
for reasons of attending to the demands of the
promised jobs for them in Japan. Both
categorically identified Jane Am-amlao (or Jean
Am-amlaw), their co-vendor in Baguio City
Market, as the person who approached them and
assured them that she knew a legal recruiter, an
ex-POEA employee, who had the capacity to send
them both abroad. Jane Am-amlaw (or Am-amlaw
for brevity) recruited complainants and personally
accompanied them on March 24, 1998 to meet
the person she earlier referred to, or Aida de Leon
(or Alma de Leon), in the latters apartment at No.
7280 J. Victor St., Pio del Pilar, Makati.
Complainants likewise categorically identified
Aida de Leon (de leon for brevity) as the person
who arranged a meeting in her apartment on
March 24, 1998 between complainants and
appellant Angel Mateo (Mateo for brevity) whom
de Leon introduced as their contact person for
Japan-bound workers. In said meeting, Mateo
represented himself as having the capacity to
send people abroad and showed complainants
various documents to convince them of his
legitimate recruitment operations. Convinced that
Mateo had indeed the capacity to facilitate their
employment as an office worker and as a cook or
mechanic in Japan, complainants, on that same
day, handed Mateo P15,000.00 which Mateo
required them to pay for their processing
fees. This was to be the first of a series of sums of
money to be extracted from complainants.
Complainants were able to positively identify
Mateo in court as the contact person of de Leon
and who collected from them, from March 24,
1998 to June 23, 1998, sums of money for the
alleged necessary expenses relative to the
promised jobs awaiting them in Japan in the total
amount of P158,600.00.Complainants likewise
categorically identified Mateo as the same person
whose authorization was needed for the recovery
of P40,000.00 of theP45,000.00 they gave Mateo
who in turn deposited it to Sampaguita Travel
Agency under his own name.
Complainants likewise positively identified
appellant Vicenta Vicky Lapis (Lapis for brevity) in

Court as the person introduced to them by Mateo

as his wife on April 29, 1998 at Maxs Restaurant
in Makati when Lapis required complainants to
pay P49,240.00 for their plane tickets and travel
taxes. Lapis is, in fact, only the live-in partner of
Mateo. Lapis told complainants that she was
helping to speed up the process[ing] of their
papers relative to the promised jobs awaiting
them in Japan. Complainants met again Lapis,
who was with Mateo on May 2, 1998 at the Makati
Restaurant, annex of Maxs Restaurant, when
Lapis assured them that Mateo could really send
them abroad and even wrote in a piece of paper
appellants address at Phase I, Lot 14, Blk 13 Mary
Cris Subd., Imus, Cavite. On May 17, 1998,
complainants once more met Lapis who was with
Mateo, de Leon and de Leons husband in Baguio
City at the house of Priscilla Marreos
daughter. Both appellants updated complainant
as to the status of their paper and reiterated their
promise that complainants would soon be leaving
for Japan, then collected from complainants
unreceipted amount of P20,000.00. Complainants
met again with Lapis, who was again with Mateo,
on May 19, 1998 at the Sampaguita Travel
Agency. Mateo extracted P45,000.00 from
complainants and deposited it under his
name. On that occasion, Perpetua wanted to ask
from the Sampaguita Travel Agencys employees
where to pay the P45,000.00 but failed to do so
because Lapis took her attention away from
asking while Mateo asked Melchor to hand over to
him said sum.
Priscilla Marreo (Priscilla for brevity) is the sister
of Melchor who loaned complainants part of
the P158,000.00 which appellants extracted from
complainant[s]. Thus, she made herself present in
most of the meetings between complainants and
appellants together with the two other accused
where she witnessed the assurances and
promises made by appellants relative to
complainants immediate departure for Japan and
their corresponding demands of sums of
money. The testimony of Priscilla underscored the
testimony of complainants showing that Amamlaw, de Leon, Lapis and Mateo indeed
corroborated and confederated in the commission
of illegal recruitment.
The prosecution presented documentary
evidence, such as varied unofficial receipts all
bearing the signature of Mateo; Sinumpaang
Salaysay of Perpetua L. Degsi executed on July
21, 1998; Affidavit executed by complainants on
July 21, 1998; Requirement for Guarantee Letter
of Visa bearing the names of both private
complainants; Request for Certification of POEACIDG, Team to Mr. Hermogenes Mateo, Director II,
Licensing Branch of POEA as represented by
Johnson Bolivar, Senior Labor Researcher of
POEA, and the various documents that
complainants alleged to have been shown to
them by Mateo to prove the legality of his
recruitment operations.[10] (Citations omitted)

Version of the Defense

For their part, appellants deny that they were
engaged in recruitment activities, and that they
promised
foreign
employment
to
the

victims. Below is the version

presented by the defense:

of

the

facts

VICENTA MEDINA LAPIS testified that she is the

live-in partner of her co-accused Mateo. They
have been living together for almost three (3)
years.According to her, she first met both
complainants at Maxs Restaurant in Makati when
they talked to accused Mateo. She was there only
to accompany her live-in partner. The subject of
the conversation between the complainants and
accused Mateo was a contract in Baguio City. She
did not see complainant deliver money to
accused Mateo while they were in that
meeting. She also has no knowledge about the
transaction between complainant and accused
Mateo. She admitted that she went to Baguio City
together with accused Mateo to talk to the City
Mayor. She likewise admitted that the
handwriting appearing in Exhibit F is hers but the
reason why she gave it was only to comply to the
request of the complainant Perpetua Degsi
regarding a matter to be followed up at the
National Bureau of Investigation (NBI). The result
of her follow-up rendered was that complainant
Perpetua Degsi has a pending case of estafa.
ANGEL MATEO averred that he is engaged in the
importation of heavy equipment and containers
but he has never been engaged in recruitment. To
prove that he was really engaged in the delivery
of heavy equipment, he presented a document of
Import Service signed by a certain Alexander
Arcilla addressed to Honorable Timoteo Encar Jr.,
City Mayor, Cavite City dated March 14, 1997 and
were marked as Exhibit 1 and 1-a. He also
presented another document of Import Services
issued by the Department of Trade and Industry
addressed to Honorable Mayor Maliksi as
Municipal Mayor of Imus, Cavite; a photocopy of a
Bill of Lading from Trade Bulk cargoes by Eastern
Shipping Lines, Inc.; and Invoice of used vehicles,
airconditioners and washing machines and the
packing list which were all marked as Exhibits 3
to 5. Sometime in March 24, 1998, he met the
complainants at Pio del Pilar, in Makati City at the
apartment of accused Aida de Leon. He went
there to follow-up their transaction about heavy
equipment with Mayor Binay because, it was
accused de Leon who entered the transaction
with Mayor Binay. While he was there, the
complainants were introduced to him by accused
de Leon.He admitted meeting the complainants
on April 29, 1998 at Maxs Restaurant but the
reason was for him to meet Mrs. Marero in person
and also because complainant Perpetua Degsi
has a pending case for large scale estafa and she
needed a clearance. He denied having signed
Exhibit B. He further claimed that the topic of
their meeting was to supply heavy equipment in
Baguio City. He denied having asked
for P50,000.00 on May 6, 1999. He likewise
denied signing the receipt showing the total
amount of P158,600.00.[11]

The Trial Courts Ruling

The trial court held that the evidence for the
prosecution sufficiently established the criminal
liability of appellants for the crimes charged.It
ruled in this manner:

Evidence for the prosecution clearly established

that both complainants were enticed by accused
Mateo and were led to believe that the latter has
the capacity to send them for employment to
Japan. Complainant Melchor Degsi and his wife
Perpetua Degsi both testified to this fact. Acting
on their belief that indeed accused Mateo can
deploy them to Japan, amounts were disbursed
by both complainants to accused Mateo to cover
the processing and placement fees. x x x The
Court finds the evidence presented by the
prosecution sufficient to establish that accused
Mateo violated Section 6 of Republic Act No. 8042
when he demanded amounts for placement and
processing fees but he failed to deploy both
complainants. The Court has a similar conclusion
insofar as the accusation for estafa is concerned
as the evidence shows accused Mateo knew
beforehand that he has no capacity to deploy
both complainants abroad and that the
enticement to work abroad was merely a scheme
or plan to exact money from both
complainants. Deception was proven.
Insofar as the accused Lapis is concerned it is to
be noted that the theory of the prosecution is
that she acted in conspiracy with her co-accused
Mateo who is her live-in partner. Evidence for the
prosecution shows that at least on three (3)
occasions accused Lapis was present when
accused Mateo asked and received money from
complainants in connection with their intended
employment in Japan. x x x The Court conclude[d]
that accused Lapis has knowledge of the
intention of her co-accused Mateo in asking for
money from both complainants. There was active
participation on her part in the recruitment of
both complainants and in deceiving them about
the capacity to secure employment. The Court
believes that conspiracy was established beyond
reasonable doubt. Her defense of ignorance of
the transaction cannot be considered given the
positive evidence presented by the prosecution
which should prevail over her plain denial.[12]
Hence, this appeal.[13]

The Issues
In their Brief, appellants
following assignment of errors:

interpose

the

I
The court a quo gravely erred in finding accusedappellants guilty beyond reasonable doubt of
violations of Republic Act No. 8042 (Migrant
Workers and Overseas Filipinos Act of 1995)
committed by a syndicate and Article 315
paragraph 2(a) of the Revised Penal Code.
II
The court a quo gravely erred in finding accusedappellant Vicenta Medina Lapis guilty beyond
reasonable doubt of illegal recruitment and
estafa.
III

The court a quo gravely erred in finding accusedappellants guilty beyond reasonable doubt of
illegal recruitment committed by a syndicate.
IV
The court a quo gravely erred in finding accusedappellants guilty beyond reasonable doubt of the
crime of estafa defined and penalized under
Article 315 par. 2(a) of the Revised Penal Code as
amended.[14]

The Courts Ruling

The appeal has no merit.

First Issue:

Syndicated Illegal Recruitment

Appellants aver that the finding of syndicated
illegal recruitment by the lower court was
erroneous; its conclusion that the offense was
committed by three (3) or more persons had no
factual or legal basis. Allegedly, without sufficient
evidence, the trial court wrongfully presumed
that all of them had acted in conspiracy.
According to them, the prosecution failed to
prove beyond reasonable doubt that they had
conspired and confederated in illegally recruiting
complainants. Appellants conclude that, if at all,
they could only be held liable for illegal
recruitment in its simple form. We disagree.
Illegal recruitment is committed when these
two elements concur: (1) the offenders have no
valid license or authority required by law to
enable them to lawfully engage in the
recruitment and placement of workers, and (2)
the offenders undertake any activity within the
meaning of recruitment and placement[15] defined
in Article 13(b) or any prohibited practices
enumerated in Article 34 of the Labor Code.[16]
Under
Article
13(b), recruitment
and
placement refers to any act of canvassing,
enlisting, contracting, transporting, utilizing,
hiring or procuring workers[;] and includes
referrals,
contract
services,
promising
or
advertising for employment, locally or abroad,
whether for profit or not. In the simplest terms,
illegal recruitment is committed by persons who,
without authority from the government, give the
impression that they have the power to send
workers abroad for employment purposes.[17]
We believe that the prosecution was able to
establish
the
elements
of
the
offense
sufficiently. The
case
records
reveal
that
appellants did in fact engage in recruitment and
placement activities by promising complainants
employment in Japan. Undisputed is the fact that
the former did not have any valid authority or
license to engage in recruitment and placement
activities. Moreover, the pieces of testimonial and
documentary
evidence
presented
by
the
prosecution clearly show that, in consideration of
their promise of foreign employment, they indeed

received various amounts of

complainants totalling P158,600.

money

from

Where appellants made misrepresentations

concerning their purported power and authority
to recruit for overseas employment, and in the
process, collected from complainants various
amounts in the guise of placement fees, the
former clearly committed acts constitutive of
illegal recruitment.[18] In fact, this Court held
that illegal recruiters need not even expressly
represent themselves to the victims as persons
who have the ability to send workers abroad. It is
enough that these recruiters give the impression
that they have the ability to enlist workers for job
placement abroad in order to induce the latter to
tender payment of fees.[19]
It is also important to determine whether
illegal recruitment committed by appellants can
be qualified as a syndicated illegal recruitment or
an offense involving economic sabotage.
Section 6 of RA 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of
1995, provides that illegal recruitment shall be
considered an offense involving economic
sabotage when it is committed by a syndicate or
carried out by a group of three or more persons
conspiring and confederating with one another.
In several cases, illegal recruitment has been
deemed committed by a syndicate if carried out
by a group of three or more persons conspiring
and/or confederating with each other in carrying
out any unlawful or illegal transaction, enterprise
or scheme defined under Article 38(b) of the
Labor Code.[20]
In this case, it cannot be denied that all four
(4) accused -- Jane Am-amlaw, Aida de Leon,
Angel Mateo and Vicenta Medina Lapis
participated in a network of deception. Verily, the
active involvement of each in the various phases
of the recruitment scam formed part of a series of
machinations.
Their
scheme
was
to
lure complainants to Manila and to divest them of
their hard-earned money on the pretext of
guaranteed employment abroad. The prosecution
evidence
shows
that
complainants
were
convinced by Jane Am-amlaw to go to Manila to
meet someone who could find employment for
them abroad. Upon reaching the city, they were
introduced to Aida de Leon and Angel Mateo;
Mateo claimed to have the contacts, the
resources and the capacity to employ them
overseas. After that initial meeting, complainants
made several payments to him, supposedly for
the processing requirements of their deployment
to Japan. Later on, they met Vicenta Medina Lapis
who volunteered her assistance in the processing
of their employment papers and assured them
that
Mateo
could
easily
send
them
abroad. Complainant Perpetua Degsi testified on
the devious trail of transactions with all of the
accused as follows:
Q How did you come to
accused in this case?

know

the

A They were introduced to me by one

Aida de Leon and Jane Am-Amlao.
Q Who is this Jane Am-Amlao you are
referring to?
A She is our co-member in Baguio.

Q What is she in relation to your

recruitment by Angel Mateo and
Vicenta Lapis?

Q After convincing you that he can send

you abroad what happened after
that?

A She was the first one who mentioned

to us that she knows somebody who
has the capacity to send us abroad.

A He asked for a processing fee and I

asked him how much.

Q When was this?

A March, 1998.
Q When Jane Am-Amlao told you that she
knows somebody who has the
capacity to send you abroad what
happened next?
A On March 24, 1998 Jane accompanied
us here in Manila.
Q Where in Manila particularly?
A At No. 72 J. Victor Street, Pio del Pilar,
Makati in the apartment of Aida de
Leon.
Q So what happened at the apartment of
Aida de Leon?
A Jane told us that Aida de Leon was an
ex-employee of POEA and she was
able to send many workers abroad.
Q Were you able to meet Aida de Leon?
A Yes, maam.
Q What happened when you met her?
A Aida called us by phone and according
to her she has the contact person
who can explain [to] us the details
on how to be able to work abroad.
Q After Aida called you up on the phone
what happened next?
A We waited because according to her,
that person is coming over to the
house.
Q A[fter] waiting what happened after
that?
A ANGEL MATEO arrived and he was
introduced to me as the contact
person and we could ask him how
we could work abroad.
Q Who is this siya, you are referring to?
A ANGEL MATEO.

Q What did he tell you?

A He told me that he does not know
because AIDA DE LEON will be the
one to give us the price.
Q After that what happened?
A I asked AIDA how much and she
answered, twenty thousand pesos.
Q After telling you that the amount
is P20,000.00 what happened next?
A We
went
to
the
bank
to
withdraw P20,000.00 but we were
only able to withdraw P15,000.00
and then we handed the P15,000.00
to ANGEL MATEO, in front of Jane
Am-Amlaw.
Q After receiving said amount from you
by ANGEL MATEO what happened
next?
A We parted ways.
Q Was
there
anything
happened after that?

else

that

A Before we parted ways, [he] asked

from us other documents like ID,
birth certificate, marriage contract in
order for him to begin processing our
papers.
Q After that what happened next?
A On March 31, we went back to [him]
and we gave [him] the other
documents needed and we also gave
[him] the balance for the processing
fee.
Q Who is this niya or he you are referring
to?
A Angel Mateo.
Q Where did you meet?
A [He] called me and we met in the
apartment of AIDA.

Q Who introduced you to ANGEL MATEO?

Q Were you able to meet ANGEL MATEO

in the apartment of AIDA DE LEON?

A AIDA DE LEON.

A Yes.

Q After introducing you to ANGEL MATEO

what happened?

Q What happened there?

A ANGEL MATEO showed us some

documents AND HE WAS ABLE TO
convince us that he has the capacity
to send us abroad.
Q What documents were shown to you?
A Incorporation
documents
of
two
companies one, Philippine company
and one is Japan company and some
other documents they made in order
to send workers abroad.

A We gave [him] the documents and we

started processing the documents
Q What are those documents that you
gave to ANGEL MATEO?
A Birth
certificate
authenticated,
marriage contract and passport IDs
and then we went to Pasay City to
start the processing of the passport.
Q You told us that ANGEL MATEO asked
for the balance of P5,000.00, were
you able to pay the said amount to
ANGEL MATEO?

A Yes, maam.
xxxxxxxxx
Q After
receiving
said
amount
of P5,000.00 what happened?
A After that meeting at Pasay City we
parted ways but [he] did not issue us
any receipt so on April 15, [he] again
called us up and told me that he
needs
NBI
clearance
so
we
processed our NBI clearance.
Q You told us that ANGEL MATEO called
you, where were you at that time?
A Baguio City.
Q Were you able to come here in Manila?
A Yes maam, we met in Quiapo.
Q Were you able to meet ANGEL MATEO
in QUIAPO?
A [He] did not arrive in Quiapo.
Q So what did you do?

of papers so that we could be sent

abroad immediately and she even
showed us some documents and I
even told her that I could help them
in typing those documents.[21]
The foregoing testimony very clearly
demonstrates that the individual actuations of all
four (4) accused were directed at a singular
criminal purpose -- to delude complainants into
believing that they would be employed
abroad. The nature and the extent of the formers
interactions among themselves as well as with
the latter clearly show unity of action towards a
common undertaking. Certainly, complainants
would not have gone to Manila to meet Aida de
Leon and Angel Mateo without the prodding of
Am-amlaw. They would not have made various
payments for their travel and employment papers
without the fraudulent representations of Mateo
De Leon. Moreover, they would not have
complied with further instructions and demands
of Mateo without the repeated assurances made
by Lapis.

Q What was the reply of AIDA DE LEON?

Even assuming that the individual acts of the

accused were not necessarily indispensable to
the commission of the offense, conspiracy would
have still been present. Their actions, when
viewed in relation to one another, showed a unity
of purpose towards a common criminal enterprise
and a concurrence in their resolve to commit it.

A She told me that whatever ANGEL

MATEO would tell us, thats what we
should follow.

In People v. Gamboa,[22] the Court had

occasion to discuss the nature of conspiracy in
the context of illegal recruitment as follows:

Q After that what happened?

Conspiracy to defraud aspiring overseas contract

workers was evident from the acts of the
malefactors whose conduct before, during and
after the commission of the crime clearly
indicated that they were one in purpose and
united in execution. Direct proof of previous
agreement to commit a crime is not necessary as
it may be deduced from the mode and manner in
which the offense was perpetrated or inferred
from the acts of the accused pointing to a joint
purpose and design, concerted action and
community of interest. As such, all the accused,
including accused-appellant, are equally guilty of
the crime of illegal recruitment since in a
conspiracy the act of one is the act of all.
[23]
(Emphasis supplied)

A We proceeded [to] the NBI and we

called up AIDA and asked her why
ANGEL MATEO did not arrive and
whom did AIDA talk to.

A The processing of our NBI clearance

did not finish so on April 15 ANGEL
MATEO asked for P2,000.00 in order
to help us process the NBI.
Q After calling you on April 15, what
happened next?
A On April 29, 1998 me, my sister,
Melchor,
and
Melchors
sister
together with ANGEL MATEO met at
Maxs Restaurant in Makati.
xxxxxxxxx
Q Were you able to meet ANGEL MATEO?
A Yes maam, they arrived together with
somebody whom [she] introduced to
us as [his] wife.
Q Who is this wife you are referring to?
A She is Vicky Lapis, and later on we
found out that she is Vicenta Medina
Lapis.
Q What was this meeting all about?
A We were updated on what was
happening on our papers and then
ANGEL MATEO AND VICENTA LAPIS
asked for a plane ticket.

To establish conspiracy, it is not essential

that there be actual proof that all the conspirators
took a direct part in every act. It is sufficient that
they acted in concert pursuant to the same
objective.[24]
Conspiracy is present when one concurs with
the criminal design of another, indicated by the
performance of an overt act leading to the crime
committed.[25]

xxxxxxxxx

The OSG avers, as an incident to this issue,

and in line with People v. Yabut,[26] that
complainants are entitled to recover interest on
the amount of P118,000, which the trial court
awarded from the time of the filing of the
Information until fully paid. We agree with the
OSGs observation and hereby grant the legal
interest on the amount prayed for.

A Vicenta Lapis told us that she is just

helping to speed up the processing

In a number of cases,[27] this Court has

affirmed the trial courts finding that victims of

Q What was the update for

processing of your papers?

the

illegal recruitment are entitled to legal interest on

the amount to be recovered as indemnity, from
the time of the filing of the information until fully
paid.

kayang-kaya niya kaming padalhin

sa Japan dahil
marami
siyang
kilalangJapanese employer at
may
ipinakita siyang mga dokumento,
maam).

Second Issue:

Q What are these documents, if you

remember, that were shown to you?

Appellants Liability for Estafa

A Papers of Japanese companies, Clean

Supplies Co. Ltd., Arabian Boy
Express Corporation and that is
the
reason
why
we
were
convinced, maam.

Appellants argue that in a prosecution for

estafa under Article 315, paragraph 2(a) of the
Revised Penal Code, it is indispensable that the
element of deceit, consisting of fraudulent
representations or false statements of the
accused, be made prior to or simultaneous with
the delivery of the thing; and that such
misrepresentations or false statements induce
the complainants to part with the object of the
crime. The former allege that the prosecution
failed to point out with certainty whether their
misrepresentations or false statements were
made prior to or at least simultaneous with the
latters delivery of the money.
Under the cited provision of the Revised
Penal Code, estafa is committed by any person
who defrauds another by using a fictitious name;
or by falsely pretending to possess power,
influence, qualifications, property, credit, agency,
business; by imaginary transactions or similar
forms of deceit executed prior to or simultaneous
with the fraud.[28] Moreover, these false pretenses
should have been the very reason that motivated
complainants to deliver property or pay money to
the perpetrators of the fraud. While appellants
insist that these constitutive elements of the
crime were not sufficiently shown by the
prosecution, the records of the case prove
otherwise.
During almost all of their meetings,
complainants paid various amounts of money to
appellants only after hearing the feigned
assurances proffered by the latter regarding the
formers employment prospects in Japan. Even as
early as their first meeting in the house of Aida
de Leon, the payment by complainants of the
initial amount of P15,000 was immediately
preceded by an onslaught of promises. These
enticing, albeit empty, promises were made by
Angel Mateo, who even showed them documents
purportedly evincing his connections with various
foreign companies. Equally important, they relied
on such misrepresentations, which convinced
them to pay the initial amount as processing
fees. Complainant Melchor Degsi testified on the
matter in this wise:
Prosecutor Ong:
So when Angel Mateo arrived at the
apartment of Aida de Leon, what did
he do, if any?
Witness:
He introduced himself to us and told us
that he can easily send us to Japan
because he knows many Japanese
employers and he also showed us
some
documents,
maam.
(Nagpakilala siya at ang sabi niya ay

Q So, after being convinced that

Angel Mateo can send you
abroad, what did you do after
that?
A Nakumbinsi nga po kami at
pagkatapos noon ay nag-usapusap silang tatlo nina Jean Amamlaw at humihingi na sila ng
processing
fee
na P20,000,
maam.
Q So what did you do when they
were already asking for the
amount of P20,000 from you as
processing fee?
A We told them that we do not have
any money that time and we
have to withdraw from the bank
and then we went to Pasay and
we
withdrew
the
amount
of P15,000.00 so that was the
only amount we were able to
give them that time, maam.
Q Who were with you when you withdrew
the said amount from the bank in
Pasay?
A Jean Am-amlaw
maam.

and

Angel

Mateo,

Q Who received the amount of P15,000?

A Angel Mateo in front of Jean Amamlaw,
maam.[29] (Emphasis
supplied)
From the foregoing, it is evident that the false
statements that convinced complainants of the
authenticity of the transaction were made prior to
their payment of the various fees. Indubitably,
the requirement that the fraudulent statements
should have been made prior to or simultaneous
with the actual payment was satisfied.
Verily, by their acts of falsely representing
themselves as persons who had the power and
the capacity to recruit workers for abroad,
appellants induced complainants to pay the
required fees.[30] There is estafa if, through
insidious words and machinations, appellants
deluded complainants into believing that, for a
fee, the latter would be provided overseas jobs.[31]
Although we agree with the ruling of the RTC
convicting appellants of estafa, we note that it
failed
to
apply
the
Indeterminate
SentenceLaw in imposing the penalty.
Under
Section 1 of that law, the maximum term of the
indeterminate sentence shall be the penalty
properly imposed, considering the attending
circumstances; while the minimum term shall be

within the range of the penalty next lower than

that prescribed by the Code.[32] Hence, pursuant
to the Indeterminate Sentence Law, the trial court
should have fixed the minimum and the
maximum penalties.[33]
The Revised Penal Code
penalties for estafa as follows:

provides

the

Art. 315. Swindling (estafa). -- Any person who

shall defraud another by any of the means
mentioned hereinbelow shall be punished by:
1st. The penalty of prision correccional in its
maximum period to prision mayor in its minimum
period, if the amount of the fraud is over
12,000.00 but does not exceed 22,000 pesos, and
if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be
imposed in its maximum period, adding one year
for each additional 10,000 pesos; but the total
penalty which may be imposed shall not exceed
twenty years. In such cases, and in connection
with the accessory penalties which may be
imposed and for the purpose of the other
provisions of this Code, the penalty shall be
termedprision mayor or reclusion temporal, as
the case may be. (Italics supplied)

conspiracy to defraud the victims. They maintain

that she merely accompanied Angel Mateo during
his meetings with complainants and that she had
no knowledge of the intentions of her coaccused. They add that mere knowledge,
acquiescence or agreement to cooperate is not
enough to constitute one as a co-conspirator.
We are not persuaded. As discussed earlier,
Lapis not only knew of the conspiracy, but she
also offered her assistance in the processing of
the
employment
requirements
of
complainants. Contrary to her claim that she was
merely
an
unknowing
spectator
in
the
underhanded transactions, she deliberately
inveigled them into pursuing the promise of
foreign employment. The records clearly belie her
claim of innocence and indicate that her
participation in the criminal scheme transcends
mere knowledge or acquiescence. Complainant
Melchor Degsi describes one of the many
instances of how deeply involved Lapis was in the
whole recruitment charade:
Prosecutor Ong:
Mr. Witness, you testified a while ago
that you were at Max Restaurant
together with Vicenta Lapis and
Angel Mateo?

Considering
that
complainants
were
defrauded in excess of the P22,000 limit fixed by
law,
the
maximum
penalty
of prision
mayor should be imposed in its minimum period,
or six (6) years and one (1) day to eight (8) years,
plus one (1) year for each additional P10,000 in
excess of the P22,000 limit. The total amount
defrauded from the complainants was P158,600 -or P136,600
in
excess
of P22,000,
which
translates to an additional prison sentence of
thirteen (13) years based on the aforementioned
computation. Accordingly, the maximum penalty
to be imposed should be nineteen (19) years and
one (1) day to twenty-one (21) years, thus raising
the penalty to reclusion temporal. However, the
penal provisions for the crime of estafa provide
that the total penalty to be imposed should not in
any case exceed twenty (20) years imprisonment.

Witness:

In Criminal Case No. 99-1113 for estafa,

consonant with the Indeterminate Sentence Law,
appellants should thus be sentenced to an
indeterminate penalty of twelve (12) years
of prision mayor which is the penalty next lower
than that prescribed by the Code for the offense
to
twenty
(20)
years
of reclusion
temporal. Indeed, the expression the penalty next
lower to that prescribed by said Code for the
offense, used in Section 1 of the Indeterminate
Sentence Law, means the penalty next lower than
that determined by the court in the case before it
as the maximum.[34]

A: Tinanong namin ang address nila at

kusang loob na ibinigay ni Vicenta
Medina [Lapis] sa amin ang address
at direksyon para makapunta kami
sa Imus, Cavite, maam.

Third Issue:

Liability as Co-conspirator
Finally, appellants contend that the trial court
should not have convicted Vicenta Medina Lapis
because the prosecution evidence did not
sufficiently prove her participation in the

Yes, maam.
Q: Could you remember what Vicenta
Medina [Lapis] said to you?
A: She promised that we will be sent
to Japan sooner as OCW, maam.
Q: Could you recall how she said it?
A: She
said
makakapunta
maam.

Sigurado
kayo ng

kay,
Japan,

Q: During that time that she was telling

you sigurado kay makakapunta kayo
ng Japan,
did
she
show
you
anything?

Q: What was the reason why Vicenta

Medina Lapis gave you the address?
A: Para sigurado raw kami na hindi
sila illegal kaya ibinigay niya ang
address nila, maam. [35] (Emphasis
supplied)
Once conspiracy is established, the act of
one becomes the act of all regardless of the
degree of individual participation. [36] Moreover,
the precise modality or extent of participation of
each individual conspirator becomes merely a
secondary
consideration.[37] Notwithstanding
nonparticipation in every detail of the execution
of the crime, the culpability of the accused still
exists.[38]
WHEREFORE, the appealed
hereby AFFIRMED with
following MODIFICATIONS:

Decision

is
the

1. In Criminal Case No. 99-1112, appellants

are ordered to pay legal interest on the amount
of P118,000 from the time of the filing of the
Information until fully paid.
2. In Criminal Case No. 99-1113, appellants
are sentenced to an indeterminate penalty of
twelve (12) years of prision mayor as minimum to
twenty (20) years of reclusion temporal as
maximum.
SO ORDERED.

IV.

Management Prerogatives

[G.R. No. 146650. January 13, 2003]

DOLE PHILIPPINES,
INC., petitioner, vs. PAWIS NG MAKABAYANG
OBRERO (PAMAO-NFL), respondent.
DECISION
CORONA, J.:
Before us is a petition for review filed under
Rule 45 of the 1997 Rules of Civil Procedure,
assailing the January 9, 2001 resolution of the
Court of Appeals which denied petitioners motion
for reconsideration of its September 22, 2000
decision[1] which in turn upheld the Order issued
by the voluntary arbitrator[2] dated 12 October
1998, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the
complainant. Respondent is hereby directed to
extend the free meal benefit as provided for in
Article XVIII, Section 3 of the collective bargaining
agreement to those employees who have actually
performed overtime works even for exactly three
(3) hours only.
SO ORDERED.

[3]

The core of the present controversy is the

interpretation of the provision for free meals
under Section 3 of Article XVIII of the 1996-2001
Collective Bargaining Agreement (CBA) between
petitioner Dole Philippines, Inc. and private
respondent labor union PAMAO-NFL. Simply put,
how many hours of overtime work must a Dole
employee render to be entitled to the free meal
under Section 3 of Article XVIII of the 1996-2001
CBA? Is it when he has rendered (a) exactly, or no
less than, three hours of actual overtime work or
(b) more than three hours of actual overtime
work?
The antecedents are as follows:
On February 22, 1996, a new five-year
Collective Bargaining Agreement for the period
starting February 1996 up to February 2001, was
executed by petitioner Dole Philippines, Inc., and
private respondent Pawis Ng Makabayang ObreroNFL (PAMAO-NFL). Among the provisions of the
new CBA is the disputed section on meal
allowance under Section 3 of Article XVIII on
Bonuses and Allowances, which reads:
Section 3. MEAL ALLOWANCE. The COMPANY
agrees to grant a MEAL ALLOWANCE of TEN

PESOS (P10.00) to all employees who render at

least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as
presently practiced, not exceeding TWENTY FIVE
PESOS (P25.00) after THREE (3) hours of actual
overtime work.[4]
Pursuant to the above provision of the
CBA, some departments of Dole reverted to the
previous practice of granting free meals after
exactly three
hours of actual
overtime
work. However, other departments continued the
practice of granting free meals only after more
than three hours of overtime work. Thus, private
respondent filed a complaint before the National
Conciliation and Mediation Board alleging that
petitioner Dole refused to comply with the
provisions of the 1996-2001 CBA because it
granted free meals only to those who rendered
overtime work for more than three hours and not
to those who rendered exactly three hours
overtime work.
The parties agreed to submit the dispute to
voluntary arbitration. Thereafter, the voluntary
arbitrator, deciding in favor of the respondent,
issued an order directing petitioner Dole to
extend the free meal benefit to those employees
who actually did overtime work even for exactly
three hours only.
Petitioner sought a reconsideration of the
above order but the same was denied. Hence,
petitioner elevated the matter to the Court of
Appeals by way of a petition for review on
certiorari.
On September 22, 2000, the Court of Appeals
rendered its decision upholding the assailed
order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase after
three hours of actual overtime work should be
interpreted to mean after more than three
hours of actual overtime work.
On the other hand, private respondent union
and the voluntary arbitrator see it as
meaning after exactly three hours of actual
overtime work.
The meal allowance provision in the 19962001 CBA is not new. It was also in the 1985-1988
CBA and the 1990-1995 CBA. The 1990-1995 CBA
provision on meal allowance was amended by the
parties in the 1993-1995 CBA Supplement. The
clear changes in each CBA provision on meal
allowance were in the amount of the meal
allowance and free meals, and the use of the
words after and after more than to qualify the
amount of overtime work to be performed by an
employee to entitle him to the free meal.
To arrive at a correct interpretation of the
disputed provision of the CBA, a review of the
pertinent section of past CBAs is in order.
The CBA covering the period 21 September
1985 to 20 September 1988 provided:
Section 3. MEAL ALLOWANCE. The COMPANY
agrees to grant a MEAL ALLOWANCE of FOUR
(P4.00) PESOS to all employees who render at
least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as

presently practiced, after THREE (3) hours of

actual overtime work.[5]
The CBA for 14 January 1990 to 13 January
1995 likewise provided:
Section 3. MEAL ALLOWANCE. The COMPANY
agrees to grant a MEAL ALLOWANCE of EIGHT
PESOS (P8.00) to all employees who render at
least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as
presently practiced, not exceeding SIXTEEN
PESOS (P16.00) after THREE (3) hours of actual
overtime work.[6]
The provision above was later amended
when the parties renegotiated the economic
provisions of the CBA pursuant to Article 253-A of
the Labor Code. Section 3 of Article XVIII of the 14
January 1993 to 13 January 1995 Supplement to
the 1990-1995 CBA reads:
Section 3. MEAL ALLOWANCE. The COMPANY
agrees to grant a MEAL SUBSIDY of NINE PESOS
(P9.00) to all employees who render at least TWO
(2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently
practiced, not exceeding TWENTY ONE PESOS
(P21.00) after more than THREE (3) hours of
actual overtime work (Section 3, as amended). [7]
We note that the phrase more than was
neither in the 1985-1988 CBA nor in the original
1990-1995 CBA. It was inserted only in the 19931995 CBA Supplement. But said phrase is again
absent in Section 3 of Article XVIII of the 19962001 CBA, which reverted to the phrase after
three (3) hours.
Petitioner asserts that the phrase after three
(3) hours of actual overtime work does not
mean after exactly three hours of actual overtime
work; it means after more than three hours of
actual overtime work. Petitioner insists that this
has been the interpretation and practice of Dole
for the past thirteen years.
Respondent, on the other hand, maintains
that after three (3) hours of actual overtime work
simply means after rendering exactly, or no less
than, three hours of actual overtime work.
The Court finds logic in private respondents
interpretation.
The omission of the phrase more than
between after and three hours in the present CBA
spells a big difference.
No amount of legal semantics can convince
the Court that after more than means the same
as after.
Petitioner asserts that the more than in the
1993-1995 CBA Supplement was mere surplusage
because, regardless of the absence of said phrase
in all the past CBAs, it had always been the policy
of petitioner corporation to give the meal
allowance only after more than 3 hours of
overtime work. However, if this were true, why
was it included only in the 1993-1995 CBA
Supplement and the parties had to negotiate its
deletion in the 1996-2001 CBA?

Clearly then, the reversion to the wording of

previous CBAs can only mean that the parties
intended that free meals be given to
employees after exactly, or no less than, three
hours of actual overtime work.
The disputed provision of the CBA is clear
and unambiguous. The terms are explicit and the
language of the CBA is not susceptible to any
other interpretation. Hence, the literal meaning of
free meals after three (3) hours of overtime work
shall prevail, which is simply that an employee
shall be entitled to a free meal if he has rendered
exactly, or no less than, three hours of overtime
work, not after more than or in excess of three
hours overtime work.
Petitioner also invokes the well-entrenched
principle of management prerogative that the
power to grant benefits over and beyond the
minimum standards of law, or the Labor Code for
that matter, belongs to the employer x x
x. According to this principle, even if the law is
solicitous of the welfare of the employees, it must
also protect the right of the employer to exercise
what clearly are management prerogatives.
[8]
Petitioner claims that, being the employer, it
has the right to determine whether it will grant a
free meal benefit to its employees and, if so,
under what conditions. To see it otherwise would
amount to an impairment of its rights as an
employer.
We do not think so.
The exercise of management prerogative is
not unlimited. It is subject to the limitations found
in law, a collective bargaining agreement or the
general principles of fair play and justice. [9] This
situation constitutes one of the limitations. The
CBA is the norm of conduct between petitioner
and private respondent and compliance therewith
is mandated by the express policy of the law.[10]
Petitioner Dole cannot assail the voluntary
arbitrators interpretation of the CBA for the
supposed impairment of its management
prerogatives just because the same interpretation
is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.

V.

Liability of Employer

[G.R. No. 146267. February 17, 2003]

NYK INTERNATIONAL KNITWEAR CORPORATION
PHILIPPINES and/or CATHY
NG, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and VIRGINIA M.
PUBLICO, respondents.
DECISION
QUISUMBING, J.:
In this petition for review, petitioners NYK
International Knitwear Corporation Philippines
(henceforth NYK, for brevity) and its manager,
Cathy
Ng,
assail
the
resolution[1] dated
September 15, 2000 of the Court of Appeals in
CA-G.R. SP No. 60542, which dismissed their
petition for certiorari for non-compliance with

Section 1, Rule 65 of the 1997 Rules of Civil

Procedure. Also assailed is the appellate courts
resolution[2] of December 5, 2000, which denied
the motion for reconsideration.
The facts, as gleaned from the findings of the
Labor Arbiter as affirmed by the National Labor
Relations Commission (NLRC), show that:
On February 8, 1995, herein petitioner NYK
hired
respondent
Virginia
Publico
as
a
sewer. Under the terms and conditions of her
employment, Publico was paid on a piece-rate
basis, but required to work from 8:00 A.M. to
12:00
midnight.
On
the
average,
she
earnedP185.00 daily.
At about 10:00 P.M. of May 7, 1997, Publico
requested that she be allowed to leave the work
place early, as she was not feeling well due to a
bout of influenza. Permission was refused but
nonetheless, Publico went home.
The following day, Publico called up her
employer and notified management that she was
still recovering from her ailment.
On May 9, 1997, Publico reported for work. To
her mortification and surprise, however, the
security guard prevented her from entering the
NYK premises, allegedly on managements order.
She begged to be allowed inside, but the guard
remained adamant. It was only when Publico
declared that she would just complete the
unfinished work she had left on May 7 that the
guard let her in.
Once inside the factory, Publico requested to
see the owner, one Stephen Ng. Her request was
declined. She was instead asked to come back
the following day.
On May 10, 1997, Publico returned to NYK as
instructed. After waiting for three and half (3)
hours, she was finally able to see Stephen Ng.
When she inquired why she was barred from
reporting for work, Mr. Ng told her she was
dismissed due to her refusal to render overtime
service.
Aggrieved, private respondent filed a
complaint for illegal dismissal against petitioner
corporation and its manager, petitioner Cathy Ng,
docketed as NLRC NCR Case No. 00-06-03925-97.
Before
the
Labor
Arbiter,
petitioners
predictably had a different version of the story.
Allegedly, they took the pains to verify why
Publico did not report for work on May 7, 1997
and found out that her husband did not allow her
to work at night. As night work is a must in their
line of business, particularly when there are rush
orders, petitioners claimed that given Publicos
failure to render overtime work, they were left
with no other recourse but to fire her.
On March 19, 1998, the Labor Arbiter held
Publicos dismissal to be illegal, disposing as
follows:
WHEREFORE, the respondents are hereby ordered
to reinstate the complainant to her former
position with full backwages from the date her
salary was withheld until she is actually
reinstated, which amounted to P50,168.30 x x x.
The respondents are, likewise, assessed the sum
of P5,016.83 representing 10% of the amount

awarded as attorneys fees. The rest of the claims

are dismissed for lack of merit.
SO ORDERED.[3]
On appeal, the NLRC, in a resolution [4] dated
May 17, 2000, affirmed the decision of the Labor
Arbiter in toto.
In due time, petitioners impugned the NLRC
decision by way of a special civil action of
certiorari filed before the Court of Appeals,
docketed as CA-G.R. SP No. 60542. Petitioners
ascribed grave abuse of discretion amounting to
lack or excess of jurisdiction to public respondent
NLRC for affirming the ruling of the Labor Arbiter.
In its resolution of September 15, 2000, the
appellate court dismissed the petition outright.
The Court of Appeals pointed out that there was
non-compliance with Section 1 of Rule 65 of the
1997 Rules of Civil Procedure as the petition was
merely accompanied by a certified xerox copy of
the assailed NLRC decision, instead of a certified
true copy thereof as required by the Rules of
Court.[5] Furthermore, petitioners failed to attach
the other pleadings and documents pertinent and
material to their petition, such as the parties
position papers, their evidence and the motion for
reconsideration in contravention of the said rule.
[6]

Petitioners duly moved for reconsideration,

explaining that they had requested for a certified
true copy of the NLRCs decision but since the
original NLRC decision was printed on onionskin
was not legible, the NLRC itself photocopied the
resolution and certified it afterwards. As proof of
payment of petitioners request for a certified true
copy of the NLRC decision, petitioners attached a
copy of the official receipts issued by the NLRC,
which described the nature of the entry as CERT.
TRUE COPY.[7] Petitioners, likewise, appended in
their motion copies of pertinent pleadings and
documents not previously attached in their
petition.
On December 5, 2000, the appellate court
denied petitioners motion for reconsideration. [8]
Hence this petition for review.
Before us, petitioners submit the following
issues for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS
SHOULD HAVE GIVEN DUE COURSE TO THE
PETITION FOR CERTIORARI.
II
WHETHER OR NOT THERE EXISTS EVIDENCE ON
RECORD TO WARRANT THE RULING THAT
COMPLAINANT WAS ILLEGALLY DISMISSED, AND
COROLLARY THERETO, WHETHER OR NOT THERE
IS LEGAL JUSTIFICATION TO AWARD BACKWAGES
AND ORDER REINSTATEMENT.
III
WHETHER OR NOT THERE WAS GRAVE ABUSE OF
DISCRETION ON THE PART OF THE PUBLIC
RESPONDENT NLRC SO AS TO JUSTIFY A

REVERSAL OF ITS RESOLUTIONS DATED MAY 17,

2000 AND JUNE 30, 2000.[9]
Only two issues need resolution, one having
to do with adjective law and the other with
substantial law, namely:
(1) Did the Court of Appeals commit a
reversible error in dismissing CA-G.R. SP No.
60542 on purely technical grounds, i.e., that the
attached copy of the NLRC decision is a mere
photocopy of the original decision; and
(2) Did the Court of Appeals err in refusing to
rule on the correctness of the NLRCs findings that
private respondent was illegally dismissed?
On the first issue, petitioners contend that
they have substantially complied with the
requirements of Section 1, Rule 65, hence, in the
interests of justice and equity, the Court of
Appeals should have given due course to their
special civil action for certiorari.
Private respondent, on the other hand,
maintains that petitioners wanton disregard of
the Rule warrant the outright dismissal of their
petition. She adds that the present petition raises
factual issues that the Court cannot pass upon at
the first instance.
Section 1 of Rule 65,[10] 1997 Rules of Civil
Procedure, requires that the petition shall be
accompanied by a certified true copy of the
judgment or order subject thereof, together with
copies of all pleadings and documents relevant
and pertinent thereto. The precursor of the
Revised Rules of Civil Procedure, Administrative
Circular No. 3-96, which took effect on June 1,
1996, instructs us what a certified true copy is:
1. The "certified true copy" thereof shall be
such other copy furnished to a party at his
instance or in his behalf, duly authenticated
by the authorized officers or
representatives of the issuing entity as
hereinbefore specified.
xxx
3. The certified true copy must further
comply with all the regulations therefor of
the issuing entity and it is the
authenticated original of such certified true
copy, and not a mere xerox copy thereof,
which shall be utilized as an annex to the
petition or other initiatory
pleading. (Emphasis supplied.)
xxx
Applying the preceding guidepost in the
present case, the disputed document although
stamped as certified true copy is not an
authenticated original of such certified true copy,
but only a xerox copy thereof, in contravention of
paragraph 3 of the above-quoted guidelines.
Hence, no error may be ascribed to the Court of
Appeals in dismissing the petition for certiorari
outright
pursuant
to
paragraph
5
of
Administrative Circular No. 3-96, which provides:
5. It shall be the duty and responsibility of the
party using the documents required by Paragraph
(3) of Circular No. 1-88 to verify and ensure

compliance with all the requirements therefor as

detailed in the preceding paragraphs. Failure to
do so shall result in the rejection of such
annexes and the dismissal of the
case. Subsequent compliance shall not
warrant any reconsideration unless the
court is fully satisfied that the noncompliance was not in any way attributable
to the party, despite due diligence on his
part, and that there are highly justifiable
and compelling reasons for the court to
make such other disposition as it may deem
just and equitable. (Emphasis supplied.)
The members of this Court are not unmindful
that in exceptional cases and for compelling
reasons, we have disregarded similar procedural
defects in order to correct a patent injustice
made. However, petitioners here have not shown
any compelling reason for us to relax the rule.
Petitioners are hereby reminded that the right to
file a special civil action of certiorari is neither a
natural right nor a part of due process. A writ of
certiorari is a prerogative writ, never demandable
as a matter of right, never issued except in the
exercise of judicial discretion. [11] Hence, he who
seeks a writ of certiorari must apply for it only in
the manner and strictly in accordance with the
provisions of the law and the Rules.
To avoid further delay in resolving the
present controversy, we now come to the second
issue. Petitioners
contend
that
private
respondents refusal to render night work is
tantamount to abandonment of duties which
constitutes a just ground for termination of
service. They aver that the Labor Arbiter gravely
erred in awarding backwages to private
respondent, as there was no illegal dismissal.
Petitioners allege that management did not
terminate her services, but in fact asked her to
return
to
work
during
the
preliminary
conferences. Hence, it would be the height of
injustice to award backwages for work, which was
never rendered through private respondents own
choice. Petitioners add that they cannot be held
solidarily liable in this case as there was neither
malice nor bad faith.
Petitioners arguments fail to persuade us.
Petitioners raise factual questions which are
improper in a petition for review on certiorari.
Findings of facts of the NLRC, particularly in a
case where the NLRC and the Labor Arbiter are in
agreement, are deemed binding and conclusive
upon this Court.[12]
Hence, petitioners bare allegations of
abandonment cannot stand the unswerving
conclusion by both quasi-judicial agencies below
that
private
respondent
was
unlawfully
dismissed. We find no reason to deviate from the
consistent findings of the Labor Arbiter and the
NLRC that there was no basis to find that Virginia
abandoned her work. Indeed, 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 sufficiently supported by evidence on
record, are accorded respect if not finality, and
are considered binding on this Court. [13] As long as
their decisions are devoid of any unfairness or
arbitrariness in the process of their deduction
from the evidence proffered by the parties, all
that is left is for the Court to stamp its affirmation

and declare its finality. No reversible error may

thus be laid at the door of the Court of Appeals
when it refused to rule that the NLRC committed
a grave abuse of discretion amounting to want or
excess of jurisdiction in holding that private
respondent was illegally dismissed.
Anent petitioners assertion that they cannot
be solidarily liable in this case as there was no
malice or bad faith on their part has no leg to
stand on. What the Court finds apropos is our
disquisition in A.C. Ransom Labor Union-CCLU v.
NLRC,[14] which held that since a corporation is an
artificial person, it must have an officer who can
be presumed to be the employer, being the
person acting in the interest of the employer. In
other words the corporation, in the technical
sense only, is the employer. In a subsequent
case, we ordered the corporate officers of the
employer corporation to pay jointly and solidarily
the private respondents monetary award. [15] More
recently, a corporation and its president were
directed by this Court to jointly and severally
reinstate the illegally dismissed employees to
their former positions and to pay the monetary
awards.[16]
In this case Cathy Ng, admittedly, is the
manager of NYK. Conformably with our ruling
in A. C. Ransom, she falls within the meaning of
an employer as contemplated by the Labor Code,
[17]
who may be held jointly and severally liable
for the obligations of the corporation to its
dismissed employees. Pursuant to prevailing
jurisprudence, Cathy Ng, in her capacity as
manager and responsible officer of NYK, cannot
be exonerated from her joint and several liability
in the payment of monetary award to private
respondent.
WHEREFORE, the instant petition is DENIED.
The assailed resolutions of the Court of Appeals
dated September 15, 2000 and December 5,
2000, are hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 138193
March 5, 2003
OSM SHIPPING PHILIPPINES, INC.,
Petitioner,NATIONAL LABOR
RELATIONS COMMISSION
(THIRD DIVISION) AND FERMIN F.
GUERRERO,
Respondents.
DECISION
PANGANIBAN, J.:
The Rules of Court do not require that
all supporting papers and documents
accompanying a petition for certiorari
should be duplicate originals or
certified true copies. Furthermore,
unilateral decisions to alter the use of
a vessel from overseas service to
coastwise shipping will not affect the
validity of an existing employment
contract validly executed. Workers
should not be prejudiced by actions
done solely by employers without the
former's consent or participation.
The Case

Before us is a Petition for Review on

Certiorari [1] under Rule 45 of the
Rules of Court, seeking to set aside the
February 11, 1999 and the March 26,
1999 Resolutions of the Court of
Appeals (CA) in CA-GR SP No. 50667.
The assailed Resolutions dismissed a
Petition filed in the CA, challenging an
adverse ruling of the National Labor
Relations Commission (NLRC). The first
Resolution disposed as follows: chan
robles virtual law library
"We resolve to OUTRIGHTLY DISMISS
the petition." [2]
The second Resolution [3]
petitioners'
Motion
Reconsideration.cralaw

denied
for

On the other hand, the NLRC Decision

disposed in this wise:
"WHEREFORE, premises considered,
the Decision appealed from is hereby
MODIFIED in that respondents OSM
Shipping Phils. Inc. and its principal,
Philippine Carrier Shipping Agency
Services Co. are jointly and severally
ordered to pay complainant the sum of
ELEVEN THOUSAND THREE HUNDRED
FIFTY NINE and 65/100 [US dollars]
(US$11,359.65) or its peso equivalent
at the time of payment representing
complainant's unpaid salaries, accrued
fixed
overtime
pay,
allowance,
vacation leave pay and termination
pay."
The Facts
This case originated from a Complaint
filed by Fermin F. Guerrero against
OSM Shipping Philippines, Inc.; and its
principal, Philippine Carrier Shipping
Agency Services Co. The Complaint
was for illegal dismissal and nonpayment of salaries, overtime pay and
vacation
pay.
The
facts
are
summarized in the NLRC Decision as
follows:
"[Private respondent] was hired by
[Petitioner] OSM for and in behalf of its
principal, Phil Carrier Shipping Agency
Services Co. (PC-SLC) to board its
vessel M/V [Princess] Hoa' as a Master
Mariner for a contract period of ten
(10) months. Under the said contract,
his
basic
monthly
salary
is
US$1,070.00, US$220.00 allowance,
US$321.00 fixed overtime, US$89
vacation leave pay per month for x x x
44 hours f] work per week. He boarded
the vessel on July 21, 1994 and
complied faithfully with the duties
assigned to him.cralaw
"[Private respondent] alleged that from
the start of his work with M/V Princess
Hoa',
he
was
not
paid
any
compensation at all and was forced to
disembark the vessel sometime in
January 1995 because he cannot even
buy his basic personal necessities. For
almost seven (7) months, i.e. from July
1994 to January 1995, despite the

services he rendered, no compensation

or remuneration was ever paid to him.
Hence, this case for illegal dismissal,
[non-payment] of salaries, overtime
pay and vacation pay. chan robles
virtual law library
"[Petitioner] OSM, for its part, alleged
that on July 26, 1994, Concorde Pacific,
an American company which owns M/V
Princess
Hoa',
then
a
foreign
registered vessel, appointed x x x
Philippine Carrier Shipping Agency
Services Co. (PC-SASCO) as ship
manager particularly to negotiate,
transact and deal with any third
persons, entities or corporations in the
planning of crewing selection or
determination of qualifications of
Filipino Seamen. On the same date,
[Petitioner] OSM entered into a Crew
Agreement with x x x PC-SASCO for
the
purpose
of
processing
the
documents of crew members of M/V
Princess Hoa'. The initial plan of the
[s]hip-owner was to use the vessel in
the overseas trade, particularly the
East Asian Growth Area. Thereafter,
the contract of [private respondent]
was processed before the POEA on
September 20, 1994.cralaw
"OSM
alleged
further
that
the
shipowner changed its plans on the
use of the vessel. Instead of using it for
overseas trade, it decided to use it in
the
coastwise
trade,
thus,
the
crewmembers hired never left the
Philippines and were merely used by
the shipowner in the coastwise trade.
Considering that the M/V Princess Hoa'
was a foreign registered vessel and
could not be used in the coastwise
trade, the shipowner converted the
vessel to Philippine registry on
September 28, 1994 by way of
bareboat chartering it out to another
entity
named
Philippine
Carrier
Shipping Lines Co. (PCSLC). To do this,
the shipowner through Conrado V.
Tendido
had
to
terminate
its
management agreement with x x x PCSASCO on September 28, 1994 by a
letter of termination dated September
20, 1994. In the same letter of
termination, the ship owner stated that
it has bareboat chartered out the
vessel to said [PCSLC] and converted it
into Philippine registry. Consequently,
x x x PC-SASCO terminated its crew
agreement with OSM in a letter dated
December 5, 1994. Because of the
bareboat charter of the vessel to
PCSLC and its subsequent conversion
to Philippine registry and use in
coastwise trade as well as to the
termination
of
the
management
agreement
and
crew
agency
agreement, a termination of contract
ensued whereby PCSLC, the bareboat
charterer, became the disponent
owner/employer of the crew.cralaw

As a disponent owner/employer, PCSLC

is now responsible for the payment of
complainant's wages. x x x. [5]
Labor Arbiter (LA) Manuel R. Caday
rendered a Decision [6] in favor of
Private
Respondent
Guerrero.
Petitioner and its principal, Philippine
Carrier Shipping Agency Services, Co.
(PC-SASCO), were ordered to jointly
and severally pay Guerrero his unpaid
salaries and allowances, accrued fixed
overtime pay, vacation leave pay and
termination pay. The Decision held that
there was a constructive dismissal of
private respondent, since he had not
been paid his salary for seven months.
It
also
dismissed
petitioner's
contention that there was a novation
of the employment contract. chan
robles virtual law library
On appeal, the NLRC (Third Division)
affirmed the LA's Decision, with a
modification as to the amount of
liability.
On
January
28,
1999,
petitioner filed with the CA a Petition
[7] to set aside the NLRC judgment.
The petition was dismissed, because
petitioner had allegedly failed to
comply with the requirements of
Section 3 of Rule 46 of the Rules of
Court. Specifically, petitioner had
attached to its Petition, not a duplicate
original or a certified true copy of the
LA's Decision, but a mere machine
copy thereof. Further, it had not
indicated the actual address of Private
Respondent Fermin F. Guerrero. [8]
Hence, this Petition. [9]
The Issues
In its Memorandum, petitioner raises
the following issues for the Court's
consideration:
"1. Did not the Court of Appeals err in
interpreting and applying the 1997
Rules when it required as attachment
to the Petition for Certiorari the
duplicate original of another Decision
which is not-the subject of the said
Petition?
"2. Did not the Court of Appeals err in
interpreting and applying the 1997
Rules
when
it
disregarded
the
subsequent compliance made by
petitioner?
"3. Did not the Court of Appeals err in
interpreting and applying the 1997
Rules when it did not consider the
Notice to private respondent Guerrero
through his counsel as Notice to
Guerrero himself?" [10]
The foregoing issues all refer to the
question of whether, procedurally,
petitioner has complied with Section 3
of Rule 46 of the Rules of Court.
Additionally and in the interest of
speedy justice, this Court will also
resolve the substantive issue brought
before the CA: did the NLRC commit

grave abuse of discretion in ruling in

favor of private respondent? chan
robles virtual law library
The Court's Ruling
While petitioner is procedurally correct,
the case should nonetheless be
decided on the merits in favor of
private respondent.cralaw
Procedural Issue: Compliance with the
Rules of Court
Petitioner puts at issue the proper
interpretation of Section 3 of Rule 46
of the Rules of Court. [11] Specifically,
was petitioner required to attach a
certified true copy of the LA's Decision
to its Petition for Certiorari challenging
the NLRC judgment?
Section 3 of Rule 46 does not require
that all supporting papers and
documents accompanying a petition
be duplicate originals or certified true
copies. Even under Rule 65 on
certiorari and prohibition, petitions
need to be accompanied only by
duplicate originals or certified true
copies of the questioned judgment,
order or resolution. Other relevant
documents and pleadings attached to
it may be mere machine copies
thereof. [12] Numerous decisions
issued by this Court emphasize that in
appeals under Rule 45 and in original
civil actions for certiorari under Rule 65
in relation to Rules 46 and 56, what is
required to be certified is the copy of
the questioned judgment, final order or
resolution. [13] Since the LA's Decision
was not the questioned ruling, it did
not have to be certified. What had to
be certified was the NLRC Decision.
And indeed it was. chan robles virtual
law library
As to the alleged missing address of
private respondent, the indication by
petitioner that Guerrero could be
served with process care of his counsel
was substantial compliance with the
Rules.cralaw
This Court has held that the sending of
pleadings to a party is not required,
provided that the party is represented
by counsel. [14] This rule is founded
on
considerations
of
fair
play,
inasmuch as an attorney of record is
engaged precisely because a party
does not feel competent to deal with
the intricacies of law and procedure.
[15] Both jurisprudence [16] and the
basics of procedure [17] provide that
when a party has appeared through
counsel, service is to be made upon
the latter, unless the court specifically
orders that it be upon the party.cralaw
We also note that from the inception of
the case at the LA's office, all
pleadings
addressed
to
private
respondent had always been sent to
his counsel, Atty. Danilo G. Macalino.
Note that private respondent, who was

employed as a seaman, was often out

of his home. The service of pleadings
and other court processes upon him
personally would have been futile, as
he would not have been around to
receive them.cralaw
This Court has repeatedly held that
while courts should meticulously
observe the Rules, they should not be
overly strict about procedural lapses
that do not impair the proper
administration of justice. [18] Rather,
procedural rules should be liberally
construed to secure the just, speedy
and inexpensive disposition of every
action and proceeding. [19]
Substantive
Issue:
Liability
Petitioner for Unpaid Salaries

of

It is worthwhile to note that what is

involved in this case is the recovery of
unpaid salaries and other monetary
benefits. The Court is mindful of the
plight of private respondent and,
indeed, of workers in general who are
seeking to recover wages that are
being unlawfully withheld from them.
Such
recovery
should
not
be
needlessly delayed at the expense of
their survival. This case is now on its
ninth year since its inception at the
LA's office. Its remand to the CA will
only unduly delay its disposition. In the
interest of substantial justice, [20] this
Court will decide the case on the
merits based upon the records of the
case, particularly those relating to the
OSM Shipping Philippines' Petition
before the CA.cralaw
On behalf of its principal, PC-SASCO,
petitioner does not deny hiring Private
Respondent
Guerrero
as
master
mariner. However, it argues that since
he was not deployed overseas, his
employment
contract
became
ineffective, because its object was
allegedly absent. Petitioner contends
that using the vessel in coastwise
trade and subsequently chartering it to
another principal had the effect of
novating the employment contract. We
are not persuaded.cralaw
As
approved
by
the
Philippine
Overseas Employment Agency (POEA),
petitioner was the legitimate manning
agent of PC-SASCO. [21] As such, it
was allowed to select, recruit, hire and
deploy seamen on board the vessel
M/V Princess Hoa, which was managed
by its principal, PC-SASCO. [22] It was
in this capacity that petitioner hired
private respondent as master mariner.
They then executed and agreed upon
an employment contract. chan robles
virtual law library
An employment contract, like any
other contract, is perfected at the
moment (1) the parties come to agree
upon its terms; and (2) concur in the
essential elements thereof: (a) consent
of the contracting parties, (b) object

certain which is the subject matter of

the contract and (c) cause of the
obligation. [23] Based on the perfected
contract, Private Respondent Guerrero
complied
with
his
obligations
thereunder and rendered his services
on board the vessel. Contrary to
petitioner's contention, the contract
had an object, which was the rendition
of service by private respondent on
board the vessel. The non-deployment
of the ship overseas did not affect the
validity of the perfected employment
contract. After all, the decision to use
the vessel for coastwise shipping was
made by petitioner only and did not
bear the written conformity of private
respondent. A contract cannot be
novated by the will of only one party.
[24] The claim of petitioner that it
processed the contract of private
respondent with the POEA only after he
had started working is also without
merit. Petitioner cannot use its own
misfeasance to defeat his claim.cralaw
Petitioner, as manning agent, is jointly
and severally liable with its principal,
[25]
PC-SASCO,
for
private
respondent's claim. This conclusion is
in accordance with Section 1 of Rule II
of the POEA Rules and Regulations.
[26] Joint and solidary liability is meant
to assure aggrieved workers of
immediate and sufficient payment of
what is due them. [27] The fact that
petitioner and its principal have
already
terminated
their
agency
agreement does not relieve the former
of its liability. The reason for this ruling
was given by this Court in Catan
National Labor Relations Commission,
[28] which we reproduce in part as
follows:
"This must be so, because the
obligations
covenanted
in
the
[manning] agreement between the
local agent and its foreign principal are
not coterminus with the term of such
agreement so that if either or both of
the parties decide to end the
agreement, the responsibilities of such
parties
towards
the
contracted
employees under the agreement do
not at all end, but the same extends
up to and until the expiration of the,
employment
contracts
of
the
employees recruited and employed
pursuant to the said recruitment
agreement. Otherwise, this will render
nugatory the very purpose for which
the law governing the employment of
workers for foreign jobs abroad was
enacted." [29] chan robles virtual law
library
WHEREFORE, the assailed Resolutions
are hereby SET ASIDE, and the
September 10, 1998 NLRC Decision
REINSTATED and AFFIRMED. Costs
against petitioner.
SO ORDERED

VI.

Labor Only/indepent contracting

[G.R. No. 113347. June 14, 1996]

FILIPINAS SYNTHETIC FIBER CORPORATION
(FILSYN), petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER
VOLTAIRE A. BALITAAN, FELIPE LOTERTE and
DE LIMA TRADING & GENERAL SERVICES,
respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR
STANDARDS; LABOR-ONLY CONTRACTING;
ELEMENTS THEREOF; NOT PRESENT IN CASE
AT BAR. We agree that there is sufficient
evidence to show that private respondent DE
LIMA is an independent job contractor, not a mere
labor-only contractor. Under the Labor Code, two
(2) elements must exist for a finding of labor-only
contracting: (a) the person supplying workers to
an employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others, and
(b) the workers recruited and placed by such
persons are performing activities directly related
to the principal business of such employer. These
two (2) elements do not exist in the instant case.
As pointed out by petitioner, private respondent
DE LIMA is a going concern duly registered with
the Securities and Exchange Commission with
substantial capitalization of P1,600,000.00,
P400,000.00 of which is actually subscribed.
Hence, it cannot be considered as engaged in
labor-only contracting being a highly capitalized
venture. Moreover, while the janitorial services
performed by Felipe Loterte pursuant to the
agreement between FILSYN and DE LIMA may be
considered directly related to the principal
business of FILSYN which is the manufacture of
polyester fiber, nevertheless, they are not
necessary in its operation. On the contrary, they
are merely incidental thereto, as opposed to
being integral, without which production and
company sales will not suffer. Judicial notice has
already been taken of the general practice in
private as well as in government institutions and
industries of hiring janitorial services on an
independent contractor basis. Consequently, DE
LIMA being an independent job contractor, no
direct employer-employee relationship exists
between petitioner FILSYN and private
respondent Felipe Loterte.
2. ID.; ID.; INDIRECT EMPLOYER JOINT AND
SEVERALLY LIABLE WITH THE DIRECT
EMPLOYER; CASE AT BAR. With respect to
FILSYNs liability, petitioner cannot totally
exculpate itself from the fact that respondent DE
LIMA is an independent job contractor. We agree
with the Solicitor General that notwithstanding
the lack of a direct employer-employee
relationship between FILSYN and Felipe Loterte,
the former is still jointly and severally liable with
respondent DE LIMA for Lotertes monetary claims
under Art. 109 of the Labor Code.
APPEARANCES OF COUNSEL

Sycip, Salazar, Hernandez & Gatmaitan for

petitioner.
Benedicto Palacol for De Lima Trading & General
Services.
DECISION
BELLOSILLO, J.:
Filipinas Synthetic Fiber Corporation (FILSYN)
assails the decision of the National Labor
Relations Commission (NLRC) of 16 September
19931 upholding the ruling of the Labor Arbiter
that there exists an employer-employee
relationship between FILSYN and private
respondent Felipe Loterte.2
On 4 April 1991 FILSYN. a domestic corporation
engaged in the manufacture of polyester fiber,
contracted with De Lima Trading and General
Services (DE LIMA) for the performance of specific
janitorial services at the former's plant in Brgy.
Don Jose, Sta. Rosa, Laguna.3 Pursuant to the
agreement Felipe Loterte, among others, was
deployed at FILSYN to take care of the plants and
maintain general cleanliness around the
premises.
On 24 February 1992 Loterte sued FILSYN and DE
LIMA as alternative defendants 4 for illegal
dismissal, underpayment of wages, non-payment
of legal holiday pay, service incentive leave pay
and 13th month pay alleging that he was first
assigned to perform janitorial work at FILSYN in
1981 by the La Saga General Services; that the
La Saga was changed to DE LIMA on August
1991; that when a movement to demand
increased wages and 13th month pay arose
among the workers on December 1991 he was
accused by a certain Dodie La Flores of having
posted in the bulletin board at FILSYN an article
attributing to management a secret
understanding to block the demand; and, for
denying responsibility, his gate pass was
unceremoniously cancelled on 6 February 1992
and he was subsequently dismissed.5
The Labor Arbiter ruled in favor of Loterte. He
was classified as a regular employee on the
ground that he performed tasks usually
necessary or desirable in the main business of
FILSYN for more than ten (10) years or since 1981
under the ruling in Guarin v. NLRC.6 FILSYN was
declared to be the real employer of Loterte and
DE LIMA as a mere labor contractor. 7 Hence,
FILSYN was adjudged liable for Loterte's
reinstatement, payment of salary differentials

1
2

and back wages from 6 February 1992 up to the

date of judgment, in addition to his unpaid legal
holiday pay, service incentive leave pay and 13th
month pay in the total amount of P56,394.90.
FILSYN appealed to the NLRC contending that the
application of the Guarin ruling was misplaced
since the contractor in said case was not able to
prove that it had substantial capital, hence the
reason for its being declared as a labor-only
contractor. In the case of DE LIMA, however,
sufficient evidence existed consisting of its
Certificate of Registration issued by the Securities
& Exchange Commission (SEC) and Articles of
Incorporation and By-Laws to prove that it had
substantial capitalization, hence, could not be
considered as a mere labor contractor.
The NLRC debunked the claim of FILSYN and
affirmed the Labor Arbiter in finding DE LIMA as a
labor-only contractor. When a motion for
reconsideration proved futile, FILSYN filed the
instant petition.
On 23 February 1994 a temporary restraining
order to stay the execution of the NLRC decision
was issued by the Court upon approval of a bond
in the amount of P56,000.00 to be effective
during the pendency of this petition.8
Petitioner contends that the NLRC committed
grave abuse of discretion in holding DE LIMA as a
labor-only contractor with no substantial capital
or investment. Petitioner insists that the
evidence9 it presented shows DE LIMA to be a
corporation duly registered with the SEC with
substantial capitalization of P1,600,000.00,
P400,000.00 of which is actually subscribed.
Hence, DE LIMA cannot possibly be considered as
without substantial capital. But, assuming
arguendo that DE LIMA is without substantial
capital or investment, petitioner contends that it
cannot still be considered as the real employer of
Loterte since his work is not necessary in the
principal business of FILSYN which is the
manufacture of polyester, and that present
jurisprudence holds that the performance of
janitorial services, although directly related to the
principal business of the alleged employer, is
nonetheless unnecessary since non-performance
thereof will not cause production and company
sales to suffer.10
In his Comment the Solicitor General agrees with
petitioner that DE LIMA is not a labor-only
contractor. However, while he concedes that no
employer-employee relationship exists between
FILSYN and Loterte, the Solicitor General opines
that the former is still liable solidarily with DE
LIMA, its contractor, for the satisfaction of the
Labor Arbiter's awards in favor of Loterte as an
indirect employer under Art. 106 of the Labor
Code.11

3
4

In its Consolidated Reply FILSYN contends that

Art. 106 of the Labor Code cited by the Solicitor
General applies only in cases where there is
failure to pay wages, not in cases where the
employee was illegally dismissed, as in the case
of Loterte.
We agree that there is sufficient evidence to show
that private respondent DE LIMA is an
independent job contractor, not a mere labor-only
contractor. Under the Labor Code, two (2)
elements must exist for a finding of labor-only
contracting: (a) the person supplying workers to
an employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others, and
(b) the workers recruited and placed by such
persons are performing activities directly related
to the principal business of such employer.12
These two (2) elements do not exist in the instant
case. As pointed out by petitioner, private
respondent DE LIMA is a going concern duly
registered with the Securities and Exchange
Commission with substantial capitalization of
P1,600,000.00, P400,000.00 of which is actually
subscribed.13 Hence, it cannot be considered as
engaged in labor-only contracting being a highly
capitalized venture.14 Moreover, while the
janitorial services performed by Felipe Loterte
pursuant to the agreement between FILSYN and
DE LIMA may be considered directly related to the
principal business of FILSYN which is the
manufacture of polyester fiber, nevertheless,
they are not necessary in its operation.15 On the
contrary, they are merely incidental thereto, as
opposed to being integral, without which
production and company sales will not suffer. 16
Judicial notice has already been taken of the
general practice in private as well as in
government institutions and industries of hiring
janitorial services on an independent contractor
basis.17 Consequently, DE LIMA being an
independent job contractor, no direct employeremployee relationship exists between petitioner
FILSYN and private respondent Felipe Loterte.18
With respect to its liability, however, petitioner
cannot totally exculpate itself from the fact that
respondent DE LIMA is an independent job
contractor. We agree with the Solicitor General
that notwithstanding the lack of a direct
employer-employee relationship between FILSYN
and Felipe Loterte, the former is still jointly and
severally liable with respondent DE LIMA for
Loterte's monetary claims under Art. 109 of the
Labor Code19 which explicitly provides

1
1
1
1
1

The provisions of existing laws to the contrary

notwithstanding, every employer or indirect
employer shall be held responsible with his
contractor or subcontractor for any violation of
any provision of this Code. For purposes of
determining the extent of their civil liability under
this Chapter, they shall be considered as direct
employers (Italics supplied).
However, a reduction of the Labor Arbiter's
awards is in order. In his decision of 31 May 1993,
the Labor Arbiter in computing the 13th month
pay and service incentive leave pay due Loterte
erroneously included the period starting June
1989 to the date of his decision. From the
admission of Loterte himself,20 he started
working for DE LIMA only in August 1991 and that
the Agreement between FILSYN and DE LIMA is
dated 4 April 1991.21 Consequently, the joint and
several liability of FILSYN and DE LIMA could not
have covered the period before said date. Thus,
without prejudice to the right of petitioner to seek
reimbursement from DE LIMA for whatever
amount it will have to pay Loterte, we determine
their joint and several liability on the basis of the
computation of the Labor Arbiter, affirmed by the
NLRC (which is not disputed by petitioner except
only as to the awards for the period prior to
August 1991), as follows
A. Underpayment:
From August 1991 to 5 Feb. 1992
(P113.00 x 314 = P35,482.00)
(P35,482.00 12 = P2,956.83)
P2,956.83 x 6 mos. & 5 days =
P18,233.78
Less: Amount received
(P104 x 314 = P32,656.00)
(P32,656.00 12 = P2,721.33)
P2,721.33 x 6mos. & 5 days =
16,781.54
Total underpayment due =
P1,452.24
B. 13th Month Pay:
From Aug. to Dec. 1991
(P113.00 x 314 = P35,482.00)
(P35,482.00 12 = P2,956.83)
(P2,956.83 x 5 mos. = P14,784.15)
P14,784.15 12 =
P1,232.01
C. Service Incentive Leave Pay:
1991 (P113.00 x 5 days) =
P565.00
D. Backwages:
From 6 Feb. 1992 to 31 May 1993
(P113.00 x 314 = P35,482.00)
(P35,482.00 12= P2,956.83)
(P2,956.83 x 15 mos. & 25 days =
P46,816.47
1992 13th month pay =
2,956.83
1992 service incentive leave pay =
565.00
Total back wages due =
P50,338.30

1
1

WHEREFORE, the questioned decision of

respondent National Labor Relations Commission
affirming that of the Labor Arbiter as well as its
resolution denying petitioner's motion for
reconsideration is REVERSED and SET ASIDE and
a new one entered:
1. Declaring the relationship between petitioner
Filipinas Synthetic Fiber Corporation (FILSYN) and
private respondent De Lima Trading and General
Services (DE LIMA) as one of job contractorship;
2. Ordering private respondent De Lima Trading
and General Services (DE LIMA) to reinstate
private respondent FELIPE LOTERTE to his former
position or its equivalent without loss of seniority
rights; and
3. Ordering private respondent De Lima Trading
and General Services (DE LIMA) jointly and
severally with petitioner Filipinas Synthetic Fiber
Corporation (FILSYN) to pay private respondent
FELIPE LOTERTE the following amounts:
P1,452.24 for salary differentials, P1,232.01 for
13th month pay, P565.00 for service incentive
leave pay, and P50,338.30 for backwages, or a
total of P53,587.55 due and payable, without
prejudice to FILSYN seeking reimbursement from
DE LIMA for whatever amount the former may
pay or have paid the latter by virtue hereof.
SO ORDERED.

[G.R. No. 117936-37. May 20, 1998]

FRANCISCO U. NAGUSARA, MARQUITO L.
PAMILARA, and DIOSCORO D. CRUZ,
petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSION, LORENZO DY AND
OTHERS, and ISAYAS AMURAO, respondents.
DECISION
PUNO, J.:
Petitioners Francisco U. Nagusara,i[1] Marquito L.
Pamilara and Dioscoro D. Cruz seek to annul the
resolution of the National Labor Relations
Commission (NLRC) dated December 27, 1991
and its order dated September 29, 1994 in NLRC
NCR Case No, 12-7287-82 & 12-7481-82.
On December 31, 1982, petitioners filed a
complaint against respondent Lorenzo Dy for
illegal dismissal, unfair labor practice and nonpayment of overtime pay, legal holiday pay and
premium pay for holiday and rest day.ii[2] The
case was set for hearing on January 12, January
21 and February 2, 1983. As respondent Dy failed
to appear on said dates, the evidence for
petitioners was received ex parte. On February
28, 1983, Labor Arbiter Bienvenido V.
Hermogenes rendered a decision finding that
petitioners were illegally dismissed and ordered
respondent Dy to reinstate them. The decision
also awarded to petitioners backwages and other
money claims.iii[3]
Respondent Dy failed with the NLRC a Motion for
Reconsideration, Set Aside Decision and/or

Memorandum of Appeal arguing that: (1) there

was no proper service of summons, (2) there was
no employer-employee relationship between him
and petitioners, and (3) petitioners were not
entitled to the relief prayed for in the complaint. iv
[4] On December 27, 1984 , the NLRC set aside
the decision and remanded the case to the Labor
Arbiter.v[5]
On September 14, 1987, respondent Dy
impleaded respondent Isayas Amurao as corespondent in accordance with Articles 106, 107
and 109 of the Labor Code. Respondent Dy
alleged that respondent Amurao was the real
employer of petitioners because he was the one
who hired them in fulfillment of his obligation to
provide manpower for respondent Dys
construction project.vi[6]
On June 29, 1988, Labor Arbiter Felipe T.
Garduque II issued a decision holding that the
termination of petitioners services was illegal. It,
however, found petitioners claim for overtime
pay, legal holiday pay and premium pay for
holiday and rest day to be unfounded.vii[7] The
dispositive portion of the decision states:
ACCORDINGLY, respondents Dynasty
Steel Works and/or Lorenzo Dy are
hereby ordered to reinstate within ten
(10) days from receipt hereof, herein
complainants Francisco Nagasora,
Marquito Pamilara and Dioscoro D. Cruz
to their former positions without loss of
seniority right and privileges but with
one (1) year backwages at (P45.00,
P38.00, P36.00 x 26 days), considering
the nature of the business of respondent
(construction business) which may not
be continuous, with at least an additional
one (1) month pay as separation pay in
case respondents business ceased
operation.
All other money claims are hereby
dismissed for lack of merit.viii[8]
On appeal, the NLRC set aside the decision of the
Labor Arbiter. It dismissed the complaint on the
ground that there was no employer-employee
relationship between petitioners and respondent
Dy. It held that respondent Dy was only an
indirect employer of petitioners as they were
actually employed by respondent Amurao whom
respondent Dy sub-contracted to provide labor for
his construction project. It also declared that
petitioners were not illegally dismissed. ix[9] The
dispositive portion of the resolution reads:
WHEREFORE, let the decision appealed
from be, as it is hereby, SET ASIDE and
another one ENTERED dismissing the
instant cases for lack of merit.x[10]
Petitioners filed a motion for reconsideration but
it was denied by the NLRC for lack of merit.xi[11]
Hence, this petition.
Petitioners and private respondents presented
conflicting versions of the circumstances which
led to the severance of petitioners employment.

Petitioners alleged that in 1981, they were hired

as carpenters by Dynasty Steel Works owned by
respondent Dy. Dynasty was engaged in the
business of making steel frames, windows, doors
and other construction works. It was contracted
by Solmac Marketing to construct its building in
Balintawak, Caloocan City.
On November 25, 1982, petitioners went to the
Social Security System (SSS) office to inquire
about their benefits under the system. They were
informed that they were not reported as
employees either by Dynasty or by respondent
Dy. Petitioners filed a complaint against Dynasty
and respondent Dy for violation of SSS laws and
regulations.
On December 20, 1982, petitioners were
prohibited from entering the work site at the
Solmac compound. The security guard showed
them an order/notice dated December 18, 1982
issued by respondent Dy instructing him not to
allow petitioners to enter the premises as they
were already dismissed from work. Petitioners
sought the help of P/Cpl. Alexander Licuan of the
Caloocan Police Department. P/Cpl. Licuan
accompanied petitioners to the work site and
inquired about the reason for the prohibition.
Respondent Amurao who introduced himself as
supervisor told P/Cpl. Licuan that petitioners
services were terminated upon the order of
respondent Dy.
Traversing petitioners allegations, respondent Dy
claimed in his comment that petitioners were not
his employees but that of respondent Amurao
whom he sub-contracted to provide manpower for
his construction project at the Solmac building.
Respondent Dy also denied that he terminated
the services of petitioners. He alleged that
sometime in December 1982, the owner of
Solmac building caught petitioners drinking inside
the company premises. Because of this, the
owner sought the dismissal or transfer of
petitioners. Heeding the owners demand,
respondent Amurao transferred petitioners to
another project. Petitioners refused and instead
filed a complaint for illegal dismissal against
respondent Dy.
Respondent Amurao also filed his own comment
stating that he and respondent Dy entered into a
sub-contracting agreement whereby he
undertook to supply the manpower for
respondent Dys construction project at Solmac
building. To comply with his obligation,
respondent Amurao engaged the services of
about thirty men which include petitioners.
Respondent Amurao stated that he had complete
discretion in the selection, hiring and dismissal of
said workers; that he had direct controls and
supervision over the performance of their work;
and that any complaint against them were
coursed through him.
Respondent Amurao, however, submitted that
petitioners were project employees. Hence, they
were no longer entitled to reinstatement because
the project for which they were hired as long
been completed.

Before we resolve the issue of illegal dismissal, it

is first necessary to determine whether
petitioners were employees of respondent Dy.
The records reveal that there existed an
employer-employee relationship between
petitioners and respondent Dy. The individual
Premium Certifications issued by the SSS on April
11, 1983 show that Dynasty Steel Works declared
petitioners as its employees for the purpose of
paying their premium. Dynasty paid petitioners
premium from August 1981 to November 1982.xii
[12] Also, the payroll of Dynasty included
petitioners.xiii[13] These pieces of evidence
sufficiently prove that petitioners were employees
of respondent Dy. It would be preposterous for
respondent Dy to report petitioners as employees
of Dynasty, pay their SSS premium as well as
their wages if it were not true that they were his
employees.
Private respondents would like to make it appear
that petitioners were employees of respondent
Amurao who was supposedly sub-contracted by
respondent Dy to provide labor for his
construction project at Solmac. Such assertion,
however, does not deserve credence because as
observed by the Labor Arbiter:
x x x (T)his Office is inclined to believe
the claim of complainants that they were
employees of respondent and not Isayas
Amurao.
Firstly, the alleged subcontract between
respondent (Dy) and Isayas Amurao is
questionable since the same was dated
June 8, 1982, and was conformed by (sic)
respondent Lorenzo Dy on June 11, 1982,
around eight (8) months after
complainants had started working in
September or October, 1981.
Secondly, the sworn statements and
testimonies of respondent Lorenzo Dy
and his witness, Isayas Amurao
submitted and declared during the
hearing of this case contain full of (sic)
inconsistencies affecting their stand. The
affidavits of the other complainants
Pozon, Garcia and Lizarondo do not also
deserve weight considering the fact that
the same contradict their previous
Sinumpaang Salaysay attached to their
position paper.
Lastly the other documentary evidences
(sic) presented by complainants mostly
relating to SSS outweigh those of
respondent.xiv[14]
We find that the supposed sub-contract between
respondent Dy and respondent Amurao was
merely a subterfuge to avoid respondent Dys
obligations to petitioners. The records show that
respondent Amurao was not a legitimate job
contractor engaged in the business of contracting
out services to clients. A legitimate job contractor
is one who: (1) carries on an independent
business and undertakes the contract work on his
own account under his own responsibility
according to his own manner and method, free
from the control and direction of his employer or
principal in all matters connected with the

performance of the work except as to the results

thereof; and (2) has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other materials
which are necessary in the conduct of his
business.xv[15] Respondent Amurao did not
satisfy both requirements. It appears, instead,
that respondent Amurao was also an employee of
respondent Dy who was tasked to screen and to
supervise the workers at respondent Dys
construction project at Solmac. It is clear from the
foregoing that petitioners were employees of
respondent Dy.
We reject respondent Amuraos submission that
petitioners were project employees. The principal
test for determining whether an employee is a
project employee or a regular employee is
whether or not the project employee was
assigned to carry out a specific project or
undertaking, the duration and scope of which
were specified at the time the employee was
engaged for that project.xvi[16] In the case at bar,
it does not appear that respondent Dy informed
petitioners at the time of their engagement about
the specific project or undertaking for which they
were hired, as well as the duration and scope of
such project.xvii[17] Besides, the records show
that petitioners, as carpenters, were performing
activities necessary or desirable in respondent
Dys business of making steel frames, windows,
doors and other construction works. Petitioners
should therefore be considered as regular
employees under Article 280 of the Labor Code
which states:
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 undertaking
the completion or termination of which
has been determined at the time of the
engagement of the employee or where
the work or services to be performed is
seasonal in nature and the employment
is for the duration of the season.
xxx

xxx

xxx

We now go to the main issue of whether

petitioners were illegally dismissed.
Respondent Dy stated in his comment that
petitioners were not dismissed from work.
Petitioners were allegedly caught by the owner of
Solmac Marketing having a drinking spree inside
the compound. Hence, respondent Amurao
allegedly decided to transfer petitioners to
another project, but petitioners opposed the
transfer and filed a complaint for illegal dismissal
against respondent Dy.
We are not convinced. Respondent Dys allegation
is self-serving and not supported by substantial

evidence. In termination cases, the employer has

the burden of proving that there was just cause
for the employees dismissal.xviii[18] In this case,
respondent Dy merely presented his own affidavit
and that of respondent Amurao stating that
petitioners were drinking within the premises by
the owner of Solmac. He did not present any
other witness to substantiate the statements
contained in the affidavits. He did not even
present as witness the owner of Solmac
Marketing who allegedly caught petitioners
drinking inside the compound.
Dismissal is the ultimate penalty that can be
meted to an employee. For dismissal to be legal,
it must be based on just cause which must be
supported by clear and convincing evidence.xix
[19] Respondent Dy failed to adduce clear and
convincing evidence to support the legality of
petitioners dismissal.
Finally, we go to the reliefs that should be
accorded to petitioners.
As a rule, employees who are illegally dismissed
are entitled to backwages and reinstatement to
their former position without loss of seniority
rights. There are instances, however, where
reinstatements is no longer viable as where the
business of the employer has closed, or where
the relations between the employer and the
employee have been so severely strained that it
is not advisable to order reinstatement, or where
the employee decides not to be reinstated. In
such events, the employer will instead be ordered
to pay separation pay.xx[20]
The records shows that Dynasty Steel Works
ceased operating in May 1985.xxi[21] The closure
of Dynasty rendered impossible the
reinstatement of petitioners. Hence, in lieu of
reinstatement, respondent Dy should pay
petitioners their separation pay in addition to
their backwages computed from the time of their
separation until the date of Dynastys closure.xxii
[22]
All the other money claims of petitioners are
dismissed for lack of sufficient evidence to
support the same. We note the finding of Labor
Arbiter Garduque:
With respect to the claim of overtime,
the same has not been established by
clear and convincing evidence, and not
even included in the computation of the
then socio economic staff of this office,
and in the first decision dated February
28, 1993.
The remaining claims of legal holiday pay
and premium pay for holiday and rest
day cannot also be granted although
unrefuted by respondent but from Annex
H to complainants reply/comment to
respondents position paper, it discloses
that complainants only worked up to six
(6) days in a week.xxiii[23]
We find no cogent reason to disturb such finding
as it is sustained by the evidence on record.

IN VIEW WHEREOF, the assailed resolution and

order of the NLRC are SET ASIDE. Private
respondent Lorenzo Dy is hereby ordered to pay
petitioners their SEPARATION PAY and
BACKWAGES. No cost.
SO ORDERED.

[G.R. No. 116123. March 13, 1997]

SERGIO F. NAGUIAT, doing business under
the name and style SERGIO F. NAGUIAT ENT.,
INC., & CLARK FIELD TAXI, INC., petitioners,
vs. NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION), NATIONAL
ORGANIZATION OF WORKINGMEN and its
members, LEONARDO T. GALANG, et al.,
respondents.
DECISION
PANGANIBAN, J.:
Are private respondent-employees of petitioner
Clark Field Taxi, Inc., who were separated from
service due to the closure of Clark Air Base,
entitled to separation pay and, if so, in what
amount? Are officers of corporations ipso facto
liable jointly and severally with the companies
they represent for the payment of separation
pay?
These questions are answered by the Court in
resolving this petition for certiorari under Rule 65
of the Rules of Court assailing the Resolutions of
the National Labor Relations Commission (Third
Division)xxiv[1] promulgated on February 28,
1994,xxv[2] and May 31, 1994.xxvi[3] The February
28, 1994 Resolution affirmed with modifications
the decisionxxvii[4] of Labor Arbiter Ariel C. Santos
in NLRC Case No. RAB-III-12-2477-91. The second
Resolution denied the motion for reconsideration
of herein petitioners.
The NLRC modified the decision of the labor
arbiter by granting separation pay to herein
individual respondents in the increased amount of
US$120.00 for every year of service or its peso
equivalent, and holding Sergio F. Naguiat
Enterprises, Inc., Sergio F. Naguiat and Antolin T.
Naguiat, jointly and severally liable with Clark
Field Taxi, Inc. ("CFTI").
The Facts
The following facts are derived from the records
of the case:
Petitioner CFTI held a concessionaire's contract
with the Army Air Force Exchange Services
("AAFES") for the operation of taxi services within
Clark Air Base. Sergio F. Naguiat was CFTI's
president, while Antolin T. Naguiat was its vicepresident. Like Sergio F. Naguiat Enterprises,
Incorporated ("Naguiat Enterprises"), a trading
firm, it was a family-owned corporation.
Individual respondents were previously employed
by CFTI as taxicab drivers. During their
employment, they were required to pay a daily

"boundary fee" in the amount of US$26.50 for

those working from 1:00 a.m. to 12:00 noon, and
US$27.00 for those working from 12:00 noon to
12:00 midnight. All incidental expenses for the
maintenance of the vehicles they were driving
were accounted against them, including gasoline
expenses.
The drivers worked at least three to four times a
week, depending on the availability of taxicabs.
They earned not less than US$15.00 daily. In
excess of that amount, however, they were
required to make cash deposits to the company,
which they could later withdraw every fifteen
days.
Due to the phase-out of the US military bases in
the Philippines, from which Clark Air Base was not
spared, the AAFES was dissolved, and the
services of individual respondents were officially
terminated on November 26, 1991.
The AAFES Taxi Drivers Association ("drivers'
union"), through its local president, Eduardo
Castillo, and CFTI held negotiations as regards
separation benefits that should be awarded in
favor of the drivers. They arrived at an
agreement that the separated drivers will be
given P500.00 for every year of service as
severance pay. Most of the drivers accepted said
amount in December 1991 and January 1992.
However, individual respondents herein refused
to accept theirs.
Instead, after disaffiliating themselves from the
drivers' union, individual respondents, through
the National Organization of Workingmen
("NOWM"), a labor organization which they
subsequently joined, filed a complaintxxviii[5]
against "Sergio F. Naguiat doing business under
the name and style Sergio F. Naguiat Enterprises,
Inc., Army-Air Force Exchange Services (AAFES)
with Mark Hooper as Area Service Manager,
Pacific Region, and AAFES Taxi Drivers Association
with Eduardo Castillo as President," for payment
of separation pay due to termination/phase-out.
Said complaint was later amendedxxix[6] to
include additional taxi drivers who were similarly
situated as complainants, and CFTI with Antolin T.
Naguiat as vice president and general manager,
as party respondent.
In their complaint, herein private respondents
alleged that they were regular employees of
Naguiat Enterprises, although their individual
applications for employment were approved by
CFTI. They claimed to have been assigned to
Naguiat Enterprises after having been hired by
CFTI, and that the former thence managed,
controlled and supervised their employment.
They averred further that they were entitled to
separation pay based on their latest daily
earnings of US$15.00 for working sixteen (16)
days a month.
In their position paper submitted to the labor
arbiter, herein petitioners claimed that the
cessation of business of CFTI on November 26,
1991, was due to "great financial losses and lost
business opportunity" resulting from the phaseout of Clark Air Base brought about by the Mt.
Pinatubo eruption and the expiration of the RP-US

military bases agreement. They admitted that

CFTI had agreed with the drivers' union, through
its President Eduardo Castillo who claimed to
have had blanket authority to negotiate with CFTI
in behalf of union members, to grant its taxi
driver-employees separation pay equivalent to
P500.00 for every year of service.
The labor arbiter, finding the individual
complainants to be regular workers of CFTI,
ordered the latter to pay them P1,200.00 for
every year of service "for humanitarian
consideration," setting aside the earlier
agreement between CFTI and the drivers' union
of P500.00 for every year of service. The labor
arbiter rejected the allegation of CFTI that it was
forced to close business due to "great financial
losses and lost business opportunity" since, at the
time it ceased operations, CFTI was profitably
earning and the cessation of its business was due
to the untimely closure of Clark Air Base. In not
awarding separation pay in accordance with the
Labor Code, the labor-arbiter explained:
"To allow respondents exemption from its
(sic) obligation to pay separation pay
would be inhuman to complainants but
to impose a monetary obligation to an
employer whose profitable business was
abruptly shot (sic) down by force
majeure would be unfair and unjust to
say the least."xxx[7]
and thus, simply awarded an amount for
"humanitarian consideration."
Herein individual private respondents appealed to
the NLRC. In its Resolution, the NLRC modified the
decision of the labor arbiter by granting
separation pay to the private respondents. The
concluding paragraphs of the NLRC Resolution
read:
"The contention of complainant is partly
correct. One-half month salary should be
US$120.00 but this amount can not be
paid to the complainant in U.S. Dollar
which is not the legal tender in the
Philippines. Paras, in commenting on Art.
1249 of the New Civil Code, defines legal
tender as 'that which a debtor may
compel a creditor to accept in payment
of the debt. The complainants who are
the creditors in this instance can be
compelled to accept the Philippine peso
which is the legal tender, in which case,
the table of conversion (exchange rate)
at the time of payment or satisfaction of
the judgment should be used. However,
since the choice is left to the debtor,
(respondents) they may choose to pay in
US dollar.' (Phoenix Assurance Co. vs.
Macondray & Co. Inc., L-25048, May 13,
1975)
In discharging the above obligations,
Sergio F. Naguiat Enterprises, which is
headed by Sergio F. Naguiat and Antolin
Naguiat, father and son at the same time
the President and Vice-President and
General Manager, respectively, should
be joined as indispensable party whose

liability is joint and several. (Sec. 7, Rule

3, Rules of Court)"xxxi[8]
As mentioned earlier, the motion for
reconsideration of herein petitioners was denied
by the NLRC. Hence, this petition with prayer for
issuance of a temporary restraining order. Upon
posting by the petitioners of a surety bond, a
temporary restraining orderxxxii[9] was issued by
this Court enjoining execution of the assailed
Resolutions.
Issues
The petitioners raise the following issues before
this Court for resolution:
"I. Whether or not public respondent
NLRC (3rd Div.) committed grave
abuse of discretion amounting to
lack of jurisdiction in issuing the
appealed resolution;
II. Whether or not Messrs. Teofilo
Rafols and Romeo N. Lopez could
validly represent herein private
respondents; and,
III. Whether or not the resolution
issued by public respondent is
contrary to law."xxxiii[10]
Petitioners also submit two additional issues by
way of a supplementxxxiv[11] to their petition, to
Wit: that Petitioners Sergio F. Naguiat and Antolin
Naguiat were denied due process; and that
petitioners were not furnished copies of private
respondents' appeal to the NLRC. As to the
procedural lapse of insufficient copies of the
appeal, the proper forum before which petitioners
should have raised it is the NLRC. They, however,
failed to question this in their motion for
reconsideration. As a consequence, they are
deemed to have waived the same and voluntarily
submitted themselves to the jurisdiction of the
appellate body.
Anent the first issue raised in their original
petition, petitioners contend that NLRC
committed grave abuse of discretion amounting
to lack or excess of jurisdiction in unilaterally
increasing the amount of severance pay granted
by the labor arbiter. They claim that this was not
supported by substantial evidence since it was
based simply on the self-serving allegation of
respondents that their monthly take-home pay
was not lower than $240.00.
On the second issue, petitioners aver that NOWM
cannot make legal representations in behalf of
individual respondents who should, instead, be
bound by the decision of the union (AAFES Taxi
Drivers Association) of which they were members.
As to the third issue, petitioners incessantly insist
that Sergio F. Naguiat Enterprises, Inc. is a
separate and distinct juridical entity which cannot
be held jointly and severally liable for the
obligations of CFTI. And similarly, Sergio F.
Naguiat and Antolin Naguiat were merely officers
and stockholders of CFTI and, thus, could not be
held personally accountable for corporate debts.

Lastly, Sergio and Antolin Naguiat assail the

Resolution of NLRC holding them solidarily liable
despite not having been impleaded as parties to
the complaint.
Individual respondents filed a comment separate
from that of NOWM. In sum, both aver that
petitioners had the opportunity but failed to
refute, the taxi drivers' claim of having an
average monthly earning of $240.00; that
individual respondents became members of
NOWM after disaffiliating themselves from the
AAFES Taxi Drivers Association which, through the
manipulations of its President Eduardo Castillo,
unconscionably compromised their separation
pay; and that Naguiat Enterprises, being their
indirect employer, is solidarily liable under the
law for violation of the Labor Code, in this case,
for nonpayment of their separation pay.
The Solicitor General unqualifiedly supports the
allegations of private respondents. In addition, he
submits that the separate personalities of
respondent corporations and their officers should
be disregarded and considered one and the same
as these were used to perpetrate injustice to their
employees.
The Court's Ruling
As will be discussed below, the petition is partially
meritorious.
First Issue: Amount of Separation Pay
Firmly, we reiterate the rule that in a petition for
certiorari filed pursuant to Rule 65 of the Rules of
Court, which is the only way a labor case may
reach the Supreme Court, the petitioner/s must
clearly show that the NLRC acted without or in
excess of jurisdiction or with grave abuse of
discretion.xxxv[12]
Long-standing and well-settled in Philippine
jurisprudence is the judicial dictum that findings
of fact of administrative agencies and quasijudicial bodies, which have acquired expertise
because their jurisdiction is confined to specific
matters, are generally accorded not only great
respect but even finality; and are binding upon
this Court unless there is a showing of grave
abuse of discretion, or where it is clearly shown
that they were arrived at arbitrarily or in
disregard of the evidence on record.xxxvi[13]
Nevertheless, this Court carefully perused the
records of the instant case if only to determine
whether public respondent committed grave
abuse of discretion, amounting to lack of
jurisdiction, in granting the clamor of private
respondents that their separation pay should be
based on the amount of $240.00, allegedly their
minimum monthly earnings as taxi drivers of
petitioners.
In their amended complaint before the Regional
Arbitration Branch in San Fernando, Pampanga,
herein private respondents set forth in detail the
work schedule and financial arrangement they
had with their employer. Therefrom they inferred
that their monthly take-home pay amounted to
not less than $240.00. Herein petitioners did not

bother to refute nor offer any evidence to

controvert said allegations. Remaining
undisputed, the labor arbiter adopted such facts
in his decision. Petitioners did not even appeal
from the decision of the labor arbiter nor manifest
any error in his findings and conclusions. Thus,
petitioners are in estoppel for not having
questioned such facts when they had all
opportunity to do so. Private respondents, like
petitioners, are bound by the factual findings of
Respondent Commission.
Petitioners also claim that the closure of their taxi
business was due to great financial losses
brought about by the eruption of Mt. Pinatubo
which made the roads practically impassable to
their taxicabs. Likewise well-settled is the rule
that business losses or financial reverses, in order
to sustain retrenchment of personnel or closure of
business and warrant exemption from payment of
separation pay, must be proved with clear and
satisfactory evidence.xxxvii[14] The records,
however, are devoid of such evidence.
The labor arbiter; as affirmed by NLRC, correctly
found that petitioners stopped their taxi business
within Clark Air Base because of the phase-out of
U.S. military presence thereat. It was not due to
any great financial loss because petitioners' taxi
business was earning profitably at the time of its
closure.
With respect to the amount of separation pay that
should be granted, Article 283 of the Labor Code
provides:
"x x x In case of 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 ()
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."
Considering the above, we find that NLRC did not
commit grave abuse of discretion in ruling that
individual respondents were entitled to
separation payxxxviii[15] in the amount $120.00
(one-half of $240.00 monthly pay) or its peso
equivalent for every year of service.
Second Issue: NOWM's Personality to
Represent Individual Respondents-Employees
On the question of NOWM's authority to represent
private respondents, we hold petitioners in
estoppel for not having seasonably raised this
issue before the labor arbiter or the NLRC. NOWM
was already a party-litigant as the organization
representing the taxi driver-complainants before
the labor arbiter. But petitioners who were partyrespondents in said complaint did not assail the
juridical personality of NOWM and the validity of
its representations in behalf of the complaining
taxi drivers before the quasi-judicial bodies.
Therefore, they are now estopped from raising
such question before this Court. In any event,
petitioners acknowledged before this Court that

the taxi drivers allegedly represented by NOWM,

are themselves parties in this case.xxxix[16]

the principal investment and asset of the

company.

Third Issue: Liability of PetitionerCorporations and Their Respective Officers

Private respondents failed to substantiate their

claim that Naguiat Enterprises managed,
supervised and controlled their employment. It
appears that they were confused on the
personalities of Sergio F. Naguiat as an individual
who was the president of CFTI, and Sergio F.
Naguiat Enterprises, Inc., as a separate corporate
entity with a separate business. They presumed
that Sergio F. Naguiat, who was at the same time
a stockholder and directorl[27] of Sergio F.
Naguiat Enterprises, Inc., was managing and
controlling the taxi business on behalf of the
latter. A closer scrutiny and analysis of the
records, however, evince the truth of the matter:
that Sergio F. Naguiat, in supervising the-taxi
drivers and determining their employment terms,
was rather carrying out his responsibilities as
president of CFTI. Hence, Naguiat Enterprises as a
separate corporation does not appear to be
involved at all in the taxi business.

The resolution of this issue involves another

factual finding that Naguiat Enterprises actually
managed, supervised and controlled employment
terms of the taxi drivers, making it their indirect
employer. As adverted to earlier, factual findings
of quasi-judicial bodies are binding upon the court
in the absence of a showing of grave abuse of
discretion.
Unfortunately, the NLRC did not discuss or give
any explanation for holding Naguiat Enterprises
and its officers jointly and severally liable in
discharging CFTI's liability for payment of
separation pay. We again remind those concerned
that decisions, however concisely written, must
distinctly and clearly set forth the facts and law
upon which they are based.xl[17] This rule applies
as well to dispositions by quasi-judicial and
administrative bodies.
Naguiat Enterprises Not Liable
In impleading Naguiat Enterprises as solidarily
liable for the obligations of CFTI, respondents rely
on Articles 106,xli[18] 107xlii[19] and 109xliii[20] of
the Labor Code.

To illustrate further, we refer to the testimony of a

driver-claimant on cross examination.
"Atty. Suarez
Is it not true that you applied not with Sergio F.
Naguiat but with Clark Field Taxi?
Witness

Based on factual submissions of the parties, the

labor arbiter, however, found that individual
respondents were regular employees of CFTI who
received wages on a boundary or commission
basis.
We find no reason to make a contrary finding.
Labor-only contracting exists where: (1) the
person supplying workers to an employer does
not have substantial capital or investment in the
form of tools, equipment, machinery, and work
premises, among others; and (2) the workers
recruited and placed by such person are
performing activities which are directly related to
the principal business of the employer.xliv[21]
Independent contractors, meanwhile, are those
who exercise independent employment,
contracting to do a piece of work according to
their own methods without being subject to
control of their employer except as to the result
of their work.xlv[22]
From the evidence proffered by both parties,
there is no substantial basis to hold that Naguiat
Enterprises is an indirect employer of individual
respondents much less a labor only contractor.
On the contrary, petitioners submitted
documents such as the drivers' applications for
employment with CFTI,xlvi[23] and social security
remittancesxlvii[24] and payrollxlviii[25] of Naguiat
Enterprises showing that none of the individual
respondents were its employees. Moreover, in the
contractxlix[26] between CFTI and AAFES, the
former, as concessionaire, agreed to purchase
from AAFES for a certain amount within a
specified period a fleet of vehicles to be "ke(pt)
on the road" by CFTI, pursuant to their
concessionaire's contract. This indicates that CFTI
became the owner of the taxicabs which became

I applied for (sic) Sergio F. Naguiat

Atty. Suarez
Sergio F. Naguiat as an individual or the
corporation?
Witness
'Sergio F. Naguiat na tao.'
Atty. Suarez
Who is Sergio F. Naguiat?
Witness
He is the one managing the Sergio F. Naguiat
Enterprises and he is the one whom we believe as
our employer.
Atty. Suarez
What is exactly the position of Sergio F. Naguiat
with the Sergio F. Naguiat Enterprises?
Witness
He is the owner, sir.
Atty. Suarez
How about with Clark Field Taxi Incorporated what
is the position of Mr. Naguiat?

Witness
What I know is that he is a concessionaire.
xxx

xxx

xxx

Atty. Suarez
But do you also know that Sergio F. Naguiat is the
President of Clark Field Taxi, Incorporated?
Witness
Yes. sir.
Atty. Suarez
How about Mr. Antolin Naguiat what is his role in
the taxi services, the operation of the Clark Field
Taxi, Incorporated?
Witness
He is the vice president."li[28]
And, although the witness insisted that Naguiat
Enterprises was his employer, he could not deny
that he received his salary from the office of CFTI
inside the base.lii[29]

Ministry of Labor and Employment, without

prejudice to the right of employees to seek
redress of grievance, if any. Backwages of 22
employees, who engaged in a strike prior to the
closure, were subsequently computed at
P164,984.00. Up to September 1976, the union
filed about ten (10) motions for execution against
the corporation, but none could be implemented,
presumably for failure to find leviable assets of
said corporation. In its last motion for execution,
the union asked that officers and agents of the
company be held personally liable for payment of
the backwages. This was granted by the labor
arbiter. In the corporation's appeal to the NLRC,
one of the issues raised was: "Is the judgment
against a corporation to reinstate its dismissed
employees with backwages, enforceable against
its officer and agents, in their individual, private
and personal capacities, who were not parties in
the case where the judgment was rendered?" The
NLRC answered in the negative, on the ground
that officers of a corporation are not liable
personally for official acts unless they exceeded
the scope of their authority.
On certiorari, this Court reversed the NLRC and
upheld the labor arbiter. In imposing joint and
several liability upon the company president, the
Court, speaking through Mme. Justice Ameurfina
Melencio-Herrera, ratiocinated this wise:

Another driver-claimant admitted, upon the

prodding of counsel for the corporations, that
Naguiat Enterprises was in the trading business
while CFTI was in taxi services.liii[30]

"(b)
How can the foregoing (Articles
265 and 273 of the Labor Code)
provisions be implemented when the
employer is a corporation? The answer is
found in Article 212(c) of the Labor Code
which provides:

In addition, the Constitutionliv[31] of CFTI-AAFES

Taxi Drivers Association which, admittedly, was
the union of individual respondents while still
working at Clark Air Base, states that members
thereof are the employees of CFTI and "(f)or
collective bargaining purposes, the definite
employer is the Clark Field Taxi Inc."

'(c)
'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.'

From the foregoing, the ineludible conclusion is

that CFTI was the actual and direct employer of
individual respondents, and that Naguiat
Enterprises was neither their indirect employer
nor labor-only contractor. It was not involved at
all in the taxi business.

The foregoing was culled from Section 2

of RA 602, the Minimum Wage Law. Since
RANSOM is an artificial person, it must
have an officer who can be presumed to
be the employer, being the 'person
acting in the interest of (the) employer'
RANSOM. The corporation, only in the
technical sense, is the employer.

CFTI president solidarily liable

Petitioner-corporations would likewise want to
avoid the solidary liability of their officers. To
bolster their position, Sergio F. Naguiat and
Antolin T. Naguiat specifically aver that they were
denied due process since they were not parties to
the complaint below.lv[32] In the broader interest
of justice, we, however, hold that Sergio F.
Naguiat, in his capacity as president of CFTI,
cannot be exonerated from joint and several
liability in the payment of separation pay to
individual respondents.
A.C. Ransom Labor Union-CCLU vs. NLRC lvi[33] is
the case in point. A.C. Ransom Corporation was a
family corporation, the stockholders of which
were members of the Hernandez family. In 1973,
it filed an application for clearance to close or
cease operations, which was duly granted by the

The responsible officer of an employer

corporation can be held personally, not
to say even criminally, liable for
nonpayment of back wages. That is the
policy of the law. x x x
(c)
If the policy of the law were otherwise, the
corporation employer can have devious ways for
evading payment of back wages. x x x
(d)
The record does not clearly identify 'the
officer or officers' of RANSOM directly responsible
for failure to pay the back wages of the 22
strikers. In the absence of definite proof in that
regard, we believe it should be presumed that the
responsible officer is the President of the
corporation who can be deemed the chief
operation officer thereof. Thus, in RA 602,
criminal responsibility is with the 'Manager or in
his default, the person acting as such.' In

RANSOM, the President appears to be the

Manager." (Underscoring supplied.)

liable for his corporate action." (footnotes

omitted)

Sergio F. Naguiat, admittedly, was the president

of CFTI who actively managed the business. Thus,
applying the ruling in A. C. Ransom, he falls
within the meaning of an "employer" as
contemplated by the Labor Code, who may be
held jointly and severally liable for the obligations
of the corporation to its dismissed employees.

As pointed out earlier, the fifth paragraph of

Section 100 of the Corporation Code specifically
imposes personal liability upon the stockholder
actively managing or operating the business and
affairs of the close corporation.

Moreover, petitioners also conceded that both

CFTI and Naguiat Enterprises were "close family
corporations"lvii[34] owned by the Naguiat family.
Section 100, paragraph 5, (under Title XII on
Close Corporations) of the Corporation Code,
states:
"(5)
To the extent that the
stockholders are actively engage(d) in
the management or operation of the
business and affairs of a close
corporation, the stockholders shall be
held to strict fiduciary duties to each
other and among themselves. Said
stockholders shall be personally liable for
corporate torts unless the corporation
has obtained reasonably adequate
liability insurance." (underscoring
supplied)
Nothing in the records show whether CFTI
obtained "reasonably adequate liability
insurance;" thus, what remains is to determine
whether there was corporate tort.
Our jurisprudence is wanting as to the definite
scope of "corporate tort." Essentially, "tort"
consists in the violation of a right given or the
omission of a duty imposed by law.lviii[35] Simply
stated, tort is a breach of a legal duty.lix[36]
Article 283 of the Labor Code mandates the
employer to grant separation pay to employees in
case of closure or cessation of operations of
establishment or undertaking not due to serious
business losses or financial reverses, which is the
condition obtaining at bar. CFTI failed to comply
with this law-imposed duty or obligation.
Consequently, its stockholder who was actively
engaged in the management or operation of the
business should be held personally liable.
Furthermore, in MAM Realty Development vs.
NLRC,lx[37] the Court recognized that a director
or officer may still be held solidarily liable with a
corporation by specific provision of law. Thus:
"x x x A corporation, being a juridical
entity, may act only through its directors,
officers and employees. Obligations
incurred by them, acting as such
corporate agents, are not theirs but the
direct accountabilities of the corporation
they represent. True, solidary liabilities
may at times be incurred but only when
exceptional circumstances warrant such
as, generally, in the following cases: Scl-aw
xxx

xxx

xxx

4.
When a director, trustee or officer is
made, by specific provision of law, personally

In fact, in posting the surety bond required by this

Court for the issuance of a temporary restraining
order enjoining the execution of the assailed
NLRC Resolutions, only Sergio F. Naguiat, in his
individual and personal capacity, principally
bound himself to comply with the obligation
thereunder, i.e., "to guarantee the payment to
private respondents of any damages which they
may incur by reason of the issuance of a
temporary restraining order sought, if it should be
finally adjudged that said principals were not
entitled thereto."lxi[38]
The Court here finds no application to the rule
that a corporate officer cannot be held solidarily
liable with a corporation in the absence of
evidence that he had acted in bad faith or with
malice.lxii[39] In the present case, Sergio Naguiat
is held solidarily liable for corporate tort because
he had actively engaged in the management and
operation of CFTI, a close corporation.
Antolin Naguiat not personally liable
Antolin T. Naguiat was the vice president of the
CFTI. Although he carried the title of "general
manager" as well, it had not been shown that he
had acted in such capacity. Furthermore, no
evidence on the extent of his participation in the
management or operation of the business was
proffered. In this light, he cannot be held
solidarily liable for the obligations of CFTI and
Sergio Naguiat to the private respondents.
Fourth Issue: No Denial of Due Process
Lastly, in petitioners' Supplement to their original
petition, they assail the NLRC Resolution holding
Sergio F. Naguiat and Antolin T. Naguiat jointly
and severally liable with petitioner-corporations in
the payment of separation pay, averring denial of
due process since the individual Naguiats were
not impleaded as parties to the complaint.
We advert to the case of A.C. Ransom once more.
The officers of the corporation were not parties to
the case when the judgment in favor of the
employees was rendered. The corporate officers
raised this issue when the labor arbiter granted
the motion of the employees to enforce the
judgment against them. In spite of this, the Court
held the corporation president solidarily liable
with the corporation.
Furthermore, Sergio and Antolin Naguiat
voluntarily submitted themselves to the
jurisdiction of the labor arbiter when they, in their
individual capacities, filed a position paperlxiii[40]
together with CFTI, before the arbiter. They
cannot now claim to have been denied due
process since they availed of the opportunity to
present their positions.

WHEREFORE, the foregoing premises

considered, the petition is PARTLY GRANTED. The
assailed February 28, 1994 Resolution of the
NLRC is hereby MODIFIED as follows:
(1)
Petitioner Clark Field Taxi, Incorporated,
and Sergio F. Naguiat, president and co-owner
thereof, are ORDERED to pay, jointly and
severally, the individual respondents their
separation pay computed at US$120.00 for every
year of service, or its peso equivalent at the time
of payment or satisfaction of the judgment;
(2)
Petitioner Sergio F. Naguiat Enterprises,
Incorporated, and Antolin T. Naguiat are
ABSOLVED from liability in the payment of
separation pay to individual respondents.
SO ORDERED.

G.R. No. L-50358 November 2, 1982

SHIPSIDE, INCORPORATED, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
and TITA ABEJON, EDUARDO ALVIARNE,
FELICIANO ALVIARNE, LIBERATO AMITA,
ANACLETO ANCHETA, RICARDO ANCHETA,
MOISES ANCHETA, et al., respondents.
Sycip, Salazar, Feliciano, Hernandez and Castillo
for petitioner.
Francisco T. Gualberto for private respondents.

DE CASTRO, J.:
Petition for certiorari with preliminary injunction
to set aside the decision 1 of respondent National
Labor Relations Commission dated October 11,
1978, which affirmed the decision of the Labor
Arbiter dated November 22, 1977 issued in NLRC
Case No. RB-1-38-78, entitled Tita Abejon, et al.,
versus La Union Stevedores, Inc. and Shipside,
Incorporated, declaring La Union Stevedores, Inc.
and Shipside, Incorporated jointly and severally
liable to pay herein private respondents their
separation pay and the equivalent of their
respective two-month salary as penalty for noncompliance with the clearance requirement of the
Labor Code, and the said respondent
Commission's en banc resolution 2 of February 9,
1979 denying herein petitioner's motion for
reconsideration, as well as the Order 3 of the said
Labor Arbiter dated April 6, 1979, directing the
immediate execution of the aforestated decision
and/or resolution.
Briefly, the records show the following undisputed
facts: Petitioner Shipside, Incorporated,
hereinafter referred to as SHIPSIDE, is a domestic
corporation engaged in the handling in bulk of all
kinds of materials, products and supplies, and
operates harbor and wharfage facilities capable
of servicing ocean vessels of deep draft at Barrio
Poro, San Fernando, La Union.

On December 27, 1963, SHIPSIDE entered into a

"Contract for Services" 4 with La Union
Stevedores, Inc., hereinafter referred to as
STEVEDORES, a stevedoring company, whereby
the former shall give the exclusive right to handle
stevedoring services to the latter on all ships that
may load or unload cargo at the piers and/or
wharves owned and/or controlled by the former in
the Port of San Fernando, La Union. The terms
and conditions of the contract were as follows:
(1) Stevedoring work shall embrace
the handling of cargo from the ship
to the pier and/or from the pier to
the ship;
(2) STEVEDORES shall furnish all
the labor needed for the
stevedoring work;
(3) Charges for all stevedoring shall
be billed through SHIPSIDE to the
shipping company, shipper or
consignee, as the case may be.
Stevedoring rate to be charged will
be worked out by both parties in
accordance with standard
stevedoring practice, with mutual
consent of both parties;
(4) STEVEDORES shall present its
payroll to SHIPSIDE for payment
after every operation, and the
former shag be responsible in
paying its own men individually;
(5) The net balance from the
stevedoring charges collected by
SHIPSIDE from the shipping
company, shipper or consignee, as
the case may be, after the payroll
of STEVEDORES and other
operating expenses incurred by
STEVEDORES and SHIPSIDE shall
have been deducted, will be
equally divided between SHIPSIDE
and STEVEDORES on a fifty-fifty
basis;
(6) SHIPSIDE shall guarantee the
exclusive right of STEVEDORES to
do the stevedoring work that may
be contracted by the former; while
STEVEDORES guarantees not to
enter into any contract with any
other party or entity for any
stevedoring work at the piers
and/or wharves owned and/or
controlled by SHIPSIDE, without
coursing the same to SHIPSIDE.
STEVEDORES further guarantees to
supply all the labor required by
SHIPSIDE at all times.
This contract shall take effect on
January 1, 1964, and shall not be
terminated by either party unless a
three-month termination notice in
writing shall have been given to
either party. Any violation of the
provisions of this contract by either
party shall make the guilty party

liable for damages that may be

suffered by the innocent party, in
addition to attorney's fee and other
expenses if and when the same is
ventilated in the courts of justice.
Pursuant to the above-quoted contract,
Stevedores hired private respondents to
constitute its labor force.
On August 28,1974, SHIPSIDE informed
STEVEDORES that three (3) months after
September 1, 1974, or effective as of the close of
business on November 30, following, the
aforestated contract would be terminated
because of financial reverses. SHIPSIDE, however,
proferred its readiness to absorb the operating
personnel of STEVEDORES from the lowest rank
of stevedores up to the rank of foreman who
desire to work under its employ on a vessel to
vessel basis, as it would thereafter undertake the
stevedoring work independently b-, itself. Thus,
SHIP-SIDE requested STEVEDORES to submit a
roster of its operating personnel as aforestated
who desires to work for the former. 5
The business relations between SHIPSIDE and
STEVEDORES was finally terminated on
November 30,1974, and as a result thereof,
several stevedores and office personnel found
themselves out of job. Since the dismissed
employees, private respondents herein among
them, received no separation benefits, said
respondents filed their complaint against
SHIPSIDE and STEVEDORES sometime in February
1975 for separation pay with the Ministry of
Labor, subject of NLRC Case No. RB-1-38-78.
After due hearing, the Labor Arbiter assigned on
the case rendered judgment on November 22,
1977, declaring both SHIPSIDE and STEVEDORES
the employers of private respondents by virtue of
the aforestated "Contract for Services", which
said Arbiter construed to be either a "joint
venture" or a "partnership" and therefore, jointly
and severally liable for the separation pay
claimed by private respondents. SHIPSIDE and
STEVEDORES were also adjudged liable for an
additional amount equivalent to two months
salary for each of the private respondents, as
penalty for their failure to file or submit with the
Ministry of Labor the necessary clearance
application or report of the termination of private
respondents' employment as required by the new
Labor Code.
On separate appeal by SHIPSIDE and
STEVEDORES, the above judgment of the Labor
Arbiter was affirmed by the respondent
Commission in its decision of October 11, 1978,
as earlier indicated. The motion for
reconsideration of SHIPSIDE was likewise denied
by the respondent Commission, sitting en banc,
in the resolution of February 9, 1979. Hence, the
present recourse. As prayed for, a temporary
restraining order was issued on May 7, 1979,
restraining the respondent Commission, its
agents or representatives, from enforcing and/or
carrying out the questioned decision, resolution
and writ of execution dated October 11, 1978,
February 9, 1979 and April 6, 1979, respectively.

The crux of the present controversy hinges on the

question of whether or not SHIPSIDE can be held
liable for the money benefits, claimed by private
respondents herein, which in turn requires
resolution of the more basic and fundamental
issue of existence of employer-employee
relationship between SHIPSIDE and private
respondents, for in the absence of such
relationship the latter have no cause of action
against the former. 6
In determining the existence of employeremployee relationship, the following elements are
generally considered, namely; (1) the selection
and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal;
and (4) the power to control the employee's
conduct-although the latter is the most important
element. 7
Tested from the foregoing criteria, in connection
with the features of the relationship between the
parties in this case as may be shown hereunder,
We fail to see how SHIPSIDE can be considered as
the employer of private respondents, who
undisputedly were the employees of
STEVEDORES. The records do not show any
participation on the part of SHIPSIDE with respect
to the selection and engagement of the individual
stevedores who will constitute the labor force of
STEVEDORES. Who the individual stevedores will
be and under what terms and conditions their
services will be rendered are matters determined
not by SHIPSIDE, but by STEVEDORES. Neither is
there any direct employment relationship
between SHIPSIDE and private respondents. The
former has no separate individual contracts with
the latter whose only possible connection with
SHIPSIDE is through STEVEDORES which
contracted them and in whose favor their
services were rendered, thus enabling
STEVEDORES to fulfill its contractual obligations
with SHIPSIDE. Withal, the individual stevedores,
who were not known to SHIPSIDE which dealt only
with STEVEDORES on matters pertaining to the
contracted task, cannot perform any stevedoring
service for SHIPSIDE unless STEVEDORES first
accepts them as such.
Under the arrangement between SHIPSIDE and
STEVEDORES, the former has no hand in deciding
how much salary is to be paid each of the
individual stevedores. Payment of such salary is
made not by SHIPSIDE, but by STEVEDORES to
the individual stevedores and said amount is
beyond the power of SHIPSIDE to determine,
which merely paid STEVEDORES the aggregate
amount as indicated in the payroll of the latter
presented after every operation to the former for
payment, pursuant to their contract for services.
Neither does SHIPSIDE reserve the power to
dismiss the individual stevedores, as We fail to
see any evidence on record that it wielded such
power.
We likewise found nothing in the records which
would indicate that private respondents were
under the control of SHIPSIDE in respect of the
means and methods they employed in the
performance of their work, to be considered as
the employees of the latter. 8 On the contrary, it
is sufficiently established that STEVEDORES
exercised supervision and control over its labor

force. If in the course of private respondents'

work, SHIPSIDE occasionally issued instructions to
them, that alone does not in the least detract
from the fact that only STEVEDORES is the
employer of private respondents, for in legal
contemplation, such instruction carry no more
weight than mere requests, the privity of contract
being between SHIPSIDE and STEVEDORES, not
between the former and the private respondents.
Corollarily, such giving of instruction inevitably
spring from SHIPSIDE's right predicated on the
"Contract for Services" entered into by it with
STEVEDORES.
There are other considerations that militate
against a finding of employer- employee
relationship between SHIPSIDE and private
respondents. To start with, the contract between
the former and STEVEDORES had already expired
or terminated in accordance with the last
paragraph thereof, as earlier quoted. Indeed,
after the expiration of said contract, SHIPSIDE
does the stevedoring work by itself and in fact
had offered to absorb the operating personnel of
STEVEDORES from the lowest rank of stevedores
up to the tank of foreman who desire to work
under its employ on a vessel to vessel basis, but
for one reason or another, private respondents
rejected said offer, although some of the
stevedores who found themselves out of job by
reason of the termination of said contract, had
accepted the offer and were thereupon hired by
SHIPSIDE. In other words, to now hold private
respondents as the employees of SHIPSIDE and
therefore entitled to labor benefits as such, would
not only be unfair to the latter, but would likewise
violate its exclusive prerogative to determine
whether it should enter into an employment
contract or not.
As succinctly held in Allied Free Workers' Union v.
Compania Maritima, 19 SCRA 258, 277:
Lastly, to uphold the court a quo's
conclusion would be tantamount to
the imposition of an employeremployee relationship against the
will of MARITIMA. This cannot be
done, since it would violate
MARITIMA's exclusive prerogative
to determine whether it should
enter into an employment contract
or not, i.e., whether it should hire
others or not. In Pampanga Bus Co.
us. Pambusco Employees' Union,
We said:
... The general right
to make a contract in
relation to one's
business is an
essential part of the
liberty of the citizens
protected by the due
process clause of the
constitution. The
right of a laborer to
sell his labor to such
person as he may
choose is, in its
essence, the same
as the right of an
employer to

purchase labor from

any person who it
chooses. The
employer and the
employee have thus
an equality of right
guaranteed by the
constitution. If the
employer can
compel the
employee to work
against the latter's
will, this is servitude.
If the employee can
compel the employer
to give him work
against the
employer's will, this
is oppression.
What legal relationship existed between SHIPSIDE
and STEVEDORES is a matter We cannot touch in
this present petition, the same being sub-judice,
it appearing that prior to the institution of this
suit sometime in February 1975, STEVEDORES
had filed a petition 9 against SHIPSIDE on
December 2, 1974 in the Court of First Instance of
La Union, docketed as Civil Case No. 2624, for
accounting, dissolution and winding up of
partnership, wherein the concomitant issue of
whether a partnership and not simply a contract
for services existed between the parties therein is
raised. Said case appears to be still pending
before said court, of which the labor arbiter was
properly apprised when SHIPSIDE had filed a
motion to dismiss the labor case, stating among
others, that said civil case constitutes a
prejudicial question determinative of the validity
of private respondents' claim which is grounded
on the theory that SHIPSIDE and STEVEDORES
being then "joint adventurers" or "partners" in the
stevedoring business, were their employers and
are therefore liable for their claim. As such, said
labor arbiter should have refrained from declaring
the questioned contract for services as a
partnership or joint venture arrangement if only
to give due deference to the well-settled rule,
assuming that the labor arbiter or respondent
Commission has jurisdiction to resolve the issue
concurrently with the Court of First Instance, that
when two or more courts have concurrent
jurisdiction, the first validly acquiring jurisdiction
does so to the exclusion of all other courts. As the
Court of First Instance had previously assumed
jurisdiction over the particular issue, it is
unwarranted for the labor arbiter to pass upon
tills issue and for the respondent Commission to
uphold such undue assumption of jurisdiction by
the labor arbiter. Moreover, even assuming that
the contract for services could partake of the
nature of a joint venture, or that of a partnership
agreement, that does not by itself justify the
holding that SHIPSIDE may also be considered as
the employer of the employees of STEVEDORES
absent a showing of the criteria above set forth.
Not being an employer of private respondents
herein, SHIPSIDE has no duty to file or submit
with the Ministry of Labor the necessary
clearance application or report of the termination
of the services of private respondents. In so far as
SHIPSIDE is concerned, there is no termination of
employment to speak of, but merely a

termination of its contract for services with

STEVEDORES.

be conveyed in writing to PRIME by CLIENT within

two (2) days from such change or termination.

WHEREFORE, the petition is hereby granted. The

questioned decision, resolution and order are
hereby set aside in so far as they hold petitioner
liable to herein private respondents for the
money claims therein stated. The temporary
restraining, order heretofore issued is hereby
made permanent. No costs.

4.
Liability/Responsibility - It is expressly
agreed that the personnel assigned to the client
are not employees of the CLIENT, and as such
PRIME shall at all times stand solely liable and/or
responsible for the enforcement of and
compliance with all existing laws, rules and
regulations, such as, but not limited to the Labor
Code, Social Security Act, Employers (sic)
Compensation Commission Act as amended,
Medical Care; provided finally, that PRIME hereby
agrees and binds itself to save and hold CLIENT
free and harmless from any civil and criminal
liability with respect thereof and/or which may
arise therefrom.

SO ORDERED.

[G.R. No. 115920. January 29, 1996]

PCI AUTOMATION CENTER, INC., petitioner,
vs. NATIONAL LABOR RELATIONS
COMMISSION and HECTOR SANTELICES,
respondents.
DECISION
PUNO, J.:
This is a special civil action for certiorari under
Rule 65 of the Revised Rules of Court for the
annulment of the Decision of the National Labor
Relations Commission (NLRC) dated December
29, 1993lxiv[1] and its Resolution dated April 15,
1994.lxv[2]
In 1985, Philippine Commercial International Bank
(PCIB) commenced its 4th GL Environment
Conversion Project intended to link all existing
computer systems within PCIB and its various
branches around the country. It entered into a
Computer Services Agreement with petitioner PCI
Automation Center, Inc. (PCI-AC), under which
petitioner obligated itself to direct, supervise and
run the development of the software, computer
software applications and computer system of
PCIB. On the other hand, PCIB agreed to provide
the petitioner with encoders and computer
attendants, among others.lxvi[3]
To comply with its obligation to procure
manpower for the petitioner, PCIB engaged the
services of Prime Manpower Resources
Development, Inc. (Prime). PCIB and Prime
entered into an External Job Contractlxvii[4] which
provides:
1. Services - PRIME shall provide qualified and
adequate personnel services required by the
CLIENT within two (2) working days from time of
receipt of the notice of the CLIENTs requisition.
2. Selection - The CLIENT shall have the right to
select, refuse, or change any or all of the
personnel assigned to deliver these services to
the CLIENT upon two (2) working days notice to
PRIME.
3. Supervision - The CLIENT shall be responsible
in supervising all PRIME personnel contracted and
assigned to deliver such services to the CLIENT.
However, PRIME shall check the time cards of the
assigned personnel for payroll and other related
purposes. Any change or discontinuance in the
work assignment of the assigned personnel shall

5.
Direct Hiring/Absorption - Since the
personnel assigned to the CLIENT are PRIME
employees, said employees cannot be absorbed
or hired directly by the CLIENT without PRIMEs
prior written consent. In which case, CLIENT shall
be charged by PRIME a placement fee equivalent
to ten percent (10%) of the commencing annual
gross compensation of the employee concerned if
said employees have worked with CLIENT for less
than five (5) months. If said employees have
worked with CLIENT as temporary employee for
more than five (5) months, CLIENT shall not be
charged any fee.
6. Injury/Damage - PRIME shall not be responsible
for any loss or damage caused by the assigned
personnel to the CLIENTs properties as well as
properties of the customers of the CLIENT unless
the loss or damage is caused by the fact that the
assigned personnel lacks the capacity to work by
reason of any mental or physical defect or he was
manifestly unfit or unqualified to perform the
tasks for which he has been assigned by PRIME to
the client.
In the event of injury to assigned PRIME
personnel under this contract, due to accidents
which are work-related, the CLIENT shall
reimburse PRIME for medical expenses incurred
which under existing laws are required to be
defrayed by the employers. In the case of
assigned PRIME personnel under regular status,
medical expenses due to accidents or illnesses,
whether or not work related, shall be defrayed by
PRIME under its Hospitalization Insurance
Scheme.
7. Confidentiality - PRIME shall guarantee the
confidentiality of CLIENTs nature of job where
PRIME personnel are involved.
8. Mode/Term of Payment - For and in
consideration of the abovementioned services,
the CLIENT shall pay PRIME the corresponding
hourly billing rate listed in Annex A which is an
integral part of this contract. Annex A consists of
letter agreement dated May 20, 1986 duly
conformed by PRIME and CLIENT as to the
specific hourly rates per job category and status,
as well as the composition of the billing rates,
basis for computation and the provision of
reserves for additional benefits granted to
assigned regular PRIME employees whenever
those are applicable and/or payable. Such rates

apply only to work done by our employees during

the first eight (8) hours on any work day.
For work rendered by the assigned personnel in
excess of the regular work period agreed upon,
the CLIENT shall be billed by PRIME the rates on
overtime pay set by the New Labor Code. The
schedule of hourly billing rates per job category
for work rendered on overtime, whether done on
a regular work day; legal holiday, special holiday
or rest day is herein attached as Annex B and
shall become an integral part of this contract.
PRIME shall bill the CLIENT for actual services
rendered by sending CLIENT its statement of
account on the 16th and on the last day of each
month. CLIENT shall make payment within seven
(7) working days from receipt of said statement
of account, unless the CLIENT, within the same
period, communicates to PRIME its refusal to pay
on some valid grounds, e.g. errors in
computation, etc. In the latter case, CLIENT shall
make payment within seven (7) working days
after the cause for non-payment is settled.
9. Provision for Rate Adjustment - In the event
that wages are increased and increased (sic) and
additional fringe benefits in favor of the
employees are promulgated by law, decrees or
regulation, or granted by mutual agreements
between PRIME and CLIENT, the above mentioned
billing rates shall be automatically adjusted to
conform with the new levels set by law or by both
parties.
On September 20, 1985, private respondent
Hector Santelices was hired by Prime and
assigned to petitioner as a data encoder to work
on the 4th GL Environment Conversion Project of
PCIB.lxviii[5] However, on March 18, 1991, Prime
decided to terminate private respondents
services after it was informed by the petitioner
that his services were no longer needed in the
project.lxix[6]
Private respondent filed before the NLRC a
complaint for illegal dismissal against Prime and
PCI-AC.lxx[7] In his position paper, private
respondent prayed for the payment of his 14th
month pay, 13th month pay, separation pay,
unpaid service incentive leave, unpaid vacation
leave, termination pay, as well as moral and
exemplary damages and attorneys fees.lxxi[8]
On April 30, 1993, Labor Arbiter Melquiades Sol
Del Rosario rendered a Decisionlxxii[9] finding that
private respondents dismissal was illegal. The
dispositive portion of the Decision states:
CONFORMABLY with the foregoing, judgment is
hereby rendered finding complainants dismissal
to be illegal and without legal basis.
Consequently, complainant should be
immediately reinstated to his former or
equivalent position as data encoder at PCI-AC.
Should reinstatement be impossible or
impractical due to a strained relation, then in lieu
thereof, payment of separation pay by Prime at
one months pay (P3,060.00) per year of service
reckoned from September 20, 1985, a fraction of
six (6) months service being considered as one
(1) whole year.

Respondents (sic) companies are further ordered

to pay in solidum the complainant the following
amounts:
1. P78,030.00 as backwages (March 16, 1991 to
April 30, 1993) not exceeding 3 years without
qualification or deduction at P3,060.00 a month;
2. P30,000.00 as moral damages;
3. P10,000.00 as exemplary damages; and
4. P5,000.00 as attorneys fees.
All other claims are hereby denied for lack of
merit.lxxiii[10]
Prime and PCI-AC appealed to the NLRC.
On June 18, 1993, during the pendency of the
appeal, Prime paid private respondent the
amount of P24,480.00 as separation pay in lieu of
reinstatement. This was in partial satisfaction of
the judgment rendered by the Labor Arbiter.
Private respondent, for his part, waived his right
to be reinstated to his former position in Prime
and/or PCI-AC. Accordingly, Prime and private
respondent executed and filed before the office of
the Labor Arbiter a document entitled Partial
Satisfaction of Judgment and Waiver of Right. lxxiv
[11]
On December 29, 1993, public respondent NLRC
affirmed the Decision of the Labor Arbiter, but
deleted the award of moral and exemplary
damages and attorneys fees.lxxv[12]
PCI-AC filed the present petition on the following
ground:
. . . the public respondent acted with grave abuse
of discretion amounting to lack of jurisdiction
when it disregarded the substantial evidence in
this case clearly showing that private respondent
was not illegally dismissed by petitioner. lxxvi[13]
The petition must fail.
Petitioner contends that private respondent,
being a project employee, was validly dismissed
when the project for which he was hired was
completed on March 15, 1991. Petitioner avers
that the 4th GL Environment Conversion Project
involved a phase-by-phase conversion of PCIBs
computer system. Private respondent was
assigned to work as data encoder in the
Consolidated Financing System/Budget
Monitoring phase of the said computer
conversion project. Allegedly, this phase was
completed on March 15, 1991. Petitioner makes
the submission that the completion of the work
therein terminated further need for private
respondents services.lxxvii[14]
The public respondent, however, held otherwise
after assessing the evidence on record. It
affirmed the findings of the Labor Arbiter, thus:
Going now to the second point of inquiry, which is
the completion or non-completion of the 4GL
conversion system project, the testimony of

Danilo Calauag, the assistant vice-president and

manager of International Operations of Prime
Manpower is most explicit. He testified on July 22,
1992 as follows:
Mr. Santelices was assigned initially to Tower 2;
(p. 33 TSN.) then he was assigned to Tower I
(Ibid) because there was work to be done in
Tower I that necessitated his (complainants)
transfer there (p. 35 Ibid) although the work he
(complainant) was performing in Tower II was still
existing (supra) and Tower II is still in progress
(supra) meaning his original assignment is still
on-going up to the present (p. 36 Ibid).
The foregoing testimony expressly and clearly
admitted that 4th conversion project, more
particularly Tower II to which complainant was
originally assigned is still an on-going project, and
not yet completed as posited by respondents.
There was therefore no reason for complainants
dismissal on March 15, 1991 on the pretended
ground which is completion of the project.
xxxlxxviii[15]
We find no valid reason to disturb public
respondents findings. No less than the assistant
vice-president and manager for International
Operations of Prime testified that the project for
which private respondent was hired was still
existing at the time of his dismissal. It is settled
that factual findings of quasi-judicial agencies like
the Labor Arbiter and the NLRC are generally
accorded not only respect but even finality if such
findings are supported by substantial
evidence.lxxix[16]
The petitioner also faults the public respondent in
affirming the disposition of the Labor Arbiter
holding it solidarily liable with Prime for all the
monetary claims of private respondent. It insists
that it is not an employer of private respondent. It
contends that private respondent is an employee
of Prime and he was merely assigned by Prime to
the petitioner to work on the 4th GL Environment
Conversion Project of PCIB.
We are not persuaded.
The petitioner, through PCIB, contracted Prime to
provide it with qualified personnel to work on the
computer conversion project of PCIB.lxxx[17] The
External Job Contract between Prime and PCIB
must be read in conjunction with the Computer
Services Agreement between PCIB and the
petitioner. Under the Computer Services
Agreement, the petitioner shall direct and
supervise the computer conversion project of
PCIB while PCIB shall provide the petitioner with
data encoders and computer attendants to work
on the project. Pursuant to said Agreement, PCIB
called on Prime to furnish the petitioner with the
needed personnel, one of whom was private
respondent. Hence, although the parties in the
External Job Contract are only Prime and PCIB,
the legal consequences of such contract must
also be made to apply to the petitioner. Under the
circumstances, PCIB merely acted as a conduit
between the petitioner and Prime. The project
was under the management and supervision of
the petitioner and it was the petitioner which

exercised control over the persons working on the

project.
Under the law, any person (hereinafter referred to
as the principal employer) who enters into an
agreement with a job contractor, either for the
performance of a specified work or for the supply
of manpower, assumes responsibility over the
employees of the latter.lxxxi[18] However, for the
purpose of determining the extent of the principal
employers liability, the law makes a distinction
between legitimate job contracting and labor-only
contracting. Article 106 of the Labor Code states:
Article 106. Contractor or subcontractor.
-Whenever an employer enters into a contract
with another person for the performance of the
formers work, the employees of the contractor
and of the latters subcontractor, if any, shall be
paid in accordance with the provisions of this
Code.
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with this Code, the employer shall be
jointly and severally liable with his contractor or
subcontractor to such employees to the extent of
the work performed under the contract, in the
same manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor may, by appropriate
regulations, restrict or prohibit the contracting
out of labor to protect the rights of workers
established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions
between labor-only contracting and job
contracting as well as differentiations within
these types of contracting and determine who
among the parties involved shall be considered
the employer for purposes of this Code, to
prevent any violation or circumvention of any
provision of this Code.
There is labor-only contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, and the workers recruited and
placed by such persons are performing activities
which are directly related to the principal
business of such employer. In such cases, the
person or intermediary shall be considered
merely as an agent of the employer who shall be
responsible to the workers in the same manner
and extent as if the latter were directly employed
by him.
In legitimate job contracting, no employeremployee relationship exists between the
employees of the job contractor and the principal
employer. Even then, the principal employer
becomes jointly and severally liable with the job
contractor for the payment of the employees
wages whenever the contractor fails to pay the
same. In such case, the law creates an employeremployee relationship between the principal
employer and the job contractors employees for a
limited purpose, that is, to ensure that the
employees are paid their wages. Other than the
payment of wages, the principal employer is not

responsible for any claim made by the

employees.lxxxii[19]

operations of the employer in which workers are

habitually employed.

On the other hand, in labor-only contracting, an

employer-employee relationship is created by law
between the principal employer and the
employees of the labor-only contractor. In this
case, the labor-only contractor is considered
merely an agent of the principal employer. The
principal employer is responsible to the
employees of the labor-only contractor as if such
employees had been directly employed by the
principal employer. The principal employer
therefore becomes solidarily liable with the laboronly contractor for all the rightful claims of the
employees.lxxxiii[20]

(b) Labor-only contracting as defined herein is

hereby prohibited and the person acting as
contractor shall be considered merely as an agent
or intermediary of the employer who shall be
responsible to the workers in the same manner
and extent as if the latter were directly employed
by him.

Thus, in legitimate job contracting, the principal

employer is considered only an indirect
employer,lxxxiv[21] while in labor-only contracting,
the principal employer is considered the direct
employer of the employees.lxxxv[22]
Considering the terms of the External Job
Contract executed by Prime and PCIB, it cannot
be doubted that Prime is a labor-only contractor.
Under the contract, Prime merely acted as a
placement agency providing manpower to the
petitioner through PCIB. The service rendered by
Prime in favor of the petitioner was not the
performance of a specific job, but the supply of
qualified personnel to work as data encoders and
computer attendants in connection with the
petitioners project.
Rule VIII Book III of the Omnibus Implementing
Rules and Regulations of the Labor Code defines
job contracting and labor-only contracting:
Sec. 8. Job contracting. - There is job contracting
permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract work on his
own account under his own responsibility
according to his own manner and method, free
from the control and direction of his employer or
principal in all matters connected with the
performance of the work except as to the results
thereof; and
(2) The contractor has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other materials
which are necessary in the conduct of his
business.
Sec. 9. Labor-only contracting. - (a) Any person
who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only
contracting when such person:
(1) Does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises and other materials;
and
(2) The workers recruited and placed by such
person are performing activities which are
directly related to the principal business or

xxx
xxx

xxx

In short, 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.
As Prime is a labor-only contractor, the workers it
supplied to the petitioner, including private
respondent, should be considered employees of
the petitioner.lxxxvi[23] The admissions made by
private respondent in his affidavits and position
paper that he is a regular employee of Prime are
not conclusive on this Court as the existence of
an employer-employee relationship is a question
of law which may not be made the subject of
stipulation.lxxxvii[24]
We hold that public respondent did not commit
grave abuse of discretion in affirming the ruling of
the Labor Arbiter adjudging the petitioner
solidarily liable with Prime for the payment of all
the monetary claims of private respondent. This
is in accord with Article 106 of the Labor Code, as
amended.
IN VIEW WHEREOF, the petition is DISMISSED.
The assailed Decision and Resolution are hereby
AFFIRMED. No costs.
SO ORDERED.

[G.R. No. 153859. December 11, 2003]

FILIPINAS (Pre-fabricated Bldg.) SYSTEMS
FILSYSTEMS, INC. and FELIPE A. CRUZ, JR.,
petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and CRESENCIANO
BEBANCO, JUANITO R. BENZON, REY
NUALLA, BONIFACIO TORRES, ERNESTO
SINCONEQUE and EMILIO ANEANO,
respondents.
DECISION
PUNO, J.:
The facts reveal that a complaint for illegal
dismissal and monetary claims for service
incentive leave, 13th month pay and night shift
differential was filed by respondents against
petitioners before the National Labor Relations
Commission.1[1] The complaint was assigned to
Labor Arbiter Donato G. Quinto, Jr. who ordered

the parties to file their position paper.

Respondents complied, but not the petitioners
despite several warnings and time extensions.
The inaction was construed as a waiver by
petitioners of their right to present evidence.2[2]
The Labor Arbiter decided the complaint on the
merit and ruled in favor of respondents. He
sustained their claim of illegal dismissal as
petitioners failed to adduce contrary evidence.
Petitioners were ordered to reinstate
respondents. The monetary claims of the
respondents were likewise granted.3[3]
Petitioners appealed to the National Labor
Relations Commission. For the first time, they
submitted evidence that respondents were
project employees and that their dismissal was
due to the discontinuation of the Jaka Tower I
project where they were assigned. Respondents,
however, assailed the jurisdiction of the NLRC
over the appeal for failure of the petitioners to file
the appeal bond within the ten (10)-day
reglementary period. They further contended that
it was too late for petitioners to present evidence
in the NLRC.
The NLRC nevertheless assumed jurisdiction over
the appeal. Due to the evidence presented by
petitioners on the issue of illegal dismissal, it
remanded the case to the Labor Arbiter for
further proceedings.4[4] Respondents motion for
reconsideration was denied.5[5]
Respondents then repaired to the Court of
Appeals on a Petition for Certiorari. The appellate
court ruled that the NLRC did not have jurisdiction
over the appeal since the appeal bond of the
petitioners was filed out of time. It reinstated the
decision of the Labor Arbiter.6[6] Petitioners
motion for reconsideration proved futile.
Hence this petition where petitioners raise the
following issues:
1. Whether or not the Court of Appeals erred and
committed grave abuse of discretion in finding
and ruling that the NLRC has not acquired
jurisdiction on the appeal of the petitioners for
submitting an appeal bond seven (7) days
beyond the ten (10)-day reglamentary (sic)
period in perfecting an appeal;
2. Whether or not the Court of Appeals erred and
committed grave abuse of discretion in finding
and ruling that:
The remand of the case to the Labor Arbiter due
to the conflicting claims of the parties, comes as
a surprise to us. As a quasi-judicial agency vested
with jurisdiction to resolve labor disputes, it is but
natural for the NLRC to encounter conflicting

2
3

claims while discharging its mandate. To insist on

a policy of remanding a case to the Labor Arbiter
each time conflicting claims arise in a case would
be an abdication of duty by the NLRC as conflicts
are inherent and integral in all disputes, whether
labor or otherwise.
xxx

xxx

xxx

3. Whether or not the Court a quo erred and

committed grave abuse of discretion in giving
due course to the private respondents petition for
certiorari under Rule 65 of the 1997 Rules on Civil
Procedure; and in annulling and setting aside the
Resolutions (of) the NLRC, and reinstating the
Decision of the Labor Arbiter ordering the
reinstatement of the private respondents, with
full backwages, and monetary awards for 13th
month pay and Service Incentive Leave pay.7[7]
We affirm. The Labor Code provides a ten (10)day period from receipt of the decision of the
Arbiter for the filing of an appeal together with an
appeal bond if the decision involves a monetary
award in favor of the employees, viz:
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. x x x
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.
xxx

xxx
x x x.

(emphasis supplied)
The NLRC Rules of Procedure 8[8] likewise require
the appeal and the appeal bond to be filed within
the ten (10)-day reglementary period:
Section 1. Periods of Appeal. Decisions, awards,
or orders of the Labor Arbiter and the POEA
Administrator shall be 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 of the Labor
Arbiter or of the Administrator, and in case of a
decision or of the Regional Director or his duly
authorized Hearing Officer within five (5) calendar
days from receipt of such decisions, awards or
orders. If the 10th or 5th day, as the case may be,
falls on a Saturday, Sunday or a holiday, the last
day to perfect the appeal shall be the next
working day.
xxx

xxx
xxx

4
5

Section 3. Requisites for Perfection of Appeal. (a)

The appeal shall be filed within the reglementary
period as provided in Section 1 of this Rule; shall
be under oath with proof of payment of the
required appeal fee and the posting of a cash
surety bond as provided in Section 5 of this Rule
(which provides how much and where the appeal
fee is to be paid); shall be accompanied by a
memorandum of appeal which shall state the
grounds relied upon and the arguments in
support thereof; the relief prayed for; and a
statement of the date when the appellant
received the appealed decision, order or award
and proof of service on the other party of such
appeal.
A mere notice of appeal without complying with
the other requisite aforestated shall not stop the
running of the period for perfecting an appeal.
xxx

xxx
xxx

Section 7. No Extension of Period. No motion or

request for extension of the period within which
to perfect an appeal shall be allowed.
xxx

xxx

xxx

We have consistently ruled that payment of the

appeal bond is a jurisdictional requisite for the
perfection of an appeal to the NLRC.9[9] It is only
in rare instances that the court relaxes the rule
upon a showing of substantial compliance with it
and to prevent patent injustice.
In the case at bar, petitioners alleged that they
received a copy of the Arbiters decision on
October 31, 1998.10[10] Their memorandum of
appeal was dated November 9, 1998, but their
appeal bond to stay execution of the decision was
executed only on November 17, 1998.11[11] The
records show no partial payment of the bond was
made during the reglementary period nor was
there any explanation for its late filing. Given
these facts, the late filing of the bond divested
the NLRC of its jurisdiction to entertain petitioners
appeal.
Likewise, we cannot countenance the late
submission of petitioners evidence with the NLRC.
Petitioners should have adduced their evidence
on the issue of illegal dismissal before the Labor
Arbiter. They failed to do so despite the
opportunities given to them by the Arbiter. It was
only when an adverse decision was rendered
against them by the Arbiter that they offered to
submit their evidence before the NLRC refuting
respondents complaint of illegal dismissal. Such a
practice cannot be tolerated for it will defeat the
speedy administration of justice involving our
poor workers. Moreover, it smacks of unfairness.

appellate court. Respondents comment alleges

that the appellate court already declared its
judgment final and executory. An entry of
judgment was made after petitioners motion for
reconsideration of the appellate courts decision
was denied on October 31, 2001 and no petition
was filed before this Court. Atty. Rodolfo P. Orticio,
however, moved for cancellation of the entry of
judgment on the ground that he is the new
counsel of the petitioners and that he received a
copy of the denial of their motion for
reconsideration only on June 19, 2002. He
contended that his request for cancellation was
filed within the allowable period. In a resolution
dated August 20, 2002 denying the request, the
Court of Appeals ruled that:
From the records, it appears that when the
decision and resolution denying the Motion for
Reconsideration dated 31 October 2001 were
received, Atty. Orticio was not yet the counsel for
private respondent. In fact, he filed his notice of
appearance on 23 November 2001 after receipt
on 9 November 2001 by private respondents
former counsel, Atty. Louis Acosta, of the
resolution denying the motion for reconsideration.
A judgment becomes final provided there was
proper service of notice thereof. In this case, the
records clearly show there was such proper
service upon private respondents former counsel,
Atty. Louis Acosta. Therefore, the decision of 2
April 2001 did become final and executory,
leaving Us no more discretion to recall the entry
of judgment.12[12]
It is thus contended by respondents that the
petition at bar should not be allowed as the
decision of the appellate court has already
become final.
Again, we agree. Petitioners should have filed the
present petition within fifteen days under Rule 45
of the Rules of Court, viz:
SECTION 1. Filing of petition with Supreme Court.
A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court
of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by
law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall
raise only questions of law which must be
distinctly set forth.
SECTION 2. Time for filing. The petition shall be
filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed
from, or of the denial of the petitioners motion for
new trial or reconsideration filed in due time after
notice of the judgment. x x x.

10

Petitioners received a copy of the denial of their

motion for reconsideration of the Court of Appeals
decision on November 9, 2001. They filed an
extension of time to file the petition at bar on
June 16, 2002, alleging that they have a new
counsel. We note, however, that petitioners
obtained the services of present counsel on
November 23, 2001. Thus, there was ample time
for their counsel to appeal to this Court the
adverse ruling of the appellate court. The appeal

11

12

Yet, this is not all. Petitioners likewise ran

roughshod of the procedural rules of the

was not seasonably made by said counsel and

such procedural lapse is binding on petitioners.
IN VIEW WHEREOF, the petition is dismissed.
The decision of the Labor Arbiter is reinstated
with the modification that if reinstatement of
respondents is not feasible, they should be paid
separation pay in accordance with law.
SO ORDERED.

G.R. Nos. 102633-35 January 19, 1993

RHONE-POULENC AGROCHEMICALS
PHILIPPINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
URCISIO A. ORAIN, and PAULINO G. ROMAN,
respondents.
Francis V. Sobrevinas and Divinagracia S. San
Juan for petitioner.

GUTIERREZ, JR., J.:

Petitioner Rhone-Poulenc Agrochemicals
Philippines, Inc. (Rhone-Poulenc for brevity)
assails the finding by the National Labor Relations
Commission (NLRC) that Contemporary Services,
Inc. (CSI), a supplier of janitorial services, is a
labor-only contractor.
The petitioner is a domestic corporation engaged
in the manufacture of agro-chemicals. Its
business operations involve the formulation,
production, distribution and sale in the local
market of its agro-chemical products.
On January 1, 1988, as a consequence of the sale
by Union Carbide, Inc. of all its agriculturalchemical divisions worldwide in favor of RhonePoulenc Agrochemie, France, the petitioner's
mother corporation, the petitioner acquired from
Union Carbide Philippines Far East, Inc. (Union
Carbide for short) the latter's agro-chemical
formulation plant in Namayan, Mandaluyong,
Metro Manila.
Rhone-Poulenc and Union Carbide agreed on a
three-month transition period for the turnover of
the Namayan plant to the former. Hence, from
January 1 to March 31, 1988, both Union Carbide
and Rhone-Poulenc shared and operated the
same facilities.
In 1987, prior to the sale, Union Carbide had
entered into a contract with CSI for the latter's
supply of janitorial services. During the transition
period, Union Carbide continued to avail itself of
CSI's janitorial services. Thus, petitioner RhonePoulenc found itself sharing the Namayan plant
with Union Carbide while the factory was being
serviced and maintained by janitors supplied by
CSI.
Midway through the transition period, Union
Carbide instructed CSI to reduce the number of

janitors working at the plant from eight (8) to

seven (7). Private respondent Paulino Roman, one
of the janitors, was recalled by CSI on February
15, l988 for reassignment. However, Roman
refused to acknowledge receipt of the recall
memorandum.
On March 9, 1988, Union Carbide formally notified
CSI of the termination of their janitorial service
agreement, effective April 1, 1988, citing as
reason the global buy-out by Rhone-Poulenc,
Agrochemie, France of Union Carbides Inc.'s agrochemical business. CSI thereafter issued a
memorandum dated March 20, 1988 to the seven
remaining janitors assigned to the Namayan
plant, including respondent Urcisio Orain,
recalling and advising them to report to the CSI
office for reassignment. Like Roman, the janitors
refused to acknowledge receipt of the recall
memorandum.
Meanwhile, in anticipation of the March 31, 1988
pull-out by Union Carbide, the petitioner started
screening proposals by prospective service
contractors. Rhone-Poulenc likewise invited CSI to
submit to its Bidding Committee a cost quotation
of its janitorial services. However, another
contractor, the Marilag Business and Industrial
Services, Inc. passed the bidding committee's
standards and obtained the janitorial services
contract.
On April 1, 1988, the eight janitors reported for
work at the Namayan plant but were refused
admission and were told that another group of
janitors had replaced them. These janitors then
filed separate complaints for illegal dismissal,
payment of 13th month salary, service leave and
overtime pay against Union Carbide, RhonePoulenc and CSI. These cases were consolidated
by order of Labor Arbiter Manuel Asuncion dated
May 23, 1988.
Trial on the merits ensued wherein the labor
arbiter conducted full-blown hearings on factual
issues. After the cases were submitted for
decision, six of the original complainants
tendered their resignations to CSI in
consideration of the latter's settlement of all their
claims. Hence, only the claims of respondents
Roman and Orain remained unsettled.
On November 8, 1989, Labor Arbiter Asuncion
ruled that CSI is a legitimate service contractor
and that Roman and Orain were employees of
CSI. The dispositive portion of the labor arbiter's
decision is quoted below:
WHEREFORE, the respondent CSI is
ordered to pay the complainants
Orain and Roman their separation
pays computed at one-half of their
salaries for every year of service.
The rest of the claims are
dismissed for lack of merit.
The respondents UCFEI and RPAPI
were (sic) absolved from any
liability it being shown that they
were not the employers of the
complainants. (Rollo, p. 52).

Respondents Roman and Orain appealed the

decision to the NLRC. In a resolution dated March
13, 1991, the NLRC reversed the labor arbiter's
ruling, found that CSI was a mere agent of Union
Carbide and Rhone-Poulenc and held that RhonePoulenc was guilty of illegal dismissal.
Respondent NLRC cited the case of Guarin v.
NLRC, 178 SCRA 267 (1987), which according to it
"involves circumstances similar, if not identical,
to the circumstances obtaining in the case at
bar."
In that case, Novelty Philippines, Inc., a domestic
corporation engaged in garment manufacturing,
entered into a contract with Lipercon Services,
Inc., a service contractor. The agreement
provided, among others, that there was no
employer-employee relationship between Novelty
and the workers assigned by Lipercon to the
former, and that Lipercon shall have exclusive
discretion in the selection, engagement and
discharge of its employees and shall have full
control over said employees. The one hundred
twenty (120) petitioners in Guarin were hired by
Lipercon and assigned to Novelty as helpers,
janitors, firemen and mechanics until the
termination by Novelty of the service agreement
resulting in their dismissal. They sued both
Novelty and Lipercon for illegal dismissal.
The labor arbiter adjudged that the petitioners
were regular employees of Novelty and declared
their dismissal illegal. The NLRC reversed this
decision and declared that Lipercon was an
independent contractor and that the petitioners
were its employees.
The Court, in a petition for certiorari, upheld the
labor arbiter's decision and ruled:
The jobs assigned to the petitioners
as mechanics, janitors, gardeners,
firemen and grasscutters were
directly related to the business of
Novelty as a garment
manufacturer. In the case of
Philippine Bank of Communications
v. NLRC, 146 SCRA 347, we ruled
that the work of a messenger is
directly related to a bank's
operations. In its Comment,
Novelty contends that the services
which are directly related to
manufacturing garments are
sewing, textile cutting, designs,
dyeing, quality control, personnel,
administration, accounting,
finance, customs, delivery and
similar activities; and that
allegedly, "[i]t is only by stretching
the imagination that one may
conclude that the services of
janitors, janitresses, firemen,
grasscutters, mechanics and
helpers are directly related to the
business of manufacturing
garments" (p. 78, Rollo). Not so, for
the work of gardeners in
maintaining clean and well-kept
grounds around the factory,
mechanics to keep the machines
functioning properly, and firemen
to look out for fires, are directly

related to the daily operations of a

garment factory. That fact is
confirmed by Novelty's rehiring the
workers or renewing the contract
with Lipercon every year from 1983
to 1986, a period of three (3) years.
(Guarin v. National Labor Relations
Commission, 178 SCRA 267, at p.
273).
Applying the Guarin ruling to the case at bar, the
NLRC pronounced:
It is in the light of the foregoing
that we are constrained to rule,
and so hold, that respondent CSI is
a mere agent of respondent UCFEI
and RPAPI who, in the context of
the aforecited pronouncement of
the Supreme Court, were the real
employers of the complainants.
Consequently, respondent RPAPI's
(the successor-in-interest by sale of
respondent UCFEI) refusal to take
in the complainants (after
admittedly absorbing or utilizing
their services during the transition
period from 04 January to 31 March
1988) on the ground that it already
had engaged the services of
another service contractor,
constitutes an illegal dismissal
plain and simple.
For while it is true that there is no
law requiring that a purchaser
should absorb the employees of
the selling company (Central
Azucarera del Davao v. CA, 137
SCRA 295); and unless expressly
assumed, labor contracts are not
enforceable against a transferee of
an enterprise (Fernando v. Angat
Labor Union, 5 SCRA 249; and
Visayan Trans. Co. v. Java, 93 Phil.
962), it is equally true that
employees absorbed by the
successor-employers enjoy
continuity of employment status
(Cruz v. PAFLU, 42 SCRA 68; PAFLU
v. CIR, 4 SCRA 457; Guerrero's
Transport Services v. Blaylocks , 30
June 1976, 71 SCRA 621; and
Sumandi v. Leogardo, et al., G.R.
No. 67635, 17 Jan. 1985).
As we have stated earlier,
respondent RPAPI admits in its
opposition to the appeal (p. 4) that
it made use of the services of the
complainants during its transition
period from 04 January to 31 March
1983. Said act of utilizing,
temporarily though, the services of
the complainants (which, in a way,
attests to the necessity or
desirability of the complainants'
service to the operation of the
respondent's business) constitutes
an absorption that gave them the
right to be retained. Its refusal to
readmit the complainants
constitutes an illegal dismissal.

Under these conditions, the

mandate to reinstate the
complainants should, therefore, be
addressed to the respondent RPAPI
and not to the respondent CSI, a
"labor only" contractor, nor to the
UCFEI which had ceased to be the
employer of the complainants
because of the sale of its business.
(Rollo, pp. 39-40).
The NLRC then ordered the petitioner to reinstate
respondents Roman and Orain and to pay one
year backwages, or to grant them separation pay
if reinstatement was not feasible. As to the
respondents' claim for 13th month pay, incentive
leave and overtime pay, these were dismissed by
the NLRC for lack of sufficient factual basis.
Rhone-Poulenc filed a motion for reconsideration
which was denied by the public respondent in its
resolution of September 11, 199l. Hence, this
petition for certiorari.
On December 2, 1991, the Court resolved to issue
a temporary restraining order enjoining the NLRC
from enforcing and/or carrying out its resolutions
dated March 13, 1991 and September 11, 1991.
(Rollo, pp. 54-56)
Petitioner Rhone-Poulenc maintains that it is CSI,
and not Union Carbide and Rhone-Poulenc, as
successor, which is the actual employer of the
respondent janitors. Rhone-Poulenc insists that,
contrary to the NLRC's findings, CSI is a
legitimate independent contractor providing
janitorial services to a wide range of clientele
including Union Carbide. Moreover, the petitioner
avers that it was grave abuse of discretion on the
part of the public respondent to conclude that
Rhone-Poutlenc absorbed Roman and Orain into
its workforce.
The issues to be resolved in this
petition are:
(1) Whether or not the janitors
were employees of Union Carbide;
(2) Whether or not CSI is a laboronly contractor; and
(3) Whether or not petitioner
Rhone-Poulenc absorbed the
janitors into its workforce.
In determining the existence of employeremployee relationship, the following elements are
generally considered, namely: (1) the selection
and engagement of employees (2) the payment
of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct
although the latter is the most important
element. (See Ecal V. NLRC, 195 SCRA 224
[1991]; Singer Sewing Machine Company v.
Drilon, 193 SCRA 270 [1991]; Brotherhood Labor
Unity Movement in the Philippines v. Zamora, 147
SCRA 49 [1986]; Social Security System v. Court
of Appeals, 39 SCRA 629 [1971]; Viaa v. AlLagadan and Piga, 99 Phil. 408 [1956]).

Where the employer-employee relationship has

been ascertained, the employer becomes bound
by the statutory requirements pertaining, though
not limited, to terms and conditions of
employment, labor relations and
post-employment. But the law has likewise
provided for situations where, although the
application of the aforementioned four-fold test
will not establish an employer-employee
relationship, a person or employer who contracts
with another for the performance of the former's
work or of any work, nevertheless becomes liable
to the employees of the contractor. Articles 106,
107 and 109 of the Labor Code provide:
Art. 106. Contractor or
subcontractor Whenever an
employer enters into a contract
with another person for the
performance of the former's work,
the employees of the contractor
and of the latter's subcontractor, if
any, shall be paid in accordance
with the provisions of this Code.
In the event that the contractor or
subcontractor fails to pay the
wages of his employees in
accordance with this Code, the
employer shall be jointly and
severally liable with his contractor
or subcontractor to such
employees to the extent of the
work performed under the contract,
in the same manner and extent
that he is liable to employees
directly employed by him.
xxx xxx xxx
There is labor-only contracting
where the person supplying
workers to an employer does not
have substantial capital or
investment, in the form of tools,
equipment, machineries, work
premises, among others and the
workers recruited and placed by
such persons, are performing
activities which are directly related
to the principal business of such
employer. In such cases, the
person or intermediary shall be
considered merely as an agent of
the employer who shall be
responsible to the workers in the
same manner and extent as if the
latter were directly employed by
him.
Art. 107. Indirect employer. The
provisions of the immediately
preceding Article shall likewise
apply to any person, partnership,
association or corporation which,
not being an employer, contracts
with an independent contractor for
the performance of any work, task,
job or project.
Art. 109. Solidary liability The
provisions of existing laws to the

contrary notwithstanding, every

employer or indirect employer shall
be held responsible with his
contractor or subcontractor for any
violation of any provision of this
Code. For purposes of determining
the extent of their civil liability
under this Chapter, they shall be
considered as direct employers.
The import Of the foregoing provisions was
enunciated in the case of Philippine Bank of
Communications v. National Labor Relations
Commission, 146 SCRA 347 (1986):
Under the general rule set out in
the first and second paragraphs of
Article 106, an employer who
enter's into a contract with a
contractor for the performance of
work for the employer, does not
thereby create an employeremployee relationship between
himself and the employees of the
contractor. Thus, the employees of
the contractor remain the
contractor's employees and his
alone. Nonetheless, when a
contractor fails to pay the wages of
his employees in accordance with
the Labor Code, the employer who
contracted out the job to the
contractor becomes jointly and
severally liable with his contractor
to the employees of the latter "to
the extent of work performed
under the contract" as if such
employer were the employer of the
contractor's employees. The law
itself, in other words, establishes
an employer-employee relationship
between the employer and the job
contractor's employees for a
limited purpose, i.e., in order to
ensure that the latter get paid the
wages due to them.
A similar situation obtains where
there is "labor only" contracting.
The "labor-only" contractor i.e.
"the person or intermediary" is
considered "merely as an agent of
the employer." The employer is
made by the statute responsible to
the employees of the "labor only"
contractor as if such employees
had been directly employed by the
employer. Thus, where "labor only"
contracting exists in a given case,
the statute itself implies or
establishes an employer-employee
relationship between the employer
(the owner of the project) and the
employees of the "labor only"
contractor, this time for a
comprehensive purpose: "employer
for purposes of this Code, to
prevent any violation or
circumvention of any provision of
this Code." The law in effect holds
both the employer and the "labor
only" contractor responsible to the
latter's employees for the more

effective safeguarding of the

employees' rights under the Labor
Code. (at p. 356; emphasis
supplied)
And in determining whether a contractor is
engaged in labor-only contracting or in job
contracting, reference may be made to Sections 8
and 9 of the Implementing Rules, which provide:
Sec. 8. Job contracting. There is
job contracting permissible under
the Code if the following conditions
are met:
(1) The contractor carries on an
independent business and
undertakes the contract work on
his own account under his own
responsibility according to his own
manner and method, free from the
control and direction of his
employer or principal in all matters
connected with the performance of
the work except as to the results
thereof; and
(2) The contractor has substantial
capital or investment in the form of
tools, equipment, machineries,
work premises, and other materials
which are necessary in the conduct
of his business.
Sec. 9. Labor-only contracting.
(a) Any person who undertakes to
supply workers to an employer
shall be deemed to be engaged in
labor-only contracting where such
person;
(1) Does not have substantial
capital or investment in the form of
tools, equipment, machineries,
work premises and other materials;
and
(2) The workers recruited and
placed by such person are
performing activities which are
directly related to the principal
business or operations of the
employer in which workers are
habitually employed.
(b) Labor-only contracting as
defined herein is hereby prohibited
and the person acting as contractor
shall be considered merely as an
agent or intermediary of the
employer who shall be responsible
to the workers in the same manner
and extent as if the latter were
directly employed by him.
xxx xxx xxx
Applying the foregoing principles to the case at
bar, the Court is constrained to rule for the
petitioner.

There is no employer-employee relationship

between Union Carbide and the respondent
janitors. The respondents themselves admitted
that they were selected and hired by CSI and
were assigned to Union Carbide. CSI likewise
acknowledged that the two janitors were its
employees. The janitors drew their salaries from
CSI and not from Union Carbide. CSI exercised
control over these janitors through Richard
Barroga, also a CSI employee, who gave orders
and instructions to CSI janitors assigned to the
Namayan plant. Moreover, CSI had the power to
assign its janitors to various clients and to pull
out, as it had done in a number of occasions, any
of its janitors working at Union Carbide.

vacuums and polishing machines. Moreover, the

petitioners in Guarin, who were assigned as
helpers, janitors, firemen and mechanics,
numbered one hundred twenty (120) in all which,
by itself, amounts to a considerable workforce
and gives rise to the suspicion that the service
agreement between Novelty and Lipercon was
designed to evade the obligations inherent in an
employer-employee relationship. In contrasts
there were only eight (8) janitors supplied by CSI
to Union Carbide.

As to whether CSI is engaged in labor-only

contracting or in job contracting, applying the
test prescribed by the Labor Code and the
implementing rules, we find sufficient basis from
the records to conclude that CSI is engaged in job
contracting. As correctly declared by the labor
arbiter:

Even on the supposition that the janitors were,

indeed, employees of Union Carbide or that CSI is
a labor-only contractor, thus making Union
Carbide a direct employer of these janitors,
petitioner Rhone-Poulenc, as purchaser of Union
Carbide's business is not compelled to absorb
these janitors into its workforce. An innocent
transferee of a business establishment has no
liability to the employees of the transferor to
continue employing them. (Central Azucarera del
Davao v. Court of Appeals, 137 SCRA 295 [1985]).

Moreover, CSI is a legitimate

service contractor. It is registered
as one and doing business as such
with a number of known companies
in the country. It has a contract
with UCFEI to assign janitorial and
ground services to the latter for a
fee. The complainants' work were
basically janitorial and gardening
chores. The tools of their trade
were supplied by CSI. Of course, we
are aware of the complainants'
claim that they were made to do
chores which are production jobs.
Yet, there is no showing of
regularity or permanence of such
assignment. Those occasional
errands cannot be considered as
genuine control of UCFEI over the
complainants. (Rollo, pp. 51-52)
Moreover, in Kimberly Independent Labor Union
v. Drilon, 185 SCRA 190 [1990], the Court took
judicial notice of the general practice adopted in
several government and private institutions and
industries of hiring a janitorial service on an
independent contractor basis.
It must be stressed that the janitorial service
agreement between Union Carbide and CSI binds
only the two, and not petitioner Rhone-Poulenc.
As new owner, Rhone-Poulenc had every right to
choose its own service contractor.
Respondent NLRC relied heavily on the ruling in
Guarin, supra, in deducing that CSI was a laboronly contractor. The facts in Guarin, however, are
different from those obtaining in the present
case. In Guarin, the contractor failed to prove
that it had substantial capital or investment in
the form of tools, equipment, machineries, work
premises and other materials. In the case at bar,
it has been established that CSI, the contractor,
owns and maintains its own office; that it owns
office equipment such as, but not limited to,
typewriters, calculators, xerox machines,
mimeographing machines, airconditioning units
and transportation vehicles; and that it furnishes
its janitors the cleaning equipment such as carpet

These two substantial differences, taken together,

are sufficient to remove the present case from
the ambit of the Guarin ruling.

The NLRC, however, concluded that since RhonePoulenc made use of the services of the janitors
during the three-month transition period, then
said act of utilizing their services constitutes
absorption of the janitors into the petitioner's
workforce which gives them the right to be
retained. This ratiocination is not correct. The
public respondent failed to consider the fact that
during the three-month transition period prior to
Union Carbide's turnover of the facilities, the
service contract between Union Carbide and CSI
was still in force. Whatever benefit the petitioner
derived from the continuous availment by Union
Carbide of the services of CSI's janitors was
merely incidental. The NLRC also overlooked the
fact that it was still Union Carbide who paid CSI
for the services of these janitors. Also, even prior
to the expiration of the transition period, the
petitioner, in anticipation of the pullout of Union
Carbide and its hired service agencies, started
screening its own service contractors. Under
these circumstances, the petitioner may not be
deemed to have absorbed the respondent janitors
as its own employees.
WHEREFORE, the resolutions of the respondent
National Labor Relations Commission dated
March 13, 1991 and September 11, 1991 are SET
ASIDE. The decision of the labor arbiter dated
November 8, 1989 is hereby REINSTATED.
The temporary restraining order issued by this
Court on December 2, 1991 is made PERMANENT.
SO ORDERED.
G.R. Nos. 97008-09 July 23, 1993
VIRGINIA G. NERI and JOSE CABELIN,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION
FAR EAST BANK & TRUST COMPANY (FEBTC)

and BUILDING CARE CORPORATION,

respondents.
R.L. Salcedo & Improso Law Office for petitioners.
Bengzon, Zarnaga, Narciso, Cudala, Pecson,
Bengzon & Jimenez for Bldg. Care Corp.
Bautista, Picaso, Buyco, Tan & Fider for
respondent FEBTC.

BELLOSILLO, J.:
Respondents are sued by two employees of
Building Care Corporation, which provides
janitorial and other specific services to various
firms, to compel Far Bast Bank and Trust
Company to recognize them as its regular
employees and be paid the same wages which its
employees receive.
Building Care Corporation (BCC, for brevity), in
the proceedings below, established that it had
substantial capitalization of P1 Million or a
stockholders equity of P1.5 Million. Thus the
Labor Arbiter ruled that BCC was only job
contracting and that consequently its employees
were not employees of Far East Bank and Trust
Company (FEBTC, for brevity). on appeal, this
factual finding was affirmed by respondent
National Labor Relations Commission (NLRC, for
brevity). Nevertheless, petitioners insist before us
that BCC is engaged in "labor-only" contracting
hence, they conclude, they are employees of
respondent FEBTC.
Petitioners Virginia G. Neri and Jose Cabelin
applied for positions with, and were hired by,
respondent BCC, a corporation engaged in
providing technical, maintenance, engineering,
housekeeping, security and other specific
services to its clientele. They were assigned to
work in the Cagayan de Oro City Branch of
respondent FEBTC on 1 May 1979 and 1 August
1980, respectively, Neri an radio/telex operator
and Cabelin as janitor, before being promoted to
messenger on 1 April 1989.
On 28 June 1989, petitioners instituted
complaints against FEBTC and BCC before
Regional Arbitration Branch No. 10 of the
Department of Labor and Employment to compel
the bank to accept them as regular employees
and for it to pay the differential between the
wages being paid them by BCC and those
received by FEBTC employees with similar length
of service.
On 16 November 1989, the Labor Arbiter
dismissed the complaint for lack of merit. 1
Respondent BCC was considered an independent
contractor because it proved it had substantial
capital. Thus, petitioners were held to be regular
employees of BCC, not FEBTC. The dismissal was
appealed to NLRC which on 28 September 1990
affirmed the decision on appeal. 2 On 22 October
1990, NLRC denied reconsideration of its
affirmance, 3 prompting petitioners to seek
redress from this Court.

Petitioners vehemently contend that BCC in

engaged in "labor-only" contracting because it
failed to adduce evidence purporting to show that
it invested in the form of tools, equipment,
machineries, work premises and other materials
which are necessary in the conduct of its
business. Moreover, petitioners argue that they
perform duties which are directly related to the
principal business or operation of FEBTC. If the
definition of "labor-only" contracting 4 is to be
read in conjunction with job contracting, 5 then
the only logical conclusion is that BCC is a "labor
only" contractor. Consequently, they must be
deemed employees of respondent bank by
operation of law since BCC is merely an agent of
FEBTC following the doctrine laid down in
Philippine Bank of Communications v. National
Labor Relations Commission 6 where we ruled
that where "labor-only" contracting exists, the
Labor Code itself establishes an employeremployee relationship between the employer and
the employees of the "labor-only" contractor;
hence, FEBTC should be considered the employer
of petitioners who are deemed its employees
through its agent, "labor-only" contractor BCC.
We cannot sustain the petition.
Respondent BCC need not prove that it made
investments in the form of tools, equipment,
machineries, work premises, among others,
because it has established that it has sufficient
capitalization. The Labor Arbiter and the NLRC
both determined that BCC had a capital stock of
P1 million fully subscribed and paid for. 7 BCC is
therefore a highly capitalized venture and cannot
be deemed engaged in "labor-only" contracting.
It is well-settled that there is "labor-only"
contracting where: (a) the person supplying
workers to an employer does not have substantial
capital or investment in the form of tools,
equipment, machineries, work premises, among
others; and, (b) the workers recruited and placed
by such person are performing activities which
are directly related to the principal business of
the employer. 8
Article 106 of the Labor Code defines "labor-only"
contracting thus
Art. 106. Contractor or
subcontractor. . . . . There is
"labor-only" contracting where the
person supplying workers to an
employer does not have substantial
capital or investment in the form of
tools, equipment, machineries,
work premises, among others, and
the workers recruited by such
persons are performing activities
which are directly related to the
principal business of such employer
. . . . (emphasis supplied).
Based on the foregoing, BCC cannot be
considered a "labor-only" contractor because it
has substantial capital. While there may be no
evidence that it has investment in the form of
tools, equipment, machineries, work premises,
among others, it is enough that it has substantial
capital, as was established before the Labor

Arbiter as well as the NLRC. In other words, the

law does not require both substantial capital and
investment in the form of tools, equipment,
machineries, etc. This is clear from the use of the
conjunction "or". If the intention was to require
the contractor to prove that he has both capital
and the requisite investment, then the
conjunction "and" should have been used. But,
having established that it has substantial capital,
it was no longer necessary for BCC to further
adduce evidence to prove that it does not fall
within the purview of "labor-only" contracting.
There is even no need for it to refute petitioners'
contention that the activities they perform are
directly related to the principal business of
respondent bank.
Be that as it may, the Court has already taken
judicial notice of the general practice adopted in
several government and private institutions and
industries of hiring independent contractors to
perform special services. 9 These services range
from janitorial, 10 security 11 and even technical or
other specific services such as those performed
by petitioners Neri and Cabelin. While these
services may be considered directly related to the
principal business of the employer, 12
nevertheless, they are not necessary in the
conduct of the principal business of the employer.
In fact, the status of BCC as an independent
contractor was previously confirmed by this Court
in Associated Labor Unions-TUCP v. National
Labor Relations Commission, 13 where we held
thus
The public respondent ruled that
the complainants are not
employees of the bank but of the
company contracted to serve the
bank. Building Care Corporation is
a big firm which services, among
others, a university, an
international bank, a big local
bank, a hospital center,
government agencies, etc. It is a
qualified independent contractor.
The public respondent correctly
ruled against petitioner's
contentions . . . . (Emphasis
supplied).
Even assuming ex argumenti that petitioners
were performing activities directly related to the
principal business of the bank, under the "right of
control" test they must still be considered
employees of BCC. In the case of petitioner Neri,
it is admitted that FEBTC issued a job description
which detailed her functions as a radio/telex
operator. However, a cursory reading of the job
description shows that what was sought to be
controlled by FEBTC was actually the end-result of
the task, e.g., that the daily incoming and
outgoing telegraphic transfer of funds received
and relayed by her, respectively, tallies with that
of the register. The guidelines were laid down
merely to ensure that the desired end-result was
achieved. It did not, however, tell Neri how the
radio/telex machine should be operated. In the
Shipside case, 14 we ruled
. . . . If in the course of private
respondents' work (referring to the

workers), SHIPSIDE occasionally

issued instructions to them, that
alone does not in the least detract
from the fact that only
STEVEDORES is the employer of
the private respondents, for in legal
contemplation, such instructions
carry no more weight than mere
requests, the privity of contract
being between SHIPSIDE and
STEVEDORES . . . .
Besides, petitioners do not deny that they were
selected and hired by BCC before being assigned
to work in the Cagayan de Oro Branch of FFBTC.
BCC likewise acknowledges that petitioners are
its employees. The record is replete with
evidence disclosing that BCC maintained
supervision and control over petitioners through
its Housekeeping and Special Services Division:
petitioners reported for work wearing the
prescribed uniform of BCC; leaves
of absence were filed directly with BCC; and,
salaries were drawn only from BCC. 15
As a matter of fact, Neri even secured a
certification from BCC on 16 May 1986 that she
was employed by the latter. On the other hand,
on 24 May 1988, Cabelin filed a complaint for
underpayment of wages, non-integration of salary
adjustments mandated by Wage Orders Nos. 5 &
6 and R.A. 6640 as well as for illegal deduction 16
against BCC alone which was provisionally
dismissed on 19 August 1988 upon Cabelin's
manifestation that his money claim was
negligible. 17
More importantly, under the terms and conditions
of the contract, it was BCC alone which had the
power to reassign petitioners. Their deployment
to FEBTC was not subject to the bank's
acceptance. Cabelin was promoted to messenger
because the FEBTC branch manager promised
BCC that two (2) additional janitors would be
hired from the company if the promotion was to
be effected. 18 Furthermore, BCC was to be paid
in lump sum unlike in the situation in Philippine
Bank of Communications 19 where the contractor,
CESI, was to be paid at a daily rate on a per
person basis. And, the contract therein stipulated
that the CESI was merely to provide manpower
that would render temporary services. In the case
at bar, Neri and Cabelin were to perform specific
special services. Consequently, petitioners cannot
be held to be employees of FEBTC as BCC "carries
an independent business" and undertaken the
performance of its contract with various clients
according to its "own manner and method, free
from the control and supervision" of its principals
in all matters "except as to the results thereof." 20
Indeed, the facts in Philippine Bank of
Communications do not square with those of the
instant case. Therein, the Court ruled that CESI
was a "labor-only" contractor because upholding
the contract between the contractor and the bank
would in effect permit employers to avoid the
necessity of hiring regular or permanent
employees and would enable them to keep their
employees indefinitely on a temporary or casual
basis, thus denying them security of tenure in
their jobs. This of course violates the Labor Code.
BCC has not committed any violation. Also, the

former case was for illegal dismissal; this case, on

the other hand, is for conversion of employment
status so that petitioners can receive the same
salary being given to regular employees of
FEBTC. But, as herein determined, petitioners are
not regular employees of FEBTC but of BCC. At
any rate, the finding that BCC in a qualified
independent contractor precludes us from
applying the Philippine Bank of Communications
doctrine to the instant petition.
The determination of employer-employee
relationship involves factual findings. 21 Absent
any grave abuse of discretion, and we find none
in the case before us, we are bound by the
findings of the Labor Arbiter as affirmed by
respondent NLRC.
IN VIEW OF THE FOREGOING, the Petition for
Certiorari is DISMISSED.
SO ORDERED.

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