THIRD DIVISION

FERNANDO G. MANAYA, Petitioner,

- versus - ALABANG COUNTRY CLUB INCORPORATED, Respondent.

G.R. No. 168988 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, and NACHURA, JJ. Promulgated: June 19, 2007

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D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by

Fernando G. Manaya (petitioner) assailing: (1) the Decision[1] of the Court of Appeals in CA-G.R. SP No.

75417, dated 9 May 2005, granting the Petition of Alabang Country Club Inc. (respondent) and setting

aside the Resolutions dated 30 August 2002 and 30 October 2002 of the National Labor Relations

Commission (NLRC); and (2) the Resolution[2] of the Court of Appeals dated 21 July 2005 denying

petitioners Motion for Reconsideration of its earlier Decision.

The assailed decision of the Court of Appeals reversed the Resolution of the NLRC dismissing the appeal

of the respondent for failure to perfect its appeal within the statutory period. Instead, the Court of

Appeals ordered the NLRC to give due course to the appeal of the respondent.

The antecedent facts are:

Petitioner alleged that on 21 August 1989, he was initially hired by the respondent as a maintenance

helper[3] receiving a salary of P198.00 per day. He was later designated as company electrician. He

continued to work for the respondent until 22 August 1998 when the latter, through its Engineering and

Maintenance Department Manager, Engr. Ronnie B. de la Cruz, informed him that his services were no

longer required by the company.[4] Petitioner alleged that he was forcibly and illegally dismissed without

cause and without due process on 22 August 1998.[5] Hence, he filed a Complaint[6] before the Labor

Arbiter. He claimed that he had not committed any infraction of company policies or rules and that he

was not paid his service incentive leave pay, holiday pay and 13th month pay. He further asserted that

with his more or less nine years of service with the respondent, he had become a regular employee. He,

therefore, demanded his reinstatement without loss of seniority rights with full backwages and all

monetary benefits due him.[7]

In its Answer, respondent denied that petitioner was its employee. It countered by saying that petitioner

was employed by First Staffing Network Corporation (FSNC), with which respondent had an existing

Memorandum of Agreement dated 21 August 1989. Thus, by virtue of a legitimate job contracting,

petitioner, as an employee of FSNC, came to work with respondent, first, as a maintenance helper, and

subsequently as an electrician. Respondent prayed for the dismissal of the complaint insisting that

petitioner had no cause of action against it.

In a Decision, dated 20 November 2000, the Labor Arbiter held:

WHEREFORE, premises considered, complainant Fernando G. Manaya is hereby found to be a regular employee of respondent Alabang Country Club, Inc., as aforediscussed. His dismissal from the service having been effected without just and valid cause and without the due observance of due process is hereby declared illegal. Consequently, respondent Alabang Country Club, Inc. is hereby ordered to reinstate complainant to his former position without loss of seniority rights and other benefits appurtenant thereto with full backwages in the partial amount of P160,724.48 as computed by Ms. Ma. Concepcion Manliclic and duly noted by Ms. Ma. Elena L. Estadilla, OIC-CEU, NCR-South Sector which computation has been made part of the records. Furthermore, respondent Alabang Country Club, Inc. and First Staffing Network Corporation are hereby ordered to pay complainant, jointly and severally the following amounts by way of the following:

1. Service Incentive Leave 2,961.75 2. 13th Month Pay 15,401.10, and 3. Attorneys fees of ten (10%) percent of the total

monetary award herein adjudged due him, within ten (10) days from receipt hereof.[8]

Respondent filed an Appeal with the NLRC which dismissed the same.[9] In a Resolution dated 30 August

2002, the NLRC held:

PREMISES CONSIDERED, instant appeal from the Decision of November 20, 2000 is hereby DISMISSED for failure to perfect appeal within the statutory period of appeal. The Decision is now final and executory.[10]

The NLRC found that respondents counsel of record Atty. Angelina A. Mailon of Monsod, Valencia and

Associates received a copy of the Labor Arbiters Decision on or before 11 December 2000 as shown by

the postal stamp or registry return card.[11] Said counsel did not file a withdrawal of appearance. Instead,

a Memorandum of Appeal[12] dated 26 December 2000 was filed by the respondents new counsel,

Atty. Arizala of Tierra and Associates Law Office. Reckoned from 11 December 2000, the date of receipt

of the Decision by respondents previous counsel, the filing of the Memorandum of Appeal by its new

counsel on 26 December 2000 was clearly made beyond the reglementary period. The NLRC held that

the failure to perfect an appeal within the statutory period is not only mandatory but jurisdictional. The

appeal having been belatedly filed, the Decision of the Labor Arbiter had become final and executory.[13]

Respondent filed a Motion for Reconsideration,[14] which the NLRC denied in a Resolution dated 30

October 2002.[15] The NLRC held that the decision of the Labor Arbiter has become final

and executoryon 28 November 2002; thus, Entry of Judgment, dated 8 January 2003[16] was issued.

Respondent filed a Petition for Certiorari[17] under Rule 65 of the Rules of Court before the Court of

Appeals. In a Decision dated 9 May 2005,[18] the Court of Appeals granted the petition and ordered the

NLRC to give due course to respondents appeal of the Labor Arbiters Decision. Petitioner filed a Motion

for Reconsideration which was denied by the Court of Appeals in a Resolution[19] dated 21 July 2005.

Not to be dissuaded, petitioner filed the instant petition before this Court.

The issue for resolution:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT ORDERED THE NLRC TO GIVE DUE COURSE TO THE APPEAL OF RESPONDENT ALABANG COUNTRY CLUB, INCORPORATED EVEN IF THE SAID APPEAL WAS FILED BEYOND THE REGLEMENTARY PERIOD OF TEN (10) DAYS FOR PERFECTING AN APPEAL.[20]

Essentially, the issue raised by the respondent before the NLRC in assailing the decision of the Labor

Arbiter pertains to the finding of the Labor Arbiter that petitioner was a regular employee of the

respondent.

In granting the petition, the Court of Appeals relied mainly on the case of Aguam v. Court of

Appeals,[21] where this Court held that litigation must be decided on the merits and not on

technicalities. The appellate court further justified the grant of respondents petition by saying that the

negligence of its counsel should not bind the respondent.[22]

The Court of Appeals gave credence to respondents claim that its lawyer abandoned the case; hence,

they were not effectively represented by a competent counsel. It further held that the respondent, upon

its receipt of the Decision of the Labor Arbiter on 15 December 2000, filed its appeal on 26 December

2000 through a new lawyer. The appeal filed by respondent through its new lawyer on 26 December

2000 was well within the reglementary period, 25 December 2000 being a holiday.

It is axiomatic that when a client is represented by counsel, notice to counsel is notice to client. In the

absence of a notice of withdrawal or substitution of counsel, the Court will rightly assume that the

counsel of record continues to represent his client and receipt of notice by the former is the reckoning

point of the reglementary period.[23] As heretofore adverted, the original counsel did not file any notice

of withdrawal.Neither was there any intimation by respondent at that time that it was terminating the

services of its counsel.

For negligence not to be binding on the client, the same must constitute gross negligence as to amount

to a deprivation of property without due process.[24] This does not exist in the case at bar. Notice sent to

counsel of record is binding upon the client and the neglect or failure of counsel to inform him of an

adverse judgment resulting in the loss of his right to appeal is not a ground for setting aside a judgment,

valid and regular on its face.[25]

Even more, it is respondents duty as a client to be in touch with his counsel so as to be constantly

posted about the case. It is mandated to inquire from its counsel about the status and progress of the

case from time to time and cannot expect that all it has to do is sit back, relax and await the outcome of

the case.[26]

On this score, we hold that the notice to respondents counsel, Atty. Angelina A. Mailon on 11 December

2000 is the controlling date of the receipt of the decision.

We now come to the issue of whether or not the Court of Appeals properly gave due course to the

petition of the respondent before it.

Of relevance is Section 1, Rule VI of the 2005 Revised Rules of the NLRC

Section 1. PERIODS OF APPEAL. Decisions, resolutions or orders of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department of Labor and Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first working day following such Saturday, Sunday or holiday. No motion or request for extension of the period within which to perfect an appeal shall be allowed.

Remarkably, in highly exceptional instances, we have allowed the relaxing of the rules on the application

of the reglementary periods of appeal.[27] Thus:

In Ramos v. Bagasao, 96 SCRA 395, we excused the delay of four days in the filing of a notice of appeal because the questioned decision of the trial court was served upon appellant Ramos at a time when her counsel of record was already dead. Her new counsel could only file the appeal four days after the prescribed reglementary period was over. In Republic v. Court of Appeals, 83 SCRA 453, we allowed the perfection of an appeal by the Republic despite the delay of six days to prevent a gross miscarriage of justice since the Republic stood to lose hundreds of hectares of land already titled in its name and had since then been devoted for educational purposes. In Olacao v. National Labor Relations Commission, 177 SCRA 38, 41, we accepted a tardy appeal considering that the subject matter in issue had theretofore been judicially settled, with finality, in another case. The dismissal of the appeal would have had the effect of the appellant being ordered twice to make the same reparation to the appellee.[28]

We pronounced in those cases that technicality should not be allowed to stand in the way of equitably

and completely resolving the rights and obligations of the parties.

In all these, the Court allowed liberal interpretation given the extraordinary circumstances that justify a

deviation from an otherwise stringent rule.[29]

Clearly, emphasized in these cases is that the policy of liberal interpretation is qualified by the

requirement that there must be exceptional circumstances to allow the relaxation of the rules.[30]

Absent exceptional circumstances, we adhere to the rule that certain procedural precepts must remain

inviolable, like those setting the periods for perfecting an appeal or filing a petition for review, for it is

doctrinally entrenched that the right to appeal is a statutory right and one who seeks to avail oneself of

that right must comply with the statute or rules. The rules, particularly the requirements for perfecting

an appeal within the reglementary period specified in the law, must be strictly followed as they are

considered indispensable interdictions against needless delays and for orderly discharge of judicial

business.Furthermore, the perfection of an appeal in the manner and within the period permitted by

law is not only mandatory but also jurisdictional and the failure to perfect the appeal renders the

judgment of the court final and executory. Just as a losing party has the right to file an appeal within the

prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution

of his/her case.[31]

In this particular case, we adhere to the strict interpretation of the rule for the following reasons:

Firstly, in this case, entry of judgment had already been made[32] which rendered the Decision of the

Labor Arbiter as final and executory.

Secondly, it is a basic and irrefragable rule that in carrying out and in interpreting the provisions of the

Labor Code and its implementing regulations, the workingmans welfare should be the primordial and

paramount consideration. The interpretation herein made gives meaning and substance to the liberal

and compassionate spirit of the law enunciated in Article 4 of the Labor Code that all doubts in the

implementation and interpretation of the provisions of the Labor Code including its implementing rules

and regulations shall be resolved in favor of labor.[33]

In the case of Bunagan v. Sentinel[34] we declared that:

[T]hat the perfection of an appeal within the statutory or reglementary period is not only mandatory, but jurisdictional, and failure to do so renders the questioned decision final and executory and deprives the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal. The underlying purpose of this principle is to prevent needless delay, a circumstance which would allow the employer to wear out the efforts and meager resources of the worker to the point that the latter is constrained to settle for less than what is due him. This Court has declared that although the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the interpretation of the rules in deciding labor cases, such liberality should not be applied where it would render futile the very purpose for which the principle of liberality is adopted. The liberal interpretation stems from the mandate that the workingmans welfare should be the primordial and paramount consideration. We see no reason in this case to waive the rules on the perfection of appeal.[35] The Court is aware that the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the interpretation of rules in deciding labor cases. However, such liberality should not be applied in the instant case as it would render futile the very purpose for which the principle of liberality is adopted. The liberal interpretation

in favor of labor stems from the mandate that the workingmans welfare should be the primordial and paramount consideration. xx x.[36] (Emphases supplied.)

Indeed, there is no room for liberality in the instant case as it would render futile the very purpose for

which the principle of liberality is adopted. As so rightfully enunciated, the liberal interpretation in favor

of labor stems from the mandate that the workingmans welfare should be the primordial and

paramount consideration. This Court has repeatedly ruled that delay in the settlement of labor cases

cannot be countenanced. Not only does it involve the survival of an employee and his loved ones who

are dependent on him for food, shelter, clothing, medicine and education; it also wears down the

meager resources of the workers to the point that, not infrequently, they either give up or compromise

for less than what is due them.[37]

Without doubt, to allow the appeal of the respondent as what the Court of Appeals had done and

remand the case to the NLRC would only result in delay to the detriment of the petitioner. In Narag v.

National Labor Relations Commission,[38] citing Vir-Jen Shipping and Marine Services, Inc. v. National

Labor Relations Commission,[39] we held that delay in most instances gives the employers more

opportunity not only to prepare even ingenious defenses, what with well-paid talented lawyers they can

afford, but even to wear out the efforts and meager resources of the workers, to the point that not

infrequently the latter either give up or compromise for less than what is due them.[40]

Nothing is more settled in our jurisprudence than the rule that when the conflicting interest of loan and

capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-

balanced by the sympathy and compassion the law must accord the under-privileged worker.[41]

Thirdly, respondent has not shown sufficient justification to reverse the findings of the Labor Arbiter as

affirmed by the NLRC.

Pertinent provision of the Labor Code provides:

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. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft an corruption; (c) If made purely on question of law; and (d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant.

Under the above provision, to obtain a reversal of the decision of the Labor Arbiter, the respondent

must be able to show in his appeal that any one of the above instances exists.

Respondent failed to show the existence of any of the above. A more than perfunctory reading of the

Decision of the Labor Arbiter shows that the same is supported by the evidence on record.

Respondent narrates that it had a contract of services, first, with Supreme Construction

(Supreme). Supreme assigned petitioner to work with the respondent starting as a painter and moving

on to perform electrical jobs. Respondent terminated its contract with Supreme and entered into

another contract of services with another job-contracting agency, First Staffing Network

Corporation. Petitioner continued to work for the respondent which claimed that the former was

supplied by FNSC to it as part of its contract to supply the manpower requirements of the

respondent. Petitioner is not the employee of the respondent. He was directly hired first by Supreme

then later by FNSC and deployed to work with the respondent based on the contract of services

between respondent and these job-contracting agencies. All these considered, respondent insists that

petitioner is therefore not its employee.

We do not agree to this submission of the respondent. The Labor Arbiter concluded otherwise and this

finds support from the evidence, thus:

[R]espondent was not able to convincingly disprove complainants claims that at the outset, he was directly hired by it as a maintenance helper on 21 August 1989. Although said respondent alleges that complainant was hired by its job contractor, Supreme Construction, it failed to submit in evidence the Contract of Service it had entered into in order to establish the entry of complainant as deployed by said company for his duties at Alabang Country Club, Inc. pursuant to the said Agreement. It can therefore be readily presumed that said respondent did not produce the said document because the production of the same will readily prove complainants assertion of having been hired long before said contractor Supreme Construction entered into the picture. We have noted complainants admission of having been later coerced to sign up with said Supreme Construction by respondent Alabang Country Club, Inc. which he did as he was told in his fear of losing his job.

As shown by respondent Alabang Country Club, Inc.s own evidence, it later terminated its contract of service or Memorandum of Agreement with Supreme Construction and entered into a new contract of service with respondent First Staffing Network Corporation effective on 16 June 1994. However by said respondents own allegation, even with the absence of complainants supposed direct employer Supreme Construction, he still remained in its employ until he signed up with respondent First Staffing Network Corporation on 11 February 1996. This indeed runs counter to the normal course of human experience such that when a contractor losses (sic) his contract of service he packs up along with all his employees, but in this case, complainant was not terminated from the service notwithstanding the expiration/termination of the contract of service of his alleged direct employer. Complainant remained working with respondent Alabang Country Club, Inc. despite the severance of the contractual relations between itself and Supreme Construction. The initial Memorandum of Agreement entered into by respondents Alabang Country Club, Inc. and First Staffing Network Corporation was dated, 16 June 1994, and was apparently renewed thereafter providing under Article III On Compensation thereof, the following, viz:

3.01 For and in consideration of the performance by FIRST STAFFING of its obligations under this AGREEMENT, the CLIENT agrees to pay the former based on the schedule of billing rates which shall be specified in the Personnel Requisition Form signed by the CLIENT. The schedule of billing rates is as follows, to wit: BILLING RATES/HOUR PLUS 10% VALUE ADDED TAX Covered Pos. A B C Waiters Accounting Supervisor Janitors Data Encoders Bag Boy Gen. Clerks Stewards Secretary Cook Helpers Receptionist Messengers Secretary Cashier xxx.

Nowhere, does complainants position of electrician appear as covered in the said contract. Finally, suffice it for Us to stress that the said contract covers almost all of respondents Alabang Country Club, Inc.s workforce including those whose jobs or activities are directly related to said respondents business, emphasizing in no uncertain terms that respondent First Staffing Network Corporation was not a truly bonafide job contractor, as it did not contract out specific service but merely supplied work personnel, a clear indication, that it was engaged in a job only contracting which is prohibited by law.

Besides, the said respondent First Staffing Network Corporation failed to prove that it is a bonafide job contractor by showing that it had an adequate capital or investment in tools, equipments and machineries and premises for that matter, and so did respondent Alabang Country Club, Inc. fail to establish the same. For that matter, respondent First Staffing Network Corporation had waived its right to present any evidence in its favor in this case. Obviously, herein respondent Alabang Country Club, Inc. actually resorted to contracting out all the positions for its workforce in violation of law in its desire to circumvent said employees rights as regular employees under the law.[42]

The existence of an employer-employee relationship between petitioner and respondent is

fortified by the fact that during his stint with the respondent, petitioner was given the opportunity to

attend a seminar/training on refrigeration and air conditioning from 16 January 1995 to 18 February

1995.[43] A certificate of participation signed by three of respondents officials was issued to the

petitioner.

Equally significant is Article 106 of the Labor Code, as amended, which provides that legitimate

job contracting is permitted, but labor-only contracting is prohibited. The said provision reads:

Art. 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 the 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 laboronly 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 person 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. Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 18, distinguishes between legitimate and labor only contracting:

Section 3. Trilateral Relationship in Contracting Arrangements. - In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor and subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Section 5. Prohibition against laboronly contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, or

ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(c) of the Labor Code, as amended. Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipments, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his on methods and without being subject to the control of the employer, except only as to the results of the work. In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. [44]

Despite respondents disavowal of the existence of the employer-employee relationship between it and

petitioner and its insistence that petitioner is an employee first, of Supreme and subsequently, of FSNC,

the totality of the facts and surrounding circumstances of the case convey otherwise.

On this point, the law is clear-cut. In laboronly contracting, the statute creates an employeremployee

relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is

considered merely an agent of the principal employer and the latter is responsible to the employees of

the laboronly contractor as if such employees had been directly employed by the principal employer.

The Labor Code and its implementing rules empower the Labor Arbiter to be the trier of facts in labor

cases. Much reliance is placed on findings of facts of the Arbiter having had the opportunity to talk to

and discuss with the parties and their witnesses the factual matters of the case during the conciliation

phase.[45] We, thus, give full credence to the findings of facts of the labor arbiter.

WHEREFORE, premises considered, the Petition is GRANTED. The Decision of the Court of Appeals

dated 9 May 2005 and its Resolution dated 21 July 2005 is REVERSED. The Decision of the Labor Arbiter

dated 20 November 2000 is REINSTATED. Let the records of the above-entitled case be remanded to the

Labor Arbiter for immediate execution of the Decision. No costs.

SO ORDERED.

[G. R. No. 129329. July 31, 2001]

ESTER M. ASUNCION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, MABINI MEDICAL CLINIC and DR. WILFRIDO JUCO, respondents.

D E C I S I O N

KAPUNAN, J.:

In her petition filed before this Court, Ester Asuncion prays that the Decision, dated November 29, 1996, and the Resolution, dated February 20,1997, of the public respondent National Labor Relations Commission, Second Division, in NLRC CA. 011188 which reversed the Decision of the Labor Arbiter, dated May 15, 1996 be set aside.

The antecedents of this case are as follows:

On August 16, 1993, petitioner Ester M. Asuncion was employed as an accountant/bookkeeper by the respondent Mabini Medical Clinic. Sometime in May 1994, certain officials of the NCR-Industrial Relations Division of the Department of Labor and Employment conducted a routine inspection of the premises of the respondent company and discovered upon the disclosure of the petitioner of (documents) violations of the labor standards law such as the non-coverage from the SSS of the employees.Consequently, respondent Company was made to correct these violations.

On August 9, 1994, the private respondent, Medical Director Wilfrido Juco, issued a memorandum to petitioner charging her with the following offenses:

1. Chronic Absentism (sic) You have incurred since Aug. 1993 up to the present 35 absences and 23 half-days.

2. Habitual tardiness You have late (sic) for 108 times. As shown on the record book.

3. Loitering and wasting of company time on several occasions and witnessed by several employees.

4. Getting salary of an absent employee without acknowledging or signing for it.

5. Disobedience and insubordination - continued refusal to sign memos given to you.[1]

Petitioner was required to explain within two (2) days why she should not be terminated based on the above charges.

Three days later, in the morning of August 12, 1994, petitioner submitted her response to the memorandum. On the same day, respondent Dr. Juco, through a letter dated August 12, 1994, dismissed the petitioner on the ground of disobedience of lawful orders and for her failure to submit her reply within the two-day period.

This prompted petitioner to file a case for illegal termination before the NLRC.

In a Decision, dated May 15, 1996, Labor Arbiter Manuel Caday rendered judgment declaring that the petitioner was illegally dismissed. The Labor Arbiter found that the private respondents were unable to prove the allegation of chronic absenteeism as it failed to present in evidence the time cards, logbooks or record book which complainant signed recording her time in reporting for work. These

documents, according to the Labor Arbiter, were in the possession of the private respondents. In fact, the record book was mentioned in the notice of termination. Hence, the non-presentation of these documents gives rise to the presumption that these documents were intentionally suppressed since they would be adverse to private respondents claim. Moreover, the Labor Arbiter ruled that the petitioners absences were with the conformity of the private respondents as both parties had agreed beforehand that petitioner would not report to work on Saturdays. The handwritten listing of the days when complainant was absent from work or late in reporting for work and even the computerized print-out, do not suffice to prove that petitioners absences were unauthorized as they could easily be manufactured.[2] Accordingly, the dispositive portion of the decision states, to wit:

WHEREFORE, Premises Considered, judgment is hereby rendered declaring the dismissal of the complainant as illegal and ordering the respondent company to immediately reinstate her to her former position without loss of seniority rights and to pay the complainants backwages and other benefits, as follows:

1) P73,500.00 representing backwages as of the date of this decision until she is actually reinstated in the service;

2) P20,000.00 by way of moral damages and another P20,000.00 representing exemplary damages; and

3) 10% of the recoverable award in this case representing attorneys fees.

SO ORDERED.[3]

On appeal, public respondent NLRC rendered the assailed decision which set aside the Labor Arbiters ruling. Insofar as finding the private respondents as having failed to present evidence relative to petitioners absences and tardiness, the NLRC agrees with the Labor Arbiter. However, the NLRC ruled that petitioner had admitted the tardiness and absences though offering justifications for the infractions. The decretal portion of the assailed decision reads:

WHEREFORE, premises considered, the appealed decision is hereby VACATED and SET ASIDE and a NEW ONE entered dismissing the complaint for illegal dismissal for lack of merit.

However, respondents Mabini Medical Clinic and Dr. Wilfrido Juco are jointly and solidarily ordered to pay complainant Ester Asuncion the equivalent of her three (3) months salary for and as a penalty for respondents non-observance of complainants right to due process.

SO ORDERED.[4]

Petitioner filed a motion for reconsideration which the public respondent denied in its Resolution, dated February 19, 1997. Hence, petitioner through a petition for certiorari under Rule 65 of the Rules of Court seeks recourse to this Court and raises the following issue:

THE PUBLIC RESPONDENT ERRED IN FINDING THAT THE PETITIONER WAS DISMISSED BY THE PRIVATE RESPONDENT FOR A JUST OR AUTHORIZED CAUSE.

The petition is impressed with merit.

Although, it is a legal tenet that factual findings of administrative bodies are entitled to great weight and respect, we are constrained to take a second look at the facts before us because of the diversity in the opinions of the Labor Arbiter and the NLRC.[5] A disharmony between the factual findings of the Labor Arbiter and those of the NLRC opens the door to a review thereof by this Court.[6]

It bears stressing that a workers employment is property in the constitutional sense. He cannot be deprived of his work without due process. In order for the dismissal to be valid, not only must it be based on just cause supported by clear and convincing evidence,[7] the employee must also be given an opportunity to be heard and defend himself. [8] It is the employer who has the burden of proving that the dismissal was with just or authorized cause.[9] The failure of the employer to discharge this burden means that the dismissal is not justified and that the employee is entitled to reinstatement and backwages.[10]

In the case at bar, there is a paucity of evidence to establish the charges of absenteeism and tardiness. We note that the employer company submitted mere handwritten listing and computer print-outs. The handwritten listing was not signed by the one who made the same. As regards the print-outs, while the listing was computer generated, the entries of time and other annotations were again handwritten and unsigned.[11]

We find that the handwritten listing and unsigned computer print-outs were unauthenticated and, hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of that nature should be rejected as evidence without any rational probative value even in administrative proceedings. For this reason, we find the findings of the Labor Arbiter to be correct. On this point, the Labor Arbiter ruled, to wit:

x x x In the instant case, while the Notice of Termination served on the complainant clearly mentions the record book upon which her tardiness (and absences) was based, the respondent (company) failed to establish (through) any of these documents and the handwritten listing, notwithstanding, of (sic) the days when complainant was absent from work or late in reporting for work and even the computerized print-outs, do not suffice to prove the complainants absences were unauthorized as they could easily be manufactured. x x x[12]

In IBM Philippines, Inc. v. NLRC,[13] this Court clarified that the liberality of procedure in administrative actions is not absolute and does not justify the total disregard of certain fundamental rules of evidence. Such that evidence without any rational probative value may not be made the basis of order or decision of administrative bodies. The Courts ratiocination in that case is relevant to the propriety of rejecting the unsigned handwritten listings and computer print-outs submitted by private respondents which we quote, to wit:

However, the liberality of procedure in administrative actions is subject to limitations imposed by basic requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure does not go so far as to justify orders without a basis in evidence having rational probative value. More specifically, as held in Uichico v. NLRC:

It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. The

Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are nothing but self-serving documents which ought to be treated as a mere scrap of paper devoid of any probative value.

The computer print-outs, which constitute the only evidence of petitioners, afford no assurance of their authenticity because they are unsigned. The decisions of this Court, while adhering to a liberal view in the conduct of proceedings before administrative agencies, have nonetheless consistently required some proof of authenticity or reliability as condition for the admission of documents.

In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC,[14] this Court held as incompetent unsigned daily time records presented to prove that the employee was neglectful of his duties:

Indeed, the DTRs annexed to the present petition would tend to establish private respondents neglectful attitude towards his work duties as shown by repeated and habitual absences and tardiness and propensity for working undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor certified true copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are not even signed by private respondent nor by any of the employers representatives. x x x.

In the case at bar, both the handwritten listing and computer print-outs being unsigned, the authenticity thereof is highly suspect and devoid of any rational probative value especially in the light of the existence of the official record book of the petitioners alleged absences and tardiness in the possession of the employer company.

Ironically, in the memorandum charging petitioner and notice of termination, private respondents referred to the record book as its basis for petitioners alleged absenteeism and tardiness. Interestingly, however, the record book was never presented in evidence. Private respondents had possession thereof and the opportunity to present the same. Being the basis of the charges against the petitioner, it is without doubt the best evidence available to substantiate the allegations. The purpose of the rule requiring the production of the best evidence is the prevention of fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally arises that the better evidence is withheld for fraudulent purposes which its production would expose and defeat.[15] Thus, private respondents unexplained and unjustified non-presentation of the record book, which is the best evidence in its possession and control of the charges against the petitioner, casts serious doubts on the factual basis of the charges of absenteeism and tardiness.

We find that private respondents failed to present a single piece of credible evidence to serve as the basis for their charges against petitioner and consequently, failed to fulfill their burden of proving the facts which constitute the just cause for the dismissal of the petitioner. However, the NLRC ruled that despite such absence of evidence, there was an admission on the part of petitioner in her Letter dated August 11, 1994 wherein she wrote:

I am quite surprised why I have incurred 35 absences since August 1993 up to the present. I can only surmise that Saturdays were not included in my work week at your clinic. If you will please recall, per agreement with you, my work days at your clinic is from Monday to Friday without Saturday work. As to my other supposed absences, I believe that said absences were authorized and therefore cannot be considered as absences which need not be explained (sic). It is also extremely difficult to

understand why it is only now that I am charged to explain alleged absences incurred way back August 1993.[16]

In reversing the decision of the Labor Arbiter, public respondent NLRC relied upon the supposed admission of the petitioner of her habitual absenteeism and chronic tardiness.

We do not subscribe to the findings of the NLRC that the above quoted letter of petitioner amounted to an admission of her alleged absences. As explained by petitioner, her alleged absences were incurred on Saturdays. According to petitioner, these should not be considered as absences as there was an arrangement between her and the private respondents that she would not be required to work on Saturdays. Private respondents have failed to deny the existence of this arrangement. Hence, the decision of the NLRC that private respondent had sufficient grounds to terminate petitioner as she admitted the charges of habitual absences has no leg to stand on.

Neither have the private respondents shown by competent evidence that the petitioner was given any warning or reprimanded for her alleged absences and tardiness. Private respondents claimed that they sent several notices to the petitioner warning her of her absences, however, petitioner refused to receive the same. On this point, the Labor Arbiter succinctly observed:

The record is bereft of any showing that complainant was ever warned of her absences prior to her dismissal on August 9, 1994. The alleged notices of her absences from August 17, until September 30, 1993, from October until November 27, 1993, from December 1, 1993 up to February 26, 1994 and the notice dated 31 May 1994 reminding complainant of her five (5) days absences, four (4) half-days and tardiness for 582 minutes (Annex "1" to "1-D" attached to respondent' Rejoinder), fail to show that the notices were received by the complainant. The allegation of the respondents that the complainant refused to received (sic) the same is self-serving and merits scant consideration. xxx[17]

The Court, likewise, takes note of the fact that the two-day period given to petitioner to explain and answer the charges against her was most unreasonable, considering that she was charged with several offenses and infractions (35 absences, 23 half-days and 108 tardiness), some of which were allegedly committed almost a year before, not to mention the fact that the charges leveled against her lacked particularity.

Apart from chronic absenteeism and habitual tardiness, petitioner was also made to answer for loitering and wasting of company time, getting salary of an absent employee without acknowledging or signing for it and disobedience and insubordination.[18]Thus, the Labor Arbiter found that actually petitioner tried to submit her explanation on August 11, 1994 or within the two-day period given her, but private respondents prevented her from doing so by instructing their staff not to accept complainants explanation, which was the reason why her explanation was submitted a day later.[19]

The law mandates that every opportunity and assistance must be accorded to the employee by the management to enable him to prepare adequately for his defense.[20] In Ruffy v. NLRC,[21] the Court held that what would qualify as sufficient or ample opportunity, as required by law, would be every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense. In the case at bar, private respondents cannot be gainsaid to have given petitioner the ample opportunity to answer the charges leveled against her.

From the foregoing, there are serious doubts in the evidence on record as to the factual basis of the charges against petitioner. These doubts shall be resolved in her favor in line with the policy under the Labor Code to afford protection to labor and construe doubts in favor of labor.[22] The consistent rule is

that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.[23] Not having satisfied its burden of proof, we conclude that the employer dismissed the petitioner without any just cause. Hence, the termination is illegal.

Having found that the petitioner has been illegally terminated, she is necessarily entitled to reinstatement to her former previous position without loss of seniority and the payment of backwages.[24]

WHEREFORE, the Decision of the National Labor Relations Commission, dated November 29, 1996 and the Resolution, dated February 20, 1997 are hereby REVERSED and SET ASIDE, and the Decision of the Labor Arbiter, dated May 15, 1996 REINSTATED.

SO ORDERED.

Republic of the Philippines SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 86773 February 14, 1992

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor Relations Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to pay private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and other post-employment benefits, and the resolution denying the petitioners' motion for reconsideration of said decision dated January 9, 1989.

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country (Article 1, Agreement Establishing the SEAFDEC).

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the financial constraints being experienced

by the department, his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits (Rollo, p. 153).

Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus moral damages and attorney's fees with the Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari).

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances from the proper departments for property or money accountability before any claim for separation pay will be paid, and which clearances had not yet been obtained by the private respondent.

A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private respondent has property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the same during his employment with the SEAFDEC-AQD (Annex "D", Id.).

On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and other post-employment benefits;

2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees.

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of P50,000.00 as actual damages and attorney's fees for being baseless. (Annex "A", p. 28, id.)

On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was denied on January 9, 1989. Thereafter, petitioners instituted this petition for certiorari alleging that the NLRC has no jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent.

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos, Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H", Petition).

The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16,1968. Its purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments of the Center, hereinafter called the "Members", and through collaboration with international organizations and governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H" Petition) (p.310, Rollo)

SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex "I", id.) to be established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p. 83, 1956 ed.):

Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority "they must be deemed to possess a species of international personality of their own." (Salonga and Yap, Public International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H",ibid.) and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed amount of money, movable and immovable property and services necessary for the establishment and operation of the Center" are concerned (Art. 11, ibid.). It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984

4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e.,that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44) The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in there operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by the Philippine Government in the management decisions of the SEARCA governing board; even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling instruments of international organizations, jurisdictional immunity from the host country is invariably among the first accorded. (See Jenks, Id.; See also Bowett, The Law of International Institutions, pp. 284-1285).

Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which it stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the Court in said case explained why it took cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two claimants to the same position; this is not a controversy between the SEAFDEC on the one hand, and an officer or employee, or a person claiming to be an officer or employee, of the SEAFDEC, on the other hand. There is before us no question involving immunity from the jurisdiction of the Court, there being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official of SEAFDEC with the consent of SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of the Philippine government, the questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction. No costs.

SO ORDERED.

Republic of the Philippines SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner vs HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE, petitioner, vs SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH INSTITUTE, INC.,respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws.

I

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in international humanitarian and voluntary work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a Petition for Certification Election among the rank and file members employed by ICMC The latter opposed the petition on the ground that it is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's request for recognition as a specialized agency was still pending with the Department of Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with the competence and authority to act on matters involving diplomatic immunity and privileges, and tasked

with the conduct of Philippine diplomatic and consular relations with foreign governments and UN organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of international law as part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the DEFORAF determination that the BLR Order for a certification election among the ICMC employees is violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she contends that a certification election is not a litigation but a mere investigation of a non-adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole concern of the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor General that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII, Section 3 of the 1987 Constitution, 1and held that "the immunities and privileges granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order, dismissed the Petition for Certification Election, and held that the grant of specialized agency status by the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and immunities of an international organization is clear and explicit. It provides in categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as immunity has been expressly waived by the Director-General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena, orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency are enforceable as against the Institute. In the case at bar there was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from filing a comment "it appearing that in the earlier case of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the stand of Director Calleja on the very same issue now before it, which position has been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and unappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor Relations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is,

however, understood that no waiver of immunity shall extend to any measure of execution.

Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action. (Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his authorized representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarrass a political department of Government.

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is generally used to describe an organization set up by agreement between two or more states. 4 Under contemporary international law, such organizations are endowed with some degree of international legal personality 5 such that they are capable of exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting general international business

in which the member states have an interest. 7 The United Nations, for instance, is an international organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting progress and international cooperation in economic, social, health, cultural, educational and related matters, contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself but by autonomous international organizations established by inter-governmental agreements outside the United Nations. There are now many such international agencies having functions in many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and refugees. Some are virtually world-wide in their membership, some are regional or otherwise limited in their membership. The Charter provides that those agencies which have "wide international responsibilities" are to be brought into relationship with the United Nations by agreements entered into between them and the Economic and Social Council, are then to be known as "specialized agencies." 10

The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain provisions conferring certain immunities on the organizations themselves, representatives of their member states and persons acting on behalf of the organizations. A series of conventions, agreements and protocols defining the immunities of various international organizations in relation to their members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or interference by any one government in the performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member States. 12 The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements of functional independence necessary to free international institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their members. 13 The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield

the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. 1. The Commission shall cooperate at all times with the appropriate authorities of the Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of justice and prevent the occurrences of any abuse of the privileges and immunities granted its officials and alien employees in Article III of this Agreement to the Commission.

2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this Agreement, consultations shall be held between the Government and the Commission to determine whether any such abuse has occurred and, if so, the Government shall withdraw the privileges and immunities granted the Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for better management-employee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and immunities of an international organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated process. It could tugger off a series of events in the collective bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions of international

Organizations. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either from the order or the results of the election itself, was already in effect, specifically since 2