POLICE POWER OF THE STATE

G.R. No. 162053 March 7, 2007ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S. SANTOS,Petitioners,vs.NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL CENTER, INC.,Respondents.

D E C I S I O N

AZCUNA,J.:Challenged in this petition for review oncertiorariis the Decision1of the Court of Appeals (CA) dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision2dated August 23, 2002 rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00.

The antecedent facts are as follows:

Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic Technology.

On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the "Radiologic Technology Act of 1992." Said law requires that no person shall practice or offer to practice as a radiology and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board of Radiologic Technology.On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the unlicensed employee will be transferred to an area which does not require a license to practice if a slot is available.

On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and passing the forthcoming examination scheduled in June 1997; otherwise, private respondent SLMC may be compelled to retire her from employment should there be no other position available where she may be absorbed.

On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC Registration form/Examination Permit per Memorandum dated March 4, 1997.

On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to petitioner Maribel S. Santos advising her that only a license can assure her of her continued employment at the Institute of Radiology of the private respondent SLMC and that the latter is giving her the last chance to take and pass the forthcoming board examination scheduled in June 1998; otherwise, private respondent SLMC shall be constrained to take action which may include her separation from employment.

On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel S. Santos informing the latter that the management of private respondent SLMC has approved her retirement in lieu of separation pay.

On November 26, 1998, the Personnel Manager of private respondent SLMC issued a "Notice of Separation from the Company" to petitioner Maribel S. Santos effective December 30, 1998 in view of the latter's refusal to accept private respondent SLMC's offer for early retirement. The notice also states that while said private respondent exerted its efforts to transfer petitioner Maribel S. Santos to other position/s, her qualifications do not fit with any of the present vacant positions in the hospital.

In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of private respondent SLMC, requesting the latter to give "due consideration" to the organization's three (3) regular members of his organization (petitioner Maribel S. Santos included) "for not passing yet the Board of Examination for X-ray Technology," "by giving them an assignment in any department of your hospital awaiting their chance to pass the future Board Exam."

On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a "Notice of Separation from the Company" to petitioner Maribel S. Santos effective February 5, 1999 after the latter failed to present/ submit her appeal for rechecking to the Professional Regulation Commission (PRC) of the recent board examination which she took and failed.

On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC for illegal dismissal and non-payment of salaries, allowances and other monetary benefits. She likewise prayed for the award of moral and exemplary damages plus attorney's fees.

In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director of private respondent SLMC, requested the latter to accommodate petitioner Maribel S. Santos and assign her to the vacant position of CSS Aide in the hospital arising from the death of an employee more than two (2) months earlier.

In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:

Gentlemen:

Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant regular position of a CSS Aide in Ms. Maribel Santos' behalf.

The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially on minimum requirements of the job and the need to meet said requirements, as well as other pre-employment requirements, in order to be considered for the vacant position. As a matter of fact, Ms. Santos is welcome to apply for any vacant position on the condition that she possesses the necessary qualifications.

As to the consensus referred to in your letter, may I correct you that the agreement is, regardless of the vacant position Ms. Santos decides to apply, she must go through the usual application procedures. The formal letter, I am afraid, will not suffice for purposes of recruitment processing. As you know, the managers requesting to fill any vacancy has a say on the matter and correctly so. The manager's inputs are necessarily factored into the standard recruitment procedures. Hence, the need to undergo the prescribed steps.

Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer while she was employed with SLMC given the prescribed period. She was given 30 days from issuance of the notice of termination to look for appropriate openings which incidentally she wittingly declined to utilize. She did this knowing fully well that the consequences would be that her application beyond the 30-day period or after the effective date of her termination from SLMC would be considered a re-application with loss of seniority and shall be subjected to the pertinent application procedures.

Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos at the time successfully managed to get herself transferred to E.R. because she opted to apply for the appropriate vacant position and qualified for it within the prescribed 30-day period. The other X-ray Technologist, on the other hand, as you may recall, was eventually terminated not just for his failure to comply with the licensure requirement of the law but for cause (refusal to serve a customer).

Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the opportunity given her, or assuming she was not qualified for any vacant position even if she tried to look for one within the prescribed period, I simply cannot understand why she also refused the separation pay offered by Management in an amount beyond the minimum required by law only to re-apply at SLMC, which option would be available to her anyway even (if she) chose to accept the separation pay!

Well, here's hoping that our Union can timely influence our employees to choose their options well as it has in the past.

(Signed)RITA MARASIGAN

Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:

Dear Mr. Calderon:

This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms. Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms regarding the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the position of Secretary at the Dietary Department. In that meeting, Ms. Santos replied that she would think about the offer. To date, we still have no definite reply from her. Again, during the conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos, and inform us of her reply by Dec. 21, 1999. Again we failed to hear her reply through him.

Please be informed that said position is in need of immediate staffing. The Dietary Department has already been experiencing serious backlog of work due to the said vacancy. Please note that more than 2 months has passed since Ms. Marasigan offered this compromise. Management cannot afford to wait for her decision while the operation of the said department suffers from vacancy.

Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If we fail to hear from her or from you as her representatives by that time, we will consider it as a waiver and we will be forced to offer the position to other applicants so as not to jeopardize the Dietary Department's operation.

For your immediate action.

(Signed)JUDITH BETITAPersonnel Manager

On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos (P115,500.00) representing her separation pay. All other claims of petitioner were dismissed for lack of merit.

Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.

On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution promulgated on December 27, 2002.

Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned, affirmed the decision of the NLRC.

Hence, this petition raising the following issues:

I. Whether the CA overlooked certain material facts and circumstances on petitioners' legal claim in relation to the complaint for illegal dismissal.

II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the issues on the merit of petitioner's constitutional right of security of tenure.3For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its comment4that: 1) the petition should be dismissed for failure of petitioners to file a motion for reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the NLRC and the Labor Arbiter's ruling that petitioner was legally dismissed; 3) petitioner was legally and validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private respondent's decision to terminate petitioner Santos was made in good faith and was not the result of unfair discrimination; and 5) petitioner Santos' non-transfer to another position in the SLMC was a valid exercise of management prerogative.

The petition lacks merit.

Generally, the Court has always accorded respect and finality to the findings of fact of the CA particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence.5True this rule admits of certain exceptions as, for example, when the judgment is based on a misapprehension of facts, or the findings of fact are not supported by the evidence on record6or are so glaringly erroneous as to constitute grave abuse of discretion.7None of these exceptions, however, has been convincingly shown by petitioners to apply in the present case. Hence, the Court sees no reason to disturb such findings of fact of the CA.

Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by private respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of Radiologic Technology.

The requirement for a certificate of registration is set forth under R.A. No. 74318thus:

Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. - Unless exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or offer to practice as a radiologic and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board.

It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos' separation from work is her failure to pass the board licensure exam for X-ray technicians, a precondition for obtaining the certificate of registration from the Board. It is argued, though, that petitioner Santos' failure to comply with the certification requirement did not constitute just cause for termination as it violated her constitutional right to security of tenure. This contention is untenable.

While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and the general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers.9The most concrete example of this would be in the field of medicine, the practice of which in all its branches has been closely regulated by the State. It has long been recognized that the regulation of this field is a reasonable method of protecting the health and safety of the public to protect the public from the potentially deadly effects of incompetence and ignorance among those who would practice medicine.10The same rationale applies in the regulation of the practice of radiologic and x-ray technology. The clear and unmistakable intention of the legislature in prescribing guidelines for persons seeking to practice in this field is embodied in Section 2 of the law:

Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic technology in the Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to ensure safe and proper diagnosis, treatment and research through the application of machines and/or equipment using radiation.11In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its decision dated August 23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's inherent police power. It should be noted that the police power embraces the power to prescribe regulations to promote the health, morals, educations, good order, safety or general welfare of the people. The state is justified in prescribing the specific requirements for x-ray technicians and/or any other professions connected with the health and safety of its citizens. Respondent-appellee being engaged in the hospital and health care business, is a proper subject of the cited law; thus, having in mind the legal requirements of these laws, the latter cannot close its eyes and [let] complainant-appellant's private interest override public interest.

Indeed, complainant-appellant cannot insist on her "sterling work performance without any derogatory record" to make her qualify as an x-ray technician in the absence of a proper certificate of Registration from the Board of Radiologic Technology which can only be obtained by passing the required examination. The law is clear that the Certificate of Registration cannot be substituted by any other requirement to allow a person to practice as a Radiologic Technologist and/or X-ray Technologist (Technician).12No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken by it conformably to an existing statute. It is undeniable that her continued employment without the required Board certification exposed the hospital to possible sanctions and even to a revocation of its license to operate. Certainly, private respondent could not be expected to retain petitioner Santos despite the inimical threat posed by the latter to its business. This notwithstanding, the records bear out the fact that petitioner Santos was given ample opportunity to qualify for the position and was sufficiently warned that her failure to do so would result in her separation from work in the event there were no other vacant positions to which she could be transferred. Despite these warnings, petitioner Santos was still unable to comply and pass the required exam. To reiterate, the requirement for Board certification was set by statute. Justice, fairness and due process demand that an employer should not be penalized for situations where it had no participation or control.13It would be unreasonable to compel private respondent to wait until its license is cancelled and it is materially injured before removing the cause of the impending evil. Neither can the courts step in to force private respondent to reassign or transfer petitioner Santos under these circumstances. Petitioner Santos is not in the position to demand that she be given a different work assignment when what necessitated her transfer in the first place was her own fault or failing. The prerogative to determine the place or station where an employee is best qualified to serve the interests of the company on the basis of the his or her qualifications, training and performance belongs solely to the employer.14The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial authority.15While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.16Labor laws, to be sure, do not authorize interference with the employer's judgment in the conduct of the latter's business. Private respondent is free to determine, using its own discretion and business judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which may be provided by law. None of these exceptions is present in the instant case.

The fact that another employee, who likewise failed to pass the required exam, was allowed by private respondent to apply for and transfer to another position with the hospital does not constitute unlawful discrimination. This was a valid exercise of management prerogative, petitioners not having alleged nor proven that the reassigned employee did not qualify for the position where she was transferred. In the past, the Court has ruled that an objection founded on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the position.17Furthermore, the records show that Ms. Santos did not even seriously apply for another position in the company.

WHEREFORE, the petition isDENIEDfor lack of merit. Costs against petitioners.

SO ORDERED.

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

DOLE PHILIPPINES, INC.,petitioner,vs.PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL),respondent.

D E C I S I O N

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 Obrero-NFL (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) hoursof 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 meanafter more than three hoursof actual overtime work.

On the other hand, private respondent union and the voluntary arbitrator see it as meaningafter exactly three hoursof actual overtime work.

The meal allowance provision in the 1996-2001 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) hoursof 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) hoursof 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 1993-1995 CBA Supplement.But said phrase is again absent in Section 3 of Article XVIII of the 1996-2001 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 meanafter exactly three hoursof actual overtime work; it meansafter more than three hoursof 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 meansafter rendering exactly, or no less than, three hoursof 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 allowanceonly after more than 3 hoursof 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 employeesafter exactly, or no less than, three hoursof 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.

Puno, (Chairman), Panganiban, Sandoval-Gutierrez,andCarpio-Morales, JJ.,concur.ART.4 Construction of Labor Code (Interpretation, Rationale and Intent)

G.R. No. 71813 July 20, 1987ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA,petitioners,vs.THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE, SR.,respondents.

PARAS,J.:This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor and Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of granting separation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for another ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp. 26-27).

During the existence of the lease, she employed the herein private respondents. Private respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo in November of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-31), ruled that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Pertinent portion of the dispositive portion of the Decision reads:

In the instant case, the respondent closed its business operation not by reason of business reverses or losses. Accordingly, the award of termination pay in complainants' favor is warranted.

WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the rate of half-month salary for every year of service, a fraction of six (6) months being considered one (1) year. (Rollo pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same was denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-8).

The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed their Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December 17, 1985 (Ibid, pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and public respondents (Ibid, pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to the petition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).

The petition is devoid of merit.

The sole issue in this case is

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired, she is not liable for payment of separation pay. Neither could she reinstate the complainants in the farm as this is a complete cessation or closure of a business operation, a just cause for employment termination under Article 272 of the Labor Code.

On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically provides:

Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

x x x x x x x x x

Art. 284.Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establisment or undertaking unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.1avvphi1There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in this case.

Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor Arbiter does not argue the justification of the termination of employment but applied Article 284 as amended, which provides for the rights of the employees under the circumstances of termination.

Petitioner then contends that the aforequoted provision violates the constitutional guarantee against impairment of obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation to pay separation pay to workers at the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369 [1977]) where the Supreme Court ruled:

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to read with literal exactness like a mathematical formula for it prohibits unreasonable impairment only. In spite of the constitutional prohibition the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the parties but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercise of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise maybe prohibited. ...

In order to determine whether legislation unconstitutionally impairs contract of obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted must be legitimate, i.e. within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974; 61 SCRA 93,102-113]).

The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of the parties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farm hands who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent legislation designed to protect the interest of the working class.

In any event, it is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of this Code including its implementing rules and regulations shall be resolved in favor of labor." The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation Commission, 109 SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernando, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.FERNANDO G. MANAYA, Petitioner,VS ALABANG COUNTRY CLUB INCORPORATED, Respondent.G.R. No.168988Present: YNARES-SANTIAGO,J., Chairperson, AUSTRIA-MARTINEZ,CHICO-NAZARIO, and NACHURA,JJ.Promulgated: June 19, 2007D E C I S I O NCHICO-NAZARIO,J.:

This is a Petition for Review onCertiorariunder 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 ofAlabangCountry 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 on21 August 1989, he was initially hired by the respondent as a maintenance helper[3]receiving a salary ofP198.00 per day.He was later designated as company electrician.He continued to work for the respondent until22 August 1998when 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 on22 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 13thmonth 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 dated21 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, dated20 November 2000, the Labor Arbiter held:

WHEREFORE, premises considered, complainant Fernando G.Manayais hereby found to be a regular employee of respondentAlabangCountry Club, Inc., asaforediscussed.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, respondentAlabangCountry 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 ofP160,724.48 as computed by Ms. Ma.ConcepcionManliclicand duly noted by Ms. Ma. Elena L.Estadilla, OIC-CEU, NCR-South Sector which computation has been made part of the records.

Furthermore, respondentAlabangCountry 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 Leave2,961.75

2.13thMonth Pay15,401.10, 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 dated30 August 2002, the NLRC held:

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

The NLRC found that respondents counsel of record Atty. Angelina A.MailonofMonsod,Valenciaand Associates received a copy of the Labor Arbiters Decision on or before11 December 2000as 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]dated26 December 2000was filed by the respondents new counsel, Atty.Arizalaof Tierra and Associates Law Office.Reckoned from11 December 2000, the date of receipt of the Decision by respondents previous counsel, the filing of the Memorandum of Appeal by its new counsel on26 December 2000was 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 andexecutory.[13]

Respondent filed a Motion for Reconsideration,[14]which the NLRC denied in a Resolution dated30 October 2002.[15]The NLRC held that the decision of the Labor Arbiter has become final andexecutoryon28 November 2002; thus, Entry of Judgment, dated8 January 2003[16]was issued.

Respondent filed a Petition forCertiorari[17]under Rule 65 of the Rules of Court before the Court of Appeals.In a Decision dated9 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]dated21 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 ofAguamv. 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 on15 December 2000, filed its appeal on26 December 2000through a new lawyer.The appeal filed by respondent through its new lawyer on26 December 2000was well within the reglementary period,25 December 2000being 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.Mailonon11 December 2000is 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 andexecutoryunless 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 10thor 5thday, 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:

InRamos 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.InRepublic 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.InOlacaov. 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 theappellee.[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 andexecutory.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 andexecutory.

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 ofBunaganv. 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 andexecutoryand 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.xxx.[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.InNaragv. National Labor Relations Commission,[38]citingVir-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 andexecutoryunless 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 ofthe Labor Arbiter;

(b)If the decision, order or award was secured through fraud orcoercion, 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 wouldcause 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 respondentwhich 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]espondentwas not able to convincingly disprove complainants claims that at the outset, he was directly hired by it as a maintenance helper on21 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 atAlabangCountry 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 respondentAlabangCountry Club, Inc. which he did as he was told in his fear of losing his job.

As shown by respondentAlabangCountry 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 on16 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 on11 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 respondentAlabangCountry Club, Inc. despite the severance of the contractual relations between itself and Supreme Construction.

The initial Memorandum of Agreement entered into by respondentsAlabangCountry Club, Inc. and First Staffing Network Corporation was dated, 16June 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.

ABC

WaitersAccountingSupervisor

JanitorsData Encoders

Bag BoyGen. Clerks

StewardsSecretary

Cook HelpersReceptionist

MessengersSecretary

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 respondentsAlabangCountry 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 trulybonafidejob 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 contractingwhich is prohibited by law.

Besides, the said respondent First Staffing Network Corporation failed to prove that it is abonafidejob contractor by showing that it had an adequate capital or investment in tools, equipments and machineries and premises for that matter, and so did respondentAlabangCountry 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 respondentAlabangCountry 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 from16 January 1995to18 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 theformerswork, 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 independentcontractorshipis 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 thetrierof 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 isGRANTED.The Decision of the Court of Appeals dated9 May 2005and its Resolution dated21 July 2005isREVERSED.The Decision of the Labor Arbiter dated20 November 2000isREINSTATED.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. L-47521 July 31, 1987CAROLINA CLEMENTE,petitioner,vs.GOVERNMENT SERVICE INSURANCE SYSTEM Department of Health (Dagupan City) and EMPLOYEES' COMPENSATION COMMISSION,respondents.

GUTIERREZ, JR.,J.:This is a petition to review the decision of the Employees' Compensation Commission in ECC Case No. 0509 which affirmed the decision of the Government Service Insurance System (GSIS) and denied the claim for death benefits filed by Carolina Clemente, widow of the late Pedro Clemente,

The undisputed facts of the case are summarized in the memorandum for the respondent Government Service Insurance System, as follows:

Petitioner's husband, the late Pedro Clemente, was for ten (10) years a janitor in the Department of Health (Dagupan City), assigned at the Ilocos Norte Skin Clinic, Laoag City. He was hospitalized from November 3 to 14, 1976 at the Central Luzon Sanitarium, Tala Sanitarium, Tala, Caloocan City, due to his ailment of "nephritis," as per medical certification of his attending physician, Dr. Winifredo Samson. He was also found to be suffering from such ailments as portal cirrhosis and leprosy, otherwise known as Hansen's Disease.

On November 14, 1976, Pedro Clemente died of uremia due to nephritis. Thereafter, petitioner filed with the GSIS a claim for employees' compensation under the Labor Code, as amended.

On February 4, 1977, the GSIS denied the claim of the petitioner because the ailments of her husband are not occupational diseases taking into consideration the nature of his work and/or (sic) or were not in the least causally related to his duties and conditions of work.

On March 9, 1977, petitioner requested for reconsideration of the GSIS' denial of her claim, stating that the ailments of her husband were contracted in the course of employment and were aggravated by the nature of his work. Petitioner alleged that her husband, as janitor of the Ilocos Norte Skin Clinic (Laoag City), worked in direct contact with persons suffering from different skin diseases and was exposed to obnoxious dusts and other dirt which contributed to his ailment of Hansen's disease. Citing further the cases ofSeven-Up Bottling Co., of the Phil. v. Rimerata, L-24349, December 24, 1968 andAvana v. Quisumbing, L-23489, March 27, 1968. Petitioner stated that her husband's ailment recurred in the course of employment presumably due to his direct contact with persons suffering from this ailment.

Acting upon petitioner's request for reconsideration, the GSIS, on April 11, 1977, reiterated its previous denial of her claim.

On April 14, 1977, treating the request for reconsideration as an appeal, the GSIS forwarded the records of the petitioner' claim for review by the ECC.

On October 26, 1977, respondent ECC affirmed the GSIS' action of denial and rendered its own decision dismissing petitioner's claim (ECC Case No. 0509).

Respondent ECC's decision was anchored upon the findings that the ailments are not listed as occupational diseases; that there was no substantial evidence of causal connection; and that, in fact, the evidence was that the deceased had already contracted the Hansen's disease before his employment. In the exact words of the ECC:

In the case at bar, since the deceased's ailments are not listed as occupational diseases, appellant herein must prove that such ailments were caused by deceased's employment and that the risk of contracting the same was increased by his working conditions in order to be compensable.

A mere cursory reading of the evidences on record, however, will disclose that appellant failed to submit the required proof of causation. There is no substantial proof in the record from which we could draw the conclusion that indeed the nature of deceased's employment as Janitor of Ilocos Norte Skin Clinic could be traced as the direct cause of his ailment. Hence, in the absence of such evidence, we are not disposed to disturb on appeal the findings of the respondent System.

On the contrary, we find the records that the deceased, prior to his employment in this office, was already suffering from his ailment of Hansen's disease. This proves that his working conditions did not increase the risk of his contracting the same. If at all, his employment merely aggravated his ailments. Unfortunately, however, aggravation of a preexisting illness, a rule under the old law, is not anymore a ground for compensation under the new law. Thus, the cases cited by the appellant cannot be raised as authorities to support her claim.

Petitioner now seeks a review of the ECC decision. (pp. 76-78, Rollo)

There is no question that the claim falls under the provisions of the Labor Code, as amended. Under Article 167(L) of the Labor Code and Section 1 (b) Rule III of the Amended Rules on Employees' Compensation, for the sickness and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex "A" of the Rules with the conditions therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is increased by the working conditions (De Jesus v. Employees' Compensation Commission, 142 SCRA 92, 96).

As the illnesses of the deceased are admittedly, not listed under Annex "A" of the Rules as occupational diseases, the petitioner bases her claim under the theory of increased risk. She alleges that the deceased, as janitor of the Ilocos Norte Skin Clinic, was exposed to patients suffering from various kinds of skin diseases, including Hansen's disease or leprosy. She avers that for ten years, the deceased had to clean the clinic and its surroundings and to freely mix with its patients. She claims that it was during this time that he was attacked by other dreadful diseases such as uremia, cancer of the liver, and nephritis.

On the other hand, the respondent Employees' Compensation Commission contends that the petitioner failed to prove by substantial evidence that the deceased's ailments were indeed caused by his employment. It maintains that the deceased merely had a recurrence of a pre-existing illness aggravated possibly by the nature of his employment and that there is no evidence on record showing that the nature of the deceased's employment was the direct cause of any of his illnesses.

The respondent Government Service Insurance System concurs with the views of the respondent Commission. It, however, argues that it should be dropped as a party respondent in this case. It claims that the petitioner has no cause of action against it, the subject of judicial review being the adverse decision of the respondent Commission.

We rule for the petitioner.

InSarmiento v. Employees' Compensation Commission(144 SCRA 421, 46) we held that:

Strict rules of evidence are not applicable in claims for compensation (San Valentin v. Employees' Compensation Commission, 118 SCRA 160; Better Building, Inc., v. Puncan, 135 SCRA 62). There are no stringent criteria to follow. The degree of proof required under P.D. 626; is merely substantial evidence, which means, "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion" (Cristobal v. Employees' Compensation Commission, supra, citing Ang Tibay v. Court of Industrial Relations and National Labor Union, Inc., 69 Phil. 635; and Acosta v. Employees' Compensation Commission, 109 SCRA 209). The claimant must show, at least, by substantial evidence that the development of the disease is brought largely by the conditions present in the nature of the job. What the law requires is a reasonable work-connection and not a direct causal relation (Cristobal v. Employees' Compensation Commission, supra; Sagliba v. Employees' Compensation Commission, 128 SCRA 723; Neri v. Employees' Compensation Commission, 127 SCRA 672; Juala v. Employees' Compensation Commission, 128 SCRA 462; and De Vera v. Employees' Compensation Commission, 133 SCRA 685). It is enough that the hypothesis on which the workmen's claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is some basis in the facts for inferring a work-connection (Delegente v. Employees' Compensation Commission, 118 SCRA 67; and Cristobal v. Employees' Compensation Commission, supra). Probability not certainty is the touchstone (San Valentin v. Employees' Compensation Commission, supra).

In this case, we find sufficient evidence on record to sustain the petitioner's view. The records disclose that in resisting the petitioner's claim, the respondent Commission cited the following medical authorities:

Uremia refers to the toxic clinical condition associated with renal insufficiency and retention in the blood of nitrogenous urinary waste products (azotemia). Renal insufficiency may be due to (1) nephritis, bilateral pyelonephritis, polycystic kidney disease, uretral or bladder obstruction, SLE, polyarteritis, amyloid disease, or bilateral cortical necrosis; (2) acute tubular necrosis resulting from transfusion reaction, shock, burns, crushing injuries, or poisons; (3) sulfonamides precipitated in the kidneys or ureters; (4) nephrocalcinosis resulting from extreme alkalosis, diabetic acidosis, dehydration, or congestive heart failure may result in azotemia, or may predipitate (sic) severe uremia in the presence of already damages kidneys.

Reference: Lyght, Charles E.:The Merck Manual of Diagnosis and Therapy;M.S. & D. Research Lab.; 11th Edition, 1966, pp. 257-258.

Portal Cirrhosis: A chronic disease characterized by incresed connective tissue that spreads from the portal spaces, distorting liver architecture and impairing liver functions. Etiology, Incidence and pathology: Portal cirrhosis occurs chiefly in males in late middle life. Malnutrition is believed to be a predisposing if not a primary etiology factor. The role of alcohol is not clearly established. Alcohol probably exerts a direct toxic effect on the liver, and also increases malnutrition by providing calories without essential nutrients. Cirrhosis has been produced in animals by diets low in protein and specifically low in choline. The addition of choline to these diets prevents cirrhosis. Chronic poisoning with carbon tetrachloride or phosphorus produces changes similar to those from portal cirrhosis. The liver is diffusely nodular, scarred and dense. Microscopic section shows parenchymal degeneration cellular infiltration, proliferation or scar tissue and areas of regeneration. Fatty changes are present in the early states.

Reference: Lyght, C.E.:The Merck Manual of Diagnosis and Therapy: M.S. & D. N.J. 11th Edition, 1966, p. 928.

Hepatoma(Liver cancer) refers to malignant primary tumor of the liver destroying the parenchyma arise (sic) from both liver cell and bile duct elements. It develops most frequently in the previous cirrhosis liver. A higher fraction of patients with post necrotic cirrhosis develop hepatoma than those with portal alcoholic cirrhosis. This may reflect the more active necrotic and regenerative processes in the post necrotic cirrhosis liver. Most large series indicate that 60% or more of hepatomas develop in a previously cirrhotic liver. The cirrhosis of hemochromatosis seems particularly liable to hepatomas as high a fraction as 20% of patients with hemochromatosis die from this cause.

Reference: Harrison, T.R.:Principles of Internal Medicine; McGraw Hill; N.Y., 5th Ed.; 1966, p. 1072.

Leprosyis a chronic, mildly contagious, infectious disease characterized by both cutaneous and constitutional symptoms and the production of various deformities and mutilations. The causative organism is an acid fast rod. Mycobacterium leprae, first described by Hansen in 1874. The mode of transmission is obscure, although infection by direct contact appears likely. The disease is found predominantly in tropical and sub-tropical Asia, Africa, and South America. It is endemic in the Gulf States of the USA, Hawaii, the Philippines and Puerto Rico.

Reference: Lyght, C.E.:The Merk Manuel of Diagnosis and Therapy; " M.S. & D.; 11th Ed.; 1966, p. 847.

The nature of nephritis, however, was discussed by Mr. Daniel Mijares, GSIS Manager, Employees' Compensation Department, in his letter dated February 4, 1977, denying petitioner's claim, as follows:

Nephritis is an acute, diffuse inflammation of the glomeruli or kidneys. It usually follows previous streptoccocal infection mostly in the upper respiratory tract. Because of this, it is always thought that nephritis is the result of an auto-immune or allergic reaction to infection, usually streptococcal. (Rollo, p. 20)

The foregoing discussions support rather than negate the theory of increased risk. We note that the major ailments of the deceased, i.e. nephritis, leprosy, etc., could be traced from bacterial and viral infections. In the case of leprosy, it is known that the source of infection is the discharge from lesions of persons with active cases. It is believed that the bacillus enters the body through the skin or through the mucous membrane of the nose and throat (Miller and Keane, Encyclopedia and Dictionary of Medicine and Nursing, (1972), p. 530).

On the other hand, infectious diseases which give rise to nephritis are believed to be as follows:

Table 294-1

Causes of acute glomerulonephritis

Infectious diseases

A. Post streptococcal glumerulonephritis

B. Non-Post streptococcal glumerulonephritis

1. Bacterial: Infective endocarditis, "Shunt nephritis," sepsis, pneumococcal pneumonia, typhoid fever, secondary syphilis, meningococcemia

2. Viral: Hepatitis B, infectious menoneucleosis, mumps, measles, varicella, vaccinia, echovirus, and coxsackievirus

3. Parasitic: Malaria, taxoplasmosis

(Harrison's Principles of Internal Medicine, 10th edition, p. 1633)

The husband of the petitioner worked in a skin clinic. As janitor of the Ilocos Norte Skin Clinic, Mr. Clemente was exposed to different carriers of viral and bacterial diseases. He had to clean the clinic itself where patients with different illnesses come and go. He had to put in order the hospital equipments that had been used. He had to dispose of garbage and wastes that accumulated in the course of each working day. He was the employee most exposed to the dangerous concentration of infected materials, and not being a medical practitioner, least likely to know how to avoid infection. It is, therefore, not unreasonable to conclude that Mr. Clemente's working conditions definitely increased the risk of his contracting the aforementioned ailments. This Court has held in appropriate cases that the conservative posture of the respondents is not consistent with the liberal interpretation of the Labor Code and the social justice guarantee embodied in the Constitution in favor of the workers (Cabanes v. Employees' Compensation Commission, et al., L-50255, January 30, 1982; and Cristobal v. Employees' Compensation Commission, et al., supra). It clashes with the injunction in the Labor Code (Article 4, New Labor Code) that, as a rule, doubts should be resolved in favor of the claimant-employee (Mercado, Jr., v. Employees' Compensation Commission, 139 SCRA 270, 277).

The respondents admit there may have been aggravation of an existing ailment but point out that aggravating is no longer a ground for compensation under the present law. They contend that the compensable factor of increased risks of contracting the disease is not present in this case.

The fallacy in this theory lies in the failure to explain how a sick person was able to enter the government service more than ten years before he became too ill to work and at a time when aggravation of a disease was compensable. There is no evidence to show that Mr. Clemente was hired inspite of having an existing disease liable to become worse.

The petitioner's arguments of recurrence of an already cured disease or the contracting of the disease due to increased risks become more plausible. When there are two or more possible explanations regarding an issue of compensability that which favors the claimant must be chosen.1avvphi1We also do not find merit in the respondent GSIS' contention that it should be dropped as a party in this case. This Court has passed upon this issue on several occasions. Thus, in the case of Cabanero v. Employees' Compensation Commission (111 SCRA 413, 419), this Court citing Lao v. Employees' Compensation Commission (97 SCRA 782), held:

x x x x x x x x x

... This Court is of the opinion that respondent System, as the ultimate implementing agency of the ECC's decision, is a proper party in this case. The fact that this Court chose to require respondent GSIS to comment is an indication that it is a necessary party. It must be noted that the law and the rules refer to the said System in all aspects of employee compensation (including enforcement of decisions (Article 182 of Implementing Rules.) (at p. 793).

WHEREFORE, in view of the foregoing, the decision appealed from is hereby SET ASIDE and the respondent Government Service Insurance System is hereby ordered to pay the petitioner:

1) The sum of TWELVE THOUSAND PESOS (P12,000.00) as death benefits; and

2) The sum of ONE THOUSAND TWO HUNDRED PESOS (P1,200.00) as attorney's fees.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.G.R. No. 73681 June 30, 1988

COLGATE PALMOLIVE PHILIPPINES, Inc.,petitioners,vs.HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION,respondents.

PARAS,J.:Before Us is a Petition for certiorari seeking to set aside and annul the Order of respondent Minister of Labor and Employment (MOLE) directly certifying private respondent as the recognized and duly-authorized collective bargaining agent for petitioner's sales force and ordering the reinstatement of three employees of petitioner.

Acting on the petition for certiorari with prayer for temporary restraining order, this Court issued a Temporary Restraining Order enjoining respondents from enforcing and/or carrying out the assailed order.

The antecedent facts are as follows:

On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing employees to retract their membership with the union and restraining non-union members from joining the union.

After efforts at a