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G.R. No. 178909 October 10, 2012SUPERIOR PACKAGING CORPORATION, Petitioner, vs.ARNEL BALAGSA Y, ZALDY ALFORGNE, JAIME ANGELES, REY APURA, GERALD CABALAN, JONALD CALENTENG, RAMIL CROIJERO, JUNREY CABALGUINTO, OSCAR DAYTO, RUFO DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO, ELIEZER MAGHAMOY, LEO FLORES, RENATOPAGADORA,REYNALDO PLAZA, H.OGER SJBNEAO, EDWIN TONALBA, .JOHN ACHARON, RODERICK RAMAS, SALVADOR ACURATO, JULUIS BASUL, CARLOS RAYTA, LITO BELANO, ROGER CASIMIRO, RENE CURADA, NESTRO ESTE, ROMMEL IMPELIOO, ZOILO ISLA, JHONIE OGARDO, EDWIN POSADAS, ALEXANDER REGPALA, CHRISTOPHER SAMPIANO, RITCHIE SANCHES, ROLANDO SORIANO, ROWELL ANCHETA, RICKY BORDAS, ANTONIO BEHEN, RONALD DOMINGO, JERRY MORENO, ROLLY ROSALES, RENATO RESTANO and ISIDRO SARIGNE, Respondents.R E S O L U T I O NREYES, J.:The main issue in this case is whether Superior Packaging Corporation (petitioner) may be held solidarily liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims.The facts are undisputed.The petitioner engaged the services of Lancer to provide reliever services to its business, which involves the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the respondents were engaged for four (4) months from February to June 1998 and their tasks included loading, unloading and segregation of corrugated boxes.Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz), for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary, the Department of Labor and Employment (DOLE) conducted an inspection of the petitioners premises and found several violations, to wit: (1) non-presentation of payrolls and daily time records; (2) non-submission of annual report of safety organization; (3) medical and accident/illness reports; (4) non-registration of establishment under Rule 1020 of Occupational and Health Standards; and (5) no trained first aide1 Due to the petitioners failure to appear in the summary investigations conducted by the DOLE, an Order2 was issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and 38/100 (P 840,463.38).3They filed a motion for reconsideration on the ground that respondents are not its employees but of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its motion in its Resolution4 dated February 16, 2004, ruling that the petitioner failed to support its claim that the respondents are not its employees, and even assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual employees to the extent of the work performed when the contractor fails to pay its employees wages.Their appeal to the Secretary of DOLE was dismissed per Order5 dated July 30, 2004 and the Order dated June 18, 2003 and Resolution dated February 16, 2004 were affirmed.6 Their motion for reconsideration likewise having been dismissed by the Secretary of DOLE in an Order dated January 21, 2005,7 petitioner and Luz filed a petition for certiorari with the Court of Appeals (CA).On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that Luz was absolved of any personal liability under the award.8 The petitioner filed a partial motion for reconsideration insofar as the finding of solidary liability with Lancer is concerned but it was denied by the CA in a Resolution9 dated July 10, 2007.The petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court, alleging that:ITHE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE COMPANY IS SOLIDARILY LIABLE WITH THE CONTRACTOR NOTWITHSTANDING THE FACT THAT:A. THE COMPANY CANNOT BE HELD SOLIDARILY LIABLE WITH THE CONTRACTOR FOR THE PENALTY OR SANCTION IMPOSED BY WAY OF "DOUBLE INDEMNITY" UNDER REPUBLIC ACT NO. 6727.B. THERE IS NO EVIDENCE TO SHOW THAT PRIVATE RESPONDENTS RENDERED OVERTIME WORK AND ACTUALLY WORKED ON THEIR RESTDAYS FOR THE COMPANY FOR THE PERIOD IN QUESTION.IITHE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE FINDINGS OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE CONTRACTOR IS ENGAGED IN LABOR-ONLY CONTRACTING.10On the first ground, the petitioner argues that the DOLE erred in doubling respondents underpayment of wages and regular holiday pay under Republic Act No. 6727 (Wage Rationalization Act) inasmuch as the solidary liability of a principal does not extend to a punitive award against a contractor.11 The petitioner also contends that there is no evidence showing that the respondents rendered overtime work and that they actually worked on their rest days for them to be entitled to such pay.12On the second ground, the petitioner objects to the finding that it is engaged in labor-only contracting and is consequently an indirect employer, considering that it is beyond the visitorial and enforcement power of the DOLE to make such conclusion. According to the petitioner, suchconclusion may be made only upon consideration of evidentiary matters and cannot be determined solely through a labor inspection.13 The petitioner also refutes respondents alleged belated argument that the latter are its employees.14The petition is bereft of merit.To begin with, the Court will not resolve or dwell on the petitioners argument on the doubling of respondents underpayment of wages and regular holiday pay by the DOLE for the simple reason that this is the first time that the petitioner raised such contention. From its pleadings filed in the DOLE and all the way up to the CA, the petitioner never questioned nor discussed such issue. It is only now before the Court that the petitioner belatedly presented such argument. It is well-settled that points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage.15 To consider the alleged facts and arguments raised belatedly would amount to trampling on the basic principles of fair play, justice and due process.16With regard to the contention that there is no evidence to support the finding that the respondents rendered overtime work and that they worked on their rest day, the resolution of this argument requires a review of the factual findings and the evidence presented, which this Court will not do. This Court is not a trier of facts and this applies with greater force in labor cases.17 Hence, where the factual findings of the labor tribunals or agencies conform to, and are affirmed by, the CA, the same are accorded respect and finality, and are binding upon this Court.18Petitioner also questions the authority of the DOLE to make a finding of an employer-employee relationship concomitant to its visitorial and enforcement power. The Court notes at this juncture that the petitioner, again, did not raise this question in the proceedings before the DOLE. At best, what the petitioner raised was the sufficiency of evidence proving the existence of an employer-employee relationship and it was only in its petition for certiorari with the CA that the petitioner sought to have this matter addressed. The CA should have refrained from resolving said matter as the petitioner was deemed to have waived such argument and was estopped from raising the same.19At any rate, such argument lacks merit. The DOLE clearly acted within its authority when it determined the existence of an employer-employee relationship between the petitioner and respondents as it falls within the purview of its visitorial and enforcement power under Article 128(b) of the Labor Code, which provides:Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment,20 the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such determination, however, is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. Such power was further explained recently by the Court in its Resolution21 dated March 6, 2012 issued in Peoples Broadcasting, viz:The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.x x x xx x x The power of the DOLE to determine the existence of an employer-employee relationship need not necessarily result in an affirmative finding.1wphi1 The DOLE may well make the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court.Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.22Also, the existence of an employer-employee relationship is ultimately a question of fact.23 The determination made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the ambit of a petition for review on certiorari.24The Court now comes to the issue regarding the nature of the relationship between the petitioner and respondents, and the consequent liability of the petitioner to the respondents under the latters claim.It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of respondents and liable to the latter for their unpaid money claims.At the time of the respondents employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of 1997.25 Under said Department Order, labor-only contracting was defined as follows:Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.26According to the CA, the totality of the facts and surrounding circumstances of this case point to such conclusion. The Court agrees.The ratio of Lancers authorized capital stock of P 400,000.00 as against its subscribed and paid-up capital stock of P 25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day operations. And while the Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, it measures the same against the type of work which the contractor is obligated to perform for the principal.27 Moreover, the nature of respondents work was directly related to the petitioners business. The marked disparity between the petitioners actual capitalization (P 25,000.00) and the resources needed to maintain its business, i.e., "to establish, operate and manage a personnel service company which will conduct and undertake services for the use of offices, stores, commercial and industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed to produce any written service contract that might serve as proof of its alleged agreement with Lancer.28Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the "labor only" contractor is considered as a mere agent of the principal, the real employer.29 The former becomes solidarily liable for all the rightful claims of the employees.30 The petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents unpaid money claims.WHEREFORE, the petition for review is DENIED.

G.R. No. 162419 July 10, 2007PAUL V. SANTIAGO, petitioner, vs.CF SHARP CREW MANAGEMENT, INC., respondent.D E C I S I O NTINGA, J.:At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether the seafarer, who was prevented from leaving the port of Manila and refused deployment without valid reason but whose POEA-approved employment contract provides that the employer-employee relationship shall commence only upon the seafarers actual departure from the port in the point of hire, is entitled to relief?This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404.1Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 On 3 February 1998, petitioner signed a new contract of employment with respondent, with the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the contract was approved by the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV Seaspread" which was scheduled to leave the port of Manila for Canada on 13 February 1998.A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice President, sent a facsimile message to the captain of "MSV Seaspread," which reads:I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan.Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart he was a serpent. If you agree with me then we will send his replacement.Kindly advise.3 To this message the captain of "MSV Seaspread" replied:Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.4 On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at some future date.Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads:WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the rate of exchange prevailing at the time of payment.All the other claims are hereby DISMISSED for lack of merit.SO ORDERED.6 On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee relationship between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorneys fees should be dismissed.7 On the other hand, the NLRC found respondents decision not to deploy petitioner to be a valid exercise of its management prerogative.8 The NLRC disposed of the appeal in this wise:WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far as other claims are concerned and with MODIFICATION by VACATING the award of actual damages and attorneys fees as well as excluding Pacifico Fernandez as party respondent.SO ORDERED.9 Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of merit.10 He elevated the case to the Court of Appeals through a petition for certiorari.In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRCs Decision when it affirmed with modification the labor arbiters Decision, because by the very modification introduced by the Commission (vacating the award of actual damages and attorneys fees), there is nothing more left in the labor arbiters Decision to affirm.12According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the period prescribed inthe POEA Rules.13 It agreed with the NLRCs finding that petitioners non-deployment was a valid exercise of respondents management prerogative.14 It added that since petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on.15Petitioners subsequent motion for reconsideration was denied on 19 February 2004.16The present petition is anchored on two grounds, to wit:A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant Workers Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioners POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC.B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor cases, which is substantial evidence, thus a total departure from established jurisprudence on the matter.17 Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages, consisting of the stipulated salary and fixed overtime pay.18 Petitioner adds that since the contract is deemed consummated, he should be considered an employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims.19Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board the same vessel owned by the same principal and manned by the same local agent. He argues that respondents act of not deploying him was a scheme designed to prevent him from attaining the status of a regular employee.20Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other alleged callers did not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on substantial evidence.23On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioners monetary claims. His employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of petitioners case much less award damages to him. The controversy involves a breach of contractual obligations and as such is cognizable by civil courts.24 On another matter, respondent claims that the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.25There is some merit in the petition.There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no employer-employee relationship was created between the parties.26However, a distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he suffered.We take exception to the Court of Appeals conclusion that damages are not recoverable by a worker who was not deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which has jurisdiction over such matters.Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is not limited to claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x [Emphasis supplied]Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are cognizable by the labor arbiters of the NLRC.Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months worth of salary as provided in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not he rendered overtime work. Even though petitioner was "prevented without valid reason from rendering regular much less overtime service,"28 the fact remains that there is no certainty that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00 stipulated in the contract will be paid only if and when the employee rendered overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission29 where we discussed the matter in this light:The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.30 The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.31 We note that respondents basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere suspicion that is based on alleged phone calls of several persons whose identities were not even confirmed. Time and again, this Court has upheld management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.32 Respondents failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorneys fees is thus warranted.However, moral damages cannot be awarded in this case. While respondents failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioners rights, as to justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too hasty in making its conclusion that petitioner will jump ship like his brother.We likewise do not see respondents failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a regular employee. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular employee, regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations Commission,33 the Court ruled that seafarers are considered contractual employees and cannot be considered as regular employees under the Labor Code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. The exigencies of their work necessitates that they be employed on a contractual basis.34WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or compensatory damages in the amount of US$4,635.00representing salary for nine (9) months as stated in the contract, and attorneys fees at the reasonable rate of 10% of the recoverable amount.SO ORDERED.

G.R. No. 124013 June 5, 1998ROSARIO MANEJA, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN HOTEL, respondents.MARTINEZ, J.:Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the Resolution 1 dated June 3, 1994 of the respondent National Labor Relations Commission in NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown Hotel, Respondent," which dismissed the illegal dismissal case filed by petitioner against private respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its Resolution 2 dated October 20, 1995 denying petitioner's motion for reconsideration.Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning January, 1985 as a telephone operator. She was a member of the National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective Bargaining Agreement (CBA) with private respondent.In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received a Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The P500.00 deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and the page boy collected another P500.00 which was also given to the operator Loleng. The second call was also unanswered. Loleng passed on the RLDC to petitioner for follow-up. Petitioner monitored the call.On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After a search, Loleng found the first deposit of P500.00 inserted in the guest folio while the second deposit was eventually discovered inside the folder for cancelled calls with deposit and official receipts.When petitioner saw that the second RLDC form was not time-stamped, she immediately placed it inside the machine which stamped the date "February 15, 1990." Realizing that the RLDC was filed 2 days earlier, she wrote and changed the date to February 13, 1990. Loleng then delivered the RLDC and the money to the cashier. The second deposit of P500.00 by Ieda was later returned to him.On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner and Loleng directing the two to explain the February 15 incident. Petitioner and Loleng thereafter submitted their written explanation. 4On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the recommendation that the offenses committed by the operators concerned covered violations of the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging, falsifying official document(s), and (2) OSDA 1.11: culpable carelessness negligence or failure to follow specific instruction(s) or established procedure(s).On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1, 1990. Petitioner refused to sign the notice and wrote therein "under protest."Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was filed before the Office of the City Prosecutor of Manila by private respondent againts Loleng and petitioner. However, the resolution recommending the filing of a case for estafa was reversed by 2nd Asst. City Prosecutor Virgilio M. Patag.On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent before the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages, unpaid vacation leave conversion and moral damages.Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed by private respondent was granted by the Labor Arbiter and trial on the merits ensued.In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner was illegally dismiised. However, in the decision, the Labor Arbiter stated that:Preliminary, we hereby state that on the face of the instant complaint, it is one that revolves on the matter of the implementation and interpretation of existing company policies, which per the last par. of Art. 217 of the Labor Code, as amended, is one within the jurisdictional ambit of the grievance procedure under the CBA and thereafter, if unresolved, one proper for voluntary arbitration. This observation is re-entrenched by the fact, that complainant claims she is a member of NUWRAIN with an existing CBA with respondent hotel.On this score alone, this case should have dismissed outright. 9Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction "since Labor Arbiters under Article 217 of the same Labor Code, are conferred original and exclusive jurisdiction of all termination case(sic.)." The dispositive portion of the decision states that:WHEREFORE, premises considered, judgment is hereby renrdered as follows:(1) Declaring complainant's dismissal by respondent hotel as illegally effected;(2) Ordering respondent to immediately reinstate complainant to her previous position without loss of seniority rights;(3) Ordering further respondent to pay complainant the full backwages due her, which is computed as follows:3/23/90 - 10/31/90 = 7.26/mos.P2.540 x 7.26/mos. P18,440.4011/1/90 - 1/7/91 = 2.23/mos.P3,224.16 x 2.23/mos. 7,189.871/8/91 - 4/29/92 = 15.7/mos.P3,589.16 x 15.7/mos. 56,349.89P81,980.08(4) Moreover, respondent is ordered to pay the 13th month pay due the complainant in the amount of P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00 respectively, as well as attorney's fees equivalent to ten (10) percent of the total award herein in the amount of P11,381.17;(5) Finally, all other claims are hereby dismissed for lack of merit.SO ORDERED.Private respondent appealed the decision to the respondent commission on the ground inter alia that the Laber Arbiter erred in "assuming jurisdiction over the illegal dismissal case after finding that the case falls within the jurisdictional ambit of the grievance procedure under the CBA, and if unresolved, proper for voluntary arbitration." 10 An Opposition 11 was filed by petitioner.In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the illegal dismissal case for lack of Jurisdiction of the Labor Arbiter because the same should have instead been subjected to voluntary arbitration.Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of merit.In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion in 1. Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;2. Not ruling that private respondent is estopped by laches from questioning the jurisdiction of the illegal dismissal case;3. Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the merits of the case.Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting the labor arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction with Article 261 14 of the Labor Code. It is the view of petitioner that termination cases arising from the interpretation or enforcement policies pertaining to violations of Offenses Subject to Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level grievance machinery. Petitioner insists that her termination is not an unresolved grievance as there has been no grievance meeting between the NUWHRAIN union and the management. The reason for this, petitioner adds, is that it has been a company practice that termination cases are not anymore referred to the grievance machinery but directly to the labor arbiter.In its comment, private respondent argues that the Labor Arbiter should have dismissed the illegal dismissal case outright after finding that it is within the jurisdictional ambit of the grievance procedure. Moreover, private respondent states that the issue of jurisdiction may be raised at any time and at any stage of the proceedings even on appeal, and is not in estoppel by laches as contended by the petitioner.For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this Court in Sanyo Philippines Workers Union- PSSLU vs. Caizares 15 in dismissing the case for lack of jurisdiction of the Labor Arbiter.The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal dismissal case.The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the illegal dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by Republic Act No. 6715. It said:White it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive jurisdiction over cases involving "termination disputes," the Supreme Court, in a fairy recent case ruled:The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the grievance machinery, and when not settled at this level, to a panel of voluntary arbitrators outlined in CBAs does not only include grievances arising from the interpretation or implementation of the CBA but applies as well to those arising from the implementation of company personnel policies. No other body shall take cognizance of these cases. . . . (Sanyo vs. Caizares, 211 SCRA 361,372) 16We Find that the respondent Commission has erroneously interpreted the aforequoted portion of our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination dispute.Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decided within thirty (30) calendar days after the submission of the case by the parties for decision without extension even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:1. Unfair labor practice cases;2. Termination disputes;3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts;6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.As can be seen from the aforequoted Article, termination cases fall under the original and exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening there appears the phrase: "Except as otherwise provided under this Code . . . ." It is paragraph (c) of the same Article which respondent Commission has erroneously interpreted as giving the voluntary arbitrator jurisdiction over the illegal dismissal case.However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement and those arising from the interpretation or enforcement of company personel policies. Note the phrase "unresolved grievances." In the case at bar, the termination of petitioner is not an unresolved grievance.The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made between a case involving "interpretation or implementation of Collective Bargaining Agreement" or interpretation or "enforcement" of company personel policies, on the one hand and a case involving termination, on the other hand. It argued that the dismissal of the private respondents does not involve an "interpretation or implementation" of a Collective Bargaining Agreement or "interpretation or enforcement" of company personel policies but involves "termination." The Solicitor General further said that where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set up the Collective Bargaining Agreement or by voluntary arbitration. Where there was already actual termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter. 17 We fully agree with the theory of the Solicitor General in the Sanyo case, which is radically apposite to its position in this case.Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company personel policies," the jurisdiction of which pertains to the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators. It is to be stressed that under Article 260 of the Labor Code, which explains the function of the grievance machinery and voluntary arbitrator. "(T)he parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personel policies." Article 260 further provides that the parties to a CBA shall name or designate their respective representative to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be refered to the voluntary arbitrators designated in advance by the parties to a CBA of the union and the company. It can thus be deduced that only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. 18In the case at bar, the union does not come into the picture, not having objected or voiced any dissent to the dismissal of the herein petitioner. The reason for this, according to petitioner is that "the practice in said Hotel in cases of termination is that the latter cases are not referred anymore to the grievance committee;" and that "the terminated employee who wishes to question the legality of his termination usually goes to the Labor Arbiter for arbitration, whether the termination arose from the interpretation or enforcement of the company personnel policies or otherwise." 19As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable foursquare in petitioner's case. The dismissal of the petitioner does not call for the interpretation or enforcement of company personnel policies but is a termination dispute which comes under the jurisdiction of the Labor Arbiter.It should be explained that "company personel policies" are guiding priciples stated in broad, long-range terms that express the philosophy or beliefs of an organization's top authority regarding personnel matters. They deal with matters affecting efficiency and well-being of employees and include, among others, the procedure in the administration of wages, benefits, promotions, transfer and other personnel movements which are usually not spelled out in the collective agreement. The usual source of grievances, however, are the rules and regulations governing disciplinary actions. 20The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor Arbiter Olairez in this manner:In our honest opinion we have jurisdiction over the complaint on the following grounds:First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217 has been conferred to the labor Arbiters. The interpretation of the CBA or enforcement of the company policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or who committed offenses contrary to the personnel policies(sic) can no longer file a case of illegal discharge is premised on the interpretation or enforcement of the company policies(sic).Second. Respondent voluntarily submitted tha case to the jurisdiction of this labor tribunal. It adduced arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time attacks(sic) the jurisdiction of the tribunal. A person cannot have one's cake and eat it too. . . . .As to the second ground, petitioner correctly points out that respondent NLRC should have ruled that private respondent is estopped by laches in questioning the jurisdiction of the Labor Arbiter.Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent's active participation in the proceedings below. In Marquez vs. Secretary of Labor, 22 the Court said:. . . . The active participation of the against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction.In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation vs. Court of Appeals 24 in holding that private respondent is not in estopel. Thus,The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be conferred by consent of the parties or by estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon. (Emphasis ours)Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under the said ruling, estoppel lies in this case. Private respondent is stopped from questioning the jurisdiction of the Labor Arbiter before the respondent NLRC having actively participated in the proceedings before the former. At no time before or during the trial on the merits did private respondent assail the jurisdiction of the Labor Arbiter. Private respondent took the cue only from the preliminary statement in the decision of the Labor Arbiter, which was a mere obiter, and raised the issue of jurisdiction before the Commission. It was then too late. Estoppel had set in.Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner was illegally dismissed.The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed in the Article 282 of the Labor Code, 25 and (2) the employee must be given an opportunity to be heard and to defend himself. 26 The substantive and procedural laws must be strictly complied with before a worker can be dismissed from his employment because what is at stake is not only the employee's position but his livelihood. 27Petitioner's dismissal was grounded on culpade carelessness, negligence and failure to follow specific instruction(s) or established procedure(s) under OSDA 1.11; and, having forged or falsified official document(s) under OSDA 2.01.Private respondent blames petitioner for failure to follow established procedure in the hotel on a guest's request for long distance calls. Petitioner, however, explained that the usual or established procedures are not followed by the operators and hotel employees when circumstances warrant. For instance, the RLDC forms and the deposits are brought by the page boy directly to the operators instead of the cashiers if the latter are busy and cannot attend to the same. Furthermore, she avers that the telephone operators are not concious of the serial numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page boys do not actually check the serial numbers of all RLDCs in one batch, except for the first and the last.On the charge of taking of the money by petitioner, it is to be noted that the second P500.00 deposit made by the Japanese guest Ieda was later discovered to be inserted in the folder for cancelled calls with deposit and official receipts. Thus, there exists no basis for personal appropriation by the petitioner of the money involved. Another reason is the alleged tampering of RLDC No. 862406. 28 While petitioner and her co-operator Loleng admitted that they indeed altered the date appearing therein from February 15, 1990 to February 13, the same was purposely made to reflect the true date of the transaction without any malice whatsoever on their part.As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:The specifics of the grounds relied by respondent hotel's dismissal of complainant are those stated in Annex "F" of the latter's POSITION PAPER, which is the Notice of Dismissal, notably:1. OSDA 2.01 Forging, falsifying official documents(s)2. OSDA 1.11 Culpable negligence or failure to follow specific instruction(s) or established procedure(s)On this score, we are persuated by the complainant's arguments that under OSDA 1.11, infractions of this sort is not without qualifications, which is, that the alleged culpable carelessness, negligence or failure to follow instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE TO COMPANY PROPERTY. From the facts obtaining in this case, there is no quantum of proof whatsoever, except the general allegations in respondent's POSITION PAPER and other pleadings that loss or damage to company property resulted from the charged infraction. To our mind, this is where labor tribunals should come in and help correct interpretation of company policies which in the enforcement thereof wreaks havoc to the constitutional guarantee of security of tenure. Apparently, the exercise of little flexibility by complainant and co-employees which is predicated on good faith should not be taken against them and more particularly against the complainant herein. In this case, to sustain the generalized charge of respondent hotel under OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty which is dismissal.In the same tenor, the respondent's charge under OSDA 1.11 on the alleged falsification of private document is also with a qualification, in that the alleged act of falsification must have been done "IN SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF." Again, based on the facts of the complained act, there appeared no one to have been misled on the change of date from RLDC #862406 FROM 15 TO 13 February 1990.As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG, the 2nd Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA from the charges of falsification of private documents and qualified theft under IS No. 90-11083 and marked Annex. "H" of complainant's POSITION PAPER, when he ruled that an altercation which makes the document speak the truth cannot be the foundation of a criminal action. As to the charge of qualified theft, we too are of the finding, like the city prosecutor above-mentioned that there was no evidence on the part of MANEJA to have unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990 and moreover, we too, find no evidence that complainant MANEJA had intention to profit thereby nor had misappropriated the P500.00 in question. 29Given the factual circumstances of the case, we cannot deduce dishonesty from the act and omission of petitioner. Our norms of social justice demand that we credit employees with the presumption of good faith in the performance of their duties, 30 especially petitioner who has served private respondent since 1985 up to 1990 without any tinge of dishonesty and was even named "Model Employee" for the month of April, 1989. 31Petitioner has been charged with a very serious offense dishonesty. This can irreparably wreck her life as an employee for no employer will take to its bosom a dishonest employee. Dismissal is the supreme penalty that can be meted to an employee and its imposition cannot be justified where the evidence is ambivalent. 32 It must, therefore, be based on a clear and not on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on the ground relied upon by an employer in terminating the services of an employee denies the latter his full right to contest its legality. Fairness cannot countenance such ambiguity or ambivalence. 33An employer can terminate the services of an employee only for valid and just causes which must be supported by clear and convincing evidence. The employer has the burden of proving that the dismissal was indeed for a valid and just cause. 34 Failure to do so result in a finding that the dismissal wasunjustified. 35Finding that there was no just cause for dismissal of petitioner, we now determine if the rudiments of due process have duly accorded to her.Well-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notice before the termination of employment can be effected: (a) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and, (b) the second informs the employee of the employer's decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. 36In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on March 7, 1990. On March 11, 1990, they submitted their written explanation thereto. On March 20, 1990, a written report was made with a recommendation that the offences committed by them were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was served with a notice of dismissal for said violations effective April 1, 1990.An examination of the record reveals that no hearing was ever conducted by private respondent before petitioner was dismissed. While it may be true that petitioner submitted a written explanation, no hearing was actually conducted before her employment was terminated. She was not accorded the opportunity to fully defend herself.Consultations or conferences may not be a substitute for the actual holding of a hearing. Every opportunity and assistance must be accorded to the employee by the management to enable hom to prepare adequately for his defense, including legal representation. 37 Considering that petitioner denied having allegedly taken the second P500.00 deposit of the Japanese guest which was eventually found; and, having made the alteration of the date on the second RLDC merely to reflect the true date of the transaction, these circumstances should have at least warranted a separate hearing to enable petitioner to fully ventilate her side. Absent such hearing, petitioner's right to due process was clearly violated. 38It bears stressing that a worker's employment is properly in the constitutional sense. He cannot be deprived of his work without due process of law. Substantive due process mandates that an employee can only be dismissed based on just or authorized causes. Procedural due process requires further that he can only be dismissed after he has been given an opportunity to be heard. The import of due process necessitates the compliance of these two aspects.Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of this finding that petitioner was dismissed without just cause and without due process.We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be awarded to an illegally dismissed employee must be computed from the time he was dismissed to the time he is actually reinstated, without deducting the earnings he derived elsewhere pending the resolution of the case.Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851, as amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenth-month pay benefit regardless of their designation and irrespective of the method by which their wages are paid. 40The award of moral and exemplary damages to petitioner is also warranted where there is lack of due process in effecting the dismissal.Where the termination of the services of an employee is attended by fraud or bad faith on the part of the employer, as when the latter knowingly made false allegations of a supposed valid cause when none existed, moral and exemplary damages may be awarded in favor of the former. 41The anti-social and oppressive abuse of its right to investigate and dismiss its employees constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression by either capital or labor against the other, and Article 21 on human relations. The grant of moral damages to the employees by reason of such conduct on the part of the company is sanctioned by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages in actions reffered to in Article 21. 42The award of attorney's fees amounting to ten percent (10%) of the total award by the labor arbiter is justified under Article 111 of the Labor Code.WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of the respondent National Labor Relations Commission dated June 3, 1994 and October 20, 1995 are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor Arbiter is therefore REINSTATED.SO ORDERED.

G.R. No. 122791 February 19, 2003PLACIDO O. URBANES, JR., doing business under the name & style of CATALINA SECURITY AGENCY, petitioner, vs.THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SOCIAL SECURITY SYSTEM, respondents.D E C I S I O NCARPIO-MORALES, J.:Before this Court is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the June 22, 1995 Order of the Department of Labor and Employment (DOLE) Secretary which set aside the September 16, 1994 Order of the Regional Director, National Capital Region (NCR). The antecedent facts of the case are as follows:Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security Agency, entered into an agreement1 to provide security services to respondent Social Security System (SSS).During the effectivity of the agreement, petitioner, by letter of May 16, 1994,2 requested the SSS for the upward adjustment of their contract rate in view of Wage Order No. NCR-03 which was issued by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act 6727 otherwise known as the Wage Rationalization Act, the pertinent provision of which wage order reads:Section 9. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed amount set forth herein for covered workers shall be borne by the principals or the clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client failed to pay the prescribed increase, the construction/service contractors shall be jointly and severally liable with the principal or client. (Emphasis and underscoring supplied.)As his May 16, 1994 letter to the SSS remained unheeded, petitioner sent another letter,3 dated June 7, 1994, reiterating the request, which was followed by still another letter,4 dated June 8, 1994.On June 24, 1994, petitioner pulled out his agencys services from the premises of the SSS and another security agency, Jaguar, took over.5On June 29, 1994, petitioner filed a complaint6 with the DOLE-NCR against the SSS seeking the implementation of Wage Order No. NCR-03.In its position paper,7 the SSS prayed for the dismissal of the complaint on the ground that petitioner is not the real party in interest and has no legal capacity to file the same. In any event, it argued that if it had any obligation, it was to the security guards.On the other hand, petitioner in his position paper,8 citing Eagle Security Agency, Inc. v. NLRC,9 contended that the security guards assigned to the SSS do not have any legal basis to file a complaint against it for lack of contractual privity.Finding for petitioner, the Regional Director of the DOLE-NCR issued an Order10 of September 16, 1994, the dispositive portion of which reads, quoted verbatim:WHEREFORE, premises considered, the respondent Social Security System (SSS) is hereby Ordered to pay Complainant the total sum of ONE MILLION SIX HUNDRED THOUSAND EIGHT HUNDRED FIFTY EIGHT AND 46/100 (P 1,600,858.46) representing the wage differentials under Wage Order No. NCR-03 of the ONE HUNDRED SIXTY EIGHT (168) Security Guards of Catalina Security Agency covering the period from December 16, 1993 to June 24, 1994, inclusive within ten (10) days from receipt hereof, otherwise a writ of execution shall be issued to enforce this Order.The claims for the payment of interest and Attorneys fees are hereby ordered dismissed for want of jurisdiction.SO ORDERED.The SSS moved to reconsider the September 16, 1994 Order of the Regional Director, praying that the computation be revised.11By Order12 of December 9, 1994, the Regional Director modified his September 16, 1994 Order by reducing the amount payable by the SSS to petitioner. The dispositive portion of the Regional Directors Order of December 9, 1994 reads:WHEREFORE, premises considered, the Order of this Office dated September 16, 1994 is hereby modified. Respondent Social Security System is hereby ordered to pay complainant the amount of ONE MILLION TWO HUNDRED THIRTY SEVEN THOUSAND SEVEN HUNDRED FORTY PESOS (P 1,237,740.00) representing the wage differentials under Wage Order No. NCR-03 of the one hundred sixty-eight (168) security guards of Catalina Security Agency covering the period from December 16, 1993 to June 20, 1994, inclusive, within ten (10) days from receipt of this Order, otherwise, execution shall issue.The SSS appealed13 to the Secretary of Labor upon the following assigned errors, quoted verbatim:A. THE REGIONAL DIRECTOR HAS NO JURISDICTION OF THE CASE AT BAR.B. THE HONORABLE REGIONAL DIRECTOR ERRED IN FINDING THAT COMPLAINANT IS THE REAL PARTY IN INTEREST AND HAS LEGAL CAPACITY TO FILE THE CASE.C. THE HONORABLE REGIONAL DIRECTOR ERRED IN ADOPTING COMPLAINANTS COMPUTATION FOR WAGE ADJUSTMENT UNDER WAGE ORDER NO. NCR-03 AS BASIS OF RESPONDENTS LIABILITY.14The Secretary of Labor, by Order15 of June 22, 1995, set aside the order of the Regional Director and remanded the records of the case "for recomputation of the wage differentials using P 5,281.00 as the basis of the wage adjustment." And the Secretary held petitioners security agency "JOINTLY AND SEVERALLY liable for wage differentials, the amount of which should be paid DIRECTLY to the security guards concerned."Petitioners Motion for Reconsideration of the DOLE Secretarys Order of June 22, 1995 having been denied by Order16 of October 10, 1995, the present petition was filed, petitioner contending that the DOLE Secretary committed grave abuse of discretion when he:1. . . . TOTALLY IGNORED THE PROVISION OF ARTICLE 129 OF THE LABOR CODE FOR PERFECTING AN APPEAL FROM THE DECISION OF THE REGIONAL DIRECTOR UNDER ARTICLE 129 INVOKED BY RESPONDENT SSS;2. . . . DISREGARDED THE PROVISION ON APPEALS FROM THE DECISIONS OR RESOLUTIONS OF THE REGIONAL DIRECTOR, DOLE, UNDER ARTICLE 129 OF THE LABOR CODE, AS AMENDED BY REPUBLIC ACT NO. 6715;3. . . . TOTALLY OVERLOOKED THE LAW AND PREVAILING JURISPRUDENCE WHEN IT ACTED ON THE APPEAL OF RESPONDENT SSS.17Petitioner asserts that the Secretary of Labor does not have jurisdiction to review appeals from decisions of the Regional Directors in complaints filed under Article 129 of the Labor Code18 which provides:ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND OTHER BENEFITS. Upon complaint of any interested party, the regional director of the Department of Labor and Employment or any duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement; Provided, further, That the aggregate money claim of each employee or househelper does not exceed Five Thousand pesos (P5,000.00). The regional director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the regional director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper, because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers.Any decision or resolution of the regional director or officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from submission of the last pleading required or allowed under its rules.x x x (Emphasis supplied).Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should have been dismissed.19The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case. Article 128 provides:ART. 128. VISITORIAL AND ENFORCEMENT POWERS x x x(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection.x x xAn order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter.x x x (Emphasis supplied).Neither the petitioners contention nor the SSSs is impressed with merit. Lapanday Agricultural Development Corporation v. Court of Appeals20 instructs so. In that case, the security agency filed a complaint before the Regional Trial Court (RTC) against the principal or client Lapanday for the upward adjustment of the contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday argued that it is the National Labor Relations Commission, not the civil courts, which has jurisdiction to resolve the issue in the case, it involving the enforcement of wage adjustment and other benefits due the agencys security guards as mandated by several wage orders. Holding that the RTC has jurisdiction over the controversy, this Court ruled:We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists.21x x x (Emphasis and underscoring supplied).In the case at bar, even if petitioner filed the complaint on his and also on behalf of the security guards,22 the relief sought has to do with the enforcement of the contract between him and the SSS which was deemed amended by virtue of Wage Order No. NCR-03. The controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil courts.But even assuming arguendo that petitioners complaint were filed with the proper forum, for lack of cause of action it must be dismissed.1awphi1.ntArticles 106, 107 and 109 of the Labor Code provide:ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an employer enters into contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wage of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. xxx (Emphasis and underscoring supplied)ART. 107 INDIRECT EMPLOYER. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.ART. 109. SOLIDARY LIABILTY. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.(Emphasis supplied.)In the case of Eagle Security Agency, Inc. v. NLRC,23 this Court held:The Wage Orders are explicit that payment of the increases are "to be borne" by the principal or client. "To be borne", however, does not mean that the principal, PTSI in this case, would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. The security guards' contractual relationship is with their immediate employer, EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages [See Article VII Sec. 3 of the Contract for Security Services, supra and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 665].On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the former availed of the security services provided by the latter. In return, the security agency collects from its client payment for its security services. This payment covers the wages for the security guards and also expenses for their supervision and training, the guards' bonds, firearms with ammunitions, uniforms and other equipments, accessories, tools, materials and supplies necessary for the maintenance of a security force.Premises considered, the security guards' immediate recourse for the payment of the increases is with their direct employer, EAGLE. However, in order for the security agency to comply with the new wage and allowance rates it has to pay the security guards, the Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. What the Wage Orders require, therefore, is the amendment of the contract as to the consideration to cover the service contractor's payment of the increases mandated. In the end, therefore, ultimate liability for the payment of the increases rests with the principal.In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the security guards. x x x (Emphasis and underscoring supplied).Passing on the foregoing disquisition in Eagle, this Court, in Lapanday,24 held:It is clear also from the foregoing that it is only when [the] contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal (as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable is in line with Article 1217 of the Civil Code which provides:"Art. 1217. Payment made by one the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. He who made payment make claim from his co-debtors only the share which corresponds to each, with interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. x x x"25 (Emphasis and underscoring supplied).In fine, the liability of the SSS to reimburse petitioner arises only if and when petitioner pays his employee-security guards "the increases" mandated by Wage Order No. NCR-03.1awphi1.ntThe records do not show that petitioner has paid the mandated increases to the security guards. The security guards in fact have filed a complaint26 with the NLRC against petitioner relative to, among other things, underpayment of wages.WHEREFORE, the present petition is hereby DISMISSED, and petitioners complaint before the Regional Director is dismissed for lack of jurisdiction and cause of action.SO ORDERED.

G.R. No. 159482. August 30, 2005NICASIO P. RODRIGUEZ JR., ANTONIO P. EREETA, JUANITO A. MAGNO, VICTOR C. PINEDA, BITUIN V. SALCEDO, CESAR R. SAN DIEGO, VICTOR V. TANTOCO and AMADOR C. DE LA MERCED, Petitioners, vs.ANTONIO L. AGUILAR SR., Respondent.D E C I S I O NPANGANIBAN, J.:Claims for moral and exemplary damages arising from employer-employee relations fall within the original and exclusive jurisdiction of the National Labor Relations Commission, not the regular courts. Hence, in the present case, the trial court should not have entertained the Complaint filed by respondent for damages arising from the alleged oppressive manner of his dismissal by petitioners.The CaseBefore the Court is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse and set aside the March 31, 2003 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 74278 and its August 5, 2003 Resolution3 denying petitioners Motion for Reconsideration. The assailed CA Decision disposed as follows:"WHEREFORE, for lack of merit, the petition is DISMISSED."4The FactsThe antecedents were summarized by the CA as follows:"Petitioners are members of the Board of Directors of Philippine Postal Savings Bank, Inc. (PPSBI) at Liwasang Bonifacio, Manila; private respondent Antonio L. Aguilar was employed as Vice President of its Finance and Administrative Group from February 14, 2000 to January 31, 2001, and thereafter as Compliance Officer until September 26, 2001 when his services were terminated."On October 25, 2001, private respondent filed a complaint against petitioners with the Regional Trial Court, Branch 49, City of Manila alleging that he was illegally dismissed by the petitioners in an oppressive way; that the cause of his dismissal was his principled act of exposing anomalies in the bank; that considering the seriousness of the violations of internal control and bank policies, there is a need to prohibit petitioners from performing their functions as members of the Board in their own personal capacity. He prayed for the award of damages, the issuance of a temporary restraining order enjoining the petitioners from dismissing him or in the alternative, to immediately reinstate him, and the prohibition of the petitioners from performing their personal and official acts in the bank."On October 29, 2001, public respondent Judge motu proprio dismissed the complaint for lack of jurisdiction stating that jurisdiction over the case lies with the Labor Arbiter of the National Labor Relations Commission."Unaware of the dismissal[,] petitioners, on November 9, 2001, filed a Motion to Dismiss private respondents complaint on the ground of the RTCs lack of jurisdiction over the subject matter of the complaint."On November 12, 2001, private respondent filed a Motion for Reconsideration of the Order dated 29 October 2001. However, on November 26, 2001, he filed an Ex-Parte Motion to Withdraw Motion For Reconsideration of the Dismissal Order and In Lieu Thereof to Submit Amended Complaint, which was attached thereto. In his Amended Complaint, he emphasized that his dismissal (constructive and actual) was done in a very oppressive manner. His prayer for reinstatement was deleted."In an Order dated January 4, 2002, public respondent Judge admitted the Amended Complaint reasoning that amendment was a matter of right before defendants filed a responsive pleading, the motion to dismiss not being a responsive pleading. Petitioners were ordered to file their Answer within fifteen (15) days from receipt thereof."On January 30, 2002, without filing a Motion for Reconsideration of the above Order, petitioners again filed a Motion to Dismiss, this time of the Amended Complaint, on the ground of lack of jurisdiction over the persons of the petitioners and over the subject matter of the claim."In an Order dated February 8, 2002, public respondent Judge ruled that petitioners filing of the above Motion to Dismiss was tantamount to a voluntary appearance through a pleading that vested the court with jurisdiction over their persons. Petitioners were given an additional ten (10) days within which to submit an Answer, otherwise, said defendants (herein petitioners), may be declared in default."Petitioners then filed a Motion for Reconsideration dated February 15, 2002, reiterating their prayer for the dismissal of the Amended Complaint. This was denied in the Order dated March 1, 2002."On April 4, 2002, respondent filed a Motion to Declare Defendants As in Default and For Judgment On the Pleadings grounded on petitioners failure to file their Answer within the additional ten (10)-day period granted by the court. Citing Ortigas & Co. Ltd. v. Velasco (254 SCRA 234), public respondent noted that defendants were heedless and unyielding to the Orders of the Court particularly its directive to file an Answer to the Amended Complaint and that the defendants continually ignored and refused to submit to the Orders of the Court, and inasmuch as no responsive pleading has been filed by them within the period fixed by the Court in its Order dated June 7, 2002 which granted respondents motion and declared defendants-petitioners in default."On the 15th day from receipt thereof on June 19, 2002, petitioners filed on July 1, 2002 an ordinary Motion for Reconsideration on the above Order, (not a Motion to Set Aside the Order of Default under Rule 9 Sec. 3(b), Rules of Civil Procedure) which was denied in an Order dated July 19, 2002."On the same date of July 19, 2002, public respondent issued the assailed decision (Judgment by Default) in favor of the private respondent ratiocinating as follows:The Court shall not delve into the legality of Mr. Aguilars demotion and, later on, dismissal by the PPSB Board of Directors for to do so would intrude into the jurisdiction of the Labor Arbiters of the National Labor Relations Commission. Rather, this Court shall concern itself with the manner in which the said demotion and dismissal were carried out and the consequent effects thereof, which, as jurisprudence teaches us, are well within this Courts jurisdiction to inquire into.From the foregoing, confluence of events, which stand unrebutted the defendants having been declared in default, there can be no question that Mr. Aguilars demotion and dismissal from service was pursued in a highly abusive, oppressive and clearly anti-social manner."On August 7, 2002, petitioners filed an Omnibus Motion contending that the Order of Default did not deprive them of their right to notice, which public respondent violated when private respondents evidence was received without notifying them; that the presentation of evidence ex parte was premature considering that they were still entitled to question the propriety of the Order of Default and that, in fact, they filed a motion for reconsideration of the Order of default. Petitioners reiterated that the Amended Complaint was filed out of time considering that the Order of Dismissal dated 29 October 2001 had already became final. On August 16, 2002, the public respondent issued the assailed Order denying the Omnibus Motion."5Petitioners filed before the CA a Petition for Certiorari under Rule 65, challenging the July 19, 2002 Decision and the August 16, 2002 Order of the Regional Trial Court (RTC), alleging that it had gravely abused its discretion in the following ways:"1. Holding that Mr. Aguilars ex parte withdrawal of his Motion for Reconsideration of the Order of Dismissal did not cause it to become final and executory."2. Taking cognizance of the Amended Complaint because [private respondent] had deleted his prayers for the other reliefs that fall within the jurisdiction of the labor court."3. Declaring [petitioners] in default and in allowing the presentation of and receiving [private respondents] evidence ex parte in violation of the Rules."6Petitioners prayed that "the lower courts judgment by default, as well as said courts all other orders and findings after its Order of dismissal of the original Complaint[,] be reversed and set aside, and that the case in question be dismissed for lack of jurisdiction and for having been decided in violation of the Rules."7Ruling of the Court of AppealsAgreeing with the RTC, the CA held that the withdrawal of the Motion for Reconsideration filed by respondent had not resulted in the finality of the Dismissal Order dated October 29, 2001, since he had simultaneously amended his Complaint. This he had every right to do, said the CA, because no responsive pleading had yet been filed by petitioners. It opined that the Amended Complaint superseded his original Complaint and mooted the issue raised in his Motion for Reconsideration. It further said that the rules on the amendment of pleadings may be liberally construed to avoid a multiplicity of s