G.R. No. 121288 - Dela Cruz vs. National Labor Relations Commission

Case Summary (G.R. No. 121288)

Factual Background

Petitioner stated that he began working for private respondent in June 1988 as an ordinary crew member and advanced through successive promotions to become patron and, later, full-pledged captain of the fishing boat M/DCA Sheenly Joy 1. Petitioner asserted that his compensation included shares of the fish catch, commissions per fish box, and at the captain stage a monthly salary of P450.00. Petitioner alleged that on December 2, 1990, respondent dismissed him without notice or separation pay. Respondent maintained that the relationship was a sharing arrangement for fishing voyages, that petitioner and the crew decided when and where to fish, and that petitioner received no fixed salary but only shares in the catch; respondent denied supervisory control and asserted that the undertaking constituted a joint venture rather than an employer-employee relationship.

Procedural History

Petitioner filed a complaint on September 5, 1991 before SRAB No. 6, alleging unfair labor practice, illegal dismissal, underpayment, unpaid overtime and holiday pay, unpaid wages or commission, and separation pay; respondent answered on October 9, 1991 and the parties submitted position papers in November 1991. Labor Arbiter Dennis D. Juanon dismissed the complaint on August 7, 1992 for lack of an employer-employee relationship. Petitioner appealed to the NLRC on September 9, 1992; the NLRC granted the appeal and remanded the case on October 22, 1992. Labor Arbiter Juanon inhibited and the case was reassigned to Labor Arbiter Rodolfo G. Lagoc. Labor Arbiter Lagoc rendered a decision on February 15, 1994 finding petitioner an employee illegally dismissed and awarding separation pay of P4,628.00 while dismissing other claims. Both parties appealed to the NLRC. The NLRC on March 17, 1995 dismissed the appeals; its resolution denying motions for reconsideration issued May 19, 1995. Petitioner filed a petition for certiorari under Rule 65, Rules of Court before the Supreme Court.

Labor Arbiter Lagoc’s Findings

Labor Arbiter Lagoc concluded that an employer-employee relationship existed because respondent exercised control and supervision over petitioner and the vessel operations, and because respondent funded and expanded the fishing business. The arbiter found petitioner was illegally dismissed and therefore entitled to separation pay computed at minimum wage because petitioner failed to state monthly income. The arbiter computed separation pay as P89.00 per day times 26 working days times two months equals P4,628.00. The arbiter dismissed the unfair labor practice charge for failure to specify the act and held that petitioner, as patron and chief of the vessel, was a managerial employee excluded from Book III benefits; consequently the arbiter denied overtime, holiday pay, premium pay, and other statutory monetary claims.

NLRC Decision and Rationale

The NLRC affirmed in part and dismissed both appeals on March 17, 1995. The NLRC refused to grant reinstatement and back wages because it found that petitioner had only sought separation pay in his complaint and relied on Section 3, Rule V of the Rules of the Commission to bar relief not specifically pleaded. The NLRC denied the parties’ motions for reconsideration in its May 19, 1995 resolution.

Issues before the Supreme Court

The sole issue presented was whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed petitioner’s claims for separation pay, back wages, allowances, and damages.

Contentions of the Parties and the OSG

Petitioner argued that the NLRC gravely abused its discretion by refusing to award monetary claims, including back wages, after finding illegal dismissal. The Office of the Solicitor General, in a manifestation, recommended that back wages be awarded pursuant to Article 279, Labor Code and cited decisions such as Torillo v. Leogardo, Santos v. NLRC, and General Baptist Bible College v. NLRC. Private respondent maintained that petitioner was a managerial employee and therefore not covered by Book III of the Labor Code and not entitled to the monetary claims sought.

Supreme Court’s Disposition

The Court granted the petition in part and modified the NLRC and labor arbiter decisions. The Court ordered private respondent EMMANUEL LO to pay petitioner ROLANDO DELA CRUZ back wages for the period from the date of illegal dismissal until finality of the Supreme Court decision, with interest at 6% per annum until the decision became final and executory and thereafter at 12% per annum until satisfaction. The Court also ordered separation pay at the rate of one month’s pay for every year of service, computed from the date petitioner was first employed until finality of the decision, with interest at 12% per annum from promulgation until paid. The Court made no pronouncement as to costs.

Legal Basis for Awarding Back Wages

The Court held that the refusal to award back wages because petitioner did not expressly plead them was grave abuse of discretion. The Court emphasized that Article 279, Labor Code mandates that an employee unjustly dismissed is entitled to reinstatement without loss of seniority and to full back wages, inclusive of allowances, and to other benefits or their monetary equivalent from the time compensation was withheld until reinstatement. The Court treated the right to back wages as substantive. It noted that failure to claim back wages in the complaint was a procedural lapse that could not defeat a substantive right under Article 279, citing prior decisions including General Baptist Bible College v. NLRC and Philippine Airlines, Inc. v. NLRC. Consequently, back wages must be awarded notwithstanding the omission in the original complaint.

Computation of Back Wages and Separation Pay

The Court prescribed that back wages be reckoned for the period of putative service from December 2, 1990, the date of dismissal, until the case could have been finally resolved and petitioner reinstated but for the appeals and litigation, i.e., until finality of the Supreme Court decision affirming illegal dismissal. The Court h

Case Syllabus (G.R. No. 121288)

Parties and Posture

ROLANDO DELA CRUZ, PETITIONER, filed a special civil action for certiorari under Rule 65, Rules of Court, seeking to set aside the National Labor Relations Commission Decision of 17 March 1995 and its Resolution of 19 May 1995 for grave abuse of discretion.
NATIONAL LABOR RELATIONS COMMISSION was the administrative tribunal whose Decision and Resolution were assailed.
EMMANUEL LO, RESPONDENT, was the private respondent and alleged employer against whom labor and monetary claims were filed.
The petition principally sought reversal of the NLRC's refusal to award reinstatement, back wages, and other monetary claims following a finding of illegal dismissal by the Labor Arbiter.

Key Facts

Petitioner started working for Respondent in June 1988 as ordinary crew and later advanced to patron (captain) with alleged remuneration comprising fixed amounts and shares of the catch.
Petitioner alleged promotions and specific monthly compensation culminating in a monthly salary of P450.00 plus ten shares of the catch and P2.00 per fish box commission as captain.
Petitioner alleged that Respondent owned and operated multiple fishing boats and kept the cash proceeds and records of sales and expenses.
Petitioner alleged dismissal without notice or separation pay on December 2, 1990, and filed his complaint on September 5, 1991.
Respondent contended that the agreement was a sharing arrangement in which the patron and crew decided when to fish and that compensation consisted solely of shares in the catch, denying an employer-employee relationship.
Witnesses produced divergent testimony on the element of control, with corroborating witnesses favoring Respondent, and the Labor Arbiter finding stronger probative value in Petitioner’s testimony of control exercised by Respondent.

Procedural History

The complaint was docketed as SRAB Case No. 06-09-50298-91 before Sub-Regional Arbitration Branch No. 6 in Iloilo City.
Labor Arbiter Dennis D. Juanon dismissed the complaint for lack of employer-employee relationship in a decision dated August 7, 1992.
NLRC granted Petitioner’s appeal in its Resolution of October 22, 1992 and remanded the case to the Labor Arbiter, leading to reassignment to Labor Arbiter Rodolfo G. Lagoc after Juanon inhibited himself.
Labor Arbiter Lagoc rendered a decision on February 15, 1994 finding illegal dismissal and awarding separation pay of P4,628.00 while dismissing other monetary claims.
Both parties appealed to the NLRC, which on March 17, 1995 dismissed both appeals for lack of merit and denied motions for reconsideration in its Resolution of May 19, 1995.
Petitioner thereafter filed the present Rule 65 petition before the Supreme Court.

Issues Presented

Whether the NLRC committed grave abuse of discretion in refusing to award Petitioner back wages, allowances, and damages after finding illegal dismissal.
Whether Petitioner was a managerial employee excluded from the protective provisions of Book III of the Labor Code and thus not entitled to various statutory monetary claims.
Whether the failure to pray specifically for back wages in the complaint precluded an award of back wages.

Contentions

Petitioner contended that the NLRC gravely abused its discretion by denying monetary claims, including back wages, once illegal dismissal was found.
The Office of the Solicitor General recommended that back wages be awarded pursuant to Article 279 of the Labor Code and cited Torillo v. Leogardo, Santos v. NLRC, and General Baptist Bible College v. NLRC.
Respondent maintained that Petitioner was a managerial employee excluded from the coverage of Book III of the Labor Code and hence not entitled to back wages and the other monetary claims.

Statutory Framework

Article 279 of the Labor Code mandates that an employee unjustly dismissed shall be entitled to reinstatement without loss of seniority and to full back wages inclusive of allowances and other benefits or their monetary equivalent.
Article 82 of the Labor Code excludes from the coverage of Title I certain classes of workers including managerial employees, and defines managerial employees as those whose primary duty consists of management of the establishment or of a department or subdivision thereof.
Book III of the Labor Code contains the labor standards that include overtime pay, holiday pay, premium pay, and service incentive leave.

Labor Arbiter Findings

Labor Arbiter Rodolfo G. Lagoc found that Petitioner was an employee of Respondent an