G.R. No. 186621 - South East International Rattan, Inc. vs. Coming

Case Summary (G.R. No. 186621)

Petitions and Reliefs Sought

Respondent filed a complaint for illegal dismissal and related wage and benefit claims (underpayment of wages, unpaid holiday pay, 13th month pay, and service incentive leave pay), seeking reinstatement, back wages, damages, separation pay and attorney’s fees. Petitioners sought review of the CA’s decision reinstating the Labor Arbiter’s award and holding petitioners liable.

Key Dates and Procedural Milestones

Respondent alleges employment beginning March 17, 1984; alleged dismissal January 1, 2002. Complaint filed November 3, 2003. Labor Arbiter decision: April 30, 2004 (finding regular employment and illegal dismissal; awarding separation pay and various monetary claims). NLRC decision: July 28, 2005 (reversed and dismissed complaint). CA decision: February 21, 2008 (reversed NLRC; reinstated Labor Arbiter decision with modifications). CA denial of motion for reconsideration: February 9, 2009. Supreme Court decision: March 12, 2014.

Applicable Law and Legal Standards

Applicable constitutional and statutory framework: 1987 Philippine Constitution as the governing framework for labor protections; Labor Code provisions on security of tenure and remedies for unjust dismissal (Article 279 quoted; Articles 282–284 discussed as authority for just/authorized causes). Procedural and evidentiary standards cited include the four-fold or control test for employer-employee relationship (selection/engagement, payment of wages, power of dismissal, power to control conduct) and the substantial evidence standard (that amount of relevant evidence a reasonable mind might accept as adequate). The Court also noted jurisprudence that failure to report an employee to SSS or absence from payroll is not conclusive proof negating employment.

Factual Background as Alleged by Respondent

Respondent claims he was hired March 17, 1984, initially paid on a pakiao basis and later P150/day, and worked regular hours (8:00 a.m. to 5:00 p.m.). He averred an interruption of employment in 1990 but returned after two months. He alleges dismissal without lawful cause on January 1, 2002, told to resume work only if needed; petitioners allegedly used his brother to persuade withdrawal of his complaint.

Petitioners’ Factual Contentions and Evidence

Petitioners denied employing respondent, asserting SEIRI was incorporated in 1986, initially engaged in trading (not manufacturing), suspended operations from late 1989 to August 1992, and never hired workers for varnishing and pole sizing. They submitted SSS employment reports (1987–2002) and payroll/pay records (1999–2000) excluding respondent’s name, certifications from suppliers (Mayol and Apondar) stating respondent worked for them, and affidavits by Vicente Coming supporting petitioners’ position.

Evidence in Support of Respondent’s Claim

Respondent presented an affidavit by five former co-workers (including one who is the son of Vicente Coming) attesting that respondent was a pioneer employee of SEIRI and that Estanislao Agbay directly paid them and controlled their employment. Respondent also relied on his own account of long-term employment and the circumstances of dismissal.

Labor Arbiter’s Findings

The Labor Arbiter found respondent to be a regular employee of SEIRI, concluding the nature of respondent’s work (sizing machine operator) was necessary and desirable to SEIRI’s business, and that omission from SSS reports and payrolls was not conclusive. The Labor Arbiter discounted Vicente’s affidavit that respondent worked for another (Apondar) and was not persuaded that Apondar was an independent contractor. The Labor Arbiter declared the dismissal illegal and awarded separation pay, backwages, wage differentials, 13th month, holiday pay and service incentive leave pay.

NLRC’s Rationale for Reversal

The NLRC reversed the Labor Arbiter, reasoning that SEIRI was incorporated in 1986 and originally engaged in buying/exporting furniture (hence no manufacturing employees early on), and that operations were suspended from late 1989 to 1992. The NLRC relied on the absence of respondent’s name in SSS reports and payrolls, the certifications of Mayol and Apondar that respondent worked for them intermittently, and the first affidavit of Vicente setting out an employment history inconsistent with SEIRI employment. The NLRC found substantial evidence to conclude respondent was not an employee of petitioners.

Court of Appeals’ Reversal of NLRC

The CA reversed the NLRC and reinstated the Labor Arbiter’s decision with instructions to recompute backwages to run until finality of the CA decision and to adjust other monetary awards. The CA gave credence to the five co-workers’ affidavits, observed petitioners’ payrolls covered only 1999–2000 (not the alleged 18-year period), noted that petitioners admitted the five affiants were former employees, and applied the control test factors—regular hours, requirement to work on premises, mode of payment, implementation of company rules, direct payment by Estanislao Agbay, and the nature of work being necessary to SEIRI’s business—to conclude an employer-employee relationship existed.

Supreme Court’s Standard of Review and Exception

The Supreme Court reiterated the general rule that questions of fact are not ordinarily reexamined, especially in labor cases, but recognized the exception where factual findings of the Labor Arbiter, NLRC and CA conflict; in such circumstances the Court may re-examine evidence and draw its own conclusions. Because the NLRC’s findings conflicted with those of the Labor Arbiter and the CA, the Court exercised that exception.

Application of the Four-Fold Test and Evaluation of Evidence

The Court applied the four-fold or control test and assessed the parties’ evidence. It held that absence from SSS reports and limited payroll documents (1999–2000 only) were not conclusive, especially since petitioners’ payrolls omitted names of admitted former employees. The certifications by Mayol and Apondar described respondent’s services as irregular, part-time, or sideline—statements that did not conclusively negate regular employment by SEIRI. Petitioners’ alternative theory that the five affiants were not their employees but employees of suppliers was not proved by evidence establishing the suppliers’ status as independent contractors. Petitioners’ later attempts to disown the five affiants were legally unavailing because petitioners previously admitted those individuals were former employees; that admission was binding.

Burden of Proof and Credibili

Case Syllabus (G.R. No. 186621)

Court and Citation

Supreme Court of the Philippines, First Division.
Citation: 729 Phil. 298; G.R. No. 186621; Decision promulgated March 12, 2014.
Case arose from CA-G.R. CEB-SP No. 02113 (Court of Appeals decision dated February 21, 2008; CA Resolution dated February 9, 2009).

Parties

Petitioners: South East International Rattan, Inc. (SEIRI), a domestic corporation engaged in manufacturing and exporting furniture with principal place of business at Paknaan, Mandaue City; and Estanislao (also spelled Estan Eslao in records) Agbay, President and General Manager of SEIRI.
Respondent: Jesus J. Coming, complainant in the labor case for illegal dismissal and monetary claims.

Nature of the Case and Reliefs Sought

Petition for review on certiorari under Rule 45 seeking reversal and setting aside of the CA Decision and Resolution.
Underlying complaint filed with the regional arbitration branch (Labor Arbiter) on November 3, 2003:
- Causes of action: illegal dismissal; underpayment of wages; non-payment of holiday pay, 13th month pay, and service incentive leave pay.
- Prayers: reinstatement, back wages, damages, and attorney's fees.

Relevant Chronology of Events

March 17, 1984: Respondent alleges he was hired as Sizing Machine Operator (alleged start of employment).
June 1984: Respondent alleges pay fixed at P150.00 per day (previously pakiao basis), paid weekly.
1990: Employment allegedly interrupted; respondent told to resume work in two months; respondent returned after two months on order of management.
January 1, 2002: Respondent alleges dismissal without lawful cause; told company not doing well financially; promised call-back if services needed.
November 3, 2003: Complaint for illegal dismissal and other claims filed.
April 30, 2004: Labor Arbiter Decision in favor of respondent (detailed awards).
July 28, 2005: NLRC Fourth Division Decision reversing Labor Arbiter and dismissing complaint.
February 21, 2008: Court of Appeals Decision reversing NLRC and reinstating Labor Arbiter’s decision with modifications.
February 9, 2009: CA Resolution denying reconsideration.
March 12, 2014: Supreme Court Decision denying petition for review and affirming CA.

Labor Arbiter Proceedings and Disposition

Labor Arbiter: Ernesto F. Carreon.
Determinations:
- Found respondent to be a regular employee of SEIRI.
- Ruled dismissal on January 1, 2002 was illegal; respondent was terminated without lawful cause.
Awards (dispositive portion, April 30, 2004):
- Separation pay: P114,400.00
- Backwages: P30,400.00
- Wage differential: P15,015.00
- 13th month pay: P5,958.00
- Holiday pay: P4,000.00
- Service incentive leave pay: P2,000.00
- Total award: P171,773.00
Other claims and the case against Estanislao Agbay dismissed for lack of merit.

NLRC Proceedings and Disposition

National Labor Relations Commission — Cebu City, Fourth Division.
Petitioners’ additional evidence submitted to NLRC:
- SEIRI employment reports to SSS (1987–2002).
- Certifications by Allan Mayol and Faustino Apondar asserting respondent worked for them.
- Payroll sheets and individual pay records (1999–2000).
- Affidavit of SEIRI treasurer Angelina Agbay.
- Second affidavit of Vicente Coming.
NLRC Decision (July 28, 2005):
- SET ASIDE and VACATED the Labor Arbiter’s decision.
- DISMISSED the complaint.
NLRC Reasons (summarized):
- SEIRI incorporated July 18, 1986; when operating in 1987 business was primarily buying and exporting (no manufacturing employees).
- Company operations suspended from last quarter 1989 to August 1992 per SEC certification.
- Respondent failed to present payslip, voucher, or payroll showing service as alleged.
- Credited certifications of Allan Mayol and Faustino Apondar that respondent worked for them.
- Credited Vicente Coming’s affidavit stating respondent was not SEIRI’s employee.
- Observed respondent’s name absent in SSS reports and sample payrolls.
NLRC denied respondent’s motion for reconsideration.

Court of Appeals Proceedings and Disposition

CA granted respondent’s petition for certiorari under Rule 65.
CA Decision (February 21, 2008):
- Reversed NLRC and reinstated Labor Arbiter’s decision with modification to computation of backwages (to be computed until finality of CA decision).
- Directed Labor Arbiter to adjust computation of separation pay and other monetary awards.
CA’s factual findings and reasoning:
- Gave weight to affidavits of five former SEIRI employees attesting respondent was their co-worker and a pioneer employee.
- Noted payrolls before NLRC covered only 1999–2000 and excluded the period respondent claimed as employment.
- Found petitioners possibly maintained separate payrolls or willfully retained parts of payroll.
- Applied control test factors indicating SEIRI exercised control over respondent’s work:
  - Required him to work within company premises.
  - Required daily reporting and performance of same job.
  - Set definite working hours (8:00 a.m.–5:00 p.m.).
  - Determined mode of payment (pakiao then daily).
  - Implemented company rules and regulations.
  - Estanislao Agbay directly paid salaries and controlled all aspects of employment.
  - Respondent rendered work necessary and desirable to SEIRI’s business.

Issues Raised in the Supreme Court Petition

Whether the CA correctly found employer-employee relationship between petitioners and respondent under law and applicable jurisprudence.
Whether CA correctly appreciated the evidence presented by both parties.
Whether CA correctly held petitioners liable for illegal