Title
Teng vs. Pahagac
Case
G.R. No. 169704
Decision Date
Nov 17, 2010
Workers hired as checkers by Albert Teng Fish Trading claimed illegal dismissal; Supreme Court ruled employer-employee relationship existed, dismissal illegal.
fishing company owner
illegally dismissing workers
unjustified dismissal

Case Summary (G.R. No. 169704)

Factual Background

Albert Teng Fish Trading operated deep sea fishing ventures employing basnig and related equipment. Teng asserted that he entered into joint venture agreements with master fishermen or maestros who managed each fishing voyage and hired their complements. The respondent workers alleged that they were hired to serve as checkers aboard the boats, to classify and count catches, to report catch volume and classes to Teng by radio, to receive instructions on unloading, and to procure and prepare provisions upon approval. They claimed regular monthly wages, 13th month pay, Christmas bonuses, and incentives in the form of shares in the catch. The respondent workers alleged that in September 2002 Teng questioned the correctness of reported catch volumes, and that Teng terminated their services in December 2002.

Voluntary Arbitration Proceedings and VA Decision

The respondent workers filed a complaint for illegal dismissal before the National Conciliation and Mediation Board, Region IX, Zamboanga City. The Voluntary Arbitrator rendered a decision on May 30, 2003 dismissing the complaint for lack of merit. The VA concluded that no employer‑employee relationship existed between Teng and the respondent workers. The VA relied on the 1989 Procedural Guidelines provision that awards or decisions become final and executory after ten calendar days from receipt and stated that the guidelines did not provide for a motion for reconsideration.

Motion for Reconsideration and Appeal

The respondent workers received the VA decision on June 12, 2003 and filed a motion for reconsideration. The VA denied that motion in an order dated June 27, 2003, which the workers received on July 8, 2003. The VA maintained that Section 6, Rule VII of the 1989 Procedural Guidelines did not allow a motion for reconsideration and that the decision became final after ten days. The respondent workers appealed to the Court of Appeals on July 21, 2003.

Court of Appeals Ruling

The Court of Appeals, in its September 21, 2004 decision, reversed and set aside the VA decision. The CA found sufficient evidence of an employer‑employee relationship between Teng and the respondent workers and concluded that Teng illegally dismissed them. The CA ordered Teng to pay separation pay with backwages and other monetary benefits and remanded to the Voluntary Arbitrator for computation. The CA denied Teng’s motion for reconsideration in its September 1, 2005 resolution.

Issues Presented to the Supreme Court

The Petition for Review on Certiorari presented principally two issues. First, whether a motion for reconsideration of a Voluntary Arbitrator’s decision is permitted under Article 262‑A of the Labor Code and its implementing rules, such that the VA’s denial of the workers’ motion precluded their appeal. Second, whether an employer‑employee relationship existed between Teng and the respondent workers and, relatedly, whether Teng validly terminated their employment.

Petitioners’ Contentions

Petitioners argued that the VA’s decision became final and executory ten days after receipt and that Article 262‑A and the 1989 Procedural Guidelines did not allow a motion for reconsideration; accordingly, the respondent workers’ motion for reconsideration was ineffective to interrupt finality. Petitioners further maintained that Teng entered into joint ventures with maestros who hired the respondent workers, and that no employer‑employee relationship existed between Teng and the workers.

Respondent Workers’ Contentions

The respondent workers contended that they were employees of Teng. They relied on the issuance of identification cards by Teng bearing their names and Teng’s signature, their continuous and regular receipt of wages and benefit entitlements over a period of years, and the control exercised by Teng over how they performed their duties as checkers. They maintained that their dismissal was summary and unjustified and thus illegal under the Labor Code.

The Supreme Court’s Disposition

The Supreme Court denied the petition and affirmed the Court of Appeals’ September 21, 2004 decision and September 1, 2005 resolution. The Court imposed costs against the petitioners.

Legal Basis: Motion for Reconsideration and Finality of VA Decisions

The Court ruled that Article 262‑A of the Labor Code does not preclude the filing of a motion for reconsideration of a Voluntary Arbitrator’s decision within the ten‑day period. The Court observed that Article 263, as originally worded, declared voluntary arbitration awards final, unappealable, and executory; the amended provision, Article 262‑A, omitted the word “unappealable” and required the award or decision to contain the facts and the law on which it was based and to become final and executory after ten calendar days from receipt. The Court read the change in phraseology as indicating congressional intent to permit recourse within the ten‑day period. The Court cited its precedents, including Imperial Textile Mills, Inc. v. Sampang and Coca‑Cola Bottlers Phil., Inc., Sales Force Union‑PTGWO‑Balais v. Coca‑Cola Bottlers Philippines, Inc., holding that a motion for reconsideration properly filed within the ten‑day period is a seasonable means to forestall finality.

Legal Basis: Invalidity of Agency Rules Prohibiting Reconsideration

The Court addressed DO 40‑03 and the 2005 Procedural Guidelines, which contained categorical provisions that VA decisions shall not be subject to a motion for reconsideration. The Court held that, in promulgating implementing rules, an agency may not exceed the statute it implements or modify substantive legislative intent. The Court found that DO 40‑03 and the 2005 Procedural Guidelines’ prohibition of motions for reconsideration contravened the intent of Article 262‑A to allow recourse within the ten‑day period and to effect exhaustion of administrative remedies. The Court emphasized the purpose of allowing the Voluntary Arbitrator an opportunity to correct his decision and the judicial policy favoring administrative exhaustion where Congress has not clearly dispensed with it. Consequently, the Court rejected the contention that the VA’s denial of the workers’ motion for reconsideration rendered the VA decision final and unassailable.

Legal Basis: Existence of Employer‑Employee Relationship

On the merits, the Court agreed with the CA that the preponderance of evidence established an employer‑employee relationship between Teng and the respondent workers. The Court relied on several indicia shown in the record: Teng’s issuance of identification cards bearing the workers’ names and his signature as employer; the workers’ continuous receipt of regular monthly wages with documented increases over the years and their share in the catch; and, most significantly, the element of control. Teng exercised direction over how the checkers performed their work and received reports of catch volumes by radio. The Court rejected Teng’s attempt to shelter behind the maestros, concluding that the maestros lacked substantial capital or investment while Teng supplied the basnig, gears, nets, fuel, and provisions. The Court found the arrangement to be labor‑only contracting, proscribed by Article 106 and Department Order No. 18‑02, and concluded that the maestros’ role as purported employers did not extinguish Teng’s status as the true employer.

Legal Basis: Illegal Dismissal

The Court applied the twofold standard for validating dismissal:

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