Caurdanetaan Piece Workers Union vs. Laguesma

An employer-employee relationship may be established by substantial evidence, and where the labor official's findings contradict those of the med-arbiter, the Court may reevaluate such findings in the exercise of equity jurisdiction; the NLRC commits grave abuse of discretion when it remands a case to the labor arbiter despite ample evidence on record sufficient to decide the case directly.

Petitioner Caurdanetaan Piece Workers Union (CPWU) is a labor organization whose 92 members worked as cargadores at the warehouse and rice mills of private respondent Corfarm Grains, Inc. in Umingan, Pangasinan, some beginning as early as 1976. The cargadores loaded, unloaded, and piled sacks of palay from Corfarm's warehouses to cargo trucks and from cargo trucks to buyers, and were paid on a piece-rate basis. When Corfarm denied certain benefits to the workers, they organized the union, prompting Corfarm to bar them from working and replace them with non-union members in mid-1992. Two parallel proceedings followed: a petition for certification election before the DOLE Regional Office and a complaint for illegal dismissal, unfair labor practice, and related claims before the NLRC Arbitration Branch.

The 92 members of petitioner Caurdanetaan Piece Workers Union worked as cargadores at the warehouse and rice mills of Corfarm Grains, Inc. in Umingan, Pangasinan, some beginning as early as 1976. As cargadores, they loaded, unloaded, and piled sacks of palay from the warehouse to cargo trucks and from cargo trucks to buyers. They were paid by Corfarm on a piece-rate basis — ₱0.12 per sack or cavan moved, which was supposed to yield ₱57.00 per day, though Corfarm deducted ₱12.00 daily, leaving each worker with ₱45.00 per day. The workers also received Christmas bonuses from Corfarm. When Corfarm denied certain benefits to the cargadores, the latter organized the Caurdanetaan Piece Workers Union. Upon learning of its formation, Corfarm barred the union members from working and replaced them with non-union members around June 18, 1992.

On July 9, 1992, petitioner filed a petition for certification election before DOLE Regional Office No. I in San Fernando, La Union, docketed as RO100-9207-RU-001. While that petition was pending, petitioner also filed on November 16, 1992 a complaint for illegal dismissal, unfair labor practice, refund of illegal deductions, payment of wage differentials, various pecuniary benefits, damages, legal interest, reinstatement, and attorney's fees before the Regional Arbitration Branch No. 1 in Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.

In the illegal dismissal case, Labor Arbiter Ricardo Olairez directed the parties to submit position papers and to appear for hearing on December 14, 1992. Only petitioner submitted its position paper on December 3, 1992. Corfarm did not appear at the December 14 hearing, prompting Labor Arbiter Olairez to allow union president Juanito Costales to testify and present evidence ex parte. Another notice was sent for a January 7, 1993 hearing before Labor Arbiter Emiliano de Asis. Before that hearing, petitioner filed a motion to amend complaint, along with affidavits from Juanito Costales, Jr. and joint affidavits from individual union members. Corfarm's counsel, Atty. Alfonso Bince, Jr., entered his appearance only on January 28, 1993. On May 20, 1993, Labor Arbiter Rolando D. Gambito, who had taken over the case, issued an order directing Corfarm to submit its position paper and documentary evidence within ten days, warning that the case would be resolved based on available evidence if it failed to do so. Corfarm's counsel received the directive on May 25, 1993, but Corfarm still failed to file its position paper.

On March 18, 1993, Med-Arbiter Sinamar E. Limos granted the petition for certification election, ordering that an election be conducted among the rank-and-file employees of Corfarm. Corfarm appealed to the Undersecretary of Labor. On September 7, 1993, Undersecretary Laguesma affirmed the med-arbiter's order, finding that Corfarm failed to prove it was an independent contractor and that a "labor-only" contracting scheme existed. However, upon Corfarm's motion for reconsideration, Laguesma reversed himself on January 4, 1994, dismissing the petition for certification election on the ground that no employer-employee relationship existed because Corfarm exercised no power of control over the cargadores. Laguesma relied on affidavits executed by three workers — Juanito Costales, Jr., Carlito Costales, and Juanito Medenilla — which stated that they worked for various rice mills and that no employer-employee relationship existed with Corfarm. These affidavits were identical in content, differing only in the typewritten names and signatures. Laguesma denied petitioner's motion for reconsideration on January 27, 1994.

On September 14, 1993, Labor Arbiter Gambito rendered his decision in the illegal dismissal case, declaring the dismissal of the 92 complainants illegal, finding Corfarm guilty of unfair labor practice for union busting, and ordering Corfarm to pay 13th month pay, service incentive leave pay, underpaid wages, backwages, refund of illegal deductions, and damages, as well as to reinstate the complainants. Both parties appealed to the NLRC. On February 16, 1994, the NLRC set aside the labor arbiter's decision and remanded the case for further proceedings, citing alleged inconsistencies in the evidence and the need to thresh out issues. The NLRC denied petitioner's motion for reconsideration on March 28, 1994. The Solicitor General, representing the public respondents, joined petitioner in both cases, filing manifestations praying that the assailed orders and resolutions be annulled. The Supreme Court consolidated the two cases on March 29, 1995.

• Grave Abuse of Discretion (First Case): Petitioner contended that Respondent Laguesma committed grave abuse of discretion in dismissing the petition for certification election by relying on Corfarm's bare allegation of lack of employer-employee relationship, and that Laguesma could not reverse his earlier decision without a concomitant change in factual findings.
• Regular Employment: Petitioner insisted that all 92 members were regular employees of Corfarm, rendering actual manual services as cargadores in activities related to Corfarm's business of buying, selling, warehousing, and milling palay for at least ten years prior to their dismissal, and that many members received Christmas bonuses from Corfarm.
• Unnecessary Remand (Second Case): Petitioner argued that the NLRC's remand was unnecessary because the mandatory requirements of due process had been observed by the labor arbiter, who rendered his decision based on available records after giving Corfarm ample opportunity to submit its position paper and evidence, including multiple notices and a May 20, 1993 order directing submission within ten days.
• Speedy Labor Justice: Petitioner maintained that the remand was contrary to the rule of speedy labor justice and the constitutional policy of social justice and protection to labor, and would only prolong the suffering of the 92 illegally dismissed workers and their families.

• DOLE Authority and Discretion: Corfarm argued that the DOLE Secretary's authority to decide appeals in representation cases is undeniable under Sections 9 and 10 of Rule V, Book V of the IRR of the Labor Code and Article 259, and that the granting and denial of a motion for reconsideration involves the exercise of discretion.
• Lack of Employer-Employee Relationship: Corfarm insisted that Laguesma's January 4, 1994 order rested on solid findings of fact, that the identity of the "92 workers" could not be known from the records, and that the workers were "street-hired" laborers engaged from time to time, with no superintendent-in-charge, no gate passes, and no tools or equipment issued by Corfarm.
• Independent Contractor: Corfarm argued that petitioner's members contracted for loading and unloading services only when work was available and when they felt like it, and that a literal application of Article 280 would result in absurdity where the workers would be regular employees of several rice mills simultaneously.
• Lack of Due Process and Evidence: Corfarm contended that the labor arbiter's decision should be set aside for lack of competent and credible evidence and lack of procedural due process, citing its pending motions to cross-examine petitioner's witnesses and to suspend proceedings, and invoking Section 7, Rule 7 of the NLRC Rules of Procedure.

• Employer-Employee Relationship (First Case): Whether Respondent Laguesma acted with grave abuse of discretion in ordering the dismissal of the petition for certification election on the ground of absence of employer-employee relationship.
• Remand by NLRC (Second Case): Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal dismissal case to the labor arbiter for further proceedings.

• Employer-Employee Relationship (First Case): Yes. Laguesma acted with grave abuse of discretion in reversing his earlier finding without any additional evidence, the four-fold test and Articles 106 and 280 of the Labor Code establishing that the cargadores were regular employees of Corfarm.
• Remand by NLRC (Second Case): Yes. The NLRC committed grave abuse of discretion in remanding the case despite ample evidence on record sufficient to decide it directly, Corfarm having been afforded due process but having failed to avail itself of the opportunity to be heard.

• Employer-Employee Relationship (First Case): The Court applied the four-fold test — power to hire, payment of wages, power of dismissal, and power of control (the most important element). The records showed that Corfarm directly paid wages to the workers, supplied the premises, tools, equipment, and paraphernalia, wielded the power of dismissal (exercised when it barred union members from working), and that the workers' tasks were directly related, necessary, and vital to Corfarm's palay business. Corfarm failed to prove the workers had substantial capital or investment, negating independent contractor status under the criteria in Brotherhood Labor Unity Movement of the Philippines vs. Zamora. The arrangement constituted labor-only contracting under Article 106, making Corfarm the direct employer. Under Article 280, the workers were regular employees because their tasks were necessary and desirable in Corfarm's usual business. Laguesma's reversal was baseless — no additional evidence was adduced to support the sudden change. The affidavits relied upon were pro forma, identical affidavits of adhesion executed by only three workers, and could not negate the substantial evidence of employment. Even assuming the three workers worked for other rice mills, this did not negate their employment with Corfarm, as it was driven by the imperative of meeting basic needs. The Court invoked equity jurisdiction to reevaluate the findings because Laguesma's findings contradicted those of the med-arbiter, an exception to the general rule that the Court does not evaluate the sufficiency of evidence in Rule 65 certiorari proceedings. The employer-employee relationship having been established, the holding of a certification election necessarily followed as the most democratic method of determining the employees' choice of bargaining representative.

• Remand by NLRC (Second Case): Corfarm was not denied procedural due process. It was duly notified of the case through multiple notices — the November 14, 1992 notice, the January 7, 1993 notice received by Corfarm's counsel, and the May 20, 1993 order giving Corfarm ten days to submit its position paper — but chose not to participate without justifiable cause. Due process is satisfied by the opportunity to be heard; it is not violated where a party is given that opportunity but chooses not to present its side. The labor arbiter's decision was based on credible, competent, and substantial evidence, including the DOLE inspector's narrative report noting underpayment of minimum wage and 13th month pay, and the affidavits of union officers and members. The NLRC's cited inconsistencies were too flimsy: the ₱57/₱45 discrepancy was explained by the unauthorized ₱12 daily deduction, and the ₱0.12 per sack was the basic computation method for daily earnings. The NLRC was in a position to resolve the dispute based on the records before it; remanding would needlessly delay a case pending since 1992. The employer bears the burden of proof in illegal dismissal cases, and Corfarm's default in filing its position paper constituted a waiver of its right to present evidence. The finding of unfair labor practice (union busting) under Article 248 was sustained, as Corfarm resorted to mass lay-off of all union members and replaced them with outsiders instead of discussing their demands. The Court modified the labor arbiter's monetary awards: 13th month pay, service incentive leave, underpaid wages, and the ₱12/day refund were to be computed from each employee's date of hiring up to the date of actual reinstatement; backwages were to be computed from the date of dismissal up to the date of actual reinstatement without deductions or conditions, pursuant to Article 279 as amended by R.A. 6715.

• Substantial Evidence in Labor Cases — In cases before administrative or quasi-judicial bodies like the DOLE, a fact may be established by substantial evidence, defined as "that amount of evidence which a reasonable mind might accept as adequate to justify a conclusion." Factual findings of the DOLE, if supported by substantial evidence, are binding upon the Court, unless the secretary of labor arbitrarily disregarded or misapprehended evidence to compel a contrary conclusion. The Court applied this standard to uphold the med-arbiter's findings over Laguesma's unsubstantiated reversal.

• Four-Fold Test for Employer-Employee Relationship — The existence of an employer-employee relationship is determined by: (1) the power to hire, (2) the payment of wages, (3) the power of dismiss, and (4) the power of control — the last being the most important element. No particular form of proof is required; any competent and relevant evidence may show the relationship. The Court found all four elements present: Corfarm hired the workers, paid their wages directly, exercised the power of dismissal, and controlled the work through its premises and operations.

• Labor-Only Contracting (Article 106, Labor Code) — Where the person supplying workers does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, and the workers perform activities directly related to the principal business of the employer, the intermediary is considered merely an agent of the employer, who is responsible to the workers as if directly employed. The Court applied this to find Corfarm the direct employer, as the alleged contractor J.P. Costales, Jr. Cargador Services had no substantial capital and the workers' loading and unloading activities were directly related to Corfarm's palay business.

• Procedural Due Process in Labor Cases — Procedural due process is satisfied by the grant of an opportunity to be heard; an actual adversarial-type trial is not required. Due process is not violated where a person is given the opportunity to be heard but chooses not to present their side. The Court found that Corfarm was given multiple opportunities to submit its position paper and evidence but failed to do so without legal justification.

• Grave Abuse of Discretion in Remand — The NLRC commits grave abuse of discretion when it remands a case to the labor arbiter despite ample evidence on record sufficient to decide the case directly, as this needlessly delays resolution and contravenes the policy of speedy labor justice. The Court found the NLRC had before it the same records the labor arbiter relied upon and could have resolved the appeal directly.

• Full Backwages Without Deduction (Article 279, R.A. 6715) — Where illegal dismissal is proven, workers are entitled to backwages from the date of dismissal up to the date of actual reinstatement, without deductions or conditions. The legislative intent of R.A. 6715 is to give more benefits to workers, meaning "full backwages" without deducting earnings derived elsewhere during the period of illegal dismissal. The Court applied this to modify the labor arbiter's backwages award, which had been limited to 14 months.

• "No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship. If only documentary evidence would be required to demonstrate that relationship, no scheming employer would ever be brought before the bar of justice." — This passage articulates the evidentiary standard for proving employer-employee relationships, rejecting the notion that only documentary evidence suffices and preventing employers from evading labor obligations through informal arrangements.

• "Due process is not violated where a person is given the opportunity to be heard, but chooses not to give his side of the case." — This defines the scope of procedural due process in labor proceedings, establishing that the opportunity to be heard — not an actual hearing — is the constitutional minimum.

• "The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the 'deduction of earnings elsewhere' rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to 'full backwages' as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal." — This passage articulates the doctrine of full backwages without deduction, a frequently cited formulation in illegal dismissal jurisprudence, quoting Bustamante vs. NLRC.

• Shoppers Gain Supermart vs. NLRC, 259 SCRA 411 (1996) — Applied as the controlling standard for determining whether a worker is an independent contractor under Article 106 of the Labor Code, establishing that where the supplier of workers lacks substantial capital and the workers perform activities directly related to the principal business, labor-only contracting exists and the principal is the direct employer.

• RJL Martinez Fishing Corp. vs. NLRC, 127 SCRA 454 (1984) — Followed on the point that "waiting time" does not denigrate regular employment; the continuity of employment is not the determining factor, but rather whether the work is part of the regular business or occupation of the employer.

• Manalo vs. Roldan-Confesor, 215 SCRA 808 (1992) — Cited for the hierarchy of evidentiary values in labor cases: proof beyond reasonable doubt, clear and convincing evidence, preponderance of evidence, and substantial evidence, in descending order — establishing that substantial evidence suffices in labor proceedings.

• Bustamante vs. NLRC, 265 SCRA 61 (1996) — Followed for the doctrine that full backwages under R.A. 6715 means exactly that — without deducting earnings derived elsewhere during the period of illegal dismissal — which the Court applied to modify the labor arbiter's limited backwages award.

• Fernandez vs. NLRC, G.R. No. 105892 (1998) — Cited for the principle that backwages are to be computed from the date of dismissal up to the date of actual reinstatement without deductions or conditions, pursuant to Article 279 of the Labor Code as amended by R.A. 6715.

• Article 106, Labor Code — Defines "labor-only" contracting: where the person supplying workers lacks substantial capital or investment in tools, equipment, machineries, and work premises, and the workers perform activities directly related to the principal business, the intermediary is considered merely an agent of the employer. Applied to find Corfarm the direct employer of the cargadores, as the alleged contractor had no substantial capital and the workers' activities were directly related to Corfarm's palay business.

• Article 280, Labor Code — Defines regular employment: an employment is deemed regular where the employee performs activities usually necessary or desirable in the usual business or trade of the employer. Applied to hold that the cargadores were regular employees because loading, unloading, and piling sacks of palay were essential to Corfarm's palay trading and milling business.

• Article 248, Labor Code — Prohibits unfair labor practices including interference with employees' right to self-organization and contracting out services performed by union members when such interferes with their right to self-organization. Applied to sustain the finding of unfair labor practice, as Corfarm resorted to mass lay-off of union members and replaced them with outsiders.

• Article 279, Labor Code, as amended by R.A. 6715 — Provides for full backwages without conditions or limitations in cases of illegal dismissal occurring after the effectivity of the amendatory law on March 21, 1989. Applied to modify the labor arbiter's backwages award from a fixed 14-month period to full backwages from date of dismissal to date of actual reinstatement.

• Section 5, Rule 133, Rules of Court — Mandates that in cases before administrative or quasi-judicial bodies, a fact may be established by substantial evidence. Applied as the evidentiary standard for determining employer-employee relationship before the DOLE.

Davide, Jr. (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concurred.