Maranaw Hotels and Resort Corp. vs. Court of Appeals

The certificate of non-forum shopping is a mandatory requirement whose presence in the pleading cannot be excused by substantial compliance, and a corporate officer or director does not, by virtue of position alone, possess authority to execute it absent a board resolution or special power of attorney specifically authorizing him to do so. On the merits, a service contractor that merely supplies personnel to perform activities usually necessary or desirable in the principal's business, with the principal exercising control over the work, is a labor-only contractor, and the principal is the real employer of the worker — who, having rendered at least one year of service, is a regular employee under Article 280 of the Labor Code.

Maranaw Hotels and Resort Corp. owns and operates Century Park Hotel, where private respondent Sheryl Oabel was engaged to work. On September 16, 1996, the hotel entered into a service contract with Manila Resource Development Corporation (MANRED), and Oabel was thereafter transferred to MANRED, which held itself out as her employer and intervened at all stages of the proceedings to assert that status. The dispute turns on the statutory classification of employment under Article 280 of the Labor Code, which deems an employee regular where he has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, and on the rules governing labor-only contracting, under which the contractor is treated merely as an agent of the principal, who becomes the real employer.

Private respondent Sheryl Oabel was initially hired by petitioner Maranaw Hotels and Resort Corp. as an extra beverage attendant on April 24, 1995, an engagement that lasted until February 7, 1997. She worked at the Century Park Hotel, an establishment owned by petitioner. On September 16, 1996, while Oabel was still working at the hotel, petitioner contracted with Manila Resource Development Corporation (MANRED). Oabel was subsequently transferred to MANRED, which thereafter held itself out as her employer; MANRED intervened at all stages of the proceedings and consistently claimed to be her employer.

For the duration of her employment, Oabel performed the following functions: secretary of the Public Relations Department from February 10, 1997 to March 6, 1997; gift shop attendant from April 7, 1997 to April 21, 1997; waitress from April 22, 1997 to May 20, 1997; and shop attendant from May 21, 1997 to July 30, 1998.

On July 20, 1998, Oabel filed before the Labor Arbiter a petition for regularization of employment against petitioner. On August 1, 1998, she was dismissed from employment, and she accordingly converted her petition for regularization into a complaint for illegal dismissal.

Labor Arbiter Madjayran H. Ajan dismissed the complaint against petitioner, finding that Oabel's work with the hotel was on a per-function or "need basis," co-terminus with the function for which she was hired, such that she could not be considered a casual or provisional employee and was at most a project employee whose engagement did not ripen into regular employment. The National Labor Relations Commission reversed, observing that under the very terms of the service contract MANRED was to provide petitioner not specific jobs or services but personnel, and that MANRED had insufficient capitalization and was not sufficiently equipped to provide specific jobs. The NLRC likewise found that the activities performed by Oabel were directly related to and usually necessary or desirable in the business of petitioner, and that her termination was not effected for a valid or just cause.

• Substantial Justice: Petitioner invoked substantial justice as justification for a reversal of the Court of Appeals' resolution dismissing its petition.
• Substantial Compliance: Petitioner contended that the filing of a motion for reconsideration with the certificate of non-forum shopping attached constituted substantial compliance with the requirement.
• Authority of the Signatory: Relying on Digital Microwave Corp. vs. Court of Appeals, petitioner sought to show that its Personnel Director had been duly authorized to sign pleadings for and in behalf of the corporation.

• Certificate of Non-Forum Shopping: Whether the Court of Appeals erred in dismissing the petition for review on the ground that the certification against forum shopping was subscribed and verified by petitioner's Personnel Director without the requisite board resolution or special power of attorney.
• Substantial Compliance: Whether the filing of a motion for reconsideration with an appended certificate of non-forum shopping cures the defect in the original pleading.
• Labor-Only Contracting: Whether MANRED is a labor-only contractor and whether petitioner is the real employer of private respondent Oabel.
• Regular Employment: Whether private respondent Oabel is a regular employee of petitioner under Article 280 of the Labor Code.

• Certificate of Non-Forum Shopping: No. The certificate of non-forum shopping is a mandatory requirement, and substantial compliance applies only with respect to its contents, not as to its presence in the pleading wherein it is required.
• Substantial Compliance: No. The filing of a motion for reconsideration with an appended certificate does not cure the defect, as it negates the very purpose for which the certification is required.
• Labor-Only Contracting: Yes. MANRED was correctly found to be a labor-only contractor, and the real employer of private respondent is petitioner.
• Regular Employment: Yes. Having rendered more than one year of service from 1995 to 1998, private respondent must be considered a regular employee pursuant to Article 280 of the Labor Code.

• Certificate of Non-Forum Shopping: The certificate of non-forum shopping is a mandatory requirement, and the requirement applies to both natural and juridical persons. Substantial compliance is available only with respect to the contents of the certificate, not as to its presence in the pleading wherein it is required. Petitioner's reliance on Digital Microwave Corp. vs. Court of Appeals was misplaced, as the portion invoked was rendered in response to the issue of the impossibility of compliance by juridical persons with the requirements of Circular 28-91; the identification of duly authorized officers or directors as proper signatories was a response to that issue and does not, ipso facto, clothe a corporate officer or director with authority to execute a certificate of non-forum shopping by virtue of position alone. Any doubt on the matter was resolved in BPI Leasing Corp. vs. Court of Appeals, where the Court emphasized that the lawyer acting for a corporation must be specifically authorized to sign pleadings for it, and that such specific authorization could only come in the form of a board resolution issued by the Board of Directors specifically authorizing the counsel to institute the petition and execute the certification, so as to make his actions binding on his principal, the corporation. The Court has not wavered in stressing the need for strict adherence to procedural requirements, the rules of procedure existing to ensure the orderly administration of justice and not to be trifled with lightly. For this reason alone, the petition must already be dismissed.

• Substantial Compliance: Petitioner's contention that the filing of a motion for reconsideration with an appended certificate of non-forum shopping suffices to cure the defect in the pleading is specious, as it negates the very purpose for which the certification against forum shopping is required: to inform the Court of the pendency of any other case which may present similar issues and involve similar parties as the one before it. The requirement applies to both natural and juridical persons.

• Labor-Only Contracting: Although the petition warranted dismissal on the procedural ground alone, the Court proceeded to resolve the case on the merits in the interest of averting further litigation arising from the controversy and in light of the respective positions asserted by the parties in the pleadings and memoranda. Petitioner posited that it had entered into a service agreement with intervenor MANRED, which in turn maintained that Oabel was its employee and offered her reinstatement. Private respondent's purported employment with MANRED commenced only in 1996, way after she was hired by petitioner as extra beverage attendant on April 24, 1995; there was thus much credence in her claim that the service agreement between petitioner and MANRED was a mere ploy to circumvent the law on employment, particularly that pertaining to regularization. The operations of the hotel do not cease with the end of each event or function, and there is an ever present need for individuals to perform certain tasks necessary in petitioner's business; although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. As borne out by the findings of the NLRC, petitioner determines the nature of the tasks to be performed by private respondent, in the process exercising control. Accordingly, the finding of the NLRC that MANRED is a labor-only contractor was sustained, and the real employer of private respondent Oabel is petitioner.

• Regular Employment: Private respondent rendered more than one year of service to petitioner for the period 1995 to 1998, for which she must already be considered a regular employee pursuant to Article 280 of the Labor Code. Under that provision, and notwithstanding any written agreement to the contrary or the oral agreement of the parties, an employment is deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking whose completion or termination has been determined at the time of engagement, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment is deemed casual if not covered by the preceding paragraph, provided that any employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed, and his employment shall continue while such activity exists.

• Certificate of Non-Forum Shopping as a Mandatory Requirement — The certificate of non-forum shopping is a mandatory requirement, and the rule admits of substantial compliance only with respect to the contents of the certificate, not as to its presence in the pleading wherein it is required. The requirement applies to both natural and juridical persons. In this case, the petition was dismissed because the certification was subscribed and verified by petitioner's Personnel Director without any attached board resolution or special power of attorney, and the defect was not cured by the subsequent filing of a motion for reconsideration with an appended certificate.

• Specific Corporate Authority to Sign Pleadings and Certifications — A corporate officer or director is not, by virtue of his position alone, clothed with authority to execute a certificate of non-forum shopping. Specific authorization can only come in the form of a board resolution issued by the Board of Directors specifically authorizing the counsel to institute the petition and execute the certification, so as to make his actions binding on his principal, the corporation. The Court held that petitioner had taken the ruling in Digital Microwave Corp. vs. Court of Appeals out of context, that portion having been rendered in response to the issue of the impossibility of compliance by juridical persons with the requirements of Circular 28-91.

• Labor-Only Contracting — A contractor is a labor-only contractor where it merely supplies personnel rather than specific jobs or services, lacks sufficient capitalization and equipment to provide specific jobs, and the activities performed by the worker are directly related to and usually necessary or desirable in the business of the principal, who determines the nature of the tasks and exercises control over the work. The real employer in such a case is the principal. The Court sustained the NLRC's finding that MANRED was a labor-only contractor, noting that Oabel's purported employment with MANRED commenced only in 1996, after she had been hired by petitioner in 1995, and that the service agreement was a mere ploy to circumvent the law on regularization.

• Regular Employment Under Article 280 of the Labor Code — An employment is deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding any written agreement to the contrary or the oral agreement of the parties, except where the employment has been fixed for a specific project or undertaking whose completion or termination was determined at the time of engagement, or where the work or service is seasonal in nature and the employment is for the duration of the season. An employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed, and his employment shall continue while such activity exists. The Court applied this provision to hold that Oabel, having rendered more than one year of service from 1995 to 1998, was a regular employee.

• Strict Adherence to Procedural Rules — The rules of procedure exist to ensure the orderly administration of justice and are not to be trifled with lightly. The Court stressed that it has not wavered in requiring strict adherence to procedural requirements, and that the procedural defect in the certification against forum shopping was by itself sufficient ground for dismissal of the petition.

• "Well-settled is the rule that the certificate of non-forum shopping is a mandatory requirement. Substantial compliance applies only with respect to the contents of the certificate but not as to its presence in the pleading wherein it is required." — This passage states the ratio decidendi on the procedural issue, delimiting the scope of substantial compliance and foreclosing petitioner's argument that the later attachment of the certificate cured the defect.

• "The ruling does not, however, ipso facto clothe a corporate officer or director with authority to execute a certificate of non-forum shopping by virtue of the former's position alone." — This clarifies the limited scope of Digital Microwave Corp. vs. Court of Appeals and establishes that corporate position alone does not confer authority to execute the certification, a point reinforced by the board-resolution requirement in BPI Leasing Corp. vs. Court of Appeals.

• "In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease with the end of each event or function and that there is an ever present need for individuals to perform certain tasks necessary in the petitioner's business." — This passage supplies the factual premise for the labor-only contracting and regular employment holdings, explaining why the work performed was necessary or desirable in the usual business of the hotel and could not be treated as project-based.

• "This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-only contractor." — This is the Court's operative conclusion on the employment relationship, from which flowed the holding that petitioner is the real employer and that private respondent is a regular employee.

• Digital Microwave Corp. vs. Court of Appeals, G.R. No. 128550, March 16, 2000, 328 SCRA 286 — Cited by petitioner and distinguished by the Court. The Court held that petitioner took the ruling out of context: the identification of duly authorized officers or directors as proper signatories of a certificate of non-forum shopping was rendered in response to the issue of the impossibility of compliance by juridical persons with the requirements of Circular 28-91, and does not, ipso facto, clothe a corporate officer or director with authority to execute the certificate by virtue of position alone.

• BPI Leasing Corp. vs. Court of Appeals, G.R. No. 127624, November 18, 2003, 416 SCRA 4 — Controlling authority relied upon by the Court for the rule that the lawyer acting for a corporation must be specifically authorized to sign pleadings for the corporation, and that such specific authorization can only come in the form of a board resolution issued by the Board of Directors specifically authorizing the counsel to institute the petition and execute the certification, so as to bind the corporation.

• Article 280, Labor Code — Defines regular and casual employment. The Court quoted the provision in full and applied it to hold that private respondent, having rendered more than one year of service to petitioner for the period 1995 to 1998, must be considered a regular employee, and that her employment shall continue while the activity in which she is employed exists. The provision's first paragraph deems employment regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding any written agreement to the contrary or the oral agreement of the parties, subject only to the exceptions for project and seasonal employment.

• Circular 28-91 — Referenced in the Court's discussion of Digital Microwave Corp. vs. Court of Appeals as the source of the certification requirement whose compliance by juridical persons was at issue in that case. The Court clarified that the identification of duly authorized officers or directors as proper signatories was a response to the issue of impossibility of compliance by juridical persons with the requirements of that Circular, and did not dispense with the need for specific authorization.

• Antonio T. Carpio
• Renato C. Corona
• Adolfo S. Azcuna
• Teresita J. Leonardo-De Castro