Palomado vs. NLRC

A petition challenging an NLRC resolution must be brought as a special civil action for certiorari under Rule 65, not as a petition for review under Rule 43 or Rule 45, and must be preceded by a timely motion for reconsideration; absent grave abuse of discretion, the NLRC’s factual findings supported by substantial evidence are binding. An illegal dismissal claim cannot prosper without first establishing an employer-employee relationship.

Marling Rice Mill was owned by Mario Tan Teng Kuan, while Rolando Tan was his son and, according to petitioner, managed and operated the mill after Mario suffered a stroke. Rolando Tan later became the proprietor of R.S. Ricemill. The dispute is governed by the Labor Code and the Revised Rules of the NLRC, particularly the rules on position papers, formal hearings, and motions for reconsideration, as well as Rule 65 of the Rules of Court on certiorari.

Restituto C. Palomado alleged that on January 2, 1970, he was hired by Marling Rice Mill as a truck driver paid on a per-trip basis averaging P3,000.00 a month. He claimed continuous employment until August 1987, when Rolando Tan, acting as manager/operator of Marling Rice Mill, dismissed him. According to Palomado, Mario Tan Teng Kuan, the owner of Marling Rice Mill, suffered a stroke in 1973, after which Rolando Tan managed and operated the mill. In August 1987, Rolando Tan told Palomado that he would sell the Isuzu cargo truck Palomado drove in order to buy a new truck, assuring Palomado that he would be retained as driver of the new unit. After the Isuzu cargo truck was bought, however, Palomado was dismissed without cause and a new driver, Antonio Pustrado, was hired. Palomado claimed loss of income of P3,000.00 a month from September 1987.

Palomado also claimed underpayment of wages and various benefits. He asserted that he took trips lasting two to three days, was paid minimal amounts depending on the load of his truck, worked continuously for days and nights, and on occasions drove during holidays and rest days upon the orders of respondents. He thus sought overtime pay, legal holiday pay, and premium pay for holiday and rest day. In support, he submitted a “Certification of Premium Payments” issued by the Employee Accounts Department of the Social Security System dated October 26, 1988, showing premium payments made by Marling Trading and Ricemill in his favor from April 1972 to July 1979. The certification indicated by the letters “NI” that after July 1979 his name was no longer included in the quarterly collection list submitted by respondents on file with the Social Security System.

Rolando Tan, in his verified position paper dated May 28, 1990, alleged that he was the proprietor of R.S. Ricemill located in Bo. Hibanga, Sariaya, Quezon, a business he started in 1987. He alleged that Mario Tan Teng Kuan was the proprietor of Marling Rice Mill, which ceased operations in 1987 following Mario’s infirmity and poor health; Mario died of cardiac arrest on March 15, 1989. Rolando Tan argued that he was neither the owner nor the manager of Marling Rice Mill, although he was a former employee of Mario Tan Teng Kuan, and that Palomado had never been an employee of R.S. Ricemill, which Rolando Tan owned and operated.

The labor arbiter found no dispute that Mario Tan Teng Kuan, as owner of Marling Rice Mill, employed Palomado as a truck driver. The real controversy was when Palomado’s services actually ended, especially in view of Mario’s death in 1989 and the mill’s cessation of operation in 1987. Absent other concrete evidence of the length of service, the labor arbiter relied on the SSS certification of premium payments, which Palomado himself procured and submitted. That certification showed that after June 1979 Palomado was no longer included among the employees listed in the quarterly collection list filed with the SSS, meaning he ceased to be employed with Marling Rice Mill after June 1979. The payrolls of Marling Rice Mill submitted to the SSS for various periods after June 1979, as well as the unrebutted sworn statement of Dionisio Belda, Palomado’s co-worker and pahinante, stating that Palomado asked to go on vacation leave in June 1979 and did not report back to work, supported this conclusion. The labor arbiter thus concluded that Palomado ceased to be an employee of Marling Rice Mill since July 1979 and that, because the complaint was filed only on April 17, 1990, it was already barred by prescription.

As to Palomado’s claims against Rolando Tan, the labor arbiter found that the documentary evidence presented by Rolando Tan overwhelmingly negated Palomado’s allegations that he had been employed by Rolando Tan. Rolando Tan appeared to be the registered proprietor/owner of R.S. Ricemill, an entity that started to operate in 1986 as per a Certificate of Registration issued by the Bureau of Domestic Trade dated April 11, 1986, and which was never impleaded as a party-respondent. Rolando Tan, whom Palomado alleged was the manager/operator of Marling Rice Mill after Mario’s stroke in 1973, was shown by the payrolls submitted to the SSS to be a mere employee of Marling Rice Mill; the payrolls showed that Guillermo Tan was the manager. Palomado’s documentary exhibits, including Annexes “I”, “I-1” to “I-16”, and “J”, failed to serve their purpose and were irrelevant and immaterial. The labor arbiter also found that the “Bilihang Lampasan” between Rolando Tan and Antonio Lindog for the sale of an Isuzu cargo truck did not prove that Rolando Tan was in absolute control of Marling Rice Mill because the truck was not shown to have been owned by the rice mill. The labor arbiter therefore found no employer-employee relationship between Palomado and Rolando Tan.

On appeal, the NLRC agreed with the labor arbiter, finding no evidentiary support for Palomado’s allegations against Rolando Tan and no grave abuse of discretion or serious errors in the labor arbiter’s findings of fact.

• Grave Abuse in Conduct of Proceedings: Petitioner argued that the labor arbiter acted with grave abuse of discretion amounting to lack of jurisdiction when, on May 17, 1990, he terminated the preliminary conference and directed the parties to file position papers without requiring private respondents to answer the claims and despite petitioner’s counsel having moved for ten days to file a reply/comment to Rolando Tan’s Letter-Answer; petitioner maintained that formal hearings should have been held because the parties held totally conflicting positions.
• Serious Errors in Findings of Fact: Petitioner asserted that the labor arbiter committed serious errors in findings of fact, including ignoring all his documentary exhibits except the SSS certification of premium payments, which was used against him, while enumerating Rolando Tan’s documentary exhibits without qualification as to admissibility and credibility.
• Serious Errors in Findings of Law: Petitioner contended that the labor arbiter committed serious errors in findings of law in ruling that no employer-employee relationship existed with Rolando Tan despite Rolando Tan allegedly exercising the power to select and engage employees, dismiss employees, pay wages, and control all work of the mill’s employees, and in finding that petitioner was terminated without just or authorized cause.
• Withheld Payrolls: Petitioner accused Rolando Tan of deliberately and unlawfully withholding the payrolls for intervening periods, which petitioner believed would have proven the employer-employee relationship.
• Formal Hearing Would Cure Reliance: Petitioner believed that had a formal hearing been conducted, the arbiter’s allegedly mistaken reliance on certain documentary evidence submitted by the parties would have been cured and remedied through controverting evidence.

• No Employer-Employee Relationship: Rolando Tan argued that he was not the owner or manager of Marling Rice Mill; he was a former employee of Mario Tan Teng Kuan, and petitioner had never been an employee of R.S. Ricemill, which Rolando Tan owned and operated.
• Failure to Move for Reconsideration: Rolando Tan argued that petitioner’s failure to file a motion for reconsideration of the assailed NLRC Resolution before filing the petition constituted a fatal infirmity even if the petition were treated as a special civil action for certiorari.
• Withheld Payrolls Unfounded: Rolando Tan argued that petitioner’s accusation that he deliberately and unlawfully withheld payrolls for intervening periods was unfounded, reckless, and irresponsible; petitioner did not prove the existence of the unpresented payrolls or that Rolando Tan had possession or custody of them.

• Propriety of Remedy and Motion for Reconsideration: Whether the petition may be entertained despite being filed under Rule 43 instead of Rule 65 and without a prior motion for reconsideration of the NLRC Resolution.
• Grave Abuse of Discretion in Conduct of Proceedings: Whether the labor arbiter acted with grave abuse of discretion amounting to lack of jurisdiction in terminating the preliminary conference and directing the submission of position papers without conducting formal hearings.
• Serious Errors in Findings of Fact: Whether the labor arbiter committed serious errors in findings of fact in relying on the SSS certification, payrolls, and Dionisio Belda’s sworn statement to conclude that petitioner ceased employment in July 1979 and had no employer-employee relationship with Rolando Tan.
• Serious Errors in Findings of Law: Whether the labor arbiter committed serious errors in findings of law in dismissing petitioner’s claims for illegal dismissal and monetary benefits.
• Employer-Employee Relationship: Whether an employer-employee relationship existed between petitioner and Rolando Tan as an indispensable precondition to the illegal dismissal claim.

• Propriety of Remedy and Motion for Reconsideration: No. The proper remedy to challenge an NLRC resolution is a special civil action for certiorari under Rule 65, not a petition for review under Rule 43 or Rule 45, and a motion for reconsideration is an essential prerequisite; failure to file it made the NLRC Resolution final and executory.
• Grave Abuse of Discretion in Conduct of Proceedings: No. The labor arbiter acted within the wide latitude granted by Sec. 3, Rule VII of the NLRC Rules to determine the need for a formal hearing after position papers and supporting proofs.
• Serious Errors in Findings of Fact: No. The findings were supported by substantial evidence, and factual findings of quasi-judicial agencies like the NLRC are accorded great respect and finality absent grave abuse of discretion.
• Serious Errors in Findings of Law: No. The dismissal of the claims was correct because no employer-employee relationship existed between petitioner and Rolando Tan, and illegal dismissal cannot prosper without that relationship.
• Employer-Employee Relationship: No. The evidence showed Rolando Tan was not the owner or manager of Marling Rice Mill but a mere employee, and petitioner was not employed by R.S. Ricemill.

• Propriety of Remedy and Motion for Reconsideration: The petition was incorrectly brought under Rule 43. The settled rule is that the appropriate remedy to challenge an NLRC resolution is a special civil action for certiorari under Rule 65, not a petition for review under Rule 45, much less Rule 43. Although the Court treated the petition as a certiorari action to afford substantial justice, petitioner failed to file a motion for reconsideration of the assailed Resolution. Certiorari lies only if there is no appeal or any other plain, speedy, and adequate remedy; the plain and adequate remedy was a motion for reconsideration under oath within ten calendar days from receipt, as provided in Sec. 9, Rule X of the New Rules of the NLRC. Failure to avail of that remedy allowed the Resolution to become final and executory. The motion for reconsideration is intended to afford the NLRC an opportunity to correct any actual or fancied error by re-examining the legal and factual aspects of the case; an improvident resort to certiorari cannot be used to circumvent that opportunity or to shield petitioner from the consequences of his own negligence or error in the choice of remedies. Even if the procedural flaws were disregarded, certiorari lies only for grave abuse of discretion or lack or excess of jurisdiction. The petition was a mere rehash of the Memorandum of Appeal and showed no patent, gross, and prejudicial errors or capricious disregard of settled law. Certiorari is not appellate jurisdiction and does not include correction of the NLRC’s evaluation of evidence. Any error would be a mere error of judgment.
• Grave Abuse of Discretion in Conduct of Proceedings: The labor arbiter’s termination of the preliminary conference and directive to file position papers did not constitute grave abuse. The initial conference/hearing is intended to explore amicable settlement under Sec. 1, Rule VII. When settlement appears remote, the arbiter must terminate the conference and require verified position papers under Sec. 2, Rule VII. The arbiter’s exercise of discretion carries the presumption of regularity; he believed further settlement exploration was futile, and the order was also based on the failure of complainant’s representative to appear. The failure to conduct a formal hearing did not preclude petitioner from filing a reply/comment to Rolando Tan’s Letter-Answer if he desired. Sec. 3, Rule VII grants the arbiter wide latitude to determine whether a formal hearing is needed after submission of position papers and supporting proofs. Petitioner also signed the minutes of the May 17, 1990 hearing, signifying agreement to the colatilla that if a formal hearing was no longer necessary, the case would be deemed submitted for decision.
• Serious Errors in Findings of Fact: The findings were based on substantial evidence. Petitioner himself procured and submitted the SSS certification of premium payments to prove employment from 1979 to his alleged termination; the certification showed that after June 1979 his name was no longer included in the quarterly collection list, meaning he ceased employment with Marling Rice Mill after June 1979. The payrolls for various periods after June 1979, and the unrebutted sworn statement of Dionisio Belda that petitioner went on vacation leave in June 1979 and did not return, supported the conclusion. Petitioner’s accusation that Rolando Tan withheld intervening payrolls was unfounded; petitioner did not prove the existence of those payrolls, especially since the mill ceased operations in 1987, nor that Rolando Tan had possession or custody of them; he should have used a subpoena duces tecum. Quasi-judicial agencies need only substantial evidence. The later Sinumpaang Salaysay of Belda dated July 26, 1990, presented for the first time before the Supreme Court, did not detract from the evidence that petitioner was not an employee of Rolando Tan and that Rolando Tan was not the manager of Marling Rice Mill. The payrolls showed Guillermo Tan signed as manager. The Bilihang Lampasan for the sale of an Isuzu cargo truck did not prove Rolando Tan had absolute control of Marling Rice Mill because the truck was not shown to be owned by the mill. The labor arbiter also found that petitioner ceased employment in July 1979 and filed the complaint only on April 17, 1990, beyond the reglementary period.
• Serious Errors in Findings of Law: The legal conclusion that no employer-employee relationship existed between petitioner and Rolando Tan was correct. The labor arbiter found that Rolando Tan was the registered proprietor/owner of R.S. Ricemill, which started operations in 1986 per a Bureau of Domestic Trade certificate dated April 11, 1986, and which was never impleaded as a party-respondent. Rolando Tan, whom petitioner alleged was manager/operator of Marling Rice Mill after Mario’s stroke in 1973, was shown by the payrolls to be a mere employee of Marling Rice Mill; Guillermo Tan was the manager. Petitioner’s documentary exhibits failed to establish his claims and were irrelevant and immaterial. Because no employer-employee relationship existed, the illegal dismissal claim had no basis, and the claims for backwages, separation pay, and other benefits likewise failed.
• Employer-Employee Relationship: An indispensable precondition of illegal dismissal is the prior existence of an employer-employee relationship. The labor arbiter and NLRC found none between petitioner and Rolando Tan. The evidence showed petitioner was employed by Marling Rice Mill, owned by Mario Tan Teng Kuan, and that his employment ended in July 1979; Rolando Tan was not the owner or manager of Marling Rice Mill but a former employee, and petitioner was never employed by R.S. Ricemill. Without the relationship, the illegal dismissal allegation could not stand.

• Proper remedy to challenge NLRC resolutions — A special civil action for certiorari under Rule 65, not a petition for review under Rule 43 or Rule 45, is the proper remedy to challenge an NLRC resolution. Certiorari lies only where there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law and only for lack or excess of jurisdiction or grave abuse of discretion, not for ordinary errors of law. The Court treated the Rule 43 petition as a Rule 65 certiorari action to afford substantial justice but still dismissed it.
• Motion for reconsideration as prerequisite to certiorari — A motion for reconsideration is an essential prerequisite to certiorari. It affords the NLRC an opportunity to correct actual or fancied errors by re-examining the legal and factual aspects of the case. Under the NLRC Rules, it must be made under oath within ten calendar days from receipt; failure to file it makes the assailed resolution final and executory and bars certiorari.
• Grave abuse of discretion and limited certiorari review — Certiorari jurisdiction is not appellate jurisdiction and does not include correction of the NLRC’s evaluation of evidence. Review is confined to issues of jurisdiction or grave abuse of discretion. A mere rehash of arguments already raised on appeal, absent patent, gross, and prejudicial errors or capricious disregard of settled law, does not establish grave abuse.
• Respect for factual findings of quasi-judicial agencies — Factual findings of quasi-judicial agencies like the NLRC, if supported by substantial evidence, are generally accorded great respect and even finality and are binding on the Supreme Court, unless the agency arbitrarily disregarded evidence or misapprehended it to such an extent that a contrary conclusion is compelled. This rests on the Court not being a trier of facts and on respect for administrative expertise.
• Substantial evidence in labor cases — Labor tribunals need only substantial evidence, not proof beyond reasonable doubt, as the basis for their decisions. The labor arbiter’s findings were upheld because they were supported by substantial evidence.
• Wide latitude of labor arbiter on formal hearings — Under Sec. 3, Rule VII of the NLRC Rules, the labor arbiter has wide latitude to determine whether a formal hearing or investigation is needed after the parties submit their position papers and supporting proofs. The initial conference is for amicable settlement; when settlement is remote, the arbiter may terminate it and require verified position papers under Sec. 2, Rule VII.
• Position papers and affidavits in labor proceedings — Under Sec. 2, Rule VII, verified position papers with all supporting documents and affidavits take the place of direct testimony. Parties may not thereafter allege or present evidence to prove facts or causes of action not included in their complaint, position papers, affidavits, and other documents. This rule serves speedy disposition and prevents surprises.
• Employer-employee relationship as precondition to illegal dismissal — Before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. Absent such relationship, the illegal dismissal claim has no basis, and claims for backwages, separation pay, and other benefits must likewise fail.
• Prescription of labor claims — The labor arbiter applied the reglementary period and found that because petitioner ceased employment in July 1979 and filed his complaint only on April 17, 1990, the complaint against Marling Rice Mill and/or Mario Tan Teng Kuan was barred by prescription. The NLRC’s affirmance was upheld in toto.

• "The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law against the acts of public respondent." — This states the threshold requirement for certiorari and supplies the basis for requiring a motion for reconsideration before resort to the courts.
• "The implementing rules of respondent NLRC are unequivocal in requiring that a motion for reconsideration of the order, resolution, or decision of respondent commission should be seasonably filed as a precondition for pursuing any further or subsequent remedy, otherwise the said order resolution, or decision shall become final and executory after ten calendar days from receipt thereof." — This is the Court’s canonical statement, quoted from Zapata vs. NLRC, that a motion for reconsideration is a precondition to further remedy and that non-compliance renders the NLRC ruling final and executory.
• "An indispensable precondition of illegal dismissal is the prior existence of an employer-employee relationship; in this case, since it was established that there was no such relationship between petitioner and private respondent Tan, therefore the allegation of illegal dismissal does not have any leg to stand on." — This is the ratio decidendi on the substantive labor issue: without an employer-employee relationship, the illegal dismissal claim and the monetary claims necessarily fail.
• "Sec. 3, Rule VII grants an arbiter wide latitude to "determine whether there is a need for a formal hearing or investigation . . . after the submission by the parties of their position papers and supporting proofs."" — This defines the labor arbiter’s discretion to dispense with a formal hearing and supports the ruling that no grave abuse attended the proceedings below.

• De Asis vs. National Labor Relations Commission, 177 SCRA 340 (September 7, 1989) — Cited for the rule that the appropriate remedy to challenge an NLRC resolution is a special civil action for certiorari under Rule 65, not a petition for review under Rule 45 or Rule 43.
• Pure Foods Corporation vs. NLRC, 171 SCRA 415, 425 (March 21, 1989) — Cited to explain that a motion for reconsideration affords the NLRC an opportunity to correct errors and that an improvident resort to certiorari cannot circumvent that opportunity or shield a party from its own negligence.
• Zapata vs. NLRC, 175 SCRA 56, 60 (July 5, 1989) — Cited for the rule that the NLRC Rules require a seasonably filed motion for reconsideration as a precondition to further remedy; otherwise the decision becomes final and executory after ten calendar days.
• Loadstar Shipping Co., Inc. vs. Gallo, 229 SCRA 654, 659-660 (February 4, 1994) — Cited to reiterate that review of an NLRC decision does not include correction of its evaluation of evidence but is confined to issues of jurisdiction or grave abuse of discretion.
• St. Mary’s College (Tagum, Davao) vs. NLRC, 181 SCRA 62, 66 (January 12, 1990) — Cited for the rule that factual findings of quasi-judicial agencies supported by substantial evidence are accorded great respect and even finality.
• Maya Farms Employees Organization vs. NLRC, 239 SCRA 508 (December 28, 1994) — Cited for respect to determinations made by administrative bodies in matters within their fields of specialization or expertise.
• Sime Darby Pilipinas, Inc. vs. Magsalin, 180 SCRA 177 (December 15, 1989) — Cited for the principle that certiorari jurisdiction is not to be equated with appellate jurisdiction.

• Rule 65, Rules of Court — Certiorari lies only where there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law and where there is grave abuse of discretion or lack/excess of jurisdiction; the Court treated the petition as a Rule 65 action.
• Rule 43 and Rule 45, Rules of Court — The petition was incorrectly brought under Rule 43; the Court reiterated that a petition for review under Rule 45, much less Rule 43, is not the proper remedy to challenge an NLRC resolution.
• Section 1, Rule VII, Revised Rules of the NLRC — The initial conference/hearing is intended to explore the possibility of amicable settlement; when settlement appears remote, the labor arbiter may terminate the conference and require position papers.
• Section 2, Rule VII, Revised Rules of the NLRC — Requires parties to submit verified position papers with supporting documents and affidavits, which take the place of direct testimony; parties may not thereafter allege or present evidence on facts or causes of action not included in their complaint, position papers, affidavits, and other documents.
• Section 3, Rule VII, Revised Rules of the NLRC — Grants the labor arbiter wide latitude to determine whether there is a need for a formal hearing or investigation after submission of position papers and supporting proofs.
• Section 9, Rule X, New Rules of the NLRC — Provides the plain and adequate remedy of a motion for reconsideration, under oath, within ten calendar days from receipt of the questioned decision; failure to file it made the assailed Resolution final and executory.
• Section 1, Rule II, Book VII, Labor Code — Cited in the decision’s footnote in connection with the reglementary period for filing the complaint; the labor arbiter found the complaint barred by prescription because petitioner ceased employment in July 1979 and filed only on April 17, 1990.

• Chief Justice Narvasa
• Justice Davide, Jr.
• Justice Melo
• Justice Francisco