PMI Colleges vs. NLRC

Certiorari under Rule 65 of the Rules of Court is confined to correcting errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction, and cannot be invoked to review the correctness of a tribunal's evaluation of evidence or factual findings; corporate by-laws operate only as internal rules among stockholders and cannot affect third persons who deal with the corporation unless they have actual knowledge of such by-laws; and the absence of a formal trial before a Labor Arbiter does not constitute denial of due process where the parties were given reasonable opportunity to present their evidence through position papers and supporting documents.

The case involves a claim for unpaid wages by a contractual instructor against an educational institution offering basic seaman's training and marine-related courses. The dispute centered on whether an employer-employee relationship existed, the validity of claims for services rendered during on-the-job training and shipyard visits, and whether procedural due process was observed when the Labor Arbiter decided the case without conducting a formal trial.

• Petitioner PMI Colleges is an educational institution offering courses on basic seaman's training and other marine-related courses.
• On July 7, 1991, petitioner hired private respondent Alejandro Galvan as a contractual instructor with an agreement to pay him hourly rates of P30.00 to P50.00 depending on the subject load and schedule.
• Private respondent organized classes in marine engineering and was initially compensated for the first three periods of the contract.
• For reasons unknown to private respondent, payment for succeeding services was withheld despite repeated demands.
• On March 3, 1992, petitioner's Acting Director Casimiro A. Aguinaldo wrote a letter to the President appealing for the release of salaries including private respondent's, specifically mentioning unpaid compensation for shipyard and plant visits and on-the-job training of Class 41 on board MV "Sweet Glory."
• The request was unheeded, prompting private respondent to file a complaint on September 14, 1993 seeking payment for: (1) basic seaman course Classes 41 and 42 (October 1991 to September 1992); (2) shipyard and plant visits and on-the-job training on board M/V "Sweet Glory"; and (3) services as Acting Director of Seaman Training Course for 3-1/2 months.
• Private respondent submitted documentary evidence including detailed load schedules, course descriptions, the Acting Director's letter-request for payment, vouchers prepared by petitioner's accounting department indicating amounts never paid, and other supporting documents.
• Petitioner resisted the claims, alleging that classes were not held in school premises, no proper supervision was exercised, activities violated DECS rules, claims were exaggerated, and private respondent abandoned his work.
• Private respondent countered that lectures were held at petitioner's rented premises in Sta. Cruz, Manila; students were duly enrolled with the Registrar; shipyard visits were conducted at Fort San Felipe, Cavite Naval Base with petitioner's knowledge and authorization; and courses were sanctioned by DECS.
• During the proceedings, petitioner manifested that a Board member wrote a letter clarifying that under petitioner's by-laws, only the Chairman is authorized to sign contracts, and that private respondent failed to submit documents regarding shipyard visits.
• On June 16, 1994, the Labor Arbiter declared the case submitted for decision based on position papers, despite petitioner's opposition requesting a formal trial.
• The Labor Arbiter denied the opposition on July 22, 1994 and subsequently rendered a decision favorable to private respondent on December 7, 1994.

• The money claims for salaries, on-the-job training, and shipyard visits lack valid legal and factual bases because private respondent failed to produce a copy of the employment contract.
• The contract is invalid because it was not signed by the Chairman of the Board, allegedly violating petitioner's by-laws which reserve contract-signing authority exclusively to the Chairman.
• Claims for services related to on-the-job training and shipyard visits are baseless because these activities were not conducted within school premises and violated DECS regulations.
• The documents presented by private respondent are self-serving and should not have been given probative value.
• Petitioner was denied procedural due process when the Labor Arbiter decided the case without conducting a formal trial or hearing, depriving petitioner of the opportunity to present witnesses and cross-examine.
• The NLRC's findings lack sound legal and factual support and constitute grave abuse of discretion.

• An employer-employee relationship existed as evidenced by the vouchers prepared by petitioner's accounting department and the letter of the Acting Director requesting payment for private respondent's services.
• The absence of a written contract does not negate the existence of an employment relationship, which may be proven by any competent and relevant evidence.
• Lectures were conducted within petitioner's rented premises at the Manufacturers Building in Sta. Cruz, Manila.
• Students were duly enrolled with the Registrar's Office, and shipyard visits were conducted at Fort San Felipe, Cavite Naval Base with petitioner's full knowledge and authorization, evidenced by a letter written by petitioner for that purpose.
• The courses were sanctioned by the Department of Education, Culture and Sports as shown by Registrar's Office records.
• Petitioner had ample opportunity to rebut the evidence presented but merely offered bare denials which constitute self-serving evidence.
• The Labor Arbiter did not commit grave abuse of discretion in proceeding without formal trial, as the rules allow decision based on position papers and petitioner was given adequate opportunity to present evidence.

• Procedural Issues:
  • Whether certiorari under Rule 65 is the proper remedy to assail the factual findings of the Labor Arbiter and NLRC.
  • Whether petitioner was denied procedural due process when the Labor Arbiter decided the case based on position papers without conducting a formal trial.
• Substantive Issues:
  • Whether the money claims for salaries, on-the-job training, and shipyard visits have valid legal and factual bases despite the absence of a written contract.
  • Whether the employment contract is invalid due to alleged violation of corporate by-laws requiring the Chairman's signature.
  • Whether the NLRC committed grave abuse of discretion in affirming the Labor Arbiter's findings.

• Procedural:
  • Certiorari under Rule 65 is limited to correcting errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction; it cannot be used to review errors of judgment or to re-evaluate the sufficiency of evidence.
  • The Supreme Court is not a trier of facts; its power in certiorari proceedings is confined to determining whether the Labor Arbiter and NLRC acted without or in excess of jurisdiction or with grave abuse of discretion.
  • Petitioner was not denied procedural due process; the essence of due process is merely that a party be afforded a reasonable opportunity to be heard and to submit evidence.
  • Under Section 3, Rule V of the New Rules of Procedure of the NLRC, the holding of a formal trial is discretionary upon the Labor Arbiter, not a matter of right.
  • The Labor Arbiter gave petitioner adequate opportunity to present evidence, including granting a motion allowing submission of additional documents, but petitioner failed to attach all supporting documents to its position paper as required by the rules.
• Substantive:
  • The absence of a written contract does not negate the existence of an employment relationship; contracts are obligatory in whatever form provided all essential requisites for validity are present.
  • No particular form of evidence is required to prove an employer-employee relationship; any competent and relevant evidence may be admitted.
  • Corporate by-laws operate merely as internal rules among stockholders and cannot affect or prejudice third persons who deal with the corporation unless they have knowledge of the same; there was no proof that private respondent knew of the by-law requiring the Chairman's signature.
  • The vouchers prepared by petitioner's accounting department and the Acting Director's letter-request for payment constitute substantial evidence supporting the existence of an employment relationship and the unpaid wages.
  • Documents prepared by a party are not necessarily self-serving when offered in proceedings where the opposing party had ample opportunity to rebut their veracity; petitioner's bare denials constitute self-serving evidence deserving scant consideration.
  • The Labor Arbiter and NLRC did not commit grave abuse of discretion in relying on private respondent's detailed and affirmative evidence, which petitioner failed to effectively controvert.

• Limited Scope of Certiorari — Certiorari under Rule 65 is a remedy narrow in scope and inflexible in character, not a general utility tool; it is confined to errors of jurisdiction or grave abuse of discretion and does not extend to errors of judgment or evaluation of evidence.
• Corporate By-Laws as Internal Rules — By-laws operate merely as internal rules among stockholders and cannot affect or prejudice third persons who deal with the corporation, unless they have knowledge of the same; restrictions on authority imposed by by-laws do not invalidate contracts with innocent third parties who dealt with the corporation without notice of such restrictions.
• Proof of Employment Relationship — No particular form of evidence is required to prove the existence of an employer-employee relationship; any competent and relevant evidence may be admitted, and the absence of a written contract does not negate the relationship if the essential requisites for validity are present.
• Self-Serving Evidence — Documents prepared by a party are not self-serving merely because they serve that party's interest; evidence is self-serving when it is unsupported by any other testimony or document and is offered solely to serve the declarant's interest, such as bare denials without affirmative proof.
• Due Process in Labor Proceedings — The essence of due process is the reasonable opportunity to be heard and to submit evidence; formal trial is discretionary upon the Labor Arbiter under the NLRC rules, and parties must attach all supporting documents to their position papers as affidavits take the place of direct testimony.

• "Contracts shall be obligatory, in whatever form they have been entered into, provided all the essential requisites for their validity are present." — Article 1356, Civil Code.
• "Since by-laws operate merely as internal rules among the stockholders, they cannot affect or prejudice third persons who deal with the corporation, unless they have knowledge of the same."
• "Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility tool in the legal workshop."
• "The essence of due process is merely that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense."
• "No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted."

• San Miguel Foods, Inc. Cebu B-Meg Feed Plant v. Hon. Bienvenido Laguesma — Cited for the principle that the Supreme Court is not the proper venue for factual issues as it is not a trier of facts, and certiorari is limited to jurisdiction and grave abuse of discretion.
• Ilocos Sur Electric Cooperative, Inc. v. NLRC — Cited for the rule that judicial review in certiorari does not extend to evaluating the sufficiency of evidence but is limited to jurisdictional errors or grave abuse of discretion.
• Opulencia Ice Plant and Storage v. NLRC — Cited for the doctrine that no particular form of evidence is required to prove an employer-employee relationship.
• Fleischer v. Botica Nolasco — Cited for the principle that by-laws operate merely as internal rules among stockholders.
• Pacific Timber Export Corp. v. NLRC — Cited for the rule that the holding of a trial is discretionary on the Labor Arbiter and parties must attach supporting documents to position papers.
• Cuison v. Court of Appeals — Cited for the definition that self-serving evidence is not to be literally taken as evidence serving one's selfish interest.
• Abadilla v. Tabiliran, Jr. — Cited for the principle that bare denials constitute self-serving evidence.

• Rule 65, Rules of Court — Governs the remedy of certiorari and its limited scope to errors of jurisdiction or grave abuse of discretion.
• Article 1356, Civil Code — Provides that contracts are obligatory in whatever form provided essential requisites are present.
• Section 3, Rule V, New Rules of Procedure of the NLRC — Requires position papers to be accompanied by all supporting documents including affidavits of witnesses in lieu of direct testimony, and prohibits allegations of facts or causes of action not included in the complaint or position papers.