St. Martin Funeral Homes vs. National Labor Relations Commission

A Labor Arbiter cannot simply rely on position papers and unsubstantiated claims when there are factual issues that require formal presentation of evidence in a hearing. The Labor Arbiter's failure to set the case for hearing, despite conflicting positions on the existence of an employer-employee relationship, warranted a remand for further proceedings.

Petitioner St. Martin Funeral Homes, Inc. is owned by Amelita Malabed. Prior to January 1996, Amelita's mother managed the funeral parlor. Respondent Bienvenido Aricayos, a former overseas contract worker, was granted financial assistance by Amelita's mother sometime in 1995, and as a sign of appreciation, he extended assistance in managing St. Martin without compensation. There was no written employment contract between Amelita's mother and Aricayos, and he was not listed as an employee in the Company's payroll.

Petitioner St. Martin Funeral Homes, Inc. is owned by Amelita Malabed. Prior to January 1996, Amelita's mother managed the funeral parlor. Respondent Bienvenido Aricayos, a former overseas contract worker, was granted financial assistance by Amelita's mother sometime in 1995. As a sign of appreciation, Aricayos extended assistance to Amelita's mother in managing St. Martin without compensation. There was no written employment contract between Amelita's mother and Aricayos, and he was not even listed as an employee in the Company's payroll.

When Amelita's mother died in January 1996, Amelita took over as manager of St. Martin. She found that St. Martin had arrearages in the payment of BIR taxes and other fees owing to the government, although company records tended to show that payments were made thereon. As a result, Amelita removed the authority from Aricayos and his wife to take part in managing St. Martin's operations.

Aggrieved, Aricayos accused St. Martin of illegal dismissal as Operations Manager of the company. He believed that the cause of his termination was Amelita's suspicion that he pocketed PhP 38,000.00 which was set aside for payment to the BIR of St. Martin's value added taxes.

On October 25, 1996, the Labor Arbiter rendered a Decision in favor of petitioner, declaring that his office had no jurisdiction over the case, relying on Dela Salle University vs. NLRC, which held that where the existence of an employer-employee relationship is disputed and not assumed, the determination of that question should be handled by the regular courts after full dress trial and not by the Labor Arbiter. Aricayos appealed to the NLRC, which on June 13, 1997, annulled the Arbiter's Decision and remanded the case to him for appropriate proceedings to determine the factual issue of employer-employee relationship.

Petitioner filed a petition for certiorari under Rule 65 before the Supreme Court, docketed as G.R. No. 130866. On September 16, 1998, the Court held for the first time that all petitions for certiorari under Rule 65 assailing NLRC decisions should henceforth be filed with the CA. The petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183. The CA rendered the assailed September 30, 1999 Decision, dismissing petitioner's appeal for lack of merit, finding that the NLRC did not commit grave abuse of discretion. The CA noted that the Labor Arbiter did not actually determine whether there was an employer-employee relationship between the parties because, according to him, such issue should be resolved by the regular court pursuant to Dela Salle University vs. NLRC. The CA's February 11, 2000 Resolution denied petitioner's Motion for Reconsideration, prompting the instant petition.

• Determination of Employer-Employee Relationship: Petitioner insisted that, contrary to the findings of the NLRC as affirmed by the CA, the Labor Arbiter actually concluded that there was no employer-employee relationship between the parties, considering the memoranda, position papers, and documentary evidence presented. St. Martin asserted that the Labor Arbiter already undertook the "appropriate proceeding" referred to by the NLRC and the CA.
• Substantial Evidence: Petitioner contended that the Labor Arbiter made a finding of the non-existence of any relationship between Aricayos and the company based on the position papers and memoranda of the parties. Petitioner claimed several affidavits of its employees were attached to its position paper whereby they attested under oath that Aricayos was never an employee of St. Martin, and that the Arbiter made the determination only after considering the documentary evidence on record, hence substantial evidence supports such finding.

• No Determination Made: Respondent Aricayos supported the pronouncement of the NLRC as affirmed by the CA that there was no determination whether he was an employee of St. Martin, and that the main basis for the dismissal of his complaint was the Labor Arbiter's reliance on Dela Salle University vs. NLRC, which held that it should be the regular court which should make such finding.

• Question of Fact: Whether the Labor Arbiter made a determination of the presence of an employer-employee relationship between St. Martin and respondent Aricayos based on the evidence on record.
• Procedural Compliance: Whether the petition raises a question of fact proscribed by Rule 45, and whether petitioner's failure to attach vital documents warrants denial of the petition.

• Question of Fact: No. The issue submitted for resolution is a question of fact proscribed by the rule disallowing factual issues in appeal by certiorari to the Supreme Court under Rule 45, which explicitly provides that petitions of this nature "shall raise only questions of law which must be distinctly set forth."
• Procedural Compliance: No. Even if the Court were to relax the rule, petitioner's abject failure to attach to the petition important and material portions of the records, including the Labor Arbiter's Decision, the NLRC Decision, the position papers and memoranda, and the affidavits of petitioner's employees, precluded the Court from granting the relief prayed for.

• Question of Fact: The Court noted that petitioner St. Martin would like the Court to examine the pleadings and documentary evidence extant on the records of the Labor Arbiter to determine if said official indeed made a finding on the existence of the alleged employer-employee nexus between the parties based on the facts contained in said pleadings and evidence. Evidently, this issue is embraced by the circumscription of Rule 45, Section 1, which limits petitions to questions of law.

• Procedural Compliance: The Court observed that even if it would like to relax the rule and allow the examination of the documentary evidence as an exception to the general rule, it is precluded by the abject failure of petitioner to attach to the petition important and material portions of the records as would support the petition prescribed by Rule 45, Section 4. St. Martin asked the Court to find out if the Labor Arbiter was correct in concluding that Aricayos was not in its employ, but committed the blunder of not attaching to the petition even the Decision of the Labor Arbiter sought to be reviewed, the NLRC Decision, the position papers and memoranda of the parties filed with the Labor Arbiter, the affidavits of petitioner's employees, and other pieces of evidence.

• Remand for Hearing: The Court found that even with the inadequate information and few documents on hand, one thing is clear—that the Labor Arbiter did not set the labor case for hearing to be able to determine the veracity of the conflicting positions of the parties. On this point alone, a remand is needed. The Court held in a catena of cases that while a formal trial or hearing is discretionary on the part of the Labor Arbiter, when there are factual issues that require a formal presentation of evidence in a hearing, the Labor Arbiter cannot simply rely on the position papers, more so, on mere unsubstantiated claims of parties.

• Admissions Requiring Hearing: The Court noted certain admissions by petitioner St. Martin that should have prodded the Labor Arbiter to conduct a hearing for a more in-depth examination of the contrasting positions of the parties, namely: that respondent helped Amelita's mother manage the funeral parlor business by running errands for her, overseeing the business from 1995 up to January 1996 when the mother died, and that after Amelita made changes in the business operation, private respondent and his wife were no longer allowed to participate in the management of St. Martin. These facts, as admitted by the petitioner and the affidavits of St. Martin's witnesses, could have been examined more in detail by the Labor Arbiter in a hearing to convince himself that there was indeed no employment relationship between the parties as he originally found.

• Labor Arbiter's Duty to Conduct Hearing — While a formal trial or hearing is discretionary on the part of the Labor Arbiter, when there are factual issues that require a formal presentation of evidence in a hearing, the Labor Arbiter cannot simply rely on the position papers, more so, on mere unsubstantiated claims of parties. The Court applied this doctrine in finding that the Labor Arbiter's failure to set the case for hearing, despite conflicting positions on the existence of an employer-employee relationship, warranted a remand.

• Hierarchy of Courts — All petitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired. This doctrine was established in the earlier decision in G.R. No. 130866, which was cited in the instant case.

• "Therefore, all references in the amended section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired." — This passage, quoted from the earlier decision in G.R. No. 130866, establishes the procedural rule that Rule 65 petitions against NLRC decisions must be filed with the CA, not directly with the Supreme Court.

• "We held in a catena of cases that while a formal trial or hearing is discretionary on the part of the Labor Arbiter, when there are factual issues that require a formal presentation of evidence in a hearing, the Labor Arbiter cannot simply rely on the position papers, more so, on mere unsubstantiated claims of parties." — This passage articulates the controlling doctrine on the Labor Arbiter's duty to conduct hearings when factual issues are present, forming the basis for the remand in this case.

• Dela Salle University vs. NLRC, 135 SCRA 674, 677 (1988) — Cited by the Labor Arbiter as basis for dismissing the complaint for lack of jurisdiction, holding that where the existence of an employer-employee relationship is disputed, the determination of that question should be handled by the regular courts after full dress trial and not by the Labor Arbiter. The Supreme Court in the instant case implicitly rejected this as a basis for the Labor Arbiter's failure to conduct proceedings.

• Batongbacal vs. Associated Bank, G.R. No. L-72977, December 21, 1988, 168 SCRA 600, 611 — Cited as a case where the Court remanded the case for further proceedings as "equity and justice demand that not only the factual issue of whether or not an assistant vice-president is a managerial employee, but also whether petitioner is entitled to an award of moral and exemplary damages, should be considered."

• Greenhills Airconditioning and Services, Inc. vs. NLRC, G.R. No. 112850, June 27, 1995, 245 SCRA 384 — Cited as a case where the Court put to task the Labor Arbiter for issuing an order submitting the case for decision without conducting a hearing, rendering the Decision merely upon reliance on the bare allegations of the parties in their position papers.

• Progress Homes vs. NLRC, G.R. No. 106212, March 7, 1997, 269 SCRA 274 — Cited as a case where, although the parties submitted documentary evidence, it was clear that a hearing was still required in order to ventilate the factual issues.

• Section 1, Rule 45, 1997 Revised Rules of Civil Procedure — Provides that petitions for review on certiorari "shall raise only questions of law which must be distinctly set forth." The Court applied this provision in finding that the issue raised by petitioner was a question of fact proscribed by the rule.

• Section 4, Rule 45, 1997 Revised Rules of Civil Procedure — Requires the attachment to the petition of important and material portions of the records. The Court applied this provision in finding that petitioner's failure to attach vital documents precluded the Court from granting the relief prayed for.

• Section 9, B.P. Blg. 129 — Referenced in the earlier decision in G.R. No. 130866, interpreted to refer to petitions for certiorari under Rule 65, which should henceforth be initially filed in the Court of Appeals.

• Quisumbing (Chairperson)
• Carpio
• Carpio Morales
• Tinga