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ALBERT TENG v. ALFREDO S. PAHAGAC

FACTS:

The case involves a Petition for Review on Certiorari filed by Albert Teng Fish Trading, seeking to reverse the decision of the Court of Appeals (CA). The CA declared an employer-employee relationship between Albert Teng Fish Trading and the respondent workers. Albert Teng Fish Trading is engaged in deep sea fishing and claims to enter into joint venture agreements with master fishermen who manage each fishing venture. The respondent workers filed a complaint for illegal dismissal, stating that they were hired by Albert Teng without a written employment contract for various tasks aboard the fishing boats. They claimed to receive regular salaries, 13th month pay, Christmas bonus, and incentives. Albert Teng denied any involvement in hiring the workers and insisted that his role was limited to providing capital and equipment. The Voluntary Arbitrator (VA) initially ruled in favor of Albert Teng, finding no employer-employee relationship. However, the CA overturned the decision and ordered Albert Teng to pay separation pay, backwages, and other monetary benefits to the respondent workers. Albert Teng appealed the CA decision, arguing that the VA's decision was final and executory and that no employer-employee relationship existed.

ISSUES:

  1. Whether the filing of a motion for reconsideration is allowed under Article 262-A of the Labor Code.

  2. Whether the Department of Labor's Department Order (DO) No. 40, series of 2003, and the 2005 Procedural Guidelines, which prohibit the filing of a motion for reconsideration, should be given effect.

  3. Whether there is an employer-employee relationship between Teng and the respondent workers.

  4. Whether Teng can be considered a labor-only contractor.

  5. Whether the respondent workers are entitled to all the benefits and rights appurtenant to regular employment.

  6. Must the dismissal be for a just or an authorized cause?

  7. Must the rudimentary requirements of due process - the opportunity to be heard and to defend oneself - be observed in dismissal cases?

RULING:

  1. Yes, the filing of a motion for reconsideration is allowed under Article 262-A of the Labor Code. The language in Article 262-A, which deleted the word "unappealable" from its predecessor, indicates the intent of the legislature to allow for reconsideration of voluntary arbitration awards or decisions. This was further supported by previous rulings and the 1989 Procedural Guidelines and Procedural Guidelines of 2005.

  2. Despite the existence of Department Order No. 40, series of 2003, and the 2005 Procedural Guidelines, which prohibit the filing of a motion for reconsideration, these rules cannot go beyond the terms of the law and modify or improve the law. The Department of Labor, as an implementing agency, cannot exceed the statutory authority granted to it by the legislature. Therefore, the provisions of Department Order No. 40 and the 2005 Procedural Guidelines cannot prevail over the clear intent of Congress in allowing the filing of a motion for reconsideration under Article 262-A of the Labor Code.

  3. Yes, there is an employer-employee relationship between Teng and the respondent workers. The Court agreed with the CA's finding that sufficient evidence exists indicating the existence of an employer-employee relationship. Teng's issuance of identification cards (IDs) bearing the names of the respondent workers and his signature as the employer, their receipt of wages on a regular basis, and the exercise of control by Teng over their performance of work as checkers are all indicative of an employer-employee relationship.

  4. No, Teng cannot be considered a labor-only contractor. The maestros did not have substantial capital or investment, and Teng admitted that he solely provided the capital and equipment while the maestros supplied the workers. The power of control over the respondent workers was also lodged with Teng, not the maestros. Therefore, the arrangement is considered to be a labor-only contracting, which is prohibited in the Philippines.

  5. Yes, as regular employees, the respondent workers are entitled to all the benefits and rights appurtenant to regular employment. They should be afforded the same benefits and rights as any other regular employee.

  6. The dismissal must be for a just cause as provided by law. The burden of proving that the dismissal was for a just cause lies with the employer. Failure to show this would mean that the dismissal was unjustified and illegal.

  7. The rudimentary requirements of due process, including the opportunity to be heard and to defend oneself, must be observed in dismissal cases.

PRINCIPLES:

  • The intent of the legislature should be given effect when interpreting laws. (Imperial Textile Mills, Inc. v. Sampang)

  • The absence of a categorical language in Article 262-A does not preclude the filing of a motion for reconsideration of a voluntary arbitration award or decision. (Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.)

  • Implementing agencies cannot go beyond the terms of the law they seek to implement and should not modify or improve the law. (DO 40-03 and 2005 Procedural Guidelines)

  • An employer-employee relationship exists when there is evidence of control by the employer over the performance of work and the necessary and desirable functions are performed by the employee.

  • Labor-only contracting, where the contractor or subcontractor recruits, supplies, or places workers to perform activities directly related to the principal business of the employer and does not exercise control over the work, is prohibited in the Philippines.

  • Regular employees are entitled to all the benefits and rights appurtenant to regular employment.

  • To dismiss an employee, there must be a just cause and due process must be observed.

  • Unsubstantiated suspicion is not a just cause for termination of employment.

  • Mere allegations and generalities are not sufficient grounds to dismiss an employee.

  • Dismissal based on mere suspicion would place the employee at the mercy of the employer and would violate the employee's right to security of tenure.