Sps. Ochoa v. Chinabank (2011 Original )
De la Rosa: 8
For resolution is petitioners motion for reconsideration 1 of our January 17, 2011
Resolution2 denying their petition for review on certiorari 3 for failing to sufficiently
show any reversible error in the assailed judgment4 of the Court of Appeals (CA).
Petitioners insist that it was error for the CA to rule that the stipulated exclusive
venue of Makati City is binding only on petitioners complaint for Annulment of
Foreclosure, Sale, and Damages filed before the Regional Trial Court of Paraaque
City, but not on respondent banks Petition for Extrajudicial Foreclosure of
Mortgage, which was filed with the same court.
We disagree.
The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No.
3135, as amended by Act No. 4118, otherwise known as "An Act to Regulate the
Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate
Mortgages." Sections 1 and 2 thereof clearly state:
Section 1. When a sale is made under a special power inserted in or attached to any
real-estate mortgage hereafter made as security for the payment of money or the
fulfillment of any other obligation, the provisions of the following sections shall
govern as to the manner in which the sale and redemption shall be effected, whether
or not provision for the same is made in the power.
Sec. 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which the
sale is to be made is the subject of stipulation, such sale shall be made in said place
or in the municipal building of the municipality in which the property or part thereof
is situated.5
The case at bar involves petitioners mortgaged real property located in Paraaque
City over which respondent bank was granted a special power to foreclose extra-
judicially. Thus, by express provision of Section 2, the sale can only be made in
Paraaque City.
The exclusive venue of Makati City, as stipulated by the parties 6 and sanctioned by
Section 4, Rule 4 of the Rules of Court, 7 cannot be made to apply to the Petition for
Extrajudicial Foreclosure filed by respondent bank because the provisions of Rule 4
pertain to venue of actions, which an extrajudicial foreclosure is not.
Pertinent are the following disquisitions in Supena v.
Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:
"Action means an ordinary suit in a court of justice, by which one party prosecutes
another for the enforcement or protection of a right, or the prevention or redress of a
wrong."
Hagans v. Wislizenus does not depart from this definition when it states that "[A]n
action is a formal demand of one's legal rights in a court of justice in the manner
prescribed by the court or by the law. x x x." It is clear that the determinative or
operative fact which converts a claim into an "action or suit" is the filing of the same
with a "court of justice." Filed elsewhere, as with some other body or office not a
court of justice, the claim may not be categorized under either term. Unlike an
action, an extrajudicial foreclosure of real estate mortgage is initiated by filing a
petition not with any court of justice but with the office of the sheriff of the province
where the sale is to be made.1avvphi1 By no stretch of the imagination can the office
of the sheriff come under the category of a court of justice. And as aptly observed by
the complainant, if ever the executive judge comes into the picture, it is only
because he exercises administrative supervision over the sheriff. But this
administrative supervision, however, does not change the fact that extrajudicial
foreclosures are not judicial proceedings, actions or suits. 9
These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-
05-0, entitled "Procedure in Extra-Judicial Foreclosure of Mortgage," the significant
portions of which provide:
In line with the responsibility of an Executive Judge under Administrative Order No.
6, date[d] June 30, 1975, for the management of courts within his administrative
area, included in which is the task of supervising directly the work of the Clerk of
Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of
commissions to notaries public and enforcement of their duties under the law, the
following procedures are hereby prescribed in extra-judicial foreclosure of
mortgages:
1. All applications for extrajudicial foreclosure of mortgage whether under the
direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act
4118, and Act 1508, as amended, shall be filed with the Executive Judge, through
the Clerk of Court who is also the Ex-Officio Sheriff.
Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No.
3135, as amended, applies, it being a special law dealing particularly with
extrajudicial foreclosure sales of real estate mortgages, and not the general
provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of Makati City is relevant only to

actions arising from or related to the mortgage, such as petitioners complaint for
Annulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already
raised in the petition for review. As declared in this Courts Resolution on January
17, 2011, the same failed to show any sufficient ground to warrant the exercise of
our appellate jurisdiction.

WHEREFORE, premises considered, the motion for reconsideration is hereby

DENIED.

SO ORDERED.
Paglaum Management v. Unionbank (2012) SC adds that the mere stipulation on the venue of an action, however, is not enough
to preclude parties from bringing a case in other venues. The parties must be able to
Facts show that such stipulation is exclusive. Failure to do so would result to the parties
Paglaum Management and Development Corporation (PAGLAUM) is the registered stipulating additional venues for the case.
owner of three parcels of land located in the Province of Cebu with Benjamin B. Dy,
the president of petitioner Health Marketing Technologies, Inc. (HealthTech) as co- In this case, both the stipulation in the Real Estate Mortgage and the Restructuring
owner. On 3 February 1994, Union Bank of the Philippines (Union Bank) extended Agreement has words of exclusivity. The SC held that the Restructuring Agreement
HealthTech a credit line in the amount of P 10,000,000 which was eventually should prevail as this modified the entire loan obligation. The later Restructuring
increased to 36,500,000. This was secured by 3 real estate mortgage on the lands. Agreement reveals the intention of the parties to implement a restrictive venue
The venue in the real estate mortgage was stipulated to be in Makati, Metro Manila stipulation, which applies not only to the principal obligation, but also to the
or in the place where any of the Mortgaged Properties is located (Cebu), at the mortgages
absolute option of the Mortgagee, the parties hereto waiving any other venue.
Note: In one of the Real Estate Mortgage, the phrase "parties hereto waiving" from
Unfortunately, Healthtech is having difficulties on paying its obligation. They both the entire phrase "the parties hereto waiving any other venue" was stricken from
executed a Restructuring Agreement whereby it states that that any action or the final executed contract. This was held not to be enough to show exclusivity.
proceeding arising out of or in connection therewith shall be commenced in Makati
City, with both parties waiving any other venue. Healthtech still defaulted on the
obligation. Union Bank foreclosed the properties through an auction sale, bought it
as the sole bidder as secured a Certificate of Sale. Healthcare filed a complaint for
annulment of sale and titles on the RTC of MAKATI. The RTC ruled in favour of
Healthtech and restrained restraining Union Bank from proceeding with the auction
sale. Union Bank filed a Motion to Dismiss citing lack of jurisdiction and improper
venue. RTC of Makati granted Union Banks motion to dismiss. CA affirmed Makati
RTC. Hence this appeal to SC

Union Bank argues that the Restructuring Agreement only pertains to the loan and
does not affect the stipulations in the real mortgage which states that it has the
option to choose the venue. Healthtech argues the restructuring agreement also
carries with it the venue for the settlement of cases for the real mortgages.

Issue
Whether or not Makati RTC is a proper venue for the case

Held
Yes.

The SC held that an action to annul a real estate mortgage foreclosure sale is no
different from an action to annul a private sale of real property. Therefore, this case
falls under Rule 4. The general rule in Rule 4 is that the venue is on where the
property is located. However, among the exceptions is where the parties have validly
agreed in writing before the filing of the action on the exclusive venue thereof. The
Fairland Knitcraft v. Po (2016)
Facts
Fairland Knitcraft Corporation alleged in its complaint for unlawful detainer
that it was the owner of Condominium Unit No. 205 in Cedar Mansion II,
which it leased to Arturo Loo Po by verbal agreement with a rental fee of
P200,000.00. From May, 2011, Po failed to pay the rent, hence Fairland did
not renew the lease agreement anymore. Despite demand to pay and to
vacate, Po refused to so, hence the complaint. During the 15-day period, Po
failed to file an answer, thus Fairland filed a motion to render judgment.
Pos counsel filed Entry of Appearance with Motion for Leave of Court to
file Comment/Opposition to Motion to Render Judgment, which the MeTC
considered as his answer, but which was not admitted, as it was belatedly
filed in accordance with the Rules on Summary Procedure.
On March 21, 2013, the MeTC dismissed the complaint for failure of
Fairland to prove by preponderance of evidence its complaint. Fairland
appealed the case to the RTC, which required the parties to file their
respective memoranda. In its memorandum, Fairland argued that an
unlawful detainer case is a special civil action governed by summary
procedure. In cases where a defendant failed to file his answer, there was no
need for a declaration of default. Fairland claimed that the Rules stated that
in such cases, judgment should be based on the facts alleged in the
complaint,and that there was no requirement that judgment must be based
on facts proved by preponderance of evidence. Considering that the
presentation of evidence was not required when a defendant in an ejectment
case failed to appear in a preliminary conference, the same should be
applied when no answer had been filed. It added that the failure of a party
to file an answer is tantamount to an admission of the allegations of the
complaint, thus there was no more need of evidence. Po argued otherwise.
The RTC affirmed the MeTC decision. It held that though it had been
consistently ruled that the only issue for resolution in an ejectment case was
the physical or material possession of the property involved, independent of
any claim of ownership by any of the party-litigants, the court may go
beyond the question of physical possession provisionally. The RTC
concluded that even assuming that Po was not the lawful owner, his actual
physical possession of the subject property created the presumption that he
was entitled to its possession thereof.
The CA affirmed the RTC judgment. The CA held that notwithstanding the
abbreviated proceeding it ordained and the limited pleadings it allowed, the
Rules on Summary Procedure did not relax the rules on evidence. In order
for an action for recovery of possession to prosper, it was indispensable that
he who brought the action should prove not only his ownership but also the
identity of the property claimed.
Issue
Whether or not the case for unlawful detainer should be dismissed for
failure to prove the complaint by preponderance of evidence even thought
defendant failed to file an Answer.
Held
The petition is meritorious.
Complaint has a valid cause of action for Unlawful Detainer
Section 1 of Rule 70 of the Rules of Court lays down the requirements for
filing a complaint for unlawful detainer, to wit:
Section 1. Who may institute proceedings, and when. Subject to the
provision of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the
expiration or termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or assigns of any
such lessor, vendor, vendee, or other person, may, at any time within one (l)
year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any person or persons
claiming under them, for the restitution of such possession, together with
damages and costs.
Stated differently, unlawful detainer is a summary action for the recovery of
possession of real property. This action may be filed by a lessor, vendor,
vendee, or other person from whom the possession of any land or building
is unlawfully withheld after the expiration or termination of the right to hold
possession by virtue of any contract, express or implied. The possession of
the defendant was originally legal, as his possession was permitted by the
plaintiff on account of an express or implied contract between them. The
defendants possession, however, became illegal when the plaintiff
demanded that the defendant vacate the subject property due to the
expiration or termination of the right to possess under the contract, and the
defendant refused to heed such demand. A case for unlawful detainer must
be instituted one year from the unlawful withholding of possession.
A complaint sufficiently alleges a cause of action for unlawful detainer if it
recites the following: (1) initially, possession of the property by the
defendant was by contract with or by tolerance of the plaintiff; (2)
eventually, such possession became illegal upon notice by the plaintiff to
the defendant of the termination of the latters right of possession; (3)
thereafter, the defendant remained in possession of the property, and
deprived the plaintiff of the enjoyment thereof; and (4) within one (1) year
from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.
There is no question that the complaint filed by Fairland adequately alleged
a cause of action for unlawful detainer. The pertinent portion of the said
complaint reads:
xxx
1 Plaintiff is the owner of, and had been leasing to the defendant, the
premises mentioned above as the residence of the latter;
2 There is no current written lease contract between plaintiff and the
defendant, but the latter agreed to pay the former the amount of
Php2o,ooo.oo as rent at the beginning of each month. Thus, the
term of the lease agreement is renewable on a month-to-month
basis;
3 Since March 2011, defendant has not been paying the aforesaid
rent despite plaintiffs repeated demands;
4 Due to defendants continuous failure to pay rent, plaintiff reached
a decision not to renew the lease agreement. It sent a formal letter,
x x x demanding defendant to pay the amount of Php220,000.00,
representing defendants twelve month rental arrears beginning
January 2011, and to vacate the leased premises, both within
fifteen (15) days from receipt of said letter;
5 Despite receipt of the aforesaid demand letter and lapse of the
fifteen day period given to comply with plaintiffs demand,
defendant neither tendered payment for the unpaid rent nor vacated
the leased premises. Worse, defendant has not been paying rent up
to now;
The above-cited portions of the complaint sufficiently alleged that Fairland
was the owner of the subject property being leased to Po by virtue of an oral
agreement. There was a demand by Fairland for Po to pay rent and vacate
before the complaint for unlawful detainer was instituted. The complaint
was seasonably filed within the one-year period prescribed by law. With all
the elements present, there was clearly a cause of action in the complaint for
unlawful detainer.
Under the Rules of Summary Procedure, the weight of evidence is not
considered when a judgment is rendered based on the complaint
The question now is whether the MeTC correctly dismissed the case for
lack of preponderance of evidence. Fairland posits that judgment should
have been rendered in its favor on the basis of the complaint itself and not
on its failure to adduce proof of ownership over the subject property.
The Court agrees with Fairlands position.
The summons, together with the complaint and its annexes, was served
upon Po on December 28, 2012. This presupposes that the MeTC found no
ground to dismiss the action for unlawful detainer.4 Nevertheless, Po failed
to file his answer on time and the MeTC had the option to render judgment
motu proprio or on motion of the plaintiff. In relation thereto, Sections 5
and 6 of the Rules on Summary Procedure provide:
Sec. 5. Answer. Within ten (10) days from service of summons, the
defendant shall file his answer to the complaint and serve a copy thereof on
the plaintiff. Affirmative and negative defenses not pleaded therein shall be
deemed waived, except for lack of jurisdiction over the subject matter.
Cross-claims and compulsory counterclaims not asserted in the answer shall
be considered barred. The answer to counterclaims or cross-claims shall be
filed and served within ten (10) days from service of the answer in which
they are pleaded.
Sec. 6. Effect of failure to answer. Should the defendant fail to answer the
complaint within the period above provided, the court, motu proprio or on
motion of the plaintiff, shall render judgment as may be warranted by
the facts alleged in the complaint and limited to what is prayed for
therein. The court may in its discretion reduce the amount of damages and
attorneys fees claimed for being excessive or otherwise unconscionable,
without prejudice to the applicability of Section 4, Rule 18 of the Rules of
Court, if there are two or more defendants.
[Emphasis Supplied]
Section 6 is clear that in case the defendant failed to file his answer, the
court shall render judgment, either motu proprio or upon plaintiffs motion,
based solely on the facts alleged in the complaint and limited to what is
prayed for. The failure of the defendant to timely file his answer and to
controvert the claim against him constitutes his acquiescence to every
allegation stated in the complaint. Logically, there is nothing to be done in
this situation except to render judgment as may be warranted by the facts
alleged in the complaint.
Similarly, under Section 7, Rule 70 of the Rules of Court, which governs the
rules for forcible entry and unlawful detainer, if the defendant fails to
answer the complaint within the period provided, the court has no authority
to declare the defendant in default. Instead, the court, motu proprio or on
motion of the plaintiff, shall render judgment as may be warranted by the
facts alleged in the complaint and limited to what is prayed for.
This has been enunciated in the case of Don Tino Realty and Development
Corporation v. Florentino,8 citing Bayog v. Natino,9 where the Court held
that there was no provision for an entry of default under the Rules of
Summary Procedure if the defendant failed to file his answer.
In this case, Po failed to file his answer to the complaint despite proper
service of summons. He also failed to provide a sufficient justification to
excuse his lapses. Thus, as no answer was filed, judgment must be rendered
by the court as may be warranted by the facts alleged in the complaint.
Failure to attach annexes is not fatal if the complaint alleges a sufficient
cause of action; evidence need not be attached to the complaint
The lower courts erroneously dismissed the complaint of Fairland simply on
the ground that it failed to establish by preponderance of evidence its
ownership over the subject property. As can be gleaned above, the rules do
not compel the plaintiff to attach his evidence to the complaint because, at
this inception stage, he only has to file his complaint to establish his cause
of action. Here, the court was only tasked to determine whether the
complaint of Fairland alleged a sufficient cause of action and to render
judgment thereon.
Also, there was no need to attach proof of ownership in the complaint
because the allegations therein constituted a sufficient cause of action for
unlawful detainer. Only when the allegations in the complaint are
insufficient to form a cause of action shall the attachment become material
in the determination thereof. Even under Section 4 of the Rules of Summary
Procedure,10 it is not mandatory to attach annexes to the complaint.
In the case of Lazaro v. Brewmaster11 (Lazaro), where judgment was
rendered based on the complaint due to the failure of the defendant to file an
answer under the Rules of Summary Procedure, it was written that:
x x x To determine whether the complaint states a cause of action, all
documents attached thereto may, in fact, be considered, particularly when
referred to in the complaint. We emphasize, however, that the inquiry is
into the sufficiency, not the veracity of the material allegations in the
complaint. Thus, consideration of the annexed documents should only
be taken in the context of ascertaining the sufficiency of the allegations
in the complaint. [Emphasis Supplied]
In Lazaro, the assailed invalid invoices attached to the complaint were not
considered because the complaint already alleged a sufficient cause of
action for collection of sum of money. Those assailed documents were not
the bases of the plaintiffs action for sum of money, but were only attached
to the complaint to provide evidentiary details on the alleged transactions.
Similarly, in the case at bench, there was no need for documentary
attachments to prove Fairlands ownership over the subject property. First,
the present action is an action for unlawful detainer wherein only de facto or
material possession is required to be alleged. Evidently, the attachment of
any deed of ownership to the complaint is not indispensable because an
action for unlawful detainer does not entirely depend on ownership.
Second, Fairland sufficiently alleged ownership and superior right of
possession over the subject property. These allegations were evidently
manifest in the complaint as Fairland claimed to have orally agreed to lease
the property to Po. The Court is of the view that these allegations were clear
and unequivocal and did not need supporting attachments to be considered
as having sufficiently established its cause of action. Even the MeTC
conceded that the complaint of Fairland stated a valid cause of action for
unlawful detainer.12 It must be stressed that inquiry into the attached
documents in the complaint is for the sufficiency, not the veracity, of the
material allegations in the complaint.
Third, considering that Po failed to file an answer within the prescribed
period, he was deemed to have admitted all the allegations in the complaint
including Fairlands claim of ownership. To reiterate, the failure of the
defendant to timely file his answer and controvert the claim against him
constituted his acquiescence to every allegation stated in the complaint.
In the Entry of Appearance with Motion for Leave of Court to file
Comment/Opposition to Motion to Render Judgment, which was belatedly
filed and so was denied by the MeTC, Po merely denied the allegations
against him without even bothering to aver why he claimed to have a
superior right of possession of the subject property.
Fourth, it is only at the later stage of the summary procedure when the
affidavits of witnesses and other evidence on factual issues shall be
presented before the court. Sections 8 and 9 of the Rules on Summary
Procedure state:
Sec. 8. Record of preliminary conference. Within five (5) days after the
termination of the preliminary conference, the court shall issue an order
stating the matters taken up therein, x x x
Sec. 9. Submission of affidavits and position papers. Within ten (10) days
from receipt of the order mentioned in the next preceding section, the
parties shall submit the affidavits of their witnesses and other evidence
on the factual issues defined in the order, together with their position
papers setting forth the law and the facts relied upon by them. [Emphasis
Supplied]
Again, it is worth stressing that these provisions are exactly Sections 9 and
10 under Rule 70 of the Rules of Court.
Accordingly, it is only at this part of the proceedings that the parties will be
required to present and offer their evidence before the court to establish
their causes and defenses. Before the issuance of the record of preliminary
conference, the parties are not yet required to present their respective
evidence.
These specific provisions under the Rules of Summary Procedure which are
also reflected in Rule 70 of the Rules of Court, serve their purpose to
immediately settle ejectment proceedings. Forcible entry and unlawful
detainer cases are summary proceedings designed to provide for an
expeditious means of protecting actual possession or the right to possession
of the property involved. It does not admit of a delay in the determination
thereof. It is a time procedure designed to remedy the situation 14. Thus, as
a consequence of the defendants failure to file an answer, the court is
simply tasked to render judgment as may be warranted by the facts alleged
in the complaint and limited to what is prayed for therein.
As the complaint contains a valid cause of action, a judgment can already
be rendered
In order to achieve an expeditious and inexpensive determination of
unlawful detainer cases, a remand of this case to the lower courts is no
longer necessary and the case can be determined on its merits by the Court.
To recapitulate, as Po failed to file his answer on time, judgment shall be
rendered based only on the complaint of Fairland without the need to
consider the weight of evidence. As discussed above, the complaint of
Fairland had a valid cause of action for unlawful detainer.
Consequently, there is no more need to present evidence to establish the
allegation of Fairland of its ownership and superior right of possession over
the subject property. Pos failure to file an answer constitutes an admission
of his illegal occupation due to his non-payment of rentals, and of Fairlands
rightful claim of material possession. Thus, judgment must be rendered
finding that Fairland has the right to eject Po from the subject property.
The Judicial Affidavit Rule
On a final note, the Court deems it proper to discuss the relevance of the
Judicial Affidavit Rule or A.M. No. 12-8-8-SC, where documentary or
object evidence are required to be attached. To begin with, the rule is not
applicable because such evidence are required to be attached to a judicial
affidavit, not to a complaint. Moreover, as the rule took effect only on
January 1, 2013, it cannot be required in this case because this was earlier
filed on December 12, 2012.
Granting that it can be applied retroactively, the rule being essentially
remedial, still it has no bearing on the ruling of this Court.
In the Judicial Affidavit Rule, the attachments of documentary or object
evidence to the affidavits is required when there would be a pre-trial or
preliminary conference or the scheduled hearing. As stated earlier, where
a defendant fails to file an answer, the court shall render judgment, either
motu proprio or upon plaintiffs motion, based solely on the facts alleged in
the complaint and limited to what is prayed for. Thus, where there is no
answer, there is no need for a pre-trial, preliminary conference or hearing.
Section 2 of the Judicial Affidavit Rule reads:
Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct
testimonies. (a) The parties shall file with the court and serve on the
adverse party, personally or by licensed courier service, not later than five
days before pre-trial or preliminary conference or the scheduled hearing
with respect to motions and incidents, the following:
(b) Should a party or a witness desire to keep the original document or
object evidence in his possession, e may, after the same has been identified,
marked as exhibit, and authenticated, warrant in his judicial affidavit that
the copy or reproduction attached to such affidavit is a faithful copy or
reproduction of that original. In addition, the party or witness shall bring the
original document or object evidence for comparison during the preliminary
conference with the attached copy, reproduction, or pictures, failing which
the latter shall not be admitted.
This is without prejudice to the introduction of secondary evidence in place
of the original when allowed by existing rules.
WHEREFORE, the petition is GRANTED. The October 31, 2014
Decision and the March 6, 2015 Resolution of the Court of Appeals in CA-
G.R. SP No. 134701 are hereby REVERSED and SET ASIDE. Respondent
Arturo Loo Po is ORDERED TO VACATE Condominium Unit No. 205
located in Cedar Mansion II on Ma. Escriba Street, Pasig City.
Narciso v. Pacific Traders (2014)
Facts
Petitioners were the employees of Pacific Traders Manufacturing Corporation
(PTMC), a domestic corporation engaged in the business of manufacturing furniture
and fixtures for export. They were hired on different dates from 1999 to 2002 and in
various capacities such as framer, attacher, finisher, assembler, etc.
Tabok Workers Multi-Purpose Cooperative (TWMPC) is a cooperative duly
registered with the Cooperative Development Authority among the purposes of
which is "to engage in job out works of rattan and wood companies to the Pacific
Rattan Manufacturing Corporation and other manufacturing companies."
The present controversy arose when the petitioners filed in 2004, complaints for
illegal dismissal with money claims against PTMC and TWMPC before the
Regional Arbitration Branch No. VII, NLRC, Cebu City docketed as NLRC RAB-
VII Case No. 10-2076-2004 and NLRC RAB-VII Case No. 10-2047-2004.
The complaints before the NLRC RAB-VII were consolidated and jointly resolved
by the Labor Arbiter (LA) in its Decision dated July 21, 2005. The LA ruled that the
petitioners were not illegally dismissed. However, TWMPC was directed to pay their
separation pay as well as the amount of benefits due them as members of the
cooperative. The LA declared that the petitioners were not employees of PTMC
which was accordingly discharged from any liability. The LA dismissed the
petitioners' money claims for lack of factual basis.
The petitioners and TWMPC appealed to the NLRC. In its Order dated February 22,
2006, the NLRC dismissed both appeals outright for failure to attach the requisite
Certificate of Non-Forum Shopping. The NLRC reasoned that appeal is a mere
statutory privilege and the period and manner for its perfection are not only
mandatory but also jurisdictional.
Petitioners moved for the reconsideration of the foregoing order. They also
submitted a Motion to Admit Certificate of Non-Forum Shopping pleading for a
liberal application of procedural rules in the interest of substantial justice.
The CA dismissed the petition upon finding that the petitioners failed to file the
certificate of non-forum shopping within the reglementary period of filing a
Memorandum of Appeal. Instead, they belatedly submitted the same in their motion
for reconsideration of the NLRC resolution dismissing their appeal. The CA also
ruled that the petitioners failed to cite any compelling reason which will warrant a
relaxation of procedural rules. The CA stressed that the petitioners were not denied
their right to appeal because it is actually a mere statutory privilege which must be
perfected in the manner provided by law. The CA reiterated the NLRC's ruling that
rules on perfection of appeal are not only mandatory but jurisdictional as well.
Issue
Whether or not there is compelling reason to which the court will warrant a
relaxation to the procedure of rules in the instant case?
Held
A certificate of non-forum shopping is a requisite for the perfection of an appeal.
This is clearly enunciated in Section 4, Rule VI of the 2005 Revised Rules of
Procedure of the NLRC (2005 NLRC Rules), thus:
Sec. 4. Requisites For Perfection Of Appeal. - a) The appeal shall be: 1) filed within
the reglementary period provided in Section 1 of this Rule; 2) verified by the
appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as
amended; 3) in the form of a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof, the relief prayed for, and with a
statement of the date the appellant received the appealed decision, resolution or
order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i)
proof of payment of the required appeal fee; ii) posting of a cash or surety bond as
provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv)
proof of service upon the other parties.
The petitioners aver that the CA should have granted their petition for certiorari and
relaxed the NLRC Rules of Procedure because on page 53 of their memorandum on
appeal is the caption "Verification and Certification." However, the counsel for the
petitioners inadvertently deleted the paragraphs intended for the certification of non-
forum shopping. They assert that they were in a hurry in preparing the memorandum
due to the very limited time of 10 days to file the same. They proffer these as
justifiable causes for their non-compliance with the NLRC Rules of Procedure and
submit that their belated filing of the certificate in their motion for reconsideration
was substantial compliance. They further aver that the outright dismissal of their
appeal on a mere technicality would seriously impair the orderly administration of
justice.
The petitioners' arguments are devoid of merit. The subsequent compliance with the
requirement does not excuse a party's failure to comply therewith in the first
instance. While the Court, in certain cases, has excused non-compliance with the
requirement to submit a certificate of non-forum shopping, such liberal posture has
always been grounded on special circumstances or compelling reasons which made
the strict application of the rule clearly unjustified or inequitable.
Here, the reasons cited by the petitioners for their failure to attach the certificate in
their appeal memorandum can hardly be considered as special circumstances or
compelling reasons to warrant a liberal application of the rules of procedure.
Moreover, based on the facts of the case, a strict application of a technical rule will
not prejudice the administration of justice in view of the petitioners' unmeritorious
claims.

In fine, in the absence of justifiable and compelling reasons, a liberal application of

procedural rules is not warranted in this case. The Court thus agrees with the CA that
no grave abuse of discretion is attributable to the NLRC when it found no
justification to excuse the absence of a certificate of non-forum shopping in the
petitioners' memorandum on appeal.

Equitable Cardnetwork v. Capistrano (2012)

This case is about the sufficiency of the defendants allegations in the answer
denying the due execution and genuineness of the plaintiffs actionable documents
and the kind of evidence needed to prove forgery of signature.
The Facts and the Case
Petitioner Equitable Cardnetwork, Inc. (ECI) alleged in its complaint that in
September 1997 respondent Josefa B. Capistrano (Mrs. Capistrano) applied for
membership at the Manila Yacht Club (MYC) under the latters widow-membership
program. Since the MYC and ECI had a credit card sponsorship agreement in which
the Club would solicit for ECI credit card enrollment among its members and
dependents, Mrs. Capistrano allegedly applied for and was granted a Visa Credit
Card by ECI.
ECI further alleged that Mrs. Capistrano authorized her daughter, Valentina C.
Redulla (Mrs. Redulla), to claim from ECI her credit card and ATM application
form. Mrs. Redulla signed the acknowledgment receipt on behalf of her mother, Mrs.
Capistrano. After Mrs. Capistrano got hold of the card, she supposedly started using
it. On November 24, 1997 Mrs. Redulla personally issued a P45,000.00 check as
partial payment of Mrs. Capistranos account with ECI. But Mrs. Redullas check
bounced upon deposit.
Because Mrs. Capistrano was unable to settle her P217,235.36 bill, ECI demanded
payment from her. But she refused to pay, prompting ECI to file on February 30,
1998 a collection suit against her before the Regional Trial Court (RTC) of Cebu
City.
Answering the complaint, Mrs. Capistrano denied ever applying for MYC
membership and ECI credit card; that Mrs. Redulla was not her daughter; and that
she never authorized her or anyone to claim a credit card for her. Assuming she
applied for such a card, she never used it. Mrs. Redulla posed as Mrs. Capistrano
and fooled ECI into issuing the card to her. Consequently, the action should have
been brought against Mrs. Redulla. Mrs. Capistrano asked the court to hold ECI
liable to her for moral and exemplary damages, attorneys fees, and litigation
expenses.
After trial, the RTC ruled that, having failed to deny under oath the genuineness and
due execution of ECIs actionable documents that were attached to the complaint,
Mrs. Capistrano impliedly admitted the genuineness and due execution of those
documents. In effect she admitted: 1) applying for membership at the MYC; 2)
accomplishing the MYC membership information sheet which contained a request
for an ECI Visa card; 3) holding herself liable for all obligations incurred in the use
of such card; 4) authorizing Mrs. Redulla to receive the Visa card issued in her
name; 5) applying for an ATM Card with ECI; and 6) using the credit card in buying
merchandise worth P217,235.36 as indicated in the sales slips.
The RTC said that when an action is founded upon written documents, their
genuineness and due execution shall be deemed admitted unless the defendant
specifically denies them under oath and states what he claims to be the facts. A mere
statement that the documents were procured by fraudulent representation does not
raise any issue as to their genuineness and due execution. The RTC rejected Mrs.
Capistranos argument that, having verified her answer, she should be deemed to
have denied those documents under oath. The RTC reasoned that she did not, in her
verification, deny signing those documents or state that they were false or fabricated.
The RTC added that respondent Mrs. Capistrano could no longer raise the defense of
forgery since this had been cut-off by her failure to make a specific denial. Besides,
said the RTC, Mrs. Capistrano failed to present strong and convincing evidence that
her signatures on the document had been forged. She did not present a handwriting
expert who could attest to the forgery. The trial court ordered Mrs. Capistrano to pay
ECIs claim of P217,235.36 plus interests, attorneys fees and litigation expenses.
Mrs. Capistrano appealed the decision to the Court of Appeals (CA).
On May 10, 2007 the CA reversed the trial courts decision and dismissed ECIs
complaint. The CA ruled that, although Mrs. Capistranos answer was somewhat
infirm, still she raised the issue of the genuineness and due execution of ECIs
documents during trial by presenting evidence that she never signed any of them.
Since ECI failed to make a timely objection to its admission, such evidence cured
the vagueness in her answer. Further, the CA ruled that Mrs. Capistrano sufficiently
proved by evidence that her signatures had been forged.
The Issues Presented
The issues presented are:
1. Whether or not the CA correctly ruled that, although Mrs. Capistrano failed to
make an effective specific denial of the actionable documents attached to the
complaint, she overcame this omission by presenting parol evidence to which ECI
failed to object; and
2. Whether or not the CA correctly ruled that Mrs. Capistrano presented clear and
convincing evidence that her signatures on the actionable documents had been
forged.
Ruling of the Court
One. An answer to the complaint may raise a negative defense which consists in
defendants specific denial of the material fact that plaintiff alleges in his complaint,
which fact is essential to the latters cause of action. Specific denial has three modes.
Thus:
1) The defendant must specify each material allegation of fact the truth of which he
does not admit and whenever practicable set forth the substance of the matters on
which he will rely to support his denial;
2) When the defendant wants to deny only a part or a qualification of an averment in
the complaint, he must specify so much of the averment as is true and material and
deny the remainder; and
3) When the defendant is without knowledge and information sufficient to form a
belief as to the truth of a material averment made in the complaint, he shall so state
and this shall have the effect of a denial.
But the rule that applies when the defendant wants to contest the documents attached
to the claimants complaint which are essential to his cause of action is found in
Section 8, Rule 8 of the Rules of Court, which provides:
SECTION 8. How to contest such documents. When an action or defense is founded
upon a written instrument, copied in or attached to the corresponding pleading as
provided in the preceding Section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath,
specifically denies them, and sets forth what he claims to be the facts ; but the
requirement of an oath does not apply when the adverse party does not appear to be
a party to the instrument or when compliance with an order for an inspection of the
original instrument is refused.
To determine whether or not respondent Mrs. Capistrano effectively denied the
genuineness and due execution of ECIs actionable documents as provided above, the
pertinent averments of the complaint and defendant Capistranos answer are here
reproduced.
ECIs complaint:
3. That sometime in 1997, defendant applied for membership, as widow of a
deceased member of the Manila Yacht Club;
4. That in connection with her application for membership in the Manila Yacht Club,
defendant applied for and was granted a Manila Yacht Club Visa Card in
accordance with Credit Card Sponsorship Agreement entered into between the
plaintiff and the Manila Yacht Club wherein Manila Yacht Club shall solicit
applications for the Manila Yacht Club Visa Cards from Manila Yacht Club members
and dependents. Copy of the Manila Yacht Club Information Sheet is hereto
attached as Annex A;
Mrs. Capistranos answer:
3. She specifically denies paragraph[s] 3 and 4 of the complaint for want of
sufficient knowledge to form a belief as to the veracity of the allegations contained
therein and for the reasons stated in her special and affirmative defenses.
ECIs complaint:
5. That defendant authorized her daughter, Mrs. Valentina Redulla to get the said
credit card including her ATM application form from the plaintiff which enabled the
defendant to avail of the cash advance facility with the use of said card; Copy of the
authorization letter, application form and acknowledgment receipt showing that
Valentina C. Redulla received the said credit card are hereto attached as Annexes B,
C, and D, respectively;
Mrs. Capistranos answer:
4. She specifically denies paragraph 5 of the complaint for want of sufficient
knowledge to form a belief as to the allegations contained therein. She never
authorized any person to get her card. Valentina Redulla is not her daughter.
ECIs complaint:
6. That with the use of the said Manila Yacht Club Visa Card, defendant could
purchase goods and services from local and accredited stores and establishments on
credit and could make cash advances from ATM machines since it is the plaintiff
who pays first the said obligations and later at a stated period every month, the
plaintiff will send a statement of account to defendant showing how much she owes
the plaintiff for the payments it previously made on her behalf. Copy of the monthly
statement of accounts for the months of November and December 1997 are hereto
attached as Annexes E and F, respectively;
Mrs. Capistranos answer:
5. She specifically denies paragraph 6 of the complaint for want of sufficient
knowledge to form a belief as to the veracity of the allegations contained therein
and for the reasons as stated in her special and affirmative defenses.
ECIs complaint:
7. That it is the agreement of the parties that in the event that an account is overdue,
interest at 1.75% per month and service charge at 1.25% will be charged to the
defendant;
Mrs. Capistranos answer:
6. She specifically denies paragraph 7 of the complaint for want of sufficient
knowledge to form a belief as to the veracity of the allegations contained therein.
ECIs complaint:
8. That on November 24, 1997, defendants daughter, Mrs. Valentina C. Redulla
issued Solidbank Check No. 0127617 dated November 24, 1997 in the amount of
P45,000.00 in partial payment of defendants account with the plaintiff;
9. That when the said check was deposited in the bank, the same was dishonored for
the reason Account Closed. Copy of said said check is hereto attached as Annex G;
Mrs. Capistranos answer:
7. She denies paragraph[s] 8 and 9 for want of sufficient knowledge to form a belief
as to the veracity of the allegations contained therein and for the reasons aforestated.
It is quite peculiar that herein defendants alleged account would be paid with a
personal check of somebody not related to her.
ECIs complaint:
10. That defendant has an unpaid principal obligation to the plaintiff in the amount
of P217,235.326;
Mrs. Capistranos answer:
8. She denies paragraph 10 for want of sufficient knowledge as to the veracity of the
allegations contained therein and for the reasons stated in her special and affirmative
defenses. Granting ex gratia argumenti that defendant did indeed apply for a card,
still, she vehemently denies using the same to purchase goods from any
establishment on credit.
ECIs complaint
11. That plaintiff made demands on the defendant to pay her obligation but despite
said demands, defendant has failed and refused to pay her obligation and still fails
and refuses to pay her obligation to the plaintiff and settle her obligation, thus,
compelling the plaintiff to file the present action and hire the services of counsel for
the amount of P53,998.84 and incur litigation expenses in the amount of
P30,000.00;
12. That it is further provided as one of the terms and conditions in the issuance of
the Manila Yacht Club Card that in the event that collection is enforced through
court action, 25% of the amount due of P53,998.84 will be charged as attorneys fees
and P53,998.84 will be charged as liquidated damages;
Mrs. Capistranos answer
9. She denies paragraph[s] 11 and 12 for want of sufficient knowledge to form a
belief as to the veracity of the allegations therein. If ever there was any demand sent
to herein defendant the same would have been rejected on valid and lawful grounds.
Therefore, any damage or expense, real or imaginary, incurred or sustained by the
plaintiff should be for its sole and exclusive account.
Further, Mrs. Capistranos special and affirmative defenses read as follows:
10. Defendant repleads by reference all the foregoing allegations which are relevant
and material hereto.
11. Defendant denies having applied for membership with the Equitable
Cardnetwork, Inc. as a widow of a deceased member of the Manila Yacht Club.
12. She has never authorized anyone to get her alleged card for the preceding
reason. Therefore, being not a member, she has no obligation, monetary or
otherwise to herein plaintiff.
13. Plaintiff has no cause of action against herein answering defendant.
14. This Valentina C. Redulla is not her daughter. In all modesty, defendant being a
member of one of the prominent families of Cebu and being a board member of the
Borromeo Brothers Estate whose holdings include Honda Cars Cebu as well as
other prestigious establishments, it would be totally uncalled for if she would not
honor a valid obligation towards any person or entity.
15. She surmises that this Valentina Redulla has been posing as Josefa Capistrano.
Therefore, plaintiffs cause of action should have been directed towards this Redulla.
16. Even granting for the sake of argument that herein answering defendant did
indeed authorized somebody to pick up her card, still, she never made any purchases
with the use thereof. She, therefore, vehemently denies having used the card to
purchase any merchandise on credit.
In substance, ECIs allegations, supported by the attached documents, are that Mrs.
Capistrano applied through Mrs. Redulla for a credit card and that the former used it
to purchase goods on credit yet Mrs. Capistrano refused to pay ECI for them. On the
other hand, Mrs. Capistrano denied these allegations for lack of knowledge as to
their truth. This mode of denial is by itself obviously ineffectual since a person must
surely know if he applied for a credit card or not, like a person must know if he is
married or not. He must also know if he used the card and if he did not pay the card
company for his purchases. A persons denial for lack of knowledge of things that by
their nature he ought to know is not an acceptable denial.
In any event, the CA ruled that, since ECI did not object on time to Mrs. Capistranos
evidence that her signatures on the subject documents were forged, such omission
cured her defective denial of their genuineness and due execution. The CAs ruling
on this point is quite incorrect.
True, issues not raised by the pleadings may be tried with the implied consent of the
parties as when one of them fails to object to the evidence adduced by the other
concerning such unimpleaded issues. But the CA fails to reckon with the rule that a
partys admissions in the course of the proceedings, like an admission in the answer
of the genuineness and true execution of the plaintiffs actionable documents, can
only be contradicted by showing that defendant made such admission through
palpable mistake. Here, Mrs. Capistrano never claimed palpable mistake in the
answer she filed.
It is of no moment that plaintiff ECI failed to object to Mrs. Capistranos evidence at
the trial that the subject documents were forgeries. As the Court ruled in Elayda v.
Court of Appeals, the trial court may reject evidence that a party adduces to
contradict a judicial admission he made in his pleading since such admission is
conclusive as to him. It does not matter that the other party failed to object to the
contradictory evidence so adduced.
Notwithstanding the above, the Court holds that the CA correctly ordered the
dismissal of ECIs action since, contrary to the RTCs finding, Mrs. Capistrano
effectively denied the genuineness and due execution of ECIs actionable documents.
True, Mrs. Capistrano denied ECIs actionable documents merely for lack of
knowledge which denial, as pointed out above, is inadequate since by their nature
she ought to know the truth of the allegations regarding those documents. But this
inadequacy was cured by her quick assertion that she was also denying the
allegations regarding those actionable documents for the reasons as stated in her
special and affirmative defenses.
In the Special and Affirmative Defenses section of her answer, Mrs. Capistrano in
fact denied ECIs documented allegations that she applied for a credit card, was
given one, and used it. She said:
11. Defendant denies having applied for membership with the Equitable
Cardnetwork, Inc. as a widow of a deceased member of the Manila Yacht Club.
12. She has never authorized anyone to get her alleged card for the preceding
reason. Therefore, being not a member, she has no obligation, monetary or
otherwise to herein plaintiff.
Neither the RTC nor the CA can ignore Mrs. Capistranos above additional reasons
denying ECIs allegations regarding its actionable documents. Such reasons form part
of her answer. Parenthetically, it seems that, when Mrs. Capistrano denied the
transactions with ECI for lack of knowledge, it was her way of saying that such
transactions took place without her knowing. And, since Mrs. Capistrano in fact
verified her claim that she had no part in those transactions, she in effect denied
under oath the genuineness and due execution of the documents supporting them.
For this reason, she is not barred from introducing evidence that those documents
were forged.
Two. Here, apart from presenting an officer who identified its documents, ECI
presented no other evidence to support its claim that Mrs. Capistrano did business
with it. On the other hand, the evidence for the defense shows that it was not likely
for Mrs. Capistrano to have applied for a credit card since she was already 81 years
old, weak, bedridden, and suffering from senility at the time in question. What is
more, she had been staying in Cagayan de Oro under the care of his son Mario;
whereas she made the alleged cash advances and purchases using the credit card in
different malls in Cebu City, Bohol, and Muntinlupa City.
Further, as the CA found, Mrs. Capistranos specimen signatures on a Deed of Sale,
an Extra-judicial Settlement of Estate of Deceased Person, a Waiver of Rights, and a
handwritten note, executed at about the time in question, clearly varied from the
signatures found on ECIs documents. The testimony of a handwriting expert, while
useful, is not indispensable in examining or comparing handwritings or signatures.
The matter here is not too technical as to preclude the CA from examining the
signatures and ruling on whether or not they are forgeries. The Court finds no reason
to take exception from the CAs finding.

WHEREFORE, the Court DISMISSES the petition and AFFIRMS the order of
the Court of Appeals in CA-G.R. CV 79424 dated May 10, 2007 that directed the
dismissal of the complaint against respondent Josefa B. Capistrano.

SO ORDERED.
Fuji Television v. Espiritu (2014)
Facts
Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a
news correspondent/producer tasked to report Philippine news to Fuji through its
Manila Bureau field office. The employment contract was initially for one year, but
was successively renewed on a yearly basis with salary adjustments upon every
renewal.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about
her condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the
former that the company had a problem with renewing her contract considering her
condition. Arlene insisted she was still fit to work as certified by her attending
physician.
After a series of verbal and written communications, Arlene and Fuji signed a non-
renewal contract. In consideration thereof, Arlene acknowledged the receipt of the
total amount of her salary from March-May 2009, year-end bonus, mid-year bonus
and separation pay. However, Arlene executed the non-renewal contract under
protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the
NLRC, alleging that she was forced to sign the non-renewal contract after Fuji came
to know of her illness. She also alleged that Fuji withheld her salaries and other
benefits when she refused to sign, and that she was left with no other recourse but to
sign the non-renewal contract to get her salaries.
Issues
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded reinstatement, damages and
attorneys fees?
Laws
Art. 280. Regular and casual employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are 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 the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, That, any employee who has rendered at least one year of
service, whether such service is 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 exist.
Art. 279. Security of tenure. In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause of when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.
Thus, on the right to security of tenure, no employee shall be dismissed, unless there
are just or authorized causes and only after compliance with procedural and
substantive due process is conducted.
Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor
Code. Disease as a ground for dismissal. Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by a competent public health authority
that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate
such employee to his former position immediately upon the restoration of his normal
health.
Case History
Labor Arbiter dismissed the complaint and held that Arlene was not a regular
employee but an independent contractor.
The NLRC reversed the Labor Arbiters decision and ruled that Arlene was a regular
employee since she continuously rendered services that were necessary and
desirable to Fujis business.
The Court of Appeals affirmed that NLRC ruling with modification that Fuji
immediately reinstate Arlene to her position without loss of seniority rights and that
she be paid her backwages and other emoluments withheld from her. The Court of
Appeals agreed with the NLRC that Arlene was a regular employee, engaged to
perform work that was necessary or desirable in the business of Fuji, and the
successive renewals of her fixed-term contract resulted in regular employment. The
case of Sonza does not apply in the case because Arlene was not contracted on
account of a special talent or skill. Arlene was illegally dismissed because Fuji failed
to comply with the requirements of substantive and procedural due process. Arlene,
in fact, signed the non-renewal contract under protest as she was left without a
choice.
Fuji filed a petition for review on certiorari under Rule 45 before the Supreme Court,
alleging that Arlene was hired as an independent contractor; that Fuji had no control
over her work; that the employment contracts were renewed upon Arlenes
insistence; that there was no illegal dismissal because she freely agreed not to renew
her fixed-term contract as evidenced by her email correspondences.
Arlene filed a manifestation stating that the SC could not take jurisdiction over the
case since Fuji failed to authorize Corazon Acerden, the assigned attorney-in-fact for
Fuji, to sign the verification.
Held
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She
was hired because of her skills. Her salary was higher than the normal rate. She had
the power to bargain with her employer. Her contract was for a fixed term. It also
stated that Arlene was not forced to sign the non-renewal agreement, considering
that she sent an email with another version of her non-renewal agreement.
Arlene argued (1) that she was a regular employee because Fuji had control and
supervision over her work; (2) that she based her work on instructions from Fuji; (3)
that the successive renewal of her contracts for four years indicated that her work
was necessary and desirable; (4) that the payment of separation pay indicated that
she was a regular employee; (5) that the Sonza case is not applicable because she
was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal;
(7) that she signed the non-renewal agreement because she was not in a position to
reject the same.
Distinctions among fixed-term employees, independent contractors, and regular
employees
Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without a
improper pressure being brought to bear upon the employee and absent any other circumstances vitiat
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less e
moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a few specia
employer and employee are on more or less in equal footing in entering into the contract. The reason
when a prospective employee, on account of special skills or market forces, is in a position to make
prospective employer, such prospective employee needs less protection than the ordinary worker. Lesse
parties freedom of contract are thus required for the protection of the employee. 155 (Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of the
(GMA Network, Inc. vs. Pabriga)
Independent Contractor
One who carries on a distinct and independent business and undertakes to perform the job, work, or
account and under ones own responsibility according to ones own manner and method, free from the co
of the principal in all matters connected with the performance of the work except as to the results thereof.
No employer-employee relationship exists between the independent contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with anot
performance of the formers work, the employees of the contractor and of the latters subcontractor, if a
accordance with the provisions of this
XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contrac
protect the rights of workers established under this Code. In so prohibiting or restricting, he may
distinctions between labor-only contracting and job contracting as well as differentiations within these t
and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any
violation or circumvention of any provision In
of contractsthis
of employment,
Code.the employer and the employee are not on equal footing. Thus, it is subject t
by the labor tribunals and courts of law. The law serves to equalize the unequal. The labor force is a
There is labor-only contracting where the person supplying workers to an employer does not constitutionally
have substantial
protected
capitalbecause
or of the inequality between capital and labor. 176 This presupposes tha
investment in the form of tools, equipment, machineries, work premises, among others, and theweak.workers recruited and placed
by such person are performing activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall beThe responsible to the workers
level of protection in should vary from case to caese. When a prospective
to labor
the same manner and extent as if the latter were directly employed by him. employee, on account of special skills or market forces, is in a position to make
demands upon the prospective employer, such prospective employee needs less
Department Order No. 18-A, Series of 2011, Section 3 protection than the ordinary worker.

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the performance
The level ofor completion
protection of must be determined on the basis of the nature of the
to labor
a specific job, work or service within a definite or predetermined period, regardless of whether work,
such job, work or service
qualifications of theis employee, and other relevant circumstances such as but
to be performed or completed within or outside the premises of the principal. not limited to educational attainment and other special qualifications.

Fujis argument that Arlene was an independent contractor under a fixed-term

This department order also states that there is a trilateral relationship in legitimate job contracting
contract is andcontradictory.
subcontractingEmployees under fixed-term contracts cannot be
arrangements among the principal, contractor, and employees of the contractor. There is no employer-employee relationship
independent contractors because in fixed-term contracts, an employer-employee
between the contractor and principal who engages the contractors services, but there is an employer-employee
relationship exists.relationship
The test in this kind of contract is not the necessity and
between the contractor and workers hired to accomplish the work for the principal. desirability of the employees activities, but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship. For
Jurisprudence has recognized another kind of independent contractor: individuals with unique skills
regularand talents that
employees, thesetnecessity
them and desirability of their work in the usual course of
apart from ordinary employees. There is no trilateral relationship in this case because the independent contractor
the employers himself
business areor
the determining factors. On the other hand, independent
herself performs the work for the principal. In other words, the relationship is bilateral. contractors do not have employer-employee relationships with their principals.

XXX
To determine the status of employment, the existence of employer-employee
relationship
There are different kinds of independent contractors: those engaged in legitimate job contracting musthave
and those who firstunique
be settled with the use of the four-fold test, especially the
skills and talents that set them apart from ordinary employees. qualifications for the power to control.

The distinction
Since no employer-employee relationship exists between independent contractors and their principals, is in this
their contracts areguise:
governed by the Civil Code provisions on contracts and other applicable laws. Rules that merely serve as guidelines towards the achievement of a mutually desired
result without dictating the means or methods to be employed creates no employer-
Regular Employees
employee relationship; whereas those that control or fix the methodology and bind
or restrict the party hired to the use of such means creates the relationship.
Contracts of employment are different and have a higher level of regulation because they are impressed with public interest.
Article 13, Section 3 of the 1987 Constitution provides full protection to labor.
In appliacation, Arlene was hired by Fuji as a news producer, but there was no
evidence that she was hired for her unique skills that would distinguish her from
Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that : The relations between capital and labor
ordinary employees. Her monthly salary appeared to be a substantial sum. Fuji had
are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good.
the power to dismiss Arlene, as provided for in her employment contract. The
Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed
contract also indicated that Fuji had control over her work as she was rquired to
shop, wages, working conditions, hours of labor and similar subjects.
report for 8 hours from Monday to Friday. Fuji gave her instructions on what to
report and even her mode of transportation in carrying out her functions was
controlled.
Therefore, Arlene could not be an independent contractor.
2. Arlene was a regular employee with a fixed-term contract.
In determining whether an employment should be considered regular or non-regular,
the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is necessary
or desirable in the usual business or trade of the employer, a fact that can be assessed
by looking into the nature of the services rendered and its relation to the general
scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities
required in carrying on the particular business or trade.
However, there may be a situation where an employees work is necessary but is not
always desirable in the usual course of business of the employer. In this situation,
there is no regular employment.
Fujis Manila Bureau Office is a small unit and has a few employees. Arlene had to
do all activities related to news gathering.
A news producer plans and supervises newscast [and] works with reporters in the
field planning and gathering information, including monitoring and getting news
stories, rporting interviewing subjects in front of a video camera, submission of
news and current events reports pertaining to the Philippines, and traveling to the
regional office in Thailand. She also had to report for work in Fujis office in
Manila from Mondays to Fridays, eight per day. She had no equipment and had to
use the facilities of Fuji to accomplish her tasks.
The successive renewals of her contract indicated the necessity and desirability of
her work in the usual course of Fujis business. Because of this, Arlene had become
a regular employee with the right to security of tenure.
Arlenes contract indicating a fixed term did not automatically mean that she could
never be a regular employee. For as long as it was the employee who requested, or
bargained, that the contract have a definite date of termination, or that the fixed-
term contract be freely entered into by the employer and the employee, then the
validity of the fixed-term contract will be upheld.
3. Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to security of tenure under Article 279 of
the Labor Code and could be dismissed only for just or authorized causaes and after
observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal. The
manner by which Fuji informed Arlene of non-renewal through email a month after
she informed Fuji of her illness is tantamount to constructive dismissal. Further,
Arlene was asked to sign a letter of resignation prepared by Fuji. The existence of a
fixed-term contract should not mean that there can be no illegal dismissal. Due
process must still be observed.
Moreoever, disease as a ground for termination under Article 284 of the Labor Code
and Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code
require two requirements to be complied with: (1) the employees disease cannot be
cured within six months and his continued employment is prohibited by law or
prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of
proving compliance with these requisites is on the employer. Non-compliance leads
to illegal dismissal.
blesvirtualLawlibrary
Arlene was not accorded due process. After informing her employer of her lung
cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of
chemotherapy. Neither did it suggest for her to take a leave. It did not present any
certificate from a competent public health authority.
Therefore, Arlene was illegally dismissed.
4. The Court of Appeals correctly awarded reinstatement, damages and
attorneys fees.
The Court of Appeals awarded moral and exemplary damages and attorneys fees. It
also ordered reinstatement, as the grounds when separation pay was awarded in lieu
of reinstatement were not proven.
The Labor Code provides in Article 279 that illegally dismissed employees are
entitled to reinstatement, backwages including allowances, and all other benefits.
Separation pay in lieu of reinstatement is allowed only (1) when the employer has
ceased operations; (2) when the employees position is no longer available; (3)
strained relations; and (4) a substantial period has lapsed from date of filing to date
of finality.
The doctrine of strained relations should be strictly applied to avoid deprivation of
the right to reinstatement. In the case at bar, no evidence was presented by Fuji to
prove that reinstatement was no longer feasible. Fuji did not allege that it ceased
operations or that Arlenes position was no longer feasible. Nothing showed that the
reinstatement would cause an atmosphere of antagonism in the workplace.
Moral damages are awarded when the dismissal is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good
morals, good customs or public policy. On the other hand, exemplary damages may
be awarded when the dismissal was effected in a wanton, oppressive or malevolent
manner.
of her dismissal was effected in an oppressive approach with her salary and other
benefits being withheld until May 5, 2009, when she had no other choice but to sign
the non-renewal contract.
With regard to the award of attorneys fees, Article 111 of the Labor Code states that
[i]n cases of unlawful withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of wages recovered. In
actions for recovery of wages or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiablen. Due to her illegal dismissal, Arlene was forced to
litigate.
Therefore, the awards for reinstatement, damages and attorneys fees were proper.

After Arlene had informed Fuji of her cancer, she was informed that there would be
problems in renewing her contract on account of her condition. This information
caused Arlene mental anguish, serious anxiety, and wounded feelings. The manner