FROM ATTY. C. CARPIO ALDEGUER 'S BLOG

FRIDAY, MARCH 11, 2011

What is a quitclaim in relation to labor law?

A quitclaim, in relation to labor law, is defined as a waiver of a claim by an employee against his employer. An employer who may want to prevent an employee from filing future cases for the recovery of his monetary claims would be encouraged to prepare a quitclaim agreement in favor of the employee to prevent the latter from filing future monetary claims. In other words, a quitclaim is executed in order to settle once and for all the disputes arising from such employment relation and to close the lid on an impending litigation.

Are quitclaim agreements valid? Yes, quitclaims are valid contracts under Philippine laws. The validity of quitclaims coincides with Article 1306 of the Civil Code of the Philippines which states: "The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy."

The requisites for a valid quitclaim are: 1) that there was no fraud or deceit on the part of any of the parties; 2) that the consideration for the quitclaim is credible and reasonable; and 3) that the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. (See Francisco Soriano, Jr. vs. NLRC et al., G.R. No. 165594 April 23, 2007). In other words, employees, must not have been deceived in signing, or taken advantage of their vulnerability and ignorance of the law.

A quitclaim is a valid and binding, provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full and complete understanding of its import and consequences. (See Plastimer Industrial Corporation et al. vs. Natalia C. Gopo et al. G.R. No. 183390 February 16, 2011).

Usually, a quitclaim is prepared by the employer and is being utilized in instances where an employee files a labor dispute and subsequently agrees to a settlement, or when a resigning employee has been terminated from employment but given a substantial severance pay so that no future litigation can be filed by the employee for recovery of additional monetary claims.

Are there instances when a quitclaim has been declared void and ineffective? The answer is in the affirmative. According to jurisprudence, even if an employee has signed a satisfaction receipt for his claims, it does not necessarily result in a valid quitclaim. A quitclaim may not be considered as a valid agreement where a worker agrees to receive less compensation than what he is entitled to recover. It is well-settled that a deed of release or quitclaim cannot prevent an employee from demanding benefits to which he is legally entitled. The reason why quitclaims are commonly frowned upon as contrary to public policy, is that the employer and the employee do not obviously stand on the same footing, the tendency for the employer to drive the employee to the wall. (See Lourdes Marcos et al. vs. NLRC et al., G.R. No. 111744 September 8, 1995)

While rights may be waived under Article 6 of the Civil Code of the Philippines, the waiver must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. A quitclaim agreement is considered void where it obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This also runs counter to Article 22 of the Civil Code of the Philippines which provides that no one shall be unjustly enriched at the expense of another.

So how can quitclaims be validly enforced? It boils down to being transparent during negotiations. Parties must be well-informed of all the necessary data to enable each one to make a sound decision before signing a quitclaim agreement. All cards must be laid down the table with nothing to hide. This way, parties can effectively negotiate on a substantial settlement, even if it does not coincide with each other's ideal expectations.

--
Antonio L. Buensuceso Jr.

REASONS FOR HAVING A CAMERA

Reasons why you should always have a camera...(through the benevolence of the CLAYTONS from Florida.)

HAVE A TERRIFIC DAY !!!

COURTESY OF THE CLAYTONS FROM FLORIDA

YOU REAP WHAT YOU SOW

COURTESY OF THE CLAYTONS AND FRIENDS FROM FLORIDA

Subject: FW: Awesome Story

I'll be honest with you. I don't care about 95% of the pre-fab, chain e-mails that I get. But this one is awesome. Enjoy!
A VERY UPLIFTING STORY!

YOU REAP WHAT YOU SOW

Good morning said a woman as she walked up to the man sitting on ground.
The man slowly looked up.

This was a woman clearly accustomed to the finer things of life. Her coat was new.. She looked like she had never missed a meal in her life

His first thought was that she wanted to make fun of him, like so many others had done before.. "Leave me alone," he growled....

To his amazement, the woman continued standing.

She was smiling -- her even white teeth displayed in dazzling rows. "Are you hungry?" she asked.

"No," he answered sarcastically "I've just come from dining with the president. Now go away."

The woman's smile became even broader. Suddenly the man felt a gentle hand under his arm.

"What are you doing, lady?" the man asked angrily. "I said to leave me alone.

Just then a policeman came up. "Is there any problem, ma'am?" he asked...

"No problem here, officer," the woman answered. "I'm just trying to get this man to his feet. Will you help me?"

The officer scratched his head. "That's old Jack. He's been a fixture around here for a couple of years. What do you want with him?"

"See that cafeteria over there?" she asked. "I'm going to get him something to eat and get him out of the cold for awhile."

"Are you crazy, lady?" the homeless man resisted. "I don't want to go in there!" Then he felt strong hands grab his other arm and lift him up. "Let me go, officer. I didn't do anything."
" This is a good deal for you, Jack" the officer answered. "Don't blow it."

Finally, and with some difficulty, the woman and the police officer got Jack into the cafeteria and sat him at a table in a remote corner. It was the middle of the morning, so most of the breakfast crowd had already left and the lunch bunch had not yet arrived....

The manager strode across the cafeteria and stood by his table. "What's going on here, officer?" he asked. "What is all this, is this man in trouble?"

"This lady brought this man in here to be fed," the policeman answered.

"Not in here!" the manager replied angrily. "Having a person like that here is bad for business.."

Old Jack smiled a toothless grin. "See, lady. I told you so. Now if you'll let me go. I didn't want to come here in the first place."

The woman turned to the cafeteria manager and smiled.. "Sir, are you familiar with Eddy and Associates, the banking firm down the street?"

"Of course I am," the manager answered impatiently. "They hold their weekly meetings in one of my banquet rooms."

"And do you make a goodly amount of money providing food at these weekly meetings?"

"What business is that of yours?"

I, sir, am Penelope Eddy, president and CEO of the company."

"Oh."

The woman smiled again. "I thought that might make a difference." She glanced at the cop who was busy stifling a giggle. "Would you like to join us in a cup of coffee and a meal, officer?"

"No thanks, ma'am," the officer replied. "I'm on duty."

"Then, perhaps, a cup of coffee to go?"
"Yes, mam. That would be very nice."

The cafeteria manager turned on his heel, "I'll get your coffee for you right away, officer."

The officer watched him walk away. "You certainly put him in his place," he said.

"That was not my intent. Believe it or not, I have a reason for all this."

She sat down at the table across from her amazed dinner guest. She stared at him intently.. "Jack, do you remember me?"

Old Jack searched her face with his old, rheumy eyes. "I think so -- I mean you do look familiar."

"I'm a little older perhaps," she said. "Maybe I've even filled out more than in my younger days when you worked here, and I came through that very door, cold and hungry."

"Ma'am?" the officer said questioningly. He couldn't believe that such a magnificently turned out woman could ever have been hungry

"I was just out of college," the woman began. "I had come to the city looking for a job, but I couldn't find anything. Finally I was down to my last few cents and had been kicked out of my apartment. I walked the streets for days. It was February and I was cold and nearly starving. I saw this place and walked in on the off chance that I could get something to eat"

Jack lit up with a smile. "Now I remember," he said.. "I was behind the serving counter. You came up and asked me if you could work for something to eat. I said that it was against company policy."

"I know," the woman continued. "Then you made me the biggest roast beef sandwich that I had ever seen, gave me a cup of coffee, and told me to go over to a corner table and enjoy it. I was afraid that you would get into trouble... Then, when I looked over and saw you put the price of my food in the cash register, I knew then that everything would be all right"

"So you started your own business?" Old Jack said.

"I got a job that very afternoon. I worked my way up. Eventually I started my own business that, with the help of God, prospered." She opened her purse and pulled out a business card.. "When you are finished here, I want you to pay a visit to a Mr. Lyons...He's the personnel director of my company. I'll go talk to him now and I'm certain he'll find something for you to do around the office." She smiled. "I think he might even find the funds to give you a little advance so that you can buy some clothes and get a place to live until you get on your feet... If you ever need anything, my door is always opened to you."

There were tears in the old man's eyes. "How can I ever thank you?" he said.
"Don't thank me," the woman answered. "To God goes the glory. Thank Jesus... He led me to you."

Outside the cafeteria, the officer and the woman paused at the entrance before going their separate ways....

"Thank you for all your help, officer," she said.

"On the contrary, Ms. Eddy," he answered. "Thank you. I saw a miracle today, something that I will never forget. And..And thank you for the coffee.."

If you have missed knowing me, you have missed nothing.

If you have missed some of my emails, you might have missed a laugh..

But, if you have missed knowing my Lord and Savior, Jesus Christ, you have missed everything in the world.

Have a Wonderful Day. May God Bless You Always and don't forget that when you "cast your bread upon the waters," you never know how it will be returned to you..
God is so big He can cover the whole world with his Love and so small He can curl up inside your heart..

When God leads you to the edge of the cliff, trust Him fully and let go..
Only 1 of 2 things will happen, either He'll catch you when you fall, or He'll teach you how to fly!

The power of one sentence!

God is going to shift things around for you today and let things work in your favor.

If you believe, send it.
If you don't believe, delete it.

God closes doors no man can open & God opens doors no man can close..
If you need God to open some doors for you...send this on.

Have a blessed day and remember to be a blessing.

LIVE WELL, LOVE MUCH, LAUGH OFTEN

Happy New Year !!!

RATTLESNAKE THE BIGGEST EVER CAUGHT

This is exactly why you should not go looking for the golf balls hit 'Out of Bounds' in Florida !!!

THIS IS NOT A PYTHON!This is a 15 foot Eastern Diamondback rattlesnake - the
largest ever caught on record, in fact.
This snake was found Near the St. Augustine outlet, in a new KB homes subdivision just south of Jacksonville FL.

A little research revealed the following:
One bite from a snake of this size would contain enough venom to
kill over 40 full grown men.

The head of this snake alone is larger than the hand of a normal sized man.
A bite from those fangs would be comparable to being stabbed by two
curved, 1/4 inch diameter screwdrivers.

The knife being used to draw out the fangs for the middle picture has a blade around 6 inches long.
This snake is estimated to have weighed over 170 pounds.
(How much do you weigh?)

Notice the girth of this snake as compared to the cop's leg in the
first picture (and he is not a small man).
A snake of this size could easily swallow a 2 year-old child
(and dogs, pigs, etc).
A snake this size has an approximately 5 1/2 foot accurate striking
distance. (The distance for an average size rattlesnake is about 2 feet.. )
This snake has probably been alive since George Bush Sr. was President.
Now just ask yourself these questions: What has this snake been
feeding on and where are its offspring?
END OF SHARED MESSAGE
COURTESY OF THE CLAYTONS AND FRIENDS FROM FLORIDA

SIEMENS vs. DOMINGO

THIRD DIVISION

[G.R. No. 150488, July 28, 2008]

SIEMENS PHILIPPINES, INC. AND MR. ERNST H. BEHRENS, PETITIONERS, VS. ENRICO A. DOMINGO, RESPONDENT.

DECISION

NACHURA, J.:

On appeal via petition for review on certiorari under Rule 45 of the Rules of Court are the Decision^[1] and Resolution^[2] of the Court of Appeals dated March 12, 2001 and October 18, 2001, respectively, in CA-G.R. SP No. 58512 entitled Enrico A. Domingo versus National Labor Relations Commission (First Division) and Siemens Philippines, Inc., and/or Mr. E. H. Behrens.

This is an offshoot of an illegal dismissal case filed by Enrico A. Domingo (Domingo) against Siemens Philippines, Inc., Manila (Siemens Philippines) in July 1995 wherein Domingo got a favorable decision from the Labor Arbiter (LA). On appeal, however, the National Labor Relations Commission (NLRC) reversed the decision of the LA and dismissed the case. Aggrieved, Domingo filed a petition for review on certiorari^[3] with the Court of Appeals (CA). Finding merit in his petition, the CA reversed the judgment of the NLRC and reinstated the decision of the LA.

The Facts

On March 16, 1987, Domingo signed an Employment Contract with Maschinen & Technik, Inc. (MATEC) as a consultant, with a compensation package of Php8,000.00/month salary and an allowance of Php400.00/month. MATEC is a subsidiary of Siemens Philippines.^[4] Thereafter, Domingo was given additional work by MATEC, in which he was paid DM1,800.00/month on top of his original salary. The extra work was the result of a contract entered into by MATEC and Siemens Aktiengesellschaft^[5] (Siemens Germany), whereby MATEC, at the request of Siemens Germany, hired Domingo to handle the operation of OEN OEV TD.^[6] Siemens Germany is a German company which has an investment in Siemens Philippines.^[7]

On January 28, 1992, Electronic Telephone System Industries, Inc. (ETSI) availed of Domingo's services as assistant manager. ETSI, like MATEC is a subsidiary of Siemens Philippines.^[8] The Contract of Employment^[9] of Domingo with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens Philippines, which is a corporation to be incorporated under the laws of the Philippines.^[10]

On March 16, 1992, while still an assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text and data networks for a period of twelve (12) months.^[11] As compensation, he received DM20,000.00, payable once for every twelve-month period.^[12]

On March 31, 1992, Siemens Germany sent a letter to ETSI guaranteeing the consultancy agreement between Siemens Germany and Domingo. The pertinent portion of the letter reads:

Under Item 7.1, the consultancy agreement is valid for 12 months. To give Mr. R. Domingo the necessary security, we guarantee you that we will extend the Consultancy Agreement with Mr. R. Domingo for as long as he has an employment relationship with you.

Please tell him that you (ETSI) will ensure that the [sic] Siemens AG will extend the Consultancy Agreement for as long as an employment relationship exists between ETSI and Mr. R. Domingo.^[13]

On June 1, 1992, Domingo signed a Contract of Employment with Siemens Philippines. The relevant portions of the contract read:

WITNESSETH : That

WHEREAS, the COMPANY, is taking over the greater part of the business activities, of ELECTRONIC TELEPHONE SYSTEMS INDUSTRIES, INC. (ETSI),

WHEREAS, the COMPANY has offered to engage the services of the EMPLOYEE as Assistant Manager and the EMPLOYEE has agreed to accept such employment under the terms and conditions mutually acceptable to both parties.

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto have agreed as follows:

1. The COMPANY hereby engages the services of the EMPLOYEE as Assistant Manager - Public Communications Systemsand the EMPLOYEE hereby accepts such employment, as a regular employee of the COMPANY in accordance with the terms and conditions of this contract. The term of the EMPLOYEE's employment shall begin on 01 June 1992. The EMPLOYEE shall cease from this date to be an employee of ETSI and the EMPLOYEE's contract of employment with ETSI is thereby deemed terminated and superseded by this Contract.

x x x x

3. The EMPLOYEE shall suffer no diminution in salary, benefits and privileges that he enjoyed as a former employee of ETSI. It is hereby agreed that the EMPLOYEE's length of service with ETSI shall be credited and recognized by the COMPANY. For this purpose, the COMPANY acknowledges that the EMPLOYEE's hiring date with ETSI is 01 January 1992.

6. The COMPANY shall pay the EMPLOYEE a salary of Twenty-Four Thousand One Hundred Fifty Pesos (P24,150.00) per month. The payments will be made [during] the 15 and 30 of each month.
   
   
7. During the period of his employment, the EMPLOYEE shall not be connected in any other work capacity or employments, nor be otherwise involved, directly or indirectly, with any other business or concern whatsoever without first having obtained the written consent of the COMPANY. It is the COMPANY's intention that the EMPLOYEE devote[s] all of his efforts towards the fulfillment of his obligations under this contract.^[14]
   

On March 11, 1993, while Domingo was already in the employ of Siemens Philippines, Siemens Germany extended the consultancy agreement with Domingo for another twelve (12) months. Again, on March 16, 1994, Siemens Germany renewed the consultancy agreement with Domingo for another six (6) months.^[15] Domingo's consultancy contract expired in September 1994.^[16] Complacent that the consultancy agreement would be renewed in accordance with the guarantee letter, Domingo continued to render service as a consultant despite the absence of a formal notice of renewal.^[17] He had every reason to feel secure because, in January 1995, without his contract being renewed, he was even made to accompany to Hong Kong the General Manager of Siemens Germany and the Division Manager of Siemens Philippines to seal an agreement between Siemens Philippines and Philippine Long Distance Telephone Company involving a US$1.09M Packet Switching Contract.^[18]

Earlier, on October 31, 1994, Siemens Philippines sent a letter^[19] to Domingo proposing a new incentive scheme. The letter was signed by Sepp E. Tietze, General Manager, VS Regional Manager Singapore; and by Ernst H. Behrens (Behrens), President and Chief Operating Officer of Siemens Philippines Inc., Manila. The relevant portions of the letter read:

We refer to your special arrangement with VS Munich (formally OEN VD) which expired September 1994.

It is the VS policy to let all sales-related employees contribute on the success of the group.

Consequently, an incentive scheme will shortly be introduced for all VS Divisions in South East (sic) Asia. As already discussed with you and agreed upon[,] you will receive a new contract incorporating the incentive scheme adapted to the conditions within the Philippines.^[20]

The incentive scheme was, in effect, a replacement of his consultancy contract with Siemens Germany. Under the scheme, Domingo would receive a sales compensation package of 20% of his peso salary, or a maximum of about Php70,000.00 per annum, whereas under the consultancy agreement, he was receiving a fixed salary of Php370,000.00 (DM20,000.00) per annum. Feeling humiliated by the diminution of his salary, Domingo was forced to resign. On February 27, 1995, Domingo tendered his Resignation Letter^[21] to Siemens Philippines, the pertinent portion of which reads:

Under the present circumstances and with the result of our discussions with Mr. Tietze and Mr. Behrens, I am tendering my resignation effective close of office on March 31, 1995. I regret that I have to make this decision but I hope you will understand that I am forced to do it. I wish you good luck in the VS Division and hope to see you again in the future.

On July 6, 1995, Domingo filed a complaint for illegal dismissal and prayed for the payment of salaries, 13^th month pay, backwages, damages, separation pay and attorney's fees.^[22] Domingo alleged that he was forced to resign because of the act of Siemens Philippines of not renewing the consultancy agreement.^[23] Siemens Philippines countered that Domingo's resignation was voluntary and that they were not privy to the consultancy agreement between Domingo and Siemens Germany.^[24]

On May 28, 1997, the Labor Arbiter rendered a Decision,^[25] disposing, as follows:

WHEREFORE, judgment is hereby rendered finding complainant [Domingo] to have been illegally dismissed and the respondent[s] are ordered, jointly and severally, to pay complainant his backwages and other benefits from April 1, 1995 up to October 5, 1995, consultancy fees of DM20,000.00 from October 1, 1994 to October 5, 1995 but rounded up to one year, or its peso equivalent at the time [of] payment, moral damages of Five Hundred Thousand Pesos (P500,000.00); exemplary damages of Five Hundred Thousand Pesos P500,000.00, separation pay equivalent to two months pay per year of service and attorney's fees of 10% of whatever amount complainant will recover in this case. Complainant's consultancy fee shall be included in the computation of his separation pay using the following formula: DM20,000.00 over 12 multiplied by 2 and the product multiplied by 3.

SO ORDERED.^[26]

On appeal, the NLRC reversed the ruling of the LA in a Decision^[27] dated August 25, 1999, and declared that Domingo was not illegally terminated. The fallo of the said Decision reads:

WHEREFORE, the appealed decision is set aside. The complaint below is dismissed for being without merit.

SO ORDERED.

Domingo filed a Motion for Reconsideration, but the same was denied by the NLRC in an Order^[28] dated January 26, 2000.

Hard pressed, Domingo filed a petition for certiorari^[29] before the CA assailing the NLRC for grave abuse of discretion in declaring that Domingo was not forced to resign, and for its erroneous appreciation of the evidence on record that resulted in the reversal of the Decision of the LA.^[30]

On March 12, 2001, the CA rendered a Decision^[31] declaring that Domingo was constructively dismissed. His resignation was adjudged to be involuntary, the substantial decrease in compensation having made Domingo's employment with Siemens Philippines unbearable. The decretal portion of the Decision reads:

WHEREFORE, premises considered, the petition is granted. The appealed decisions of the NLRC are hereby REVERSED and SET

ASIDE. In lieu thereof, the decision of the Labor Arbiter is hereby reinstated.

SO ORDERED.^[32]

A motion for reconsideration was filed by Siemens Philippines and Behrens, but the same was denied in a Resolution^[33] dated October 18, 2001.

On December 13, 2001, Siemens Philippines and Behrens filed the present petition for review on certiorari. They raise the following arguments:

Siemens, Inc. was not a party to the consultancy agreement, hence, it could not guarantee its extension/renewal.

The non-extension/renewal of respondent's consultancy agreement with Siemens AG may not be taken as a circumstance leaving respondent with no alternative but to resign.

Since respondent's resignation was purely voluntary, Siemens, Inc. did not commit illegal dismissal. Hence, there is absolutely no basis in holding petitioners liable to respondent for backwages, consultancy fee, separation pay, damages and attorney's fees.^[34]

The Issue

The crucial issue in this case is whether there was constructive dismissal that would entitle Domingo to his monetary claims.

The Ruling of the Court

I. On Illegal Dismissal

We believe, and so hold, that Domingo was constructively dismissed from employment.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.^[35] The gauge for constructive dismissal is whether a reasonable person in the employee's position would feel compelled to give up his employment under the prevailing circumstances. Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank or diminution in pay.^[36] It exists when the resignation on the part of the employee was involuntary due to the harsh, hostile and unfavorable conditions set by the employer. It is brought about by the clear discrimination, insensibility or disdain shown by an employer which becomes unbearable to the employee. An employee who is forced to surrender his position through the employer's unfair or unreasonable acts is deemed to have been illegally terminated and such termination is deemed to be involuntary.^[37]

We have, under the law's mandate, consistently resolved this situation in favor of the employee in order to protect his rights and interests from the coercive acts of the employer.

In the instant case, Domingo's resignation was brought about by the decision of the management of Siemens Philippines not to renew â€" or work for the renewal of â€" his consultancy contract with Siemens Germany which clearly resulted in the substantial diminution of his salary. The situation brought about the feeling of oppression which compelled Domingo to resign. The diminution in pay created an adverse working environment that rendered it impossible for Domingo to continue working for Siemens Philippines. His resignation from the company was in reality not his choice but a situation created by the company, thereby amounting to constructive dismissal.

The argument of Siemens Philippines that it is not privy to the consultancy agreement between Domingo and Siemens Germany is unacceptable. By virtue of its employment contract with Domingo, Siemens Philippines stepped into the shoes of ETSI as Domingo's employer. The stipulation in the contract that Domingo shall suffer no diminution in salary, benefits and privileges that he enjoyed as employee of ETSI is, in effect, assumption by Siemens Philippines of ETSI's obligations and commitments. This included the guarantee that Domingo's consultancy contract with Siemens Germany would be renewed. After all, there was a commitment by Siemens Germany that the consultancy contract would continue as long as Domingo remained an employee of ETSI; and Domingo's employment with Siemens Philippines was merely a continuation of his employment with ETSI.

While admittedly, Siemens Philippines is not a party to the arrangement between Siemens Germany, ETSI and Domingo, knowledge of and acquiescence to - if not actual concurrence in - the arrangement can be imputed to Siemens Philippines as to bind it to the arrangement. This conclusion finds support in the following:

First, based on the findings of facts of the LA, NLRC and CA ― MATEC, ETSI, Siemens Philippines and Siemens Germany are related companies, the first three being subsidiaries of the parent company, and the fourth, Siemens Germany, having an investment in Siemens Philippines. Short of piercing the veil of corporate fiction, we note the intimate corporate relationship of Siemens Germany and Siemens Philippines, including the practice of the two companies of integrating their workforce.

Second, in Domingo's contract of employment with Siemens Philippines, it is provided that Domingo shall not be connected in any other work capacity or employment or be otherwise involved, directly or indirectly, with any other business or concern without first having obtained the written consent of the company. Yet, Siemens Philippines never questioned the continued consultancy work of Domingo with Siemens Germany, not even when the consultancy agreement was renewed twice during the lifetime of Domingo's contract of employment with Siemens Philippines.

Third, the guarantee letter issued by Siemens Germany in favor of Domingo was never questioned, much less revoked by Siemens Philippines when it assumed the employment of Domingo. The Guarantee Letter was a security given to Domingo by Siemens Germany assuring Domingo that Siemens Philippines would ensure that Siemens Germany would extend the consultancy agreement as long as Domingo was under its employ.

Fourth, the consultancy agreement was a form of benefit or privilege given to Domingo by ETSI, a privilege that was allowed by Siemens Philippines to continue when it took over the majority of the business activities of ETSI and, consequently, became Domingo's employer. The outright removal of the privilege contravenes the law, because it resulted in the effective diminution of Domingo's salary.

II. On Domingo's Monetary Claims

As stated above, Domingo's work as a consultant for Siemens Germany was a privilege or benefit, if not actually granted, at least acquiesced in by Siemens Philippines. However, this does not mean that the latter corporation also assumes the responsibility of compensating Domingo for his work as a consultant, even if, by stepping into the shoes of ETSI, it effectively sealed the guarantee of Siemens Germany for the renewal of Domingo's consultancy contract. In other words, what Siemens Philippines granted to Domingo was only the privilege to work in another corporation, but it did not undertake to compensate him for such work.

Before a corporation can be held accountable for the corporate liabilities of another, the veil of corporate fiction must first be pierced. Thus, before Siemens Philippines can be held answerable for the obligations of Siemens Germany to its employees, it must be sufficiently established that the two companies are actually a single corporate entity, such that the liability of one is the liability of the other. On this aspect, Domingo has failed to present the proof necessary to pierce the corporate veil between the two companies.

Ordinarily, when there is constructive dismissal, which is a form of illegal dismissal, the employer is liable for the full amount of backwages, if reinstatement is no longer possible, and separation pay. In the case at bar, we cannot hold Siemens Philippines liable for the monetary obligations of Siemens Germany. The circumstances surrounding this case necessitate a different treatment in the award of backwages and separation pay, since the companies involved are separate and distinct from each other. However, by Siemens Philippines' failure to work for the renewal of Domingo's consultancy contract with Siemens Germany, Siemens Philippines may be held answerable in damages to Domingo.

Consequently, Domingo's constructive dismissal entitles him to his monetary claims, subject to the following modifications:

First, we are not in accord with the Decision of the LA finding Behrens, the President and Chief Executive Officer of Siemens Philippines, solidarily liable with the company. A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith.^[38] In the case at bar, malice or bad faith on the part of Behrens in the constructive dismissal of Domingo was not sufficiently proven to justify a ruling holding him solidarily liable with Siemens Philippines.

Second, an illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively.^[39]

As a rule, separation pay is awarded to an illegally dismissed employee, computed at the rate of one month pay per year of service. Accordingly, the LA decision granting separation pay equivalent to two months salary per year of service must be modified. There is nothing on record that even remotely suggests that it is the company policy of Siemens Philippines to grant its employees separation pay of two months' salary for every year of service. Thus, in consonance with our previous rulings,^[40] Domingo shall be awarded separation pay in the amount of one month pay for every year of service, but consultancy fees shall not be included in the computation of his separation pay. As discussed above, the evidence presented by Domingo is not sufficient to pierce the veil of corporate fiction between Siemens Philippines and Siemens AG, which would make Siemens Philippines liable for the monetary obligations of Siemens AG.

Third, the backwages that should be awarded to Domingo shall be reckoned from the time his constructive dismissal took effect until the finality of this decision. This is in conformity with Article 279 of the Labor Code which provides that an employee who is unjustly dismissed from work shall be entitled to 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. Since reinstatement of Domingo is no longer possible due to his strained relations with the management of Siemens Philippines, and considering the position he held in the company, he is lawfully entitled to receive backwages. For the same reason cited above, consultancy fees shall be excluded in the computation of Domingo's backwages.

Finally, moral damages may be recovered when the dismissal of the employee was tainted by bad faith or fraud; or when it constituted an act oppressive to labor or done in a manner contrary to morals, good customs or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton, oppressive, or malevolent manner.^[41] In this case, we have found that there was bad faith in the failure or refusal of Siemens Philippines to work for the renewal of Domingo's consultancy contract with Siemens Germany. But while we affirm Domingo's entitlement to these damages, they are not intended to enrich the dismissed employee. Consequently, we find the amount of P50,000.00 for moral damages and P50,000.00 for exemplary damages sufficient to allay the sufferings experienced by Domingo and by way of example or correction for public good, respectively.

WHEREFORE, the Decision of the Court of Appeals, dated March 12, 2001, is hereby AFFIRMED WITH THE MODIFICATION that petitioner Siemens Philippines, Inc. is hereby ordered to pay respondent Enrico A. Domingo the following:

(1) separation pay equivalent to one month pay per year of service;

(2) full backwages and other benefits from the date of his constructive dismissal up to the finality of this Decision;

(3) moral damages of fifty thousand pesos (P50,000.00);

(4) exemplary damages of fifty thousand pesos (P50,000.00); and

(5) attorney's fees.

This case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary awards due respondent.

SO ORDERED.

Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ., concur.

---

^[1] Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Ramon A. Barcelona and Alicia L. Santos, concurring; rollo, pp. 44-55.

^[2] Rollo, p. 57.

^[3] RULES OF COURT, Rule 65.

^[4] Rollo, p. 177.

^[5] Appears in some parts of the records as Aktiengeselsschaft.

^[6] Rollo, pp. 92-94.

^[7] Id. at 44.

^[8] Id. at 178.

^[9] Id. at 100-101.

^[10] Id.

^[11] Id. at 70.

^[12] Id. at 72.

^[13] Id. at 75.

^[14] Id. at 67-68.

^[15] Id. at 180.

^[16] Id. at 403.

^[17] Id. at 181, 403.

^[18] Id. at 181.

^[19] Id. at 119.

^[20] Id.

^[21] Id. at 77.

^[22] Id. at 46.

^[23] Id. at 200.

^[24] Id. at 183.

^[25] Penned by Labor Arbiter Vladimir P. L. Sampang; rollo, pp. 177-192.

^[26] Id. at 191-192.

^[27] Penned by Commissioner Vicente S.E. Veloso, with Presiding Commissioner Rogelio I. Rayala and Commissioner Alberto R. Quimpo, concurring; rollo, pp. 255-269.

^[28] Id. at 282-283.

^[29] RULES OF COURT, Rule 65.

^[30] Rollo, p. 47.

^[31] Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Ramon A. Barcelona and Alicia L. Santos, concurring; rollo, pp. 44-55.

^[32] Id. at 54.

^[33] Id. at 57.

^[34] Rollo, pp. 23-24.

^[35] Francisco v. NLRC, G.R. No. 170087, August 31, 2006, 500 SCRA 690, 702.

^[36] New Ever Marketing, Inc. v. Court of Appeals, G.R. No. 140555, July 14, 2005, 463 SCRA 284, 297.

^[37] Aguilar v. Burger Machine Holdings Corporation, G.R. No. 172062, October 30, 2006, 506 SCRA 266, 273.

^[38] MAM Realty Development Corporation v. NLRC, 314 Phil. 838, 844 (1995).

^[39] Aurora Land Projects Corporation v. NLRC, 344 Phil. 44, 58 (1997); Torillo v. Leogardo, Jr., G.R. No. 77205, May 27, 1991, 197 SCRA 471, 477.

^[40] Rutaquio v. NLRC, 375 Phil. 405 (1999); Gaco v. NLRC, G.R. No. 104690, February 23, 1994, 230 SCRA 261, citing Pepsi-Cola Bottling Co v. NLRC, 210 SCRA 277 (1992); De Vera v. NLRC, G.R. No. 93212, November 22, 1990, 191 SCRA 632; Carandang v. Dulay, G.R. No. 90492, August 20, 1990, 188 SCRA 792; Quezon Electric Cooperative v. NLRC, G.R. Nos. 79718-22, April 12, 1989, 172 SCRA 89.

^[41] Norkis Trading Co., Inc. v. NLRC, G.R. No. 168159, August 19, 2005, 467 SCRA 461, 473; Garcia v. NLRC, G.R. No. 110518, August 1, 1994, 234 SCRA 632, 638.

E-Library Doc. ID: 12180017421451483464

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Antonio L. Buensuceso Jr.

PIERCING THE VEIL RESEARCH-1

PIERCING THE VEIL RESEARCH-1
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SYLLABI/SYNOPSIS

SECOND DIVISION

[G.R. No. 100812. June 25, 1999]

FRANCISCO MOTORS CORPORATION, petitioner, vs. COURT OF APPEALS and SPOUSES GREGORIO and LIBRADA MANUEL, respondents.

D E C I S I O N

QUISUMBING, J.:

This petition for review on certiorari, under Rule 45 of the Rules of Court, seeks to annul the decision[1] of the Court of Appeals in C.A. G.R. CV No. 10014 affirming the decision rendered by Branch 135, Regional Trial Court of Makati, Metro Manila. The procedural antecedents of this petition are as follows:

On January 23, 1985, petitioner filed a complaint[2] against private respondents to recover three thousand four hundred twelve and six centavos (P3,412.06), representing the balance of the jeep body purchased by the Manuels from petitioner; an additional sum of twenty thousand four hundred fifty-four and eighty centavos (P20,454.80) representing the unpaid balance on the cost of repair of the vehicle; and six thousand pesos (P6,000.00) for cost of suit and attorney's fees.[3] To the original balance on the price of jeep body were added the costs of repair.[4] In their answer, private respondents interposed a counterclaim for unpaid legal services by Gregorio Manuel in the amount of fifty thousand pesos (P50,000) which was not paid by the incorporators, directors and officers of the petitioner. The trial court decided the case on June 26, 1985, in favor of petitioner in regard to the petitioner's claim for money, but also allowed the counter-claim of private respondents. Both parties appealed. On April 15, 1991, the Court of Appeals sustained the trial court's decision.[5] Hence, the present petition.

For our review in particular is the propriety of the permissive counterclaim which private respondents filed together with their answer to petitioner's complaint for a sum of money. Private respondent Gregorio Manuel alleged as an affirmative defense that, while he was petitioner's Assistant Legal Officer, he represented members of the Francisco family in the intestate estate proceedings of the late Benita Trinidad. However, even after the termination of the proceedings, his services were not paid. Said family members, he said, were also incorporators, directors and officers of petitioner. Hence to counter petitioner's collection suit, he filed a permissive counterclaim for the unpaid attorney's fees.[6]

For failure of petitioner to answer the counterclaim, the trial court declared petitioner in default on this score, and evidence ex-parte was presented on the counterclaim. The trial court ruled in favor of private respondents and found that Gregorio Manuel indeed rendered legal services to the Francisco family in Special Proceedings Number 7803- "In the Matter of Intestate Estate of Benita Trinidad". Said court also found that his legal services were not compensated despite repeated demands, and thus ordered petitioner to pay him the amount of fifty thousand (P50,000.00) pesos.[7]

Dissatisfied with the trial court's order, petitioner elevated the matter to the Court of Appeals, posing the following issues:

"I.

WHETHER OR NOT THE DECISION RENDERED BY THE LOWER COURT IS NULL AND VOID AS IT NEVER ACQUIRED JURISDICTION OVER THE PERSON OF THE DEFENDANT.

II.

WHETHER OR NOT PLAINTIFF-APPELLANT NOT BEING A REAL PARTY IN THE ALLEGED PERMISSIVE COUNTERCLAIM SHOULD BE HELD LIABLE TO THE CLAIM OF DEFENDANT-APPELLEES.

III.

WHETHER OR NOT THERE IS FAILURE ON THE PART OF PLAINTIFF-APPELLANT TO ANSWER THE ALLEGED PERMISSIVE COUNTERCLAIM."[8]

Petitioner contended that the trial court did not acquire jurisdiction over it because no summons was validly served on it together with the copy of the answer containing the permissive counterclaim. Further, petitioner questions the propriety of its being made party to the case because it was not the real party in interest but the individual members of the Francisco family concerned with the intestate case.

In its assailed decision now before us for review, respondent Court of Appeals held that a counterclaim must be answered in ten (10) days, pursuant to Section 4, Rule 11, of the Rules of Court; and nowhere does it state in the Rules that a party still needed to be summoned anew if a counterclaim was set up against him. Failure to serve summons, said respondent court, did not effectively negate trial court's jurisdiction over petitioner in the matter of the counterclaim. It likewise pointed out that there was no reason for petitioner to be excused from answering the counterclaim. Court records showed that its former counsel, Nicanor G. Alvarez, received the copy of the answer with counterclaim two (2) days prior to his withdrawal as counsel for petitioner. Moreover when petitioner's new counsel, Jose N. Aquino, entered his appearance, three (3) days still remained within the period to file an answer to the counterclaim. Having failed to answer, petitioner was correctly considered in default by the trial court.[9] Even assuming that the trial court acquired no jurisdiction over petitioner, respondent court also said, but having filed a motion for reconsideration seeking relief from the said order of default, petitioner was estopped from further questioning the trial court's jurisdiction.[10]

On the question of its liability for attorney's fees owing to private respondent Gregorio Manuel, petitioner argued that being a corporation, it should not be held liable therefor because these fees were owed by the incorporators, directors and officers of the corporation in their personal capacity as heirs of Benita Trinidad. Petitioner stressed that the personality of the corporation, vis-à-vis the individual persons who hired the services of private respondent, is separate and distinct,[11] hence, the liability of said individuals did not become an obligation chargeable against petitioner.

Nevertheless, on the foregoing issue, the Court of Appeals ruled as follows:

"However, this distinct and separate personality is merely a fiction created by law for convenience and to promote justice. Accordingly, this separate personality of the corporation may be disregarded, or the veil of corporate fiction pierced, in cases where it is used as a cloak or cover for found (sic) illegality, or to work an injustice, or where necessary to achieve equity or when necessary for the protection of creditors. (Sulo ng Bayan, Inc. vs. Araneta, Inc., 72 SCRA 347) Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity. (Chemplex Philippines, Inc. vs. Pamatian, 57 SCRA 408)

"In the instant case, evidence shows that the plaintiff-appellant Francisco Motors Corporation is composed of the heirs of the late Benita Trinidad as directors and incorporators for whom defendant Gregorio Manuel rendered legal services in the intestate estate case of their deceased mother. Considering the aforestated principles and circumstances established in this case, equity and justice demands plaintiff-appellant's veil of corporate identity should be pierced and the defendant be compensated for legal services rendered to the heirs, who are directors of the plaintiff-appellant corporation."[12]

Now before us, petitioner assigns the following errors:

"I.

THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF PIERCING THE VEIL OF CORPORATE ENTITY.

II.

THE COURT OF APPEALS ERRED IN AFFIRMING THAT THERE WAS JURISDICTION OVER PETITIONER WITH RESPECT TO THE COUNTERCLAIM."[13]

Petitioner submits that respondent court should not have resorted to piercing the veil of corporate fiction because the transaction concerned only respondent Gregorio Manuel and the heirs of the late Benita Trinidad. According to petitioner, there was no cause of action by said respondent against petitioner; personal concerns of the heirs should be distinguished from those involving corporate affairs. Petitioner further contends that the present case does not fall among the instances wherein the courts may look beyond the distinct personality of a corporation. According to petitioner, the services for which respondent Gregorio Manuel seeks to collect fees from petitioner are personal in nature. Hence, it avers the heirs should have been sued in their personal capacity, and not involve the corporation.[14]

With regard to the permissive counterclaim, petitioner also insists that there was no proper service of the answer containing the permissive counterclaim. It claims that the counterclaim is a separate case which can only be properly served upon the opposing party through summons. Further petitioner states that by nature, a permissive counterclaim is one which does not arise out of nor is necessarily connected with the subject of the opposing party's claim. Petitioner avers that since there was no service of summons upon it with regard to the counterclaim, then the court did not acquire jurisdiction over petitioner. Since a counterclaim is considered an action independent from the answer, according to petitioner, then in effect there should be two simultaneous actions between the same parties: each party is at the same time both plaintiff and defendant with respect to the other,[15] requiring in each case separate summonses.

In their Comment, private respondents focus on the two questions raised by petitioner. They defend the propriety of piercing the veil of corporate fiction, but deny the necessity of serving separate summonses on petitioner in regard to their permissive counterclaim contained in the answer.

Private respondents maintain both trial and appellate courts found that respondent Gregorio Manuel was employed as assistant legal officer of petitioner corporation, and that his services were solicited by the incorporators, directors and members to handle and represent them in Special Proceedings No. 7803, concerning the Intestate Estate of the late Benita Trinidad. They assert that the members of petitioner corporation took advantage of their positions by not compensating respondent Gregorio Manuel after the termination of the estate proceedings despite his repeated demands for payment of his services. They cite findings of the appellate court that support piercing the veil of corporate identity in this particular case. They assert that the corporate veil may be disregarded when it is used to defeat public convenience, justify wrong, protect fraud, and defend crime. It may also be pierced, according to them, where the corporate entity is being used as an alter ego, adjunct, or business conduit for the sole benefit of the stockholders or of another corporate entity. In these instances, they aver, the corporation should be treated merely as an association of individual persons.[16]

Private respondents dispute petitioner's claim that its right to due process was violated when respondents' counterclaim was granted due course, although no summons was served upon it. They claim that no provision in the Rules of Court requires service of summons upon a defendant in a counterclaim. Private respondents argue that when the petitioner filed its complaint before the trial court it voluntarily submitted itself to the jurisdiction of the court. As a consequence, the issuance of summons on it was no longer necessary. Private respondents say they served a copy of their answer with affirmative defenses and counterclaim on petitioner's former counsel, Nicanor G. Alvarez. While petitioner would have the Court believe that respondents served said copy upon Alvarez after he had withdrawn his appearance as counsel for the petitioner, private respondents assert that this contention is utterly baseless. Records disclose that the answer was received two (2) days before the former counsel for petitioner withdrew his appearance, according to private respondents. They maintain that the present petition is but a form of dilatory appeal, to set off petitioner's obligations to the respondents by running up more interest it could recover from them. Private respondents therefore claim damages against petitioner.[17]

To resolve the issues in this case, we must first determine the propriety of piercing the veil of corporate fiction.

Basic in corporation law is the principle that a corporation has a separate personality distinct from its stockholders and from other corporations to which it may be connected.[18] However, under the doctrine of piercing the veil of corporate entity, the corporation's separate juridical personality may be disregarded, for example, when the corporate identity is used to defeat public convenience, justify wrong, protect fraud, or defend crime. Also, where the corporation is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation, then its distinct personality may be ignored.[19] In these circumstances, the courts will treat the corporation as a mere aggrupation of persons and the liability will directly attach to them. The legal fiction of a separate corporate personality in those cited instances, for reasons of public policy and in the interest of justice, will be justifiably set aside.

In our view, however, given the facts and circumstances of this case, the doctrine of piercing the corporate veil has no relevant application here. Respondent court erred in permitting the trial court's resort to this doctrine. The rationale behind piercing a corporation's identity in a given case is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. However, in the case at bar, instead of holding certain individuals or persons responsible for an alleged corporate act, the situation has been reversed. It is the petitioner as a corporation which is being ordered to answer for the personal liability of certain individual directors, officers and incorporators concerned. Hence, it appears to us that the doctrine has been turned upside down because of its erroneous invocation. Note that according to private respondent Gregorio Manuel his services were solicited as counsel for members of the Francisco family to represent them in the intestate proceedings over Benita Trinidad's estate. These estate proceedings did not involve any business of petitioner.

Note also that he sought to collect legal fees not just from certain Francisco family members but also from petitioner corporation on the claims that its management had requested his services and he acceded thereto as an employee of petitioner from whom it could be deduced he was also receiving a salary. His move to recover unpaid legal fees through a counterclaim against Francisco Motors Corporation, to offset the unpaid balance of the purchase and repair of a jeep body could only result from an obvious misapprehension that petitioner's corporate assets could be used to answer for the liabilities of its individual directors, officers, and incorporators. Such result if permitted could easily prejudice the corporation, its own creditors, and even other stockholders; hence, clearly inequitous to petitioner.

Furthermore, considering the nature of the legal services involved, whatever obligation said incorporators, directors and officers of the corporation had incurred, it was incurred in their personal capacity. When directors and officers of a corporation are unable to compensate a party for a personal obligation, it is far-fetched to allege that the corporation is perpetuating fraud or promoting injustice, and be thereby held liable therefor by piercing its corporate veil. While there are no hard and fast rules on disregarding separate corporate identity, we must always be mindful of its function and purpose. A court should be careful in assessing the milieu where the doctrine of piercing the corporate veil may be applied. Otherwise an injustice, although unintended, may result from its erroneous application.

The personality of the corporation and those of its incorporators, directors and officers in their personal capacities ought to be kept separate in this case. The claim for legal fees against the concerned individual incorporators, officers and directors could not be properly directed against the corporation without violating basic principles governing corporations. Moreover, every action —including a counterclaim — must be prosecuted or defended in the name of the real party in interest.[20] It is plainly an error to lay the claim for legal fees of private respondent Gregorio Manuel at the door of petitioner (FMC) rather than individual members of the Francisco family.

However, with regard to the procedural issue raised by petitioner's allegation, that it needed to be summoned anew in order for the court to acquire jurisdiction over it, we agree with respondent court's view to the contrary. Section 4, Rule 11 of the Rules of Court provides that a counterclaim or cross-claim must be answered within ten (10) days from service. Nothing in the Rules of Court says that summons should first be served on the defendant before an answer to counterclaim must be made. The purpose of a summons is to enable the court to acquire jurisdiction over the person of the defendant. Although a counterclaim is treated as an entirely distinct and independent action, the defendant in the counterclaim, being the plaintiff in the original complaint, has already submitted to the jurisdiction of the court. Following Rule 9, Section 3 of the 1997 Rules of Civil Procedure,[21] if a defendant (herein petitioner) fails to answer the counterclaim, then upon motion of plaintiff, the defendant may be declared in default. This is what happened to petitioner in this case, and this Court finds no procedural error in the disposition of the appellate court on this particular issue. Moreover, as noted by the respondent court, when petitioner filed its motion seeking to set aside the order of default, in effect it submitted itself to the jurisdiction of the court. As well said by respondent court:

"Further on the lack of jurisdiction as raised by plaintiff-appellant[,] [t]he records show that upon its request, plaintiff-appellant was granted time to file a motion for reconsideration of the disputed decision. Plaintiff-appellant did file its motion for reconsideration to set aside the order of default and the judgment rendered on the counterclaim.

"Thus, even if the court acquired no jurisdiction over plaintiff-appellant on the counterclaim, as it vigorously insists, plaintiff-appellant is considered to have submitted to the court's jurisdiction when it filed the motion for reconsideration seeking relief from the court. (Soriano vs. Palacio, 12 SCRA 447). A party is estopped from assailing the jurisdiction of a court after voluntarily submitting himself to its jurisdiction. (Tejones vs. Gironella, 159 SCRA 100). Estoppel is a bar against any claims of lack of jurisdiction. (Balais vs. Balais, 159 SCRA 37)."[22]

WHEREFORE, the petition is hereby GRANTED and the assailed decision is hereby REVERSED insofar only as it held Francisco Motors Corporation liable for the legal obligation owing to private respondent Gregorio Manuel; but this decision is without prejudice to his filing the proper suit against the concerned members of the Francisco family in their personal capacity. No pronouncement as to costs.

SO ORDERED.

Bellosillo, (Chairman), Puno, Mendoza, and Buena, JJ., concur.

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[1] Dated April 15, 1991. Rollo, pp. 31 - 35. Reconsideration thereof was denied on July 1, 1991. Rollo, pp. 28-29.

[2] Civil Case No. 9542. Records, RTC, pp. 1-3.

[3] Rollo, p. 31.

[4] Id. at 9.

[5] Id. at 11.

[6] Supra, note 4.

[7] Supra note 5.

[8] Rollo, pp. 32-33.

[9] Id. at 32.

[10] Id. at 34.

[11] Ibid.

[12] Rollo, pp. 34-35.

[13] Id. at 12.

[14] Id. at 12 - 16.

[15] Id. at 18 - 21; See also Golden Ribbon Lumber Co., Inc. vs. Salvador S. Santos and Rafaela M. Santos, C.A. - G. R. No. 12935 November 15, 1955.

[16] Id. at 47 - 51.

[17] Id. at 52- 60.

[18] Concept Builders's Inc. vs. NLRC 257 SCRA 149, 157 (1996); See also Emilio Cano Enterprises, Inc. vs. CIR, 13 SCRA 290 (1965) and Yutivo Sons Hardware Co. vs. CTA, 1 SCRA 160 (1961).

[19] Indophil Textile Mill Workers Union vs. Calica, 205 SCRA 697, 704 (1992); See also Umali et al vs. C C.A, 189 SCRA 529,542 (1990).

[20] Section 2, Rule 3 of the RULES OF COURT; See also, De Leon vs. Court of Appeals, 277 SCRA 478, 486 (1997).

[21] In the Court of Appeals Decision, Section 3 of Rule 9 was still under Section 1 of Rule 18 of the Rules of Court.

[22] Rollo, p. 34.

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Antonio L. Buensuceso Jr.