ALBERT TENG, doing business G.R. No.

169704
under the firm name ALBERT WHEREFORE, premises considered,
TENG FISH TRADING, and Present: judgment is hereby rendered dismissing the
EMILIA TENG-CHUA, instant complaint for lack of merit.
Petitioners, CARPIO MORALES, J., Chairperson,
BRION, It follows also, that all other claims are
BERSAMIN, likewise dismissed for lack of merit.[10]
VILLARAMA, JR., and The respondent workers received the VAs decision on June
- versus - SERENO, JJ. 12, 2003.[11] They filed a motion for reconsideration, which was
denied in an order dated June 27, 2003 and which they received
on July 8, 2003.[12] The VA reasoned out that Section 6, Rule VII of the
Promulgated: 1989 Procedural Guidelines in the Conduct of Voluntary Arbitration
ALFREDO S. PAHAGAC, EDDIE Proceedings (1989 Procedural Guidelines) does not provide the
D. NIPA, ORLANDO P. LAYESE, remedy of a motion for reconsideration to the party adversely affected
HERNAN Y. BADILLES and November 17, 2010 by the VAs order or decision.[13] The order states:
ROGER S. PAHAGAC,
Respondents. Under Executive Order No. 126, as
x---------------------------------------------------------------------------------------- x amended by Executive Order No. 251, and in order
DECISION to implement Article 260-262 (b) of the Labor
Code, as amended by R.A. No. 6715, otherwise
BRION, J.: known as the Procedural Guidelines in the
Conduct of Voluntary Arbitration Proceedings,
inter alia:
Before this Court is a Petition for Review on Certiorari[1] filed
by petitioners Albert Teng Fish Trading, its owner Albert Teng, and its An award or the
manager Emilia Teng-Chua, to reverse and set aside the September Decision of the Voluntary
21, 2004 decision[2] and the September 1, 2005 resolution[3] of the Arbitrators becomes final and
Court of Appeals (CA) in CA-G.R. SP No. 78783. The CA reversed the executory after ten (10)
decision of the Voluntary Arbitrator (VA), National Conciliation and calendar days from receipt of
Mediation Board (NCMB), Region IX, Zamboanga City, and declared copies of the award or
that there exists an employer-employee relationship between Teng decision by the parties (Sec. 6,
and respondents Hernan Badilles, Orlando Layese, Eddie Nipa, Alfredo Rule VII).
Pahagac, and Roger Pahagac (collectively, respondent workers). It also
found that Teng illegally dismissed the respondent workers from their Moreover, the above-mentioned
employment. guidelines do not provide the remedy of a motion
for reconsideration to the party adversely affected
BACKGROUND FACTS by the order or decision of voluntary arbitrators.[14]

Albert Teng Fish Trading is engaged in deep sea fishing and, On July 21, 2003, the respondent-workers elevated the case
for this purpose, owns boats (basnig), equipment, and other fishing to the CA. In its decision of September 21, 2004, the CA reversed the
paraphernalia. As owner of the business, Teng claims that he VAs decision after finding sufficient evidence showing the existence of
customarily enters into joint venture agreements with master employer-employee relationship:
fishermen (maestros) who are skilled and are experts in deep sea
fishing; they take charge of the management of each fishing venture, WHEREFORE, premises considered, the
including the hiring of the members of its complement. He avers that petition is granted. The questioned decision of the
the maestros hired the respondent workers as checkers to determine Voluntary Arbitrator dated May 30, 2003 is
the volume of the fish caught in every fishing voyage.[4] hereby REVERSED and SET ASIDE by ordering
private respondent to pay separation pay with
On February 20, 2003, the respondent workers filed a backwages and other monetary benefits. For this
complaint for illegal dismissal against Albert Teng Fish Trading, Teng, purpose, the case is REMANDED to the Voluntary
and Chua before the NCMB, Region Branch No. IX, Zamboanga City. Arbitrator for the computation of petitioners
backwages and other monetary benefits. No
The respondent workers alleged that Teng hired them, pronouncement as to costs.
without any written employment contract, to serve as his eyes and
ears aboard the fishing boats; to classify the fish caught by baera; to SO ORDERED.[15]
report to Teng via radio communication the classes and volume of
each catch; to receive instructions from him as to where and when to Teng moved to reconsider the CAs decision, but the CA
unload the catch; to prepare the list of the provisions requested by denied the motion in its resolution of September 1, 2005.[16] He,
the maestro and the mechanic for his approval; and, to procure the thereafter, filed the present Petition for Review on Certiorari under
items as approved by him.[5] They also claimed that they received Rule 45 of the Rules of Court, claiming that:
regular monthly salaries, 13th month pay, Christmas bonus, and
incentives in the form of shares in the total volume of fish caught. a. the VAs decision is not subject to a motion for
reconsideration; and
They asserted that sometime in September 2002, Teng b. no employer-employee relationship existed
expressed his doubts on the correct volume of fish caught in every between Teng and the respondent workers.
fishing voyage.[6] In December 2002, Teng informed them that their Teng contends that the VAs decision is not subject to a
services had been terminated.[7] motion for reconsideration in the absence of any specific provision
allowing this recourse under Article 262-A of the Labor Code.[17] He
In his defense, Teng maintained that he did not have any hand in hiring cites the 1989 Procedural Guidelines, which, as the VA declared, does
the respondent workers; the maestros, rather than he, invited them to not provide the remedy of a motion for reconsideration.[18] He claims
join the venture. According to him, his role was clearly limited to the that after the lapse of 10 days from its receipt, the VAs decision
provision of the necessary capital, tools and equipment, consisting becomes final and executory unless an appeal is taken.[19] He argues
of basnig, gears, fuel, food, and other supplies.[8] that when the respondent workers received the VAs decision on June
12, 2003,[20] they had 10 days, or until June 22, 2003, to file an appeal.
The VA rendered a decision[9] in Tengs favor and declared that no As the respondent workers opted instead to move for reconsideration,
employer-employee relationship existed between Teng and the the 10-day period to appeal continued to run; thus, the VAs decision
respondent workers. The dispositive portion of the VAs May 30, had already become final and executory by the time they assailed it
2003 decision reads: before the CA on July 21, 2003.[21]
 consequently rule that the respondent workers seasonably filed a
Teng further insists that the VA was correct in ruling that there was no motion for reconsideration of the VAs judgment, and the VA erred in
employer-employee relationship between him and the respondent denying the motion because no motion for reconsideration is allowed.
workers. What he entered into was a joint venture agreement with
the maestros, where Tengs role was only to provide basnig, gears, The Court notes that despite our interpretation that Article 262-A does
nets, and other tools and equipment for every fishing voyage.[22] not preclude the filing of a motion for reconsideration of the VAs
THE COURTS RULING decision, a contrary provision can be found in Section 7, Rule XIX of the
Department of Labors Department Order (DO) No. 40, series of
We resolve to deny the petition for lack of merit. 2003:[32]

Article 262 Rule XIX

A of the Section 7. Finality of
Labor Code Award/Decision. The decision, order, resolution or
does not award of the voluntary arbitrator or panel of
prohibit the voluntary arbitrators shall be final and executory
filing of a after ten (10) calendar days from receipt of the
motion for copy of the award or decision by the parties and it
reconsiderat shall not be subject of a motion for
ion. reconsideration.

Presumably on the basis of DO 40-03, the 1989 Procedural Guidelines

On March 21, 1989, Republic Act No. 6715[23] took effect, was revised in 2005 (2005 Procedural Guidelines),[33] whose pertinent
amending, among others, Article 263 of the Labor Code which was provisions provide that:
originally worded as: Rule VII
DECISIONS
Art. 263 x x x Voluntary arbitration
awards or decisions shall be final, unappealable, Section 6. Finality of Decisions. The decision of the
and executory. Voluntary Arbitrator shall be final and executory
after ten (10) calendar days from receipt of the
As amended, Article 263 is now Article 262-A, which states: copy of the decision by the parties.

Art. 262-A. x x x [T]he award or decision Section 7. Motions for Reconsideration. The
x x x shall contain the facts and the law on which it decision of the Voluntary Arbitrator is not subject
is based. It shall be final and executory after ten of a Motion for Reconsideration.
(10) calendar days from receipt of the copy of the
award or decision by the parties. We are surprised that neither the VA nor Teng cited DO 40-
03 and the 2005 Procedural Guidelines as authorities for their cause,
Notably, Article 262-A deleted the word unappealable from considering that these were the governing rules while the case was
Article 263. The deliberate selection of the language in the pending and these directly and fully supported their theory. Had they
amendatory act differing from that of the original act indicates that the done so, their reliance on the provisions would have nevertheless
legislature intended a change in the law, and the court should been unavailing for reasons we shall now discuss.
endeavor to give effect to such intent.[24] We recognized the intent of
the change of phraseology in Imperial Textile Mills, Inc. v. In the exercise of its power to promulgate implementing
Sampang,[25] where we ruled that: rules and regulations, an implementing agency, such as the
Department of Labor,[34] is restricted from going beyond the terms of
It is true that the present rule [Art. 262- the law it seeks to implement; it should neither modify nor improve
A] makes the voluntary arbitration award final and the law. The agency formulating the rules and guidelines cannot
executory after ten calendar days from receipt of exceed the statutory authority granted to it by the legislature.[35]
the copy of the award or decision by the
parties. Presumably, the decision may still be By allowing a 10-day period, the obvious intent of Congress
reconsidered by the Voluntary Arbitrator on the in amending Article 263 to Article 262-A is to provide an opportunity
basis of a motion for reconsideration duly filed for the party adversely affected by the VAs decision to seek
during that period.[26] recourse via a motion for reconsideration or a petition for review
In Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO- under Rule 43 of the Rules of Court filed with the CA. Indeed, a motion
Balais v. Coca-Cola Bottlers Philippines, Inc.,[27] we likewise ruled that for reconsideration is the more appropriate remedy in line with the
the VAs decision may still be reconsidered on the basis of a motion for doctrine of exhaustion of administrative remedies. For this reason, an
reconsideration seasonably filed within 10 days from receipt appeal from administrative agencies to the CA via Rule 43 of the Rules
thereof.[28] The seasonable filing of a motion for reconsideration is a of Court requires exhaustion of available remedies[36] as a condition
mandatory requirement to forestall the finality of such decision.[29] We precedent to a petition under that Rule.
further cited the 1989 Procedural Guidelines which implemented
Article 262-A, viz:[30] The requirement that administrative remedies be exhausted
is based on the doctrine that in providing for a remedy before an
[U]nder Section 6, Rule VII of the same administrative agency, every opportunity must be given to the agency
guidelines implementing Article 262-A of the to resolve the matter and to exhaust all opportunities for a resolution
Labor Code, this Decision, as a matter of course, under the given remedy before bringing an action in, or resorting to,
would become final and executory after ten (10) the courts of justice.[37] Where Congress has not clearly required
calendar days from receipt of copies of the exhaustion, sound judicial discretion governs,[38] guided by
decision by the parties x x x unless, in the congressional intent.[39]
meantime, a motion for reconsideration or a
petition for review to the Court of Appeals under By disallowing reconsideration of the VAs decision, Section
Rule 43 of the Rules of Court is filed within the 7, Rule XIX of DO 40-03 and Section 7 of the 2005 Procedural
same 10-day period. [31] Guidelines went directly against the legislative intent behind Article
262-A of the Labor Code. These rules deny the VA the chance to
These rulings fully establish that the absence of a categorical language correct himself[40] and compel the courts of justice to prematurely
in Article 262-A does not preclude the filing of a motion for intervene with the action of an administrative agency entrusted with
reconsideration of the VAs decision within the 10-day period. Tengs the adjudication of controversies coming under its special knowledge,
allegation that the VAs decision had become final and executory by the training and specific field of expertise. In this era of clogged court
time the respondent workers filed an appeal with the CA thus fails. We dockets, the need for specialized administrative agencies with the
special knowledge, experience and capability to hear and determine (i) The contractor or subcontractor does
promptly disputes on technical matters or intricate questions of facts, not have substantial capital or
subject to judicial review, is indispensable.[41] In Industrial Enterprises, investment which relates to the job,
Inc. v. Court of Appeals,[42] we ruled that relief must first be obtained work or service to be performed and the
in an administrative proceeding before a remedy will be supplied by employees recruited, supplied or placed
the courts even though the matter is within the proper jurisdiction of by such contractor or subcontractor are
a court.[43] performing activities which are directly
related to the main business of the
There exists an employer-employee principal; or
relationship between Teng and the (ii) The contractor does not exercise the
respondent workers. right to control over the performance of
the work of the contractual employee.
We agree with the CAs finding that sufficient evidence exists
indicating the existence of an employer-employee relationship In the present case, the maestros did not have any
between Teng and the respondent workers. substantial capital or investment. Teng admitted that he solely
provided the capital and equipment, while the maestrossupplied the
While Teng alleged that it was the maestros who hired the workers. The power of control over the respondent workers was
respondent workers, it was his company that issued to the respondent lodged not with the maestros but with Teng. As checkers, the
workers identification cards (IDs) bearing their names as employees respondent workers main tasks were to count and classify the fish
and Tengs signature as the employer. Generally, in a business caught and report them to Teng. They performed tasks that were
establishment, IDs are issued to identify the holder as a bona necessary and desirable in Tengs fishing business. Taken together,
fide employee of the issuing entity. these incidents confirm the existence of a labor-only contracting which
is prohibited in our jurisdiction, as it is considered to be the employers
For the 13 years that the respondent workers worked for attempt to evade obligations afforded by law to employees.
Teng, they received wages on a regular basis, in addition to their
shares in the fish caught.[44] The worksheet showed that the Accordingly, we hold that employer-employee ties exist
respondent workers received uniform amounts within a given year, between Teng and the respondent workers. A finding that
which amounts annually increased until the termination of their the maestros are labor-only contractors is equivalent to a finding that
employment in 2002.[45]Tengs claim that the amounts received by the an employer-employee relationship exists between Teng and the
respondent workers are mere commissions is incredulous, as it would respondent workers. As regular employees, the respondent workers
mean that the fish caught throughout the year is uniform and are entitled to all the benefits and rights appurtenant to regular
increases in number each year. employment.

More importantly, the element of control which we have The dismissal of an employee, which the employer must
ruled in a number of cases to be a strong indicator of the existence of validate, has a twofold requirement: one is substantive, the other is
an employer-employee relationship is present in this case. Teng not procedural.[47] Not only must the dismissal be for a just or an
only owned the tools and equipment, he directed how the respondent authorized cause, as provided by law; the rudimentary requirements
workers were to perform their job as checkers; they, in fact, acted as of due process the opportunity to be heard and to defend oneself must
Tengs eyes and ears in every fishing expedition. be observed as well.[48]The employer has the burden of proving that
the dismissal was for a just cause; failure to show this, as in the present
Teng cannot hide behind his argument that the respondent case, would necessarily mean that the dismissal was unjustified and,
workers were hired by the maestros. To consider the respondent therefore, illegal.[49]
workers as employees of the maestros would mean that Teng
committed impermissible labor-only contracting. As a policy, the Labor The respondent workers allegation that Teng summarily
Code prohibits labor-only contracting: dismissed them on suspicion that they were not reporting to him the
correct volume of the fish caught in each fishing voyage was never
ART. 106. Contractor or Subcontractor x x x The denied by Teng. Unsubstantiated suspicion is not a just cause to
Secretary of Labor and Employment may, by terminate ones employment under Article 282[50] of the Labor
appropriate regulations, restrict or prohibit the Code. To allow an employer to dismiss an employee based on mere
contracting-out of labor. allegations and generalities would place the employee at the mercy of
xxxx his employer, and would emasculate the right to security of
tenure.[51] For his failure to comply with the Labor Codes substantive
There is labor-only contracting where the person requirement on termination of employment, we declare that Teng
supplying workers to an employer does not have illegally dismissed the respondent workers.
substantial capital or investment in the form of
tools, equipment, machineries, work premises, WHEREFORE, we DENY the petition
among others, and the workers recruited and and AFFIRM the September 21, 2004 decision and the September 1,
placed by such persons are performing activities 2005 resolution of the Court of Appeals in CA-G.R. SP No. 78783. Costs
which are directly related to the principal business against the petitioners.
of such employer.In such cases, the person or
intermediary shall be considered merely as an SO ORDERED.
agent of the employer who shall be responsible to
the workers in the same manner and extent as if
the latter were directly employed by him.

Section 5 of the DO No. 18-02,[46] which implements Article 106 of the

Labor Code, provides:

Section 5. Prohibition against labor-only

contracting. Labor-only contracting is hereby
declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where
the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work
or service for a principal, and any of the following
elements are present: