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571 Phil. 461


[ G.R. No. 167334, March 07, 2008 ]

CATHOLIC VICARIATE, BAGUIO CITY, Petitioner, vs. HON. PATRICIA A. STO. TOMAS, Secretary of the Department of Labor & Employment, and GEORGE AGBUCAY, Respondents.



For consideration is a Petition for Review[1] filed by petitioner Catholic Vicariate of Baguio City, seeking the annulment of the

Decision[2] and Resolution[3] issued by the Court of Appeals in CA-G.R. SP No. 83518.

First, the antecedents.

Petitioner contracted Kunwha Luzon Construction (KUNWHA) to construct the retaining wall of the Baguio Cathedral. KUNWHA, in turn, subcontracted CEREBA Builders (CEREBA) to do the formworks of the church. The contract between KUNWHA and CEREBA lasted up to the completion of the project or on 8 September 2000.[4] KUNWHA failed to pay CEREBA. Consequently, the latter failed to pay its employees.

On 29 August 2000, respondent George Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA and petitioner before the DOLE-CAR Regional Office for nonpayment of wages, special and legal holiday premium pay. An inspection of the premises resulted in the discovery of violations of labor standards law, such as nonpayment of wages and holiday pay from 28 June 2000 to 5 September 2000, non-presentation of employment records, and others.[5] Petitioner, KUNWHA and CEREBA were given five (5) days from receipt of the notice of inspection results to rectify its violations. Despite the notice, the parties failed to comply. A hearing was set wherein CEREBA manifested its willingness to pay the affected employees on the condition that KUNWHA would pay its obligation to CEREBA. Petitioner meanwhile manifested that the retention fee due to KUNWHA was sufficient to pay the deficiencies due the affected employees.

On 12 March 2001, the DOLE-CAR Regional Director issued an Order[6] holding CEREBA, KUNWHA and petitioner jointly and severally liable to the 82 affected workers in the amount of P1,029,952.80 or P12,560.40 for each employee.[7] During the pendency of its motion for reconsideration, KUNWHA voluntarily settled the deficiencies due the 23 affected workers amounting to P84,544.00 as follows:
1. Edwin Balaoro

2. Jay Araneta
3. Renato Beado
4. Edgar Cortez
5. Cesar Cuenta
6. Redentor Espiritu
7. Abelardo Galvez
8. Ireneo Galvez
9. Jose Galvez
10. Roland Galvez
11. Rommel Galvez
12. Mamerto Nadela
13. Lito Nazareno
14. Orbel Nerida
15. Roy Padilla
16. Roy John Padilla
17. Randy Sibayan
18. Raymund Sibayan
19. Reynald Sibayan
20. Ronnie Villarino
21. Fernan Villarino
22. Felix Padilla
23. William Pitlongay
On 21 May 2001, the Regional Director dismissed the complaint by reason of the said settlement. He also advised the other employees to ventilate their claims in an appropriate forum considering that no employer-employee relationship exists between the parties. [9]

On appeal, the Secretary of Labor reversed the ruling of the Regional Director and held that pursuant to Articles 106 and 107 of the Labor Code, the liability of KUNWHA, CEREBA and the Catholic Vicariate is solidary notwithstanding the absence of an employer-employee relationship. The Secretary of Labor ruled, however, that there existed an employer-employee relationship between the parties since the records show that the subcontracting agreement was terminated only on 28 September 2000, almost a month after the complaint was filed on 29 August 2000. The settlement with respect to the 23 workers was declared unconscionable and the Order of the Regional Director dated 12 March 2001 was reinstated. The dispositive portion of the Order [10] dated 23 June 2003 reads:
WHEREFORE, premises considered, the Motion to Set Aside Judgment/Order, herein treated as an Appeal, filed by appellant George Agbucay is hereby GRANTED. The Order dated May 21, 2001 of the Regional Director is SET ASIDE and VACATED. The Order dated March 21, 2001 is REINSTATED with MODIFICATION, and CEREBA BUILDERS, KUNWHA LUZON CONSTRUCTION and the CATHOLIC VICARIATE are hereby ordered to pay jointly and severally, the eighty-two (82) affected workers the amount of ONE MILLION TWENTY-NINE THOUSAND NINE HUNDRED FIFTY-TWO & 80/100 (P1,029,952.80) Pesos. Any legitimate payments earlier made by respondents to the twenty-three (23) complainants may be deducted from their individual claims only upon proof of actual receipt. Let the entire records of this case be remanded to the Regional Office a quo for proper execution. [11]
Petitioner moved for Reconsideration[12] but it was denied on 19 January 2004.[13]

On 28 September 2004, the Court of Appeals affirmed the order of the Secretary of Labor with the modification that payments made in favor of the 23 workers amounting to P84,544.00 be deducted from whatever amount still due each of them.[14]

On appeal, petitioner raised three issues, namely: (1) whether the Secretary of Labor acquired jurisdiction over the appeal considering that this case falls within the exception stated in Article 128(b) of the Labor Code; (2) whether the quitclaims signed by affected employees are valid; and (3) whether the appeal interposed by petitioner inures to the benefit of the other affected employees.[15]

The appellate court held that petitioner was estopped from questioning the jurisdiction of the Secretary of Labor, it having attended the initial hearing and therein manifested that it had in its possession the retention fee of KUNWHA sufficient to answer for the deficiencies due the affected workers. The appellate court noted that it was only when the judgment imposed joint and several liability that petitioner began to question the jurisdiction of the Secretary of Labor. The appellate court further sustained the finding of the Secretary of Labor that the settlement is not legally acceptable as it defied public policy for being unconscionable. Moreover, the appellate court succinctly stated that parties who did not appeal may be benefited by the judgment of said court insofar as it is favorable and applicable to them. [16]

There is no cogent reason to disturb the assailed judgment.

Petitioner contends that the question of jurisdiction may be raised at any time and even on appeal. It alleges that its participation in the hearing before the Regional Director could not amount to estoppel because it did not have sufficient information at that time as to the factual basis of the presence or absence of jurisdiction by the Secretary of Labor or his authorized representative.[17]

In resolving this jurisdictional issue, the Secretary of Labor relied on the limitations set forth in Article 128(b)[18] of the Labor Code and ruled, thus:
It is worthy to note that as regards the power granted to Regional Director by Article 128 of the Labor Code, as amended, only two (2) limitations are set forth: first, where the employer contests the findings of the labor regulations officer, and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection, and second, where the employer-employee relationship no longer exists.

x x x

Both of the above-stated limitations are wanting in this case. Records show that, when this case was filed on August 29, 2000, complainants were still employed with the respondent CEREBA working for KUNWHA’s project with the Vicariate. There was no proof that the subcontracting agreement between KUNWHA LUZON CONSTRUCTION and CEREBA Builders was terminated as of July 2000. The letters showing the poor performance of CEREBA Builders cannot be considered as a notice of termination of the Subcontracting Agreement for the same do not state so.

x x x

Succinctly put, since no written notice was served to respondent CEREBA Builders terminating the Subcontracting Agreement, the employer-employee relationship between KUNWHA and complainants existed until the completion of the subcontracting agreement on September 18, 2000. Considering this, when the complainants filed this case on August 29, 2000, the Regional Director validly acquired jurisdiction over the case. And, jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is terminated.

x x x

It is also equally important to note that, during the initial hearing of this case at the Regional Office, the respondents failed to contest the findings of the Labor Employment and Enforcement Officer. The respondents failed to present employment records and any evidence to controvert the findings despite the reasonable period of time afforded them. It was only when respondent KUNWHA filed its Motion for Reconsideration from the Order dated March 12, 2001 of the Regional Director that it submitted documents which the Vicariate now alleged to be not verifiable in the summary nature of the labor inspection[19]
Moreover, the issue of jurisdiction is clearly intertwined with the existence of employer-employee relationship. It is undisputed that the existence of an employer-employee relationship is ultimately a question of fact.[20] Thus, it can be inferred that this petition also seeks a review of the factual findings of the Regional Director, as affirmed by the Secretary of Labor and the Court of Appeals. Such review is beyond the ambit of a petition for review on certiorari.

Assuming arguendo the absence of an employer-employee relationship between the parties, the Secretary of Labor, invoking Odin Security Agency v. De la Serna,[21] correctly declared that petitioner is now estopped from questioning the jurisdiction of the Regional Director when it actively participated in the proceedings held therein. In said case, petitioner also submitted to the jurisdiction of the Regional Director by taking part in the hearings before him and by submitting a position paper. Similarly, it was only when the order of the Regional Director was modified did petitioner question the former’s jurisdiction to hear and decide the case. This Court declares that petitioner is barred by estoppel from raising the issue of jurisdiction. [22]

Anent the issue on the validity of the quitclaims signed by 22 out of the 23 affected employees, petitioner avers that they were signed voluntarily and executed under the supervision of the Regional Director.

Not all quitclaims are per se invalid or against public policy. A quitclaim is said to be invalid and against public policy (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In such cases, the law will step in to annul the questionable transaction. [23] The second exception obtains in the case at bar. As succinctly put by the Secretary of Labor:
As to the claim that this Office failed to show why the Quitclaims and Releases were unconscionable, despite the fact that it was executed before the DOLE-CAR Regional Office, the same is totally misplaced. Clear from the record is that, except for the quitclaim signed by complainant Felix Padilla, the monetary considerations indicated in the 22 Quitclaims and Releases were way below the total claims of each complainants. The presence and assistance of the representatives of the DOLE-CAR Regional Office in the execution and consummation of the same is of no moment. This Office, pursuant to its administrative supervision and control over the Regional Offices and the power to review actions and decisions of her subordinates, can exercise corrective measures, where the circumstances warrant and to prevent injustice. [24]
Indeed, as ordered by the Regional Director, the 23 affected workers are entitled to receive P12,560.40 each or a total of P288,889.20 for unpaid wages and special and regular holiday premium pay.[25] KUNWHA however paid them only P84,544.00,[26] less than half of what they are entitled to as computed by the Regional Director. Therefore, this Court is not inclined to sustain the validity of the quitclaims although apparently they were signed voluntarily and in the presence of the Regional Director.

Finally, petitioner asserts that the Secretary of Labor erred in granting affirmative relief to those who did not appeal.[27] On the contrary, however, the Court of Appeals properly affirmed the monetary award of the Secretary of Labor to the other affected employees. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.[28] The doctrine in Maternity Children’s Hospital v. Secretary of Labor [29] is instructive. In said case, the award is extended to all employees of the establishment concerned, including those who did not sign the complaint. This Court explained, thus:

The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable over establishments, not over the individual members/employees, because what is sought to be achieved by its exercise is the observance of, and/or compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an award resulting from a violation of labor legislation by such establishment, the entire members/employees should benefit therefrom.[30]

WHEREFORE, finding no reversible error in the questioned Decision of the Court of Appeals, the instant petition for review is DENIED.


Carpio, (Acting Chairperson), Carpio Morales, Azcuna,[*] and Velasco, Jr., JJ., concur.

As replacement of Justice Leonardo A. Quisumbing who is on official leave per Administrative Circular No. 84-2007.

[1] Rollo, pp. 11-35.

[2] Id. at 38-48. Penned by Associate Justice Eugenio S. Labitoria, and concurred in by Associate Justices Rebecca De Guia-Salvador and Rosalinda Asuncion-Vicente.

[3] Id. at 50-51.

[4] Id. at 39. The Court of Appeals decision dated 28 September 2004 and the Order of the Secretary of Labor dated 23 June 2003 both indicated that the subcontracting agreement lasted until 8 September 2000. On the other hand, in the Order dated 19 January 2004, the completion of the subcontracting agreement was on 18 September 2000, as manifested by CEREBA.

[5] Id. at 53.

[6] Id. at 53-59.

[7] Id. at 59.

[8] Id. at 84.

[9] Id. at 85.

[10] Id. at 92-98.

[11] Id. at 98.

[12] DOLE records, pp. 181-192.

[13] CA rollo, pp. 38-44.

[14] Rollo, p. 47.

[15] CA rollo, p. 11.

[16] Rollo, pp. 46-47.

[17] Id. at 22.

[18] Art. 128. Visitorial and enforcement power

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

[19] Rollo, pp. 102-104.

[20] Manila Water Co., Inc. v. Pena, 478 Phil. 68, 77 (2004); Sonza v. ABS-CBN Broadcasting Corporation, G.R. No. 138051, 10 June 2004, 431 SCRA 583, 594; Fleischer Company, Inc. v. NLRC, 407 Phil. 391, 399 (2001).

[21] G.R. No. 87439, 21 February 1990, 182 SCRA 472.

[22] Id. at 479.

[23] Sarocam v. Interorient Maritime Ent. Inc., G.R. No. 167813, 27 June 2006, 493 SCRA 502, 515, citing Periquet v. NLRC, G.R. No. 91298, 22 June 1990, 186 SCRA 724; Maricalum Mining Corporation v. Brion, G.R. Nos. 157696-97, 9 February 2006, 482 SCRA 87, 104.

[24] Rollo, p. 105.

[25] Id. at 57.

[26] Supra note 5.

[27] Rollo, p. 32.

[28] St. Michael’s Institute v. Santos, 422 Phil. 723, 735 (2001).

[29] G.R. No. 78909, 30 June 1989, 174 SCRA 632.

[30] Id. at 649-650.

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