J.A.B. Bulao & Associates

NATIONAL POWER CORPORATION VS. TERESITA DIATO-BERNAL (G.R. NO. 180979, 15 DECEMBER 2010, NACHURA, J.)        (EXPROPRIATION; JUST COMPENSATION) (BRIEF TITLE: NAPOCOR VS. BERNAL)

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DOCTRINES

DISTINCTION BETWEEN QUESTION OF LAW AND QUESTION OF FACT

In Santos v. Committee on Claims Settlement,^[1][20] the Court had occasion to delineate the distinction between a question of law and a question of fact, thus: A question of law exists when there is doubt or controversy on what the law is on a certain state of facts. There is a question of fact when the doubt or difference arises from the truth or the falsity of the allegations of facts.

The Court elucidated as follows:

A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation.^[2][21]

EXAMPLE OF HOW EVALUATION OF PRICE OF PROPERTY MADE BY COMMISSIONERS ARE DEEMED BASELESS

          In arriving at the P10,000.00 per sq m market value of the expropriated property, the commissioners utilized the following factors:

                        I. PROPERTY LOCATION

                                    The property subject of the appraisal is situated along Gen. Aguinaldo Highway, Brgy. Anabu, Municipality of Imus, Province of Cavite, consisting of 946 sq. m. more or less, identified as Lot 6075-B with Flat Terrain approximately 5 kms. Distance Southwest of Imus Town proper, about 500 to 600 m. from the entrance gate of Orchard Club and San Miguel Yamamura Corp. from Southeast around 1 km. [t]o 1.5 kms. From EMI (Yasaki), Makro, and Robinsons Department Store.

                        II. NEGHBORHOOD DESCRIPTION

                                    The neighborhood particularly in the immediate vicinity, is within a mixed residential and commercial area situated in the Southern Section of the Municipality of Imus which is transversed by Gen. Emilio Aguinaldo Highway w[h]ere several residential subdivisions and commercial establishments are located.

                                    Residential houses in the area are one to two storey in height constructed of concrete and wood materials belonging to families in the middle income bracket, while commercial buildings mostly located along Gen. Emilio Aguinaldo Highway.

                                    Some of the important landmarks and commercial establishments in the immediate vicinity are:

Newly constructed Robinsons Department Store

Makro

Caltex Gasoline station and Shell Gasoline station

Goldbomb Const. Corp.

EMI (Yasaki)

Pallas Athena Subd.

and various Commercial and Savings Banks

                                    Community [c]enters such as school, churches, public markets, shopping malls, banks and gasoline stations are easily accessible from the subject property.

                                    Convenience facility such as electricity, telephone service as well as pipe potable water supply system are all available along Gen. Aguinaldo Highway

                                    x x x x 

IV. VALUATION OF LAND MARKET DATA

This method of valuation involves the research and investigation of market and sales data of the properties comparable with the property under appraisal.

These other properties are compare[d] with the subject property as to location and physical characteristics. Adjustment of their selling prices [is] then made with respect to the said comparative elements as well as time compensate for the increase or decrease in value.

Based on our investigations and verifications of market sales data and price listings of the neighborhood where the property under appraisal is located indicates land value within the range of P10,000.00 to P15,000.00 per square meter for residential lots while commercial lots along Gen. E. Aguinaldo Highway are range[d] from P10,000.00 to P20,000.00 per square meters (sic).

With this data and making the proper adjustment with respect to the location, area, shape, accessibility, and the highest and best use of the subject property, we estimate the market value of the subject land at P10,000.00 per square meter, as of this date September 10, 1999.^[3][22]

          It is evident that the above conclusions are highly speculative and devoid of any actual and reliable basis. First, the market values of the subject property’s neighboring lots were mere estimates and unsupported by any corroborative documents, such as sworn declarations of realtors in the area concerned, tax declarations or zonal valuation from the Bureau of Internal Revenue for the contiguous residential dwellings and commercial establishments. The report also failed to elaborate on how and by how much the community centers and convenience facilities enhanced the value of respondent’s property.^[4][23] Finally, the market sales data and price listings alluded to in the report were not even appended thereto.

          As correctly invoked by NAPOCOR, a commissioners’ report of land prices which is not based on any documentary evidence is manifestly hearsay and should be disregarded by the court.^[5][24]

TRIAL COURT MUST NOT ADOPT FINDINGS OF COMMISSIONERS HOOK, LINE AND SINKER IN EXPROPRIATION PROCEEDINGS

          The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did not even bother to require the submission of the alleged “market sales data” and “price listings.” Further, the RTC overlooked the fact that the recommended just compensation was gauged as of September 10, 1999 or more than two years after the complaint was filed on January 8, 1997. It is settled that just compensation is to be ascertained as of the time of the taking, which usually coincides with the commencement of the expropriation proceedings. Where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint.^[6][25] Clearly, the recommended just compensation in the commissioners’ report is unacceptable.

WHAT IS JUST COMPENSATION?

          Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator.  The measure is not the taker’s gain, but the owner’s loss.  The word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.^[7][26] Indeed, the “just”-ness of the compensation can only be attained by using reliable and actual data as bases in fixing the value of the condemned property.

 The trial court should have been more circumspect in its evaluation of just compensation due the property owner, considering that eminent domain cases involve the expenditure of public funds.

DETERMINATION OF JUST COMPENSATION IS A JUDICIAL FUNCTION. NAPOCOR’S DETERMINATION IS NOT VALID.

As to the resolution of the PAC-Cavite advanced by NAPOCOR, which pegged the fair market value of the property at P3,500.00 per sq m, it can only serve as one of the factors in the judicial evaluation of just compensation, along with several other considerations.^[8][27] NAPOCOR cannot demand that the PAC-Cavite resolution be substituted for the report of court-appointed commissioners in consonance with the firm doctrine that the determination of just compensation is a judicial function.^[9][28]

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RESOLUTION

NACHURA, J.: 

          At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the reversal of the September 28, 2007 Decision^[10][1] and the December 17, 2007 Resolution^[11][2] of the Court of Appeals (CA).

The assailed issuances affirmed the January 14, 2000 Order^[12][3] of the Regional Trial Court (RTC), Branch 20, Imus, Cavite, which fixed the just compensation at P10,000.00 per square meter (sq m), in relation to the expropriation suit, entitled “National Power Corporation v. Teresita Diato-Bernal.”

The factual antecedents are undisputed.

          Petitioner National Power Corporation (NAPOCOR) is a government owned and controlled corporation created by Republic Act No. 6395,^[13][4] as amended, for the purpose of undertaking the development of hydroelectric power throughout the Philippines. To carry out the said purpose, NAPOCOR is authorized to exercise the power of eminent domain.^[14][5]

          Respondent Teresita Diato-Bernal (respondent) is the registered owner of a 946 sq m parcel of land situated along General Aguinaldo Highway, Imus, Cavite, covered by Transfer Certificate of Title No. T-384494.^[15][6]

          In order to complete the construction of structures and steel posts for NAPOCOR’s “Dasmariñas-Zapote 230 KV Transmission Line Project,” it had to acquire an easement of right of way over respondent’s property.^[16][7]

Thus, on January 8, 1997, NAPOCOR filed an expropriation suit against respondent, alleging, inter alia, that: the project is for public purpose; NAPOCOR negotiated with respondent for the price of the property, as prescribed by law, but the parties failed to reach an agreement; and NAPOCOR is willing to deposit the amount of Eight Hundred Fifty- Three Pesos and 72/100 (P853.72), representing the assessed value of the property for taxation purposes.^[17][8]

          Respondent moved for the action’s dismissal, arguing the impropriety of the intended expropriation, and claiming that the value of her property is Twenty Thousand Pesos (P20,000.00) per sq m for the front portion, and Eighteen Thousand Pesos (P18,000.00) per sq m for the rear portion, and that she will lose One Hundred Fifty Thousand Pesos (P150,000.00) per month by way of expected income if the property is expropriated.^[18][9]

          On September 25, 1998, the parties filed with the RTC a partial compromise agreement,^[19][10] which reads:

1.         That the parties, after earnest and diligent efforts, have reached an amicable settlement regarding the location and size of Pole Site No. DZ-70 to be constructed on the property of (respondent);

2.         That the parties have agreed that the said Pole Site No. DZ-70 shall be constructed or located on (respondent’s) Lot No. 6075-B covered by Transfer Certificate of Title No. T-384494 of the Registry of Deeds for Cavite, covering a total affected area of 29.25 square meters more or less as indicated in the Sketch hereto attached as Annex “A”;

3.         That the case shall[,] however, proceed to trial on its merits only with respect to the question of just compensation.

          The agreement was approved by the RTC in its Order dated September 25, 1998.^[20][11]

          With the first phase of the expropriation proceedings having been laid to rest by the partial compromise agreement, the RTC proceeded to determine the amount of just compensation. To assist in the evaluation of the fair market value of the subject property, the RTC appointed three (3) commissioners, viz.: (1) the Provincial Assessor of Cavite; (2) the Municipal Assessor of Imus, Cavite, upon recommendation of NAPOCOR; and (3) Soledad Zamora, respondent’s representative.^[21][12] The commissioners submitted their report to the RTC on September 14, 1999. In the main, they recommended that the just compensation due from NAPOCOR be pegged at P10,000.00 per sq m, based on the property’s fair market value.^[22][13]

NAPOCOR filed an Opposition^[23][14] to the Commissioner’s Valuation Report, asserting that it was not substantiated by any official documents or registered deeds of sale of the subject property’s neighboring lots. NAPOCOR invoked our ruling in Rep. of the Phil. v. Santos,^[24][15]  wherein we held that a commissioner’s report that is not based on any documentary evidence is hearsay and should be disregarded by the court. Lastly, NAPOCOR claimed that the just compensation for the expropriated property should be P3,500.00 per sq m, based on Resolution No. 08-95 dated October 23, 1995, enacted by the Provincial Appraisal Committee of Cavite (PAC-Cavite).

          On January 14, 2000, the RTC issued an Order adopting the recommendation of the commissioners, viz.:

          To the mind of the Court, the appraisal made by the Commissioners is just and reasonable. It is of judicial notice that land values in Cavite ha[ve] considerably increased. Such being the case, the just compensation is fixed at P10,000.00 per sq. meter.^[25][16]

Dissatisfied, NAPOCOR sought recourse with the CA, reiterating the arguments raised in its Opposition.

          On September 28, 2007, the CA rendered its Decision affirming the RTC’s judgment.^[26][17] Its motion for reconsideration^[27][18] having been denied,^[28][19] NAPOCOR interposed the present petition.

          NAPOCOR, through the Office of the Solicitor General, repleads its contentions before the courts a quo and adds that the CA failed to explain why the value of the subject property went up by almost 200% in a span of two (2) years – P3,500.00 per sq m in 1995 to P10,000.00 per sq m at the time of the filing of the expropriation complaint in 1997.

          For her part, respondent prays for the dismissal of the petition on the ground that it raises purely factual questions which are beyond the province of a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

          The petition is meritorious.

          We shall first address the procedural infirmity raised by respondent. 

In Santos v. Committee on Claims Settlement,^[29][20] the Court had occasion to delineate the distinction between a question of law and a question of fact, thus: A question of law exists when there is doubt or controversy on what the law is on a certain state of facts. There is a question of fact when the doubt or difference arises from the truth or the falsity of the allegations of facts.

The Court elucidated as follows:

A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation.^[30][21]

          In this case, it is clear that NAPOCOR raises a question of law, that is, whether or not the resolution of the PAC-Cavite should prevail over the valuation report of the court-appointed commissioners. The issue does not call for a recalibration or reevaluation of the evidence submitted by the parties, but rather the determination of whether the pertinent jurisprudence and laws cited by NAPOCOR in support of its argument are applicable to the instant case.

On the substantive issue, the Court finds that the CA and the RTC erred in relying on the unsubstantiated and insufficient findings contained in the commissioners’ report.

          In arriving at the P10,000.00 per sq m market value of the expropriated property, the commissioners utilized the following factors:

                        I. PROPERTY LOCATION

                                    The property subject of the appraisal is situated along Gen. Aguinaldo Highway, Brgy. Anabu, Municipality of Imus, Province of Cavite, consisting of 946 sq. m. more or less, identified as Lot 6075-B with Flat Terrain approximately 5 kms. Distance Southwest of Imus Town proper, about 500 to 600 m. from the entrance gate of Orchard Club and San Miguel Yamamura Corp. from Southeast around 1 km. [t]o 1.5 kms. From EMI (Yasaki), Makro, and Robinsons Department Store.

                        II. NEGHBORHOOD DESCRIPTION

                                    The neighborhood particularly in the immediate vicinity, is within a mixed residential and commercial area situated in the Southern Section of the Municipality of Imus which is transversed by Gen. Emilio Aguinaldo Highway w[h]ere several residential subdivisions and commercial establishments are located.

                                    Residential houses in the area are one to two storey in height constructed of concrete and wood materials belonging to families in the middle income bracket, while commercial buildings mostly located along Gen. Emilio Aguinaldo Highway.

                                    Some of the important landmarks and commercial establishments in the immediate vicinity are:

Newly constructed Robinsons Department Store

Makro

Caltex Gasoline station and Shell Gasoline station

Goldbomb Const. Corp.

EMI (Yasaki)

Pallas Athena Subd.

and various Commercial and Savings Banks

                                    Community [c]enters such as school, churches, public markets, shopping malls, banks and gasoline stations are easily accessible from the subject property.

                                    Convenience facility such as electricity, telephone service as well as pipe potable water supply system are all available along Gen. Aguinaldo Highway

                                    x x x x 

IV. VALUATION OF LAND MARKET DATA

This method of valuation involves the research and investigation of market and sales data of the properties comparable with the property under appraisal.

These other properties are compare[d] with the subject property as to location and physical characteristics. Adjustment of their selling prices [is] then made with respect to the said comparative elements as well as time compensate for the increase or decrease in value.

Based on our investigations and verifications of market sales data and price listings of the neighborhood where the property under appraisal is located indicates land value within the range of P10,000.00 to P15,000.00 per square meter for residential lots while commercial lots along Gen. E. Aguinaldo Highway are range[d] from P10,000.00 to P20,000.00 per square meters (sic).

With this data and making the proper adjustment with respect to the location, area, shape, accessibility, and the highest and best use of the subject property, we estimate the market value of the subject land at P10,000.00 per square meter, as of this date September 10, 1999.^[31][22]

          It is evident that the above conclusions are highly speculative and devoid of any actual and reliable basis. First, the market values of the subject property’s neighboring lots were mere estimates and unsupported by any corroborative documents, such as sworn declarations of realtors in the area concerned, tax declarations or zonal valuation from the Bureau of Internal Revenue for the contiguous residential dwellings and commercial establishments. The report also failed to elaborate on how and by how much the community centers and convenience facilities enhanced the value of respondent’s property.^[32][23] Finally, the market sales data and price listings alluded to in the report were not even appended thereto.

          As correctly invoked by NAPOCOR, a commissioners’ report of land prices which is not based on any documentary evidence is manifestly hearsay and should be disregarded by the court.^[33][24]

          The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did not even bother to require the submission of the alleged “market sales data” and “price listings.” Further, the RTC overlooked the fact that the recommended just compensation was gauged as of September 10, 1999 or more than two years after the complaint was filed on January 8, 1997. It is settled that just compensation is to be ascertained as of the time of the taking, which usually coincides with the commencement of the expropriation proceedings. Where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint.^[34][25] Clearly, the recommended just compensation in the commissioners’ report is unacceptable.

          Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator.  The measure is not the taker’s gain, but the owner’s loss.  The word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.^[35][26] Indeed, the “just”-ness of the compensation can only be attained by using reliable and actual data as bases in fixing the value of the condemned property.

 The trial court should have been more circumspect in its evaluation of just compensation due the property owner, considering that eminent domain cases involve the expenditure of public funds.

As to the resolution of the PAC-Cavite advanced by NAPOCOR, which pegged the fair market value of the property at P3,500.00 per sq m, it can only serve as one of the factors in the judicial evaluation of just compensation, along with several other considerations.^[36][27] NAPOCOR cannot demand that the PAC-Cavite resolution be substituted for the report of court-appointed commissioners in consonance with the firm doctrine that the determination of just compensation is a judicial function.^[37][28]

Hence, the legal basis for the determination of just compensation being insufficient, the ruling of the RTC and the affirming Decision and Resolution of the CA ought to be set aside.

WHEREFORE, the petition is GRANTED. The January 14, 2000 Order of the Regional Trial Court, Branch 120, Imus, Cavite, and the September 28, 2007 Decision and the December 17, 2007 Resolution of the Court of Appeals are hereby Set ASIDE. This case is remanded to the trial court for the proper determination of just compensation, in conformity with this Resolution. No costs. 

SO ORDERED.

                                      ANTONIO EDUARDO B. NACHURA

                                      Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

JOSE CATRAL MENDOZA

Associate Justice

A T T E S T A T I O N

          I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                             ANTONIO T. CARPIO

                                      Associate Justice

                                      Chairperson, Second Division

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                      RENATO C. CORONA

                                      Chief Justice

PEOPLE OF THE PHILIPPINES VS. ALEX LINGASA, JORGE BI-AY AND JOHN DOE  (G.R. NO. 192187, 13 DECEMBER 20101, MENDOZA, J.)

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DOCTRINES

WHAT OBSERVATIONS ARE MADE KNOWN TO THE TRIAL COURT SUCH THAT ASSESSMENT OF CREDIBILITY OF WITNESSES IS BEST LEFT TO THE TRIAL COURT?

It is a well-entrenched doctrine that the assessment of the credibility of witnesses and their testimonies is a matter best undertaken by the trial court because of its unique opportunity to observe the witnesses first hand and note their demeanor, conduct and attitude under grilling examination.^[1][8] The trial court has the singular opportunity to observe the witnesses “through the different indicators of truthfulness or falsehood, such as the angry flush of an insisted assertion or the sudden pallor of a discovered lie or the tremulous mutter of a reluctant answer or the forthright tone of a ready reply; or the furtive glance, the blush of conscious shame, the hesitation, the sincere or the flippant or sneering tone, the heat, the calmness, the yawn, the sign, the candor or lack of it, the scant or full realization of the solemnity of an oath, the carriage and mien.”^[2][9]

THE RULE IS THAT FINDINGS OF FACTS OF TRIAL COURT ARE HELD CONCLUSIVE. WHAT ARE THE EXCEPTIONS?

This rule admits of exceptions, however, such as when the trial court’s findings of facts and conclusions are not supported by the evidence on record, or when certain facts of substance and value likely to change the outcome of the case have been overlooked by the lower court, or when the assailed decision is based on a misapprehension of facts.^[3][10]

X X X X X X

Thus, in the absence of any of these exceptions warranting the reversal of the decisions of the courts below, the general rule applies.  In addition, the Court notes that the trial court’s findings have been affirmed by the appellate court which, therefore, makes said findings generally conclusive and binding upon this Court.

ACCUSED SAID HE IS ONLY AN ACCOMPLICE BECAUSE HIS BLOW AGAINST THE VICTIM WAS NOT FATAL. SC SAID THERE WAS STILL CONSPIRACY. WHY? BECAUSE HIS BLOW WAS WHAT CAUSED THE ACCUSED TO FALL DOWN AND ALLOWED THE REST TO HACK HIM.

Indeed, the accused is guilty as principal by direct participation.  By his own admission, he delivered the first blow on the unwary victim. He initiated the deadly assault by hacking the hapless victim on the nape, causing the latter to immediately lose his balance and fall to the ground. Right after his initial attack, his co-accused rushed towards the poor and helpless victim and stabbed him several times in the back until he died. As confirmed by the autopsy report of Dr. Lorna V. Transmontero, the Municipal Health Officer of Cauayan, Negros Occidental, the victim died of multiple stab wounds inflicted on several parts of his body.

Considering the above circumstances, the Court cannot hold the accused liable as a mere accomplice because his active and direct involvement in the brutal killing of the victim was too obvious.

XXXXXXXXXXXX

 At any rate, the records clearly prove that there was conspiracy in the commission of the crime. Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Where all the accused acted in concert at the time of the commission of the offense, and it was shown by such acts that they had the same purpose or common design and were united in its execution, conspiracy is sufficiently established.^[4][11]

In the case at bench, the initial hacking by the accused followed by the multiple stabbing by his co-accused proves that they acted in concert at the time of the brutal killing. The fact that each one of them carried a deadly bladed weapon shows that they acted pursuant to the singular purpose of killing the victim.  It is not important who delivered the fatal blow.  In conspiracy, it matters not who among the accused actually killed the victim.  The act of one is the act of all. Each of the accused is equally guilty of the crime committed.^[5][12] 

TRUE WITNESSES ARE NOT FLAWLESS

Truth-telling witnesses are not expected to give flawless testimonies, considering the lapse of time and the treachery of human memory.  The Court has stated time and again that minor inconsistencies in the narration of witnesses do not detract from their essential credibility as long as their testimonies on the whole are coherent and intrinsically believable.  Inaccuracies may in fact suggest that the witnesses are telling the truth and have not been rehearsed.^[6][13]  Instead, they may even serve to strengthen their credibility as they negate any suspicion that their testimonies have been fabricated or rehearsed.

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D E C I S I O N

MENDOZA, J.:

Challenged in this appeal is the July 16, 2009 Decision^[7][1] of the Court of Appeals (CA) which affirmed the March 27, 2003 Decision^[8][2] of the Regional Trial Court, Branch 61, Kabankalan City, Negros Occidental (RTC), finding accused Eliseo Bi-ay, Jr. y Sarintas alias “Gideon” guilty beyond reasonable doubt of the crime of murder. 

On March 31, 1997, an information for Murder was filed against accused Eliseo Bi-ay, Jr. (Eliseo) and his co-accused, Jorge Bi-ay and Alex Lingasa, which reads as follows:

That on or about the 26^th day of December, 1996, in the Municipality of Cauayan, Province of Negros Occidental, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, in company of their other co-accused, whose true name is still unknown and herein designated only as “JOHN DOE,” armed with a bolo, conspiring, confederating and mutually helping one another, with evident premeditation and treachery, with intent to kill, did then and there, willfully, unlawfully and feloniously attack, assault, and hack one RODRIGO CLARO, thereby inflicting multiple fatal hack wounds upon the body of the latter which caused his death.

CONTRARY TO LAW.^[9][3]

When arraigned on April 3, 2000, Eliseo pleaded not guilty to the charge. Trial proceeded but only with respect to him as his co-accused were then at-large.

The respective positions of the parties were succinctly recited in the subject decision of the CA as follows:

On December 26, 1996, at around 7:00 in the evening, the victim Rodrigo Claro, together with his son Baby Boy Claro, were in the house of the victim’s father, Francisco Claro, in Sitio, Barangay Caliling, Cauayan, Negros Occidental. While Rodrigo and Francisco were talking with each other, accused Jorge Bi-ay, Alex Lingasa, and appellant Eliseo Bi-ay, Jr. alias “Gideon” arrived.  Accused Jorge Bi-ay, being the eldest in the group, then approached Francisco near the side of the house and asked for coffee. Francisco readily accommodated his visitors by getting coffee and sugar from the store of his younger sister nearby his house, and boiled some water. When the coffee was ready, accused Jorged [sic] requested the victim Rodrigo to serve coffee to his two companions, accused Alex and appellant Eliseo, who were waiting outside, which Rodrigo acceded.

Rodrigo then went out of the house and while carrying the two (2) cups of coffee, he noticed that his 10 year-old son, Baby Boy Claro, was following him. He turned his back and told his son to stay behind. When he was about to proceed, appellant Eliseo who was ahead of him, suddenly hacked him on the nape which caused him to lose his balance and fall to the ground. Accused Alex followed suit and stabbed Rodrigo at the back by thrusting a bladed instrument. Accused Jorge also went towards Rodrigo and stabbed him.

Witnessing the vicious assault on his father, Baby Boy Claro ran and shouted to his grandfather for help who then went out from his house with a bolo. Within ten (10) meters away, Francisco saw appellant delivering hacking blows on his son who was then lying on the ground face up, while accused Jorge and Alex immediately withdrew and fled as Francisco nearly approached them. Thereafter, appellant also ran away after all of them took turns in hacking the victim.

By the time Francisco finally reached his bloodied son, the victim already succumbed to the multiple stab wounds he sustained which caused his untimely death.

After the incident, Dr. Lorna V. Transmontero, Municipal Health Officer of Cauayan, Negros Occidental conducted an autopsy and yielded the following post mortem findings:

1.        Hacked wound at the forehead mid portion 3 cm. in diameter.

2.       Hacked wound at the L side of the mouth 4 inches in diameter.

3.       Hacked wound at the R side of the lower portion of the ear 4 inches in diameter.

4.       Hacked wound at the L nipple upper portion 1 inch in diameter.

5.        Hacked wound at the L side of the hypochondrium 1 inch in diameter.

6.       Hacked wound at the R side of the R nipple upper portion 1 inch in diameter.

7.        Hacked wound at the posterior portion of the neck 2 inches in diameter.

8.   Hacked wound at the posterior portion of the R upper arm 2 inches in diameter.

9.    Hacked wound at the posterior portion of the R lower arm 2 inches in diameter.

10.  Hacked wound at the lower portion of the R leg 2 inches  in diameter.

11.   Hacked wound at the L upper leg 2 inches in diameter.

On the other hand, appellant Eliseo denies the accusation against him and interposed the defense of alibi. He claims that on December 26, 1996, at around 5:00 in the afternoon, he and Jerry Siblag were in Sitio Kalapisan, Barangay Inayawan, Cauayan, Negros Occidental, to rent a sound system from Uldarico Alipan to be used in celebrating the birth anniversary of his deceased grandmother. Together with Uldarico, they left the latter’s house and brought the sound system to his father’s house at Sitio Kantyang, about seven (7) kilometers away, and arrived at around 7:00 in the evening. He stayed at the house of his father the entire evening and never left the place.^[10][4]

On March 27, 2003, the RTC rendered a decision finding the accused guilty beyond reasonable doubt of murder, the dispositive portion of which reads:

WHEREFORE, the Court finds accused Eliseo Bi-ay, Jr. alias “Gideon” guilty beyond reasonable doubt of the crime of murder as charged qualified by treachery and hereby sentences him to a penalty of imprisonment of reclusion perpetua and to indemnify the heirs of Rodrigo Claro the amount of P50, 000.00 by reason of his death and to pay the costs.

It is ordered that said accused be immediately remitted to the National Penitentiary.

Let this case be placed in the archives to be revived as soon as accused Alex Lingasa is apprehended.

The case against accused Jorge Bi-ay who is already deceased is DISMISSED.

SO ORDERED.^[11][5]

          Aggrieved, Eliseo appealed the RTC Decision to the CA assigning this lone error:

THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY AS PRINCIPAL IN THE COMMISSION OF THE CRIME CHARGED WHEN HE IS ONLY LIABLE AS AN ACCOMPLICE. 

The CA noted that Eliseo raised the defense of denial and alibi during the trial of the case at the RTC but, on appeal, he argued that he could only be liable as an accomplice, and not as a principal.  In his Brief,^[12][6] Eliseo assailed  the RTC for finding him guilty as principal by direct participation in the commission of the crime of murder against the victim.  He claimed that the prosecution failed to show clear proof that he conspired with his co-accused in the killing of the victim. His alleged cooperation in the assault on the victim was not indispensable, thus, he could only be held liable as an accomplice. Moreover, the credibility of the prosecution witnesses was doubtful because of the glaring inconsistencies and lapses in their narration of their version of the incident.

On the other hand, the prosecution counters that the role of the accused as principal by direct participation in the execution of the crime was clearly established. Moreover, the questioned discrepancies and inconsistencies in the prosecution witnesses’ testimonies are minor and trivial.

            On July 16, 2009, the CA rendered a decision affirming with modification the RTC Decision, the dispositive portion of which reads:

WHEREFORE, premises considered the assailed Decision of the Regional Trial Court, 6^th Judicial Region, Branch 61, Kabankalan City, Negros Occidental, in Criminal Case No. 97-1893, finding accused-appellant Eliseo-Biay, Jr. y Sarintas alias “Gideon,” guilty beyond reasonable doubt of Murder, is hereby AFFIRMED with MODIFICATION. Appellant is hereby directed to pay the heirs of Rodrigo Claro the amounts of P50,000.00 as moral damages, P25,000.00 as exemplary damages, and P25,000.00 as temperate damages in addition to the P50,000.00 as civil indemnity awarded by the trial court.

No costs.

SO ORDERED.^[13][7]

          Hence, this petition raising this lone

ISSUE

WHETHER OR NOT THE ACCUSED-APPELLANT ELISEO-BI-AY, JR. y SARINTAS alias “GIDEON” IS GUILTY BEYOND REASONABLE DOUBT OF MURDER.

The accused argues that the facts established by the prosecution failed to show the existence of conspiracy in the killing of the victim. It was rather proven that he did not have any direct participation in the slaying because his initial hacking of the victim did not mortally wound him. The victim died after he was fatally stabbed in the back by his co-accused. Hence, he can only be liable as an accomplice because his participation was not indispensable compared with those of his co-accused.

Moreover, the accused claims that Francisco Claro (Francisco), testified on direct examination that he saw all the accused hacking his son. On cross-examination, however, his testimony was to the effect that he saw the other assailants fleeing away from the scene of the crime and the accused was the only one holding a weapon and stabbing the victim.

The Court finds no merit in the appeal.

It is a well-entrenched doctrine that the assessment of the credibility of witnesses and their testimonies is a matter best undertaken by the trial court because of its unique opportunity to observe the witnesses first hand and note their demeanor, conduct and attitude under grilling examination.^[14][8] The trial court has the singular opportunity to observe the witnesses “through the different indicators of truthfulness or falsehood, such as the angry flush of an insisted assertion or the sudden pallor of a discovered lie or the tremulous mutter of a reluctant answer or the forthright tone of a ready reply; or the furtive glance, the blush of conscious shame, the hesitation, the sincere or the flippant or sneering tone, the heat, the calmness, the yawn, the sign, the candor or lack of it, the scant or full realization of the solemnity of an oath, the carriage and mien.”^[15][9]

This rule admits of exceptions, however, such as when the trial court’s findings of facts and conclusions are not supported by the evidence on record, or when certain facts of substance and value likely to change the outcome of the case have been overlooked by the lower court, or when the assailed decision is based on a misapprehension of facts.^[16][10]

In the case at bench, the Court has not come across any misapprehension of facts. The prosecution witnesses, Francisco and Baby Boy Claro (Baby Boy), saw with their own eyes the brutal killing of the victim.  The Court finds no indication that either Francisco or Baby Boy was lying.

Thus, in the absence of any of these exceptions warranting the reversal of the decisions of the courts below, the general rule applies.  In addition, the Court notes that the trial court’s findings have been affirmed by the appellate court which, therefore, makes said findings generally conclusive and binding upon this Court.

Strangely, the accused interposed inconsistent defenses, as noted by the CA.  In the RTC, he claimed denial and alibi.  On appeal, he put up the defense that his participation in the murder was merely that of an accomplice instead of that of a principal by direct participation. Clearly, his change of defense strategy rendered his defense impotent.

Indeed, the accused is guilty as principal by direct participation.  By his own admission, he delivered the first blow on the unwary victim. He initiated the deadly assault by hacking the hapless victim on the nape, causing the latter to immediately lose his balance and fall to the ground. Right after his initial attack, his co-accused rushed towards the poor and helpless victim and stabbed him several times in the back until he died. As confirmed by the autopsy report of Dr. Lorna V. Transmontero, the Municipal Health Officer of Cauayan, Negros Occidental, the victim died of multiple stab wounds inflicted on several parts of his body.

Considering the above circumstances, the Court cannot hold the accused liable as a mere accomplice because his active and direct involvement in the brutal killing of the victim was too obvious.

For said reason, it is not even important to find out if conspiracy attended the commission of the crime. The conviction of the accused was not because of any conspiracy. He was convicted because he was positively identified by the eyewitnesses, Francisco and Baby Boy, as one of the assailants who actively and directly participated in the killing of Rodrigo Claro.

 At any rate, the records clearly prove that there was conspiracy in the commission of the crime. Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and decide to commit it. Where all the accused acted in concert at the time of the commission of the offense, and it was shown by such acts that they had the same purpose or common design and were united in its execution, conspiracy is sufficiently established.^[17][11]

In the case at bench, the initial hacking by the accused followed by the multiple stabbing by his co-accused proves that they acted in concert at the time of the brutal killing. The fact that each one of them carried a deadly bladed weapon shows that they acted pursuant to the singular purpose of killing the victim.  It is not important who delivered the fatal blow.  In conspiracy, it matters not who among the accused actually killed the victim.  The act of one is the act of all. Each of the accused is equally guilty of the crime committed.^[18][12] 

On the alleged inconsistency or discrepancy in the testimony of Francisco, the Court finds none.  The alleged inconsistency is more apparent than real.  As pointed out by the CA, what he meant was that while he was still approaching them, he witnessed the accused ganging up on his son.  When he was already there, he saw the accused continuously stabbing him while his companions were running away.  Thus the Court considers innocuous whatever discrepancies there were in the testimony of Francisco.

Truth-telling witnesses are not expected to give flawless testimonies, considering the lapse of time and the treachery of human memory.  The Court has stated time and again that minor inconsistencies in the narration of witnesses do not detract from their essential credibility as long as their testimonies on the whole are coherent and intrinsically believable.  Inaccuracies may in fact suggest that the witnesses are telling the truth and have not been rehearsed.^[19][13]  Instead, they may even serve to strengthen their credibility as they negate any suspicion that their testimonies have been fabricated or rehearsed.

WHEREFORE, the July 16, 2009 Decision of the Court of Appeals is AFFIRMED.

SO ORDERED. 

           JOSE CATRAL MENDOZA

                                                                                          Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

ANTONIO EDUARDO B. NACHURA     DIOSDADO M. PERALTA

               Associate Justice                                    Associate Justice

ROBERTO A. ABAD

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                   ANTONIO T. CARPIO

                          Associate Justice

                                                                 Chairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                      RENATO C. CORONA

                                                                               Chief Justice

EMMANUEL BABAS ET AL VS. LORENZO SHIPPING CORPORATION (G.R. NO. 86091, 15 DECEMBER 2010, NACHURA J.)

x————————————————————-x

DOCTRINES

IN A PETITION, THOSE WHO DO NOT SIGN THE VERIFICATION AND CERTIFICATION ON NON-FORUM SHOPPING HAVE NO LEGAL STANDING. THE PETITION AS REGARDS THEM WILL BE DISMISSED OUTRIGHT.

Before resolving the petition, we note that only seven (7) of the nine petitioners signed the Verification and Certification.^[1][14]  Petitioners Maximo Soriano, Jr. (Soriano) and Felixberto Anajao (Anajao) did not sign the Verification and Certification, because they could no longer be located by their co-petitioners.^[2][15]

In Toyota Motor Phils. Corp. Workers Association (TMPCWA), et al. v. National Labor Relations Commission,^[3][16] citing Loquias v. Office of the Ombudsman,^[4][17] we stated that the petition satisfies the formal requirements only with regard to the petitioner who signed the petition, but not his co-petitioner who did not sign nor authorize the other petitioner to sign it on his behalf.  Thus, the petition can be given due course only as to the parties who signed it. The other petitioners who did not sign the verification and certificate against forum shopping cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to the non-conforming petitioners.

Thus, we dismiss the petition insofar as petitioners Soriano and Anajao are concerned.

THE CHARACTER OF THE BUSINESS, I.E., WHETHER AS LABOR-ONLY CONTRACTOR OR AS JOB CONTRACTOR, SHOULD BE MEASURED IN TERMS OF, AND DETERMINED BY, THE CRITERIA SET BY STATUTE. THE PARTIES CANNOT DICTATE BY THE MERE EXPEDIENCE OF A UNILATERAL DECLARATION IN A CONTRACT THE CHARACTER OF THEIR BUSINESS.

Petitioners vigorously insist that they were employees of LSC; and that BMSI is not an independent contractor, but a labor-only contractor.  LSC, on the other hand, maintains that BMSI is an independent contractor, with adequate capital and investment.  LSC capitalizes on the ratiocination made by the CA. 

 In declaring BMSI as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and investment. 

De Los Santos v. NLRC^[5][18] instructed us that the character of the business, i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business. 

In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,^[6][19] this Court explained:

Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so.  The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCO’s business, that is, whether as labor-only contractor, or job contractor. AMPCO’s character should be measured in terms of, and determined by, the criteria set by statute. 

Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. 

WHAT IS  LABOR-ONLY CONTRACTING?

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal.  In labor-only contracting, the following elements are present:  (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility;  and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.^[7][20]

WHAT IS PERMISSIBLE JOB CONTRACTING OR SUBCONTRACTING?

On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. ^[8][21]

A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof;

(b) The contractor has substantial capital or investment; and

(c) The agreement between the principal and the contractor or subcontractor assures the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.^[9][22]

WHY BMSI IS ENGAGED IN LABOR-ONLY CONTRACTING? THIS IS AN EXAMPLE OF LABOR-ONLY CONTRACTING FIRM.

Given the above standards, we sustain the petitioners’ contention that BMSI is engaged in labor-only contracting.

First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners’ working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that petitioners were hired by BMSI.

Second, LSC was unable to present proof that BMSI had substantial capital.  The record before us is bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render.  What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC. 

In Mandaue Galleon Trade, Inc. v. Andales,^[10][23] we held:

The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.

          Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSC’s business. Logically, when petitioners were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

BUT BMSI HAS A CERTIFICATE OF REGISTRATION WITH THE DOLE AS AN INDEPENDENT CONTRACTOR. SC RULED THIS IS NOT CONCLUSIVE.  IT ONLY PREVENTS THE LEGAL PRESUMPTION OF BEING A MERE LABOR-ONLY CONTRACTOR FROM ARISING.

The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor.  In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,^[11][24] we held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.^[12][25] 

THE WORKERS OF A LABOR-ONLY CONTRACTOR BECOME REGULAR EMPLOYEES OF THE COMPANY WHERE THEY WORK.

Indubitably, BMSI can only be classified as a labor-only contractor.   The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular employees of the latter.^[13][26]  Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process.

Petitioners lost their employment when LSC terminated its Agreement with BMSI.  However, the termination of LSC’s Agreement with BMSI cannot be considered a just or an  authorized cause for petitioners’ dismissal.  In Almeda v. Asahi Glass Philippines. Inc. v. Asahi Glass Philippines, Inc.,^[14][27] this Court declared:

The sole reason given for the dismissal of petitioners by SSASI was the termination of its service contract with respondent. But since SSASI was a labor-only contractor, and petitioners were to be deemed the employees of respondent, then the said reason would not constitute a just or authorized cause for petitioners’ dismissal. It would then appear that petitioners were summarily dismissed based on the aforecited reason, without compliance with the procedural due process for notice and hearing.

Herein petitioners, having been unjustly dismissed from work, are entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances, and to other benefits or their monetary equivalents computed from the time compensation was withheld up to the time of actual reinstatement.  Their earnings elsewhere during the periods of their illegal dismissal shall not be deducted therefrom.

x————————————————————-x

DECISION

NACHURA, J.: 

          Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, and Felixberto Anajao appeal by certiorari under Rule 45 of the Rules of Court the October 10, 2008 Decision^[1][1] of the Court of Appeals (CA) in CA-G.R. SP. No. 103804, and the January 21, 2009 Resolution,^[2][2] denying its reconsideration.

          Respondent Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry; it owns several equipment necessary for its business. On September 29, 1997, LSC entered into a General Equipment Maintenance Repair and Management Services Agreement^[3][3] (Agreement) with Best Manpower Services, Inc. (BMSI).  Under the Agreement, BMSI undertook to provide maintenance and repair services to LSC’s container vans, heavy equipment, trailer chassis, and generator sets.  BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels.

          Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI.^[4][4]  The period of lease was coterminous with the Agreement. 

         BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics.    Six years later, or on May 1, 2003, LSC entered into another contract with BMSI, this time, a service contract.^[5][5] 

In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI.  On October 1, 2003, LSC terminated the Agreement, effective October 31, 2003.  Consequently, petitioners lost their employment.

BMSI asserted that it is an independent contractor.  It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job.  BMSI was willing to reassign petitioners who were willing to accept reassignment.  BMSI denied petitioners’ claim for underpayment of wages and non-payment of 13^th month pay and other benefits.

          LSC, on the other hand, averred that petitioners were employees of BMSI and were assigned to LSC by virtue of the Agreement.  BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and BMSI constituted legitimate job contracting.  Thus, petitioners were employees of BMSI and not of LSC.

          After due proceedings, the LA rendered a decision^[6][6] dismissing petitioners’ complaint.  The LA found that petitioners were employees of BMSI.  It was BMSI which hired petitioners, paid their wages, and exercised control over them. 

          Petitioners appealed to the National Labor Relations Commission (NLRC), arguing that BMSI was engaged in labor-only contracting.  They insisted that their employer was LSC.

          On January 16, 2008, the NLRC promulgated its decision.^[7][7]  Reversing the LA, the NLRC held:

We find from the records of this case that respondent BMSI is not engaged in legitimate job contracting.

            First, respondent BMSI has no equipment, no office premises, no capital and no investments as shown in the Agreement itself which states:

x x x x

VI.    RENTAL OF EQUIPMENT

         [6.01.] That the CLIENT has several forklifts and truck tractor, and has offered to the CONTRACTOR the use of the same by way of lease, the monthly rental of which shall be deducted from the total monthly billings of the CONTRACTOR for the services covered by this Agreement.

         6.02.    That the CONTRACTOR has agreed to rent the CLIENT’s forklifts and truck tractor.

  6.03.    The parties herein have agreed to execute a Contract of Lease for the forklifts and truck tractor that will be rented by the CONTRACTOR. (p. 389, Records) 

True enough, parties signed a Lease Contract (p. 392, Records) wherein respondent BMSI leased several excess equipment of LSC to enable it to discharge its obligation under the Agreement.  So without the equipment which respondent BMSI leased from respondent LSC, the former would not be able to perform its commitments in the Agreement.

            In Phil. Fuji Xerox Corp. v. NLRC (254 SCRA 294) the Supreme Court held:

            x x x.  The phrase “substantial capital and investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business,” in the Implementing Rules clearly contemplates tools, equipment, etc., which are directly related to the service it is being contracted to render.  One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. (underscoring ours)

            Second, respondent BMSI has no independent business or activity or job to perform in respondent LSC free from the control of respondent LSC except as to the results thereof.  In view of the absence of such independent business or activity or job to be performed by respondent BMSI in respondent LSC [petitioners] performed work that was necessary and desirable to the main business of respondent LSC. Respondents were not able to refute the allegations of [petitioners] that they performed the same work that the regular workers of LSC performed and they stood side by side with regular employees of respondent LSC performing the same work.  Necessarily, the control on the manner and method of doing the work was exercised by respondent LSC and not by respondent BMSI since the latter had no business of its own to perform in respondent LSC.

            Lastly, respondent BMSI has no other client but respondent LSC.  If respondent BMSI were a going concern, it would have other clients to which to assign [petitioners] after its Agreement with LSC expired.  Since there is only one client, respondent LSC, it is easy to conclude that respondent BMSI is a mere supplier of labor.

            After concluding that respondent BMSI is engaged in prohibited labor-only contracting, respondent LSC became the employer of [petitioners] pursuant to DO 18-02.

            [Petitioners] therefore should be reinstated to their former positions or equivalent positions in respondent LSC as regular employees with full backwages and other benefits without loss of seniority rights from October 31, 2003, when they lost their jobs, until actual reinstatement (Vinoya v. NLRC, 324 SCRA 469). If reinstatement is not feasible, [petitioners] then should be paid separation pay of one month pay for every year of service or a fraction of six months to be considered as one year, in addition to full backwages.

            Concerning [petitioners’] prayer to be paid wage differentials and benefits under the CBA, We have no doubt that [petitioners] would be entitled to them if they are covered by the said CBA.  For this purpose, [petitioners] should first enlist themselves as union members if they so desire, or pay agency fee.  Furthermore, only [petitioners] who signed the appeal memorandum are covered by this Decision.  As regards the other complainants who did not sign the appeal, the Decision of the Labor Arbiter dismissing this case became final and executory.^[8][8]

The NLRC disposed thus:

          WHEREFORE, the appeal of [petitioners] is GRANTED.  The Decision of the Labor Arbiter is hereby REVERSED, and a NEW ONE rendered finding respondent Best Manpower Services, Inc. is engaged in prohibited labor-only-contracting and finding respondent Lorenzo Shipping Corp. as the employer of the following [petitioners]:

1.                  Emmanuel  B. Babas

2.                  Danilo Banag

3.                  Edwin L. Javier

4.                  Rex Allesa

5.                  Arturo Villarin, [Sr.]

6.                  Felixberto C. Anajao

7.                  Arsenio Estorque

8.                  Maximo N. Soriano, Jr.

9.                  Sandi G. Bermeo

            Consequently, respondent Lorenzo Shipping Corp. is ordered to reinstate [petitioners] to their former positions as regular employees and pay their wage differentials and benefits under the CBA.

            If reinstatement is not feasible, both respondents Lorenzo Shipping Corp. and Best Manpower Services are adjudged jointly and solidarily to pay [petitioners] separation pay of one month for every year of service, a fraction of six months to be considered as one year.

            In addition, respondent LSC and BMSI are solidarily liable to pay [petitioners’] full backwages from October 31, 2003 until actual reinstatement or, if reinstatement is not feasible, until finality of this Decision.

            Respondent LSC and respondent BMSI are likewise adjudged to be solidarily liable for attorney’s fees equivalent to ten (10%) of the total monetary award.

x x x x

SO ORDERED.^[9][9]

          LSC went to the CA via certiorari.  On October 10, 2008, the CA rendered the now challenged Decision,^[10][10] reversing the NLRC.  In holding that BMSI was an independent contractor, the CA relied on the provisions of the Agreement, wherein BMSI warranted that it is an independent contractor, with adequate capital, expertise, knowledge, equipment, and personnel necessary for the services rendered to LSC.   According to the CA, the fact that BMSI entered into a contract of lease with LSC did not ipso facto make BMSI a labor-only contractor; on the contrary, it proved that BMSI had substantial capital.  The CA was of the view that the law only required substantial capital or investment. Since BMSI had substantial capital, as shown by its ability to pay rents to LSC, then it qualified as an independent contractor. It added that even under the control test, BMSI would be the real employer of petitioners, since it had assumed the entire charge and control of petitioners’ services.  The CA further held that BMSI’s Certificate of Registration as an independent contractor was sufficient proof that it was an independent contractor.  Hence, the CA absolved LSC from liability and instead held BMSI as employer of petitioners.

          The fallo of the CA Decision reads:

          WHEREFORE, premises considered, the instant petition is GRANTED and the assailed decision and resolution of public respondent NLRC are REVERSED and SET ASIDE.  Consequently, the decision of the Labor Arbiter dated September 29, 2004 is REINSTATED.

            SO ORDERED.^[11][11]

Petitioners filed a motion for reconsideration, but the CA denied it on January 21, 2009.^[12][12] 

Hence, this appeal by petitioners, positing that:

THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT PETITIONERS’ RIGHT TO SECURITY OF TENURE.^[13][13]

Before resolving the petition, we note that only seven (7) of the nine petitioners signed the Verification and Certification.^[14][14]  Petitioners Maximo Soriano, Jr. (Soriano) and Felixberto Anajao (Anajao) did not sign the Verification and Certification, because they could no longer be located by their co-petitioners.^[15][15]

In Toyota Motor Phils. Corp. Workers Association (TMPCWA), et al. v. National Labor Relations Commission,^[16][16] citing Loquias v. Office of the Ombudsman,^[17][17] we stated that the petition satisfies the formal requirements only with regard to the petitioner who signed the petition, but not his co-petitioner who did not sign nor authorize the other petitioner to sign it on his behalf.  Thus, the petition can be given due course only as to the parties who signed it. The other petitioners who did not sign the verification and certificate against forum shopping cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to the non-conforming petitioners.

Thus, we dismiss the petition insofar as petitioners Soriano and Anajao are concerned.

Petitioners vigorously insist that they were employees of LSC; and that BMSI is not an independent contractor, but a labor-only contractor.  LSC, on the other hand, maintains that BMSI is an independent contractor, with adequate capital and investment.  LSC capitalizes on the ratiocination made by the CA. 

 In declaring BMSI as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and investment. 

De Los Santos v. NLRC^[18][18] instructed us that the character of the business, i.e., whether as labor-only contractor or as job contractor, should

be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business. 

In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,^[19][19] this Court explained:

Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so.  The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCO’s business, that is, whether as labor-only contractor, or job contractor. AMPCO’s character should be measured in terms of, and determined by, the criteria set by statute. 

Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. 

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal.  In labor-only contracting, the following elements are present:  (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility;  and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.^[20][20]

On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. ^[21][21]

A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof;

(b) The contractor has substantial capital or investment; and

(c) The agreement between the principal and the contractor or subcontractor assures the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.^[22][22]

Given the above standards, we sustain the petitioners’ contention that BMSI is engaged in labor-only contracting.

First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners’ working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that petitioners were hired by BMSI.

Second, LSC was unable to present proof that BMSI had substantial capital.  The record before us is bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render.  What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC. 

In Mandaue Galleon Trade, Inc. v. Andales,^[23][23] we held:

The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.

          Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSC’s business. Logically, when petitioners were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor.  In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,^[24][24] we held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.^[25][25] 

Indubitably, BMSI can only be classified as a labor-only contractor.   The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular employees of the latter.^[26][26]  Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process.

Petitioners lost their employment when LSC terminated its Agreement with BMSI.  However, the termination of LSC’s Agreement with BMSI cannot be considered a just or an  authorized cause for petitioners’ dismissal.  In Almeda v. Asahi Glass Philippines. Inc. v. Asahi Glass Philippines, Inc.,^[27][27] this Court declared:

The sole reason given for the dismissal of petitioners by SSASI was the termination of its service contract with respondent. But since SSASI was a labor-only contractor, and petitioners were to be deemed the employees of respondent, then the said reason would not constitute a just or authorized cause for petitioners’ dismissal. It would then appear that petitioners were summarily dismissed based on the aforecited reason, without compliance with the procedural due process for notice and hearing.

Herein petitioners, having been unjustly dismissed from work, are entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances, and to other benefits or their monetary equivalents computed from the time compensation was withheld up to the time of actual reinstatement.  Their earnings elsewhere during the periods of their illegal dismissal shall not be deducted therefrom.

Accordingly, we hold that the NLRC committed no grave abuse of discretion in its decision.  Conversely, the CA committed a reversible error when it set aside the NLRC ruling.

WHEREFORE, the petition is GRANTED.  The Decision and the Resolution of the Court of Appeals in CA-G.R. SP. No. 103804 are REVERSED and SET ASIDE.  Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, and Arsenio Estorque are declared regular employees of Lorenzo Shipping Corporation.   Further, LSC is ordered to reinstate the seven petitioners to their former position without loss of seniority rights and other privileges, and to pay full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time compensation was withheld up to the time of actual reinstatement.

No pronouncement as to costs.

SO ORDERED.

                                      ANTONIO EDUARDO B. NACHURA

                                      Associate Justice

WE CONCUR:

                                         ANTONIO T. CARPIO

Associate Justice

Chairperson

JOSE CATRAL MENDOZA

Associate Justice

A T T E S T A T I O N

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                             ANTONIO T. CARPIO

                                      Associate Justice

                                      Chairperson, Second Division

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                      RENATO C. CORONA

                                                                     Chief Justice