LabRel-Basic Concepts Cases

8/14/2019 LabRel-Basic Concepts Cases

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Labor Relations Basic Concepts Cases 2

one who will furnish the musical background for a film. A price is agreed upon verballybetween the producer and musical director for the cost of furnishing such musicalbackground. Thus, the musical director may compose his own music specially writtenfor or adapted to the picture. He engages his own men and pays the correspondingcompensation of the musicians under him.

When the music is ready for recording, the musicians are summoned through 'callslips' in the name of the film company (Exh 'D'), which show the name of the

musician, his musical instrument, and the date, time and place where he will bepicked up by the truck of the film company. The film company provides the studio forthe use of the musicians for that particular recording. The musicians are also providedtransportation to and from the studio by the company. Similarly, the companyfurnishes them meals at dinner time.

During the recording sessions, the motion picture director, who is an employee of thecompany, supervises the recording of the musicians and tells what to do in everydetail. He solely directs the performance of the musicians before the camera asdirector, he supervises the performance of all the action, including the musicians whoappear in the scenes so that in the actual performance to be shown on the screen,the musical director's intervention has stopped.

And even in the recording sessions and during the actual shooting of a scene, thetechnicians, soundmen and other employees of the company assist in the operation.Hence, the work of the musicians is an integral part of the entire motion picture sincethey not only furnish the music but are also called upon to appear in the finishedpicture.

The question to be determined next is what legal relationship exits between themusicians and the company in the light of the foregoing facts.

We are thus called upon to apply R.A. Act 875. which is substantially the same asand patterned after the Wagner Act substantially the same as a Act and the Taft-

Hartley Law of the United States. Hence, reference to decisions of American Courtson these laws on the point-at-issue is called for.

Statutes are to be construed in the light of purposes achieved and the evils sought tobe remedied. (U.S. vs. American Tracking Association, 310 U.S. 534, 84 L. ed. 1345.).

In the case of National Labor Relations Board vs. Hearts Publication , 322 U.S. 111,the United States Supreme Court said the Wagner Act was designed to avert the'substantial obstruction to the free flow of commerce which results from strikes andother forms of industrial unrest by eliminating the causes of the unrest. Strikes andindustrial unrest result from the refusal of employers' to bargain collectively and the

inability of workers to bargain successfully for improvement in their workingconditions. Hence, the purposes of the Act are to encourage collective bargaining and

to remedy the workers' inability to bargaining power, by protecting the exercise of fullfreedom of association and designation of representatives of their own choosing, forthe purpose of negotiating the terms and conditions of their employment.'

The mischief at which the Act is aimed and the remedies it offers are not confinedexclusively to 'employees' within the traditional legal distinctions, separating themfrom 'independent contractor'. Myriad forms of service relationship, with infinite andsubtle variations in the term of employment, blanket the nation's economy. Some are

within this Act, others beyond its coverage. Large numbers will fall clearly on one sideor on the other, by whatever test may be applied. Inequality of bargaining power incontroversies of their wages, hours and working conditions may characterize thestatus of one group as of the other. The former, when acting alone may be ashelpless in dealing with the employer as dependent on his daily wage and as unableto resist arbitrary and unfair treatment as the latter.'

To eliminate the causes of labor dispute and industrial strike, Congress thought itnecessary to create a balance of forces in certain types of economic relationship.Congress recognized those economic relationships cannot be fitted neatly into thecontainers designated as 'employee' and 'employer'. Employers and employees not inproximate relationship may be drawn into common controversies by economic forces

and that the very dispute sought to be avoided might involve 'employees' who are attimes brought into an economic relationship with 'employers', who are not their'employers'. In this light, the language of the Act's definition of 'employee' or'employer' should be determined broadly in doubtful situations, by underlyingeconomic facts rather than technically and exclusively established legalclassifications. (NLRB vs. Blount, 131 F [2d] 585.)

In other words, the scope of the term 'employee' must be understood with referenceto the purposes of the Act and the facts involved in the economic relationship. Whereall the conditions of relation require protection, protection ought to be given .

By declaring a worker an employee of the person for whom he works and by

recognizing and protecting his rights as such, we eliminate the cause of industrialunrest and consequently we promote industrial peace, because we enable him tonegotiate an agreement which will settle disputes regarding conditions ofemployment, through the process of collective bargaining.

The statutory definition of the word 'employee' is of wide scope. As used in the Act,the term embraces 'any employee' that is all employees in the conventional as well inthe legal sense expect those excluded by express provision. (Connor Lumber Co., 11NLRB 776.).

It is the purpose of the policy of Republic Act 875; (a) To eliminate the causes ofindustrial unrest by protecting the exercise of their right to self-organization for the

purpose of collective bargaining. (b) To promote sound stable industrial peace andthe advancement of the general welfare, and the best interests of employers and


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turn engaged the services of Arcadio Geronimo, a laborer, who fell while painting thetank and died in consequence of the injuries thus sustained by him. Inasmuch as thecompany was engaged in the manufacture of soap, vegetable lard, cooking oil andmargarine, it was held that the connection between its business and the paintingaforementioned was purely casual ; that Eliano Garcia was an independent contractor;that Geronimo was not an employee of the company; and that the latter was notbound, therefore, to pay the compensation provided in the Workmen's Compensation

Act. Unlike the Philippine Manufacturing case, the relation between the business of

herein petitioners-appellants and the work of the musicians is not casual. As held inthe order appealed from which, in this respect, is not contested by herein petitioners-appellants "the work of the musicians is an integral part of the entire motionpicture." Indeed, one can hardly find modern films without music therein. Hence, inthe Caro case ( supra ), the owner and operator of buildings for rent was held bound topay the indemnity prescribed in the Workmen's Compensation Act for the injurysuffered by a carpenter while working as such in one of said buildings even thoughhis services had been allegedly engaged by a third party who had directly contractedwith said owner. In other words, the repair work had not merely a casual connectionwith the business of said owner. It was a necessary incident thereof, just as music isin the production of motion pictures.

The case of Josefa Vda. de Cruz vs. The Manila Hotel Co. , L-9110 (April 30, 1957)differs materially from the present cases. It involved the interpretation of Republic ActNo. 660, which amends the law creating and establishing the Government ServiceInsurance System. No labor law was sought to be construed in that case. In act, thesame was originally heard in the Court of First Instance of Manila, the decision ofwhich was, on appeal, affirmed by the Supreme Court. The meaning or scope if theterm "employee," as used in the Industrial Peace Act (Republic Act No. 875), was nottouched therein. Moreover, the subject matter of said case was a contract betweenthe management of the Manila Hotel, on the one hand, and Tirso Cruz, on the other,whereby the latter greed to furnish the former the services of his orchestra, consistingof 15 musicians, including Tirso Cruz, "from 7:30 p.m. to closing time daily." In thelanguage of this court in that case, "what pieces the orchestra shall play, and how themusic shall be arranged or directed, the intervals and other details such are left tothe leader's discretion."

This is not situation obtaining in the case at bar. The musical directors above referredto have no such control over the musicians involved in the present case. Said musicaldirectors control neither the music to be played, nor the musicians playing it. The filmcompanies summon the musicians to work, through the musical directors. The filmcompanies, through the musical directors, fix the date, the time and the place of work.The film companies, not the musical directors, provide the transportation to and fromthe studio. The film companies furnish meal at dinner time.

What is more in the language of the order appealed from "during the recordingsessions, the motion picture director who is an employee of the company " not the

musical director "supervises the recording of the musicians and tells them what todo in every detail" . The motion picture director not the musical director "solelydirects and performance of the musicians before the camera ". The motion picturedirector "supervises the performance of all the actors, including the musicians whoappear in the scenes, so that in the actual performance to be shown in thescreen, the musical director's intervention has stopped ." Or, as testified to in the lowercourt, "the movie director tells the musical director what to do; tells the music to be cutor tells additional music in this part or he eliminates the entire music he does not

(want) or he may want more drums or move violin or piano, as the case may be". Themovie director " directly controls the activities of the musicians." He "says he wantsmore drums and the drummer plays more" or "if he wants more violin or he does notlike that.".

It is well settled that "an employer-employee relationship exists . . .where the personfor whom the services are performed reserves a right to control not only the end to beachieved but also the means to be used in reaching such end . . . ." (AlabamaHighway Express Co., Express Co., v. Local 612, 108S. 2d. 350.) The decisive natureof said control over the "means to be used", is illustrated in the case of GilchristTimber Co., et al., Local No. 2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in which,by reason of said control, the employer-employee relationship was held to exist

between the management and the workers, notwithstanding the intervention of analleged independent contractor, who had, and exercise, the power to hire and firesaid workers . The aforementioned control over the means to be used" in reading thedesired end is possessed and exercised by the film companies over the musicians inthe cases before us.

WHEREFORE, the order appealed from is hereby affirmed, with costs againstpetitioners herein. It is so ordered.


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G.R. No. L-32245 May 25, 1979DY KEH BENG, petitioner,vs.INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ETAL., respondents.DE CASTRO, J .:

Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court ofIndustrial Relations dated March 23, 1970 in Case No. 3019-ULP and the Court's

Resolution en banc of June 10, 1970 affirming said decision. The Court of IndustrialRelations in that case found Dy Keh Beng guilty of the unfair labor practice actsalleged and order him to

reinstate Carlos Solano and Ricardo Tudla to their former jobs with backwages fromtheir respective dates of dismissal until fully reinstated without loss to their right ofseniority and of such other rights already acquired by them and/or allowed by law. 1

Now, Dy Keh Beng assigns the following errors 2 as having been committed by theCourt of Industrial Relations:

I. RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO

AND TUDLA WERE EMPLOYEES OF PETITIONERS.

II. RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT BY PETITIONER.

III. RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES (SIC) APATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.

IV. RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OFUNFAIR LABOR PRACTICE ACTS AS ALLEGED AND DESCRIBED IN THECOMPLAINT.

V. RESPONDENT COURT ERRED IN PETITIONER TO REINSTATERESPONDENTS TO THEIR FORMER JOBS WITH BACKWAGES FROM THEIRRESPECTIVE DATES OF DISMISSALS UNTIL FINALLY REINSTATED WITHOUTLOSS TO THEIR RIGHT OF SENIORITY AND OF SUCH OTHER RIGHTS

ALREADY ACQUIRED BY THEM AND/OR ALLOWED BY LAW.

The facts as found by the Hearing Examiner are as follows:

A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of abasket factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875, 3 by dismissing on September 28 and

29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was filed in the Court of

Industrial Relations for in behalf of the International Labor and Marine Union of thePhilippines and two of its members, Solano and Tudla In his answer, Dy Keh Bengcontended that he did not know Tudla and that Solano was not his employee becausethe latter came to the establishment only when there was work which he didon pakiaw basis, each piece of work being done under a separate contract. Moreover,Dy Keh Beng countered with a special defense of simple extortion committed by thehead of the labor union, Bienvenido Onayan.

After trial, the Hearing Examiner prepared a report which was subsequentlyadopted in toto by the Court of Industrial Relations. An employee-employerrelationship was found to have existed between Dy Keh Beng and complainantsTudla and Solano, although Solano was admitted to have worked on piecebasis. 4 The issue therefore centered on whether there existed an employee employerrelation between petitioner Dy Keh Beng and the respondents Solano and Tudla .

According to the Hearing Examiner, the evidence for the complainant Union tended toshow that Solano and Tudla became employees of Dy Keh Beng from May 2, 1953and July 15, 1955, 5 respectively, and that except in the event of illness, their workwith the establishment was continuous although their services were compensated onpiece basis. Evidence likewise showed that at times the establishment had eight (8)

workers and never less than five (5); including the complainants, and thatcomplainants used to receive ?5.00 a day. sometimes less. 6

According to Dy Keh Beng, however, Solano was not his employee for the followingreasons:

(1) Solano never stayed long enought at Dy's establishment;

(2) Solano had to leave as soon as he was through with the

(3) order given him by Dy;

(4) When there were no orders needing his services there was nothing for him to do;

(5) When orders came to the shop that his regular workers could not fill it was thenthat Dy went to his address in Caloocan and fetched him for these orders; and

(6) Solano's work with Dy's establishment was not continuous. , 7

According to petitioner, these facts show that respondents Solano and Tudla are onlypiece workers, not employees under Republic Act 875, where an employee 8 isreferred to as

shall include any employee and shag not be limited to the employee of a particularemployer unless the Act explicitly states otherwise and shall include any individual

whose work has ceased as a consequence of, or in connection with any current labor


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dispute or because of any unfair labor practice and who has not obtained any othersubstantially equivalent and regular employment.

while an employer 9

includes any person acting in the interest of an employer, directly or indirectly butshall not include any labor organization (otherwise than when acting as an employer)or anyone acting in the capacity of officer or agent of such labor organization.

Petitioner really anchors his contention of the non-existence of employee-employerrelationship on the control test. He points to the case of Madrigal Shipping Co., Inc. v.Nieves Baens del Rosario, et al. , L-13130, October 31, 1959, where the Court ruledthat:

The test ... of the existence of employee and employer relationship is whether there isan understanding between the parties that one is to render personal services to or forthe benefit of the other and recognition by them of the right of one to order and controlthe other in the performance of the work and to direct the manner and method of itsperformance.

Petitioner contends that the private respondents "did not meet the control test in thefight of the ... definition of the terms employer and employee, because there was noevidence to show that petitioner had the right to direct the manner and method ofrespondent's work. 10 Moreover, it is argued that petitioner's evidence showed that"Solano worked on a pakiaw basis" and that he stayed in the establishment onlywhen there was work.

While this Court upholds the control test 11 under which an employer-employeerelationship exists "where the person for whom the services are performed reserves aright to control not only the end to be achieved but also the means to be used inreaching such end, " it finds no merit with petitioner's arguments as stated above. Itshould be borne in mind that the control test calls merely for the existence of the rightto control the manner of doing the work, not the actual exercise of theright. 12 Considering the finding by the Hearing Examiner that the establishment of DyKeh Beng is "engaged in the manufacture of baskets known as kaing , 13 it is naturalto expect that those working under Dy would have to observe, among others, Dy'srequirements of size and quality of the kaing . Some control would necessarily beexercised by Dy as the making of the kaing would be subject to Dy's specifications.Parenthetically, since the work on the baskets is done at Dy's establishments, it canbe inferred that the proprietor Dy could easily exercise control on the men heemployed.

As to the contention that Solano was not an employee because he worked on piecebasis, this Court agrees with the Hearing Examiner that

circumstances must be construed to determine indeed if payment by the piece is justa method of compensation and does not define the essence of the relation. Units oftime ... and units of work are in establishments like respondent (sic) just yardstickswhereby to determine rate of compensation, to be applied whenever agreed upon.We cannot construe payment by the piece where work is done in such anestablishment so as to put the worker completely at liberty to turn him out and take inanother at pleasure.

At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief JusticeRicardo Paras who penned the decision in " Sunrise Coconut Products Co. v. Court ofIndustrial Relations " (83 Phil..518, 523), opined that

judicial notice of the fact that the so-called "pakyaw" system mentioned in this case asgenerally practiced in our country, is, in f act, a labor contract -between employers andemployees, between capitalists and laborers.

Insofar as the other assignments of errors are concerned, there is no showing that theCourt of Industrial Relations abused its discretion when it concluded that the findingsof fact made by the Hearing Examiner were supported by evidence on the record.Section 6, Republic Act 875 provides that in unfair labor practice cases, the factual

findings of the Court of Industrial Relations are conclusive on the Supreme Court, ifsupported by substantial evidence. This provision has been put into effect in a longline of decisions where the Supreme Court did not reverse the findings of fact of theCourt of Industrial Relations when they were supported by substantial evidence. 14

Nevertheless, considering that about eighteen (18) years have already elapsed fromthe time the complainants were dismissed, 15 and that the decision being appealedordered the payment of backwages to the employees from their respective dates ofdismissal until finally reinstated, it is fitting to apply in this connection the formula forbackwages worked out by Justice Claudio Teehankee in "cases not terminatedsooner." 16 The formula cans for fixing the award of backwages without qualificationand deduction to three years, "subject to deduction where there are mitigating

circumstances in favor of the employer but subject to increase by way of exemplarydamages where there are aggravating circumstances. 17 Considering there are nosuch circumstances in this case, there is no reason why the Court should not applythe abovementioned formula in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial Relationsis herein modified to an award of backwages for three years without qualification anddeduction at the respective rates of compensation the employees concerned werereceiving at the time of dismissal. The execution of this award is entrusted to theNational Labor Relations Commission. Costs against petitioner.

SO ORDERED.


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G.R. Nos. L-63550-51 January 31, 1984RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHINGCORPORATION, petitioners,vs.NATIONAL LABOR RELATIONS COMMISSION and ANTONIO BOTICARIO,ISIDRO FARIOLAN, FERNANDO SEVILLA, TOTONG ROLDAN, ROGERESQUILLA, MARIO MIRANDA, EDUARDO ESPINOSA, ALBERTO NOVERA,ANTONIO PATERNO, MARCIANO PIADORA, MARIO ROMERO, CLINITOESQUILLA, ALEJO BATOY, BOBBY QUITREZA, ROLANDO DELA TORRE,

HERNANI REVATEZ, RODOLFO SEVILLA, ROLANDO ANG, JUANITO PONPON,HOSPINIANO CALINDEZ, JOSE MABULA, DEONG DE LEON, MELENCIOCONEL and ALFREDO BULAONG, respondents.MELENCIO-HERRERA, J .:

Petition for Certiorari, Prohibition and mandamus assailing the Decision of respondentNational Labor Relations Commission (NLRC) in Cases Nos. AB-4-11054-81 and AB-8-12354-81 entitled Antonio Boticario, et al. vs. RJL Fishing Corporation and/orPeninsula Fishing Corporation , dated November 26, 1982, as well as the Order,dated February 14, denying petitioners' Manifestation and Omnibus Motion to dismissprivate respondents' appeal. The dispositive portion of the challenged resolutionreads:

WHEREFORE, in view of the foregoing considerations, the Decision appealed from ishereby set aside and another one entered, directing respondents-appellees: (1) toreinstate complainants-appellants to their former work, without loss of seniority rightsand other privileges appertaining thereto; (2) to pay complainants-appellants fullbackwages computed from the date they were dismissed up to the date they areactually reinstated; (3) to pay complainants-appellants legal holiday pay, emergencyliving allowance and 13th month pay in accordance with law; and (4) to paycomplainants-appellants who are entitled to incentive leave pay, as herein abovedetermined, according to law.

The claims for overtime pay and premium pay for holiday and rest day are dismissed.

SO ORDERED.

This case was originally assigned to the Second Division but because of thependency of a lower-numbered case, G.R. No. 63474, entitled RJL Martinez FishingCorporation vs. National Labor Relations Commission, et als. before the First Division,involving the same petitioners and their workers (albeit a different group and notexactly Identical issues), this case was transferred to the latter, Division for properaction and determination. G.R. No. 63474 was dismissed by the First Division on

August 17, 1983 for lack of merit.

Petitioner corporations are principally engaged in the deep-sea fishing business.Since 1978, private respondents were employed by them as stevedores at Navotas

Fish Port for the unloading of tuna fish catch from petitioners' vessels and thenloading them on refrigerated vans for shipment abroad.

On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others,upon the premise that they are petitioners' regular employees, filed a complaintagainst petitioners for non-payment of overtime pay, premium pay, legal holiday pay,emergency allowance under P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713, 1751,13th month pay (P.D. 851), service incentive leave pay and night shift differential.

Claiming that they were dismissed from employment on March 29, 1981 as aretaliatory measure for their having failed the said complaint private respondents filedon the said complaint, private respondents filed on April 21, 1981 another complaintagainst petitioners for Illegal Dismissal and for Violation of Article 118 of the LaborCode, as amended. Upon petitioners' motion, these two cases were consolidatedand tried jointly.

In disputing any employer-employee relationship between them, petitioners contendthat private respondents are contract laborers whose work terminated uponcompletion of each unloading, and that in the absence of any boat arrivals, privaterespondents did not work for petitioners but were free to work or seek employment

with other fishing boat operators.

On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling that thelatter are extra workers, who were hired to perform specific tasks on contractualbasis; that their work is intermittent depending on the arrival of fishing vessels; that ifthere are no fish to unload and load, they work for some other fishing boat operators;that private respondent Antonio Boticario had executed an employment contractunder which he agreed to act as a labor contractor and that the other privaterespondents are his men; that even assuming that private respondents areemployees of petitioners, their employer-employee relation is co-terminous with eachunloading and loading job; that in the same manner, petitioners are not under anyobligation to hire petitioners exclusively, hence, when they were not given any job on

March 29, 1981, no dismissal was effected but that they were merely not rehired.4

On April 1, 1982, private respondents received the Decision of the Labor Arbiterdismissing their complaints. On April 19 , 1982, they filed an appeal before respondentNLRC, which took cognizance thereof.

In its Decision of November 26, 1982, the NLRC reversed the findings of the Labor Arbiter, and resolved, as previously stated, to uphold the existence of employer-employee relationship between the parties.

Petitioners resorted to a "Manifestation and Omnibus Motion to Dismiss Appeal andto Vacate and/or to Declare Null and Void the Decision of this Honorable Commission

Promulgated on November 25 (should be 26), 1982" but the same was denied,hence, the instant recourse.


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As prayed for, a Temporary Restraining Order to enjoin the enforcement of thequestioned decision of respondent NLRC was issued on April 20, 1983, and on

August 15, 1983, the Petition was given due course by the Second Division.

Petitioners submit the following issues for resolution:

I. Whether or not the appeal from the decision of Labor Arbiter filed by privaterespondents is within the l0-day reglementary period;

II. Whether or not respondent NLRC erred in reversing the decision of the Labor Arbiter despite the failure to furnish petitioners with a copy of the appeal;

III. Whether or not there is an employer-employee relationship between the parties;

IV. Whether or not private respondents are entitled to legal holiday pay, emergencyliving allowance, thirteenth month pay and incentive leave pay.

1. Petitioners, joined by the Solicitor General, contend that the appeal filed by privaterespondents from the Decision of the Labor Arbiter was filed out of time consideringthat they received copy of the same on April 1, 1982 but that they filed their appealonly on April 19, 1982, or 18 days later. If we were to reckon the 10 -day reglementaryperiod to appeal as calendar days, as held in the case of Vir-Jen Shipping and MarineServices, Inc. vs. NLRC, et al . 5 , private respondents' appeal was, indeed, out oftime. However, it was clear from Vir-Jen that the calendar day basis of computationwould apply only "henceforth" or to future cases. That ruling was not affected by thisCourt's Resolution of November 18, 1983 reconsidering its Decision of July 20, 1982.When the appeal herein was filed on April 19, 1982, the governing proviso was foundin Section 7, Rule XIII of the Rules and Regulations implementing the Labor Codealong with NLRC Resolution No. 1, Series of 1977, which based the computation on"working days". They very face of the Notice of Decision itself 6 indicated aggrievedparty could appeal within 10 "working days" from receipt of copy of the resolutionappealed from. From April 1 to April 19, 1982 is exactly ten (10) working daysconsidering the Holy Week and the two Saturdays and Sundays that supervened inbetween that period. In other words, private respondents' appeal, having been filedduring the time that the prevailing period of appeal was ten (10) working days andprior to the Vir-Jen case promulgated on July 20, 1982, it must be held to have beentimely filed.

2. Anent the failure of private respondents to furnish petitioners with a copy of theirmemorandum on appeal, suffice it to state that the same is not fatal to the appeal. 7

3. The issue of the existence of an employer-employee relationship between theparties is actually a question of fact, and the finding of the NLRC on this point isbonding upon us, the exceptions to the general rule being absent in this case.Besides the continuity of employment is not the determining factor, but rather whetherthe work of the laborer is part of the regular business or occupation of the

employer. 8 We are thus in accord with the findings of respondent NLRC in thisregard.

Although it may be that private respondents alternated their employment on differentvessels when they were not assigned to petitioners' boats, that did not affect theiremployee status. The evidence also establishes that petitioners had a fleet of fishingvessels with about 65 ship captains, and as private respondents contended, whenthey finished with one vessel, they were instructed to wait f or the next. As respondent

NLRC had found:

We further find that the employer-employee relationship between the parties herein isnot co-terminous with each loading and unloading job. As earlier shown, respondentsare engaged in the business of fishing. For this purpose, they have a fleet of fishingvessels. Under this situation, respondents' activity of catching fish is a continuousprocess and could hardly be considered as seasonal in nature. So that the activitiesperformed by herein complainants, i.e. unloading the catch of tuna fish fromrespondents' vessel and then loading the same to refrigerated vans, are necessary ordesirable in the business of respondents. This circumstances makes the employmentof complainants a regular one, in the sense that it does not depend on any specificproject or seasonal activity.

The employment contract signed by Antonio Boticario, which described him as "laborcontractor", is not really so inasmuch as wages continued to be paid by petitionersand he and the other workers were uniformly paid. He was merely asked thepetitioners to recruit other workers. Besides, labor-contracting is prohibited underSec. 9(b), Rule VIII, Book III Rules and Regulations Implementing the Labor Codeas amended. Directly in point and controlling is the ruling in an analogouscase, Philippine Fishing Boat Officers and Engineers Union vs. CIR , reading:

The Court holds, therefore, that the employer-employee relationship existed betweenthe parties notwithstanding evidence to the fact that petitioners Visayas and Bergado,even during the time that they worked with respondent company alternated their

employment on different vessels when they were not assigned on the company'svessels. For, as was stressed in the above-quoted case of Industrial-Commercial-

Agricultural Workers Organization vs. CIR , 16 SCRA 562 [1966], "that during thetemporary layoff the laborers are considered free to seek other employment isnatural, since the laborers are not being paid, yet must find means of support" andsuch temporary cessation of operations "should not mean starvation for employeesand their families."

4. Indeed, considering the length of time that private respondents have worked forpetitioner since 1978 there is justification to conclude that they were engaged toperform activities usually necessary or desirable in the usual business or trade ofpetitioners and are, therefore, regular employees. As such, they are entitled to the

benefits awarded them by respondent NLRC.


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WHEREFORE, the instant Petition for Certiorari, Prohibition and Mandamus is herebydismissed and the Temporary Restraining Order heretofore issued is herebydissolved.

Costs against petitioners.

SO ORDERED.


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G.R. No. 169752 September 25, 2007 PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TOANIMALS, Petitioners,vs.COMMISSION ON AUDIT, DIR. RODULFO J. ARIESGA (in his official capacity asDirector of the Commission on Audit), MS. MERLE M. VALENTIN and MS.SUSAN GUARDIAN (in their official capacities as Team Leader and TeamMember, respectively, of the audit Team of the Commission onAudit), Respondents.

AUSTRIA-MARTINEZ,J .:

Before the Court is a special civil action for Certiorari and Prohibition under Rule 65 ofthe Rules of Court, in relation to Section 2 of Rule 64, filed by the petitioner assailingOffice Order No. 2005-02 11 dated September 14, 2005 issued by the respondentswhich constituted the audit team, as well as its September 23, 2005 Lette r 2informingthe petitioner that respondents audit team shall conduct an audit survey on thepetitioner for a detailed audit of its accounts, operations, and financial transactions.No temporary restraining order was issued.

The petitioner was incorporated as a juridical entity over one hundred years ago byvirtue of Act No. 1285, enacted on January 19, 1905, by the Philippine Commission.

The petitioner, at the time it was created, was composed of animal aficionados andanimal propagandists. The objects of the petitioner, as stated in Section 2 of itscharter, shall be to enforce laws relating to cruelty inflicted upon animals or theprotection of animals in the Philippine Islands, and generally, to do and perform allthings which may tend in any way to alleviate the suffering of animals and promotetheir welfare .3

At the time of the enactment of Act No. 1285, the original Corporation Law, Act No.1459, was not yet in existence. Act No. 1285 antedated both the Corporation Law andthe constitution of the Securities and Exchange Commission. Important to note is thatthe nature of the petitioner as a corporate entity is distinguished from the sociedadanonimas under the Spanish Code of Commerce.

For the purpose of enhancing its powers in promoting animal welfare and enforcinglaws for the protection of animals, the petitioner was initially imbued under its charterwith the power to apprehend violators of animal welfare laws. In addition, thepetitioner was to share one-half (1/2) of the fines imposed and collected through itsefforts for violations of the laws related thereto. As originally worded, Sections 4 and 5of Act No. 1285 provide:

SEC. 4. The said society is authorized to appoint not to exceed five agents in the Cityof Manila, and not to exceed two in each of the provinces of the PhilippineIslands who shall have all the power and authority of a police officer to make arrestsfor violation of the laws enacted for the prevention of cruelty to animals and the

protection of animals, and to serve any process in connection with the execution ofsuch laws; and in addition thereto, all the police force of the Philippine Islands,

wherever organized, shall, as occasion requires, assist said society, its members oragents, in the enforcement of all such laws.

SEC. 5. One-half of all the fines imposed and collected through the efforts of saidsociety , its members or its agents, for violations of the laws enacted for the preventionof cruelty to animals and for their protection, s hall belong to said society and shall beused to promote its objects .

(emphasis supplied)

Subsequently, however, the power to make arrests as well as the privilege to retain aportion of the fines collected for violation of animal-related laws were recalled byvirtue of Commonwealth Act (C.A.) No. 148 ,4 which reads, in its entirety, thus:

Be it enacted by the National Assembly of the Philippines:

Section 1. Section four of Act Numbered Twelve hundred and eighty-five as amendedby Act Numbered Thirty five hundred and forty-eight, is hereby further amended so asto read as follows:

Sec. 4. The said society is authorized to appoint not to exceed ten agents in the Cityof Manila, and not to exceed one in each municipality of the Philippines who shallhave the authority to denounce to regular peace officers any violation of the lawsenacted for the prevention of cruelty to animals and the protection of animals and tocooperate with said peace officers in the prosecution of transgressors of such laws.

Sec. 2. The full amount of the fines collected for violation of the laws against cruelty toanimals and for the protection of animals, shall accrue to the general fund of theMunicipality where the offense was committed.

Sec. 3. This Act shall take effect upon its approval.

Approved, November 8, 1936. (Emphasis supplied)

Immediately thereafter, then President Manuel L. Quezon issued Executive Order(E.O.) No. 63 dated November 12, 1936, portions of which provide:

Whereas, during the first regular session of the National Assembly, Commonwealth Act Numbered One Hundred Forty Eight was enacted depriving the agents of theSociety for the Prevention of Cruelty to Animals of their power to arrest persons whohave violated the laws prohibiting cruelty to animals thereby correcting a seriousdefect in one of the laws existing in our statute books .

x x x x

Whereas, the cruel treatment of animals is an offense against the State, penalizedunder our statutes, which the Government is duty bound to enforce;
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Now, therefore, I, Manuel L. Quezon, President of the Philippines, pursuant to theauthority conferred upon me by the Constitution, hereby decree, order, and direct theCommissioner of Public Safety, the Provost Marshal General as head of theConstabulary Division of the Philippine Army, every Mayor of a chartered city, andevery municipal president to detail and organize special members of the police force,local, national, and the Constabulary to watch, capture, and prosecuteoffenders against the laws enacted to prevent cruelty to animals. (Emphasis supplied)

On December 1, 2003, an audit team from respondent Commission on Audit (COA)visited the office of the petitioner to conduct an audit survey pursuant to COA OfficeOrder No. 2003-051 dated November 18, 200 35a ddressed to the petitioner. Thepetitioner demurred on the ground that it was a private entity not under the jurisdictionof COA, citing Section 2(1) of Article IX of the Constitution which specifies the general

jurisdiction of the COA, viz :

Section 1. General Jurisdiction . The Commission on Audit shall have the power,authority, and duty to examine, audit, and settle all accounts pertaining to the revenueand receipts of, and expenditures or uses of funds and property, owned or held intrust by, or pertaining to the Government, or any of its subdivisions, agencies, orinstrumentalities, including government-owned and controlled corporations with

original charters , and on a post-audit basis: (a) constitutional bodies, commissionsand officers that have been granted fiscal autonomy under the Constitution; (b)autonomous state colleges and universities; (c) other government-owned orcontrolled corporations and their subsidiaries; and (d) such non-governmental entitiesreceiving subsidy or equity, directly or indirectly, from or through the government,which are required by law or the granting institution to submit to such audit as acondition of subsidy or equity . However, where the internal control system of theaudited agencies is inadequate, the Commission may adopt such measures,including temporary or special pre-audit, as are necessary and appropriate to correctthe deficiencies. It shall keep the general accounts of the Government, and for suchperiod as may be provided by law, preserve the vouchers and other supportingpapers pertaining thereto. (Emphasis supplied)

Petitioner explained thus:

a. Although the petitioner was created by special legislation, this necessarily cameabout because in January 1905 there was as yet neither a Corporation Law or anyother general law under which it may be organized and incorporated, nor a Securitiesand Exchange Commission which would have passed upon its organization andincorporation.

b. That Executive Order No. 63, issued during the Commonwealth period, effectivelydeprived the petitioner of its power to make arrests, and that the petitioner lost itsoperational funding, underscore the fact t hat it exercises no governmental function. In

fine, the government itself, by its overt acts, confirmed petitioners status as a private juridical entity.

The COA General Counsel issued a Memorandum 6 dated May 6, 2004, asserting thatthe petitioner was subject to its audit authority. In a letter dated May 17,2004 ,7 respondent COA informed the petitioner of the result of the evaluation,furnishing it with a copy of said Memorandum dated May 6, 2004 of the GeneralCounsel.

Petitioner thereafter filed with the respondent COA a Request for Re-evaluation datedMay 19, 2004 ,8 insisting that it was a private domestic corporation.

Acting on the said request, the General Counsel of respondent COA, in aMemorandum dated July 13, 2004 ,9a ffirmed her earlier opinion that the petitioner wasa government entity that was subject to the audit jurisdiction of respondent COA. In aletter dated September 14, 2004, the respondent COA informed the petitioner of theresult of the re-evaluation, maintaining its position that the petitioner was subject to itsaudit jurisdiction, and requested an initial conference with the respondents.

In a Memorandum dated September 16, 2004, Director Delfin Aguilar reported toCOA Assistant Commissioner Juanito Espino, Corporate Government Sector, that theaudit survey was not conducted due to the refusal of the petitioner because the lattermaintained that it was a private corporation.

Petitioner received on September 27, 2005 the subject COA Office Order 2005-021dated September 14, 2005 and the COA Letter dated September 23, 2005.

Hence, herein Petition on the following grounds:

A. RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OFDISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN ITRULED THAT PETITIONER IS SUBJECT TO ITS AUDIT AUTHORITY.

B. PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE BEING NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THEORDINARY COURSE OF LAW AVAILABLE TO IT .10

The essential question before this Court is whether the petitioner qualifies as agovernment agency that may be subject to audit by respondent COA.

Petitioner argues: first , even though it was created by special legislation in 1905 asthere was no general law then existing under which it may be organized orincorporated, it exercises no governmental functions because these have beenrevoked by C.A. No. 148 and E.O. No. 63; second , nowhere in its charter is itindicated that it is a public corporation, unlike, for instance, C.A. No. 111 whichcreated the Boy Scouts of the Philippines, defined its powers and purposes, andspecifically stated that it was "An Act to Create a Public Corporation" in which, evenas amended by Presidential Decree No. 460, the law still adverted to the Boy Scoutsof the Philippines as a "public corporation," all of which are not obtaining in the
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charter of the petitioner; third , if it were a government body, there would have been noneed for the State to grant it tax exemptions under Republic Act No. 1178, and thefact that it was so exempted strengthens its position that it is a privateinstitution; fourth , the employees of the petitioner are registered and covered by theSocial Security System at the latters initiative and not through the GovernmentService Insurance System, which should have been the case had the employeesbeen considered government employees; fifth, the petitioner does not receive anyform of financial assistance from the government, since C.A. No. 148, amending

Section 5 of Act No. 1285, states that the "full amount of the fines, collected forviolation of the laws against cruelty to animals and for the protection of animals, shallaccrue to the general fund of the Municipality where the offense wascommitted"; sixth , C.A. No. 148 effectively deprived the petitioner of its powers tomake arrests and serve processes as these functions were placed in the hands of thepolice force; seventh , no government appointee or representative sits on the board oftrustees of the petitioner; eighth , a reading of the provisions of its charter (Act No.1285) fails to show that any act or decision of the petitioner is subject to the approvalof or control by any government agency, except to the extent that it is governed bythe law on private corporations in general; and finally, ninth , the Committee on AnimalWelfare, under the Animal Welfare Act of 1998, includes members from both theprivate and the public sectors.

The respondents contend that since the petitioner is a "body politic" created by virtueof a special legislation and endowed with a governmental purpose, then, indubitably,the COA may audit the financial activities of the latter. Respondents in effect dividetheir contentions into six strains: first , the test to determine whether an entity is agovernment corporation lies in the manner of its creation, and, since the petitionerwas created by virtue of a special charter, it is thus a government corporation subjectto respondents auditing power; second , the petitioner exercises "sovereign powers,"that is, it is tasked to enforce the laws for the protection and welfare of animals which"ultimately redound to the public good and welfare," and, therefore, it is deemed to bea government "instrumentality" as defined under the Administrative Code of 1987, th epurpose of which is connected with the administration of government, as purportedlyaffirmed by American jurisprudence; third , by virtue of Section 23 ,11 Title II, Book III ofthe same Code, the Office of the President exercises supervision or control over thepetitioner; fourth , under the same Code, the requirement under its special charter forthe petitioner to render a report to the Civil Governor, whose functions have beeninherited by the Office of the President, clearly reflects the nature of the petitioner asa government instrumentality; fifth, despite the passage of the Corporation Code, thelaw creating the petitioner had not been abolished, nor had it been re-incorporatedunder any general corporation law; and finally, sixth , Republic Act No. 8485,otherwise known as the "Animal Welfare Act of 1998," designates the petitioner as amember of its Committee on Animal Welfare which is attached to the Department of

Agriculture.

In view of the phrase " One-half of all the fines imposed and collected through theefforts of said society ," the Court, in a Resolution dated January 30, 2007, requiredthe Office of the Solicitor General (OSG) and the parties to comment on: a)petitioner's authority to impose fines and the validity of the provisions of Act No. 1285and Commonwealth Act No. 148 considering that there are no standard measuresprovided for in the aforecited laws as to the manner of implementation, the specificviolations of the law, the person/s authorized to impose fine and in what amount; and,b) the effect of the 1935 and 1987 Constitutions on whether petitioner continues to

exist or should organize as a private corporation under the CorporationCode, B.P. Blg. 68 as amended.

Petitioner and the OSG filed their respective Comments. Respondents filed aManifestation stating that since they were being represented by the OSG which filedits Comment, they opted to dispense with the filing of a separate one and adopt forthe purpose that of the OSG.

The petitioner avers that it does not have the authority to impose fines for violation ofanimal welfare laws; it only enjoyed the privilege of sharing in the fines imposed andcollected from its efforts in the enforcement of animal welfare laws; such privilege,however, was subsequently abolished by C.A. No. 148; that it continues to exist as a

private corporation since it was created by the Philippine Commission before theeffectivity of the Corporation law, Act No. 1459; and the 1935 and 1987 Constitutions.

The OSG submits that Act No. 1285 and its amendatory laws did not give petitionerthe authority to impose fines for violation of law s 12 relating to the prevention of crueltyto animals and the protection of animals; that even prior to the amendment of Act No.1285, petitioner was only entitled to share in the fines imposed; C.A. No. 148abolished that privilege to share in the fines collected; that petitioner is a publiccorporation and has continued to exist since Act No. 1285; petitioner was notrepealed by the 1935 and 1987 Constitutions which contain transitory provisionsmaintaining all laws issued not inconsistent therewith until amended, modified orrepealed.

The petition is impressed with merit.

The arguments of the parties, interlaced as they are, can be disposed of in five points.

First , the Court agrees with the petitioner that the "charter test" cannot be applied.

Essentially, the "charter test" as it stands today provides:

[T]he test to determine whether a corporation is government owned or controlled, orprivate in nature is simple. Is it created by its own charter for the exercise of a publicfunction, or by incorporation under the general corporation law? Those with specialcharters are government corporations subject to its provisions , and its employees are
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under the jurisdiction of the Civil Service Commission, and are compulsory membersof the Government Service Insurance System. xxx (Emphasis supplied )13

The petitioner is correct in stating that the charter test is predicated, at best, on thelegal regime established by the 1935 Constitution, Section 7, Article XIII, whichstates:

Sec. 7. The National Assembly shall not, except by general law, provide for theformation, organization, or regulation of private corporations, unless suchcorporations are owned or controlled by the Government or any subdivision orinstrumentality thereof .14

The foregoing proscription has been carried over to the 1973 and the 1987Constitutions. Section 16 of Article XII of the present Constitution provides:

Sec. 16. The Congress shall not, except by general law, provide for the formation,organization, or regulation of private corporations. Government-owned or controlledcorporations may be created or established by special charters in the interest of thecommon good and subject to the test of economic viability.

Section 16 is essentially a re-enactment of Section 7 of Article XVI of the 1935Constitution and Section 4 of Article XIV of the 1973 Constitution.

During the formulation of the 1935 Constitution, the Committee on Franchisesrecommended the foregoing proscription to prevent the pressure of special interestsupon the lawmaking body in the creation of corporations or in the regulation of thesame. To permit the lawmaking body by special law to provide for the organization,formation, or regulation of private corporations would be in effect to offer to it thetemptation in many cases to favor certain groups, to the prejudice of others or to theprejudice of the interests of the country .15

And since the underpinnings of the charter test had been introduced by the 1935Constitution and not earlier, it follows that the test cannot apply to the petitioner,which was incorporated by virtue of Act No. 1285, enacted on January 19, 1905.Settled is the rule that laws in general have no retroactive effect, unless the contraryis provided .16 All statutes are to be construed as having only a prospective operation,unless the purpose and intention of the legislature to give them a retrospective effectis expressly declared or is necessarily implied from the language used. In case ofdoubt, the doubt must be resolved against the retrospective effect .17

There are a few exceptions. Statutes can be given retroactive effect in the followingcases: (1) when the law itself so expressly provides; (2) in case of remedial statutes;(3) in case of curative statutes; (4) in case of laws interpreting others; and (5) in caseof laws creating new rights .18 None of the exceptions is present in the instant case.

The general principle of prospectivity of the law likewise applies to Act No. 1459,otherwise known as the Corporation Law, which had been enacted by virtue of theplenary powers of the Philippine Commission on March 1, 1906, a little over a yearafter January 19, 1905, the time the petitioner emerged as a juridical entity. Even theCorporation Law respects the rights and powers of juridical entities organizedbeforehand, viz:

SEC. 75. Any corporation or sociedad anonima formed, organized, and existing under

the laws of the Philippine Islands and lawfully transacting business in the PhilippineIslands on the date of the passage of this Act, shall be subject to the provisionshereof so far as such provisions may be applicable and shall be entitled at itsoptioneither to continue business as such corporation or to reform and organize underand by virtue of the provisions of this Act , transferring all corporate interests to thenew corporation which, if a stock corporation, is authorized to issue its shares of stockat par to the stockholders or members of the old corporation according to theirinterests. (Emphasis supplied).

As pointed out by the OSG, both the 1935 and 1987 Constitutions contain transitoryprovisions maintaining all laws issued not inconsistent therewith until amended,modified or repealed .19

In a legal regime where the charter test doctrine cannot be applied, the mere fact thata corporation has been created by virtue of a special law does not necessarily qualifyit as a public corporation.

What then is the nature of the petitioner as a corporate entity? What legal regimegoverns its rights, powers, and duties?

As stated, at the time the petitioner was formed, the applicable law was the PhilippineBill of 1902, and, emphatically, as also stated above, no proscription similar to thecharter test can be found therein.

The textual foundation of the charter test, which placed a limitation on the power ofthe legislature, first appeared in the 1935 Constitution. However, the petitioner wasincorporated in 1905 by virtue of Act No. 1258, a law antedating the Corporation Law(Act No. 1459) by a year, and the 1935 Constitution, by thirty years. There beingneither a general law on the formation and organization of private corporations nor arestriction on the legislature to create private corporations by direct legislation, thePhilippine Commission at that moment in history was well within its powers in 1905 toconstitute the petitioner as a private juridical entity. 1wphi1

Time and again the Court must caution even the most brilliant scholars of the law andall constitutional historians on the danger of imposing legal concepts of a later date onfacts of an earlier date .20
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The amendments introduced by C.A. No. 148 made it clear that the petitioner was aprivate corporation and not an agency of the government. This was evident inExecutive Order No. 63, issued by then President of the Philippines Manuel L.Quezon, declaring that the revocation of the powers of the petitioner to appointagents with powers of arrest "corrected a serious defect" in one of the laws existing inthe statute books.

As a curative statute, and based on the doctrines so far discussed, C.A. No. 148 has

to be given retroactive effect, thereby freeing all doubt as to which class ofcorporations the petitioner belongs, that is, it is a quasi-public corporation, a kind ofprivate domestic corporation, which the Court will further elaborate on underthe fourth point.

Second , a reading of petitioners charter shows that it is not subject to control orsupervision by any agency of the State, unlike government-owned and -controlledcorporations. No government representative sits on the board of trustees of thepetitioner. Like all private corporations, the successors of its members are determinedvoluntarily and solely by the petitioner in accordance with its by-laws, and mayexercise those powers generally accorded to private corporations, such as thepowers to hold property, to sue and be sued, to use a common seal, and so forth. It

may adopt by-laws for its internal operations: the petitioner shall be managed oroperated by its officers "in accordance with its by-laws in force." The pertinentprovisions of the charter provide:

Section 1. Anna L. Ide, Kate S. Wright, John L. Chamberlain, William F. Tucker, MaryS. Fergusson, Amasa S. Crossfield, Spencer Cosby, Sealy B. Rossiter, Richard P.Strong, Jose Robles Lahesa, Josefina R. de Luzuriaga, and such other persons asmay be associated with them in conformity with this act, and their successors, arehereby constituted and created a body politic and corporate at law, under the nameand style of "The Philippines Society for the Prevention of Cruelty to Animals."

As incorporated by this Act, said society shall have the power to add to its

organization such and as many members as it desires, to provide for and choosesuch officers as it may deem advisable, and in such manner as it may wish, and toremove members as it shall provide.

It shall have the right to sue and be sued, to use a common seal, to receive legaciesand donations, to conduct social enterprises for the purpose of obtaining funds, tolevy dues upon its members and provide for their collection to hold real and personalestate such as may be necessary for the accomplishment of the purposes of thesociety, and to adopt such by-laws for its government as may not be inconsistent withlaw or this charter.

x x x x

Sec. 3. The said society shall be operated under the direction of its officers, inaccordance with its by-laws in force, and this charter.

x x x x

Sec. 6. The principal office of the society shall be kept in the city of Manila, and thesociety shall have full power to locate and establish branch offices of the societywherever it may deem advisable in the Philippine Islands, such branch offices to beunder the supervision and control of the principal office.

Third . The employees of the petitioner are registered and covered by the SocialSecurity System at the latters initiative, and not through the Government ServiceInsurance System, which should be the case if the employees are consideredgovernment employees. This is another indication of petitioners nature as a privateentity. Section 1 of Republic Act No. 1161, as amended by Republic Act No. 8282,otherwise known as the Social Security Act of 1997, defines the employer:

Employer Any person, natural or juridical, domestic or foreign, who carries on in thePhilippines any trade, business, industry, undertaking or activity of any kind and usesthe services of another person who is under his orders as regards theemployment, except the Government and any of its political subdivisions, branches orinstrumentalities, including corporations owned or controlled by the Government :Provided, That a self-employed person shall be both employee and employer at thesame time. (Emphasis supplied)

Fourth . The respondents contend that the petitioner is a "body politic" because itsprimary purpose is to secure the protection and welfare of animals which, in turn,redounds to the public good.

This argument, is, at best, specious. The fact that a certain juridical entity isimpressed with public interest does not, by t hat circumstance alone, make the entity apublic corporation, inasmuch as a corporation may be private although its chartercontains provisions of a public character, incorporated solely for the public good. Thisclass of corporations may be considered quasi-public corporations, which are privatecorporations that render public service, supply public wants ,21 or pursue othereleemosynary objectives. While purposely organized for the gain or benefit of itsmembers, they are required by law to discharge functions for the public benefit.Examples of these corporations are utility ,22 railroad, warehouse, telegraph,telephone, water supply corporations and transportation companies .23 It must bestressed that a quasi-public corporation is a species of private corporations , butthe qualifying factor is the type of service the former renders to the public: if itperforms a public service, t hen it becomes a quasi-public corporation .241wphi1

Authorities are of the view that the purpose alone of the corporation cannot be taken

as a safe guide, for the fact is that almost all corporations are nowadays created topromote the interest, good, or convenience of the public. A bank, for example, is a
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private corporation; yet, it is created for a public benefit. Private schools anduniversities are likewise private corporations; and yet, they are rendering publicservice. Private hospitals and wards are charged with heavy social responsibilities.More so with all common carriers. On the other hand, there may exist a publiccorporation even if it is endowed with gifts or donations from private individuals.

The true criterion, therefore, to determine whether a corporation is public or private isfound in the totality of the relation of the corporation to the State. If the corporation is

created by the State as the latters own agency or instrumentality to help it in carryingout its governmental functions, then that corporation is considered public; otherwise, itis private. Applying the above test, provinces, chartered cities, and barangays canbest exemplify public corporations. They are created by the State as its own deviceand agency for the accomplishment of parts of its own public works .25

It is clear that the amendments introduced by C.A. No. 148 revoked the powers of thepetitioner to arrest offenders of animal welfare laws and the power to serve processesin connection therewith.

Fifth. The respondents argue that since the charter of the petitioner requires the latterto render periodic reports to the Civil Governor, whose functions have been inherited

by the President, the petitioner is, therefore, a government instrumentality.This contention is inconclusive. By virtue of the fiction that all corporations owe theirvery existence and powers to the State, the reportorial requirement is applicable to allcorporations of whatever nature, whether they are public, quasi-public, or privatecorporations as creatures of the State, there is a reserved right in the legislature toinvestigate the activities of a corporation to determine whether it acted within itspowers. In other words, the reportorial requirement is the principal means by whichthe State may see to it that its creature acted according to the powers and functionsconferred upon it. These principles were extensively discussed in Bataan Shipyard &Engineering Co., Inc. v. Presidential Commission on Good Government .26 Here, theCourt, in holding that the subject corporation could not invoke the right against self-

incrimination whenever the State demanded the production of its corporate books andpapers, extensively discussed the purpose of reportorial requirements, viz :

x x x The corporation is a creature of the state. It is presumed to be incorporated forthe benefit of the public. It received certain special privileges and franchises, andholds them subject to the laws of the state and the limitations of its charter. Its powersare limited by law. It can make no contract not authorized by its charter. Its rights toact as a corporation are only preserved to it so long as it obeys the laws of itscreation. There is a reserve[d] right in the legislature to investigate its contracts andfind out whether it has exceeded its powers. It would be a strange anomaly to holdthat a state, having chartered a corporation to make use of certain franchises, couldnot, in the exercise of sovereignty, inquire how these franchises had been employed,

and whether they had been abused, and demand the production of the corporatebooks and papers for that purpose . The defense amounts to this, that an officer of the

corporation which is charged with a criminal violation of the statute may plead thecriminality of such corporation as a refusal to produce its books. To state thisproposition is to answer it. While an individual may lawfully refuse to answerincriminating questions unless protected by an immunity statute, it does not followthat a corporation vested with special privileges and franchises may refuse to show itshand when charged with an abuse of such privileges . (Wilson v. United States, 55Law Ed., 771, 780. )27

WHEREFORE, the petition is GRANTED . Petitioner is DECLARED a privatedomestic corporation subject to the jurisdiction of the Securities and ExchangeCommission. The respondents are ENJOINED from investigating, examining andauditing the petitioner's fiscal and financial affairs.

SO ORDERED.
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G.R. No. L-21278 December 27, 1966FEATI UNIVERSITY, petitioner,vs.HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relationsand FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.----------------------------------------G.R. No. L-21462 December 27, 1966FEATI UNIVERSITY, petitioner-appellant,vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.----------------------------------------G.R. No. L-21500 December 27, 1966FEATI UNIVERSITY, petitioner-appellant,vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.ZALDIVAR, J .:

This Court, by resolution, ordered that these three cases be considered together, andthe parties were allowed to file only one brief for t he three cases.

On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU hereinafter referred to as Faculty Club wrote a letter to Mrs. Victoria L.

Araneta, President of petitioner Feati University hereinafter referred to asUniversity informing her of the organization of the Faculty Club into a registeredlabor union. The Faculty Club is composed of members who are professors and/orinstructors of the University. On January 22, 1963, the President of the Faculty Clubsent another letter containing twenty-six demands that have connection with theemployment of the members of the Faculty Club by the University, and requesting ananswer within ten days from receipt thereof. The President of the University answeredthe two letters, requesting that she be given at least thirty days to study thoroughlythe different phases of the demands. Meanwhile counsel for the University, to whomthe demands were referred, wrote a letter to the President of the Faculty Clubdemanding proof of its majority status and designation as a bargaining representative.On February 1, 1963, the President of the Faculty Club again wrote the President of

the University rejecting the latter's request for extension of time, and on the same dayhe filed a notice of strike with the Bureau of Labor alleging as reason therefor therefusal of the University to bargain collectively. The parties were called toconferences at the Conciliation Division of the Bureau of Labor but efforts to conciliatethem failed. On February 18, 1963, the members of the Faculty Club declared a st rikeand established picket lines in the premises of the University, resulting in thedisruption of classes in the University. Despite further efforts of the officials from theDepartment of Labor to effect a settlement of the differences between themanagement of the University and the striking faculty members no satisfactoryagreement was arrived at. On March 21, 1963, the President of the Philippinescertified to the Court of Industrial Relations the dispute between the management ofthe University and the Faculty Club pursuant to the provisions of Section 10 ofRepublic Act No. 875.

In connection with the dispute between the University and the Faculty Club andcertain incidents related to said dispute, various cases were filed with the Court ofIndustrial Relations hereinafter referred to as CIR. The three cases now before thisCourt stemmed from those cases that were filed with t he CIR.

CASE NO. G.R. NO. L-21278

On May 10, 1963, the University filed before this Court a "petition for certiorari andprohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying:(1) for the issuance of the writ of preliminary injunction enjoining respondent JudgeJose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA,1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183-MC beannulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29,1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be orderedto dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.

On May 10, 1963, this Court issued a writ of preliminary injunction, upon theUniversity's filing a bond of P1,000.00, ordering respondent Judge Jose S. Bautistaas Presiding Judge of the CIR, until further order from this Court, "to desist and refrain

from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 ofthe Court of Industrial Relations)." 1 On December 4, 1963, this Court ordered theinjunction bond increased to P100,000.00; but on January 23, 1964, upon a motionfor reconsideration by the University, this Court reduced the bond to P50,000.00.

A brief statement of the three cases CIR Cases 41-IPA, 1183-MC and V-30 involved in the Case G.R. No. L-21278, is here necessary.

CIR Case No. 41-IPA , relates to the case in connection with the strike staged by themembers of the Faculty Club. As we have stated, the dispute between the Universityand the Faculty Club was certified on March 21, 1963 by the President of thePhilippines to the CIR. On the strength of the presidential certification, respondent

Judge Bautista set the case for hearing on March 23, 1963. During the hearing, theJudge endeavored to reconcile the part and it was agreed upon that the strikingfaculty members would return to work and the University would readmit them undera status quo arrangement. On that very same day, however, the University, thrucounsel filed a motion to dismiss the case upon the ground that the CIR has no

jurisdiction over the case, because (1) the Industrial Peace Act is not applicable to theUniversity, it being an educational institution, nor to the members of the Faculty Club,they being independent contractors; and (2) the presidential certification is violative ofSection 10 of the Industrial Peace Act, as the University is not an industrialestablishment and there was no industrial dispute which could be certified to the CIR.On March 30, 1963 the respondent Judge issued an order denying the motion todismiss and declaring that the Industrial Peace Act is applicable to both parties in the

case and that the CIR had acquired jurisdiction over the case by virtue of thepresidential certification. In the same order, the respondent Judge, believing that the


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dispute could not be decided promptly, ordered the strikers to return immediately towork and the University to take them back under the last terms and conditionsexisting before the dispute arose, as per agreement had during the hearing on March23, 1963; and likewise enjoined the University, pending adjudication of the case, fromdismissing any employee or laborer without previous authorization from the CIR. TheUniversity filed on April 1, 1963 a motion for reconsideration of the order of March 30,1963 by the CIR en banc , and at the same time asking that the motion forreconsideration be first heard by the CIR en banc . Without the motion for

reconsideration having been acted upon by the CIR en banc , respondent Judge setthe case for hearing on the merits for May 8, 1963. The University moved for thecancellation of said hearing upon the ground that the court en banc should first hearthe motion for reconsideration and resolve the issues raised therein before the case isheard on the merits. This motion for cancellation of the hearing was denied. Therespondent Judge, however, cancelled the scheduled hearing when counsel for theUniversity manifested that he would take up before the Supreme Court, by a petitionfor certiorari , the matter regarding the actuations of the respondent Judge and theissues raised in the motion for reconsideration, specially the issue relating to the

jurisdiction of the CIR. The order of March 30, 1963 in Case 41-IPA is one of theorders sought to be annulled in the case, G.R. No. L-21278.

Before the above-mentioned order of March 30, 1963 was issued by respondentJudge, the University had employed professors and/or instructors to take the placesof those professors and/or instructors who had struck. On April 1, 1963, the FacultyClub filed with the CIR in Case 41-IPA a petition to declare in contempt of courtcertain parties, alleging that the University refused to accept back to work thereturning strikers, in violation of the return-to-work order of March 30, 1963. TheUniversity filed, on April 5,1963, its opposition to the petition for contempt, denyingthe allegations of the Faculty Club and alleging by way of special defense that therewas still the motion for reconsideration of the order of March 30, 1963 which had notyet been acted upon by the CIR en banc . On April 6, 1963, the respondent Judgeissued an order stating that "said replacements are hereby warned and cautioned, forthe time being, not to disturb nor in any manner commit any act tending to disrupt theeffectivity of the order of March 30,1963, pending the final resolution of thesame." 2 On April 8, 1963, there placing professors and/or instructors concerned filed,thru counsel, a motion for reconsideration by the CIR en banc of t he order ofrespondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders thatare sought to be annulled in case G.R. No. L -21278.

CIR Case No. 1183-MC relates to a petition for certification election filed by theFaculty Club on March 8, 1963 before the CIR, praying that it be certified as the soleand exclusive bargaining representative of all the employees of the University. TheUniversity filed an opposition to the petition for certification election and at the sametime a motion to dismiss said petition, raising the very same issues raised in CaseNo. 41-IPA, claiming that the petition did not comply with the rules promulgated by theCIR; that the Faculty Club is not a legitimate labor union; that the members of the

Faculty Club cannot unionize for collective bargaining purposes; that the terms of theindividual contracts of the professors, instructors, and teachers, who are members ofthe Faculty Club, would expire on March 25 or 31, 1963; and that the CIR has no

jurisdiction to take cognizance of the petition because the Industrial Peace Act is notapplicable to the members of the Faculty Club nor to the University. This case wasassigned to Judge Baltazar Villanueva of the CIR. Before Judge Villanueva could acton the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion towithdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had

already been certified by the President to the CIR and the issues raised in Case No.1183-MC were absorbed by Case No. 41-IPA. The University opposed thewithdrawal, alleging that the issues raised in Case No. 1183-MC were separate anddistinct from the issues raised in Case No. 41-IPA; that the questions of recognitionand majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA;and that the CIR could not exercise its power of compulsory arbitration unless thelegal issue regarding the existence of employer-employee relationship was firstresolved. The University prayed that the motion of the Faculty Club to withdraw thepetition for certification election be denied, and that its motion to dismiss the petitionbe heard. Judge Baltazar Villanueva, finding that the reasons stated by the FacultyClub in the motion to withdraw were well taken, on April 6, 1963, issued an ordergranting the withdrawal. The University filed, on April 24, 1963, a motion for

reconsideration of that order of April 6, 1963 by the CIR en banc . This order of April 6,1963 in Case No. 1183-MC is one of the orders sought to be annulled in the case,G.R. No. L-21278, now before Us.

CIR Case No. V-30 relates to a complaint for indirect contempt of court filed againstthe administrative officials of the University. The Faculty Club, through the ActingChief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose Segovia, as officials ofthe University, with indirect contempt of court, reiterating the same charges filed inCase No. 41-IPA for alleged violation of the order dated March 30, 1963. Based onthe complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent JudgeBautista issued on April 29, 1963 an order commanding any officer of the law toarrest the above named officials of the University so that they may be dealt with inaccordance with law, and the same time fixed the bond for their release at P500.00each. This order of April 29, 1963 is also one of the orders sought to be annulled inthe case, G.R. No. L-2l278.

The principal allegation of the University in its petition for certiorari and prohibitionwith preliminary injunction in Case G.R. No. L-21278, now before Us, is thatrespondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or withgrave abuse of discretion, in taking cognizance of, and in issuing the questionedorders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted that when thepetition for certiorari and prohibition

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