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THIRD DIVISION

OLYMPIA HOUSING, INC., G.R. No. 187691

Petitioner,
Present:

VELASCO, JR., J,
Chairperson,
- versus - PERALTA,
VILLARAMA, JR.,
REYES, and
JARDELEZA, JJ

ALLAN LAPASTORA
and IRENE UBALUBAO, Promulgated:
Respondents. January 13, 2016

x-------------------------------------------------~-~-~----------------x
DECISION

REYES, J.:

This is a Petition for Review on Certiorari 1 filed under Rule 45 of the

Rules of Court, assailing the Decision2 dated April 28, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 103699, which affirmed the Decision
dated December 28, 2007 and Resolution3 dated February 29, 2008 of the
National Labor Relations Commission (NLRC) in NLRC NCR Case
No. 30-03-00976-00.

The instant case stemmed from a complaint for illegal dismissal,

payment of backwages and other benefits, and regularization of employment
filed by Allan Lapastora (Lapastora) and Irene Ubalubao (Ubalubao) against
Olympic Housing, Inc. (OHI), the entity engaged in the management of the

Rollo, pp. 3-32.

2
Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Arturo G. Tayag and
Myrna Dimaranan Vidal concurring; id. at 34-48.
3
Id. at 78-79.

~
Decision 2 G.R. No. 187691

Olympia Executive Residences (OER), a condominium hotel building

situated in Makati City, owned by a Philippine-registered corporation known
as the Olympia Condominium Corporation (OCC). The complaint, which
was docketed as NLRC NCR Case No. 30-03-00976-00 (NLRC NCR CA
No. 032043-02), likewise impleaded as defendants the part owner of OHI,
Felix Limcaoco (Limcaoco), and Fast Manpower and Allied Services
Company, Inc. (Fast Manpower). Lapastora and Ubalubao alleged that they
worked as room attendants of OHI from March 1995 and June 1997,
respectively, until they were placed on floating status on February 24, 2000,
through a memorandum sent by Fast Manpower.4

To establish employer-employee relationship with OHI, Lapastora and

Ubalubao alleged that they were directly hired by the company and received
salaries directly from its operations clerk, Myrna Jaylo (Jaylo). They also
claimed that OHI exercised control over them as they were issued time
cards, disciplinary action reports and checklists of room assignments. It was
also OHI which terminated their employment after they petitioned for
regularization. Prior to their dismissal, they were subjected to investigations
for their alleged involvement in the theft of personal items and cash
belonging to hotel guests and were summarily dismissed by OHI despite
lack of evidence.5

For their part, OHI and Limcaoco alleged that Lapastora and
Ubalubao were not employees of the company but of Fast Manpower, with
which it had a contract of services, particularly, for the provision of room
attendants. They claimed that Fast Manpower is an independent contractor
as it (1) renders janitorial services to various establishments in Metro
Manila, with 500 janitors under its employ; (2) maintains an office where
janitors assemble before they are dispatched to their assignments; (3)
exercises the right to select, refuse or change personnel assigned to OHI; and
(4) supervises and pays the wages of its employees.6

Reinforcing OHI’s claims, Fast Manpower reiterated that it is a

legitimate manpower agency and that it had a valid contract of services with
OHI, pursuant to which Lapastora and Ubalubao were deployed as room
attendants. Lapastora and Ubalubao were, however, found to have violated
house rules and regulations and were reprimanded accordingly. It denied the
employees’ claim that they were dismissed and maintained they were only
placed on floating status for lack of available work assignments.7

4
Id. at 35.
5
Id. at 36.
6
Id.
7
Id. at 37.
Decision 3 G.R. No. 187691

Subsequently, on August 22, 2000, a memorandum of agreement was

executed, stipulating the transfer of management of the OER from OHI to
HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter, OHI informed the
Department of Labor and Employment (DOLE) of its cessation of operations
due to the said change of management and issued notices of termination to
all its employees. This occurrence prompted some union officers and
members to file a separate complaint for illegal dismissal and unfair labor
practice against OHI, OCC and HSAI-Raintree, docketed as NLRC NCR
CN 30-11-04400-00 (CA No. 032193-02), entitled Malonie D. Ocampo, et
al. v. Olympia Housing, Inc., et al. (Ocampo v. OHI). This complaint was,
however, dismissed for lack of merit. The complainants therein appealed the
said ruling to the NLRC.8

Meanwhile, on May 10, 2002, the Labor Arbiter (LA) rendered a

Decision9 in the instant case, holding that Lapastora and Ubalubao were
regular employees of OHI and that they were illegally dismissed. The
dispositive portion of the decision reads as follows:

WHEREFORE, finding complainants to have been illegally

dismissed and as regular employees of [OHI] the latter is ordered to
reinstate complainants to their former position or substantially equal
position without loss of seniority rights and benefits. [OHI] is further
ordered to pay complainants backwages, service incentive leave pay and
attorney’s fees as follows:

1. Backwages:
[Lapastora] - P171,616.60 and
[Ubalubao] - P170,573.44 from February 24, 2000 to date
of decision which shall further be adjusted
until their actual reinstatement.
2. P3,305.05 - ILP for Lapastora
3. P3,426.04 - SILP for Ubalubao
4. 10% of the money awards as attorney’s fees.

Other claims are dismissed for lack of merit.

The claim against [Limcaoco] is hereby dismissed for lack of

merit.

SO ORDERED.10

In ruling for the existence of employer-employee relationship, the LA

held that OHI exercised control and supervision over Lapastora and
Ubalubao through its supervisor, Anamie Lat. The LA likewise noted that
documentary evidence consisting of time cards, medical cards and medical
examination reports all indicated OHI as employer of the said employees.

8
Id. at 37-38.
9
Id. at 83-95.
10
Id. at 94-95.
Decision 4 G.R. No. 187691

Moreover, the affidavit of OHI’s housekeeping coordinator, Jaylo, attested to

the fact that OHI is the one responsible for the selection of employees for its
housekeeping department. OHI also paid the salaries of the housekeeping
staff by depositing them to their respective ATM accounts. That there is a
contract of services between OHI and Fast Manpower did not rule out the
existence of employer-employee relationship between the former and
Lapastora and Ubalubao as it appears that the said contract was a mere ploy
to circumvent the application of pertinent labor laws particularly those
relating to security of tenure. The LA pointed out that the business of OHI
necessarily requires the services of housekeeping aides, room boys,
chambermaids, janitors and gardeners in its daily operations, which is
precisely the line of work being rendered by Lapastora and Ubalubao.11

Both parties appealed to the NLRC. OHI asseverated that the

reinstatement of Lapastora and Ubalubao was no longer possible in view of
the transfer of the management of the OER to HSAI-Raintree.12

On December 28, 2007, the NLRC rendered a decision, dismissing the

appeal for lack of merit, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the appeals of both the

respondents and the complainants are DISMISSED, and the Decision of
the [LA] is hereby AFFIRMED. All other claims are dismissed for lack of
merit.13

The NLRC held that OHI is the employer of Lapastora and Ubalubao
since Fast Manpower failed to establish the fact that it is an independent
contractor. Further, it ruled that the memorandum of agreement between
OCC and HSAI-Raintree did not render the reinstatement of Lapastora and
Ubalubao impossible since a change in the management does not
automatically result in a change of personnel especially when the
memorandum itself did not include a provision on that matter.14

Unyielding, OHI filed its Motion for Reconsideration15 but the NLRC
denied the same in a Resolution16 dated February 29, 2008.

In the meantime, in Ocampo v. OHI, the NLRC rendered a Decision17

dated November 22, 2002, upholding the validity of the cessation of OHI’s
operations and the consequent termination of all its employees. It stressed

11
Id. at 89-91.
12
Id. at 39-40.
13
Id. at 146.
14
Id. at 41.
15
Id. at 146-160.
16
Id. at 78-79.
17
Id. at 116-128.
Decision 5 G.R. No. 187691

that the cessation of business springs from the management’s prerogative to

do what is necessary for the protection of its investment, notwithstanding
adverse effect on the employees. The discharge of employees for economic
reasons does not amount to unfair labor practice.18 The said ruling of the
NLRC was elevated on petition for certiorari to the CA, which dismissed
the same in Resolutions dated November 28, 200319 and June 23, 2004.20
The mentioned resolutions were appealed to this Court and were docketed as
G.R. No. 164160, which was, however, denied in the Resolution21
dated July 26, 2004 for failure to comply with procedural rules and lack of
reversible error on the part of the CA.

Ruling of the CA

OHI, upon receipt of the adverse decision in NLRC NCR Case No.
30-03-00976-00, filed a Petition for Certiorari22 with the CA, praying that
the Decision dated December 28, 2007 and Resolution dated February 29,
2008 of the NLRC be set aside. It pointed out that in the related case of
Ocampo v. OHI, the NLRC took into consideration the supervening events
which transpired after the supposed termination of Lapastora and Ubalubao,
particularly OHI’s closure of business on October 1, 2000. The NLRC then
likewise upheld the validity of the closure of business and the consequent
termination of employees in favor of OHI, holding that the measures taken
by the company were proper exercises of management prerogative. OHI
argued that since the said disposition of the NLRC in Ocampo v. OHI was
affirmed by both the CA and the Supreme Court, the principle of stare
decisis becomes applicable and the issues that had already been resolved in
the said case may no longer be relitigated.23 At any rate, OHI argued that it
could not be held liable for illegal dismissal since Lapastora and Ubalubao
were not its employees.24

On April 28, 2009, the CA rendered a Decision25 dismissing the

petition, the dispositive portion of which reads as follows:

WHEREFORE, the petition for certiorari is DISMISSED. The

NLRC’s Decision dated December 28, 2007 and Resolution dated
February 29, 2008 in NLRC NCR Case No. 30-03-00976-00 (NLRC NCR
CA No. 032043-02) are AFFIRMED.

SO ORDERED.26

18
Id. at 123.
19
Id. at 129-130.
20
Id. at 131.
21
Id. at 133-134.
22
Id. at 49-75.
23
Id. at 63.
24
Id. at 68.
25
Id. at 34-48.
26
Id. at 47.
Decision 6 G.R. No. 187691

The CA ruled that OHI’s cessation of operations on October 1, 2000 is

not a supervening event because it transpired long before the promulgation
of the LA’s Decision dated May 10, 2002 in the instant case. In the same
manner, the ruling of the NLRC in Ocampo v. OHI does not constitute stare
decisis to the present petition because of the apparent dissimilarities in the
attendant circumstances. For instance, Ocampo v. OHI was founded on the
union members’ allegation that OHI’s claim of substantial financial losses to
support closure of business lacked evidence, while in the instant case,
Lapastora and Ubalubao claimed illegal dismissal on account of their being
placed on floating status after they were implicated in a theft case. The
differences in the facts and issues in the two cases rule out the invocation of
the doctrine. The CA added that the prevailing jurisprudence is that the
NLRC decision upholding the validity of the closure of business and
retrenchment of employees resulting therefrom will not preclude it from
decreeing the illegality of an employee’s dismissal. Considering that OHI
failed to prove that the memorandum of agreement between OCC and
HSAI-Raintree had any effect on the employment of Lapastora and
Ubalubao or that there is any other valid or authorized cause for their
termination from employment, the CA concluded that they were unlawfully
dismissed.27

Unyielding, OHI filed the instant petition, reiterating its arguments

before the CA. It added that, even assuming that the facts warrant a finding
of illegal dismissal, the cessation of operations of the company is a
supervening event that should limit the award of backwages to Lapastora
and Ubalubao until October 1, 2000 only and justify the deletion of the order
of reinstatement. After all, it complied with the notice requirements of the
DOLE for a valid closure of business.28

On April 4, 2011, Ubalubao, on her own behalf, filed a Motion to

Dismiss/Withdraw Complaint and Waiver,29 stating that she has decided to
accept the financial assistance in the amount of ₱50,000.00 offered by OHI,
in lieu of all the monetary claims she has against the company, as full and
complete satisfaction of any judgment that may be subsequently rendered in
her favor. She likewise informed the Court that she had willingly and
knowingly executed a quitclaim and waiver agreement, releasing OHI from
any liability. She thus prayed for the dismissal of the complaint she filed
against OHI.

27
Id. at 44-45.
28
Id. at 15.
29
Id. at 266-269.
Decision 7 G.R. No. 187691

In a Resolution30 dated January 16, 2012, the Court granted

Ubalubao’s motion and considered the case closed and terminated as to her
part, leaving Lapastora as the lone respondent in the present petition.

Ruling of the Court

Lapastora was illegally dismissed

Indisputably, Lapastora was a regular employee of OHI. As found by

the LA, he has been under the continuous employ of OHI since March 3,
1995 until he was placed on floating status in February 2000. His
uninterrupted employment by OHI, lasting for more than a year, manifests
the continuing need and desirability of his services, which characterize
regular employment. Article 280 of the Labor Code provides as follows:

Art. 280. Regular and casual employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by

the preceding paragraph: Provided, That, any employee who has rendered
at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exists.

Based on records, OHI is engaged in the business of managing

residential and commercial condominium units at the OER. By the nature of
its business, it is imperative that it maintains a pool of housekeeping staff to
ensure that the premises remain an uncluttered place of comfort for the
occupants. It is no wonder why Lapastora, among several others, was
continuously employed by OHI precisely because of the indispensability of
their services to its business. The fact alone that Lapastora was allowed to
work for an unbroken period of almost five years is all the same a reason to
consider him a regular employee.

30
Id. at 292-293.
Decision 8 G.R. No. 187691

The attainment of a regular status of employment guarantees the

employee’s security of tenure that he cannot be unceremoniously terminated
from employment. “To justify fully the dismissal of an employee, the
employer must, as a rule, prove that the dismissal was for a just cause and
that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear,
accurate, consistent, and convincing evidence the validity of the
dismissal.”31

OHI miserably failed to discharge its burdens thus making Lapastora’s

termination illegal.

On the substantive aspect, it appears that OHI failed to prove that

Lapastora’s dismissal was grounded on a just or authorized cause. While it
claims that it had called Lapastora’s attention several times for tardiness,
unexplained absences and loitering, it does not appear from the records that
the latter had been notified of the company’s dissatisfaction over his
performance and that he was made to explain his supposed infractions. It
does not even show from the records that Lapastora was ever disciplined
because of his alleged tardiness. In the same manner, allegations regarding
Lapastora’s involvement in the theft of personal items and cash belonging to
hotel guests remained unfounded suspicions as they were not proven despite
OHI’s probe into the incidents.

On the procedural aspect, OHI admittedly failed to observe the twin

notice rule in termination cases. As a rule, the employer is required to
furnish the concerned employee two written notices: (1) a written notice
served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain
his side; and (2) a written notice of termination served on the employee
indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination.32 In the present case,
Lapastora was not informed of the charges against him and was denied the
opportunity to disprove the same. He was summarily terminated from
employment.

OHI argues that no formal notices of investigation, notice of charges

or termination was issued to Lapastora since he was not an employee of the
company but of Fast Manpower.

The issue of employer-employee relationship between OHI and

Lapastora had been deliberated and ruled upon by the LA and the NLRC in
the affirmative on the basis of the evidence presented by the parties. The LA
31
Aliling v. Feliciano, G.R. No. 185829, April 25, 2012, 671 SCRA 186, 205.
32
Lynvil Fishing Enterprises, Inc., et al. v. Ariola, et al., 680 Phil. 696, 715 (2012).
Decision 9 G.R. No. 187691

ruled that Lapastora was under the effective control and supervision of OHI
through the company supervisor. She gave credence to the pertinent records
of Lapastora’s employment, i.e., timecards, medical records and medical
examinations, which all indicated OHI as his employer. She likewise noted
Fast Manpower’s failure to establish its capacity as independent contractor
based on the standards provided by law.

That there is an existing contract of services between OHI and Fast

Manpower where both parties acknowledged the latter as the employer of
the housekeeping staff, including Lapastora, did not alter established facts
proving the contrary. The parties cannot evade the application of labor laws
by mere expedient of a contract considering that labor and employment are
matters imbued with public interest. It cannot be subjected to the agreement
of the parties but rather on existing laws designed specifically for the
protection of labor. Thus, it had been repeatedly stressed in a number of
jurisprudence that “[a] party cannot dictate, by the mere expedient of a
unilateral declaration in a contract, the character of its business, i.e., whether
as labor-only contractor or as job contractor, it being crucial that its character
be measured in terms of and determined by the criteria set by statute.”33

The Court finds no compelling reason to deviate from the findings of

the LA and NLRC, especially in this case when the same was affirmed by
the CA. It is settled that findings of fact made by LAs, when affirmed by the
NLRC, are entitled not only to great respect but even finality and are binding
on this Court especially when they are supported by substantial evidence.34

The principle of stare decisis is not

applicable

Still, OHI argues that the legality of the closure of its business had
been the subject of the separate case of Ocampo v. OHI, where the NLRC
upheld the validity of the termination of all the employees of OHI due to
cessation of operations. It asserts that since the ruling was affirmed by the
CA and, eventually by this Court, the principle of stare decisis becomes
applicable. Considering the closure of its business, Lapastora can no longer
be reinstated and should instead be awarded backwages up to the last day of
operations of the company only, specifically on October 1, 2000.35

In Ting v. Velez-Ting,36 the Court elaborated on the principle of stare

decisis, thus:

33
Almeda, et al. v. Asahi Glass Philippines, Inc., 586 Phil. 103, 116 (2008).
34
Metro Transit Organization, Inc. v. NLRC, 367 Phil. 259, 263 (1999).
35
Rollo, pp. 20-21.
36
601 Phil. 676 (2009).
Decision 10 G.R. No. 187691

The principle of stare decisis enjoins adherence by lower courts to

doctrinal rules established by this Court in its final decisions. It is based
on the principle that once a question of law has been examined and
decided, it should be deemed settled and closed to further argument.
Basically, it is a bar to any attempt to relitigate the same issues, necessary
for two simple reasons: economy and stability. In our jurisdiction, the
principle is entrenched in Article 8 of the Civil Code.37 (Citations omitted)

Verily, the import of the principle is that questions of law that have
been decided by this Court and applied in resolving earlier cases shall be
deemed the prevailing rule which shall be binding on future cases dealing on
the same intricacies. Apart from saving the precious time of the Court, the
application of this principle is essential to the consistency of the rulings of
the Court which is significant in its role as the final arbiter of judicial
controversies.

The CA correctly ruled that the principle of stare decisis finds no

relevance in the present case. To begin with, there is no doctrine of law that
is similarly applicable in both the present case and in Ocampo v. OHI.
While both are illegal dismissal cases, they are based on completely
different sets of facts and involved distinct issues. In the instant case,
Lapastora cries illegal dismissal after he was arbitrarily placed on a floating
status on mere suspicion that he was involved in theft incidents within the
company premises without being given the opportunity to explain his side or
any formal investigation of his participation. On the other hand, in Ocampo
v. OHI, the petitioners therein questioned the validity of OHI’s closure of
business and the eventual termination of all the employees. Thus, the NLRC
ruled upon both cases differently.

Nonetheless, the Court finds the recognition of the validity of OHI’s

cessation of business in the Decision dated November 22, 2002 of the
NLRC, which was affirmed by the CA and this Court, a supervening event
which inevitably alters the judgment award in favor of Lapastora. The
NLRC noted that OHI complied with all the statutory requirements,
including the filing of a notice of closure with the DOLE and furnishing
written notices of termination to all employees effective 30 days from
receipt.38 OHI likewise presented financial statements substantiating its
claim that it is operating at a loss and that the closure of business is
necessary to avert further losses.39 The action of the OHI, the NLRC held, is
a valid exercise of management prerogative.

37
Id. at 687.
38
Rollo, p. 197.
39
Id. at 199.
Decision 11 G.R. No. 187691

Thus, while the finding of illegal dismissal in favor of Lapastora

subsists, his reinstatement was rendered a legal impossibility with OHI’s
closure of business. In Galindez v. Rural Bank of Llanera, Inc.,40 the Court
noted:

Reinstatement presupposes that the previous position from which

one had been removed still exists or there is an unfilled position more or
less of similar nature as the one previously occupied by the employee.
Admittedly, no such position is available. Reinstatement therefore
becomes a legal impossibility. The law cannot exact compliance with
what is impossible.41

Considering the impossibility of Lapastora’s reinstatement, the

payment of separation pay, in lieu thereof, is proper. The amount of
separation pay to be given to Lapastora must be computed from March 1995,
the time he commenced employment with OHI, until the time when the
company ceased operations in October 2000.42 As a twin relief, Lapastora is
likewise entitled to the payment of backwages, computed from the time he
was unjustly dismissed, or from February 24, 2000 until October 1, 2000
when his reinstatement was rendered impossible without fault on his part.43

Finally, for OHI’s failure to prove the fact of payment, the Court
sustains the award for the payment of service incentive leave pay and 13th
month pay. The rule, as stated in Mantle Trading Services, Inc. and/or Del
Rosario v. NLRC, et al.,44 is that “the burden rests on the employer to prove
payment, rather than on the employee to prove nonpayment. The reason for
the rule is that the pertinent personnel files, payrolls, records, remittances
and other similar documents — which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid — are
not in the possession of the employee but in the custody and absolute control
of the employer.”45 Considering that OHI did not dispute Lapastora’s claim
for nonpayment of the mentioned benefits and opted to disclaim
employer-employee relationship, the presumption is that the said claims
were not paid.

The award for attorney’s fees of 10% of the monetary awards is

likewise sustained considering that Lapastora was forced to litigate and,
thus, incurred expenses to protect his rights and interests.46

40
G.R. No. 84975, July 5, 1989, 175 SCRA 132.
41
Id. at 139, citing Pizza Inn/Consolidated Foods Corp. v. NLRC, 245 Phil. 738, 743 (1988).
42
Industrial Timber Corporation v. NLRC, 323 Phil. 753, 761 (1996).
43
Golden Ace Builders, et al. v. Talde, 634 Phil. 364, 371 (2010).
44
611 Phil. 570 (2009).
45
Id. at 581-582.
46
Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union, et al. v.
Manila Water Company, Inc., 676 Phil. 262, 276 (2011).
Decision 12 G.R. No. 187691

WHEREFORE, the Decision dated April 28, 2009 of. the Court of
Appeals in CA-G.R. SP No. 103699 is AFFIRMED with
MODIFICATION in that OHI is hereby ORDERED to pay Allan
Lapastora the following: (1) separation pay, in lieu of reinstatement,
computed from the time of his employment until the time of its closure of
business, or from March 1995 to October 2000; (2) backwages, computed
from the time of illegal dismissal until cessation of business, or from
February 24, 2000 to October 1, 2000; (3) service incentive leave pay and
13th month pay; and (4) attorney's fees.

SO ORDERED.

Associate Justice

WE CONCUR:

PRESBITERO,J. VELASCO, JR.

airperson

~-

~.VI~
Associate~

......
1~~
FRANCIS H.J
Associate Justice
Decision 13 G.R. No. 187691

ATTESTATION

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.

PRESBITER<)' J. VELASCO, JR.

Assiciate Justice

CERTIFICATION

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. ·

MARIA LOURDES P.A. SERENO

Chief Justice