CONTRACT OF EMPLOYMENT TAKES EFFECT ONLY BETWEEN THE PARTIES

Contract of employment takes effect only between the parties, their assigns and heirs, except in case where the lights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.

Thus, the Supreme Court held in the March 5, 2018 labor case as follows:

Rolando De Roca vs. Eduardo C. Dabuyan, et al.
G.R. No. 215281, March 5, 2018

Facts:

Eduardo Dabuyan, et al. (Dabuyan, et al.) filed a complaint for illegal dismissal against “RAF Mansion Hotel Oki Management and New Management and Victoriano Ewayan.” Later, they amended the complaint and included petitioner Rolando De Roca (Roca) as [co]-respondent.

Summons was served on Roca but it was returned. Another summons was issued and personally served to Roca. Despite service of summons, Roca did not attend the subsequent hearings prompting the labor arbiter to direct Dabuyan, et al. to submit their position paper.

Dabuyan et al. filed their position paper. On the same day, Roca filed his motion to dismiss on the ground of lack of jurisdiction. He alleged that, while he was the owner of RA.F Mansion Hotel building, the same was being leased by Victoriano Ewayan, the owner of Oceanics Travel and Tour Agency.

Roca claims that Ewayan was the employer of Dabuyan, et al. Consequently, he asserted that there was no employer-employee relationship between him and Dabuyan, et al. and the labor arbiter had no jurisdiction.

LA Ruling:

The LA rendered a Decision directing Roca, among others, to pay backwages and other monetary award to Dabuyan, et al.

ln said decision, the LA also denied the motion to dismiss having been filed beyond the reglementary period. Roca received a copy of the decision on 3 August 2012.

NLRC Ruling:

On 4 September 2012, Roca filed a petition for annulment of judgment on the ground of lack of jurisdiction before the NLRC. However, the petition was dismissed because it was also filed beyond the period allowed by the 2011 NLRC Rules of Procedure.

Roca sought reconsideration but the same was also denied.

Roca filed a Petition for Certiorari before the CA, where he argued, among others, that he was never an employer of Dabuyan, et al., as he was merely the owner of the premises which were leased out to and occupied by Dabuyan et al.’s true employer, Victoriano Ewayan (Ewayan), who owned Oceanic Travel and Tours Agency which operated the RAF Mansion Hotel where they were employed as cook, waitress, and housekeeper; and that his inclusion in the labor case was borne of malice which is shown by the fact that when the labor complaint was filed, he was not originally impleaded as a respondent, and was made so only afler Dabuyan, et al. discovered that their employer had already absconded in which case he was impleaded under the pretext that he constituted the “new management of RAF Mansion Hotel.”

CA Ruling:

The CA rendered the assailed Decision dismissing the petition.

The CA ruled that the motion to dismiss was filed at about the period when the case was about to be submitted for decision. The inclusion of the denial of the motion to dismiss in the decision is not without justification.

Roca not only failed to submit the motion to dismiss on time but also forfeited the right to submit his position paper because he did not attend the conference and subsequent hearings. Even if the labor arbiter denied the motion to dismiss in a separate order, Roca would still be precluded from submitting a position paper where he can buttress his claim of lack of jurisdiction. The labor arbiter, therefore, could not be said to have committed grave abuse of discretion in denying the motion to dismiss and in incorporating its order in the decision.

Roca did not present any evidence to support his claim because he lost the opportunity to submit a position paper. Thus, his allegations will remain mere allegations. It would transgress fairness if his allegations in this petition should be given any attention because Dabuyan, et al. never had the opportunity to present evidence to meet his claims.

Dabuya et al.’s arguments were correctly centered on the provisions of the 2011 NLRC Rules of Procedure because they were the bases for the denial of Roca’s motion to dismiss and petition for annulment of judgment. Furthermore, Roca did not submit the position paper of Dabuyan, et al. where the CA could find their averments on the employment relationship between them and Roca or lack thereof.

This omission not only rendered useless the evaluation of the asseverations in the petition but also gave the CA another reason to dismiss this petition under Section 3, Rule 46 of the Rules of Court. Roca is well aware that this pleading is material to the resolution of his petition and in neglecting to attach the same to his petition, the same would warrant the dismissal of this petition.

Roca filed a motion for reconsideration, but the CA denied the same via a Resolution.

Hence, Roca filed the instant Petition, which includes a prayer for injunctive relief against execution of the judgment pending appeal. The SC issued Resolutions respectively granting temporary injunctive relief and issuing in favor of Roca a Temporary Restraining Order upon filing of a cash or surety bond. The Court resolved to give due course to the petition.

Issue/s:

Whether or not a lessor of a hotel business can be held liable for the labor obligation of the lessee who also used the name of the hotel in his operations

SC Ruling:

The SC granted the petition.

The SC held that it would appear from the on record and the evidence that Roca’s building was an existing hotel called the “‘RAF Mansion Hotel”, which Oceanic agreed to continue to operate under the same name. There is no connection between petitioner and Oceanic other than through the lease agreement executed by them; they are not partners in the operation of RAF Mansion l-Iotel. It just so happens that Oceanic decided to continue operating the hotel using the original name -“RAF Mansion Hotel”.

The claim Dabuyan, et al. have in resorting to implead Roca as a co-respondent in the labor case is the fact that he is the owner of the entire building called “RAF Mansion Hotel” which happens to be the very same name of the hotel which Ewayan and Oceanic continued to adopt, for reasons not evident in the pleadings.

The SC noted as well that when they originally filed the labor case, Dabuyan, et al. did not include Roca as respondent therein. It was only later on that they moved to amend their complaint, impleading Roca and thus amending the title of the case.

The SC saw such belated attempt to implead him in the labor case as an afterthought. Moreover, the fact that Dabuyan, et al. recognize Roca as embodying the “new management” of RAF Mansion Hotel betrays an admission on their part that he had no hand in the “old management” of the hotel under Ewayan, during which they were hired and maintained as hotel employees -meaning that Roca was never considered as Ewayan’s partner and co-employer; Dabuyan, et al. merely viewing Roca as the subsequent manager taking over from Ewayan, which bolsters Roca’s allegation that Ewayan had absconded and left Dabuyan, et al. without recourse other than to implead him as the “new management” upon whom the obligation to settle the claims abandoned by Ewayan now fell.

Contracts take effect only between the parties, their assigns and heirs, except in case where the lights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.

Contract of employment between Dabuyan, et al., on the one hand, and Oceanic and Ewayan on the other, is effective only between them; it does not extend to Roca, who is not a party thereto. His only role is as lessor of the premises which Oceanic leased to operate as a hotel; he cannot be deemed as Dabuyan et al.’s employer -not even under the pretext that he took over as the “new management” of the hotel operated by Oceanic. There simply is no truth to such claim.

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Thus, to allow Dabuyan, et al. to recover their monetary claims from Roca would necessarily result in their unjust enrichment.

In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat against substantive rights, and not the other way around.” In short, substantive law outweighs procedural technicalities as in this case.

It necessarily follows that the decision of the Labor Arbiter must be set aside for being grossly erroneous and unjust. At worst, it is null and void, and, as Roca correctly put it, it is a “lawless thing, which can be treated ac; an outlaw and slain at sight, or ignored wherever it exhibits its head.” Being of such nature, it could not have acquired finality, contrary to what Dabuyan, et al. believe -as it “creates no rights and imposes no duties. Any act performed pursuant to it and any claim emanating from it have no legal effect.”