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MANAGEMENT PREROGATIVE SLMC, requested the latter to accommodate petitioner Maribel S.

SLMC, requested the latter to accommodate petitioner Maribel S. Santos and assign her to the vacant position of
GR No. 162053, March 3, 2007 CSS Aide in the hospital arising from the death of an employee more than two (2) months earlier.
ST. LUKE’S MEDICAL CENTER EMPLOYEE’S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S. In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:
SANTOS, Petitioners, versus NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE’S Gentlemen:
MEDICAL Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant regular position of a CSS
AZCUNA, J.: Aide in Ms. Maribel Santos’ behalf.
The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially on minimum
Challenged in this petition for review on certiorari is the Decision[1] of the Court of Appeals (CA) dated requirements of the job and the need to meet said requirements, as well as other pre-employment requirements, in
January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision[2] dated August 23, 2002 rendered by the order to be considered for the vacant position. As a matter of fact, Ms. Santos is welcome to apply for any vacant
National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00. position on the condition that she possesses the necessary qualifications.
As to the consensus referred to in your letter, may I correct you that the agreement is, regardless of the vacant
The antecedent facts are as follows: position Ms. Santos decides to apply, she must go through the usual application procedures. The formal letter, I am
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private respondent St. afraid, will not suffice for purposes of recruitment processing. As you know, the managers requesting to fill any
Luke’s Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of Associate in Radiologic Technology vacancy has a say on the matter and correctly so. The manager’s inputs are necessarily factored into the standard
from The Family Clinic Incorporated School of Radiologic Technology. recruitment procedures. Hence, the need to undergo the prescribed steps.
On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the “Radiologic Technology Act Indeed we have gone through the mechanics to accommodate Ms. Santos’ transfer while she was employed with
of 1992.” Said law requires that no person shall practice or offer to practice as a radiology and/or x-ray technologist SLMC given the prescribed period. She was given 30 days from issuance of the notice of termination to look for
in the Philippines without having obtained the proper certificate of registration from the Board of Radiologic appropriate openings which incidentally she wittingly declined to utilize. She did this knowing fully well that the
Technology. consequences would be that her application beyond the 30-day period or after the effective date of her termination
On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of private respondent from SLMC would be considered a re-application with loss of seniority and shall be subjected to the pertinent
SLMC issued a final notice to all practitioners of Radiologic Technology to comply with the requirement of Republic application procedures.
Act No. 7431 by December 31, 1995; otherwise, the unlicensed employee will be transferred to an area which does Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos at the time
not require a license to practice if a slot is available. successfully managed to get herself transferred to E.R. because she opted to apply for the appropriate vacant
On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner Maribel S. Santos position and qualified for it within the prescribed 30-day period. The other X-ray Technologist, on the other hand, as
requiring the latter to comply with Republic Act. No. 7431 by taking and passing the forthcoming examination you may recall, was eventually terminated not just for his failure to comply with the licensure requirement of the law
scheduled in June 1997; otherwise, private respondent SLMC may be compelled to retire her from employment but for cause (refusal to serve a customer).
should there be no other position available where she may be absorbed. Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the opportunity given her, or
On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services issued a assuming she was not qualified for any vacant position even if she tried to look for one within the prescribed period, I
memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC Registration form/Examination simply cannot understand why she also refused the separation pay offered by Management in an amount beyond the
Permit per Memorandum dated March 4, 1997. minimum required by law only to re-apply at SLMC, which option would be available to her anyway even (if she)
On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to petitioner Maribel S. chose to accept the separation pay!
Santos advising her that only a license can assure her of her continued employment at the Institute of Radiology of Well, here’s hoping that our Union can timely influence our employees to choose their options well as it has in the
the private respondent SLMC and that the latter is giving her the last chance to take and pass the forthcoming board past.
examination scheduled in June 1998; otherwise, private respondent SLMC shall be constrained to take action which (Signed)
may include her separation from employment. RITA MARASIGAN
On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel S. Santos Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of private respondent
informing the latter that the management of private respondent SLMC has approved her retirement in lieu of SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:
separation pay. Dear Mr. Calderon:
On November 26, 1998, the Personnel Manager of private respondent SLMC issued a “Notice of Separation from the This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms. Rita Marasigan, HR
Company” to petitioner Maribel S. Santos effective December 30, 1998 in view of the latter’s refusal to accept private Director, discussed with you and Mr. Greg Del Prado the terms regarding the re-hiring of Ms. Maribel Santos. Ms.
respondent SLMC’s offer for early retirement. The notice also states that while said private respondent exerted its Marasigan offered Ms. Santos the position of Secretary at the Dietary Department. In that meeting, Ms. Santos
efforts to transfer petitioner Maribel S. Santos to other position/s, her qualifications do not fit with any of the present replied that she would think about the offer. To date, we still have no definite reply from her. Again, during the
vacant positions in the hospital. conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos, and inform us of her reply by Dec. 21,
In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine Association of Radiologic 1999. Again we failed to hear her reply through him.
Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of private respondent SLMC, requesting the latter to Please be informed that said position is in need of immediate staffing. The Dietary Department has already been
give “due consideration” to the organization’s three (3) regular members of his organization (petitioner Maribel S. experiencing serious backlog of work due to the said vacancy. Please note that more than 2 months has passed
Santos included) “for not passing yet the Board of Examination for X-ray Technology,” “by giving them an since Ms. Marasigan offered this compromise. Management cannot afford to wait for her decision while the operation
assignment in any department of your hospital awaiting their chance to pass the future Board Exam.” of the said department suffers from vacancy.
On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a “Notice of Separation from Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If we fail to hear from
the Company” to petitioner Maribel S. Santos effective February 5, 1999 after the latter failed to present/ submit her her or from you as her representatives by that time, we will consider it as a waiver and we will be forced to offer the
appeal for rechecking to the Professional Regulation Commission (PRC) of the recent board examination which she position to other applicants so as not to jeopardize the Dietary Department’s operation.
took and failed. For your immediate action.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC for illegal (Signed)
dismissal and non-payment of salaries, allowances and other monetary benefits. She likewise prayed for the award JUDITH BETITA
of moral and exemplary damages plus attorney’s fees. Personnel Manager
In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal Counsel, in a letter
dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director of private respondent

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On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent SLMC to pay educations, good order, safety or general welfare of the people. The state is justified in prescribing the specific
petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos (P115,500.00) requirements for x-ray technicians and/or any other professions connected with the health and safety of its citizens.
representing her separation pay. All other claims of petitioner were dismissed for lack of merit. Respondent-appellee being engaged in the hospital and health care business, is a proper subject of the cited law;
Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC. thus, having in mind the legal requirements of these laws, the latter cannot close its eyes and [let] complainant-
On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the Labor appellant’s private interest override public interest.
Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution promulgated on Indeed, complainant-appellant cannot insist on her “sterling work performance without any derogatory record”
December 27, 2002. to make her qualify as an x-ray technician in the absence of a proper certificate of Registration from the Board of
Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned, affirmed the decision of Radiologic Technology which can only be obtained by passing the required examination. The law is clear that the
the NLRC. Certificate of Registration cannot be substituted by any other requirement to allow a person to practice as a
Hence, this petition raising the following issues: Radiologic Technologist and/or X-ray Technologist (Technician).[12]
I. Whether the CA overlooked certain material facts and circumstances on petitioners’ legal claim in No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken
relation to the complaint for illegal dismissal. by it conformably to an existing statute. It is undeniable that her continued employment without the required Board
II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the issues on certification exposed the hospital to possible sanctions and even to a revocation of its license to operate. Certainly,
the merit of petitioner’s constitutional right of security of tenure.[3] private respondent could not be expected to retain petitioner Santos despite the inimical threat posed by the latter to
For its part, private respondent St. Luke’s Medical Center, Inc. (SLMC) argues in its comment[4] that: 1) the petition its business. This notwithstanding, the records bear out the fact that petitioner Santos was given ample opportunity
should be dismissed for failure of petitioners to file a motion for reconsideration; 2) the CA did not commit grave to qualify for the position and was sufficiently warned that her failure to do so would result in her separation from
abuse of discretion in upholding the NLRC and the Labor Arbiter’s ruling that petitioner was legally dismissed; 3) work in the event there were no other vacant positions to which she could be transferred. Despite these warnings,
petitioner was legally and validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private petitioner Santos was still unable to comply and pass the required exam. To reiterate, the requirement for Board
respondent’s decision to terminate petitioner Santos was made in good faith and was not the result of unfair certification was set by statute. Justice, fairness and due process demand that an employer should not be penalized
discrimination; and 5) petitioner Santos’ non-transfer to another position in the SLMC was a valid exercise of for situations where it had no participation or control.[13]
management prerogative. It would be unreasonable to compel private respondent to wait until its license is cancelled and it is materially injured
The petition lacks merit. before removing the cause of the impending evil. Neither can the courts step in to force private respondent to
Generally, the Court has always accorded respect and finality to the findings of fact of the CA particularly if they reassign or transfer petitioner Santos under these circumstances. Petitioner Santos is not in the position to demand
coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence.[5] True this rule that she be given a different work assignment when what necessitated her transfer in the first place was her own
admits of certain exceptions as, for example, when the judgment is based on a misapprehension of facts, or the fault or failing. The prerogative to determine the place or station where an employee is best qualified to serve the
findings of fact are not supported by the evidence on record[6] or are so glaringly erroneous as to constitute grave interests of the company on the basis of the his or her qualifications, training and performance belongs solely to the
abuse of discretion.[7] None of these exceptions, however, has been convincingly shown by petitioners to apply in employer.[14] The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different
the present case. Hence, the Court sees no reason to disturb such findings of fact of the CA. Divisions of the NLRC (nor in the courts) managerial authority.[15]
Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by private While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does
respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of Radiologic not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management
Technology. has rights which are also entitled to respect and enforcement in the interest of fair play.[16] Labor laws, to be sure,
The requirement for a certificate of registration is set forth under R.A. No. 7431[8] thus: do not authorize interference with the employer's judgment in the conduct of the latter’s business. Private respondent
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. — Unless exempt from the is free to determine, using its own discretion and business judgment, all elements of employment, "from hiring to
examinations under Sections 16 and 17 hereof, no person shall practice or offer to practice as a radiologic and/or x- firing" except in cases of unlawful discrimination or those which may be provided by law. None of these exceptions
ray technologist in the Philippines without having obtained the proper certificate of registration from the Board. is present in the instant case.
It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos’ separation from The fact that another employee, who likewise failed to pass the required exam, was allowed by private respondent to
work is her failure to pass the board licensure exam for X-ray technicians, a precondition for obtaining the certificate apply for and transfer to another position with the hospital does not constitute unlawful discrimination. This was a
of registration from the Board. It is argued, though, that petitioner Santos’ failure to comply with the certification valid exercise of management prerogative, petitioners not having alleged nor proven that the reassigned employee
requirement did not constitute just cause for termination as it violated her constitutional right to security of tenure. did not qualify for the position where she was transferred. In the past, the Court has ruled that an objection founded
This contention is untenable. on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the
While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably minimum qualifications for the position.[17] Furthermore, the records show that Ms. Santos did not even seriously
regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and apply for another position in the company.
the general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.
scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their SO ORDERED.
chosen careers.[9] The most concrete example of this would be in the field of medicine, the practice of which in all its ADOLFO S. AZCUNA
branches has been closely regulated by the State. It has long been recognized that the regulation of this field is a Associate Justice
reasonable method of protecting the health and safety of the public to protect the public from the potentially deadly WE CONCUR:
effects of incompetence and ignorance among those who would practice medicine.[10] The same rationale applies in REYNATO S. PUNO, ANGELINA SANDOVAL-GUTIERREZ, RENATO C. CORONA, CANCIO C. GARCIA
the regulation of the practice of radiologic and x-ray technology. The clear and unmistakable intention of the G.R. No. 155421, July 7, 2004
legislature in prescribing guidelines for persons seeking to practice in this field is embodied in Section 2 of the law: ELMER M. MENDOZA, Petitioner, versus RURAL BANK OF LUCBAN, Respondent.
Sec. 2. Statement of Policy. — It is the policy of the State to upgrade the practice of radiologic technology in the DECISION
Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to ensure safe and PANGANIBAN, J.:
proper diagnosis, treatment and research through the application of machines and/or equipment using radiation.[11] The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with
In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its decision dated August business judgments of employers, provided they do not violate the law, collective bargaining agreements, and
23, 2002: general principles of fair play and justice. The transfer of personnel from one area of operation to another is
The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State’s inherent police power. It
should be noted that the police power embraces the power to prescribe regulations to promote the health, morals,

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inherently a managerial prerogative that shall be upheld if exercised in good faith -- for the purpose of advancing 99-53, dated April 25, 1999. Management merely shifted the duties of employees, their position title [may be]
business interests, not of defeating or circumventing the rights of employees. retained if requested formally.
The Case "Being a standard procedure in maintaining an effective internal control system recommended by the Bangko
The Court applies these principles in resolving the instant Petition for Review[1] under Rule 45 of the Rules of Court, Sentral ng Pilipinas, we believe that the conduct of reshuffle is also a prerogative of bank management."[9]
assailing the June 14, 2002 Decision[2] and September 25, 2002 Resolution[3] of the Court of Appeals (CA) in CA- On June 7, 1999, petitioner submitted to the bank’s Tayabas branch manager a letter in which he applied for a
GR SP No. 68030. The assailed Decision disposed as follows: leave of absence from work:
“WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit.”[4] -Dear Sir:
The challenged Resolution denied petitioner’s Motion for Reconsideration. -I wish I could continue working but due to the ailment that I always feel every now and then, I have the honor to
The Facts apply for at least ten (10) days sick leave effective June 7, 1999.
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution Nos. 99-52 and "Hoping that this request [merits] your favorable and kind consideration and understanding."[10]
99-53, which read: On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty days
“Board Res. No. 99-52 effective on the same date.[11]
“‘RESOLVED AS IT IS HEREBY RESOLVED’ that in line with the policy of the bank to familiarize bank employees On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration Branch No.
with the various phases of bank operations and further strengthen the existing internal control system[,] all officers IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal, underpayment,
and employees are subject to reshuffle of assignments. Moreover, this resolution does not preclude the transfer of separation pay and damages -- was filed against the Rural Bank of Lucban and/or its president, Alejo B. Daya; and
assignment of bank officers and employees from the branch office to the head office and vice-versa.” its Tayabas branch manager, Briccio V. Cada. The case was docketed as NLRC Case SRAB-IV-6-5862-99-Q.[12]
“Board Res. No. 95-53 The labor arbiter’s June 14, 2000 Decision upheld petitioner’s claims as follows:
“Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled to their new assignments “WHEREFORE, premises considered, judgment is hereby rendered as follows:
without changes in their compensation and other benefits. 1. Declaring respondents guilty of illegal dismissal.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT 2. Ordering respondents to reinstate complainant to his former position without loss of seniority rights with full
JOYCE V. ZETA Bank Teller C/A Teller backwages from date of dismissal to actual reinstatement in the amount of P55,000.00 as of June 30, 2000.
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser 3. Ordering the payment of separation pay if reinstatement is not possible in the amount of P30,000.00 in
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection addition to 13th month pay of P5,000.00 and the usual P10,000.00 annual bonus afforded the employees.
CHONA R. MENDOZA Clerk-Meralco Bank Teller”[5] 4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999 in the amount of P5,000.00
Collection 5. Ordering the payment of moral damages in the amount of P50,000.00.
In a letter dated April 30, 1999, Alejo B. Daya, the bank’s board chairman, directed Briccio V. Cada, the 6. Ordering the payment of exemplary damages in the amount of P25,000.00
manager of the bank’s Tayabas branch, to implement the reshuffle.[6] The new assignments were to "be effective 7. Ordering the payment of Attorney’s fees in the amount of P18,000.00 which is 10% of the monetary award.-
on May 1, 1999 without changes in salary, allowances, and other benefits received by the aforementioned [13]
employees."[7] On appeal, the NLRC reversed the labor arbiter.[14] In its July 18, 2001 Resolution, it held:
On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his opinion on -We can conceive of no reason to ascribe bad faith or malice to the respondent bank for its implementation of its
the reshuffle, as follows: Board Resolution directing the reshuffle of employees at its Tayabas branch to positions other than those they were
-RE: The recent reshuffle of employees as per occupying. While at first the employees thereby affected would experience difficulty in adjusting to their new jobs, it
Board Resolution dated April 25, 1999 cannot be gainsaid that the objective for the reshuffle is noble, as not only would the employees obtain additional
-Dear Sir: knowledge, they would also be more well-rounded in the operations of the bank and thus help the latter further
-This is in connection with the aforementioned subject matter and which the undersigned received on April 25, strengthen its already existing internal control system.
1999. -The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that from an appraiser he was
-Needless to state, the reshuffling of the undersigned from the present position as Appraiser to Clerk-Meralco made to perform the work of a clerk in the collection of Meralco payments, which he may have considered as
Collection is deemed to be a demotion without any legal basis. Before this action on your part[,] the undersigned has beneath him and his experience, being a pioneer employee. But it cannot be discounted either that other employees
been besieged by intrigues due to [the] malicious machination of a certain public official who is bruited to be your at the Tayabas branch were similarly reshuffled. The only logical conclusion therefore is that the Board Resolution
good friend. These malicious insinuations were baseless and despite the fact that I have been on my job as was not aimed solely at the [petitioner], but for all the other employees of the x x x bank as well. Besides, the
Appraiser for the past six (6) years in good standing and never involved in any anomalous conduct, my being complainant has not shown by clear, competent and convincing evidence that he holds a vested right to the position
reshuffled to [C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to my termination in due of Appraiser. x x x.
time. This will constitute an unfair labor practice. "How and by what manner a business concern conducts its affairs is not for this Commission to interfere with,
-Meanwhile, may I beseech your good office that I may remain in my position as Appraiser until the reason especially so if there is no showing, as in the case at bar, that the reshuffle was motivated by bad faith or ill-will. x x
[for] my being reshuffled is made clear. x."[15]
"Your kind consideration on this request will be highly appreciated."[8] After the NLRC denied his Motion for Reconsideration,[16] petitioner brought before the CA a Petition for
On May 10, 1999, Daya replied: Certiorari[17] assailing the foregoing Resolution.
-Dear Mr. Mendoza, Ruling of the Court of Appeals
-Anent your undated letter expressing your resentment/comments on the recent management’s decision to Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus:
reshuffle the duties of bank employees, please be informed that it was never the intention (of management) to -The so-called ‘harassment’ which Mendoza allegedly experienced in the aftermath of the reshuffling of
downgrade your position in the bank considering that your due compensation as Bank Appraiser is maintained and employees at the bank is but a figment of his imagination as there is no evidence extant on record which
no future reduction was intended. substantiates the same. His alleged demotion, the ‘cold shoulder’ stance, the things about his chair and table, and
-Aside from giving bank employees a wider experience in various banking operations, the reshuffle will also the alleged reason for the harassment are but allegations bereft of proof and are perforce inadmissible as self-
afford management an effective tool in providing the bank a sound internal control system/check and balance and a serving statements and can never be considered repositories of truth nor serve as foundations of court decisions
basis in evaluating the performance of each employee. A continuing bankwide reshuffle of employees shall be made anent the resolution of the litigants’ rights.
at the discretion of management which may include bank officers, if necessary as expressed in Board Resolution No. -When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted as there was no
[diminution] of his salary benefits and rank. He could even retain his position title, had he only requested for it

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pursuant to the reply of the Chairman of the bank’s board of directors to Mendoza’s letter protesting the reshuffle. of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the
There is, therefore, no cause to doubt the reasons which the bank propounded in support of its move to reshuffle its employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because
employees, viz: continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and
1. to ‘familiarize bank employees with the various phases of bank operations,’ and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain
2. to ‘further strengthen the existing internal control system’ of the bank. by an employer has become so unbearable to the employee leaving him with no option but to forego with his
-The reshuffling of its employees was done in good faith and cannot be made the basis of a finding of continued employment."[31]
constructive dismissal. Petitioner’s Transfer Lawful
"The fact that Mendoza was no longer included in the bank’s payroll for July 1 to 15, 1999 does not signify that the The employer bears the burden of proving that the transfer of the employee has complied with the foregoing test. In
bank has dismissed the former from its employ. Mendoza separated himself from the bank’s employ when, on June the instant case, we find no reason to disturb the conclusion of the NLRC and the CA that there was no constructive
24, 1999, while on leave, he filed the illegal dismissal case against his employer for no apparent reason at all."[18] dismissal. Their finding is supported by substantial evidence -- that amount of relevant evidence that a reasonable
Hence, this Petition.[19] mind might accept as justification for a conclusion.[32]
The Issues Petitioner’s transfer was made in pursuit of respondent’s policy to "familiarize bank employees with the various
Petitioner raises the following issues for our consideration: phases of bank operations and further strengthen the existing internal control system"[33] of all officers and
-I. Whether or not the petitioner is deemed to have voluntarily separated himself from the service and/or employees. We have previously held that employees may be transferred -- based on their qualifications, aptitudes
abandoned his job when he filed his Complaint for constructive and consequently illegal dismissal; and competencies -- to positions in which they can function with maximum benefit to the company.[34] There
-II. Whether or not the reshuffling of private respondent’[s] employees was done in good faith and cannot be made appears no justification for denying an employer the right to transfer employees to expand their competence and
as the basis of a finding of constructive dismissal, even as the [petitioner’s] demotion in rank is admitted by both maximize their full potential for the advancement of the establishment. Petitioner was not singled out; other
parties; employees were also reassigned without their express consent.
-III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and Isetann Department Store Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits.
(323 SCRA 445)] is applicable to the case at bar; This fact is clear in respondent’s Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch
-IV. Whether or not the Court of Appeals erred in dismissing the petitioner’s money claims, damages, and unpaid Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
salaries for the period July 1-30, 1999, although this was not disputed by the private respondent; and On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no credence by both
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the NLRC are a nullity since lower tribunals was his bare and self-serving statement that he had been positioned near the comfort room, made to
the appeal filed by private respondent before the NLRC on August 5, 2000 was on the 15th day or five (5) days work without a table, and given no work assignment.[35] Purely conjectural is his claim that the reshuffle of
beyond the reglem[e]ntary period of ten (10) days as provided for by law and the NLRC Rules of Procedure."[20] personnel was a harassment in retaliation for an alleged falsification case filed by his relatives against a public
In short, the main issue is whether petitioner was constructively dismissed from his employment. official.[36] While the rules of evidence prevailing in courts of law are not controlling in proceedings before the
The Court’s Ruling NLRC,[37] parties must nonetheless submit evidence to support their contentions.
The Petition has no merit. Secondary Issues:
Main Issue: Serrano v. NLRC Inapplicable
Constructive Dismissal Serrano v. NLRC[38] does not apply to the present factual milieu. The Court ruled therein that the lack of
Constructive dismissal is defined as an involuntary resignation resorted to when continued employment is rendered notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal.[39] Thus, the
impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay; or when a clear procedural infirmity was remedied by ordering payment of his full back wages from the time of his dismissal.[40] The
discrimination, insensibility or disdain by an employer becomes unbearable to the employee.[21] Petitioner argues absence of constructive dismissal in the instant case precludes the application of Serrano. Because herein petitioner
that he was compelled to file an action for constructive dismissal, because he had been demoted from appraiser to was not dismissed, then he is not entitled to his claimed monetary benefits.
clerk and not given any work to do, while his table had been placed near the toilet and eventually removed.[22] He Alleged Nullity of NLRC and CA Proceedings
adds that the reshuffling of employees was done in bad faith, because it was designed primarily to force him to Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent’s appeal
resign.[23] before the NLRC had allegedly been filed beyond the reglementary period.[41] A careful scrutiny of his Petition for
Management Prerogative to Transfer Employees Review[42] with the appellate court shows
Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline to that this issue was not raised there. Inasmuch as the instant Petition challenges the Decision of the CA, we cannot
interfere in legitimate business decisions of employers.[24] Indeed, labor laws discourage interference in employers’ rule on arguments that were not brought before it. This ruling is consistent with the due-process requirement that no
judgments concerning the conduct of their business.[25] The law must protect not only the welfare of employees, but question shall be entertained on appeal, unless it has been raised in the court below.[43]
also the right of employers. WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
from one office or area of operation to another -- provided there is no demotion in rank or diminution of salary, SO ORDERED.
benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a ARTEMIO V. PANGANIBAN
form of punishment or demotion without sufficient cause.[26] This privilege is inherent in the right of employers to Associate Justice
control and manage their enterprise effectively.[27] The right of employees to security of tenure does not give them W E C O N C U R:
vested rights to their positions to the extent of depriving management of its prerogative to change their assignments HILARIO G. DAVIDE, JR.
or to transfer them.[28] CONSUELO YNARES-SANTIAGO ANTONIO T. CARPIO
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and ADOLFO S. AZCUNA
general principles of fair play and justice.[29] The test for determining the validity of the transfer of employees was RECRUITMENT AND PLACEMENT OF WORKERS
explained in Blue Dairy Corporation v. NLRC[30] as follows: MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners, vs. NATIONAL
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents., G.R. No. 127195, 1999 Aug
without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should 25, 2nd Division
not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES MARITIME, INC.
employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is (DIAMANTIDES) assail the Decision of public respondent National Labor Relations Commission dated 16
not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution

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September 1996 as well as its Resolution dated 12 November 1996 affirming the Labor Arbiter's decision finding consent was not proved by petitioners, especially after noting that private respondent did not actually sign his
them guilty of illegal dismissal and ordering them to pay respondent Wilfredo T. Cajeras salaries corresponding to Seaman’s Service Record Book to signify his assent to the repatriation as alleged by petitioners. The entry made by
the unexpired portion of his employment contract, plus attorney's fees. Capt. Alekos in the Deck Log was not considered reliable proof that private respondent agreed to his repatriation
Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner because no opportunity was given the latter to contest the entry which was against his interest. Similarly, the
DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value since it contained only a
period of ten (10) months with a monthly salary of US$600.00, evidenced by a contract between the parties dated 15 sweeping statement of the supposed ailment of Cajeras without any elaboration on the factual basis thereof.
June 1995. Cajeras started work on 8 August 1995 but less than two (2) months later, or on 28 September 1995, he Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996.[9]
was repatriated to the Philippines allegedly by “mutual consent.” Hence, this petition contending that the NLRC committed grave abuse of discretion: (a) in not according full faith and
On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the credit to the official entry by Capt. Alekos in the vessel’s Deck Log conformably with the rulings in Haverton Shipping
NLRC National Capital Region Arbitration Branch alleging that he was dismissed illegally, denying that his Ltd. v. NLRC[10] and Wallem Maritime Services, Inc. v. NLRC;[11] (b) in not appreciating the Medical Report issued
repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorney’s fees.[1] by Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from paranoia and other mental
Cajeras alleged that he was assigned not only as Chief Cook Steward but also as assistant cook and messman in problems; (c) in affirming the award of attorney’s fees despite the fact that Cajeras' claim for exemplary damages
addition to performing various inventory and requisition jobs. Because of his additional assignments he began to feel was denied for lack of merit; and, (d) in ordering a monetary award beyond the maximum of three (3) months’ salary
sick just a little over a month on the job constraining him to request for medical attention. He was refused at first by for every year of service set by RA 8042.
Capt. Kouvakas Alekos, master of the MV Prigipos, who just ordered him to continue working. However a day after We deny the petition. In the Contract of Employment[12] entered into with private respondent, petitioners
the ship’s arrival at the port of Rotterdam, Holland, on 26 September 1995 Capt. Alekos relented and had him convenanted strict and faithful compliance with the terms and conditions of the Standard Employment Contract
examined at the Medical Center for Seamen. However, the examining physician, Dr. Wden Hoed, neither apprised approved by the POEA/DOLE[13] which provides:
private respondent about the diagnosis nor issued the requested medical certificate allegedly because he himself 1. The employment of the seaman shall cease upon expiration of the contract period indicated in the Crew Contract
would forward the results to private respondent’s superiors. Upon returning to the vessel, private respondent was unless the Master and the Seaman, by mutual consent, in writing, agree to an early termination x x x x (underscoring
unceremoniously ordered to prepare for immediate repatriation the following day as he was said to be suffering from ours).
a disease of unknown origin. Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to the expiration of the
On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of stipulated period provided that the master and the seaman (a) mutually consent thereto and (b) reduce their consent
discharge - Mutual Consent."[2] Private respondent promptly objected to the entry but was not able to do anything in writing.
more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam Airport for the return In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document
flight to Manila. After his arrival in Manila on 29 September 1995 Cajeras complained to MARSAMAN but to no exists whereby Capt. Alekos and private respondent reduced to writing their alleged “mutual consent” to the
avail.[3] termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an entry
MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal. They alleged that unilaterally made by Capt. Alekos purported to show that private respondent himself asked for his repatriation.
Cajeras approached Capt. Alekos on 26 September 1995 and informed the latter that he could not sleep at night However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act which is vehemently
because he felt something crawling over his body. Furthermore, Cajeras reportedly declared that he could no longer denied by private respondent. Secondly, the entry in no way satisfies the requirement of a bilateral documentation to
perform his duties and requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly prove early termination of an overseas employment contract by mutual consent required by the Standard
entered by Capt. Alekos, to wit: Employment Contract. Hence, since the latter sets the minimum terms and conditions of employment for the
Cajeras approached me and he told me that he cannot sleep at night and that he feels something crawling on his protection of Filipino seamen subject only to the adoption of better terms and conditions over and above the
body and he declared that he can no longer perform his duties and he must be repatriated.[4] minimum standards,[14] the NLRC could not be accused of grave abuse of discretion in not accepting anything less.
Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was examined by Dr. However petitioners contend that the entry should be considered prima facie evidence that respondent himself
Wden Hoed whose diagnosis appeared in a Medical Report as “paranoia” and “other mental problems.”[5] requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC[15] and Abacast Shipping
Consequently, upon Dr. Hoed’s recommendation, Cajeras was repatriated to the Philippines on 28 September 1995. and Management Agency, Inc. v. NLRC.[16] Indeed, Haverton says that a vessel’s log book is prima facie evidence
On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved the dispute in favor of private respondent Cajeras of the facts stated therein as they are official entries made by a person in the performance of a duty required by law.
ruling that the latter's discharge from the MV Prigipos allegedly by “mutual consent” was not proved by convincing However, this jurisprudential principle does not apply to win the case for petitioners. In Wallem Maritime Services,
evidence. The entry made by Capt. Alekos in the Deck Log was dismissed as of little probative value because it was Inc. v. NLRC[17] the Haverton ruling was not given unqualified application because the log book presented therein
a mere unilateral act unsupported by any document showing mutual consent of Capt. Alekos, as master of the MV was a mere typewritten collation of excerpts from what could be the log book.[18] The Court reasoned that since the
Prigipos, and Cajeras to the premature termination of the overseas employment contract as required by Sec. H of log book was the only piece of evidence presented to prove just cause for the termination of respondent therein, the
the Standard Employment Contract Governing the Employment of all Filipino Seamen on Board Ocean-Going log book had to be duly identified and authenticated lest an injustice would result from a blind adoption of its contents
Vessels. Dr. Hoed’s diagnosis that private respondent was suffering from “paranoia” and “other mental problems” which were but prima facie evidence of the incidents stated therein.
was likewise dismissed as being of little evidentiary value because it was not supported by evidence on how the In the instant case, the disputed entry in the Deck Log was neither authenticated nor supported by credible evidence.
paranoia was contracted, in what stage it was, and how it affected respondent's functions as Chief Cook Steward Although petitioners claim that Cajeras signed his Seaman’s Service Record Book to signify his conformity to the
which, on the contrary, was even rated “Very Good” in respondent's Service Record Book. Thus, the Labor Arbiter repatriation, the NLRC found the allegation to be actually untrue since no signature of private respondent appeared
disposed of the case as follows: in the Record Book.
WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint Wilfredo T. Neither could the “Medical Report” prepared by Dr. Hoed be considered corroborative and conclusive evidence that
Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and Diamantides Maritime, Inc. to private respondent was suffering from “paranoia” and “other mental problems,” supposedly just causes for his
jointly and severally pay complainant the sum of USD 5,100.00 or its peso equivalent at the time of payment plus repatriation. Firstly, absolutely no evidence, not even an allegation, was offered to enlighten the NLRC or this Court
USD 510.00 as 10% attorney’s fees it appearing that complainant had to engage the service of counsel to protect his as to Dr. Hoed's qualifications to diagnose mental illnesses. It is a matter of judicial notice that there are various
interest in the prosecution of this case. specializations in medical science and that a general practitioner is not competent to diagnose any and all kinds of
The claims for nonpayment of wages and overtime pay are dismissed for having been withdrawn (Minutes, illnesses and diseases. Hence, the findings of doctors who are not proven experts are not binding on this Court.[19]
December 18, 1995). The claims for damages are likewise dismissed for lack of merit, since no evidence was Secondly, the Medical Report prepared by Dr. Hoed contained only a general statement that private respondent was
presented to show that bad faith characterized the dismissal.[6] suffering from “paranoia” and “other mental problems” without providing the details on how the diagnosis was arrived
Petitioners appealed to the NLRC.[7] On 16 September 1996 the NLRC affirmed the appealed findings and at or in what stage the illness was. If Dr. Hoed indeed competently examined private respondent then he would have
conclusions of the Labor Arbiter.[8] The NLRC subscribed to the view that Cajeras’ repatriation by alleged mutual been able to discuss at length the circumstances and precedents of his diagnosis. Petitioners cannot rely on the

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presumption of regularity in the performance of official duties to make the Medical Report acceptable because the SO ORDERED.
presumption applies only to public officers from the highest to the lowest in the service of the Government, Mendoza, Quisumbing, and Buena, JJ., concur.
departments, bureaus, offices, and/or its political subdivisions,[20] which Dr. Wden Hoed was not shown to be. GR No. 125903, November 15, 2000
Furthermore, neither did petitioners prove that private respondent was incompetent or continuously incapacitated for PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ROMULO SAULO, AMELIA DE LA CRUZ, and
the duties for which he was employed by reason of his alleged mental state. On the contrary his ability as Chief CLODUALDO DE LA CRUZ, accused. / ROMULO SAULO, accused-appellant.
Cook Steward, up to the very moment of his repatriation, was rated “Very Good” in his Seaman’s Service Record DECISION
Book as correctly observed by public respondent. GONZAGA-REYES, J.:
Considering all the foregoing we cannot ascribe grave abuse of discretion on the part of the NLRC in ruling that Accused-appellant, together with Amelia de la Cruz and Clodualdo de la Cruz, were charged with violation of
petitioners failed to prove just cause for the termination of private respondent's overseas employment. Grave abuse Article 38 (b) of the Labor Code[1] for illegal recruitment in large scale in an information which states -
of discretion is committed only when the judgment is rendered in a capricious, whimsical, arbitrary or despotic CRIM. CASE NO. Q-91-21911
manner, which is not true in the present case.[21] The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ and
With respect to attorney’s fees, suffice it to say that in actions for recovery of wages or where an employee was CLODUALDO DE LA CRUZ, of the crime of ILLEGAL RECRUITMENT IN LARGE SCALE (ART. 38(b) in relation to
forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten percent Art. 39(a) of the Labor Code of the Philippines, as amended by P.D. No. 2018, committed as follows:
(10%) of the monetary award by way of attorney’s fees is legally and morally justifiable under Art. 111 of the Labor That on or about the period comprised from April 1990 to May 1990 in Quezon City, Philippines, and within the
Code,[22] Sec. 8, Rule VIII, Book III of its Implementing Rules,[23] and par. 7, Art. 2208[24] of the Civil Code.[25] jurisdiction of the Honorable Court, the above-named accused, conspiring together, confederating with and mutually
The case of Albenson Enterprises Corporation v. Court of Appeals[26] cited by petitioners in arguing against the helping one another, by falsely representing themselves to have the capacity to contract, enlist and recruit workers
award of attorney’s fees is clearly not applicable, being a civil action for damages which deals with only one of the for employment abroad, did, then and there, wilfully, unlawfully and feloniously for a fee, recruit and promise
eleven (11) instances when attorney’s fees could be recovered under Art. 2208 of the Civil Code. employment/job placement abroad to LEODEGARIO MAULLON, BENY MALIGAYA and ANGELES JAVIER, without
Lastly, on the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker first securing the required license or authority from the Department of Labor and Employment, in violation of said
whose employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion law.
of his employment.[27] However on 15 July 1995, RA 8042 otherwise known as the “Migrant Workers and Overseas That the crime described above is committed in large scale as the same was perpetrated against three (3)
Filipinos Act of 1995” took effect, Sec. 10 of which provides: persons individually or as [a] group penalized under Articles 38 and 39 as amended by PD 2018 of the Labor Code
Sec. 10. In case of termination of overseas employment without just, valid or authorized cause as defined by law or (P.D. 442).
contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent CONTRARY TO LAW.[2]
(12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for In addition, accused were charged with three counts of estafa (Criminal Case Nos. Q-91-21908, Q-91-21909 and
every year of the unexpired term whichever is less (underscoring ours). Q-91-21910). Except for the names of the complainants, the dates of commission of the crime charged, and the
The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective only one (1) month after amounts involved, the informations[3] were identical in their allegations -
respondent's overseas employment contract was entered into on 15 June 1995, simply awarded private respondent CRIM. CASE NO. Q-91-21908
his salaries corresponding to the unexpired portion of his employment contract, i.e., for 8.6 months. The NLRC The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ AND
affirmed the award and the Office of the Solicitor General (OSG) fully agreed. But petitioners now insist that Sec. 10, CLODUALDO DE LA CRUZ of the crime of ESTAFA (Art. 315, par. 2 (a) RPC), committed as follows:
RA 8042 is applicable because although private respondent’s contract of employment was entered into before the That on or about the period comprised from April 1990 to May 1990, in Quezon City, Philippines, and within the
law became effective his alleged cause of action, i.e., his repatriation on 28 September 1995 without just, valid or jurisdiction of this Honorable Court, the above-named accused, conspiring together, confederating with and mutually
authorized cause, occurred when the law was already in effect. Petitioners' purpose in so arguing is to invoke the helping one another, with intent of gain, by means of false pretenses and/or fraudulent acts executed prior to or
law in justifying a lesser monetary award to private respondent, i.e., salaries for three (3) months only pursuant to the simultaneously with the commission of the fraud, did, then and there wilfully, unlawfully and feloniously defraud one
last portion of Sec. 10 as opposed to the salaries for 8.6 months awarded by the Labor Arbiter and affirmed by the BENY MALIGAYA, in the following manner, to wit: on the date and in the place aforementioned, accused falsely
NLRC. pretended to the offended party that they had connection and capacity to deploy workers for overseas employment
We agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to all overseas and that they could secure employment/placement for said Beny Maligaya and believing said misrepresentations,
contract workers dismissed on or after its effectivity on 15 July 1995 in the same way that Sec. 34,[28] RA 6715,[29] the offended party was later induced to give accused, as in fact she did give the total amount of P35,000.00,
is made applicable to locally employed workers dismissed on or after 21 March 1989.[30] However, we cannot Philippine Currency, and once in possession of the said amount and far from complying with their commitment and
subscribe to the view that private respondent is entitled to three (3) months’ salary only. A plain reading of Sec. 10 despite repeated demands made upon them to return said amount, did, then and there wilfully, unlawfully and
clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., feloniously and with intent to defraud, misappropriate, misapply and convert the same to their own personal use and
whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of benefit, to the damage and prejudice of said offended party in the aforementioned amount and in such amount as
the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of may be awarded under the provisions of the Civil Code.
at least one (1) year or more. This is evident from the words “for every year of the unexpired term” which follows the CONTRARY TO LAW.
words “salaries x x x for three months.” To follow petitioners’ thinking that private respondent is entitled to three (3) Upon arraignment, accused-appellant pleaded not guilty to all the charges against him. Meanwhile accused
months salary only simply because it is the lesser amount is to completely disregard and overlook some words used Amelia de la Cruz and Clodualdo de la Cruz have remained at large.
in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in During trial, the prosecution sought to prove the following material facts and circumstances surrounding the
interpreting a statute, care should be taken that every part or word thereof be given effect[31] since the law-making commission of the crimes:
body is presumed to know the meaning of the words employed in the statue and to have used them advisedly.[32] Ut Benny Maligaya, having learned from a relative of accused-appellant that the latter was recruiting workers for
res magis valeat quam pereat.[33] Taiwan, went to accused-appellant's house in San Francisco del Monte, Quezon City, together with Angeles Javier
WHEREFORE, the questioned Decision and Resolution dated 16 September 1996 and 12 November 1996, and Amelia de la Cruz, in order to discuss her chances for overseas employment. During that meeting which took
respectively, of public respondent National Labor Relations Commission are AFFIRMED. Petitioners MARSAMAN place sometime in April or May, 1990, accused-appellant told Maligaya that she would be able to leave for Taiwan as
MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are ordered, jointly and severally, to pay private a factory worker once she gave accused-appellant the fees for the processing of her documents. Sometime in May,
respondent WILFREDO T. CAJERAS his salaries for the unexpired portion of his employment contract or 1990, Maligaya also met with Amelia de la Cruz and Clodualdo de la Cruz at their house in Baesa, Quezon City and
USD$5,100.00, reimburse the latter's placement fee with twelve percent (12%) interest per annum conformably with they assured her that they were authorized by the Philippine Overseas Employment Administration (POEA) to recruit
Sec. 10 of RA 8042, as well as attorney's fees of ten percent (10%) of the total monetary award. Costs against workers for Taiwan. Maligaya paid accused-appellant and Amelia de la Cruz the amount of P35,000.00, which is
petitioners.

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evidenced by a receipt dated May 21, 1990 signed by accused-appellant and Amelia de la Cruz (Exhibit A in Crim. The Court finds no merit in the instant appeal.
Case No. Q-91-21908). Seeing that he had reneged on his promise to send her to Taiwan, Maligaya filed a The essential elements of illegal recruitment in large scale, as defined in Art. 38 (b) of the Labor Code and
complaint against accused-appellant with the POEA.[4] penalized under Art. 39 of the same Code, are as follows:
Angeles Javier, a widow and relative by affinity of accused-appellant, was told by Ligaya, accused-appellant's (1) the accused engages in the recruitment and placement of workers, as defined under Article 13 (b) or in any
wife, to apply for work abroad through accused-appellant. At a meeting in accused-appellant's Quezon City prohibited activities under Article 34 of the Labor Code;
residence, Javier was told by accused-appellant that he could get her a job in Taiwan as a factory worker and that (2) accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly
she should give him P35,000.00 for purposes of preparing Javier's passport. Javier gave an initial amount of with respect to the securing of a license or an authority to recruit and deploy workers, whether locally or overseas;
P20,000.00 to accused-appellant, but she did not ask for a receipt as she trusted him. As the overseas employment and
never materialized, Javier was prompted to bring the matter before the POEA.[5] (3) accused commits the same against three (3) or more persons, individually or as a group.[10]
On April 19, 1990, Leodigario Maullon, upon the invitation of his neighbor Araceli Sanchez, went to accused- Under Art. 13 (b) of the Labor Code, recruitment and placement refers to "any act of canvassing, enlisting,
appellant's house in order to discuss his prospects for gaining employment abroad. As in the case of Maligaya and contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
Javier, accused-appellant assured Maullon that he could secure him a job as a factory worker in Taiwan if he paid advertising for employment, locally or abroad, whether for profit or not; Provided, That any person or entity which, in
him P30,000.00 for the processing of his papers. Maullon paid P7,900.00 to accused-appellant's wife, who issued a any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in
receipt dated April 21, 1990 (Exhibit A in Crim. Case No. Q-91-21910). Thereafter, Maullon paid an additional recruitment and placement."
amount of P6,800.00 in the presence of accused-appellant and Amelia de la Cruz, which payment is also evidenced After a careful and circumspect review of the records, the Court finds that the trial court was justified in holding
by a receipt dated April 25, 1990 (Exhibit B in Crim. Case No. Q-91-21910). Finally, Maullon paid P15,700.00 to a that accused-appellant was engaged in unlawful recruitment and placement activities. The prosecution clearly
certain Loreta Tumalig, a friend of accused-appellant, as shown by a receipt dated September 14, 1990 (Exhibit C in established that accused-appellant promised the three complainants - Benny Maligaya, Angeles Javier and
Crim. Case No. Q-91-21910). Again, accused-appellant failed to deliver on the promised employment. Maullon thus Leodigario Maullon - employment in Taiwan as factory workers and that he asked them for money in order to
filed a complaint with the POEA.[6] process their papers and procure their passports. Relying completely upon such representations, complainants
The prosecution also presented a certification dated July 26, 1994 issued by the POEA stating that accused are entrusted their hard-earned money to accused-appellant in exchange for what they would later discover to be a vain
not licensed to recruit workers for overseas employment (Exhibit A in Crim. Case No. Q-91-21911).[7] hope of obtaining employment abroad. It is not disputed that accused-appellant is not authorized[11] nor licensed[12]
In his defense, accused-appellant claimed that he was also applying with Amelia de la Cruz for overseas by the Department of Labor and Employment to engage in recruitment and placement activities. The absence of the
employment. He asserts that it was for this reason that he met all three complainants as they all went together to necessary license or authority renders all of accused-appellant's recruitment activities criminal.
Amelia de la Cruz' house in Novaliches, Quezon City sometime in May, 1990 in order to follow up their applications. Accused-appellant interposes a denial in his defense, claiming that he never received any money from the
Accused-appellant flatly denied that he was an overseas employment recruiter or that he was working as an agent complainants nor processed their papers. Instead, accused-appellant insists that he was merely a co-applicant of the
for one. He also denied having received any money from any of the complainants or having signed any of the complainants and similarly deceived by the schemes of Amelia and Clodualdo de la Cruz. He contends that the fact
receipts introduced by the prosecution in evidence. It is accused-appellant's contention that the complainants were that Benny Maligaya and Angleles Javier went to the house of Amelia and Clodualdo de la Cruz in Novaliches,
prevailed upon by accused-appellant's mother-in-law, with whom he had a misunderstanding, to file the present Quezon City, to get back their money and to follow-up their application proves that complainants knew that it was the
cases against him.[8] de la Cruz' who received the processing fees, and not accused-appellant. Further, accused-appellant argues that
The trial court found accused-appellant guilty of three counts of estafa and of illegal recruitment in large scale. It complainants could not have honestly believed that he could get them their passports since they did not give him any
adjudged: of the necessary documents, such as their birth certificate, baptismal certificate, NBI clearance, and marriage
WHEREFORE, this Court finds the accused Romulo Saulo: contract.
A. In Criminal Case No. Q-91-21908, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a) Accused-appellant's asseverations are self-serving and uncorroborated by clear and convincing evidence. They
of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby cannot stand against the straightforward and explicit testimonies of the complainants, who have identified accused-
sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of three (3) years, four (4) appellant as the person who enticed them to part with their money upon his representation that he had the capability
months and one (1) day of prision correccional as minimum to seven (7) years and one (1) day of prision mayor as of obtaining employment for them abroad. In the absence of any evidence that the prosecution witnesses were
maximum, and to indemnify the complainant Beny Maligaya in the amount of P35,000.00, with interest thereon at motivated by improper motives, the trial court's assessment of the credibility of the witnesses shall not be interfered
12% per annum until the said amount is fully paid, with costs against the said accused. with by this Court.[13]
B. In Criminal Case No. Q-91-21909, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a) The fact that accused-appellant did not sign all the receipts issued to complainants does not weaken the case of
of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby the prosecution. A person charged with illegal recruitment may be convicted on the strength of the testimonies of the
sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of two (2) years, four (4) complainants, if found to be credible and convincing.[14] The absence of receipts to evidence payment does not
months and one (1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor as warrant an acquittal of the accused, and it is not necessarily fatal to the prosecution's cause.[15]
maximum, and to indemnify the complainant Angeles Javier in the amount of P20,000.00 with interest thereon at Accused-appellant contends that he could not have committed the crime of illegal recruitment in large scale since
12% per annum until the said amount is fully paid, with costs against said accused. Nancy Avelino, a labor and employment officer at the POEA, testified that licenses for recruitment and placement are
C. In Criminal Case No. Q-91-21910, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a) issued only to corporations and not to natural persons. This argument is specious and illogical. The Labor Code
of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby states that "any person or entity which, in any manner, offers or promises for a fee employment to two or more
sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of two (2) years, four (4) persons shall be deemed engaged in recruitment and placement."[16] Corrolarily, a nonlicensee or nonholder of
months and one (1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor as authority is any person, corporation or entity which has not been issued a valid license or authority to engage in
maximum, and to indemnify the complainant Leodigario Maullon in the amount of P30,400.00 with interest thereon at recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked,
12% per annum until the said amount is fully paid, with costs against said accused. or canceled by the POEA or the Secretary.[17] It also bears stressing that agents or representatives appointed by a
D. In Criminal Case No. Q-91-21911, guilty beyond reasonable doubt of Illegal Recruitment in Large Scale as licensee or a holder of authority but whose appointments are not previously authorized by the POEA fall within the
defined and punished under Article 38 (b) in relation to Article 39 (a) of the Labor Code of the Philippines as meaning of the term nonlicensee or nonholder of authority.[18] Thus, any person, whether natural or juridical, that
amended, and this Court sentences the accused Romulo Saulo to suffer the penalty of life imprisonment and to pay engages in recruitment activities without the necessary license or authority shall be penalized under Art. 39 of the
a fine of One Hundred Thousand Pesos (P100,000.00). Labor Code.
Being a detention prisoner, the accused Romulo Saulo shall be entitled to the benefits of Article 29 of the It is well established in jurisprudence that a person may be charged and convicted for both illegal recruitment and
Revised Penal Code as amended. estafa. The reason for this is that illegal recruitment is a malum prohibitum, whereas estafa is malum in se, meaning
SO ORDERED.[9] that the criminal intent of the accused is not necessary for conviction in the former, but is required in the latter.[19]

Labor Standards | To digest (old cases) | Ajean Tuazon| 7


The elements of estafa under Art. 315, paragraph 2 (a), of the Revised Penal Code are: (1) that the accused has In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the amount of
defrauded another by abuse of confidence or by deceit, and (2) that damage or prejudice capable of pecuniary P20,000.00, accused-appellant shall suffer the indeterminate penalty of one (1) year, eight (8) months and twenty-
estimation is caused to the offended party or third person.[20] The trial court was correct in holding accused- one (21) days of prision correccional minimum to five (5) years, five (5) months and eleven (11) days of prision
appellant liable for estafa in the case at bench. Owing to accused-appellant's false assurances that he could provide correccional maximum. Accused-appellant shall also pay Angeles Javier P20,000.00 by way of actual damages.
them with work in another country, complainants parted with their money, to their damage and prejudice, since the In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in the amount of
promised employment never materialized. P30,400.00, accused-appellant shall suffer the indeterminate penalty of four (4) years and two (2) months of prision
Under Art. 315 of the Revised Penal Code, the penalty for the crime of estafa is as follows: correccional medium, as minimum to eight (8) years of prision mayor, as maximum. Accused-appellant shall also
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the pay Leodigario Maullon P30,400.00 by way of actual damages.
amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds the latter In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911) and pursuant to
sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty of life imprisonment and a fine of One
additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years. In such cases, Hundred Thousand Pesos (P100,000.00).
and in connection with the accessory penalties which may be imposed under the provisions of this Code, the penalty Costs against accused-appellant.
shall be termed prision mayor or reclusion temporal, as the case may be. SO ORDERED.
xxx xxx xxx Melo, (Chairman), Vitug, and Panganiban, JJ., concur.
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be that which, in view of the APPRENTICES
attending circumstances, could be properly imposed under the Revised Penal Code, and the minimum shall be 248 SCRA 654
within the range of the penalty next lower to that prescribed for the offense. Since the penalty prescribed by law for G.R. No. L-114337, September 29, 1995
the estafa charge against accused-appellant is prision correccional maximum to prision mayor minimum, the penalty NITTO ENTERPRISES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and ROBERTO CAPILI,
next lower in degree is prision correccional minimum to medium. Thus, the minimum term of the indeterminate respondents.
sentence should be anywhere within six (6) months and one (1) day to four (4) years and two (2) months. DECISION
In fixing the maximum term, the prescribed penalty of prision correccional maximum to prision mayor minimum KAPUNAN, J.:
should be divided into three equal portions of time, each of which portion shall be deemed to form one period, as This is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the decision 1 rendered by
follows - public respondent National Labor Relations Commission, which reversed the decision of the Labor Arbiter.
Minimum Period : From 4 years, 2 months and 1 day to 5 years, 5 months and 10 days Briefly, the facts of the case are as follows:
Medium Period : From 5 years, 5 months and 11 days to 6 years, 8 months and 20 days Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto
Maximum Period : From 6 years, 8 months and 21 days to 8 years Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship
pursuant to Article 65, in relation to Article 64, of the Revised Penal Code. agreement 2 for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of
When the amounts involved in the offense exceeds P22,000, the penalty prescribed in Article 315 of the Revised P66.75 which was 75% of the applicable minimum wage.
Penal Code shall be imposed in its maximum period, adding one year for each additional P10,000.00, although the At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working
total penalty which may be imposed shall not exceed twenty (20) years.[21] on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital.
Accordingly, the following penalties shall be imposed upon accused-appellant: Later that same day, after office hours, private respondent entered a workshop within the office premises which
In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the amount of was not his work station. There, he operated one of the power press machines without authority and in the process
P35,000.00, one year for the additional amount of P13,000.00 in excess of P22,000.00 provided for in Article 315 injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent.
shall be added to the maximum period of the prescribed penalty of prision correccional maximum to prision mayor The following day, Roberto Capili was asked to resign in a letters 3 which reads:
minimum. Thus, accused-appellant shall suffer the indeterminate penalty of four (4) years, and two (2) months of August 2, 1990
prision correccional medium, as minimum to nine (9) years of prision mayor as maximum.[22] Accused-appellant Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano gamitin and "TOOL"
shall also pay Benny Maligaya P35,000.00 by way of actual damages. sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng tool at may disgrasya at nadamay pa ang isang
In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the amount of sekretarya ng kompanya.
P20,000.00, accused-appellant shall suffer the indeterminate penalty of one (1) year, eight (8) months and twenty- Sa araw ding ito limang (5) minuto ang nakakalipas mula alas-singko ng hapon siya ay pumasok sa shop na
one (21) days of prision correccional minimum to five (5) years, five (5) months and eleven (11) days of prision hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot ang makina at nadisgrasya niya ang kanyang
correccional maximum. Accused-appellant shall also pay Angeles Javier P20,000.00 by way of actual damages. sariling kamay.
In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in the amount of Nakagastos ang kompanya ng mga sumusunod:
P30,400.00, accused-appellant shall suffer the indeterminate penalty of four (4) years and two (2) months of prision Emergency and doctor fee P715.00
correccional medium, as minimum to eight (8) years of prision mayor, as maximum.[23] Accused-appellant shall also Medicines (sic) and others 317.04
pay Leodigario Maullon P30,400.00 by way of actual damages. Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang tahi ng kanyang
In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911) and pursuant to kamay.
Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty of life imprisonment and a fine of One Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng Agosto, 1990.
Hundred Thousand Pesos (P100,000.00). Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang kamay, pagkatapos ng
WHEREFORE, the March 6, 1996 Decision of the trial court finding accused-appellant guilty beyond reasonable siyam na araw mula ika-2 ng Agosto.
doubt of the crime of illegal recruitment in large scale and estafa is hereby AFFIRMED subject to the following
modifications: Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama ng kanyang
In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the amount of confirmasyon at pag-ayon na ang lahat ng nakasulat sa itaas ay totoo.
P35,000.00, one year for the additional amount of P13,000.00 in excess of P22,000.00 provided for in Article 315 xxx xxx xxx
shall be added to the maximum period of the prescribed penalty of prision correccional maximum to prision mayor Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala sa hindi pagsunod sa
minimum. Thus, accused-appellant shall suffer the indeterminate penalty of four (4) years, and two (2) months of alintuntunin ng kompanya.
prision correccional medium, as minimum to nine (9) years of prision mayor as maximum. Accused-appellant shall (Sgd.) Roberto Capili
also pay Benny Maligaya P35,000.00 by way of actual damages.

Labor Standards | To digest (old cases) | Ajean Tuazon| 8


Roberto Capili Petitioner's argument is erroneous.
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in The law is clear on this matter. Article 61 of the Labor Code provides:
consideration of the sum of P1,912.79. 4 Contents of apprenticeship agreement. - Apprenticeship agreements, including the main rates of apprentices,
Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration Branch, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not
National Capital Region a complaint for illegal dismissal and payment of other monetary benefits. exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private respondent as valid case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with
and dismissing the money claim for lack of merit. The dispositive portion of the ruling reads: apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop
WHEREFORE, premises considered, the termination is valid and for cause, and the money claims dismissed for standard model programs of apprenticeship.
lack of merit. In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on
The respondent however is ordered to pay the complainant the amount of P500.00 as financial assistance. May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder.". On the same
SO ORDERED 5 date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capili was valid. First, Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence
private respondent who was hired as an apprentice violated the terms of their agreement when he acted with gross of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was
negligence resulting in the injury not only to himself but also to his fellow worker. Second, private respondent had signed.
shown that "he does not have the proper attitude in employment particularly the handling of machines without Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that
authority any proper training. 6 apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with
On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision of the Labor the apprenticeship program duly approved by the Minister of Labor and Employment.
Arbiter, the dispositive portion of which reads: Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is,
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby directed to reinstate therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into.
complainant to his work last performed with backwages computed from the time his wages were withheld up to the The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a
time he is actually reinstated. The Arbiter of origin is hereby directed to further hear complainant's money claims and preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice
to dispose them on the basis of law and evidence obtaining. relationship.
SO ORDERED. 7 Article 57 of t he Labor Code provides that the State aims to "establish national apprenticeship program through
The NLRC declared that private respondent was a regular employee of petitioner by ruling thus: the participation of employers, workers and government and non-government agencies" and "to establish
As correctly pointed out by the complainant, we cannot understand how an apprenticeship agreement filed with apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior
the Department of Labor only on June 7, 1990 could be validly used by the Labor Arbiter as basis to conclude that approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such
the complainant was hired by respondent as a plain 'apprentice' on May 28, 1990. Clearly, therefore, the apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements
complainant was respondent' s regular employee under Article 280 of the Labor Code, as early as May 28, 1990 cannot be debased.
who thus enjoyed the security of tenure guaranteed in Section 3, Article XIII of our 1987 Constitution. Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in
The complaint being for illegal dismissal (among others) it then behooves upon respondent, pursuant to Art. the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he
277(b) and as ruled in Edwin Gesulgon vs. NLRC, et al. (G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserve credence. He should rightly
prove that the dismissal of complainant was for a valid cause. Absent such proof, we cannot but rule that the be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code:
complainant was illegally dismissed. 8 ART. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
representative was present. where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
On April 22, 1994, a Writ of Execution was issued, which reads: business or trade of the employer, except where the employment has been fixed for a specific project or undertaking
NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the Writ, you are hereby the completion or termination of which has been determined at the time of the engagement of the employee or
commanded to proceed to the premises of [petitioner] Nitto Enterprises and Jovy Foster located at No. 1 74 Araneta where the work or services to be performed is seasonal in nature and the employment is for the duration of the
Avenue, Portero, Malabon, Metro Manila or at any other places where their properties are located and effect the season.
reinstatement of herein [private respondent] to his work last performed or at the option of the respondent by payroll An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided That, any
reinstatement. employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
You are also to collect the amount of P122,690.85 representing his backwages as called for in the dispositive considered a regular employee with respect to the activity in which he is employed and his employment shall
portion, and turn over such amount to this Office for proper disposition. continue while such activity exists. mphasis supplied)
Petitioner filed a motion for reconsideration but the same was denied. and pursuant to the constitutional mandate to "protect the rights of workers and promote their welfare." 9
Hence, the instant petition-for certiorari. Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
The issues raised before us are the following: There is an abundance of cases wherein the Court ruled that the twin requirements of due process, substantive
I. WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN and procedural, must be complied with, before valid dismissal exists. 10 Without which, the dismissal becomes
HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE. void.
II. WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN The twin requirements of notice and hearing constitute the essential elements of due process. This simply means
HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN that the employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of
TERMINATING THE SERVICE OF PRIVATE RESPONDENT. his representative, if he so desires.
We find no merit in the petition Ample opportunity connotes every kind of assistance that management must accord the employee to enable him
Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be considered an to prepare adequately for his defense including legal representation 11
apprentice since no apprenticeship program had yet been filed and approved at the time the agreement was As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12
executed. The law requires that the employer must furnish the worker sought to be dismissed with two (2) written notices
Petitioner further insists that the mere signing of the apprenticeship agreement already established an employer- before termination of employee can be legally effected: (1) notice which apprises the employee of the particular acts
apprentice relationship. or omissions for which his dismissal is sought, and (2) the subsequent notice which informs the employee of the

Labor Standards | To digest (old cases) | Ajean Tuazon| 9


employer's decision to dismiss him (Sec. 13, BP130, Sec. 2-6 Rule XIV, Book V, Rules and Regulations amount of P7,176.00 (P138.75 x 26 x 2 mos.). All other dispositions of the Arbiter as appearing in the dispositive
Implementing the Labor Code as amended). Failure to comply with the requirements taints the dismissal with portion of his decision are AFFIRMED.
illegality. This procedure is mandatory; in the absence of which, any judgment reached by management is void and SO ORDERED.[7]
inexistent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122, Ruffy Upon denial of Palad’s motion for reconsideration, Palad filed a special civil action for certiorari with the Court
vs. NLRC. 182 SCRA 365 L [1990]). of Appeals. On 12 November 2001, the Court of Appeals rendered a decision, the dispositive portion of which reads:
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days after he was WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby SET ASIDE and a
made to sign a Quitclaim, a clear indication that such resignation was not voluntary and deliberate. new one entered, to wit:
Private respondent averred that he was actually employed by petitioner a delivery boy ("kargador" or (a) finding the dismissal of petitioner to be illegal;
"pahinante"). (b) ordering private respondent to pay petitioner her underpayment in wages;
He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation letter and (c) ordering private respondent to reinstate petitioner to her former position without loss of seniority rights and to pay
quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that anyway, he did not have her full backwages computed from the time compensation was withheld from her up to the time of her reinstatement;
a choice. 13 (d) ordering private respondent to pay petitioner attorney’s fees equivalent to ten (10%) per cent of the monetary
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's alleged award herein; and
resignation and subsequent execution of a Quitclaim and Release. A judicious examination of both events belies any (e) ordering private respondent to pay the costs of the suit.
spontaneity on private respondent's part. SO ORDERED.[8]
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor Relations The Ruling of the Court of Appeals
Commission, the appealed decision is hereby AFFIRMED. The Court of Appeals held that the apprenticeship agreement which Palad signed was not valid and binding
SO ORDERED. because it was executed more than two months before the TESDA approved petitioner’s apprenticeship program.
Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur. The Court of Appeals cited Nitto Enterprises v. National Labor Relations Commission,[9] where it was held that prior
CENTURY CANNING CORPORATION, Petitioner, versus COURT OF APPEALS and GLORIA C. PALAD, approval by the DOLE of the proposed apprenticeship program is a condition sine qua non before an apprenticeship
Respondents., G.R. No. 152894, 2007 Aug 17, 2nd Division agreement can be validly entered into.
DECISION The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of Appeals ruled that
CARPIO, J.: petitioner failed to show that Palad was properly apprised of the required standard of performance. The Court of
The Case Appeals likewise held that Palad was not afforded due process because petitioner did not comply with the twin
This is a petition for review[1] of the Decision[2] dated 12 November 2001 and the Resolution dated 5 April requirements of notice and hearing.
2002 of the Court of Appeals in CA-G.R. SP No. 60379. The Issues
The Facts Petitioner raises the following issues:
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as “fish cleaner” at 1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PRIVATE
petitioner’s tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement[3] with petitioner. RESPONDENT WAS NOT AN APPRENTICE; and
Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner submitted its apprenticeship 2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT
program for approval to the Technical Education and Skills Development Authority (TESDA) of the Department of PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE
Labor and Employment (DOLE). On 26 September 1997, the TESDA approved petitioner’s apprenticeship program. SERVICE OF PRIVATE RESPONDENT.[10]
[4] The Ruling of the Court
According to petitioner, a performance evaluation was conducted on 15 November 1997, where petitioner The petition is without merit.
gave Palad a rating of N.I. or “needs improvement” since she scored only 27.75% based on a 100% performance Registration and Approval by the TESDA of Apprenticeship Program Required Before Hiring of Apprentices
indicator. Furthermore, according to the performance evaluation, Palad incurred numerous tardiness and absences. The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship agreement
As a consequence, petitioner issued a termination notice[5] dated 22 November 1997 to Palad, informing her of her with an employer.[11] One of the objectives of Title II (Training and Employment of Special Workers) of the Labor
termination effective at the close of business hours of 28 November 1997. Code is to establish apprenticeship standards for the protection of apprentices.[12] In line with this objective, Articles
Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated 13th 60 and 61 of the Labor Code provide:
month pay for the year 1997. ART. 60. Employment of apprentices. — Only employers in the highly technical industries may employ apprentices
On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but ordered petitioner to pay and only in apprenticeable occupations approved by the Minister of Labor and Employment. mphasis supplied)
Palad her last salary and her pro-rated 13th month pay. The dispositive portion of the Labor Arbiter’s decision reads: ART. 61. Contents of apprenticeship agreements. — Apprenticeship agreements, including the wage rates of
WHEREFORE, premises considered, judgment is hereby rendered declaring that the complaint for illegal apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of
dismissal filed by the complainant against the respondents in the above-entitled case should be, as it is hereby apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal
DISMISSED for lack of merit. However, the respondents are hereby ordered to pay the complainant the amount of minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into
ONE THOUSAND SIX HUNDRED THIRTY-TWO PESOS (P1,632.00), representing her last salary and the amount only in accordance with apprenticeship programs duly approved by the Minister of Labor and Employment. The
of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT (P7,228.00) PESOS representing her prorated 13th Ministry shall develop standard model programs of apprenticeship. mphasis supplied)
month pay. In Nitto Enterprises v. National Labor Relations Commission,[13] the Court cited Article 61 of the Labor Code
All other issues are likewise dismissed. and held that an apprenticeship program should first be approved by the DOLE before an apprentice may be hired,
otherwise the person hired will be considered a regular employee. The Court held:
SO ORDERED.[6]
On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the Labor Arbiter’s In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed
decision, thus: on May 28, 1990 allegedly employing the latter as an apprentice in the trade of “care maker/molder.” On the same
WHEREFORE, premises considered, the decision of the Arbiter dated 25 February 1999 is hereby date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and
MODIFIED in that, in addition, respondents are ordered to pay complainant’s backwages for two (2) months in the Employment. However, the apprenticeship agreement was filed only on June 7, 1990. Notwithstanding the absence
of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was
signed.

Labor Standards | To digest (old cases) | Ajean Tuazon| 10


Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance employer.
with the apprenticeship program duly approved by the Minister of Labor and Employment. Illegal Termination of Palad
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, We shall now resolve whether petitioner illegally dismissed Palad.
therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into. Under Article 279[22] of the Labor Code, an employer may terminate the services of an employee for just
The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a causes[23] or for authorized causes.[24] Furthermore, under Article 277(b)[25] of the Labor Code, the employer
preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice must send the employee who is about to be terminated, a written notice stating the causes for termination and must
relationship. give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid dismissal from
Article 57 of the Labor Code provides that the State aims to “establish a national apprenticeship program employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the
through the participation of employers, workers and government and non-government agencies” and “to establish employee must be afforded an opportunity to be heard and to defend himself.[26]
apprenticeship standards for the protection of apprentices.” To translate such objectives into existence, prior In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor
approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor Code, habitual
apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements absenteeism and poor efficiency of performance are among the valid causes for which the employer may terminate
cannot be debased. the apprenticeship agreement after the probationary period.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force and However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palad’s termination:
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent’s assertion As to the validity of complainant’s dismissal in her status as an apprentice, suffice to state that the findings of
that he was hired not as an apprentice but as a delivery boy (“kargador” or “pahinante”) deserves credence. He the Arbiter that complainant was dismissed due to failure to meet the standards is nebulous. What clearly appears is
should rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code x x x. that complainant already passed the probationary status of the apprenticeship agreement of 200 hours at the time
mphasis supplied)[14] she was terminated on 28 November 1997 which was already the fourth month of the apprenticeship period of 1000
Republic Act No. 7796[15] (RA 7796), which created the TESDA, has transferred the authority over hours. As such, under the Code, she can only be dismissed for cause, in this case, for poor efficiency of
apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA.[16] RA 7796 performance on the job or in the classroom for a prolonged period despite warnings duly given to the apprentice.
emphasizes TESDA’s approval of the apprenticeship program as a pre-requisite for the hiring of apprentices. Such We noted that no clear and sufficient evidence exist to warrant her dismissal as an apprentice during the
intent is clear under Section 4 of RA 7796: agreed period. Besides the absence of any written warnings given to complainant reminding her of “poor
SEC. 4. Definition of Terms. — As used in this Act: performance,” respondents’ evidence in this respect consisted of an indecipherable or unauthenticated xerox of the
xxx performance evaluation allegedly conducted on complainant. This is of doubtful authenticity and/or credibility, being
j) “Apprenticeship” training within employment with compulsory related theoretical instructions involving a contract not only incomplete in the sense that appearing thereon is a signature (not that of complainant) side by side with a
between an apprentice and an employer on an approved apprenticeable occupation; date indicated as “1/16/98”. From the looks of it, this signature is close to and appertains to the typewritten position
k) “Apprentice” is a person undergoing training for an approved apprenticeable occupation during an established of “Division/Department Head”, which is below the signature of complainant’s immediate superior who made the
period assured by an apprenticeship agreement; evaluation indicated as “11-15-97.”
l) “Apprentice Agreement” is a contract wherein a prospective employer binds himself to train the apprentice who in The only conclusion We can infer is that this evaluation was made belatedly, specifically, after the filing of the
turn accepts the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and case and during the progress thereof in the Arbitral level, as shown that nothing thereon indicate that complainant
responsibilities of each party; was notified of the results. Its authenticity therefor, is a big question mark, and hence lacks any credibility.
m) “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite body and approved for Evidence, to be admissible in administrative proceedings, must at least have a modicum of authenticity. This,
apprenticeship by the Authority [TESDA]; mphasis supplied) respondents failed to comply with. As such, complainant is entitled to the payment of her wages for the remaining
In this case, the apprenticeship agreement was entered into between the parties before petitioner filed its two (2) months of her apprenticeship agreement.[27] mphasis supplied)
apprenticeship program with the TESDA for approval. Petitioner and Palad executed the apprenticeship agreement Indeed, it appears that the Labor Arbiter’s conclusion that petitioner validly terminated Palad was based
on 17 July 1997 wherein it was stated that the training would start on 17 July 1997 and would end approximately in mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that she had no
December 1997.[17] On 25 July 1997, petitioner submitted for approval its apprenticeship program, which the knowledge of the performance evaluation conducted and that she was not even informed of the result of the alleged
TESDA subsequently approved on 26 September 1997.[18] Clearly, the apprenticeship agreement was enforced performance evaluation. Palad also claims she did not receive a notice of dismissal, nor was she given the chance
even before the TESDA approved petitioner’s apprenticeship program. Thus, the apprenticeship agreement is void to explain. According to petitioner, Palad did not receive the termination notice because Palad allegedly stopped
because it lacked prior approval from the TESDA. reporting for work after being informed of the result of the evaluation.
The TESDA’s approval of the employer’s apprenticeship program is required before the employer is allowed Under Article 227 of the Labor Code, the employer has the burden of proving that the termination was for a
to hire apprentices. Prior approval from the TESDA is necessary to ensure that only employers in the highly technical valid or authorized cause.[28] Petitioner failed to substantiate its claim that Palad was terminated for valid reasons.
industries may employ apprentices and only in apprenticeable occupations.[19] Thus, under RA 7796, employers In fact, the NLRC found that petitioner failed to prove the authenticity of the performance evaluation which petitioner
can only hire apprentices for apprenticeable occupations which must be officially endorsed by a tripartite body and claims to have conducted on Palad, where Palad received a performance rating of only 27.75%. Petitioner merely
approved for apprenticeship by the TESDA. This is to ensure the protection of apprentices and to obviate possible relies on the performance evaluation to prove Palad’s inefficiency. It was likewise not shown that petitioner ever
abuses by prospective employers who may want to take advantage of the lower wage rates for apprentices and apprised Palad of the performance standards set by the company. When the alleged valid cause for the termination
circumvent the right of the employees to be secure in their employment. of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.[29]
The requisite TESDA approval of the apprenticeship program prior to the hiring of apprentices was further Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance evaluation on
emphasized by the DOLE with the issuance of Department Order No. 68-04 on 18 August 2004. Department Order Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad denies any knowledge of the
No. 68-04, which provides the guidelines in the implementation of the Apprenticeship and Employment Program of performance evaluation conducted and of the result thereof. Petitioner likewise admits that Palad did not receive the
the government, specifically states that no enterprise shall be allowed to hire apprentices unless its apprenticeship notice of termination[30] because Palad allegedly stopped reporting for work. The records are bereft of evidence to
program is registered and approved by TESDA.[20] show that petitioner ever gave Palad the opportunity to explain and defend herself. Clearly, the two requisites for a
Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before the valid dismissal are lacking in this case.
TESDA’s approval of petitioner’s apprenticeship program, Palad is deemed a regular employee performing the job of WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution dated 5 April 2002 of
a “fish cleaner.” Clearly, the job of a “fish cleaner” is necessary in petitioner’s business as a tuna and sardines the Court of Appeals in CA-G.R. SP No. 60379.
factory. Under Article 280[21] of the Labor Code, an employment is deemed regular where the employee has been SO ORDERED.

Labor Standards | To digest (old cases) | Ajean Tuazon| 11


ANTONIO T. CARPIO WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended for possible
Associate Justice employment with the BANK;
WE CONCUR: LEONARDO A. QUISUMBING, CONCHITA CARPIO MORALES, DANTE O. TINGA, PRESBITERO NOW, THEREFORE, for and in consideration of the foregoing premises and in compliance with Article 80 of the
J. VELASCO, JR. Labor Code of the Philippines as amended, the BANK and the EMPLOYEE have entered into this Employment
HANDICAPPED WORKERS Contract as follows:
310 SCRA 186 1. The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees to diligently and faithfully
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL work with the BANK, as Money Sorter and Counter.
ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., 2. The EMPLOYEE shall perform among others, the following duties and responsibilities:
CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS i Sort out bills according to color;
REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE CABANDUCOS, ii. Count each denomination per hundred, either manually or with the aid of a counting machine;
COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. iii. Wrap and label bills per hundred;
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V. GRUELA, BERNADETH D. iv. Put the wrapped bills into bundles; and
AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA v. Submit bundled bills to the bank teller for verification.
MATA, ARIEL DEL PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE 3. The EMPLOYEE shall undergo a training period of one (1) month, after which the BANK shall determine whether
CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. or not he/she should be allowed to finish the remaining term of this Contract.
PARDO & RICO TIMOSA, petitioners vs. NATIONAL LABOR RELATIONS COMMISSION & FAR EAST BANK 4. The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day, subject to adjustment in the sole
AND TRUST COMPANY, respondents., G.R. No. 122917, 1999 Jul 12, 3rd Division) judgment of the BANK, payable every 15th and end of the month.
DECISION 5. The regular work schedule of the EMPLOYEE shall be five (5) days per week, from Mondays thru Fridays, at eight
PANGANIBAN, J.: (8) hours a day. The EMPLOYEE may be required to perform overtime work as circumstance may warrant, for which
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same terms and overtime work he/she [shall] be paid an additional compensation of 125% of his daily rate if performed during
conditions of employment as qualified able-bodied employees. Once they have attained the status of regular ordinary days and 130% if performed during Saturday or [a] rest day.
workers, they should be accorded all the benefits granted by law, notwithstanding written or verbal contracts to the 6. The EMPLOYEE shall likewise be entitled to the following benefits:
contrary. This treatment is rooted not merely on charity or accommodation, but on justice for all. i. Proportionate 13th month pay based on his basic daily wage.
The Case ii. Five (5) days incentive leave.
Challenged in the Petition for Certiorari1 [Rollo, pp. 3-39.] before us is the June 20, 1995 Decision2 [Rollo, pp. 46- iii. SSS premium payment.
65.] of the National Labor Relations Commission (NLRC),3 [Penned by Presiding Comm. Lourdes C. Javier and 7. The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK Rules and Regulations and
concurred in by Comm. Joaquin A. Tanodra. The other member, Comm. Ireneo B. Bernardo, dissented.] which Policies, and to conduct himself/herself in a manner expected of all employees of the BANK.
affirmed the August, 22 1994 ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiter’s Decision disposed as 8. The EMPLOYEE acknowledges the fact that he/she had been employed under a special employment program of
follows:4 [Rollo, p. 113.] the BANK, for which reason the standard hiring requirements of the BANK were not applied in his/her case.
"WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for lack of merit." Consequently, the EMPLOYEE acknowledges and accepts the fact that the terms and conditions of the employment
Also assailed is the August 4, 1995 Resolution5 [Rollo, pp. 73-74.] of the NLRC, which denied the Motion for generally observed by the BANK with respect to the BANK’s regular employee are not applicable to the EMPLOYEE,
Reconsideration. and that therefore, the terms and conditions of the EMPLOYEE’s employment with the BANK shall be governed
The Facts solely and exclusively by this Contract and by the applicable rules and regulations that the Department of Labor and
The facts were summarized by the NLRC in this wise:6 [NLRC Decision, pp. 2-10; rollo, pp. 47-55.] Employment may issue in connection with the employment of disabled and handicapped workers. More specifically,
"Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various periods from 1988 to the EMPLOYEE hereby acknowledges that the provisions of Book Six of the Labor Code of the Philippines as
1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded amended, particularly on regulation of employment and separation pay are not applicable to him/her.
agreement called ‘Employment Contract for Handicapped Workers’. (pp. 68 & 69, Records) The full text of said 9. The Employment Contract shall be for a period of six (6) months or from ____ to ____ unless earlier terminated by
agreement is quoted below: the BANK for any just or reasonable cause. Any continuation or extension of this Contract shall be in writing and
‘EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS therefore this Contract will automatically expire at the end of its terms unless renewed in writing by the BANK.
This Contract, entered into by and between: IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____ day of _________________,
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly organized and existing under and ____________ at Intramuros, Manila, Philippines.’
by virtue of the laws of the Philippines, with business address at FEBTC Building, Muralla, Intramuros, Manila, "In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in 1990, nineteen (19); in
represented herein by its Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred to as the 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their employment[s] were renewed every six months such
‘BANK’); that by the time this case arose, there were fifty-six (56) deaf-mutes who were employed by respondent under the
- and - said employment agreement. The last one was Thelma Malindoy who was employed in 1992 and whose contract
________________, ________________ years old, of legal age, _____________, and residing at expired on July 1993.
__________________ (hereinafter referred to as the (‘EMPLOYEE’). xxxxxxxxx
WITNESSETH: That "Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Company maintained
that complainants who are a special class of workers – the hearing impaired employees were hired temporarily under
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need to provide disabled and [a] special employment arrangement which was a result of overtures made by some civic and political personalities
handicapped persons gainful employment and opportunities to realize their potentials, uplift their socio-economic well to the respondent Bank; that complainant[s] were hired due to ‘pakiusap’ which must be considered in the light of the
being and welfare and make them productive, self-reliant and useful citizens to enable them to fully integrate in the context of the respondent Bank’s corporate philosophy as well as its career and working environment which is to
mainstream of society; maintain and strengthen a corps of professionals trained and qualified officers and regular employees who are
WHEREAS, there are certain positions in the BANK which may be filled-up by disabled and handicapped persons, baccalaureate degree holders from excellent schools which is an unbending policy in the hiring of regular
particularly deaf-mutes, and the BANK ha[s] been approached by some civic-minded citizens and authorized employees; that in addition to this, training continues so that the regular employee grows in the corporate ladder; that
government agencies [regarding] the possibility of hiring handicapped workers for these positions; the idea of hiring handicapped workers was acceptable to them only on a special arrangement basis; that it adopted
the special program to help tide over a group of handicapped workers such as deaf-mutes like the complainants who

Labor Standards | To digest (old cases) | Ajean Tuazon| 12


could do manual work for the respondent Bank; that the task of counting and sorting of bills which was being As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this recourse to
performed by tellers could be assigned to deaf-mutes; that the counting and sorting of money are tellering works this Court.9 [The case was deemed submitted for resolution on December 1, 1998, when the Memorandum of the
which were always logically and naturally part and parcel of the tellers’ normal functions; that from the beginning private respondent was received by the Court.
there have been no separate items in the respondent Bank plantilla for sorters or counters; that the tellers The case was given due course on December 8, 1997.]
themselves already did the sorting and counting chore as a regular feature and integral part of their duties (p. 97, The Ruling of the NLRC
Records); that through the ‘pakiusap’ of Arturo Borjal, the tellers were relieved of this task of counting and sorting In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under Article
bills in favor of deaf-mutes without creating new positions as there is no position either in the respondent or in any 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:
other bank in the Philippines which deals with purely counting and sorting of bills in banking operations." "We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were
Petitioners specified when each of them was hired and dismissed, viz:7 [Petition, p. 12; rollo, p. 14.] hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were
"NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed covered by xxx Employment Contract[s] with special provisions on duration of contract as specified under Art. 80.
1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 93 Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the
2. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 94 parties."10 [NLRC Decision, p. 18; rollo, p. 63.]
3. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 93 The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing
4. DAVID P. PASCUA Bel-Air 15 OCT 88 21 NOV 94 circumstances/milieu of the case."
5. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 94 Issues
6. ALBERT HALLARE West 4 JAN 91 9 JAN 94 In their Memorandum, petitioners cite the following grounds in support of their cause:
7. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 93 "I. The Honorable Commission committed grave abuse of discretion in holding that the petitioners - money sorters
8. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 93 and counters working in a bank - were not regular employees.
9. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 94 "II. The Honorable Commission committed grave abuse of discretion in holding that the employment contracts signed
10. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 93 and renewed by the petitioners - which provide for a period of six (6) months - were valid.
11. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 93 "III. The Honorable Commission committed grave abuse of discretion in not applying the provisions of the Magna
12. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 93 Carta for the Disabled (Republic Act No. 7277), on proscription against discrimination against disabled persons."11
13. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 93 [Petitioners’ Memorandum, p. 3; rollo, p. 474.]
14. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 93 In the main, the Court will resolve whether petitioners have become regular employees.
15. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 93 This Court’s Ruling
16. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 93 The petition is meritorious. However, only the employees, who worked for more than six months and whose
17. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 93 contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal.
18. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 93 Preliminary Matter: Propriety of Certiorari
19. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 93 Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the NLRC is not
20. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 93 allowed in a petition for certiorari. Specifically, it maintains that the Court cannot pass upon the findings of public
21. ROBERT MARCELO West 31 JUL 938 1 AUG 93 respondents that petitioners were not regular employees.
22. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 93 True, the Court, as a rule, does not review the factual findings of public respondents in a certiorari proceeding. In
23. JOSE E. SALES West 6 AUG 92 12 OCT 93 resolving whether the petitioners have become regular employees, we shall not change the facts found by the public
24. ISABEL MAMAUAG West 8 MAY 92 10 NOV 93 respondent. Our task is merely to determine whether the NLRC committed grave abuse of discretion in applying the
25. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 94 law to the established facts, as above-quoted from the assailed Decision.
26. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 93 Main Issue: Are Petitioners Regular Employees?
27. MELODY V. GRUELA West 28 OCT 91 3 NOV 93 Petitioners maintain that they should be considered regular employees, because their task as money sorters and
28. BERNADETH D. AGERO West 19 DEC 90 27 DEC 93 counters was necessary and desirable to the business of respondent bank. They further allege that their contracts
29. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 93 served merely to preclude the application of Article 280 and to bar them from becoming regular employees.
30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93 Private respondent, on the other hand, submits that petitioners were hired only as "special workers and should not in
31. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 94 any way be considered as part of the regular complement of the Bank."12 [Respondent’s Memorandum, p. 10; rollo,
32. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 93 p.523.] Rather, they were "special" workers under Article 80 of the Labor Code. Private respondent contends that it
33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93 never solicited the services of petitioners, whose employment was merely an "accommodation" in response to the
34. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 93 requests of government officials and civic-minded citizens. They were told from the start, "with the assistance of
35. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 94 government representatives," that they could not become regular employees because there were no plantilla
36. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 93 positions for "money sorters," whose task used to be performed by tellers. Their contracts were renewed several
37. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 93 times, not because of need "but merely for humanitarian reasons." Respondent submits that "as of the present, the
38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93 ‘special position’ that was created for the petitioners no longer exist[s] in private respondent [bank], after the latter
39. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 93 had decided not to renew anymore their special employment contracts."
40. PINKY BALOLOA West 3 JUN 91 2 DEC 93
41. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC] At the outset, let it be known that this Court appreciates the nobility of private respondent’s effort to provide
42. GRACE S. PARDO West 4 APR 90 13 MAR 94 employment to physically impaired individuals and to make them more productive members of society. However, we
43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93" cannot allow it to elude the legal consequences of that effort, simply because it now deems their employment
8 [This is a typographical error on the part of the petitioner, for it is unlikely that the Contract of Employment was irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show
terminated the day after it was executed. In fact, Annex "C" of petitioners’ Position Paper, which was submitted that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal
before the labor arbiter, shows that Petitioner Robert Marcelo was hired on July 31, 1992, not 1993 (Rollo, p. 10)] rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of
law and justice.

Labor Standards | To digest (old cases) | Ajean Tuazon| 13


The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza,
after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and
contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless Grace S. Pardo.
renewed in writing by the employer, the contract shall automatically expire at the end of the term. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making
According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments,
Code, which provides: ad infinitum."15 [CENECO v. NLRC, 236 SCRA 108, September 1, 1994, per Puno, J.] The contract signed by
"ART. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an employment petitioners is akin to a probationary employment, during which the bank determined the employees’ fitness for the
agreement with them, which agreement shall include: job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees
(a) The names and addresses of the handicapped workers to be employed; thereby became regular employees.16 [Ibid.; Article 281, Labor Code.] No employer is allowed to determine
(b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the indefinitely the fitness of its employees.
applicable legal minimum wage; As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be
(c) The duration of employment period; and terminated only for a just or authorized cause. Because respondent failed to show such cause,17 [Articles 282 to 284
(d) The work to be performed by handicapped workers. of the Code.] these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages
The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized and reinstatement without loss of seniority rights and other privileges.18 [Article 279 of the Labor Code as amended.]
representatives." Considering the allegation of respondent that the job of money sorting is no longer available because it has been
The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding events assigned back to the tellers to whom it originally belonged,19 [Respondent’s Memorandum, p. 16; rollo, p. 529.]
and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons),13 [Approved on March 24, 1992.] petitioners are hereby awarded separation pay in lieu of reinstatement.20 [Zarate v. Olegario, 263 SCRA 1, October
however, justify the application of Article 280 of the Labor Code. 7, 1996.]
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the Because the other sixteen worked only for six months, they are not deemed regular employees and hence not
contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the entitled to the same benefits.
handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to Applicability of the Brent Ruling
the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. Respondent bank, citing Brent School v. Zamora21 [181 SCRA 802, February 6, 1990.] in which the Court upheld
In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. the validity of an employment contract with a fixed term, argues that the parties entered into the contract on equal
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD Secretary
same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides: Mita Pardo de Tavera and Representative Arturo Borjal.
"Section 5. Equal Opportunity for Employment.No disabled person shall be denied access to opportunities for We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were disabled, and
suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of that the bank had to determine their fitness for the position. Indeed, its validity is based on Article 80 of the Labor
employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified Code. But as noted earlier, petitioners proved themselves to be qualified disabled persons who, under the Magna
able bodied person." Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied
The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. The validation of the
ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus limit imposed on their contracts, imposed by reason of their disability, was a glaring instance of the very mischief
covered by Article 280 of the Labor Code, which provides: sought to be addressed by the new law.
"ART. 280. Regular and Casual Employment. -- The provisions of written agreement to the contrary notwithstanding Moreover, it must be emphasized that a contract of employment is impressed with public interest.22 [Article 1700 of
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the the Civil Code provides: "The relations between capital and labor are not merely contractual. They are so impressed
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or with public interest that labor contracts must yield to the common good. x x x."] Provisions of applicable statutes are
trade of the employer, except where the employment has been fixed for a specific project or undertaking the deemed written into the contract, and the "parties are not at liberty to insulate themselves and their relationships from
completion or termination of which has been determined at the time of the engagement of the employee or where the the impact of labor laws and regulations by simply contracting with each other."23 [Pakistan Airlines Corporation v.
work or services to be performed is seasonal in nature and the employment is for the duration of the season. Ople, 190 SCRA 90, September 28, 1990, per Feliciano, J. See also Servidad v. NLRC, GR No. 128682, March 18,
"An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any 1999; Villa v. NLRC, 284 SCRA 105, January 14, 1998.] Clearly, the agreement of the parties regarding the period of
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate that
considered as regular employee with respect to the activity in which he is employed and his employment shall petitioners must be treated as qualified able-bodied employees.
continue while such activity exists." Respondent’s reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ng
The test of whether an employee is regular was laid down in De Leon v. NLRC,14 [176 SCRA 615, 621, August 21, Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from 8:00 a.m. to
1989, per Fernan, CJ.] in which this Court held: 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this task "could not
"The primary standard, therefore, of determining regular employment is the reasonable connection between the be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night."24
particular activity performed by the employee in relation to the usual trade or business of the employer. The test is [Respondent’s Memorandum, p. 15; rollo, p. 528.] We find no basis for this argument. Travelling at night involves
whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their employment.
can be determined by considering the nature of the work performed and its relation to the scheme of the particular Other Grounds Cited by Respondent
business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing need for its Respondent argues that petitioners were merely "accommodated" employees. This fact does not change the nature
performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the of their employment. As earlier noted, an employee is regular because of the nature of work and the length of
employment is considered regular, but only with respect to such activity, and while such activity exists." service, not because of the mode or even the reason for hiring them.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. Equally unavailing are private respondent’s arguments that it did not go out of its way to recruit petitioners, and that
With the exception of sixteen of them, petitioners performed these tasks for more than six months. Thus, the its plantilla did not contain their positions. In L. T. Datu v. NLRC,25 [253 SCRA 440, 450, February 9, 1996, per
following twenty-seven petitioners should be deemed regular employees: Marites Bernardo, Elvira Go Diamante, Kapunan, J.] the Court held that "the determination of whether employment is casual or regular does not depend on
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George the will or word of the employer, and the procedure of hiring x x x but on the nature of the activities performed by the
P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. employee, and to some extent, the length of performance and its continued existence."

Labor Standards | To digest (old cases) | Ajean Tuazon| 14


Private respondent argues that the petitioners were informed from the start that they could not become regular sold at public auction, with GSIS as the winning bidder. The latter, in turn, sold the property to the Centertown
employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this point. Still, we are Marketing Corporation (CMC) which assigned all its rights to its sister-corporation, the Manila Tower Development
not persuaded. The well-settled rule is that the character of employment is determined not by stipulations in the Corporation (MTDC) for P21,000,000.00. The HIBTAI protested, claiming that its members had the priority to buy
contract, but by the nature of the work performed.26 [A.M. Oreta & Co. v. NLRC, 176 SCRA 208, August 10, 1989.] the property.[3] The tenants refused to pay their rentals and instead remitted them to HIBTAI.
Otherwise, no employee can become regular by the simple expedient of incorporating this condition in the contract of On June 29, 1981, the City Engineer wrote the MTDC, through Luis Javellana, requesting that the defects of the
employment. building be corrected. The City Engineer warned the MTDC that the defects were serious and would endanger the
In this light, we iterate our ruling in Romares v. NLRC:27 [GR No. 122327, August 19, 1998, per Martinez, J.] lives of the tenants if not immediately corrected. The City Engineer reiterated his request in a letter dated July 10,
"Article 280 was emplaced in our statute books to prevent the circumvention of the employee’s right to be secure in 1981 to MTDC urging that the building be immediately repaired. However, before the MTDC could make the
his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept necessary repairs, the HIBTAI, on October 2, 1982, filed a complaint against the GSIS for injunction and damages in
of regular employment defined therein. Where an employee has been engaged to perform activities which are the Court of First Instance (CFI) of Manila.
usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee On January 31, 1983, the court rendered judgment dismissing the complaint. However, on February 23, 1983,
and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment. HIBTAI filed another complaint for annulment of contract and damages in the CFI of Manila, docketed as Civil Case
"x x x x x x x x x No. 83-15875, against the CMC, MTDC and GSIS. It averred that under Presidential Decree (P.D.) No. 1517, the
"At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent tenants had the priority right to purchase the property. The court rendered judgment dismissing the complaint,
cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in ‘term prompting HIBTAI to appeal the decision to the appellate court. The ruling of the trial court was later affirmed on
employment’ should not be the activities that the employee is called upon to perform but the day certain agreed upon February 4, 1986. HIBTAI assailed the ruling in this Court via petition for review. On June 30, 1987, this Court
the parties for the commencement and termination of their employment relationship. But this Court went on to say rendered judgment affirming the decision of the CA.[4] According to the Court, the tenants of the building, not the
that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of HIBTAI, were the real parties-in-interest as parties-plaintiffs.
tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and About eight (8) years later, on October 12, 1995, Atty. Samuel S. Samuela, the building administrator, wrote
morals." Architect Juan A. Maravillas, Jr., then Officer-in-Charge (OIC), Office of the Building Official, City of Manila,
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but requesting for an immediate ocular inspection of the building to determine its safety. The letter mentioned that, as
also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled far back as 1981, the City Engineer and Building Official had ordered the building condemned after inspection. Atty.
Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified Samuela stated that when the MTDC was about to initiate the repairs on the building, the tenants filed several suits
persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their against it; this prevented MTDC from complying with the said order. During the pendency of these cases, the
work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should tenants likewise took control of the building and even illegally put up structures in the building without MTDC’s
they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness consent. He pleaded to the Building Official to give priority to his request to prevent undue injuries and protect the
for the work assigned to them, they should be treated and granted the same rights like any other regular employees. lives of the tenants.[5]
In this light, we note the Office of the Solicitor General’s prayer joining the petitioners’ cause.28 [Manifestation of the The City Building Official granted the request and scheduled an ocular inspection of the building at 2:00 p.m. on
Office of the Solicitor General; rollo, pp. 354-375.] October 24, 1995.[6]
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision and the August With prior notices to the tenants and in the presence of a representative of HIBTAI, Amado Ramoneda, the
4, 1995 Resolution of the NLRC are REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company is representatives of the Office of the Building Official conducted an ocular inspection of the building.[7] On November
hereby ORDERED to pay back wages and separation pay to each of the following twenty-seven (27) petitioners, 3, 1995, they submitted a Building Inspection Report with the following findings:
namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, I. STRUCTURAL ASPECT (Sec. 3.1 Rule VII-IRR)
Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel 1. Cracks on the exterior interior walls are prominent which manifest earthquake movement and decrease in
Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. seismic resistance. Damages to beams and columns are feasible.
Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie II. ELECTRICAL ASPECT (Sec. 3.3 Rule VII-IRR)
Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed to 2. Wiring system are already old, obsolete and not properly maintained;
compute the exact amount due each of said employees, pursuant to existing laws and regulations, within fifteen days 3. Some junction boxes are not properly covered thus exposing the wiring connections;
from the finality of this Decision. No costs. 4. Usage of dangling extension cords and octopus wiring connections were likewise observed.
SO ORDERED. III. SANITARY/PLUMBING ASPECT (Sec. 3.5 Rule VII-IRR)
Romero (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur. 5. Defective sanitary/plumbing installations;
BONIFACIO NAKPIL, Petitioner, versus MANILA TOWERS DEVELOPMENT CORPORATION, Respondent., 6. Poor drainage system that caused the stagnation of waste water within the back part (Ground Floor) of the
G.R. No. 160867, 2006 Sep 20, 1st Division) building;
DECISION 7. All sanitary/plumbing fixtures on vacated 9th, 10th & 11th floors, due to lack of proper maintenance has los[t]
CALLEJO, SR., J.: their trap seals, this allowed the escape of toxicating sewer gas from the system.
This is a consolidation of two Petitions for Review, assailing the Decision[1] of the Court of Appeals (CA) in CA- IV. ARCHITECTURAL ASPECT (Sec. 3.6 Rule VII-IRR).
G.R. CV No. 72289 dated August 25, 2003 and the Resolution dated November 19, 2003 denying the motion for 8. Steel frames and roofings at deck are rusted/corroded and inadequately maintained;
reconsideration thereof. 9. Broken window glass panes and rusted steel casement;
The Antecedents 10. Inadequate light and ventilation resulting from illegal constructions at the required open space areas;
A 14-storey high rise building was constructed at 777 Ongpin St., Sta. Cruz, Manila. Sometime in 1964, its owner, 11. Illegal use of 14th floor as sauna bath parlor which is non-conforming to City Ordinance.
Cheong Kiao Ang, leased the building to about 200 Filipino Chinese tenants who used the same for either residential OTHERS
or commercial purposes. One of these tenants was Atty. Bonifacio Nakpil who leased Room 204 in the mezzanine 12. Non-compliance with the provisions of BP 344, the Law to Enhance Mobility of Disabled Persons;
floor. He used the unit as his law office.[2] The tenants of the building later formed the House International Building 13. Illegal construction at the estero easement area and at the required open spaces in violations of Section 3.8
Tenants Association, Inc. (HIBTAI). Rule VII-IRR.[8] nderscoring supplied)
The property was mortgaged with the Government Service Insurance System (GSIS) as security for a loan Ang had The City Building Official recommended that the windows glass/frames be repaired and the illegally appended
earlier obtained. Upon failure to pay the loan, the GSIS had the real estate mortgage foreclosed and the property structures removed. It was also recommended that the use of the sauna bath be discontinued and the old electrical

Labor Standards | To digest (old cases) | Ajean Tuazon| 15


wiring system and fixtures be replaced. He also stated that the structural integrity of the building was questionable, For your information and further instruction.
and that structural testing was needed.[9] (SGD)
Consequently, on November 10, 1995, the City Building Official wrote a letter to the building administrator, ordering MELVIN Q. BALAGOT
him to cause the tenants to vacate the building and undertake the necessary repairs and rehabilitation of the Engineer V
building. The following warning was also issued: Chief, Slum Clearance and
Failure to comply herewith shall constrain this Office to impose further administrative sanctions in accordance with Demolition Services.[16]
the provisions of the National Building Code PD. 1096, as well as the other existing laws and ordinances. This is Upon his arrival in the Philippines, Atty. Nakpil filed, on November 5, 1996, a complaint in the Regional Trial Court
without prejudice to further legal action that may be taken under the provisions of Articles 482 and 694 to 707 of the (RTC) of Manila against the MTDC, seeking for actual, moral, and exemplary damages, attorney’s fees, litigation
Civil Code of the Philippines.[10] expenses, costs of suit and other reliefs. The case was docketed as Civil Case No. 65980. He alleged that the
However, the MTDC did not respond to the letter. On January 24, 1996, the City Building Official issued a Closure MTDC, through its agents and representatives and the policemen who accompanied the demolition team, forced the
Order to the MTDC and ordered the building administrator to cause the tenants to vacate the building within fifteen guard to open the gate to the building, and, thereafter, 200 people armed with hammer and crowbars started
(15) days from notice and to commence its repair. He also directed MTDC to file an application for the necessary destroying the mezzanine floor of the building on July 19, 1996. His room was destroyed, the walls and partitions
permits before the start of the actual repairs, together with a certification on structural stability from the building’s were completely hammered down, and the electricity was cut off. His personal belongings were either scattered,
structural designer and to attach thereto the results of the structural testing as well as the thrown away, or stolen. He pointed out that he had been renting the premises and complying with the conditions of
recommendation/evaluation reports, scope of project activities, repair/renovation plans and retrofitting plans. The the lease since 1965. The MTDC violated his right as lessee to the possession of the premises, unlawfully depriving
order would only be lifted after the defects or deficiencies of the subject building or structure shall have been him of said possession without any lawful authority or court order.[17]
corrected or substantially complied with in accordance with Section 21, Rule VIII-IRR, P.D. No. 1096, without Atty. Nakpil prayed that MTDC be ordered to pay the following:
prejudice to further action that may be taken under the provisions of Articles 482, and 694 to 707 of the Civil Code, a) P100,000 for actual damages, representing the value of the personal belongings and important papers which
as well as other existing laws and ordinances.[11] were lost and/or stolen by the representatives of the defendant during the actual demo[li]tion and tearing or
The City Building Official conducted a reinspection of the building and, on March 26, 1996, made the following hammering down of the walls and partitions of the room of the plaintiff;
recommendation: b) The sum of P500,000.00 as moral damages;
It is recommended that because of: c) The sum of P100,000.00 as exemplary damages;
1) the adamant refusal of the owners of the building to correct the serious defects noted by this Office as early d) The sum equivalent to 20% of the amount due to the plaintiff as attorney’s fees; and
as 1981 up to the present, notwithstanding notices to this effect; e) The sum of P50,000 as litigation expenses, plus costs of suit.
2) the directive of national as well as local leaders to intensify the campaign against buildings which are Plaintiff prays for such other relief and remedies he is entitled to in the premises.[18]
dangerous to life and limb as exemplified in the tragic Ozone case in Quezon City; and Meantime, the trial court dismissed the complaint of Ong in Civil Case No. 96-79267. In view of this development,
3) the possibility of City officials incurring criminal as well as administrative liabilities for failure to take positive the Office of the Mayor sent a letter dated March 6, 1998 to the President and officers of the MTDC, and the owners
steps to protect the lives of the people against ruinous or dangerous buildings. of the building, directing them to undertake immediate repairs within three (3) days from receipt thereof, otherwise, it
The persistence of the owners of the building in not undertaking the required urgent repairs allegedly because of will undertake the repair and all expenses shall be charged against them.[19] The Office of the Mayor made it clear
suits filed against them, gives this Office no better alternative but to recommend that the City Engineer be authorized that the order became necessary to protect the people from any injury as a consequence of the dilapidated and
and directed to make the necessary repairs and all expenses thereto be shouldered by the owners of the building serious deterioration of the building. The MTDC forthwith applied for a demolition permit with the Office of the
and also to order the occupants of the building to immediately vacate the premises to give way to the repair and to Building Official which was granted on March 30, 1998.[20] The MTDC later had the building demolished.
ensure the protection of their lives and property. In due course, the complaint and summons were served on MTDC on April 14, 1998 in Civil Case No. 65980.[21] In
Approval of this request is urgently needed.[12] its answer to the complaint, MTDC alleged that it was the City of Manila which caused the repair of the building,
The City Mayor approved the recommendation and directed the repairs of the building by the City Building Official following the tragic Ozone fire incident in Quezon City. Consequently, it was not liable for Atty. Nakpil’s claims.
with the expenses therefor to be charged against the account of MTDC.[13] Atty. Nakpil testified that he had been a lessee of Room 204 and used the room as a law office; on July 19, 1996, he
On June 28, 1996, notices were sent to the tenants, giving them fifteen (15) days within which to vacate the building was in the United States for treatment when his daughter informed him, through phone, that his place was being
to give way to its general repair.[14] However, at the time, Atty. Nakpil was in the United States for medical demolished. He rushed back home and arrived in Manila on July 30, 1996, and discovered that he had no more
treatment, and his secretary was left behind to take care of the law office. office to speak of. The demolition team (the sheriff, policemen and laborers), armed with crowbars, looted the room
Felix Ong, one of the tenants in the building and the President of the HIBTAI, filed a petition for prohibition with a and destroyed the pipes and cabinets and scattered his things.[22] He lost some of his books, a tanguile table, three
plea for a writ of preliminary injunction and/or a temporary restraining order (TRO) with damages against the MTDC, paintings, two manual typewriters, all valued at P100,000.00. He averred that he had been in the law practice for 30
City Engineer and Police Major Franklin Gacutan, docketed as Civil Case No. 96-79267. Ong prayed that a TRO be years, all spent in Room 204; because of the demolition of his office, he could not resume his law practice.
issued to enjoin respondents from conducting repair and rehabilitation work within the building, which the court For his part, Joseph Villanueva declared that, since 1973, he had leased a portion of the mezzanine floor,
granted. Room 200, which he used as his clinic. At around 3:00 p.m. on July 19, 1996, a group of employees of the City
Clemente Sy, who claimed to be the Barangay Captain of Barangay No. 297, Zone 29 where the building was Engineer’s Office, accompanied by policemen and sheriffs, gained entry into the building, cut the electric current, and
located and the incumbent President of the House International Building Tenants Association, filed a similar petition destroyed the pipes with the use of heavy equipments and crowbars. They demolished the mezzanine and upper
against the same respondents, including MTDC.[15] floors and other parts of the building. Around 20 members of the demolition crew entered the office of Atty. Nakpil.
At about 4:00 p.m. on July 19, 1996, a group of men led by Engr. Melvin Balagot, the Chief Slum Clearance and Some members of the demolition crew looted the room and took everything they could carry. He stated that what he
Demolition Services of the Office of the City Building Official, entered the building and, in compliance with the order and the tenants received were notices to repair and not notice of demolition.
of the City Mayor as recommended by the City Building Official, commenced the repairs and tore down some of the
structures. However, the repair works were temporarily suspended on July 22, 1996 as a result of the TRO issued Atty. Nakpil presented Engr. Guillermo de Leon who testified that he was requested to conduct an ocular inspection
by the court in favor of Ong in Civil Case No. 96-79267. of the building. As per his report dated August 9, 1990, he assessed the building to be safe, sound and stable. The
On July 23, 1996, Engr. Balagot submitted the following Report: building was not destroyed by the earthquake on July 6, 1990. He found hairline cracks, caused probably by
1. That all the occupants thereat already vacated the premises to give way for the repair work of the subject temperature. He never used any instrument to determine the structural stability because there was no danger. He
structure except for the unit occupied by the security guards at the ground floor; stated that upon inspection, he found no hairline cracks and that the building could be saved by plastering; in fact, it
2. That most of the interior walls were already dismantled by this Office to give way for immediate replacement. could withstand any earthquake.
3. It is likewise reported that the said building is not safe for occupancy for the meantime.

Labor Standards | To digest (old cases) | Ajean Tuazon| 16


Carmelita Tan, a member of the HIBTAI, testified that she owned a grocery store in the ground floor and in the the property. Moreover, Nakpil failed to prove that it had anything to do with the demolition/repairs and the loss of
mezzanine. At about 4:00 p.m. on July 19, 1996, 100 persons, carrying hammers and crowbars and long irons, his personal property.
gained entry into the building. She rushed to the mezzanine and saw that ten of them were in the law office of Atty. Nakpil counters that while MTDC may have failed to make the necessary repairs because it was prevented by the
Nakpil and that the door and partitions were damaged. The lights were off at the time. tenants’ association from doing so, there is no showing that it failed to maintain him in the peaceful
MTDC adduced testimonial and documentary evidence that the Office of the City Engineer, through Engr. Melvin and adequate possession of the leased premises for the same reason. He contends that MTDC allowed the city to
Balagot, Jr., commenced the repairs of the building on July 19, 1996, with the assistance of the employees of the demolish the building even when the order was only for its repair. He posits that the MTDC is liable for damages
City Engineer’s Office, laborers and policemen who were tasked to check the flow of traffic. They removed the because the MTDC, not a third person, deprived him of his possession of the leased premises.[33]
cracked interior walls of the building with crowbars, hammers and other instruments, and some portions of the ceiling The threshold issues are: (1) whether or not the MTDC is liable for actual, moral and exemplary damages to Nakpil;
which needed to be replaced.[23] However, they did not remove the walls and partitions in the mezzanine floor.[24] and (2) whether the award of P50,000.00 for nominal damages has factual and legal basis.
They started the work on the 9th and 10th floors of the building,[25] but had to stop due to the temporary restraining The Ruling of the Court
order from the RTC of Manila on the complaint of Felix Ong. During the ocular inspection of the building on August The petition of the MTDC in G.R. No. 160886 is meritorious. The petition of Nakpil in G.R. No. 160867 is denied for
8, 1996 conducted by the Clerk of Court in connection with Civil Case No. 96-79267, the Office of Atty. Nakpil was lack of merit.
unoccupied.[26] Article 1654 of the Civil Code enumerates the obligations of the lessor:
On May 20, 2001, the court rendered judgment in favor of MTDC and ordered the dismissal of the complaint. The (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;
trial court declared that Atty. Nakpil failed to prove that the building was demolished on July 30, 1996 and failed to (2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use for which
link MTDC to the incident on July 19, 1996 and the loss of the personal properties of Atty. Nakpil. As admitted by it has been devoted, unless there is a stipulation to the contrary;
one of his witnesses (Villanueva), the employees of the City Engineer’s office were the ones who demolished the (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the
building, while Carmelita Tan declared that she did not know who those people were.[27] contract.
Atty. Nakpil appealed to the CA. On August 25, 2003, the CA rendered judgment granting the appeal and reversing Failure of the lessor to fulfill any of these obligations will render the lessor liable for damages.[34] In contracts, the
the decision of the RTC. The fallo of the decision reads: obligor (lessor) who acted in good faith is liable for damages that are the material and probable consequence of the
WHEREFORE premises considered, the appealed decision of the Regional Trial Court, Branch 152 in Civil Case No. breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time the
is hereby REVERSED and SET ASIDE. A new one is hereby rendered ordering defendant-appellee, Manila Towers obligation was contracted. In case of fraud, bad faith, malice or wanton attitude, he shall be responsible for all
to pay herein plaintiff-appellant Bonifacio Nakpil the amount of P50,000.00 as nominal damages. damages which may be reasonably attributed to the non-performance of the obligation.[35]
SO ORDERED.[28] We do not agree with the ruling of the CA that the MTDC committed a breach of its lease contract with Nakpil when it
The CA held that MTDC was remiss in its duty as lessor under Article 1654, that is, to make the necessary repairs on failed to comply with its obligation as lessor, and that the MTDC is liable for nominal damages. Breach of contract is
the building. This led to the demolition of the leased premises, thereby disturbing the peaceful and adequate the failure without legal reason to comply with the terms of a contract. It is also defined as the failure, without legal
enjoyment of the lessee. Thus, the failure of MTDC to fulfill such obligation entitled Atty. Nakpil to damages. The excuse, to perform any promise which forms the whole or part of the contract.[36] There is no factual and legal basis
appellate court cited Goldstein v. Roces.[29] However, the CA also ruled that no actual damages could be awarded for any award for damages to respondent.
to Atty. Nakpil since he failed to present competent evidence to prove the actual damages sustained. Neither can The duty to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract
moral damages be awarded to him since he likewise failed to prove bad faith or any fraudulent act on the part of is merely a warranty that the lessee shall not be disturbed in his legal, and not physical, possession.[37] In the early
MTDC. Thus, no exemplary damages could likewise be awarded, and, consequently, he was not entitled to case of Goldstein v. Roces,[38] the Court, citing the commentaries of Manresa, pointed out that the obligation to
attorney’s fees. According to the CA, the most that could be adjudged in his favor was nominal damages for maintain the lessee in the peaceful and adequate enjoyment of the leased property seeks to protect the lessee not
violation of his right.[30] only from acts of third persons but also from the acts of the lessor, thus:
The parties filed their respective motions for reconsideration of the decision, which the CA denied in its Resolution The lessor must see that the enjoyment is not interrupted or disturbed, either by others’ acts [save in the case
dated November 19, 2003.[31] provided for in the article 1560 (now Article 1664)], or by his own. By his own acts, because, being the person
The parties filed their respective petitions for review on certiorari in this Court, seeking to reverse the decision and principally obligated by the contract, he would openly violate it if, in going back on his agreement, he should attempt
resolution of the appellate court. to render ineffective in practice the right in the thing he had granted to the lessee; and by others’ acts, because he
In G.R. No. 160867, Nakpil, petitioner therein, contends that, while actual damages must be proven as a general rule must guarantee the right he created, for he is obliged to give warranty in the manner we have set forth in our
and the amount of damages must possess at least a degree of certainty, it is not necessary to prove exactly how commentary on article 1553, and, in this sense, it is incumbent upon him to protect the lessee in the latter’s peaceful
much the loss was; it is enough that loss is proven. He insists that he has presented proof that he suffered losses enjoyment.[39]
when his office was demolished and the value he gave was a fair and reasonable assessment thereof. He maintains When the act of trespass is done by third persons, it must be distinguished whether it is trespass in fact or in law
that as of June 1995, there were already 245 volumes of the Supreme Court Reports Annotated (SCRA). In 1998, because the lessor is not liable for a trespass in fact or a mere act of trespass by a third person.[40] In the Goldstein
the value of each volume of the SCRA was P520.00; hence, the value of 245 volumes would be P127,400.00, a case, trespass in fact was distinguished from legal trespass, thus: “if the act of trespass is not accompanied or
matter which the court can take judicial notice of. Assuming that the evidence he presented is not sufficient to entitle preceded by anything which reveals a juridic intention on the part of the trespasser, in such wise that the lessee can
him to an award of actual damages, the P50,000.00 nominal damages awarded to him is too minimal. He maintains only distinguish the material fact, stripped of all legal form or reasons, we understand it to be trespass in fact only (de
that he is entitled to moral damages because the MTDC had the building demolished to have him evicted from his mero hecho).”[41] Further, the obligation under Article 1654(3) arises only when acts, termed as legal trespass
office; he suffered mental anguish and was embarrassed by his eviction; he had his law office for more than 30 years (perturbacion de derecho), disturb, dispute, object to, or place difficulties in the way of the lessee’s peaceful
and considered it his second home. enjoyment of the premises that in some manner cast doubt upon the right of the lessor by virtue of which the lessor
On the other hand, in G.R. No. 160886, MTDC, petitioner therein, avers that it cannot be made liable for actual, himself executed the lease.[42]
moral and exemplary damages because it had not been remiss in its duty to make the necessary repairs; it was What is evident in the present case is that the disturbance on the leased premises on July 19, 1996 was actually
prohibited from taking possession of the property by the tenants who had filed several suits against it.[32] It alleged done by the employees under the City Engineer of Manila and the City Building Official on orders of the City Mayor
that it acquired the building from the GSIS in 1981, and it was the HIBTAI that had been managing the affairs of the without the participation of the MTDC. It bears stressing that the City Building Official is authorized and mandated
said building and collected the rentals from the tenants. It pointed out that in CA-G.R. No. 04393, the CA ruled that under Section 214 of the National Building Code to order the repair, maintenance or demolition of the building found
the HIBTAI had no right to collect the rentals. Moreover, HIBTAI did not use the rentals to make the necessary or declared to be dangerous or ruinous, depending upon the degree of danger to life, health, safety and/or well-being
repairs but used it instead to pay its accounts and obligations. By their own actions, the tenants of the subject of the general public and its occupants as provided in Section 215 thereof. This is without prejudice to the provisions
building prevented MTDC from performing its duty to maintain them in their peaceful possession and enjoyment of of Articles 482, 694 and 707 of the New Civil Code. Sections 214 and 215 of the National Building Code read:
SECTION 214. Dangerous and Ruinous Buildings or Structures

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Dangerous buildings are those which are herein declared as such or are structurally unsafe or not provided with safe entitled Dy v. Government Service Insurance System.[48] In 1994, a similar complaint was filed against the GSIS by
egress, or which constitute a fire hazard, or are otherwise dangerous to human life, or which in relation to existing another tenant entitled Cruz v. GSIS.[49]
use, constitute a hazard to safety or health or public welfare because of inadequate maintenance, dilapidation, Even Nakpil admitted that the MTDC was prevented by the HIBTAI and its members from undertaking any repairs in
obsolescence, or abandonment; or which otherwise contribute to the pollution of the site or the community to an the building. The only recourse of the MTDC was for the repair/rehabilitation of the building through the Office of the
intolerable degree. City Engineer/City Building Official. Thus, in 1995, it requested for an immediate ocular inspection of the building to
SECTION 215. Abatement of Dangerous Building determine the condition and safety of the building under Sections 214 and
When any building or structure is found or declared to be dangerous or ruinous, the Building Official shall order its 215 of the National Building Code. The MTDC had no involvement in the actual repairs/rehabilitation of the building,
repair, vacation or demolition depending upon the degree of danger to life, health, or safety. This is without prejudice nor in the selection, supervision and control of the laborers to initially repair/rehabilitate the building.
to further action that may be taken under the provisions of Articles 482 and 694 to 707 of the Civil Code of the Moreover, Atty. Nakpil failed to present preponderance of evidence to prove that any of the laborers under the
Philippines. Office of the City Building Official/City Engineer carried away his books, table, painting, and typewriter. Villanueva
When the personnel of the City Building Official/City Engineer in coordination with the Philippine National Police merely testified that the laborers carried away “things they could carry.” The evidence of Nakpil shows that the
undertook the repair/rehabilitation of the building, they did so in the lawful performance of their duties, independently mezzanine floor was dark, as the lights had been turned off to prevent a conflagration. If at all the laborers had
of and separate from the obligation of the MTDC to effect the required immediate repair/rehabilitation of the building. taken any of the materials from any of the rooms in the building, these were building materials which they were
Admittedly, the MTDC requested the City Building Official for the inspection of the building to determine its safety, authorized to carry away under Section 10, Rule II of the Implementing Rules of the National Building Code which
conformably with its obligation under Article 1654 of the New Civil Code to maintain peaceful and adequate reads:
enjoyment of the tenants of the leased premises, and to insure the personal safety of the tenants and their 10. The building/structure as repaired or in case of demolition, the building materials gathered after the demolition
properties. At the time, the Ozone Bar and Grill in Quezon City had just been burned down, and many lives were thereof shall be held by the OBO until full reimbursement of the cost of repair, renovation, demolition and removal is
lost. made by the owner which, in no case, shall extend beyond thirty (30) days from the date of completion of the repair,
There is no question that the possession by respondent of the leased premises had been disturbed by the renovation, demolition and removal. After such period, said building materials of the building thus repaired,
attempt of the personnel of the City Building Official to repair and rehabilitate the building due to MTDC’s failure to renovated or removed shall be sold at public auction to satisfy the claim of the OBO. Any amount in excess of the
undertake the same. Any act or omission by the lessor which causes a substantial interference with the actual claim of the government realized from the sale of the building and/or building materials shall be delivered to the
possession of the lessee will constitute a breach of the obligation of quiet enjoyment. In some jurisdictions, the owner.
lessor’s failure to make repairs or alterations to the leased premises as required by public authorities, particularly Assuming that Atty. Nakpil lost any of his personal properties, at the very least, he should have inquired from
those that are substantial and structural in nature, constitutes constructive eviction, which makes the lessor liable for the office of the City Engineer/City Building Official and requested that they be returned to him.
damages.[43] Such conclusion is grounded on the fact that the lessors, in those cases, were obliged to make WHEREFORE, premises considered, the petition in G.R. No 160867 is DENIED. The petition in G.R. No. 160886 is
structural and substantial repairs on the leased property. The same doctrine could very well be applied in our GRANTED. The Decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the Regional
jurisdiction considering that, under our laws, the lessor is likewise obliged to make the necessary repairs on the Trial Court is AFFIRMED. No costs.
leased premises which would undoubtedly include those that are structural and substantial in nature. In fact, there SO ORDERED.
may be a constructive eviction if the landlord does a wrongful act or is guilty of any default or neglect whereby the ROMEO J. CALLEJO, SR.
leased premises are rendered unsafe, unfit, or unsuitable for occupancy, in whole, or in substantial part, for the WE CONCUR:
purposes for which they were leased.[44] ARTEMIO V. PANGANIBAN, CONSUELO YNARES-SANTIAGO, MA. ALICIA AUSTRIA-MARTINEZ, MINITA V.
It bears stressing, however, that two factors must exist before there can be a constructive eviction: (1) an act or CHICO-NAZARIO
omission by the landlord, or someone acting under his authority, which permanently interferes with the tenant’s EMPLOYER-EMPLOYEE RELATIONSHIP
beneficial enjoyment or use of the leased premises; and (2) an abandonment of possession by the lessee within a (DEALCO FARMS, INC., Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION),
reasonable time.[45] CHIQUITO BASTIDA, and ALBERT CABAN, Respondents., G.R. No. 153192, 2009 Jan 30, 3rd Division)
Nakpil failed to establish any of the foregoing factors. The City Building Official was tasked merely to DECISION
repair/rehabilitate the building and not to demolish the same and cause the placement eviction of the tenants. NACHURA, J.:
Neither did respondent abandon the leased premises. Admittedly, the MTDC failed to make the necessary repairs in Under review are Resolutions[1] of the Court of Appeals (CA) in CA-G.R. SP No. 68972 denying due course to and
the building despite requests of the City Building Official as early as June 29, 1981 and July 10, 1981. However, the dismissing petitioner Dealco Farms, Inc.’s petition for certiorari.
MTDC cannot be faulted for such failure. No less than the HIBTAI or its members prevented MTDC from instituting Petitioner is a corporation engaged in the business of importation, production, fattening and distribution of live cattle
the necessary repairs. Even Villanueva, Nakpil’s witness, admitted that HIBTAI objected to the orders of the City for sale to meat dealers, meat traders, meat processors, canned good manufacturers and other dealers in Mindanao
Building Official for the repair of the building.[46] and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City,
Moreover, a complaint for injunction and damages was filed by the HIBTAI on October 2, 1982 against the MTDC. Subic, Batangas, or Manila. In turn, these imported cattle are transported to, and housed in, petitioner’s farms in
Even after the dismissal of the complaint, on January 31, 1983, the HIBTAI filed a complaint against the GSIS, CMC Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle individually reach the market
and MTDC with the RTC of Manila for the nullification of weight of 430 to 450 kilograms.
the deed of conditional sale between the GSIS and the CMC and the deed of assignment executed by the defendant Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994,
CMC and the MTDC over the property. Plaintiff alleged therein that its members, presumably including Nakpil, the respectively, as escorts or “comboys” for the transit of live cattle from General Santos City to Manila. Respondents’
tenants in the building had the priority right under P.D. No. 1517 to purchase the property; that the CMC was not work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to
qualified to purchase the property from the GSIS under its Articles of Information and, hence, the deed of conditional prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be
sale was ultra vires; consequently, the deed of assignment executed by the CMC and its sister corporation was null safe from harm or death caused by a cattle fight or any such similar incident.
and void. The tenants in the building, including Nakpil, refused to pay rentals and remitted the same to the HIBTAI Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of
which used the money partly to finance its suits against the MTDC, thus depriving the latter from generating funds for petitioner, at which point, respondents’ work ceases. For every round trip travel which lasted an average of 12 days,
the repair of the building. In fine, the tenants, through the HIBTAI, already controlled the premises. The RTC respondents were each paid P1,500.00. The 12-day period is occasionally extended when petitioner’s customers are
dismissed the complaint of HIBTAI. The Intermediate Appellate Court affirmed the dismissal on February 4, 1986. delayed in receiving the cattle. In a month, respondents usually made two trips.
The HIBTAI filed a petition for review in this Court and, on June 30, 1987, the petition was denied for lack of merit. On October 15, 1999, respondents Bastida and Caban, together with Ramon Maquinsay and Roland Parrocha, filed
[47] The Court ruled that the HIBTAI had no personality to assail the contracts and to invoke P.D. No. 1517 for its a Complaint for illegal dismissal with claims for separation pay with full backwages, salary differentials, service
members, including Nakpil. Shortly, thereafter, in 1988, a complaint was filed against the GSIS by one of the tenants

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incentive leave pay, 13th month pay, damages, and attorney’s fees against petitioner, Delfin Alcoriza[2] and Paciano When in transit (usually two-and-one-half days) they do not queue to the mess hall, they are fed. x x x The caretaker
Danilo Ramis[3] before the National Labor Relations Commission (NLRC), Sub-Regional Arbitration Branch No. XI, is a component of the business, a part of the scheme of the operation. (NFL and Ricardo Garcia v. Bibiana Farms,
General Santos City. Although the four complainants collectively filed a case against petitioner, Maquinsay and Inc., NLRC CA No. XI-065089-99 (rab-xi-01-50026-98); prom. April 28, 2000).
Parrocha never appeared in any of the conferences and/or hearings before the Labor Arbiter. Neither did they sign More, it also appears that [respondents] had rendered service for more than one year doing the same task
the verification page of complainants’ position paper. Most importantly, Maquinsay and Parrocha executed affidavits repeatedly, thus, even assuming they were casual employees they may be considered regular employees with
in favor of petitioner praying for the dismissal of the complaint insofar as they were concerned. respect to the activity in which they were employed and their employment shall continue while such activity exists
It appears that, on August 19, 1999, respondents were told by a Jimmy Valenzuela, a hepe de viaje, that he had (last par. of Art. 280). [Respondents], in fact, were hired on October 29, 1994 (Bastida) and June 25, 1993 (Caban),
been instructed by Ramis to immediately effect their replacement. Valenzuela proffered no reason for respondents’ a fact which [petitioner] dismally failed to refute.
replacement. Respondents’ repeated attempts to see and meet with Ramis, as well as to write Alcoriza, proved futile, Given the foregoing, [petitioner’s] contention that [respondents] were independent contractors and free lancers
compelling them to file an illegal dismissal case against petitioner and its officers. deserves little consideration. Its argument that its usual trade or business (importation/production and fattening) ends
In all, respondents alleged in their position paper that: (1) they were illegally dismissed, as they never violated any of in General Santos City, and does not include transporting the cattle, does not persuade us.
petitioner’s company rules and policies; (2) their dismissal was not due to any just or authorized cause; and (3) [Petitioner’s] witnesses tried to corroborate [its] contention that [respondents] also offered their services to various
petitioner did not observe due process in effecting their dismissal, failing to give them written notice thereof. Thus, shippers and traders of cattle, not only to [petitioner]. Former complainants Maquinsay and Parrocha mentioned the
respondents prayed for money claims, i.e., salary differentials, service incentive leave pay, cost of living allowance names of these traders/buyers or shippers as Lozano Farms, Bibiana Farms and other big cattle feedlot farms in
(COLA) and 13th month pay. SOCSARGEN (Annexes “A” and “E,” [petitioner’s] position paper.) But not a modicum of evidence was adduced to
Petitioner, however, paints a different picture. Petitioner asserts that the finished cattle are sold to traders and prove payment of [respondent’s] services by any of these supposed traders or that [respondents] received
middlemen who undertake transportation thereof to Manila for distribution to the wet markets. In fact, according to instructions from them. There is also no record that shows that the trader/s actually shipped livestock and engaged
petitioner, the buyers and end-users of their finished cattle actually purchase the cattle as soon as they are the services of caretakers.[5]
considered ready for the market. Petitioner claims that once the finished cattle are bought by the buyers, these Accordingly, the Labor Arbiter granted respondents’ claim for separation pay, COLA and union service fees. The
buyers act separately from, and independently of, petitioner’s business. In this regard, the buyers themselves Labor Arbiter awarded respondents: (a) separation pay of one month for every year of service; (b) COLA, as
arrange, through local representatives, for the (a) hauling from petitioner’s farm to the port area; (b) shipment of the petitioner failed to prove payment thereof or its exemption therefrom; and (c) union service fees fixed at 10% of the
finished cattle to Manila; and (c) escort or “comboy” services to feed and water the cattle during transit. total monetary award. The Labor Arbiter computed respondents’ total monetary awards as follows:
In its position paper, petitioner relates only one instance when it engaged the services of respondents as “comboys.” NAME SEPARATION PAY COLA SUB-TOTAL
Petitioner maintains that their arrangement with respondents was only on a “per-trip” or “per-contract” basis to escort Chiquito Bastida P15,000.00 P2,400.00 P17,400.00
cattle to Manila which contemplated the cessation of the engagement upon return of the ship to the port of origin – Albert Caban 18,000.00 2,400.00 20,400.00
the General Santos City port. P37,800.00
Petitioner further narrates that sometime in 1998, and well into 1999, its import of cattle from Australia substantially Plus 10% Union Service Fees
decreased due to the devalued dollar. Consequently, petitioner was forced to downsize, and the sale and shipments 3,780.00
to Manila were drastically reduced. Thus, petitioner and/or its buyers no longer retained escort or “comboy” services. TOTAL ------ P41,580.00[6]
Ultimately, petitioner denies the existence of an employer-employee relationship with respondents. Petitioner posits However, the Labor Arbiter denied respondents’ claim for backwages, 13th month pay, salary differential, service
that: (a) respondents are independent contractors who offer “comboy” services to various shippers and traders of incentive leave pay and damages, to wit:
cattle, not only to petitioner; (b) in the performance of work on board the ship, respondents are free from the control But we deny the “claim” for backwages which was merely inserted in the prayer portion of [respondents’] position
and supervision of the cattle owner since the latter is interested only in the result thereof; (c) in the alternative, paper. Reasons are abundant why we decline to grant the same. In their complaint, [respondents] prayed for
respondents can only be considered as casual employees performing work not necessary and desirable to the usual separation pay (not reinstatement with consequent backwages) thereby indicating right from the start that they do not
business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise want to work with [petitioner] again. More importantly[,] during the conference held on January 6, 2000, [petitioner]
failed to complete the one-year service period, whether continuous or broken, set forth in Article 280[4] of the Labor manifested its willingness to reinstate [respondents] to their former work as [comboys] under the same terms and
Code, as petitioner’s shipments were substantially reduced in 1998-1999, thereby limiting the escort or “comboy” conditions but [respondents] answered that they do not want to return to work and instead are asking for payment of
activity for which respondents were employed. their separation pay. Finally[,] [respondents] do not dispute that [petitioner’s] downsizing of its escorts in 1999 was
On June 30, 2000, the Labor Arbiter found that respondents were employees of petitioner, thus: due to a legitimate cause, i.e., dollar devaluation.
[Petitioner] admits having engaged the services of [respondents] as caretakers or “comboys” (convoys) though it Also to go are [respondents’] labor standard claims for 13th month pay and service incentive leave pay as well as the
qualifies that it was on a “per trip” or “per contract” basis. It also admits paying their remuneration of P1,500.00 per claim for damages. We also deny the “claim” for salary differentials.
trip. It tacitly admits having terminated [respondents’] services when it said that [respondents] were among the group [Respondents] are not entitled to their claims for 13th month pay and service incentive leave pay because they were
of escorts who were no longer accommodated due to the decrease in volume of imports and shipments. [Petitioner] paid on task basis. The claim for damages is denied for lack of factual and legal basis as there is no showing that
also undoubtedly exercised control and supervision over [respondents’] work as caretakers considering that the respondent acted in bad faith in downsizing the number of its caretakers. It even appears that the same is due to a
value of the cattle shipped runs into hundreds of thousands of pesos. The preparation of the cattle for shipment, legitimate cause. The “claim” for salary differentials is denied on two grounds: (1) [these are] not prayed for in their
manning and feeding them prior to and during transit, and making a report upon return to General Santos City to tally complaint; and (2) for lack of merit. It takes not more than 3 days for the Gen. Santos-Manila trip. Even if we include
the records of the cattle shipped out versus cattle that actually reached Manila are certainly all in accordance with counting the return trip that would be total of six (6) days to the maximum. [Respondents] were paid P1,500.00 per
[petitioner’s] instructions. trip. Or, since they made an average of 2 trips/month they were paid P3,000.00 for a twelve (12) days’ work (or the
Thus, all the four elements in the determination of an employer-employee relationship being present, [x x x] equivalent of P250.00/day).[7]
[respondents] were, therefore, employees of [petitioner]. On appeal to the NLRC, the Fifth Division affirmed the Labor Arbiter’s ruling on the existence of an employer-
x x x [Respondents] also performed activities which are usually necessary or desirable in the usual business or trade employee relationship between the parties and the total monetary award of P41,580.00 representing respondents’
of [petitioner] (Art. 280, Labor Code). [Petitioner’s] contention, to the contrary, is erroneous. Transporting the cattle to separation pay, COLA and union service fees. The NLRC declared:
its main market in Manila is an essential and component aspect of [petitioner’s] operation. As held by [the NLRC’s] After a judicious review of the records of this case, we found no cogent reason to disturb the findings of the branch.
Fifth Division in one case: The presence of the four (4) elements in the determination of an employer-employee relationship has been clearly
Complainant’s task of escorting the livestock shipped to Manila, taking care of the livestock in transit, is an activity established by the facts and evidence on record, starting with the admissions of [petitioner] who acknowledged the
which is necessary and desirable in the usual business or trade of respondent. It is of judicial notice that the bulk of engagement of [respondents] as escorts of their cattles shipped from General Santos to Manila, and the
the market for livestock of big livestock raisers such as respondent is in Manila. Hogs do not swim, they are shipped.

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compensation of the latter at a fee of P1,500.00 per trip. The dates claimed by [respondents] that they were engaged SEC. 6. Order to comment. — x x x
remain not disputed by [petitioner] as observed by the branch. In petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56,
The element of control, jurisprudentially considered the most essential element of the four, has not been demolished shall be observed. x x x
by any evidence to the contrary. The branch has noticed that the preparation of the shipment of cattle, manning and SEC. 2. Rules applicable. — The procedure in original cases for certiorari, prohibition, mandamus, quo warranto and
feeding them while in transit, and making a report upon their return to General Santos that the cattle shipped and habeas corpus shall be in accordance with the applicable provisions of the Constitution, laws, and Rules 46, 48, 49,
which reached Manila actually tallied were all indicators of instructions, supervision and control by [petitioner] on 51, 52 and this Rules[.] x x x
[respondents’] performance of work as escorts for which they were hired. This we agree on all four[s]. The livestock SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. — x x x
shipment would cost thousands of pesos and the certainty of it reaching its destination would be the only thing any The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the
operator would consider at all [time] and under all circumstances. Nothing more, nothing less. It is illogical for dismissal of the petition.
[petitioner] to argue that the shipment was not necessary [or] desirable to their business, as their business was Quite apparent from the foregoing is that the CA did not err, much less commit grave abuse of discretion, in denying
mainly livestock production, because they were undeniably the owners of the cattle escorted by [respondents]. due course to and dismissing the petition for certiorari for its procedural defects. Petitioner’s failure to attach copies
Should losses of a shipment occur due to [respondents’] neglect these would still be [petitioners’] loss, and nobody of all pleadings and documents relevant and pertinent to its petition for certiorari warranted the outright dismissal
else’s. thereof.
At this point, we emphasize the fact that even on appeal [petitioner] declines to refute, by way of evidence, the Petitioner, however, invokes the righteous ends of substantial justice as would exempt it from adherence to
finding of the branch that they failed to prove the payment of [respondents’] services by any of the supposed traders, procedural rules. Petitioner claims that the merits of its case necessitate a liberal interpretation of the Rules of Court
or that said traders actually shipped livestock. This is the point where the case of NFL v. Bibiana Farms cited by leading to a reversal of the appellate court’s outright dismissal of its petition.
[petitioner] differs from the instant case in that bills of lading issued to, thus, in the name of the hog shippers were Regrettably, upon an evaluation of the merits of the petition, we do not find cause to disturb the findings of the Labor
submitted as proof that said shippers engaged, compensated and supervised the escorts or convoys in their work, Arbiter, affirmed by the NLRC, which are supported by substantial evidence.
and not the hog raisers.[8] The well-entrenched rule is that factual findings of administrative or quasi-judicial bodies, which are deemed to have
Undaunted, petitioner filed a petition for certiorari before the CA. As previously adverted to, the CA denied due acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even
course and dismissed the petition for the following procedural flaws: finality, and bind the Court when supported by substantial evidence.[11] Section 5, Rule 133 defines substantial
1) other material portions of the record referred to in the petition are not attached thereto such as the Complaint for evidence as “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
illegal dismissal and position papers of the parties, in violation of Sec. 3, Rule 46 of the 1997 Rules of Civil conclusion.”
Procedure; and Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases.
2) there is no written explanation why personal service was not resorted to, as required under Sec. 11, Rule 13, Ibid. [12] We may take cognizance of and resolve factual issues only when the findings of fact and conclusions of law of
[9] the Labor Arbiter are inconsistent with those of the NLRC and the CA.[13]
Petitioner’s motion for reconsideration was, likewise, denied by the appellate court. In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that respondents were not
Hence, this appeal positing the following issues: independent contractors, but employees of petitioner. In determining the existence of an employer-employee
1. Whether the CA gravely abused its discretion when it dismissed the petition for certiorari based on technical rules relationship between the parties, both the Labor Arbiter and the NLRC examined and weighed the circumstances
of procedure. against the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the
2. Whether the NLRC gravely abused its discretion when it affirmed the Labor Arbiter’s ruling on the existence of an power to dismiss, and (4) the power to control the employees’ conduct, or the so-called “control test.”[14] Of the four,
employer-employee relationship between the parties. the power of control is the most important element. More importantly, the control test merely calls for the existence of
3. Corollary thereto, whether the NLRC gravely erred when it affirmed the Labor Arbiter’s finding that respondents the right to control, and not necessarily the exercise thereof.[15]
were illegally dismissed by petitioner and the consequent award of money claims to respondents. Naturally, both petitioner’s and respondents’ claims are on opposite poles. Respondents aver that they were regular
At the outset, we observe that petitioner raises extraneous issues which were obviously not passed upon by employees of petitioner, designated as escorts or “comboys” for the latter’s cattle. Petitioner, on the other hand,
appellate court when the latter denied due course and dismissed outright the petition for certiorari. As such, the denies that claim, and simultaneously asserts that respondents are free lance escorts who offer their services to the
instant petition for review on certiorari directly assails the NLRC’s decision which mainly involves factual issues, such buyers, middlemen and traders of petitioner. Petitioner further asserts that its business is only confined to the
as whether respondents were employees of petitioner and if they are entitled to their money claims. fattening of cattle and their sale once they reach the required market weight. According to petitioner, its business
Petitioner is unconcerned with the CA’s reasons for dismissing the petition and, in fact, declares that the dismissal does not include the shipment of cattle, which is undertaken by the middlemen, traders and buyers, who, as owners
was done with grave abuse of discretion for sticking to the provisions of the Rules of Court – a “mere technicality” as thereof, engage respondents’ services to care for the cattle while in transit. Thus, petitioner ultimately asserts that
petitioner cavalierly puts it. Petitioner asseverates that the CA dismissal “defeat[s] substantial justice considering that respondents, at that juncture, were under the control and supervision of these middlemen, traders and buyers.
[it] has a strong cause of action against [respondents].” In all, petitioner submits that it had faithfully complied with To support the foregoing contentions, petitioner simply presents the affidavits of Maquinsay and Parrocha, original
Section 11, Rule 13 of the Rules of Court by submitting an explanation and a duly notarized affidavit of service of complainants before the Labor Arbiter, praying for the withdrawal of the complaint for illegal dismissal insofar as they
Maria Fe Sobrevega. Petitioner likewise points out that the Explanation for the resort to service of the petition for are concerned. Maquinsay and Parrocha both allege that their engagement with petitioner is on a “per-trip” or “per-
certiorari via registered mail is found on page 30 thereof. Curiously, however, only the copy of the same document contract” basis, and that they and their fellow “comboys” or escorts, herein respondents, did not offer their services to
submitted to the CA lacked an Explanation. petitioner alone.
We completely agree with the appellate court’s forthright dismissal of the petition for certiorari. Paying no heed to petitioner’s narration of the contemplated arrangement with respondents, the Labor Arbiter
Even if we are to overlook petitioner’s account on the curious case of the missing Explanation only in the CA’s copy pointed out the following:
of the petition, petitioner’s non-compliance with the requisites for the filing a petition for certiorari remains. We detect [Maquinsay and Parrocha, petitioner’s] witnesses, tried to corroborate [petitioner’s] contention that complainants also
petitioner’s ploy to sidestep a more fatal procedural error, i.e., the failure to attach copies of all pleadings and offered their services to various shippers and traders of cattle, not only to [petitioner]. Former complainants
documents relevant and pertinent to the petition for certiorari set forth in paragraph 2, Section 1, Rule 65 of the Rules Maquinsay and Parrocha mentioned the names of these traders/buyers or shippers as Lozano Farms, Bibiana
of Court which reads: Farms and other big cattle feedlot farms in SOCSARGEN (Annexes “A” and “B”, [petitioner’s] position paper). But not
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies a modicum of evidence was adduced to prove payment of [respondents’] services by any of these supposed traders
of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as or that [respondents] received instructions from them. There is also no record that the trader/s actually shipped
provided in the third paragraph of Section 3, Rule 46.[10] livestock and engaged the services of caretakers.[16]
Corollary thereto, the second paragraph of Section 6, Rule 65, the first paragraph of Section 2, Rule 56, and the last Echoing the same observation, the NLRC declared, thus:
paragraph of Section 3, Rule 46 respectively read:

Labor Standards | To digest (old cases) | Ajean Tuazon| 20


At this point, we emphasize the fact that even on appeal [petitioner] decline to refute, by way of evidence, the finding WE CONCUR: MA. ALICIA AUSTRIA-MARTINEZ, DANTE O. TINGA, MINITA V. CHICO-NAZARIO, DIOSDADO M.
of the branch that they failed to prove the payment of [respondents’] services by any of the supposed traders, or that PERALTA
said traders actually shipped livestock. This is the point where the case of NFL v. Bibiana Farms cited by [petitioner] EFREN P. PAGUIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES
differ from the instant case in that bills of lading issued to, thus, in the name of the hog shippers were submitted as CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D.
proof that said shippers engaged, compensated and supervised the escorts or convoys in their work, and not the hog GO and ALDA IGLESIA, respondents., G.R. No. 147816, 2003 May 9, 1st Division)
raisers.[17] DECISION
Yet, petitioner is adamant that its lack of documentary evidence should not be taken against it since Maquinsay and VITUG, J.:
Parrocha, two of the original complainants, attest to the nature of a “comboy’s” or escort’s work. On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with
Significantly, Maquinsay’s and Parrocha’s affidavits proffer no reason why, in the first place, they filed, along with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.[1] Again, petitioner was to
herein respondents, the complaint for illegal dismissal against petitioner. Maquinsay and Parrocha made an absolute solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent
turnaround and retracted their previous claim of regular employee status without proof to support their allegations as company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct
against the claim of the remaining complainants, herein respondents. advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues
Conveniently, for its purposes, petitioner claims that Maquinsay’s and Parrocha’s affidavits “substantiate the claim of less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of
petitioner that indeed shipping arrangements and accommodation of escorts, which are informal in nature and, thus, each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from
unrecorded, are under the responsibility, control and supervision of the buyers and traders.” Essentially, petitioner commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-
insists that the affidavits of Maquinsay and Parrocha should bear more weight than the claims of respondents in their monthly quota. Basically, the contentious points raised by the parties had something to do with the following
complaint and position paper. stipulations of the agreement; viz:
We reject petitioner’s self-serving contention. Having failed to substantiate its allegation on the relationship between "12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations
the parties, we stick to the settled rule in controversies between a laborer and his master that doubts reasonably towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may
arising from the evidence should be resolved in the former’s favor.[18] The policy is reflected in no less than the incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be
Constitution,[19] Labor Code[20] and Civil Code.[21] amended or modified in any way except with the duly authorized consent in writing of both parties.
Moreover, petitioner’s other contention that the shipment and the escort of live cattle is not part of its business, thus, "13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior
at most, respondents may only be considered as casual employees, likewise fails to persuade. to effectivity of termination."[2]
First. Petitioner failed to disprove respondents’ claim that they were hired by petitioner as “comboys” from 1993 and On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from
1994, respectively. In fact, petitioner admits that respondents were engaged, at one point, as “comboys,” on a “per respondent firm -
trip” or “per contract” basis. This assertion petitioner failed anew to substantiate. Noteworthy is the fact that "Dear Mr. Paguio,
Maquinsay’s and Parrocha’s affidavit merely contain a statement that the offer of their services as “comboys” or "Please be advised of our decision to terminate your services as Account Executive of Manila Times effective
escorts was not limited to petitioner alone. The affidavits simply aver that they, including herein respondents, were September 30, 1992.
engaged by Dealco on a “per trip” basis, which commenced upon embarkation on a ship for Manila and terminated "This is in accordance with our contract signed last July 1, 1992."[3]
upon their return to the port of origin. Maquinsay and Parrocha did not state that respondents’ engagement by Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating
petitioner was on a one-time basis. As a result, petitioner’s claim remains an unsubstantiated and bare-faced clients from his co-executives and failing to produce results, no definite cause for petitioner’s termination was given.
allegation. Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his
Second. Even assuming that respondents’ task is not part of petitioner’s regular course of business, this does not reinstatement, with entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that
preclude their attainment of regular employee status. respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages
Article 280 of the Labor Code explicitly provides: and for P200,000.00 exemplary damages.
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.[4]
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating
trade of the employer, except where the employment has been fixed for a specific project or undertaking the that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended
completion or termination of which has been determined at the time of the engagement of the employee or where the date of termination, the corresponding notice to the other.
work or services to be performed is seasonal in nature and the employment is for the duration of the season. The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his
considered a regular employee with respect to the activity in which he is employed and his employment shall reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held
continue while such activity exists.[22] liable to petitioner for moral damages in the amount of P20,000.00.
Undoubtedly, respondents were regular employees of petitioner with respect to the escort or “comboy” activity for On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared
which they had been engaged since 1993 and 1994, respectively, without regard to continuity or brokenness of the the contractual relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-
service. term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any
Lastly, considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances
relationship between the parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal vitiating his consent."[5] The finding of the NLRC was primarily hinged on the assumption that petitioner, on account
dismissal. Accordingly, we are not wont to disturb the award of separation pay, claims for COLA and union service of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely
fees fixed at 10% of the total monetary award, as these were based on the finding that respondents were dismissed victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held:
without just or authorized cause. "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the
WHEREFORE, the petition is DENIED. The Resolution dated July 29, 2001 of the NLRC in NLRC CA No. M-005974- day certain agreed upon by the parties for the commencement and termination of their employment relationship, a
2000 (RAB-11-10-50453-99) is hereby AFFIRMED. Costs against the petitioner. day certain being understood to be that which (would) necessarily come, although it (might) not be known when."[6]
SO ORDERED.
ANTONIO EDUARDO B. NACHURA

Labor Standards | To digest (old cases) | Ajean Tuazon| 21


Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the petitioner. The notice of termination recites no valid or just cause for the dismissal of petitioner nor does it appear
commission. In his petition for review on certiorari, petitioner raised the following issues for resolution: that he has been given an opportunity to be heard in his defense.
"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT’S COMPANY IS FOR A FIXED The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of
PERIOD. respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted.
"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL. WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773
"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."[7] and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is
The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I.
respondent company - was it or was it not one of regular employment? Gomez which award is deleted.
A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of SO ORDERED.
the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to [1] The letter contract dated 22 June 1992 read -
control the conduct of the putative employee or the power to control the employee with respect to the means or Dear Mr. Paguio:
methods by which his work is to be accomplished.[8] The "control test" assumes primacy in the overall This letter is to appoint you as Account Executive for The Manila Times for a period of twelve (12) months effective
consideration. Under this test, an employment relation obtains where work is performed or services are rendered July 1, 1992 to June 30, 1993, and to set forth the terms and conditions of your contract.
under the control and supervision of the party contracting for the service, not only as to the result of the work but also 1. As account executive, you will use your best efforts to obtain advertisements exclusively for us and for such
as to the manner and details of the performance desired.[9] projects that The Manila Times may decide to do from time to time.
An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent 2. You are authorized to solicit advertisements and quote advertising rates in accordance with and subject to all the
Metromedia Times Corporation not only of the right to control the results to be achieved but likewise the manner and terms and conditions in our rate cards.
the means used in reaching that end.[10] Metromedia Times Corporation exercised such control by requiring 3. All advertisements are subject to acceptance by us and we reserve the right in our absolute discretion to reject or
petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various omit any advertisements.
solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising 4. You will be paid fifteen (15) percent commission on direct advertisements less corresponding withholding tax.
manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner. 5. You will be paid ten (10) percent commission on agency advertisements based on gross ad revenues less agency
The Labor Code, in Article 280 thereof, provides: commission and corresponding withholding tax.
"ART. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding 6. Walk-in advertisements, not solicited by the Advertising staff, are not commissionable.
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the 7. All payments must be paid direct to Metromedia Times Corporation. In no case, however, will commission be paid
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or until and unless the advertisements, whether agency or direct, have been paid for, subject to the corresponding
trade of the employer, except where the employment has been fixed for a specific project or undertaking the withholding taxes authorized by law.
completion or termination of which has been determined at the time of the engagement of the employee or where the 8. Commissions earned on paid advertisements covering the period from the first (1st) to the fifteenth (15) of every
work or services to be performed is seasonal in nature and the employment is for the duration of the season. month shall be payable at the end of the same month; commissions earned on paid advertisements covering the
"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any period from the sixteenth (16th ) to the end of the month shall be payable on the fifteenth (15) of the succeeding
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be month.
considered a regular employee with respect to the activity in which he is employed and his employment shall 9. You will be entitled to a monthly allowance of P2,000.00 provided that you meet a monthly quota of P30,000.00 in
continue while such activity exists." advertising lineage. But should you fail to meet your quota, your allowance shall be charged against your future
Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in account.
the usual business or trade of the employer as against those which are undertaken for a specific project or are 10 For all ex-deal arrangements, the barter agreement and your commission will be subject to the written approval of
seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the the President and Treasurer on a case-to-case basis.
nature of the activity performed or of whether it is continuous or intermittent, the employment is considered regular 11. You will be paid your approved commission only after the payment for the liquidation (sold and/or consumed) of
as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally the goods received from the advertiser has been completed.
declared as such before acquiring a regular status.[11] 12. You are not an employee of Metromedia Times Corporation nor does the Company have any obligations towards
That petitioner performed activities which were necessary and desirable to the business of the employer, and that anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The
the same went on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or
advertisements, clearly necessary and desirable, for the survival and continued operation of the business of modified in any way except with the duly authorized consent in writing of both parties.
respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid 13. Either party may terminate this agreement at any time by giving written notice to the other thirty (30) days prior to
advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized the effectivity of termination.
petitioner’s invaluable contribution to the business when it renewed, not just once but five times, its contract with If these terms and conditions are acceptable to you, please indicate your conformity by signing below. (Rollo, pp.
petitioner. 41-42.)
Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA, Petitioners, versus
law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or ROBERTO C. SERVAÑA, Respondent., G.R. No. 167648, 2008 Jan 28, 2nd Division)
oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform.[12] The law DECISION
affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A Tinga, J.:
stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of This petition for review under Rule 45 assails the 21 December 2004 Decision[1] and 8 April 2005 Resolution[2] of
tenure.[13] The sheer inequality that characterizes employer-employee relations, where the scales generally tip the Court of Appeals declaring Roberto Servaña (respondent) a regular employee of petitioner Television and
against the employee, often scarcely provides him real and better options. Production Exponents, Inc. (TAPE). The appellate court likewise ordered TAPE to pay nominal damages for its
The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A failure to observe statutory due process in the termination of respondent’s employment for authorized cause.
lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or
authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that
respondent company has fully bothered itself with either of these requirements in terminating the services of

Labor Standards | To digest (old cases) | Ajean Tuazon| 22


TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety time that he was working for respondent company. The foregoing indubitably shows that complainant-appellee was
program, “Eat Bulaga!”. Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto C. Servaña had served a program employee. Otherwise, he would have two (2) employers at the same time.[9]
as a security guard for TAPE from March 1987 until he was terminated on 3 March 2000. Respondent filed a motion for reconsideration but it was denied in a Resolution[10] dated 28 June 2002.
Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that Respondent filed a petition for certiorari with the Court of Appeals contending that the NLRC acted with grave
he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter.
company guard. He was detailed at Broadway Centrum in Quezon City where “Eat Bulaga!” regularly staged its Respondent asserted that he was a regular employee considering the nature and length of service rendered.[11]
productions. On 2 March 2000, respondent received a memorandum informing him of his impending dismissal on Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee. We
account of TAPE’s decision to contract the services of a professional security agency. At the time of his termination, quote the dispositive portion of the decision:
respondent was receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick IN LIGHT OF THE FOREGOING, the petition is hereby GRANTED. The Decision dated 22 April 2002 of the
leave benefits and other monetary considerations were withheld from him. He further contended that his dismissal public respondent NLRC reversing the Decision of the Labor Arbiter and its Resolution dated 28 June 2002 denying
was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation petitioner’s motion for reconsideration are REVERSED and SET ASIDE. The Decision dated 29 June 2001 of the
pay.[3] Labor Arbiter is REINSTATED with MODIFICATION in that private respondents are ordered to pay jointly and
In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no severally petitioner the amount of P10,000.00 as nominal damages for non-compliance with the statutory due
jurisdiction over the case in the absence of an employer-employee relationship between the parties. TAPE made the process.
following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network SO ORDERED.[12]
(RPN-9); (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that Finding TAPE’s motion for reconsideration without merit, the Court of Appeals issued a Resolution[13] dated 8
when RPN-9 severed its relationship with the security agency, TAPE engaged respondent’s services, as part of the April 2005 denying said motion.
support group and thus a talent, to provide security service to production staff, stars and guests of “Eat Bulaga!” as TAPE filed the instant petition for review raising substantially the same grounds as those in its petition for
well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that certiorari before the Court of Appeals. These matters may be summed up into one main issue: whether an employer-
complainant would render his services until such time that respondent company shall have engaged the services of a employee relationship exists between TAPE and respondent.
professional security agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a On 27 September 2006, the Court gave due course to the petition and considered the case submitted for decision.
talent and a member of the support group, until such time that TAPE shall have engaged the services of a [14]
professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not At the outset, it bears emphasis that the existence of employer-employee relationship is ultimately a question
related to security services, before or after attending to his “Eat Bulaga!” functions; (7) that sometime in late 1999, of fact. Generally, only questions of law are entertained in appeals by certiorari to the Supreme Court. This rule,
TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; however, is not absolute. Among the several recognized exceptions is when the findings of the Court of Appeals and
and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant Labor Arbiters, on one hand, and that of the NLRC, on the other, are conflicting,[15] as obtaining in the case at bar.
by the engagement of the security agency, informing them of the management’s decision to terminate their services. Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of
[4] employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of
TAPE averred that respondent was an independent contractor falling under the talent group category and was wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means
working under a special arrangement which is recognized in the industry.[5] and method by which the work is to be accomplished.[16] The most important factor involves the control test. Under
Respondent for his part insisted that he was a regular employee having been engaged to perform an activity the control test, there is an employer-employee relationship when the person for whom the services are performed
that is necessary and desirable to TAPE’s business for thirteen (13) years.[6] reserves the right to control not only the end achieved but also the manner and means used to achieve that end.[17]
On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of In concluding that respondent was an employee of TAPE, the Court of Appeals applied the “four-fold test” in this
TAPE. The Labor Arbiter relied on the nature of the work of respondent, which is securing and maintaining order in wise:
the studio, as necessary and desirable in the usual business activity of TAPE. The Labor Arbiter also ruled that the First. The selection and hiring of petitioner was done by private respondents. In fact, private respondents
termination was valid on the ground of redundancy, and ordered the payment of respondent’s separation pay themselves admitted having engaged the services of petitioner only in 1995 after TAPE severed its relations with
equivalent to one (1)-month pay for every year of service. The dispositive portion of the decision reads: RPN Channel 9.
WHEREFORE, complainant’s position is hereby declared redundant. Accordingly, respondents are hereby By informing petitioner through the Memorandum dated 2 March 2000, that his services will be terminated as soon
ordered to pay complainant his separation pay computed at the rate of one (1) month pay for every year of service or as the services of the newly hired security agency begins, private respondents in effect acknowledged petitioner to
in the total amount of P78,000.00.[7] be their employee. For the right to hire and fire is another important element of the employer-employee relationship.
On appeal, the National Labor Relations Commission (NLRC) in a Decision[8] dated 22 April 2002 reversed the Second. Payment of wages is one of the four factors to be considered in determining the existence of employer-
Labor Arbiter and considered respondent a mere program employee, thus: employee relation. . . Payment as admitted by private respondents was given by them on a monthly basis at a rate of
We have scoured the records of this case and we find nothing to support the Labor Arbiter’s conclusion that P5,444.44.
complainant was a regular employee. Third. Of the four elements of the employer-employee relationship, the “control test” is the most important. x x x
xxxx The bundy cards representing the time petitioner had reported for work are evident proofs of private respondents’
The primary standard to determine regularity of employment is the reasonable connection between the control over petitioner more particularly with the time he is required to report for work during the noontime program of
particular activity performed by the employee in relation to the usual business or trade of the employer. This “Eat Bulaga!” If it were not so, petitioner would be free to report for work anytime even not during the noontime
connection can be determined by considering the nature and work performed and its relation to the scheme of the program of “Eat Bulaga!” from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a “talent.” Precisely,
particular business or trade in its entirety. x x x Respondent company is engaged in the business of production of he is being paid for being the security of “Eat Bulaga!” during the above-mentioned period. The daily time cards of
television shows. The records of this case also show that complainant was employed by respondent company petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the
beginning 1995 after respondent company transferred from RPN-9 to GMA-7, a fact which complainant does not management of private respondent TAPE.[18]
dispute. His last salary was P5,444.44 per month. In such industry, security services may not be deemed necessary TAPE asseverates that the Court of Appeals erred in applying the “four-fold test” in determining the existence
and desirable in the usual business of the employer. Even without the performance of such services on a regular of employer-employee relationship between it and respondent. With respect to the elements of selection, wages and
basis, respondent’s company’s business will not grind to a halt. dismissal, TAPE proffers the following arguments: that it never hired respondent, instead it was the latter who offered
xxxx his services as a talent to TAPE; that the Memorandum dated 2 March 2000 served on respondent was for the
Complainant was indubitably a program employee of respondent company. Unlike [a] regular employee, he discontinuance of the contract for security services and not a termination letter; and that the talent fees given to
did not observe working hours x x x. He worked for other companies, such as M-Zet TV Production, Inc. at the same respondent were the pre-agreed consideration for the services rendered and should not be construed as wages.

Labor Standards | To digest (old cases) | Ajean Tuazon| 23


Anent the element of control, TAPE insists that it had no control over respondent in that he was free to employ seek refuge under the concept of an independent contractor theory. For if petitioner were indeed an independent
means and methods by which he is to control and manage the live audiences, as well as the safety of TAPE’s stars contractor, private respondents will not be liable to pay the benefits prayed for in petitioner’s complaint.[28]
and guests.[19] More importantly, respondent had been continuously under the employ of TAPE from 1995 until his termination in
The position of TAPE is untenable. Respondent was first connected with Agro-Commercial Security Agency, March 2000, or for a span of 5 years. Regardless of whether or not respondent had been performing work that is
which assigned him to assist TAPE in its live productions. When the security agency’s contract with RPN-9 expired in necessary or desirable to the usual business of TAPE, respondent is still considered a regular employee under
1995, respondent was absorbed by TAPE or, in the latter’s language, “retained as talent.”[20] Clearly, respondent Article 280 of the Labor Code which provides:
was hired by TAPE. Respondent presented his identification card[21] to prove that he is indeed an employee of Art. 280. Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding
TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.[22] employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to designate trade of the employer, except where the employment has been fixed for a specific project or undertaking the
such amount as talent fees. Wages, as defined in the Labor Code, are remuneration or earnings, however completion or termination of which has been determined at the time of engagement of the employee or where the
designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or work or service to be performed is seasonal in nature and employment is for the duration of the season.
commission basis, or other method of calculating the same, which is payable by an employer to an employee under An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, that, any
a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
It is beyond dispute that respondent received a fixed amount as monthly compensation for the services he rendered considered a regular employee with respect to the activity in which he is employed and his employment shall
to TAPE. continue while such activity exists.
The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the power As a regular employee, respondent cannot be terminated except for just cause or when authorized by law.[29] It is
to dismiss respondent. clear from the tenor of the 2 March 2000 Memorandum that respondent’s termination was due to redundancy. Thus,
Control is manifested in the bundy cards submitted by respondent in evidence. He was required to report daily the Court of Appeals correctly disposed of this issue, viz:
and observe definite work hours. To negate the element of control, TAPE presented a certification from M-Zet Article 283 of the Labor Code provides that the employer may also terminate the employment of any employee due
Productions to prove that respondent also worked as a studio security guard for said company. Notably, the said to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of
certificate categorically stated that respondent reported for work on Thursdays from 1992 to 1995. It can be recalled operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
that during said period, respondent was still working for RPN-9. As admitted by TAPE, it absorbed respondent in this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
late 1995.[23] month before the intended date thereof. In case of termination due to the installation of labor saving devices or
TAPE further denies exercising control over respondent and maintains that the latter is an independent contractor. redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
[24] Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor carries on pay or to at least one (1) month pay for every year or service, whichever is higher.
a distinct and independent business and undertakes to perform the job, work or service on its own account and xxxx
under its own responsibility according to its own manner and method, and free from the control and direction of the We uphold the finding of the Labor Arbiter that “complainant [herein petitioner] was terminated upon [the]
principal in all matters connected with the performance of the work except as to the results thereof.[25] TAPE failed management’s option to professionalize the security services in its operations. x x x” However, [we] find that
to establish that respondent is an independent contractor. As found by the Court of Appeals: although petitioner’s services [sic] was for an authorized cause, i.e., redundancy, private respondents failed to prove
We find the annexes submitted by the private respondents insufficient to prove that herein petitioner is indeed an that it complied with service of written notice to the Department of Labor and Employment at least one month prior to
independent contractor. None of the above conditions exist in the case at bar. Private respondents failed to show the intended date of retrenchment. It bears stressing that although notice was served upon petitioner through a
that petitioner has substantial capital or investment to be qualified as an independent contractor. They likewise failed Memorandum dated 2 March 2000, the effectivity of his dismissal is fifteen days from the start of the agency’s take
to present a written contract which specifies the performance of a specified piece of work, the nature and extent of over which was on 3 March 2000. Petitioner’s services with private respondents were severed less than the month
the work and the term and duration of the relationship between herein petitioner and private respondent TAPE.[26] requirement by the law.
TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a program Under prevailing jurisprudence the termination for an authorized cause requires payment of separation pay.
employee and equating him to be an independent contractor. Procedurally, if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
Policy Instruction No. 40 defines program employees as— employee and the Deparment of Labor and Employment written notice 30 days prior to the effectivity of his
x x x those whose skills, talents or services are engaged by the station for a particular or specific program or separation. Where the dismissal is for an authorized cause but due process was not observed, the dismissal should
undertaking and who are not required to observe normal working hours such that on some days they work for less be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the
than eight (8) hours and on other days beyond the normal work hours observed by station employees and are employer should be liable for non-compliance with procedural requirements of due process.
allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring xxxx
companies. The engagement of program employees, including those hired by advertising or sponsoring companies, Under recent jurisprudence, the Supreme Court fixed the amount of P30,000.00 as nominal damages. The basis of
shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay the violation of petitioners’ right to statutory due process by the private respondents warrants the payment of
and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the
Media Council within three (3) days from its consummation.[27] court, taking into account the relevant circumstances. We believe this form of damages would serve to deter
TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy employer from future violations of the statutory due process rights of the employees. At the very least, it provides a
instruction. It did not even present its contract with respondent. Neither did it comply with the contract-registration vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing
requirement. Rules. Considering the circumstances in the case at bench, we deem it proper to fix it at P10,000.00.[30]
Even granting arguendo that respondent is a program employee, stills, classifying him as an independent contractor In sum, we find no reversible error committed by the Court of Appeals in its assailed decision.
is misplaced. The Court of Appeals had this to say: However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted with
We cannot subscribe to private respondents’ conflicting theories. The theory of private respondents that petitioner is malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE.[31] Thus, the Court of
an independent contractor runs counter to their very own allegation that petitioner is a talent or a program employee. Appeals ruling on this point has to be modified.
An independent contractor is not an employee of the employer, while a talent or program employee is an employee. WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION in
The only difference between a talent or program employee and a regular employee is the fact that a regular that only petitioner Television and Production Exponents, Inc. is liable to pay respondent the amount of P10,000.00
employee is entitled to all the benefits that are being prayed for. This is the reason why private respondents try to as nominal damages for non-compliance with the statutory due process and petitioner Antonio P. Tuviera is
accordingly absolved from liability.

Labor Standards | To digest (old cases) | Ajean Tuazon| 24


SO ORDERED. On April 23, 1998, you still did not report for work despite memorandum issued by the CMC Medical Director
DANTE O. TINGA implementing the Labor Secretary’s ORDER. The same is true on April 24, 1998 and April 25, 1998,--you still did not
WE CONCUR: LEONARDO A. QUISUMBING, ANTONIO T. CARPIO, CONCHITA CARPIO MORALES, report for work [sic].
PRESBITERO J. VELASCO, JR. You are likewise aware that you were observed (re: signatories [sic] to the Saligang Batas of BMCMC-UWP) to be
CALAMBA MEDICAL CENTER, INC., Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION, unlawfully participating as member in the rank-and-file union’s concerted activities despite knowledge that your
RONALDO LANZANAS AND MERCEDITHA* LANZANAS, Respondents., G.R. No. 176484, 2008 Nov 25, 2nd position in the hospital is managerial in nature (Nurses, Orderlies, and staff of the Emergency Room carry out your
Division orders using your independent judgment) which participation is expressly prohibited by the New Labor Code and
DECISION which prohibition was sustained by the Med-Arbiter’s ORDER dated February 24, 1998. (Emphasis and italics in the
CARPIO MORALES, J.: original; underscoring partly in the original and partly supplied)
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors- For these reasons as grounds for termination, you are hereby terminated for cause from employment effective today,
spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August April 25, 1998, without prejudice to further action for revocation of your license before the Philippine [sic] Regulations
1995, respectively, as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four- [sic] Commission.[17] (Emphasis and underscoring supplied)
hour shifts, respondents were paid a monthly “retainer” of P4,800.00 each.[1] It appears that resident physicians Dr. Lanzanas thus amended his original complaint to include illegal dismissal.[18] His and Dr. Merceditha’s
were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and complaints were consolidated and docketed as NLRC CASE NO. RAB-IV-3-9879-98-L.
discharge billings, in addition to their fixed monthly retainer.[2] By Decision[19] of March 23, 1999, Labor Arbiter Antonio R. Macam dismissed the spouses’ complaints for want of
The work schedules of the members of the team of resident physicians were fixed by petitioner’s medical director Dr. jurisdiction upon a finding that there was no employer-employee relationship between the parties, the fourth requisite
Raul Desipeda (Dr. Desipeda). And they were issued identification cards[3] by petitioner and were enrolled in the or the “control test” in the determination of an employment bond being absent.
Social Security System (SSS).[4] Income taxes were withheld from them.[5] On appeal, the NLRC, by Decision[20] of May 3, 2002, reversed the Labor Arbiter’s findings, disposing as follows:
On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently WHEREFORE, the assailed decision is set aside. The respondents are ordered to pay the complainants their full
overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee, Diosdado Miscala, through backwages; separation pay of one month salary for every year of service in lieu of reinstatement; moral damages of
an extension telephone line. Apparently, Dr. Lanzanas and Miscala were discussing the low “census” or admission P500,000.00 each; exemplary damages of P250,000.00 each plus ten percent (10%) of the total award as attorney’s
of patients to the hospital.[6] fees.
Dr. Desipeda whose attention was called to the above-said telephone conversation issued to Dr. Lanzanas a SO ORDERED.[21]
Memorandum of March 7, 1998 reading: Petitioner’s motion for reconsideration having been denied, it brought the case to the Court of Appeals on certiorari.
As a Licensed Resident Physician employed in Calamba Medical Center since several years ago, the hospital The appellate court, by June 30, 2004 Decision,[22] initially granted petitioner’s petition and set aside the NLRC
management has committed upon you utmost confidence in the performance of duties pursuant thereto. This is the ruling. However, upon a subsequent motion for reconsideration filed by respondents, it reinstated the NLRC decision
reason why you were awarded the privilege to practice in the hospital and were entrusted hospital functions to serve in an Amended Decision[23] dated September 26, 2006 but tempered the award to each of the spouses of moral and
the interest of both the hospital and our patients using your capability for independent judgment. exemplary damages to P100,000.00 and P50,000.00, respectively and omitted the award of attorney’s fees.
Very recently though and unfortunately, you have committed acts inimical to the interest of the hospital, the details of In finding the existence of an employer-employee relationship between the parties, the appellate court held:
which are contained in the hereto attached affidavit of witness. x x x. While it may be true that the respondents are given the discretion to decide on how to treat the petitioner’s
You are therefore given 24 hours to explain why no disciplinary action should be taken against you. patients, the petitioner has not denied nor explained why its Medical Director still has the direct supervision and
Pending investigation of your case, you are hereby placed under 30-days [sic] preventive suspension effective upon control over the respondents. The fact is the petitioner’s Medical Director still has to approve the schedule of duties
receipt hereof.[7] (Emphasis, italics and underscoring supplied) of the respondents. The respondents stressed that the petitioner’s Medical Director also issues instructions or
Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said incident, any work orders to the respondents relating to the means and methods of performing their duties, i.e. admission of patients,
schedule after sending her husband Dr. Lanzanas the memorandum,[8] nor inform her the reason therefor, albeit she manner of characterizing cases, treatment of cases, etc., and may even overrule, review or revise the decisions of
was later informed by the Human Resource Department (HRD) officer that that was part of petitioner’s cost-cutting the resident physicians. This was not controverted by the petitioner. The foregoing factors taken together are
measures.[9] sufficient to constitute the fourth element, i.e. control test, hence, the existence of the employer-employee
Responding to the memorandum, Dr. Lanzanas, by letter of March 9, 1998,[10] admitted that he spoke with Miscala relationship. In denying that it had control over the respondents, the petitioner alleged that the
over the phone but that their conversation was taken out of context by Dr. Trinidad. respondents were free to put up their own clinics or to accept other retainership agreement with the other hospitals.
On March 14, 1998,[11] the rank-and-file employees union of petitioner went on strike due to unresolved grievances But, the petitioner failed to substantiate the allegation with substantial evidence. (Emphasis and underscoring
over terms and conditions of employment.[12] supplied)[24]
On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension[13] before the National Labor Relations The appellate court thus declared that respondents were illegally dismissed.
Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed a complaint for illegal x x x. The petitioner’s ground for dismissing respondent Ronaldo Lanzanas was based on his alleged participation in
dismissal.[14] union activities, specifically in joining the strike and failing to observe the return-to-work order issued by the
In the meantime, then Sec. Cresenciano Trajano of the Department of Labor and Employment (DOLE) certified the Secretary of Labor. Yet, the petitioner did not adduce any piece of evidence to show that respondent Ronaldo
labor dispute to the NLRC for compulsory arbitration and issued on April 21, 1998 return-to-work Order to the striking indeed participated in the strike. x x x.
union officers and employees of petitioner pending resolution of the labor dispute.[15] In the case of respondent Merceditha Lanzanas, the petitioner’s explanation that “her marriage to complainant
In a memorandum[16] of April 22, 1998, Dr. Desipeda echoed the April 22, 1998 order of the Secretary of Labor Ronaldo has given rise to the presumption that her sympat[hies] are likewise with her husband” as a ground for her
directing all union officers and members to return-to-work “on or April 23, 1998, except those employees that were dismissal is unacceptable. Such is not one of the grounds to justify the termination of her employment.[25]
already terminated or are serving disciplinary actions.” Dr. Desipeda thus ordered the officers and members of the nderscoring supplied)
union to “report for work as soon as possible” to the hospital’s personnel officer and administrator for “work The fallo of the appellate court’s decision reads:
scheduling, assignments and/or re-assignments.” WHEREFORE, the instant Motion for Reconsideration is GRANTED, and the Court’s decision dated June 30, 2004,
Petitioner later sent Dr. Lanzanas a notice of termination which he received on April 25, 1998, indicating as grounds is SET ASIDE. In lieu thereof, a new judgment is entered, as follows:
therefor his failure to report back to work despite the DOLE order and his supposed role in the striking union, thus: WHEREFORE, the petition is DISMISSED. The assailed decision dated May 3, 2002 and order dated September
24, 2002 of the NLRC in NLRC NCR CA No. 019823-99 are AFFIRMED with the MODIFICATION that the moral and
exemplary damages are reduced to P100,000.00 each and P50,000.00 each, respectively.

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SO ORDERED.[26] (Emphasis and italics in the original; underscoring supplied) A close scrutiny of the job descriptions of the alleged supervisors narrated by the employer only proves that except
Preliminarily, the present petition calls for a determination of whether there exists an employer-employee for the contention that these employees allegedly supervise, they do not however recommend any managerial
relationship[27] between petitioner and the spouses-respondents. action. At most, their job is merely routinary in nature and consequently, they cannot be considered supervisory
Denying the existence of such relationship, petitioner argues that the appellate court, as well as the NLRC, employees.
overlooked its twice-a-week reporting arrangement with respondents who are free to practice their profession They are not therefore barred from membership in the union of rank[-]and[-]file, which the petitioner [the union] is
elsewhere the rest of the week. And it invites attention to the uncontroverted allegation that respondents, aside from seeking to represent in the instant case.[38] (Emphasis and underscoring supplied)
their monthly retainers, were entitled to one-half of all suturing, admitting, consultation, medico-legal and operating xxxx
room assistance fees.[28] These circumstances, it stresses, are clear badges of the absence of any employment Admittedly, Dr. Lanzanas was a union member in the hospital, which is considered indispensable to the national
relationship between them. interest. In labor disputes adversely affecting the continued operation of a hospital, Article 263(g) of the Labor Code
This Court is unimpressed. provides:
Under the “control test,” an employment relationship exists between a physician and a hospital if the hospital controls ART. 263. STRIKES, PICKETING, AND LOCKOUTS.—
both the means and the details of the process by which the physician is to accomplish his task.[29] xxxx
Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours (g) x x x x
or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the x x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions,
element of control is absent.[30] it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal
As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its workforce of medical and other health personnel, whose movement and services shall be unhampered and
medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most
observed under pain of administrative sanctions. especially emergency cases, for the duration of the strike or lockout. In such cases, the Secretary of Labor and
That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, Employment is mandated to immediately assume, within twenty-four hours from knowledge of the occurrence of
the operating room, or any department or ward for that matter, respondents’ work is monitored through its nursing such strike or lockout, jurisdiction over the same or certify to the Commission for compulsory arbitration. For this
supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as
operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary
supervise the performance of duties of the employee, it being enough that it has the right to wield the power.[31] action, including dismissal or loss of employment status or payment by the locking-out employer of backwages,
With respect to respondents’ sharing in some hospital fees, this scheme does not sever the employment tie between damages and other affirmative relief, even criminal prosecution against either or both of them.
them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to x x x x (Emphasis and underscoring supplied)
what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code, thus: An assumption or certification order of the DOLE Secretary automatically results in a return-to-work of all striking
“Wage” paid to any employee shall mean the remuneration or earning, however designated, capable of being workers, whether a corresponding return-to-work order had been issued.[39] The DOLE Secretary in fact issued a
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other return-to-work Order, failing to comply with which is punishable by dismissal or loss of employment status.[40]
method of calculating the same, which is payable by an employer to an employee under a written or unwritten Participation in a strike and intransigence to a return-to-work order must, however, be duly proved in order to justify
contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair immediate dismissal in a “national interest” case. As the appellate court as well as the NLRC observed, however,
and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily there is nothing in the records that would bear out Dr. Lanzanas’ actual participation in the strike. And the medical
furnished by the employer to the employee. x x x (Emphasis and underscoring supplied), director’s Memorandum[41] of April 22, 1998 contains nothing more than a general directive to all union officers and
Respondents were in fact made subject to petitioner-hospital’s Code of Ethics,[32] the provisions of which cover members to return-to-work. Mere membership in a labor union does not ipso facto mean participation in a strike.
administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses Dr. Lanzanas’ claim that, after his 30-day preventive suspension ended on or before April 9, 1998, he was never
against persons, property and the hospital’s interest. given any work schedule[42] was not refuted by petitioner. Petitioner in fact never released any findings of its
More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, supposed investigation into Dr. Lanzanas’ alleged “inimical acts.”
the identification cards it issued them, the payslips[33] and BIR W-2 (now 2316) Forms which reflect their status as Petitioner thus failed to observe the two requirements,before dismissal can be effected - notice and hearing - which
employees, and the classification as “salary” of their remuneration. Moreover, it enrolled respondents in the SSS constitute essential elements of the statutory process; the first to apprise the employee of the particular acts or
and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law[34] omissions for which his dismissal is sought, and the second to inform the employee of the employer's decision to
is premised on the existence of an employer-employee relationship,[35] except in cases of compulsory coverage of dismiss him.[43] Non-observance of these requirements runs afoul of the procedural mandate.[44]
the self-employed. It would be preposterous for an employer to report certain persons as employees and pay their The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the first and only time that he
SSS premiums as well as their wages if they are not its employees.[36] was apprised of the reason for his dismissal. He was not afforded, however, even the slightest opportunity to explain
And if respondents were not petitioner’s employees, how does it account for its issuance of the earlier-quoted March his side. His was a “termination upon receipt” situation. While he was priorly made to explain on his telephone
7, 1998 memorandum explicitly stating that respondent is “employed” in it and of the subsequent termination letter conversation with Miscala,[45] he was not with respect to his supposed participation in the strike and failure to heed
indicating respondent Lanzanas’ employment status. the return-to-work order.
Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-employee As for the case of Dr. Merceditha, her dismissal was worse, it having been effected without any just or authorized
relationship exists between the resident physicians and the training hospitals, unless there is a training agreement cause and without observance of due process. In fact, petitioner never proferred any valid cause for her dismissal
between them, and the training program is duly accredited or approved by the appropriate government agency. In except its view that “her marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is] with
respondents’ case, they were not undergoing any specialization training. They were considered non-training general her husband; [and that when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their workload
practitioners,[37] assigned at the emergency rooms and ward sections. by the medical doctor, he was presumed to be speaking for himself [and] for his wife Merceditha.”[46]
Turning now to the issue of dismissal, the Court upholds the appellate court’s conclusion that private respondents Petitioner’s contention that Dr. Merceditha was a member of the union or was a participant in the strike remained just
were illegally dismissed. that. Its termination of her employment on the basis of her conjugal relationship is not analogous to any of the
Dr. Lanzanas was neither a managerial nor supervisory employee but part of the rank-and-file. This is the import of causes enumerated in Article 282[47] of the Labor Code. Mere suspicion or belief, no matter how strong, cannot
the Secretary of Labor’s Resolution of May 22, 1998 in OS A-05-15-98 which reads: substitute for factual findings carefully established through orderly procedure.[48]
xxxx The Court even notes that after the proceedings at the NLRC, petitioner never even mentioned Dr. Merceditha’s
In the motion to dismiss it filed before the Med-Arbiter, the employer (CMC) alleged that 24 members of petitioner case. There is thus no gainsaying that her dismissal was both substantively and procedurally infirm.
are supervisors, namely x x x Rolando Lanzonas [sic] x x x.

Labor Standards | To digest (old cases) | Ajean Tuazon| 26


Adding insult to injury was the circulation by petitioner of a “watchlist” or “watch out list”[49] including therein the Due to the impending completion of the aforementioned project and the lack of up-coming contracted works for our
names of respondents. Consider the following portions of Dr. Merceditha’s Memorandum of Appeal: company in the immediate future, volume of work for our engineering and technical personnel has greatly been
3. Moreover, to top it all, respondents have circulated a so called “Watch List” to other hospitals, one of which [was] diminished.
procured from Foothills Hospital in Sto. Tomas, Batangas [that] contains her name. The object of the said list is In view of this, you are hereby advised to wind up all technical reports including accomplishments, change orders,
precisely to harass Complainant and malign her good name and reputation. This is not only unprofessional, but runs etc.
smack of oppression as CMC is trying permanently deprived [sic] Complainant of her livelihood by ensuring that she Further, you are advised that your services are being terminated effective at the close of office hours on April 30,
is barred from practicing in other hospitals. 1991.
4. Other co-professionals and brothers in the profession are fully aware of these “watch out” lists and as such, her This, however, has no prejudice to your re-employment in this company in its local and overseas projects should the
reputation was not only besmirched, but was damaged, and she suffered social humiliation as it is of public need for your services arises.
knowledge that she was dismissed from work. Complainant came from a reputable and respected family, her father Thank you for your invaluable services rendered to this company.
being a retired full Colonel in the Army, Col. Romeo A. Vente, and her brothers and sisters are all professionals, her (Sgd.) NESTOR A. DELANTAR Project manager
brothers, Arnold and Romeo Jr., being engineers. The Complainant has a family protection [sic] to protect. She Noted By:
likewise has a professional reputation to protect, being a licensed physician. Both her personal and professional (Sgd.) Mario B. Cornista
reputation were damaged as a result of the unlawful acts of the respondents.[50] Vice President 1
While petitioner does not deny the existence of such list, it pointed to the lack of any board action on its part to On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor
initiate such listing and to circulate the same, viz: practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission,
20. x x x. The alleged watchlist or “watch out list,” as termed by complainants, were merely lists obtained by one Dr. allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. 2
Ernesto Naval of PAMANA Hospital. Said list was given by a stockholder of respondent who was at the same time a On 29 January 1992, Labor Arbiter Raul T. Aquino rendered a decision, the dispositive portion of which reads, thus:
stockholder of PAMAN[A] Hospital. The giving of the list was not a Board action.[51] (Emphasis and underscoring WHEREFORE, responsive to the foregoing, the instant case is hereby DISMISSED for lack of merits.
supplied) SO ORDERED. 3
The circulation of such list containing names of alleged union members intended to prevent employment of workers The Labor Arbiter ruled that petitioner was a managerial employee and therefore exempt from payment of benefits
for union activities similarly constitutes unfair labor practice, thereby giving a right of action for damages by the such as overtime pay, service incentive leave pay and premium pay for holidays and rest days. Petitioner, Labor
employees prejudiced.[52] Arbiter Aquino further declared, was also not entitled to separation pay. He was hired as a project employee and his
A word on the appellate court’s deletion of the award of attorney’s fees. There being no basis advanced in deleting services were terminated due to the completion of the project. 4
it, as exemplary damages were correctly awarded,[53] the award of attorney’s fees should be reinstated. The Labor Arbiter, likewise, denied petitioner's claim for a share in the project's profits, reimbursement of legal
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 75871 is AFFIRMED with MODIFICATION in expenses and unpaid wages for lack of basis. 5
that the award by the National Labor Relations Commission of 10% of the total judgment award as attorney’s fees is On 14 April 1992, petitioner appealed to the National Labor Relations Commission (NLRC).
reinstated. In all other aspects, the decision of the appellate court is affirmed. On 27 November 1992, the NLRC rendered the assailed decision, the dispositive portion of which reads as follows:
SO ORDERED. WHEREFORE, premises considered, the appeal is hereby Dismissed and the assailed decision is Affirmed en toto.
CONCHITA CARPIO MORALES SO ORDERED. 6
WE CONCUR: LEONARDO A. QUISUMBING, DANTE O. TINGA, PRESBITERO J. VELASCO, JR., ARTURO D. On 29 January 1993, petitioner filed a motion for reconsideration which the NLRC denied for lack of merit on 22
BRION February 1993. 7
WORKING CONDITIONS AND REST PERIOD Hence, the instant petition wherein the following issues were raised:
HOURS OF WORK I. Granting for the sake of argument without conceding, that complainant-petitioner herein was a managerial
ENGINEER LEONCIO V. SALAZAR, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd employee, was his verbal contract to be paid his overtime services as stated in paragraph 2(b) of this Petition
Division) and H.L. CARLOS CONSTRUCTION, CO. INC., respondents., G.R. No. 109210, 1996 Apr 17, 1st invalid? and the payments of such overtime services as evidenced by Exhibits "B" to "B-24" (the genuineness and
Division) authenticity of which are not disputed) are they not evidentiary and of corroborative value to the true unwritten
KAPUNAN, J.: agreement between the parties in this case?
This is a petition for certiorari * to annul the decision of the National Labor Relations Commission in NLRC Case No. II. Is there any portion of the Labor Code that prohibits contracts between employer and employee giving the latter
002855-92 dated 27 .November 1992 which affirmed in toto the decision of the Labor Arbiter in NLRC NCR-00-09- the benefit of being paid overtime services, as in this particular case?
05335-91 dated 29 January 1992 dismissing the complaint filed by petitioner for lack of merit. The NLRC's resolution III. Where an employee was induced to accept a low or distorted salary or wage level, because of an incentive
dated 22 February 1993 is similarly impugned for denying petitioner's motion for reconsideration. promise to receive a bigger compensation than that which would be his true and correct wage level as shown by
The antecedent facts are as follows: documents for the payment of his distorted wages and overtime services, is it not legally proper, in the alternative to
On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as construction/project claim payment of the differential of his undistorted salary or wage level when the promised incentive compensation is
engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral denied by his employer after the completion of the job for which he has employed?
contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's IV. Is the Certificate of employment issued to an employee by his employer, assailable by mere affidavits of denials
services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be to the effect that said Certificate was issued because of the insistence of the employee that it be made to include a
compensable overtime at the rate of P27.85 per hour. period he did not work, but which such fact of insistence or request is also denied by the employee, because he
On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor really worked during the period included in said Certificate?
A. Delantar informing him of the termination of his services effective on 30 April 1991. Reproduced hereunder is the V. Is the employer liable for the payment of the attorney's pay incurred by his employee in a work connected
abovementioned memorandum: criminal prosecution against him for an act done by another employee assigned by same employer to do the act
April 16, 1991 which was the subject of the criminal prosecution? 8
MEMORANDUM TO: LEONCIO V. SALAZAR Petitioner prays that judgment be rendered, thus:
Project Engineer 1. That the decision of the NLRC and its resolution denying the Motion for Reconsideration be set aside on grounds
MONTE DE PIEDAD BLDG. PROJECT of grave abuse of discretion and;
Quezon City 2. That private respondent be ordered to pay petitioner the following:

Labor Standards | To digest (old cases) | Ajean Tuazon| 27


a. the premium pays for his overtime services of 368 hours on ordinary days at 25%; 272 hours on Saturdays at under another exempt category "officers or members of a managerial staff" as defined under sec. 2(c) of the
30%; 272 hours on Sundays plus 24 hours on legal holidays at 200% computed at the rate of P27.85 per hour of abovementioned implementing rules:
undistorted wage level; Sec. 2. Exemption. The provisions of this Rule shall not apply to the following persons if they qualify for exemption
b. in the alternative, to pay at least one (1) percent of 4.5 million pesos profit share, or the sum total of the under the condition set forth herein:
differential of his salaries, in the amount of P2,184.00 per month, since April 17, 1990 to April 30, 1991, his xxx xxx xxx
undistorted salary being P6,684.00 per month; and to pay his unpaid salary for 15 days - May 1 to 15, 1991, with his (c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
undistorted salary rate; (1) The primary duty consists of the performance of work directly related to management policies of their employer;
c. the amount of P3,000.00 reimbursement for what he paid his defense counsel in that criminal action which (2) Customarily and regularly exercise discretion and independent judgment;
should have instead been against respondent's general manager; (3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
d. Separation pay of at least one month salary, he having been terminated unreasonably without cause, and three management of the establishment in which he is employed or subdivision thereof; or [ii] execute under general
days service incentive leave pay; and to pay the costs; 9 supervision work along specialized or technical lines requiring special training, experience, or knowledge; or [iii]
Before proceeding to the merits of the petition, we shall first resolve the procedural objection raised. Private execute under general supervision special assignments and tasks; and
respondent prays for the outright dismissal of the instant petition on grounds of wrong mode of appeal, it being in the (4) who do not devote more than 20 percent of their hours worked in a work-week to activities which are not directly
form of a petition for review on certiorari (Rule 45 of the Revised Rules of Court) and not a special civil action for and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.
certiorari (Rule 65 thereof) which is the correct mode of appeal from decisions of the NLRC. A case in point is National Sugar Refineries Corporation v. NLRC. 18 On the issue of "whether supervisory
Although we agree with private respondent that appeals to the Supreme Court from decisions of the NLRC should be employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of
in the form of a special civil action for certiorari under Rule 65 of the Revised Rules of Court, this rule is not inflexible. the managerial staff under Article 82, Book III of the same Code and hence not entitled to overtime, rest day and
In a number of cases, 10 this Court has resolved to treat as special civil actions for certiorari petitions erroneously holiday pay," 19 this Court ruled:
captioned as petitions for review on certiorari "in the interest of justice." In People's Security, Inc. v. NLRC, 11 we A cursory perusal of the Job Value Contribution Statements of the union members will readily show that these
elaborated, thus: supervisory employees are under the direct supervision of their respective department superintendents and that
Indeed, this Court has time and again declared that the only way by which a labor case may reach the Supreme generally they assist the latter in planning, organizing, staffing, directing, controlling, communicating and in making
Court is through a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible
grave abuse of discretion (Pearl S. Buck Foundation v. NLRC, 182 SCRA 446 [1990]). for the effective and efficient operation of their respective departments. . . .
This petition should not be dismissed on a mere technicality however. "Dismissal of appeal purely on technical Xxx xxx xxx
grounds is frowned upon where the policy of the courts is to encourage hearings of appeal on their merits. The rules From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which
of procedure ought not to be applied in a very rigid technical sense, rules of procedure are used only to help secure, ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I, Book III of the
not override substantial justice. If a technical and rigid enforcement of the rules is made, their aim would be aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work
defeated" (Tamayo v. Court of Appeals, 209 SCRA 518, 522 [1992] citing Gregorio v. Court of Appeals, 72 SCRA directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and
120 [1976]). Consequently, in the interest of justice, the instant petition for review shall be treated as a special civil independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consists of
action on certiorari. the management of a department of the establishment in which they are employed; (4) they execute, under general
Moving on to the merits, stated differently, the issues for our resolution are the following: supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they
1) Whether or not petitioner is entitled to overtime pay, premium pay for services rendered on rest days and execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of
holidays and service incentive leave pay, pursuant to Articles 87, 93, 94 and 95 of the Labor Code; their hours worked in a work-week to activities which are not directly and clearly related to the performance of their
2) Whether or not petitioner is entitled to a share in the profits of the construction project;. work hereinbefore described.
3) Whether or not petitioner rendered services from 1 May to 15 May 1991 and is, therefore, entitled to unpaid Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be
wages; considered as officers or members of the managerial staff and are, therefore, exempt from the coverage of Article
4) Whether or not private respondent is liable to reimburse petitioner's legal expenses and; 82. Perforce, they are not entitled to overtime, rest day and holiday pay. 20
5) Whether or not petitioner is entitled to separation pay. The aforequoted rationale equally applies to petitioner herein considering in the main his supervisory duties as
On the first issue, the NLRC concurred with the Labor Arbiter's ruling that petitioner was a managerial employee and, private respondent's project engineer, duties which, it is significant to note, petitioner does not dispute.
therefore, exempt from payment of overtime pay, premium pay for holidays and rest days and service incentive leave Petitioner, likewise, claims that the NLRC failed to give due weight and consideration to the fact that private
pay under the law. The NLRC declared that: respondent compensated him for his overtime services as indicated in the various disbursement vouchers he
Book III on conditions of employment exempts managerial employees from its coverage on the grant of certain submitted as evidence.
economic benefits, which are the ones the complainant-appellant was demanding from respondent. It is an Petitioner's contention is unmeritorious. That petitioner was paid overtime benefits does not automatically and
undisputed fact that appellant was a managerial employee and such, he was not entitled to the economic benefits he necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who
sought to recover. 12 are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the
Petitioner claims that since he performs his duties in the project site or away from the principal place of business of Labor Code and the exemptions thereto. As previously determined, petitioner falls under the exemptions and
his employer (herein private respondent), he falls under the category of "field personnel." However, petitioner therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime
accentuates that his case constitutes the exception to the exception because his actual working hours can be services. However, this does not translate into a right on the part of petitioner to demand additional payment when,
determined as evidenced by the disbursement vouchers containing payments of petitioner's salaries and overtime under the law, petitioner is clearly exempted therefrom.
services. 13 Strangely, petitioner is of the view that field personnel may include managerial employees. Going to the second issue, petitioner insists that private respondent promised him a share in the profits after
We are constrained to disagree with petitioner. completion of the construction project. It is because of this oral agreement, petitioner elucidates, that he agreed to a
In his original complaint, petitioner stated that the nature of his work is "supervisory-engineering." 14 Similarly, in his monthly salary of P4,500.00, an amount which he claims is too low for a professional civil engineer like him with the
own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to supervise the rank of project engineer.
laborers in the construction project 15 Hence, although petitioner cannot strictly be classified as a managerial Arguing further, petitioner states that payment of his overtime services, as shown by the aforementioned
employee under Art. 82 of the Labor Code, 16 and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the disbursement vouchers, proves the existence of this verbal agreement since payment of his overtime services
Labor Code, 17 nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely constitutes part of this so-called understanding.

Labor Standards | To digest (old cases) | Ajean Tuazon| 28


We cannot accede to petitioner's demand. Nowhere in the disbursement vouchers can we find even the remotest xxx xxx xxx
hint of a profit-sharing agreement between petitioner and private respondent. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the
Petitioner's rationalization stretches the imagination way too far. project or any phase thereof in which they are employed, regardless of the number of projects in which they have
Thus, we concur with the ruling of the Labor Arbiter: been employed by a particular construction company. Moreover, the company is not required to obtain a clearance
As to the issue of profit sharing, we simply cannot grant the same on the mere basis of complainant's allegation that from the Secretary of Labor in connection with such termination. What is required of the company is a report to the
respondent verbally promised him that he is entitled to a share in the profits derive(d) from the projects. Benefits or nearest Public Employment Office for statistical purposes.
privileges of this nature (are) usually in writing, besides complainant failed to (establish) that said benefits or Xxx xxx xxx
privileges (have) been given to any of respondent('s) employees as a matter of practice or policy. 21 Department Order No. 19 of the Department of Labor and Employment (DOLE) entitled "Guidelines Governing the
Anent the third issue, petitioner alleges that on 30 April 1991, before closing hours, private respondent's project Employment of Workers in the Construction Industry" promulgated on 1 April 1993, reiterates the same rule. 30
manager, Engineer Nestor Delantar advised him to continue supervising the "finishing touches on many parts of the WHEREFORE, premises considered, the assailed decision is hereby MODIFIED as follows:
building which took him and the assisting laborers until 15 May 1991." 22 1) Private respondent is ordered to pay petitioner for services rendered from 1 May to 15 May 1991; and,
As proof of his extended service, petitioner presented the certificate of service issued by Engr. Delantar attesting to 2) Private respondent is ordered to reimburse petitioner's legal expenses in the amount of P3,000.00.
petitioner's employment as project engineer from April 1990 to May 1991. 23 In all other respects, the impugned decision is hereby AFFIRMED.
In contrast, private respondent argues that the abovementioned certificate was issued solely to accommodate SO ORDERED.
petitioner who needed the same for his work application abroad. It further stressed that petitioner failed to prove he Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
actually worked during the aforestated period. SAN MIGUEL BREWERY INC., ETC., petitioner, vs. DEMOCRATIC LABOR ORGANIZATION, ET AL.,
On this score, we rule for the petitioner. The purpose for which the said certificate was issued becomes irrelevant. respondents., G.R. No. L-18353, 1963 July 31, En Banc
The fact remains that private respondent knowingly and voluntarily issued the certificate. Mere denials and self- DECISION
serving statements to the effect that petitioner allegedly promised not to use the certificate against private BAUTISTA ANGELO, J.:
respondent are not sufficient to overturn the same. Hence, private respondent is estopped from assailing the On January 27, 1953, the Democratic Labor Association filed a complaint against the San Miguel Brewery, Inc.,
contents of its own certificate of service. embodying 12 demands for the betterment of the conditions of employment of its members. The company filed its
During the construction of the Monte de Piedad building, a criminal complaint for unjust vexation was filed by one answer to the complaint specifically denying its material averments and answering the demands point by point. The
Salvador Flores against the officers of the Monte de Piedad & Savings Bank, the owner thereof, for constructing a company asked for the dismissal of the complaint.
bunkhouse in front of his (Flores) apartment and making it difficult for him to enter the same. At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to its demands
Petitioner avers that he was implicated in the complaint for the sole reason that he was the construction engineer of for overtime, night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service
the project. Hence, private respondent, being the employer, is obligated to pay petitioner's legal expenses, rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave
particularly, reimbursement of the fees petitioner paid his counsel amounting to P3,000.00. Petitioner argues that compensation.
private respondent's act of giving allowances to enable petitioner to attend the hearings, as shown in the After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive
disbursement voucher submitted as evidence, 24 constitutes an admission of the aforestated obligation. the evidence, rendered decision expressing his disposition with regard to the points embodied in the complaint on
We agree with petitioner. Although not directly implicated in the criminal complaint, private respondent is nonetheless which evidence was presented. Specifically, the disposition insofar as those points covered by this petition for review
obligated to defray petitioner's legal expenses. Petitioner was included in the complaint not in his personal capacity are concerned, is as follows:
but in his capacity as project engineer of private respondent and the case arose in connection with his work as such. 1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-Hour Labor
At the construction site, petitioner is the representative of private respondent being its employee and he acts for and Law apply to the employees concerned for those working in the field or engaged in the sale of the company's
in behalf of private respondent. Hence, the inclusion of petitioner in the complaint for unjust vexation, which was products outside its premises and consequently they should be paid the extra compensation accorded them by said
work-related, is equivalent to inclusion of private respondent itself. law in addition to the monthly salary and commission earned by them, ragardless of the meal allowance given to
On the last issue, we rule that petitioner is a project employee and, therefore, not entitled to separation pay. employees who work up to late at night.
The applicable provision is Article 280 of the Labor Code which defines the term "project employee," thus: 2. As to employees who work at night, Judge Bautista decreed that they be paid their corresponding salary
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding differentials for work done at night prior to January 1, 1949 with the present qualification: 25% on the basis of their
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the salary to those who work from 6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the morning.
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or 3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the employees
trade of the employer, except where the employment has been fixed for a specific period or undertaking the concerned be paid an additional compensation of 25% as provided for in Commonwealth Act No. 444 even if they
completion or termination of which has been determined at the time of the engagement of the employee or where the had been paid a compensation on monthly salary basis.
work or services to be performed is seasonal in nature and the employment is for the duration of the season. 25 The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of
In the case at bench, it was duly established that private respondent hired petitioner as project or construction accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation pay, were
engineer specifically for its Monte de Piedad building project. In his own words, petitioner declared: either dismissed, denied, or set aside.
xxx xxx xxx Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the decision of the
2. That complainant-petitioner herein, by virtue of an oral agreement entered into with private respondent herein court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review.
through its proprietor, president and general manager, Engr. Honorio L. Carlos, on April 17, 1990, began to work as Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field
a licensed Civil Engineer as construction or engineer of its contracted project, the Monte de Piedad Bank Building, at sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts are as follows:
Cubao, Quezon City, on the following terms and conditions, to wit: . . . 26 After the morning roll call, the employees leave the plant of the company to go on their respective sales routes either
Accordingly, as project employee, petitioner's services are deemed coterminous with the project, that is, petitioner's at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time record. The company
services may be terminated as soon as the project for which he was hired is completed. 27 never require them to start their work as outside sales personnel earlier than the above schedule.
There can be no dispute that petitioner's dismissal was due to the completion of the construction of the Monte de The sales routes are so planned that they can be completed within 8 hours at most, or that the employees could
Piedad building. Petitioner himself stated that it took him and his assisting laborers until 15 May 1991 to complete the make their sales on their routes within such number of hours variable in the sense that sometimes they can be
"finishing touches" on the said building. 28 completed in less than 8 hours, sometimes 6 or 7 hours, or more. The moment these outside or field employees
Petitioner, thus, has no legal right to demand separation pay. 29 Policy Instruction No. 20 entitled "Stabilizing leave the plant and while in their sales routes they are on their own; and often times when the sales are completed,
Employer-Employee Relations in the Construction Industry" explicitly mandates that:

Labor Standards | To digest (old cases) | Ajean Tuazon| 29


or when making short trip deliveries only, they go back to the plant, load again, and make another round of sales. company which culminated in a strike in 1952. Unfortunately, however, the strike fizzled out and the strikers were
These employees receive monthly salaries and sales commission in variable amounts. The amount of compensation ordered to return to work with the understanding that the claim for night salary differentials should be settled in court.
they receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary, they are It is perhaps for this reason that the court a quo granted this claim in spite of the objection of the company to the
paid sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90, P100, and P109 a contrary.
month, at the rate of P.01 to P.01 1/2 per case. The remaining point to be determined refers to the claim for pay for Sundays and holidays for service performed by
It is contended that since the employees concerned are paid a commission on the sales they make outside of the some claimants who were watchmen or security guards. It is contended that these employees are not entitled to
required 8 hours besides the fixed salary that is paid to them, the Court of Industrial Relations erred in ordering that extra pay for work done during these days because they are paid on a monthly basis and are given one day off
they be paid an overtime compensation as required by the Eight-Hour Labor Law for the reason that the commission which may take the place of the work they may perform either on Sunday or any holiday.
they are paid already takes the place of such overtime compensation. Indeed, it is claimed, overtime compensation We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444 expressly
is an additional pay for work or service rendered in excess if 8 hours a day by an employee, and if the employee is provides that no person, firm or corporation may compel an employee or laborer to work during Sundays and legal
already given extra compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His holidays unless he is paid an additional sum of 25% of his regular compensation. This proviso is mandatory,
situation, the company contends, can be likened to an employee who is paid on piecework, "pakiao", or commission regardless of the nature of compensation. The only exception is with regard to public utilities who perform some
basis, which is expressly excluded from the operation of the Eight-Hour Labor Law. 1 public service.
We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee WHEREFORE, the decision of the industrial court is hereby modified as follows; the award with regard to extra work
or laborer is paid in a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made performed by those employed in the outside or field sales force is set aside. The rest of the decision insofar as work
to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. performed on Sundays and holidays covering watchmen and security guards, as well as the award for night salary
This law has no application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis, differentials is affirmed. No costs.
regardless of the time employed. The philosophy behind this exemption is that his earnings are in the form of Bengzon, C.J. Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.
commission based on the gross receipts of the day. His participation depends upon his industry so that the more MERCURY DRUG CO., INC., petitioner, vs. NARDO DAYAO, ET AL., respondents., G.R. No. L-30452, 1982
hours he employs in the work the greater are his gross returns and the higher his commission. This philosophy is September 30, 2nd Division
better explained in Jewel Tea Co. v. Williams, C.G.A. Okl., 118 F. 2d 202, as follows: GUTIERREZ, JR., J.:
"The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a great extent, works This is a petition for review on certiorari of the decision of the Court of Industrial Relations dated March 30, 1968 in
individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within Case No. 1926-V and the Resolution of the Court en banc dated July 6, 1968 denying two separate motions for
the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra reconsideration filed by petitioners and respondents.
compensation. He works away from his employer's place of business, is not subject to the personal supervision of The factual background of Case No. 1926-V is summarized by the respondent Court of Industrial Relations as
his employer, and his employer has no way of knowing the number of hours he works per day." follows:
True it is that the employees concerned are paid a fixed salary for their month of service, such as Benjamin Sevilla, a "This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo
salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and
each, and sometimes they work in excess of the required 8-hour period of work, but for their extra work they are paid Mercury Drug Co., Inc., Employees Association praying, with respect to respondent corporation and its president and
a commission which is in lieu of the extra compensation to which they are entitled. The record shows that these general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 26%
employees during the period of their employment were paid sales commission ranging from P30, P40, sometimes additional compensation from date of their employment up to June 30, 1962; 2) payment of extra compensation on
P60, P70, to sometimes P90, P100 and P109 a month depending on the volume of their sales and their rate of work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back
commission per case. And so, insofar as the extra work they perform, they can be considered as employees paid on salaries; and, as against the respondent union, for its disestablishment and the refund of all monies it had collected
piecework, "pakiao" or commission basis. The Department of Labor, called upon to implement the Eight-Hour Labor from petitioners.
Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the Director of "In separate motions, respondent management and respondent union move to dismiss, the first on the ground that:
the Bureau of Labor Standards, to the effect that field sales personnel receiving regular monthly salaries, plus "I. The petition states no cause of action.
commission, are not subject to the Eight-Hour Labor Law. Thus, on this point, said official stated: "II. This Court has no jurisdiction over the subject of the claims of petitioners Januario Referente and Oscar
". . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, Echalar.
it is also the established policy of the Office to consider his commission as payment for the extra time he renders in "III. There is another action pending between the same parties, namely, Mercury Drug Co., Inc., and/or Mariano Que
excess of eight hours, thereby classifying him as if he were on piecework basis, and therefore, technically speaking, and Nardo Dayao.
he is not subject to the Eight Hours Labor Law." While on the other hand, the second alleges that this Court has no jurisdiction over the acts complained of against
We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the respondent union.
the employees composing the outside service force and ordering that they be paid the corresponding additional "For reasons stated in the Order dated March 24, 1966, this Court resolved the motions to dismiss, as follows:
compensation. "1. Ground No. 1 of management's motion to dismiss was denied for lack of merit.
With regard to the claim for night salary differentials, the industrial court found that claimants Magno Johnson and "2. Its second ground was found meritorious and, accordingly Januario Referente and Oscar Echalar were
Jose Sanchez worked with the respondent company during the periods specified by them in their testimony and that dropped as party petitioners in this case.
watchmen Zoilo Lliga, Inocentes Prescillas and Daniel Cauyca rendered night duties once every three weeks "3. The third ground was denied, holding that there still exists the employer-employee relationship between Nardo
continuously during the period of their employment and that they were never given any additional compensation Dayao and the management.
aside from their monthly regular salaries. The court found that the company started paying night differentials only in "4. With respect to the fourth ground, the Court held that on the basis of section 7-A of C.A. No. 444, as amended
January, 1949 but never before that time. And so it ordered that the employees concerned be paid 25% additional by R.A. No. 1993, 'it can be safely said that, counting backward the three (3) year prescriptive period from the date of
compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for those who worked the filing of the instant petition - March 20, 1964 - all of petitioners' claims have not yet prescribed.'
from 12:01 to 6:00 in the morning. It is now contended that this ruling is erroneous because an award for night shift "5. In so far as respondent union's motion is concerned, the Court held that 'petitioners' cause of action against the
differentials cannot be given retroactive effect but can only be entertained from the date of demand which was on respondent; Association should be dismissed without prejudice to the refiling of the same as an unfair labor practice
January 27, 1953, citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Work v. The Court of case.'
Industrial Relations, et al., L-8896, January 25, 1957. "Only the respondent management moved to reconsider the Order of March 24, 1965 but the same was denied by
This ruling, however, has no application here for it appears that before the filing of the petition concerning this claim the Court en banc in a resolution dated August 26, 1965. Respondent submitted an answer to the amended petition
a similar one had already been filed long ago which had been the subject of negotiations between the union and the

Labor Standards | To digest (old cases) | Ajean Tuazon| 30


which was subsequently amended on January 6, 1966, containing some admissions and some denials of the performing some public service such as supplying gas, electricity, power, water, or providing means of transportation
material averments of the amended petition. By way of affirmative and special defenses, respondents alleged that or communication.' (Section 4 C. A. No. 444)
petitioners have no cause of action against Mariano Que because their employer is respondent Mercury Drug Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as
Company, Inc., an existing corporation which has a separate and distinct personality from its incorporators, amended known as the Eight Hour Labor Law, for they do not fall within the category or class employees or laborers
stockholders and/or officers, that the company being a service enterprise is excluded from the coverage of the Eight excluded from its provisions. (Section 2, ibid.)
Hour Labor Law, as amended; that no court has the power to set wages, rates of pay, hours of employment or other "The Court is not impressed by the argument that under the contracts of employment the petitioners are not entitled
conditions of employment to the extent of disregarding an agreement thereon between the respondent company and to such claim for the reason that the same are contrary to law. Payment of extra or additional pay for services
the petitioners, and of fixing night differential wages; that the petitioners were fully paid for services rendered under rendered during Sundays and legal holidays is mandated by law. Even assuming that the petitioners had agreed to
the terms and conditions of the individual contracts of employment; that the petition having been verified by only work on Sundays and legal holidays without any further consideration than their monthly salaries, they are not barred
three of the petitioners without showing that the others authorized the inclusion of their names as petitioners does nevertheless from claiming what is due them, because such agreement is contrary to public policy and is declared
not confer jurisdiction to this Court; that there is no employer-employee relationship between management and null and void by law.
petitioner Nardo Dayao and that his claim has been released and/or barred by another action; and that petitioners' "'Any agreement or contract between employer and the laborer or employee contrary to the provisions of this Act
claims accruing before March 20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo). shall be null and void ab initio.'
After hearing on the merits, the respondent court rendered its decision. The dispositive portion of the March 30, 1968 "Under the cited statutory provision, the petitioners are justified to receive additional amount equivalent to 25% of
decision reads: their respective basic or regular salaries for work done on Sundays and legal holidays for the period from March 20,
"IN VIEW OF THE FOREGOING, the Court hereby resolves that: 1961 to June 30, 1962." (Decision, pp. 119-120, rollo)
"1. The claim of the petitioners for payment of backwages corresponding to the first four hours work rendered on From a perusal of the foregoing statements of the respondent court, it can be seen readily that the petitioner-
every other Sunday and first four hours on legal holidays should be denied for lack of merit. company based its arguments in its first assignment of error on the wrong premise. The contracts of employment
"2. Respondent Mercury Drug Company, Inc. is hereby ordered to pay the sixty-nine (69) petitioners: signed by the private respondents are on a standard form, an example of which is that of private respondent Nardo
"(a) An additional sum equivalent to 25% of their respective basic or regular salaries for services rendered on Dayao quoted hereunder:
Sundays and legal holidays during the period from March 20, 1961 up to June 30, 1962; and "Mercury Drug Co., Inc.
"(b) Another additional sum or premium equivalent to 25% of their respective basic or regular salaries for nighttime 1580 Bambang, Manila
services rendered from March 20, 1961 up to June 30, 1962. October 30, 1959
"3. Petitioners' petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit. Mr. Nardo Dayao
"4. Respondent Mariano Que, being an officer and acted only as an agent in behalf of the respondent corporation, 1015 Sta. Catalina
should be absolved from the money claims of herein petitioners whose employer, according to the pleadings and Rizal Ave., Exten.
evidence, is the Mercury Drug Company, Inc. Dear Mr. Dayao:
"To expedite the computation of the money award, the Chief Court Examiner or his authorized representative is You are hereby appointed as Checker, in the Checking Department of MERCURY DRUG CO., INC., effective July 1,
hereby directed to proceed to the office of the respondent corporation at Bambang Street, Sta. Cruz, Manila, the 1959 and you shall receive an annual compensation the amount of Two Thousand four hundred pesos only
latter to make available to said employee its records, like time records, payrolls and other pertinent papers, and P2,400.000, that includes the additional compensation for work on Sundays and legal holidays.
compute the money claims awarded in this decision and, upon the completion thereof, to submit his report as soon Your firm being a Service Enterprise, you will be required to perform work every day in a year as follows:
as possible for further disposition of the Court." 8 Hours work on regular days and all special Holidays that may be declared but with the 25 % additional
Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for reconsideration, compensation;
was however, denied by the Court en banc in its Resolution dated July 6, 1968. 4 Hours work on every other Sundays of the month;.
Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition: For any work performed in excess of the hours as above mentioned, yon shall be paid 25 % additional compensation
I. RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND "B", per hour.
NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY, PRIVATE This appointment may be terminated without notice for cause and without cause upon thirty days written notice.
RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL HOLIDAY PREMIUMS BECAUSE SUCH This supersedes your appointment of July 1, 1959.
DECLARATION AND AWARD ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS INFRINGING UPON Very truly yours,
THE CARDINAL RIGHTS OF THE PETITIONER; AND ALSO BECAUSE THE VALIDITY OF SAID CONTRACTS OF MERCURY DRUG CO., INC.
EMPLOYMENT HAS NOT BEEN RAISED. (Sgd.) MARIANO QUE
II. RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS' CLAIMS FOR NIGHTTIME WORK General Manager
PREMIUMS NOT ONLY BECAUSE OF THE DECLARE POLICY ON COLLECTIVE BARGAINING FREEDOM ACCEPTED WITH FULL CONFORMITY:
EXPRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN SECTION 7 OF SAID STATUTE, (Sgd.) NARDO DAYAO'"
BUT ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS AND THE TOTAL ABSENCE OF EVIDENCE (EXH. "A" and "1")
THEREON. (Decision, pp. 114-115, rollo)
III. RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE PRIVATE RESPONDENTS WHO These contracts were not declared by the respondent court null and void in their entirety. The respondent court, on
NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO SHOW THEIR INTEREST. the basis of the conflicting evidence presented by the parties, in effect: 1) rejected the theory of the petitioner
Three issues are discussed by the petitioner in its first assignment of error. The first issue refers to its allegation that company that the 25% additional compensation claimed by the private respondents for the four-hour work they
the respondent Court erred in declaring the contracts of employment null and void and contrary to law. This rendered during Sundays and legal holidays provided in their contracts of employment were covered by the private
allegation is premised upon the following finding of the respondent court: respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo Dayao, Ernesto
"But the Court finds merit in the claim for the payment of additional compensation for work done on Sundays and Talampas and Josias Federico) testimonies that the 25% additional compensation was not included in the private
holidays. While an employer may compel his employees to perform service on such days, the law nevertheless respondents' respective monthly salaries and 3) ruled that any agreement in a contract of employment which would
imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries. exclude the 25% additional compensation for work done during Sundays and holidays is null and void as mandated
"'No person firm or corporation, business establishment or place of center of labor shall compel an employee or by law.
laborer to work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per On the second issue, the petitioner-company reiterated its stand that under the respective contracts of employment
centum of his regular remuneration. PROVIDED, HOWEVER, That this prohibition shall not apply to public utilities the private respondents, the subject 25% additional compensation had already been included in the latter's

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respective monthly salaries. This contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion al (19 SCRA 130). The earliest cases cited by the petitioner-company, Naric v. Naric Workers Union, L-12075, May
and pertinent exhibits. Thus: 29, 1959 and Philippine Engineers' Syndicate v. Bautista, L-16440, February 29, 1964, were discussed lengthily.
"Exhibit A shows that for the period of October 30, 1960, the annual compensation of private respondent Nardo Thus -
Dayao, including the additional compensation for the work he renders during the first four (4) hours on every other xxx xxx xxx
Sunday and on the eight (8) Legal Holidays at the time was P2,400.00 or P200.00 per month. These amounts did not "2. On the claim for night differentials, no extended discussion is necessary. To be read as controlling here is
represent basic salary only, but they represented the basic daily wage of Nardo Dayao considered to be in the Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court,
amount of P7.36 x 305 ordinary working days at the time or in the total amount of P2,144.80. So plus the amount of speaking thru Mr. Chief Justice Cesar Bengzon, declared -
P156.40 which is the equivalent of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof "'Only one issue is raised: whether or not upon the enactment of Republic Act 875, the CIR lost its jurisdiction over
or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal Holidays of 8 hours each. . . . claims for additional compensation for regular night work. Petitioner says that this Act reduced the jurisdiction of
Xxx xxx xxx respondent court and limited it to specific cases which this Court has defined as: '. . . (1) when the labor dispute
"That the required minimum 25% Sunday and Legal Holiday additional compensation was paid to and received by affects an industry which is indispensable to the national interest and is so certified by the President to the industrial
the employees for the work they rendered on every other Sunday and on the eight Legal Holidays for the period court (Sec. 10, Republic Act 875); (2) when the controversy refers to minimum wage under the Minimum Wage Law
October, 1959 to June 30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and the testimony of Mr. Jacinto (Republic Act 602); (3) when it involves hours of employment under the Eight-Hour Labor Law (Commonwealth Act
Concepcion thereon." (Brief for the Petitioner, pp. 24, 27). 444) and (4) when it involves an unfair labor practice [Sec. 5 (a), Republic Act 875]', [Paflu, et al. vs. Tan, et al., 52
The aforesaid computations were not given credence by the respondent court. In fact the same computations were Off. Gaz, No. 13, 5836].
not even mentioned in the court's decision which shows that the court found such computations incredible. The "Petitioner insists that respondents' case falls in none of these categories because as held in two previous cases,
computations, supposedly patterned after the WAS Interpretative Bulletin No. 2 of the Department Labor night work is not overtime but regular work; and that respondent court's authority to try the case cannot be implied
demonstrated in Exhibits "6", "7", "8", "9", and "9-A", miserably failed to show the exact and correct annual salary as from its 'general jurisdiction and broad powers' under Commonwealth Act 103 because Republic Act 875 precisely
stated in the respective contracts of employment of the respondent employees. The figures arrived at in each case curbed such powers limiting them to certain specific litigations, beyond which it is not permitted to act.
did not tally with the annual salaries on the employees' contracts of employment, the difference varying from P1.20 to "We believe petitioner to be in error. Its position collides with our ruling in the Naric case [National Rice & Corn Corp.
as much as P14.40 always against the interest of the employees. The petitioner's defense consists of mathematical (NARIC) vs. NARIC Workers' Union, et al., G.R. No. 12075, May 29, 1959] where we held:
computations made after the filing of the case in order to explain a clear attempt to make its employees work without "'While it is true that this Court made the above comment in the aforementioned case, it does not intend to convey
the extra compensation provided by law on Sundays and legal holidays. the idea that work done at night cannot also be an overtime work. The comment only served to emphasize that the
In not giving weight to the evidence of the petitioner-company, the respondent court sustained the private demand which the Shell Company made upon its laborers is not merely overtime work but night work and so there
respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal was need to differentiate night from daytime work. In fact, the company contended that there was no law that
Holidays were not included in their respective monthly salaries. The private respondents presented evidence through required the payment of additional compensation for night work unlike an overtime work which is covered by
the testimonies of Nardo Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees Commonwealth Act No. 444 (Eight-Hour Labor Law). And this court in that case said that while there was no law
who filed the case for unfair labor practice in the respondent court and are private respondents herein. The actually requiring payment of additional compensation for night work, the industrial court has the power to determine
petitioner-company's contention that the respondent court's conclusion on the issue of the 25% additional the wages that night workers should receive under Commonwealth Act No. 103, and so it justified the additional
compensation for work done on Sundays and legal holidays during the first four hours that the private respondents compensation in the Shell case for 'hygienic, medical, moral, cultural and sociological reasons.'"
had to work under their respective contracts of employment was not supported by substantial evidence is, therefore, xxx xxx xxx
unfounded. Much less do We find any grave abuse of discretion on the part of the respondent court in its True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that the broad powers
interpretation of the employment contract's provision on salaries. In view of the controlling doctrine that a grave conferred by Commonwealth Act 103 on the CIR may have been curtailed by Republic Act 875 which limited them to
abuse of discretion must be shown in order to warrant our disturbing the findings of the respondent court, the the four categories therein expressed in line with the public policy of allowing settlement of industrial disputes via the
reversal of the court's findings on this matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA collective bargaining process; but We find no cogent reason for concluding that a suit of this nature - for extra
490). compensation for night work falls outside the domain of the industrial court. Withal, the record does not show that the
The last issue raised in the first assignment of error refers to a procedural matter. The petitioner-company contends employer-employee relation between the 64 respondents and the petitioner had ceased.
that the question as to whether or not the contracts of employment were null and void was not put in issue, hence, After the passage of Republic Act 875, this Court has not only upheld the industrial court's assumption of jurisdiction
the respondent court pursuant to the Rules of Court should have refrained from the ruling that such contracts of over cases for salary differentials and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et al., G.R.
employment were null and void. In this connection We restate our finding that the respondent court did not declare No. L-11655, April 29, 1959; Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional
the contracts of employment null and void in their entirely. Only the objectionable features violative of law were compensation for work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R. No. L-
nullified. But even granting that the Court of Industrial Relations declared the contracts of employment wholly void, it 9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-8738, May 31,
could do so notwithstanding the procedural objection. In Sanchez v. Court of Industrial Relations, supra, this Court 1957] but has also supported such court's ruling that work performed at night should be paid more than work done at
speaking through then Justice, now Chief Justice Enrique M. Fernando, stated: daytime, and that if that work is done beyond the worker's regular hours of duty, he should also be paid additional
xxx xxx xxx compensation for overtime work. [Naric vs. Naric Workers' Union, et al., G.R. No. L-12075, May 29, 1959, citing shell
"Moreover, petitioners appear to be oblivious of the statutory mandate that respondent Court in the hearing, Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation now falls beyond
investigation and determination of any question or controversy and in the exercise of any of its duties or power is to the powers of the industrial court to decides, would amount to a further curtailment of the jurisdiction of said court to
act 'according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms an extent which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al vs. CIR,
and shall not be bound by any technical rules of legal evidence' informing its mind 'in such manner as it may deem G.R. No. L-17788, May 25, 1962]"
just and equitable.' Again, this Court has invariably accorded the most hospitable scope to the breadth and amplitude The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over additional
with which such provision is couched. So it has been from the earliest case decided in 1939 to a 1967 decision." compensation for work done at night by the respondents is without merit.
Two issues are raised in the second assignment of error by the petitioner-company. The first hinges on the The other issue raised in the second assignment of error is premised on the petitioner-company's contention that the
jurisdiction of the respondent court to award additional compensation for nighttime work. Petitioner wants Us to re- respondent court's ruling on the additional compensation for nighttime work is not supported by substantial evidence.
examine Our rulings on the question of nighttime work. It contends that the respondent court has no jurisdiction to This contention is untenable. Pertinent portions of the respondent court's decision read:
award additional compensation for nighttime work because of the declared policy on freedom of collective bargaining xxx xxx xxx
expressed in Republic Act 875 and the express prohibition in Section 7 of the said statute. a re-examination of the "There is no serious disagreement between the petitioners and respondent management on the facts recited above.
decisions on nighttime pay differential was the focus of attention in Rheem of the Philippines, Inc. et al. v. Ferrer, et The variance in the evidence is only with respect to the money claims. Witnesses for petitioners declared they

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worked on regular days and on every other Sunday and also during all holidays; that for services rendered on WEEKLY REST PERIOD
Sundays and holidays they were not paid for the first four (4) hours and what they only received was the overtime REMERCO GARMENTS MANUFACTURING, petitioner, vs. HON. MINISTER OF LABOR AND EMPLOYMENT
compensation corresponding to the number of hours after or in excess of the first fort hours; and that such payment and ZENAIDA BUSTAMANTE, LUZ RAYMUNDO and RUTH CORPUZ, respondents., G.R. Nos. L-56176-77,
is being indicated in the overtime pay for work done in excess of eight hours on regular working days. It is also 1985 Feb 28, 2nd Division
claimed that their nighttime services could well be seen on their respective daily time records. . . . (p. 116, rollo) CUEVAS, J.:
The respondent court's ruling on additional compensation for work done at night is, therefore, not without evidence. Petitioner Remerco Garments Manufacturing seeks the nullification of the decision 1 of the Minister of Labor and
Moreover, the petitioner-company did not deny that the private respondents rendered nighttime work. In fact, no Employment dated January 21, 1981, declaring the dismissal of Zenaida Bustamante, Luz Raymundo and Ruth
additional evidence was necessary to prove that the private respondents were entitled to additional compensation for Corpuz, (its employees) illegal, and ordering their reinstatement to their former positions without loss of seniority
whether or not they were entitled to the same is a question of law which the respondent court answered correctly. rights and privileges and with full backwages. The said decision set aside, on appeal, the order 2 of Acting Director,
The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime work is founded on public National Capital Region, MOLE, dated March 6, 1978, granting petitioner's clearance application to terminate the
policy, hence the same cannot be waived. (Article 6, Civil Code). On this matter, We believe that the respondent employment of its three (3) employees.
court acted according to justice and equity and the substantial merits of the case, without regard to technicalities or Private respondents Zenaida Bustamante, Luz Raymundo and Ruth Corpuz were the employees of Remerco
legal forms and should be sustained. Garments Manufacturing, a domestic corporation engaged in the business of manufacturing and exporting of men's,
The third assignment of error is likewise without merit. The fat that only three of the private respondents testified in ladies' and children's dresses.
court foes not adversely affect the interests of the other respondents in the case. The ruling in Dimayuga v. Court of This case arose from three (3) applications for clearance to terminate employment filed by the petitioner on three (3)
Industrial Relations (G.R. No. L-0213, May 27, 1957) has been abandoned in later rulings of this Court. IN Philippine separate dates. The first, against Ruth Corpuz filed on October 5, 1978 for allegedly defacing company's property by
Land-Air-Sea labor Union (PLASLU) v. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had occasion to placing a check mark on a jacket with a chalk; the second, filed on October 16, 1978 against Luz Raymundo for
re-examine the ruling in Dimayuga. We stated: insubordination for refusal to work on her rest day; and the third, against Zenaida Bustamante on November 10,
"The latter reversed the decision of the trial Judge as regards the reinstatement with backwages of . . . upon the 1980, for abandonment for failing to report for work after the expiration of her suspension on October 23, 1978. The
theory that this is not a class suit; that, 'consequently, it is necessary and imperative that they should personally said employees sought to be dismissed opposed the clearance application by filing separate complaints for illegal
testify and prove the charges in the complaint', and that, having failed to do so, the decision of the trial Judge in their dismissal docketed as Case Nos. R4-STF-10-6695-78 and R4-STF-10-6670-78.
favor is untenable under the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-0213 (May 27, The antecedent facts appearing on record are as follows:
1957). During the period of their employment with petitioner, Luz Raymundo and Zenaida Bustamante were given three
"We do not share the view taken in the resolution appealed from. As the trial Judge correctly said, in his dissent from consecutive warnings. The first, on June 24; then on July 24; and the third one, on October 15, 1978 for alleged
said resolution: refusal to render overtime work. Finally, they were penalized with one week's suspension effective October 16, 1978.
xxx xxx xxx It appears that Luz Raymundo was required to work on October 15, 1978, a Sunday, despite her request for
In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated: exemption to work on that Sunday, her rest day. Her request was disapproved. For failure to report for work despite
"To the reproach against the challenged order in the brief of petitioners in view of only two of the seven claimants denial of her request, she was notified of her dismissal effective upon expiration of her suspension. Thereafter or
testifying, a statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would more specifically on October 16, 1978, petitioner filed a clearance application to dismiss her on grounds of
suffice by way of refutation. Thus: 'This Court fully agrees with the respondent that quality and not quantity of insubordination. Raymundo opposed said application by filing a complaint for illegal dismissal and for money claims.
witnesses should be the primordial consideration in the appraisal of evidence.' Barely eight days later, in another With respect to Zenaida Bustamante, she failed to report for work despite the expiration of her suspension on
decision, the above statement was given concrete expression. Thus: 'The bases of the awards were not only the October 23, 1978. Petitioner contends that said failure constitutes abandonment which it later invoke as ground for
respective affidavits of the claimants but the testimonies of 24 witnesses (because 6 were not given credence by the clearance application to dismiss her from employment filed on November 10, 1978. Like Raymundo, Zenaida
court below) who identified the said 239 claimants. The contention of petitioners on this point is therefore unfounded'. Bustamante opposed the clearance application by filing a complaint for illegal dismissal claiming that her alleged
Moreover in Philippine Land-Air-Sea Labor Union (PLASLU) v. Sy Indong Company Rice & Corn Mill, this Court, failure to report for work was due to illness, as in fact, she was treated by one Dr. Lorenzo Yuson for fever and
through the present Chief Justice, rejected as untenable the theory of the Court of Industrial Relations concerning severe stomach ache on October 15, 1978.
the imperative needs of all the claimants to testify personally and prove their charges in the complaint. As tersely put: Ruth Corpuz, like the two aforenamed co-respondents of hers, was also given a warning for refusal to render
'We do not share the view taken in the resolution appealed from." overtime work on another date, August 30, 1978. She was subsequently dismissed on October 4, 1978 for having
The petitioner's contention that its employees fully understood what they signed when they entered into the contracts written a chalk mark on a nylon jacket for export allegedly a violation of Rule 26 of petitioner's rules and regulations,
of employment and that they should be bound by their voluntary commitment's is anachronistic in this time and age. which provides: "Employees are strictly prohibited from defacing or writing on walls of the factory, toilets or any other
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and, for some company property." The clearance application for her dismissal was filed only on October 5, 1978 which she also
stores, up to very late at night because of the nature of the pharmaceutical retail business. The respondents knew opposed by filing a complaint for illegal dismissal.
that they had to work Sundays and holidays and at night, not as exceptions to the rule but a part of the regular The case was submitted for conciliation proceedings, but no settlement was arrived at, whereupon, the Acting
course of employment. Presented with contracts setting their compensation on an annual basis with an express Director of National Capital Region, MOLE, required the parties to submit their respective position papers, after
waiver of extra compensation for work on Sundays and holidays, the workers did not have much choice. The private which, the case was deemed submitted for resolution.
respondents were at a disadvantage insofar as the contractual relationship was concerned. Workers in our country On March 6, 1979, the Acting Director of National Capital Region, MOLE, issued an order granting petitioner's
do not have the luxury or freedom of declining job openings or filing resignations even when some terms and application for clearance to terminate the employment of private respondents and dismissing their complaints for lack
conditions of employment are not only onerous and inequitous but illegal. It is precisely because of this situation that of merit.
the framers of the Constitution embodied the provisions on social justice (Section 6, Article II) and protection to labor Private respondents appealed the order to the National Labor Relations Commission on March 22, 1979. Meanwhile,
(Section 9, Article II) in the Declaration of Principles And State Policies. the Acting Director of the National Capital Region, MOLE, elevated the records of the case to the Labor Appeals and
It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers who Review Staff, Office of the Minister of Labor on April 17, 1979. 3
are places in contractually disadvantageous positions and who sign waivers or provisions contrary to law and public On January 20, 1981, the Minister of Labor rendered a decision reversing the appealed order and directed petitioner
policy. to reinstate private respondents Luz Raymundo, Zenaida Bustamante and Ruth Corpuz to their former positions
WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are affirmed with costs without loss of seniority rights and privileges and with full backwages.
against the petitioner. Petitioner's motion for reconsideration was denied by the Minister of Labor in an order 4 dated February 9, 1981.
SO ORDERED. Hence, this petition for certiorari.
Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

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After the Solicitor General and private respondents filed their respective COMMENTS on the petition in compliance Of course, it is a recognized principle that abandonment of work by an employee is inconsistent with the immediate
with the resolution of this Court of March 16, 1981, petitioner filed on June 25, 1981 a motion 5 which reads: filing of a complaint for illegal dismissal. 12 It would be illogical for Zenaida Bustamante to abandon her job and then
"PETITIONER respectfully states that one of the private respondents, Ruth Corpuz de Leon, has executed a sworn immediately file an action seeking her reinstatement. At that time, no employee would recklessly abandon her job
statement manifesting her desire to withdraw the complaint against petitioner in Case No. R4-STF-10-6695-78, knowing fully well the acute unemployment problem then existing and the difficulty of looking for a means of
Region 4, Ministry of Labor, absolving petitioner from any and all of the charges contained in the complaint, and livelihood.
stating that she did not execute and sign the appeal to the respondent National Labor Relations Commission and The illegality of the dismissal of the herein private respondents, under the facts and circumstances disclosed,
had no intention of doing so and it was private respondent Luz Raymundo who signed her name on the appeal. A becomes even more apparent in the light of the express provision of the Constitution, requiring the State to assure
copy of the affidavit is hereto attached and made integral part hereof. the workers "security of tenure" and "just and humane conditions of work." 13 The constitutional mandate of security
WHEREFORE, it is respectfully prayed that an order issue vacating the decision of the respondent Minister of Labor of tenure and just and humane conditions of work, both as aspects of the protection accorded to labor, militates
and Employment, subject matter of the petition, insofar as it orders reinstatement of Ruth Corpuz de Leon without against the severity of the sanction imposed on private respondents. The penalty of dismissal from the service, even
loss of seniority right and privilege and with full backwages, absolving petitioner from her complaint in Case No. R4- assuming petitioner's charges to be true, is too severe a penalty. It is a penalty out of proportion to the offense
STF-10-6695-78, Region 4, Ministry of Labor and striking out the comment of private respondents in this case as to committed - failure to report for work on a Sunday (October 15, 1978) - when after all, suspension would suffice. The
her." dismissal came as an afterthought because private respondents were already suspended for one week. The lack of
In a Resolution 6 dated November 4, 1981, this Court, acting on the aforequoted motion, the Comment 7 of private sympathetic understanding of the underlying reasons for their absence aggravated by the indecent haste attendant
respondents Luz Raymundo and Zenaida Bustamante thereon, and the Reply 8 of petitioner thereto, as well as the to the efforts of petitioner to terminate the services of private respondents portray a total disregard of the
motion to dismiss 9 personally filed by Ruth Corpuz de Leon assisted by her husband Jesus de Leon and her constitutional mandate of "security of tenure" and "just and humane conditions of work" which the State is mandated
complaint/claim which was confirmed by petitioner in its Comment 10 on said motion to dismiss, GRANTED the to protect. The New Labor Code is clear on this point. It is the duty of every employer, whether operating for profit or
dismissal of the complaint/claim of respondent Ruth Corpuz de Leon against petitioner. not, to provide each of his employees a rest period of not less than twenty four (24) hours after every six (6)
Meanwhile, the petition was given due course. consecutive normal work days. 14 Even if there really existed an urgency to require work on a rest day, (which is not
Petitioner would want Us to annul the decision of the Minister of Labor assailed to have been rendered without in the instant case) outright dismissal from employment is so severe a consequence, more so when justifiable
and/or lack of jurisdiction, and in lieu thereof, sustain the order of the Acting Director of the National Capital Region, grounds exist for failure to report for work.
MOLE, granting the clearance application to dismiss Luz Raymundo, Zenaida Bustamante and Ruth Corpuz. As From the other standpoint, We find the objections raised grounded on procedural technicalities devoid of merit. The
herein earlier stated, Ruth Corpuz had withdrawn her complaint/claim against petitioner, hence, the resolution of the mere failure to furnish copy of the appeal memorandum to adverse party is not a fatal defect. We have consistently
instant appeal applies only to Luz Raymundo and Zenaida Bustamante, the two (2) remaining employees. adhered to the principle clearly held in Alonso vs. Villamor 15 that "technicality when it deserts its proper office as an
In support of the jurisdictional issue raised, petitioner contends that private respondents' appeal from the order dated aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from court." In a more
March 6, 1979 of the Acting Director of the National Capital Region granting the application for clearance to dismiss forceful language, Mr. Chief Justice Enrique M. Fernando, speaking for the Court, in Meracap vs. International
them was not perfected on time for failure to furnish petitioner a copy of the appeal pursuant to Article 223 of the Ceramics Manufacturing Co., Inc. 16 stated "for the strictly juridical standpoint, it cannot be too strongly stressed, to
New Labor Code and Section 9, Rule XIII of its Implementing Rules and Regulations, thus making the order follow Davis in his masterly work, Discretionary Justice, that where a decision may be made to rest on informed
appealed from, final and executory. Further, it is the contention of petitioner that it was denied due process of law judgment rather than rigid rules, all the equities of the case must be accorded their due weight. Finally, labor law
because it was not given the opportunity to present evidence to rebut private respondents' documentary evidence determinations, to quote from Bultmann, should be not only secundum retionem but also secundum caritatem." More
allegedly submitted only on appeal. recently, we held that in appeals in labor cases, non-service of the copy of the appeal or appeal memorandum to the
Stripped of procedural technicalities, the decisive issue before Us - is whether or not sufficient legal grounds exist adverse party is not a jurisdictional defect, and does not justify dismissal of the appeal. 17 Likewise, it was held that
under the relevant facts and applicable law to justify the dismissal of private respondents Luz Raymundo and dismissal of an employee's appeal on a purely technical ground is inconsistent with the constitutional mandate on
Zenaida Bustamante. protection to labor. 18
Our answer is in the negative. Petitioner's belated claim of lack of jurisdiction on the ground that it was the Minister of Labor, and not the National
While it is true that it is the sole prerogative of the management to dismiss or lay-off an employee, the exercise of Labor Relations Commission, which acted on the appeal pursuant to Article 217 of the New Labor, lacks merit. The
such a prerogative, however, must be made without abuse of discretion, for what is at stake is not only private records of the case were forwarded by the Acting Director of the National Capital Region to the Labor Appeals and
respondents' positions but also their means of livelihood. Basically, the right of an employer to dismiss an employee Review Staff, Office of the Minister of Labor in an order dated April 17, 1979 with the knowledge of petitioner. Having
differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive failed to manifest its objection, but chose instead to await the decision of the Minister of Labor, petitioner is now
and abusive since it affects one's person and property. 11 estopped from questioning the exercise of jurisdiction by the Minister of Labor after an adverse decision have been
In the case of Luz Raymundo, she was charged of insubordination for allegedly refusing to work on a Sunday, rendered against it. We cannot countenance petitioner's stance of speculating on the possibility of a favorable
October 15, 1978, which was her rest day. The records show that the day before, she requested exemption from decision from the Minister of Labor and later on question the latter's jurisdiction after an adverse decision.
work on that Sunday. In fact, she was granted a clearance slip (Exhibit "B") allowing her to be absent on that Sunday As regards the due process argument, petitioner contend that it was denied the opportunity to cross-examine private
by her immediate supervisor (Department Head). She had a valid ground, therefore, not to work on that Sunday, and respondents and rebut their documentary evidence allegedly submitted only on appeal. At the inception of the case
her failure to report that day can not be considered as gross insubordination. The disapproval of her request by top however, both parties, after failing to arrive at an amicable settlement, agreed to submit their case for resolution on
management reasonably creates the impression of a hostile attitude characterizing the efforts of petitioner the basis of their respective position papers. While private respondents insisted on its claim that they have submitted
(Management) of easing out with undue haste the services of private respondents. Besides, petitioner has not shown their documentary evidence together with their position papers, petitioner, on the other hand, claim otherwise.
that Luz Raymundo's failure to report for work on that Sunday, October 15, 1978, constitutes one of the just causes Surprisingly though, it is only after the rendition of an adverse decision that petitioner now raised this matter of non-
for termination under Article 283 of the New Labor Code. submission of documentary evidence. And petitioner did not insist on this alleged non-submission of evidence
On the other hand, in the case of Zenaida Bustamante, she allegedly abandoned her employment by failing to report apparently because the Acting Director of the National Capital Region decided the case in its favor.
for work after the expiration of her suspension on October 23, 1978. Like Luz Raymundo, her one week suspension Even on the assumption that no documentary evidence was ever submitted by private respondents, still, on appeal,
arose from her failure to report for work on a Sunday, October 15, 1978 which as explained in her opposition to the the entire record of the case was reviewed by the respondent Minister of Labor and in fact, decided the case on the
clearance application, was not without reason because on that day, she was ill and in fact treated by Dr. Lorenzo merits. Besides, a motion for reconsideration filed by petitioner invoking due process cured the defect based on the
Yuson for fever and severe stomach ache as shown by the medical certificate (Exhibit "C"). On the consequent alleged lack of procedural due process. 19 On its argument that it was denied the opportunity to rebut private
charge of abandonment, it must be noted that Zenaida Bustamante filed a complaint for illegal dismissal on respondents' documentary evidence allegedly submitted only on appeal, it is interesting to note that in the application
November 15, 1978 to oppose the clearance application to dismiss her. for clearance to dismiss employees, the employer is required to present evidence before the former can present any

Labor Standards | To digest (old cases) | Ajean Tuazon| 34


contrary evidence. Petitioner's technical objections pointedly create an impression of the weakness of its stand or the failed to arrive at an agreement and on 15 November 1993, respondent company filed with Office of the Secretary of
merits of the case. Labor and Employment a petition for assumption of jurisdiction.
Notwithstanding the foregoing, We are convinced, after a closer examination of the records, that indeed there is no On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly
reasonable ground for the outright dismissal of Luz Raymundo and Zenaida Bustamante. committed by respondent company. On 12 February 1994, the union staged a strike.
Petitioner therefore is under obligation to REINSTATE Luz Raymundo and Zenaida Bustamante to their former or On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order[4] over the labor dispute. On
substantially equivalent positions without loss of seniority rights and privileges with three-year (3) backwages 20 to 02 March 1994, Secretary Confesor issued an order directing respondent company to “immediately accept all striking
be computed from October 23, 1978, the date of expiration of their suspension. workers, including the fifty-three (53) terminated union officers, shop stewards and union members back to work
WHEREFORE, finding the instant petition to be without merit, the same is hereby DISMISSED. The appealed under the same terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end
decision of the Minister of Labor and Employment dated January 21, 1981 is hereby AFFIRMED. benefits of its employees in 1993.”[5] On the other hand, petitioner union was directed to “strictly and immediately
Petitioner Remerco Garments Manufacturing is hereby ordered to reinstate Luz Raymundo and Zenaida Bustamante comply with the return to work orders issued by (the) Office x x x.”[6] The same order pronounced that “(a)ll
to their former or substantially equivalent position without loss of seniority rights and privileges with three-year (3) pending cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith.”[7]
backwages computed from October 23, 1978. In the interim, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an “Urgent
No costs. Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings” seeking the consolidation of
SO ORDERED. the case with the labor dispute pending before the Secretary of Labor. Despite objection by respondent company,
Makasiar, Concepcion Jr., Abad Santos and Escolin, JJ., concur. Aquino, J., no part. Labor Arbiter Caday held in abeyance the proceedings before him. However, on 06 June 1994, Acting Labor
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA MONTEJO, Secretary Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the presentation
petitioners, vs. INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING, of evidentiary matters, directed the Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the
SECRETARY OF LABOR AND EMPLOYMENT, respondents., G.R. No. 142824, 2001 Dec 19, 1st Division) cases before them and to thereafter submit their report and recommendation to his office.
KAPUNAN, J.: On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor
Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999, and the Leonardo A. Quisumbing.[8] Then Secretary Quisumbing approved and adopted the report in his Order, dated 13
resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978. August 1997, hence:
Culled from the questioned decision, the facts of the case are as follows: WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial evidence,
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and-file this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this case, and judgment is
employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging hereby rendered:
pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31 (1) Declaring the ‘overtime boycott’ and ‘work slowdown’ as illegal strike;
July 1993. (2) Declaring the respondent union officers namely:
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,[1] Vice-President-Human Nestor Ocampo - President
Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and Carmelo Santos - Vice-President
Hernando Clemente, a union director. The two union officers inquired about the stand of the company regarding the Marites Montejo - Treasurer/Board Member
duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter could be Rico Gonzales - Auditor
best discussed during the formal negotiations which would start soon. Rod Abuan - Director
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status Segundino Flores - Director
and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration Hernando Clemente - Director
and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers who spearheaded and led the overtime boycott and work slowdown, to have lost their employment status; and
asked whether Salazar would be amenable to make the new CBA effective for two (2) years, starting 01 August (3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which prohibits the
1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could union or any employee during the existence of the CBA from staging a strike or engaging in slowdown or interruption
not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the of work and ordering them to cease and desist from further committing the aforesaid illegal acts.
company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to Petitioner union moved for the reconsideration of the order but its motion was denied. The union went to the Court of
6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without Appeals via a petition for certiorari. In the now questioned decision promulgated on 29 December 1999, the
sealing the containers and securing the raw materials they were working on. When Salazar inquired about the appellate court dismissed the petition. The union’s motion for reconsideration was likewise denied.
reason for their refusal to follow their normal work schedule, the employees told him to "ask the union officers." To Hence, the present recourse where petitioner alleged:
minimize the damage the overtime boycott was causing the company, Salazar immediately asked for a meeting with THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC
the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING
return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED “PAROL EVIDENCE
the new CBA. Salazar again told the union officers that the matter could be better discussed during the formal RULE” IN THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.
renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company, the overtime THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
boycott continued. In addition, the employees started to engage in a work slowdown campaign during the time they DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE
were working, thus substantially delaying the production of the company.[2] PRIVATE RESPONDENT’S ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT
counter-proposal. TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED.
On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
to declare illegal petitioner union’s “overtime boycott” and “work slowdown” which, according to respondent DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE
company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE
Labor Arbiter Manuel R. Caday. STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.[9]
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an We sustain the questioned decision.
urgent request for preventive mediation aimed to help the parties in their CBA negotiations.[3] The parties, however, On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the illegal strike
committed by petitioner union, it is undisputed that the petition to declare the strike illegal before Labor Arbiter Caday

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was filed long before the Secretary of Labor and Employment issued the assumption order on 14 February 1994. hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard
However, it cannot be denied that the issues of “overtime boycott” and “work slowdown” amounting to illegal strike to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours.
before Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March As Labor Arbiter Caday elucidated in his report:
1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of
same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following
Caday to continue with the hearing of the illegal strike case, the parties acceded and participated in the proceedings, day that has been going on since 1988. Proof of this is the case undisputedly filed by the union for and in behalf of
knowing fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and its members, wherein it is claimed that the company has not been computing correctly the night premium and
recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of petitioner overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10,
union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of Labor. testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union Vice-President Carmelo C.
The appellate court also correctly held that the question of the Secretary of Labor and Employment’s jurisdiction over Santos, demanded that the company make a recomputation of the overtime records of the employees from 1987
labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and (Exh. "P"). Even their own witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still a
Associated Labor Union (ALU)[10] where the Court declared: Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to assume sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while
national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the employees to
labor dispute must include and extend to all questions and controversies arising therefrom, including cases over sign, his name appeared but without his signatures, he however had rendered overtime during those dates and was
which the labor arbiter has exclusive jurisdiction. paid because unlike in other departments, it has become a habit to them to sign the overtime schedule weekly (t.s.n.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union, its officers and members about
the opening proviso therein reading ‘(e)xcept as otherwise provided under this Code x x x.’ Plainly, Article 263(g) of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following
the Labor Code was meant to make both the Secretary (or the various regional directors) and the labor arbiters day will be further shown in the discussion of the second issue.[18]
share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to effectively and As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work slowdown"
efficiently dispose of the primary dispute. To hold the contrary may even lead to the absurd and undesirable result from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence presented is equally crystal
wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings. As we have said, clear that the "overtime boycott" and "work slowdown" committed by the respondents amounted to illegal strike.
‘(i)t is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it. As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-Human Resources
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263(g) of Department, sometime in February, 1993, he was approached by the union President Nestor Ocampo and Union
the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally construed to subserve Director Hernando Clemente who asked him as to what was the stand of the company regarding the duration of the
the objective of the jurisdiction vested in the Secretary.[11] CBA between the company and which was set to expire on July 31, 1993. He answered that the matter could be
Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings of best discussed during the formal renegotiations which anyway was to start soon. This query was followed up
the Labor Arbiter, when sufficiently supported by the evidence on record, must be accorded due respect by the sometime in March, 1993, and his answer was the same. In early April, 1993, the union president requested for a
Supreme Court.[12] Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then meeting to discuss the duration and effectivity of the CBA. Acceding to the request, a meeting was held on April 15,
Secretary of Labor Quisumbing but it was likewise affirmed by the Court of Appeals. We see no reason to depart 1993 wherein the union officers asked him if he would agree to make the new CBA effective on August 1, 1993 and
from their findings. the term thereof to be valid for only two (2) years. When he answered that it was still premature to discuss the
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the “parol evidence rule”[13] matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow their
when they upheld the allegation of respondent company that the work schedule of its employees was from 6:00 a.m. regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work,
to 6:00 p.m. and from 6:00 p.m. to 6:00 a.m. According to petitioner union, the provisions of their CBA on working they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without sealing
hours clearly stated that the normal working hours were “from 7:30 a.m. to 4:30 p.m.”[14] Petitioner union the containers and securing the raw materials they were working on. When he saw the workers leaving before the
underscored that the regular work hours for the company was only eight (8) hours. It further contended that the end of their shift, he asked them why and their reply was "asked (sic) the union officers." Alarmed by the overtime
Labor Arbiter as well as the Court of Appeal should not have admitted any other evidence contrary to what was boycott and the damage it was causing the company, he requested for a meeting with the union officers. In the
stated in the CBA. meeting, he asked them why the regular work schedule was not being followed by the employees, and union Director
The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Enrico Gonzales, with the support of the other union officers, told him that if management would agree to a two-year
Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling.[15] Rules of procedure and duration for the new CBA and an effectivity date of August 1, 1993, all employees will return to the normal work
evidence are not applied in a very rigid and technical sense in labor cases.[16] Hence, the Labor Arbiter is not schedule of two 12-hour shifts. When answered that the management could not decide on the matter at the
precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in, the CBA. moment and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott continued
In any event, the parties stipulated: and the employees at the same time employed a work slowdown campaign during working hours, causing
Section 1. Regular Working Hours - A normal workday shall consist of not more than eight (8) hours. The regular considerable delay in the production and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G.
working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; Salazar which formed part of his direct testimony). This testimonial narrations of Salazar was, as earlier said,
however the company may change the prevailing work time at its discretion, should such change be necessary in the undisputed because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on August 9,
operations of the Company. All employees shall observe such rules as have been laid down by the company for the 1994).
purpose of effecting control over working hours.[17] Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department Managers pointing
It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, to the union officers as the instigators of the overtime boycott and work slowdown, the testimony of Epifanio
should such change be necessary for its operations, and that the employees shall observe such rules as have been Salumbides (Exh. "Y") a union member at the time the concerted activities of the respondents took place, is quoted
laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt hereunder:
a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It “2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng
was established that the employees adhered to the said work schedule since 1988. The employees are deemed to bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng
have waived the eight-hour schedule since they followed, without any question or complaint, the two-shift schedule Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-imbento
while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working ng sari-saring dahilan para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na

Labor Standards | To digest (old cases) | Ajean Tuazon| 36


siya namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng substantial agreement with the petitioner’s concept of a slowdown as a “strike on the installment plan;” as a willful
magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko. x x x reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer,
“3. Nakalipas ang dalawaang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop Stewards namin in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production
na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-ovetime pag nagbigay or their performance of duties and functions to compel management to grant their demands. The Court also agrees
ng senyas ang Unyon ng "showtime." that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees
“4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala ng “continue to work and remain at their positions and accept the wages paid to them,” they at the same time “select
empleyadong nag-overtime at sabay-sabay silang umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the
18, 1993 na Sabado at Linggo. employer’s damage, to do other work;” in other words, they “work on their own terms.” x x x.[24]
“5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation
ko doon ang halos lahat ng opisyales ng Unyon na sina: package to some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts
Nestor Ocampo ----- Presidente they committed.
Carmelo Santos ----- Bise-Presidente Respondent company correctly postured that at the time these union officers obtained their separation benefits, they
Nanding Clemente -- Director were still considered employees of the company. Hence, the company was merely complying with its legal
Tess Montejo------- Chief Steward obligations.[25] Respondent company could have withheld these benefits pending the final resolution of this case.
Segundo Flores ------ Director Yet, considering perhaps the financial hardships experienced by its employees and the economic situation
Enrico Gonzales ----- Auditor prevailing, respondent company chose to let its employees avail of their separation benefits. The Court views the
Boy Alcantara ------- Shop Steward gesture of respondent company as an act of generosity for which it should not be punished.
Rod Abuan ----------- Director WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the Court of Appeals
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng Unyon. is AFFIRMED.
Tinanong ako ni Rod Aguan kung bakit ako "nag-ovetime" gayong "Binigyan ka na namin ng instruction na huwag SO ORDERED.
pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista. Davide, Jr., C.J., (Chairman), Pardo, and Ynares-Santiago, JJ., concur. Puno, J., on official leave.
Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na dahilan para lang hindi pumasok -----------------------------------------------------------------------------------------------------------------------------------------------------------
at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL TANGIHAN, SAMUEL
umalis. LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO NENO, ALBERTO
x x x" BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON
Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in the ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN,
performance and work efficiency for the year 1993 as compared to the previous year was even rebuffed by their petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,
witness M. Theresa Montejo, a Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and STANDARD
could not answer how she was able to prepare the productivity reports from May 1993 to February 1994 because (PHILIPPINES) FRUIT CORPORATION, respondents., G.R. No. 78210, 1989 February 28, 2nd Division)
from April 1993 up to April 1994, she was on union leave. As such, the productivity reports she had earlier shown PARAS, J.:
was not prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February This is a petition for review on certiorari of the decision of the National Labor Relations Commission dated December
27, 1995). Aside from this admission, the comparison made by the respondents was of no moment, because the 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et al. vs. Standard (Phil.) Fruits Corporation
higher production for the years previous to 1993 was reached when the employees regularly rendered overtime (STANFILCO) which affirmed the decision of Labor Arbiter Pedro C. Ramos, NLRC, Special Task Force, Regional
work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted Arbitration Branch No. XI, Davao City dismissing the claim of petitioners.
not only in financial losses to the company but also damaged its business reputation. This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for assembly time,
Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work schedule thru their moral damages and attorney's fees, with the aforementioned Regional Arbitration Branch No. XI, Davao City.
concerted activities of "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, to force the After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex "D", Rollo, pp.
petitioner company to accede to their unreasonable demands, can be classified as a strike on an installment basis, 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985 (Annex "E", Rollo, pp. 51-58) in
as correctly called by petitioner company. xxx[19] favor of private respondent STANFILCO, holding that:
It is thus undisputed that members of the union by their own volition decided not to render overtime services in April "Given these facts and circumstances, we cannot but agree with respondent that the pronouncement in that earlier
1993.[20] Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of case, i.e. the thirty-minute assembly time long practiced cannot be considered waiting time or work time and,
Appeals, as well as in the petition before this Court, which both stated that "(s)sometime in April 1993, members of therefore, not compensable, has become the law of the case which can no longer be disturbed without doing
herein petitioner, on their own volition and in keeping with the regular working hours in the Company x x x decided violence to the time-honored principle of res-judicata.
not to render overtime".[21] Such admission confirmed the allegation of respondent company that petitioner engaged "WHEREFORE, in view of the foregoing considerations, the instant complaint should therefore be, as it is hereby,
in “overtime boycott” and “work slowdown” which, to use the words of Labor Arbiter Caday, was taken as a means to DISMISSED.
coerce respondent company to yield to its unreasonable demands. SO ORDERED." (Rollo, p. 58)
More importantly, the “overtime boycott” or “work slowdown” by the employees constituted a violation of their CBA, On December 12, 1986, after considering the appeal memorandum of complainant and the opposition of
which prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or respondents, the First Division of public respondent NLRC composed of Acting Presiding Commissioner Franklin
interruption of work.[22] In Ilaw at Buklod ng Manggagawa vs. NLRC,[23] this Court ruled: Drilon, Commissioner Conrado Maglaya, Commissioner Rosario D. Encarnacion as Members, promulgated its
x x x (T)he concerted activity in question would still be illicit because contrary to the workers’ explicit contractual Resolution, upholding the Labor Arbiters' decision. The Resolution's dispositive portion reads:
commitment “that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, "Surely, the customary functions referred to in the above-quoted provision of the agreement includes the long-
refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any standing practice and institutionalized non-compensable assembly time. This, in effect, estopped complainants from
other interference with any of the operations of the COMPANY during the term of xxx (their collective bargaining) pursuing this case.
agreement.” "The Commission cannot ignore these hard facts, and we are constrained to uphold the dismissal and closure of the
What has just been said makes unnecessary resolution of SMC’s argument that the workers’ concerted refusal to case.
adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially "WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in

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"SO ORDERED." (Annex "H", Rollo, pp. 86-89). It is clear that herein petitioners are merely reiterating the very same claim which they fled through the ALU and
On January 15, l987, petitioners filed a Motion for Reconsideration which was opposed by private respondent (Annex which records show had already long been considered terminated and closed by this Court in G.R. No. L-48510.
"I" Rollo, pp. 90-91; Annex "J," Rollo, pp. 92-96). Therefore, the NLRC can not be faulted for ruling that petitioners' claim is already barred by res judicata.
Public respondent NLRC, on January 30, 1987, issued resolution denying for lack of merit petitioners' motion for Be that as it may, petitioners' claim that there was a change in the factual scenario which are "substantial changes in
reconsideration (Annex "K", Rollo, p. 97). the facts" makes respondent firm now liable for the same claim they earlier filed against respondent which was
Hence this petition for review on certiorari filed on May 7, 1987. dismissed. It is thus axiomatic that the non-compensability of the claim having been earlier established, constitute
The Court in the resolution of May 4, 1988 gave due course to this petition. the controlling legal rule or decision between the parties and remains to be the law of the case making this petition
Petitioners assign the following issues: without merit.
1) Whether or not the 30-minute activity of the petitioners before the scheduled working time is compensable nder As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar principle of res judicata.
the Labor Code. There will be no end to this controversy if the light of the Minister of Labor's decision dated May 12, 1979 that had
2) Whether or not res judicata applies when the facts obtaining in the prior case and in the case at bar are long acquired the character of finality ---- and which already resolved that petitioners' thirty (30)-minute assembly
significantly different from each other in that there is merit in the case at bar. time is not compensable, the same issue can be re-litigated again." (Rollo, p. 183).
3) Whether or not there is finality in the decision of Secretary Ople in view of the compromise agreement novating This Court has held:
it and the withdrawal of the appeal. "In this connection account should be taken of the cognate principle that res judicata operates to bar not only the
4) Whether or not estoppel and laches lie in decisions for the enforcement of labor standards (Rollo, p. 10). relitigation in a subsequent action of the issues squarely raised, passed upon and adjudicated in the first suit, but
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the assembly area is also the ventilation in said subsequent suit of any other issue which could have been raised in the first but was not
compensable as working time (from 5:30 to 6:00 o'clock in the morning) since these preliminary activities are The law provides that 'the judgment or order is, with respect to the matter directly adjudged or as to any other matter
necessarily and primarily for private respondent's benefit. that could have been raised in relation thereto, conclusive between the parties and their successors in interest by
These preliminary activities of the workers are as follows: title subsequent to the commencement of the action . . . litigating for the same thing and in the same capacity.' So,
(a) First there is the roll call. This is followed by getting their individual work assignments from the foreman. even if new causes of action are asserted in the second action (e.g. fraud, deceit, undue machinations in connection
(b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report during with their execution of the convenio de transaccion), this would not preclude the operation of the doctrine of res
which they are often made to explain about their reported accomplishment the following day. judicata. Those issues are also barred, even if not passed upon in the first. They could have been, but were not,
(c ) Then they go to the stockroom to get the working materials, tools and equipment. there raised." (Vda. de Buncio v. Estate of the late Anita de Leon, 156 SCRA 352 [1987]).
(d) Lastly, they travel to the field bringing with them their tools, equipment and materials. Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise because their
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11). jurisdiction is confined to specific matters are accorded not only respect but at times even finality if such findings are
Contrary to this contention, respondent avers that the instant complaint is not new, the very same claim having been supported by substantial evidence (Special Events & Central Shipping Office Workers Union v. San Miguel
brought against herein respondent by the same group of rank and file employees in the case of Associated Labor Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau
Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back April 27, 1976 when of Labor Relations, 75 SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265 [1982]; National Federation of Labor
ALU was the bargaining agent of respondent's rank and file workers. The said case involved a claim for "waiting Union (NAFLU) v. Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453
time", as the complainants purportedly were required to assemble at a designated area at least 30 minutes prior to [1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
the start of their scheduled working hours "to ascertain the work force available for the day by means of a roll call, for The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition) pointed out in detail
the purpose of assignment or reassignment of employees to such areas in the plantation where they are most the basis of his findings and conclusions, and no cogent reason can be found to disturb these findings nor of those of
needed." (Rollo, pp. 64-65). the National Labor Relations Commission which affirmed the same.
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated Labor Union PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the National Labor
vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where significant findings of facts and Relations Commission is AFFIRMED.
conclusions had already been made on the matter. SO ORDERED.
The Minister of Labor held: Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.
"The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Separate Opinions
Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as 'waiting time' within the SARMIENTO, J., dissenting:
purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code . . . It is my opinion that res judicata is not a bar.
"Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon
proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other by the respondents as basis for claims of res judicata, is not, to my mind, a controlling precedent. In that case, it was
personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their held that the thirty-minute "waiting time" complained of was a mere "assembly time" and not a waiting time as the
respective work assignments. Their houses are situated right on the area where the farms are located, such that term is known in law, and hence, a compensable hour of work. Thus:
after the roll call, which does not necessarily require the personal presence, they can go back to their houses to The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under
attend to some chores. In short, they are not subject to the absolute control of the company during this period, Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as 'waiting time' within the
otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code . . .
CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other
interests of the employer, but ultimately for the employees to indicate their availability or non-availability for work personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their
during every working day." (Annex "E", Rollo, p. 57). respective work assignments. Their houses are situated right on the area where the farms are located, such that
Accordingly, the issues are reduced to the sole question as to whether public respondent National Labor Relations after the roll call, which does not necessarily require the personal presence, they can go back to their houses to
Commission committed a grave abuse of discretion in its resolution of December 17, 1986. attend to some chores.
The facts on which this decision was predicated continue to be the facts of the case in this questioned resolution of In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to
the National Labor Relations Commission. report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain
any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the

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indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the employer, 2. On the alleged non-compliance with Wage Order No. 6, the NLRC again gravely abused its discretion when it
but ultimately for the employees to indicate their availability or non-availability for work during every working day. patently and palpably erred in holding that it is “more inclined to adopt the stance of appellant (private respondent
(Decision, 6.) Precisely, it is the petitioners' contention that the assembly time in question had since undergone UNION) in this issue since it is more in keeping with the law and its implementing provisions and the intendment of
dramatic changes, thus: the parties as revealed in their CBA” without giving any reason or justification for such conclusions as the stance of
(a) First there is the roll call. This is followed by getting their individual work assignments from the foreman. appellant (private respondent UNION) does not traverse the clear and correct finding and conclusion of the Labor
(b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report during Arbiter.
which they are often made to explain about their reported accomplishment the following day. Furthermore, the petitioner, under conservatorship and distressed, is exempted under Wage Order No. 6.
(c ) Then they go to the stockroom to, at the working materials, tools and equipment. Finally, the “wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment
(d) Lastly, they travel to the field bringing with them their tools, equipment and materials. thereof” (par. 2, dispositive portion, NLRC Decision), has prescribed (p. 12, Motion for Partial Reconsideration,
(Supra, 4-5.) Annex “H”).
The petitioners have vehemently maintained that in view thereof, the instant case should be distinguished from the 3. On the alleged non-payment of legal holiday pay, the NLRC again gravely abused its discretion when it patently
first case. And I do not believe that the respondents have successfully rebutted these allegations. The Solicitor and palpably erred in approving and adopting “the position of appellant (private respondent UNION)” without giving
General relies solely on the decision of then Minister Ople, the decision the petitioners precisely reject in view of the any reason or justification therefor which position does not squarely traverse or refute the Labor Arbiter’s correct
changes in the conditions of the parties. The private respondent on the other hand insists that these practices were finding and ruling (p. 18, Motion for Partial Reconsideration, Annex “H”).[6]
the same practices taken into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon. On 29 July 1991, the Court granted petitioner’s prayer for a temporary restraining order enjoining respondents from
It is evident that the Ople decision was predicated on the absence of any insinuation of obligatoriness in the course executing the 30 April 1991 Decision and 18 June 1991 Resolution of the NLRC.[7]
or after the assembly activities on the part of the employees. (". . . [T]hey are not subject to the absolute control of Coming now to the merits of the petition, the Court shall discuss the issues ad seriatim.
the company during this period, otherwise, their failure to report in the assembly time would justify the company to Bonuses
impose disciplinary measures;" supra, 6.) As indicated, however, by the petitioners, things had since changed, and As to the bonuses, private respondent declared in its position paper[8] filed with the NLRC that –
remarkably so, and the latter had since been placed under a number of restrictions. My considered opinion is that the 1. Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees
thirty-minute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor Code. since 1971 when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus
I vote, then, to grant the petition. equivalent to an employee’s one-month basic pay and a Christmas bonus equivalent to an employee’s one whole
HOLIDAYS month salary (basic pay plus allowance);
PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and 2. When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously being given as part of the
PRODUCERS BANK EMPLOYEES ASSOCIATION,[1] respondents., G.R. No. 100701, 2001 Mar 28, 3rd Christmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;
Division 3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay
GONZAGA-REYES, J.: as 13th month pay but the Christmas bonus was no longer based on the allowance but on the basic pay of the
Before us is a special civil action for certiorari with prayer for preliminary injunction and/or restraining order seeking employees which is higher;
the nullification of (1) the decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled “Producers 4. In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year
Bank Employees Association v. Producers Bank of the Philippines,” promulgated on 30 April 1991, reversing the bonus;
Labor Arbiter’s dismissal of private respondent’s complaint and (2) public respondent’s resolution dated 18 June 5. By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a one-half (1/2) month basic pay
1991 denying petitioner’s motion for partial reconsideration. as compliance of the 13th month pay and none for the Christmas bonus. In a tabular form, here are the bank’s
The present petition originated from a complaint filed by private respondent on 11 February 1988 with the Arbitration violations:
Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution YEAR MID-YEAR BONUS CHRISTMAS BONUS 13TH MO. PAY
of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent previous years one mo. basic one mo. basic one mo. basic
prayed for damages.[2] 1984 [one mo. basic] - none - one-half mo. basic
On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondent’s claims to be unmeritorious and 1985 one-half mo. Basic - none - one-half mo. basic
dismissed its complaint.[3] In a complete reversal, however, the NLRC[4] granted all of private respondent’s claims, 1986 one-half mo. basic one-half mo. basic one mo. basic
except for damages.[5] The dispositive portion of the NLRC’s decision provides – 1987 one-half mo. basic one-half mo. basic one mo. basic
WHEREFORE, premises considered, the appealed Decision is, as it is hereby, SET ASIDE and another one issued Private respondent argues that the mid-year and Christmas bonuses, by reason of their having been given for
ordering respondent-appellee to pay complainant-appellant: thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by
1. The unpaid bonus (mid-year and Christmas bonus) and 13th month pay; petitioner without violating Article 100 of Presidential Decree No. 442[9] which prohibits the diminution or elimination
2. Wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof; and of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus
3. Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years. is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may
The rest of the claims are dismissed for lack of merit. become part of the employee’s regular compensation.[10]
SO ORDERED. On the other hand, petitioner asserts that it cannot be compelled to pay the alleged bonus differentials due to its
Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC in a Resolution issued on 18 June depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the
1991. Hence, recourse to this Court. Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion
Petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons stated which was affirmed by the labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of
in its Petition – the parties does not provide for the payment of any mid-year or Christmas bonus. On the contrary, section 4 of the
1. On the alleged diminution of benefits, the NLRC gravely abused its discretion when (1) it contravened the collective bargaining agreement states that –
Supreme Court decision in Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now
(2) its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the so- accorded or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole
called “company practice invoked by it has no legal and moral bases” (p. 2, Motion for Partial Reconsideration, judgment and discretion of the BANK to grant, modify or withdraw.[11]
Annex “H”); A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success
of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an

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enlightened employer to spur the employee to greater efforts for the success of the business and realization of xxx xxx xxx
bigger profits.[12] The granting of a bonus is a management prerogative, something given in addition to what is Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the
ordinarily received by or strictly due the recipient.[13] Thus, a bonus is not a demandable and enforceable obligation, bank is continuously unable or unwilling to maintain a condition of solvency or liquidity. In Central Bank of the
[14] except when it is made part of the wage, salary or compensation of the employee.[15] Philippines v. Court of Appeals,[23] the Court declared that the order placing petitioner herein under conservatorship
However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold had long become final and its validity could no longer be litigated upon. Also, in the same case, the Court found that
otherwise would be to penalize the employer for his past generosity. Thus, in Traders Royal Bank v. NLRC,[16] we sometime in August, 1983, some news items triggered a bank-run in petitioner which resulted in continuous over-
held that – drawings on petitioner’s demand deposit account with the Central Bank; the over-drawings reached P143.955 million
It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees. The matter of giving them by 17 January 1984; and as of 13 February 1990, petitioner had over-drawings of up to P1.233 billion, which
bonuses over and above their lawful salaries and allowances is entirely dependent on the profits, if any, realized by evidences petitioner’s continuing inability to maintain a condition of solvency and liquidity, thus justifying the
the Bank from its operations during the past year. conservatorship. Our findings in the Central Bank case coincide with petitioner’s claims that it continuously suffered
From 1979-1985, the bonuses were less because the income of the Bank had decreased. In 1986, the income of losses from 1984 to 1988 as follows -
the Bank was only 20.2 million pesos, but the Bank still gave out the usual two (2) months basic mid-year and two YEAR NET LOSSES IN MILLIONS OF PESOS
months gross year-end bonuses. The petitioner pointed out, however, that the Bank weakened considerably after 1984 P 144.418
1986 on account of political developments in the country. Suspected to be a Marcos-owned or controlled bank, it 1985 P 144.940
was placed under sequestration by the present administration and is now managed by the Presidential Commission 1986 P 132.940
on Good Government (PCGG). 1987 P 84.182
In light of these submissions of the petitioner, the contention of the Union that the granting of bonuses to the January-February 1988 P 9.271
employees had ripened into a company practice that may not be adjusted to the prevailing financial condition of the These losses do not include the interest expenses on the overdraft loan of the petitioner to the Central Bank, which
Bank has no legal and moral bases. Its fiscal condition having declined, the Bank may not be forced to distribute interest as of July 31, 1987, amounted to P610.065 Million, and penalties on reserve deficiencies which amounted to
bonuses which it can no longer afford to pay and, in effect, be penalized for its past generosity to its employees. P89.029 Million. The principal balance of the overdraft amounted to P971.632 Million as of March 16, 1988.[24]
Private respondent’s contention, that the decrease in the mid-year and year-end bonuses constituted a diminution of Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a
the employees’ salaries, is not correct, for bonuses are not part of labor standards in the same class as salaries, cost bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to
of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code. continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the
This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLRC[17] wherein the Court mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be to defeat the reason for the
made the following pronouncements – conservatorship which is to preserve the assets and restore the viability of the financially precarious bank.
By definition, a “bonus” is a gratuity or act of liberality of the giver which the recipient has no right to demand as a Ultimately, it is to the employees’ advantage that the conservatorship achieve its purposes for the alternative would
matter of right. It is something given in addition to what is ordinarily received by or strictly due the recipient. The be petitioner’s closure whereby employees would lose not only their benefits, but their jobs as well.
granting of a bonus is basically a management prerogative which cannot be forced upon the employer who may not 13th Month Pay
be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic With regard to the 13th month pay, the NLRC adopted the position taken by private respondent and held that the
salaries or wages, especially so if it is incapable of doing so. conservator was not justified in diminishing or not paying the 13th month pay and that petitioner should have instead
xxx xxx xxx applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by
Clearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in Presidential Decree No. 1364, but that it did not do so.[25] The NLRC held that the actions of the conservator ran
business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature counter to the provisions of PD 851.
of bonuses to its employees when it has been operating on considerable net losses for a given period of time? In its position paper,[26] private respondent claimed that petitioner made the following payments to its members –
Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80’s. As early as 1984, YEAR MID-YEAR BONUS 13TH MO. PAY CHRISTMAS BONUS
the Central Bank found that Manilabank had been suffering financial losses. Presumably, the problems commenced 1984 1 month basic ½ month basic None
even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under 1985 ½ month basic ½ month basic None
comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed 1986 ½ month basic 1 month basic ½ month basic
under receivership and ordered to close operation. In 1988, it was ordered liquidated. 1987 ½ month basic 1 month basic ½ month basic
It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, However, in its Memorandum[27] filed before this Court, private respondent revised its claims as follows –
resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or YEAR MID-YEAR BONUS 13TH MO. PAY CHRISTMAS BONUS
realization of profits to speak of that would warrant the conferment of additional benefits sought by private 1984 1 month basic None ½ month basic
respondents. No company should be compelled to act liberally and confer upon its employees additional benefits
1985 ½ month basic None ½ month basic
over and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of
1986 ½ month basic ½ month basic 1 month basic
enlightened generosity and self-interest can be exacted from near empty, if not empty coffers.
It was established by the labor arbiter[18] and the NLRC[19] and admitted by both parties[20] that petitioner was 1987 ½ month basic ½ month basic 1 month basic
placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act 1988 ½ month basic ½ month basic 1 month basic
No. 265,[21] as amended by Presidential Decree No. 72,[22] which provides – Petitioner argues that it is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its
Sec. 28-A. Appointment of conservator. - Whenever, on the basis of a report submitted by the appropriate employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month
supervising and examining department, the Monetary Board finds that a bank is in a state of continuing inability or basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay,
unwillingness to maintain a condition of solvency and liquidity deemed adequate to protect the interest of depositors pursuant to Section 2 of PD 851.[28]
and creditors, the Monetary Board may appoint a conservator to take charge of the assets, liabilities, and the PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their
management of that banking institution, collect all monies and debts due said bank and exercise all powers employees receiving a basic salary of not more than P1,000 a month,[29] regardless of the nature of the
necessary to preserve the assets of the bank, reorganize the management thereof and restore its viability. He shall employment, a 13th month pay, not later than December 24 of every year.[30] However, employers already paying
have the power to overrule or revoke the actions of the previous management and board of directors of the bank, their employees a 13th month pay or its equivalent are not covered by the law. Under the Revised Guidelines on the
any provision of law to the contrary notwithstanding, and such other powers as the Monetary Board shall deem Implementation of the 13th-Month Pay Law,[31] the term “equivalent” shall be construed to include Christmas bonus,
necessary. mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The

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intention of the law was to grant some relief – not to all workers – but only to those not actually paid a 13th month Order No. 6 because the former were not granted within the period of creditability provided for in such wage order.
salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be According to private respondent, the significant dates with regard to the granting of the first year increases are 9
imposed on the employer already paying his employees a 13th month pay or its equivalent – whether out of pure November 1984 – the date of issuance of the MOLE Resolution, 16 November 1984 – the date when the collective
generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the bargaining agreement was signed by the parties and 1 March 1984 – the retroactive date of effectivity of the first
equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would year increases. Private respondent points out that none of these dates fall within the period of creditability under
react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage
same benefits, his prior concessions might not be given due credit.[32] Order No. 6.[34]
In the case at bar, even assuming the truth of private respondent’s claims as contained in its position paper or The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of
Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and employers to grant wage and allowance increases to their employees higher than the minimum rates of increases
Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still prescribed by statute or administrative regulation. Thus, we held in Apex Mining Company, Inc. v. NLRC[35] that –
exceed, or at least be equal to, one month basic salary and thus, may be considered as an “equivalent” of the 13th [t]o obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel
month pay mandated by PD 851. Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus employers simply to add on legislated increases in salaries or allowances without regard to what is already being
as part of the 13th month pay. paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of
Wage Order No. 6 increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The
Wage Order No. 6, which came into effect on 1 November 1984, increased the statutory minimum wage of workers, creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do
with different increases being specified for agricultural plantation and non-agricultural workers. The bone of not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or
contention, however, involves Section 4 thereof which reads - regulations require.
All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Section 1 of Article VIII of the collective bargaining agreement of the parties states that “…the parties have
Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein formulated and agreed on the following highly substantial packaged increases in salary and allowance which take
provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay into account and cover (a) any deflation in income of employees because of such price increases and inflation and
the difference. Such increases shall not include anniversary wage increases provided in collective bargaining (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and
agreements unless the agreement expressly provide otherwise. benefits, during the next three (3) years of this Agreement…” The unequivocal wording of this provision manifests
On 16 November 1984, the parties entered into a collective bargaining agreement providing for the following salary the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining
adjustments – agreement to any statutory wage and allowance adjustments issued during the effectivity of such agreement - from
Article VIII. Section 1. Salary Adjustments. – Cognizant of the effects of, among others, price increases of oil and 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent’s contentions, there is nothing in
other commodities on the employees’ wages and earnings, and the certainty of continued governmental or statutory the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from
actions adjusting employees’ minimum wages, earnings, allowances, bonuses and other fringe benefits, the parties crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6.
have formulated and agreed on the following highly substantial packaged increases in salary and allowance which It would be inconsistent with the abovestated rationale underlying the creditability provision of Wage Order No. 6 if,
take into account and cover (a) any deflation in income of employees because of such price increases and inflation after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases
and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and under Wage Order No. 6 for the fact remains that petitioner actually granted wage and allowance increases sufficient
benefits, during the next three (3) years of this Agreement: to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6.
(i) Effective March 1, 1984 – P225.00 per month as salary increase plus P100.00 per month as increase in allowance Holiday Pay
to employees within the bargaining unit on March 1, 1984. Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular
(ii) Effective March 1, 1985 – P125.00 per month as salary increase plus P100.00 per month as increase in holidays[36] and that the employer may require an employee to work on any holiday but such employee shall be paid
allowance to employees within the bargaining unit on March 1, 1985. a compensation equivalent to twice his regular rate. In this case, the Labor Arbiter found that the divisor used by
(iii) Effective March 1, 1986 – P125.00 per month as salary increase plus P100.00 per month as increase in petitioner in arriving at the employees’ daily rate for the purpose of computing salary-related benefits is 314.[37] This
allowance to employees within the bargaining unit on March 1, 1986. finding was not disputed by the NLRC.[38] However, the divisor was reduced to 303 by virtue of an inter-office
In addition, the collective bargaining agreement of the parties also included a provision on the chargeability of such memorandum issued on 13 August 1986, to wit -
salary or allowance increases against government-ordered or legislated income adjustments – To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August 18, 1986, the
Section 2. Pursuant to the MOLE Decision dated October 2, 1984 and Order dated October 24, 1984, the first-year acting Conservator approved the use of 303 days as divisor in the computation of Overtime pay. The present Policy
salary and allowance increases shall be chargeable against adjustments under Wage Order No. 5, which took effect of 314 days as divisor used in the computation for cash conversion and determination of daily rate, among others,
on June 16, 1984. The chargeability of the foregoing salary increases against government-ordered or legislated still remain, Saturdays, therefore, are still considered paid rest days.
income adjustments subsequent to Wage Order No. 5 shall be determined on the basis of the provisions of such Corollarily, the Acting Convservator also approved the increase of meal allowance from P25.00 to P30.00 for a
government orders or legislation. minimum of four (4) hours of work for Saturdays.
Petitioner argues that it complied with Wage Order No. 6 because the first year salary and allowance increase Proceeding from the unambiguous terms of the above quoted memorandum, the Labor Arbiter observed that the
provided for under the collective bargaining agreement can be credited against the wage and allowance increase reduction of the divisor to 303 was for the sole purpose of increasing the employees’ overtime pay and was not
mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the meant to replace the use of 314 as the divisor in the computation of the daily rate for salary-related benefits.[39]
employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage
allowance adjustments prescribed therein. Petitioner asserts that although the collective bargaining agreement was rate of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for
signed by the parties on 16 November 1984, the first year salary and allowance increase was made to take effect purposes of computing overtime pay only. In its Memorandum, private respondent states that –
retroactively, beginning from 1 March 1984 until 28 February 1985. Petitioner maintains that this period 49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting Conservator
encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance is clear. Prior to August 18, 1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of
remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the the monthly-salaried employees. Effective August 18, 1986, this was changed. It adopted the following formula:
increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the Basic salary x 12 months = Daily Wage Rate
increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference.[33] 303 days
On the other hand, private respondent contends that the first year salary and allowance increases under the
collective bargaining agreement cannot be applied towards the satisfaction of the increases prescribed by Wage

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50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not Claiming that strained relations between her and Forest Hill have rendered reinstatement not feasible, petitioner
actually paying its employees the regular holiday pay mandated by law. Consequently, it is bound to pay the salary prayed for separation pay in lieu of reinstatement.
differential of its employees effective November 1, 1974 up to the present. In its Position Paper,[4] Forest Hills claimed as follows: In July 2001, petitioner was permitted to go on leave for two
xxx xxx xxx weeks but did not return for work after the expiration of the period. Despite petitioner’s undertaking to report “soon,”
54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986 (Annex “E”) provides for a she never did even until the end of School Year 2001-2002. It thus hired a temporary employee to accomplish the
divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, needed reports. When she finally returned for work, classes for the School Year 2002-2003 were already on-going.
we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the To belie petitioner’s claim that she was dismissed, Forest Hills submitted a list of faculty members and staff from
employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is School Year 1998-1999 up to School Year 2001 to 2002 which included her name.[5]
not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their With regard to the charge for illegal deduction, Forest Hills claimed that the Seventh Day Adventist Church requires
corresponding holiday pay.[40] its members to pay tithes equivalent to 10% of their salaries, and petitioner was hired on account of her being a
In Union of Filipro Employees v. Vivar, Jr.[41] the Court held that “[t]he divisor assumes an important role in member thereof, and petitioner never questioned the deduction of the tithe from her salary.
determining whether or not holiday pay is already included in the monthly paid employee’s salary and in the With regard to the charge for non-payment of overtime pay, holiday pay, and allowances, Forest Hills noted that
computation of his daily rate.” This was also our ruling in Chartered Bank Employees Association v. Ople,[42] as petitioner proffered no evidence to support the same.
follows – The Labor Arbiter decided in favor of petitioner, disposing as follows:
It is argued that even without the presumption found in the rules and in the policy instruction, the company practice WHEREFORE, judgment is hereby rendered:
indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. 1. Finding respondents Forest Hills Academy and/or Naomi Cabaluna guilty of illegally dismissing the complainant;
The petitioner contends otherwise. 2. Directing respondent to pay complainant Lilia P. Labadan the total amount of P152,501.02 representing her
One strong argument in favor of the petitioner’s stand is the fact that the Chartered Bank, in computing overtime monetary award x x x.
compensation for its employees, employs a “divisor” of 251 days. The 251 working days divisor is the result of Complainant’s other claim[s] are hereby dismissed for lack of merit and/or failure to substantiate.
subtracting all Saturdays, Sundays and the ten (10) legal holidays form the total number of calendar days in a year. If SO ORDERED.[6]
the employees are already paid for all non-working days, the divisor should be 365 and not 251. The National Labor Relations Commission (NLRC), finding the Labor Arbiter to have misappreciated the facts of the
Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a case, reversed and set aside his decision and dismissed petitioner’s complaint by Resolution of June 30, 2005.[7]
year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 On petitioner’s Petition for Certiorari,[8] the Court of Appeals, by Resolution[9] of December 15, 2005, dismissed the
as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein. petition for deficient amount of appellate docket fee, non-attachment of Affidavit of Service, absence of written
We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing explanation why the petition was filed through registered mail instead of through personal service, and non-
the employees’ overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner’s attachment of copies of the Complaint and the Answer filed before the Labor Arbiter. Petitioner’s Motion for
employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent Reconsideration having been denied,[10] she filed the present Petition for Review on Certiorari,[11] faulting the Court
in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the of Appeals
determination of the daily rate. Thus, based on the records of this case and the parties’ own admissions, the Court x x x IN DISMISSING THE PETITION ON THE GROUND OF TECHNICALITIES[;]
holds that petitioner has complied with the requirements of Article 94 of the Labor Code. x x x IN NOT DECIDING ON THE MERITS WHETHER OR NOT HONORABLE COMMISSIONERS OF THE 5TH
Damages DIVISION HAVE COMMITTED AN ACT OF GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
As to private respondent’s claim for damages, the NLRC was correct in ruling that there is no basis to support the EXCESS OF JURISDICTION:
same. A. IN REVERSING THE FINDINGS OF THE EXECUTIVE LABOR ARBITER THAT HEREIN PETITIONER-
WHEREFORE, for the reasons above stated, the 30 April 1991 Decision of public respondent in NLRC-NCR Case COMPLAINANT WAS NOT DISMISSED FROM HER WORK AS A TEACHER and AT THE SAME TIME THE
No. 02-00753-88, entitled “Producers Bank Employees Association v. Producers Bank of the Philippines,” and its 18 REGISTRAR;
June 1991 Resolution issued in the same case are hereby SET ASIDE, with the exception of public respondent’s B. IN FINDING THAT BY A PROLONGED ABSENCE OF ONE YEAR MORE OR LESS, PETITIONER WAIVED
ruling on damages. HER 13TH MONTH PAY AND SERVICE INCENTIVE LEAVES AS SHE FAILED TO STATE SUCH CLAIMS IN HER
SO ORDERED. AFFIDAVIT THAT WAS ATTACHED [TO] HER POSITION PAPER, and;
Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur. C. THAT THE DECISION/RESOLUTION RENDERED BY THE HONORABLE COMMISSIONERS OF THE 5TH
LILIA P. LABADAN Petitioner, versus FOREST HILLS ACADEMY/NAOMI CABALUNA and PRESIDING DIVISION WAS TAINTED WITH GRAVE ABUSE OF DISCRETION AS IT WAS INCOMPLETE AND UNLAWFUL[.]
COMISSIONER SALIC B. DUMARPA, COMMISSIONER PROCULO T. SARMEN, COMMISSIONER NOVITO C. [12] (Italics and emphasis in the original)
CAGAYAN, Respondents., G.R. No. 172295, 2008 Dec 23, 2nd Division Non-payment of docket fee at the time of the filing of a petition does not automatically call for its dismissal as long as
CARPIO MORALES, J.: the fee is paid within the applicable prescriptive or reglementary period.[13] While petitioner paid the P30 deficient
Lilian L. Labadan (petitioner) was hired by private respondent Forest Hills Mission Academy (Forest Hills) in July amount of the docket fee on February 7, 2006,[14] it was beyond the 60-day period for filing the petition for certiorari.
1989 as an elementary school teacher. From 1990 up to 2002, petitioner was registrar and secondary school Nevertheless, the Court, in the interest of substantial justice, brushes aside this and the other technicalities cited by
teacher. the Court of Appeals in its Resolution of December 15, 2005[15] and, instead of remanding the case to the appellate
On August 18, 2003, petitioner filed a complaint[1] against respondent Forest Hills and its administrator respondent court, now hereby decides the case on the merits.
Naomi Cabaluna for illegal dismissal, non-payment of overtime pay, holiday pay, allowances, 13th month pay, While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or
service incentive leave, illegal deductions, and damages. authorized cause, the employee must first establish by substantial evidence the fact of dismissal.[16]
In her Position Paper,[2] petitioner alleged that she was allowed to go on leave from Forest Hills, and albeit she had The records do not show that petitioner was dismissed from the service. They in fact show that despite petitioner’s
exceeded her approved leave period, its extension was impliedly approved by the school principal because she absence from July 2001 to March 2002 which, by her own admission, exceeded her approved leave,[17] she was still
received no warning or reprimand and was in fact retained in the payroll up to 2002.[3] considered a member of the Forest Hills faculty[18] which retained her in its payroll.[19]
Petitioner further alleged that since 1990, tithes to the Seventh Day Adventist church have been illegally deducted Petitioner argues, however, that she was constructively dismissed when Forest Hills merged her class with another
from her salary; and she was not paid overtime pay for overtime service, 13th month pay, five days service incentive “so much that when she reported back to work, she has no more claims to hold and no more work to do.”[20]
leave pay, and holiday pay; and that her SSS contributions have not been remitted. Petitioner, however, failed to refute Forest Hills’ claim that when she expressed her intention to resume teaching,
classes were already ongoing for School Year 2002-2003. It bears noting that petitioner simultaneously held the

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positions of secondary school teacher and registrar and, as the NLRC noted, she could have resumed her work non-remittance of SSS contributions are concerned. Respondents are accordingly ORDERED to refund to petitioner
as registrar had she really wanted to continue working with Forest Hills.[21] the amount of the illegal deductions from her salary; to pay her holiday pay, service incentive leave pay, and 13th
Petitioner’s affidavit and those of her former colleagues,[22] which she attached to her Position Paper, merely month pay; to remit her contributions to the SSS; and to pay her attorney’s fees equivalent to 10% of the final
attested that she was dismissed from her job without valid cause, but gave no particulars on when and how she was judgment award. The case is accordingly REMANDED to the Labor Arbiter for computation of the amount of such
dismissed. money claims.
There being no substantial proof that petitioner was dismissed, she is not entitled to separation pay or backwages. SO ORDERED.
Respecting petitioner’s claim for holiday pay, Forest Hills contends that petitioner failed to prove that she actually CONCHITA CARPIO MORALES (Associate Justice)
worked during specific holidays. Article 94 of the Labor Code provides, however, that WE CONCUR:
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service LEONARDO A. QUISUMBING (Associate Justice, Chairperson), DANTE O. TINGA (Associate Justice),
establishments regularly employing less than ten (10) workers; PRESBITERO J. VELASCO, JR. (Associate Justice) ARTURO D. BRION (Associate Justice)
(b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation ENTITLEMENT OF MONTHLY PAID EMPLOYEES TO REGULAR HOLIDAY PAY
equivalent to twice his regular rate[.] INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner, vs. HON. AMADO G.
The provision that a worker is entitled to twice his regular rate if he is required to work on a holiday implies that the INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA AND AMERICA, respondents.
provision entitling a worker to his regular rate on holidays applies even if he does not work. MAKASIAR, J.:
The petitioner is likewise entitled to service incentive leave under Article 95 of the Labor Code which provides that This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent Deputy Minister of
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America Employees'
of five days with pay. Union (complainant-appellee), vs. Insular Bank of Asia and America" (respondent-appellant), the dispositive portion
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying of which reads as follows:
vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten "xxx xxx xxx
employees or in establishment exempted from granting this benefit by the Secretary of Labor after considering the "ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
viability or financial condition of such establishment. Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment promulgated dismissing the
x x x x, instant case for lack of merit" (p. 109, rec.).
and to 13th month pay under Presidential Decree No. 851.[23] The antecedent facts culled from the records are as follows:
As for petitioner’s claims for overtime pay, it must be denied, for other than the uncorroborated affidavits of her On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of holiday pay before the
colleagues, there is no concrete proof that she is entitled thereto.[24] And so must her claim for allowances, no proof then Department of Labor, National Labor Relations Commission, Regional Office No. IV in Manila. Conciliation
to her entitlement thereto having been presented. having failed, and upon the request of both parties, the case was certified for arbitration on July 7, 1975 (p. 18,
On the deduction of 10% tithe, Article 113 of the Labor Code instructs: NLRC rec.).
ART. 113. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled case, granting
his employees, except: petitioner's complaint for payment of holiday pay. Pertinent portions of the decision read:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the xxx xxx xxx
employer for the amount paid by him as premium on the insurance; "The records disclosed that employees of respondent bank were not paid their wages on unworked regular holidays
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the as mandated by the Code, particularly Article 208, to wit:
employer or authorized in writing by the individual worker concerned; and 'Art. 208. Right to holiday pay. -
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor, as does Rule '(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service
VIII, Section 10 of the Rules Implementing Book III of the Labor Code reading: establishments regularly employing less than 10 workers.
SEC. 10. Deductions from the wages of the employees may be made by the employer in any of the following cases: '(b) The term "holiday" as used in this chapter, shall include: New Year's Day, Maundy Thursday, Good Friday, the
(a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and
employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the thirtieth of December and the day designated by law for holding a general election.
employer or authorized in writing by the individual employee himself; 'xxx xxx xxx'
(b) When the deductions are with the written authorization of the employees for payment to a third person and the "This conclusion is deduced from the fact that the daily rate of pay of the bank employees was computed in the past
employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from with the unworked regular holidays as excluded for purposes of determining the deductible amount for absences
the transaction. (Emphasis and underscoring supplied) incurred 4 Thus, if the employer uses the factor 303 days as a divisor in determining the daily rate of monthly paid
In the absence then of petitioner’s written conformity to the deduction of the 10% tithe from her salary, the deduction employee, this gives rise to a presumption that the monthly rate does not include payments for unworked regular
made by Forest Hills was illegal. holidays. The use of the factor 303 indicates the number of ordinary working days in a year (which normally has 365
Finally, on petitioner’s claim that Forest Hills did not remit her SSS contributions, Villar v. National Labor Relations calendar days), excluding the 52 Sundays and the 10 regular holidays. The use of 251 as a factor (365 calendar
Commission[25] enlightens: days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise to the same presumption that the
x x x [T]he burden of proving payment of monetary claims rests on the employer. x x x unworked Saturdays, Sundays and regular holidays are unpaid. This being the case, it is not amiss to state with
xxxx certainty that the instant claim for wages on regular unworked holidays is found to be tenable and meritorious.
The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar "WHEREFORE, judgment is hereby rendered:
documents – which will show that overtime, differentials, service incentive leave and other claims of workers have "(a) . . .
been paid – are not in the possession of the worker but in the custody and absolute control of the employer.[26] "(b) Ordering respondent to pay wages to all its employees fro all regular holidays since November 1, 1974" (pp.
nderscoring supplied) 97-99, rec.).
Forest Hills having glossed over this claim, the same must be granted. Respondent bank did not appeal from the said decision. Instead, it complied with the order of Arbiter Ricarte T.
Finally, insofar as petitioner was compelled to litigate her money claims, an award of attorney’s fees equivalent to Soriano by paying their holiday pay up to and including January, 1976.
10% of the final judgment award is in order.[27] On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among others, the provisions of
WHEREFORE, the Court of Appeals Resolution of December 15, 2005 is SET ASIDE. The petition is GRANTED the Labor Code on the right to holiday pay to read as follows:
insofar as petitioner’s claims for illegal deductions, holiday pay, service incentive leave pay, 13th month pay, and

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"Art. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wages during regular holidays, Copies of the above resolution were served on the petitioner only on February 9, 1979 or almost eight (8) months
except in retail and service establishments regularly employing less than ten (10) workers; after it was promulgated, while copies were served on the respondent bank on February 13, 1979.
"(b) The employer may require an employee to work on any holiday but such employee shall be paid a On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion for
compensation equivalent to twice his regular rate; and reconsideration/appeal with urgent prayer to stay execution, alleging therein the following: (a) that there is prima
"(c) As used in this Article, 'holiday' includes: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, facie evidence of grave abuse of discretion, amounting to lack of jurisdiction on the part of the National Labor
the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth of Relations Commission, in dismissing the respondent's appeal on pure technicalities without passing upon the merits
December, and the day designated by law for holding a general election." of the appeal; and (b) that the resolution appealed from is contrary to the law and jurisprudence (pp. 260-274, NLRC
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department of Labor (now rec.).
Ministry of Labor) promulgated the rules and regulations for the implementation of holidays with pay. The On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged the following grounds:
controversial section thereof reads: (a) that the office of the Minister of Labor has no jurisdiction to entertain the instant appeal pursuant to the provisions
"Sec. 2. Status of employees paid by the month. - Employees who are uniformly paid by the month, irrespective of of P. D. 1391; (b) that the labor arbiter's decision being final, executory and unappealable, execution is a matter of
the number of working days therein, with e salary of not less than the statutory or established minimum wage shall right for the petitioner; and (c) that the decision of the labor arbiter dated August 25, 1975 is supported by the law
be presumed to be paid for all days in the month whether worked or not. and the evidence in the case (p. 364, NLRC rec.).
"For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a writ of execution be
days divided by twelve". issued by the National Labor Relations Commission pending appeal of the case with the Office of the Minister of
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now Minister) interpreting the Labor. Respondent bank filed its opposition thereto on August 8, 1979.
above-quoted rule, pertinent portions of which read: On August 13, 1979, the National Labor Relations Commission issued an order which states:
"xxx xxx xxx "The Chief, Research and Information Division of this Commission is hereby directed to designate a Socio-Economic
"The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of Analyst to compute the holiday pay of the employees of the Insular Bank of Asia and America from April 1976 to the
monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled present, in accordance with the Decision of the Labor Arbiter dated August 25, 1975" (p. 80, rec.).
to the benefit. On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G. Inciong, issued an
"Under the rules implementing P.D. 850, this policy has been fully clarified to eliminate controversies on the order, the dispositive portion of which states:
entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is receiving "ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment promulgated dismissing the
December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from instant case for lack of merit" (p. 436, NLRC rec.).
his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of discretion amounting to
legal holidays. . . . ". lack or excess of jurisdiction.
Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article 94 of the Labor Code The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of regular holiday pay can
and by Policy Instruction No. 9, stopped the payment of holiday pay to all its employees. still be set aside on appeal by the Deputy Minister of Labor even though it has already become final and had been
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's decision of August 25, partially executed, the finality of which was affirmed by the National Labor Relations Commission sitting en banc, on
1975, whereby the respondent bank was ordered to pay its employees their daily wage for the unworked regular the basis of an Implementing Rule and Policy Instruction promulgated by the Ministry of Labor long after the said
holidays. decision had become final and executory.
On September 10, 1975, respondent bank filed an opposition to the motion for a writ of execution alleging, among WE find for the petitioner.
others, that: (a) its refusal to pay the corresponding unworked holiday pay in accordance with the award of Labor I. WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy
Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified by Policy Instruction No. 9 which Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor
interpreted the rules implementing P.D. 850; and (b) that the said award is already repealed by P.D. 850 which took Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion (p. 11, rec.).
effect on December 16, 1975, and by said Policy Instruction No. 9 of the Department of Labor, considering that its Article 94 of the Labor Code, as amended by P.D. 850, provides:
monthly paid employees are not receiving less than P240.00 and their monthly pay is uniform from January to "Art. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except
December, and that no deductions are made from the monthly salaries of its employees on account of holidays in in retail and service establishments regularly employing less than ten (10) workers. . . . . "
months where they occur (pp. 64-65, NLRC rec.). The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution, issued an order thereof which reads:
enjoining the respondent bank to continue paying its employees their regular holiday pay on the following grounds: "Art. 82. Coverage. - The provision of this Title shall apply to employees in all establishments and undertakings,
(a) that the judgment is already final and the findings which is found in the body of the decision as well as the whether for profit or not, but not to government employees, managerial employees, field personnel, members of the
dispositive portion thereof is res judicata or is the law of the case between the parties; and (b) that since the decision family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of
had been partially implemented by the respondent bank, appeal from the said decision is no longer available (pp. another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
100-103, rec.). "xxx xxx xxx".
On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter Soriano to the From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday
National Labor Relations Commission, reiterating therein its contentions averred in its opposition to the motion for pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly
writ of execution. Respondent bank further alleged for the first time that the questioned order is not supported by paid employees from the said benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2,
evidence insofar as it finds that respondent bank discontinued payment of holiday pay beginning January, 1976 (p. which provides that: "employees who are uniformly paid by the month, irrespective of the number of working days
84, NLRC rec.). therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all
On June 20, 1978, the National Labor Relations Commission promulgated its resolution en banc dismissing days in the month whether worked or not."
respondent bank's appeal, the dispositive portion of which reads as follows: Public respondent maintains that " (T)he rules implementing P. D. 850 and Policy Instruction No. 9 were issued to
"In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss, respondent's appeal; to set aside clarify the policy in the implementation of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays
Labor Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by complainant, to order the issuance are deemed paid insofar as monthly paid employees are concerned if (a) they are receiving not less than the
of the proper writ of execution" (p. 244, NLRC rec.). statutory minimum wage, (b) their monthly pay is uniform from January to December, and (c) no deduction is made
from their monthly salary on account of holidays in months where they occur. As explained in Policy Instruction No.

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9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily paid employees. In case of Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative
monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled enactment. Its terms must be followed. The statute requires adherence to, not departure from its provisions. No
to the benefit'" (pp. 340-341, rec.). This contention is untenable. deviation is allowable. In the terse language of the present Chief Justice, an administrative agency 'cannot amend an
It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal the act of Congress.' Respondents can be sustained, therefore, only if it could be shown that the rules and regulations
law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the promulgated by them were in accordance with what the Veterans Bill of Rights provides'" (Phil. Apparel Workers
entitlement to the benefits of holiday pay are clear and explicit - it provides for both the coverage of and exclusion Union vs. National Labor Relations Commission, supra, 463, 464, citing Teozon vs. Members of the Board of
from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the Administrators, PVA, 33 SCRA 585; see also Santos vs. Hon. Estenzo, et al., 109 Phil. 419; Hilado vs. Collector of
benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and
their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code, which Trinidad, 43 Phil. 259).
states that "All doubts in the implementation and interpretation of the provisions of this Code, including its This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers Union (TUPAS) vs.
implementing rules and regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that The National Labor Relations Commission and American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on
the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its June 29, 1984.
language permits (Orlosky vs. Haskell, 155, A. 112.). In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy Instruction
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor No. 9 issued by the then Secretary of Labor must be declared null and void. Accordingly, public respondent Deputy
Code authorizing him to promulgate the necessary implementing rules and regulations. Minister of Labor Amado G. Inciong had no basis at all to deny the members of petitioner union their regular holiday
Public respondent vehemently argues that the intent and spirit of the holiday pay law, as expressed by the Secretary pay as directed by the Labor Code.
of Labor in the case of Chartered Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-1789- II. It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, had already become
75, March 24, 1976), is to correct the disadvantages inherent in the daily compensation system of employment - final, and was, in fact, partially executed by the respondent bank.
holiday pay is primarily intended to benefit the daily paid workers whose employment and income are circumscribed However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA 49, November 13,
by the principle of "no work, no pay." This argument may sound meritorious; but, until the provisions of the Labor 1974, he can annul the final decision of Labor Arbiter Soriano since the ensuing promulgation of the integrated
Code on holiday pay is amended by another law, monthly paid employees are definitely included in the benefits of implementing rules of the Labor Code pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy
regular holiday pay. As earlier stated, the presumption is always in favor of law, negatively put, the Labor Code is Instruction No. 9 on April 23, 1976 by the then Secretary of Labor are facts and circumstances that transpired
always strictly construed against management. subsequent to the promulgation of the decision of the labor arbiter, which renders the execution of the said decision
While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).
enforce it should be given great weight by the courts, still if such construction is so erroneous, as in the instant case, This contention is untenable.
the same must be declared as null and void. It is the role of the Judiciary to refine and, when necessary, correct To start with, unlike the instant case, the case of De Luna relied upon by the public respondent is not a labor case
constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of the wherein the express mandate of the Constitution on the protection to labor is applied. Thus Article 4 of the Labor
government, almost always in situations where some agency of the State has engaged in action that stems Code provides that, "All doubts in the implementation and interpretation of the provisions of this Code, including its
ultimately from some legitimate area of governmental power (The Supreme Court in Modern Role, C. B. Swisher, implementing rules and regulations, shall be resolved in favor of labor"; and Article 1702 of the Civil Code provides
1958, p. 36). that, "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent
Thus, in the case of Philippine Apparel Workers Union vs. National Labor Relations Commission (106 SCRA 444, living for the laborer."
July 31, 1981) where the Secretary of Labor enlarged the scope of exemption from the coverage of a Presidential Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the members of petitioner
Decree granting increase in emergency allowance, this Court ruled that: union of their vested right acquired by virtue of a final judgment on the basis of a labor statute promulgated following
". . . the Secretary of Labor has-exceeded his authority when he included paragraph (k) in Section 1 of the Rules the acquisition of the "right".
implementing P.D. 1123. On the question of whether or not a law or statute can annul or modify a judicial order issued prior to its
Xxx xxx xxx promulgation, this Court, through Associate Justice Claro M. Recto, said:
"Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and the "xxx xxx xxx
same is therefore void, as ruled by this Court in a long line of cases. . . . . "We are decidedly of the opinion that they did not. Said order, being unappealable, became final on the date of its
"'The recognition of the power of administrative officials to promulgate rules in the administration of the statute, issuance and the parties who acquired rights thereunder cannot be deprived thereof by a constitutional provision
necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United enacted or promulgated subsequent thereto. Neither the Constitution nor the statutes, except penal laws favorable to
States vs. Barrios decided in 1908. Then came in a 1914 decision, United States vs. Tupasi Molina (29 Phil. 119) the accused have retroactive effect in the sense of annulling or modifying vested rights, or altering contractual
delineation of the scope of such competence. Thus: 'Of course the regulations adopted under legislative authority by obligation. (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil 324).
a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: ". . . when a court renders a
effect its general provisions. By such regulations, of course, the law itself cannot be extended. So long, however, as decision or promulgates a resolution or order on the basis of and in accordance with a certain law or rule then in
the regulations relate solely to carrying into effect the provisions of the law, they are valid.' In 1936, in People vs. force, the subsequent amendment or even repeal of said law or rule may not affect the final decision, order, or
Santos, this Court expressed its disapproval of an administrative order that would amount to an excess of the resolution already promulgated, in the sense of revoking or rendering it void and of no effect." Thus, the amendatory
regulatory power vested in an administrative official. We reaffirmed such a doctrine in a 1951 decision, where we rule (Rule IV, Book III of the Rules to Implement the Labor Code) cannot be given retroactive effect as to modify final
again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al., Ibid.).
Act, 'the mandate of the Act must prevail and must be followed.' Justice Barrera, speaking for the Court in Victorias Furthermore, the facts of the case relied upon by the public respondent are not analogous to that of the case at bar.
Milling Inc. vs. Social Security Commission, citing Parker as well as Davis did tersely sum up the matter thus: 'A rule The case of De Luna speaks of final and executory judgment, while in the instant case, the final judgment is partially
is binding on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the executed. Just as the court is ousted of its jurisdiction to annul or modify a judgment the moment it becomes final,
statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or the court also loses its jurisdiction to annul or modify a writ of execution upon its service or execution; for, otherwise,
its innate wisdom . . . . On the other hand, administrative interpretation of the law is at best merely advisory, for it is we will have a situation wherein a final and executed judgment can still be annulled or modified by the court upon
the courts that finally determine what the law means.' mere motion of a party. This would certainly result in endless litigations thereby rendering inutile the rule of law.
"'It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, Respondent bank counters with the argument that its partial compliance was involuntary because it did so under pain
to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, of levy and execution of its assets (p. 138, rec.). WE find no merit in this argument. Respondent bank clearly
contrary to the express language of the Constitution, assert for itself a more extensive prerogative. manifested its voluntariness in complying with the decision of the labor arbiter by not appealing to the National Labor

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Relations Commission as provided for under the Labor Code under Article 223. A party who waives his right to Tested by and pitted against this broad concept of the constitutional guarantee of due process, the action of public
appeal is deemed to have accepted the judgment, adverse or not, as correct, especially if such party readily respondent Amado G. Inciong is a clear example of deprivation of property without due process of law and
acquiesced in the judgment by starting to execute said judgment even before a writ of execution was issued, as in constituted grave abuse of discretion, amounting to lack or excess of jurisdiction in issuing the order dated
this case. Under these circumstances, to permit a party to appeal from the said partially executed final judgment November 10, 1979.
would make a mockery of the doctrine of finality of judgments long enshrined in this jurisdiction.
Section 1 of Rule 39 of the Revised Rules of Court provides that ". . . execution shall issue as a matter of right upon WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE,
the expiration of the period to appeal . . . or if no appeal has been duly perfected." This rule applies to decisions or AND THE DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
orders of labor arbiters who are exercising quasi-judicial functions since; ". . . the rule of execution of judgments REINSTATED.
under the rules should govern all kinds of execution of judgment, unless it is otherwise provided in other laws" COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA.
(Sagucio vs. Bulos, 5 SCRA 803) and Article 223 of the Labor Code provides that ". . . decisions, awards, or orders SO ORDERED.
of the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the Commission by any or Guerrero, Escolin and Cuevas, JJ., concur. Aquino and Abad Santos, JJ., concur in the result. Concepcion, Jr., J.,
both of the parties within ten (10) days from receipt of such awards, orders, or decisions. . . . . " took no part.
Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of jurisdiction to alter the final CEZAR ODANGO in his behalf and in behalf of 32 complainants, petitioners, vs. NATIONAL LABOR
judgment and the judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE, INC., respondents., G.R. No. 147420,
PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. 2004 Jun 10, 1st Division
WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576). CARPIO, J.:
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961, where the lower court The Case
modified a final order, this Court ruled thus: Before the Court is a petition for review[1] assailing the Court of Appeals’ Resolutions of 27 September 2000[2] and
"xxx xxx xxx 7 February 2001 in CA-G.R. SP No. 51519. The Court of Appeals upheld the Decision[3] dated 27 November 1997
"The lower court was thus aware of the fact that it was thereby altering or modifying its order of January 8,1959. and the Resolution dated 30 April 1998 of the National Labor Relations Commission ("NLRC") in NLRC Case No. V-
Regardless of the excellence of the motive for acting as it did, we are constrained to hold, however, that the lower 0048-97. The NLRC reversed the Labor Arbiter’s Decision of 29 November 1996, which found respondent Antique
court had no authority to make said alteration or modification. . . . . Electric Cooperative ("ANTECO") liable for petitioners’ wage differentials amounting to P1,017,507.73 plus attorney’s
"xxx xxx xxx fees of 10%.
"The equitable considerations that led the lower court to take the action complained of cannot offset the demands of Antecedent Facts
public policy and public interest - which are also responsive to the tenets of equity - requiring that all issues passed Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of
upon in decisions or final orders that have become executory, be deemed conclusively disposed of and definitely Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment ("DOLE")
closed, for, otherwise, there would be no end to litigations, thus setting at naught the main role of courts of justice, found ANTECO liable for underpayment of the monthly salaries of its employees. On 10 September 1989, the DOLE
which is to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling justiciable directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay.
controversies with finality. Thus, on various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC Sub-
"xxx xxx xxx Regional Branch VI, Iloilo City, praying for payment of wage differentials, damages and attorney’s fees. Labor Arbiter
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court said: Rodolfo G. Lagoc ("Labor Arbiter") heard the consolidated complaints.
"xxx xxx xxx On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage differentials
"In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule is absolute that after a judgment amounting to P1,017,507.73 and attorney’s fees of 10%. Florentino Tongson, whose case the Labor Arbiter
becomes final, by the expiration of the period provided by the rules within which it so becomes, no further dismissed, was the sole exception.
amendment or correction can be made by the court except for clerical errors or mistakes. And such final judgment is ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997, the NLRC reversed
conclusive not only as to every matter which was offered and received to sustain or defeat the claim or demand but the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration in its Resolution dated 30 April
as to any other admissible matter which must have been offered for that purpose (L-7044, 96 Phil. 526). In the earlier 1998. Petitioners then elevated the case to this Court through a petition for certiorari, which the Court dismissed for
case of Contreras and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306), it was stated that the rule must petitioners’ failure to comply with Section 11, Rule 13 of the Rules of Court. On petitioners’ motion for
be adhered to regardless of any possible injustice in a particular case for '(W)e have to subordinate the equity of a reconsideration, the Court on 13 January 1999 set aside the dismissal. Following the doctrine in St. Martin Funeral
particular situation to the overmastering need of certainty and immutability of judicial pronouncements.'. Home v. NLRC,[4] the Court referred the case to the Court of Appeals.
"xxx xxx xxx" On 27 September 2000, the Court of Appeals issued a Resolution dismissing the petition for failure to comply with
III. The despotic manner by which public respondent Amado G. Inciong divested the members of the petitioner union Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific
of their rights acquired by virtue of a final judgment is tantamount to a deprivation of property without due process of instances where the NLRC abused its discretion. The appellate court denied petitioners’ motion for reconsideration
law. Public respondent completely ignored the rights of the petitioner union's members in dismissing their complaint on 7 February 2001.
since he knew for a fact that the judgment of the labor arbiter had long become final and was even partially executed Hence, this petition.
by the respondent bank. The Labor Arbiter’s Ruling
A final judgment vests in the prevailing party a right recognized and protected by law under the due process clause The Labor Arbiter reasoned that ANTECO failed to refute petitioners’ argument that monthly-paid employees are
of the Constitution (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a considered paid for all the days in a month under Section 2, Rule IV of Book 3 of the Implementing Rules of the
vested interest which it is right and equitable that the government should recognize and protect, and of which the Labor Code (“Section 2”).[5] Petitioners claim that this includes not only the 10 legal holidays, but also their un-
individual could not be deprived arbitrarily without injustice" (Rookledge v. Gariwood, 65 N.W. 2d 785, 791). worked half of Saturdays and all of Sundays.
It is by this guiding principle that the due process clause is interpreted. Thus, in the pithy language of then Justice, The Labor Arbiter gave credence to petitioners’ arguments on the computation of their wages based on the 304
later Chief Justice, Concepcion: ". . . acts of Congress, as well as those of the Executive, can deny due process only divisor used by ANTECO in converting the leave credits of its employees. The Labor Arbiter agreed with petitioners
under pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any that ANTECO’s use of 304 as divisor is an admission that it is paying its employees for only 304 days a year instead
statutory provision to the contrary notwithstanding" (Vda. de Cuaycong vs. Vda. de Sengbengco, 110 Phil. 118, of the 365 days as specified in Section 2. The Labor Arbiter concluded that ANTECO owed its employees the wages
talics supplied). And "(I)t has been likewise established that a violation of a constitutional right divests the court of for 61 days, the difference between 365 and 304, for every year.
jurisdiction; and as a consequence its judgment is null and void and confers no rights" (Phil. Blooming Mills The NLRC’s Ruling
Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211, June 5, 1973).

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On appeal, the NLRC reversed the Labor Arbiter’s ruling that ANTECO underpaid its employees. The NLRC pointed These four paragraphs comprise the petitioners’ entire argument. In these four paragraphs petitioners ask that a writ
out that the Labor Arbiter’s own computation showed that the daily wage rates of ANTECO’s employees were above of certiorari be issued in their favor. We find that the Court of Appeals did not err in dismissing the petition outright.
the minimum daily wage of P124. The lowest paid employee of ANTECO was then receiving a monthly wage of Section 3, Rule 46 of the Rules of Court requires that a petition for certiorari must state the grounds relied on for the
P3,788. The NLRC applied the formula in Section 2 [(Daily Wage Rate = (Wage x 12)/365)] to the monthly wage of relief sought. A simple perusal of the petition readily shows that petitioners failed to meet this requirement.
P3,788 to arrive at a daily wage rate of P124.54, an amount clearly above the minimum wage.
The NLRC noted that while the reasoning in the body of the Labor Arbiter’s decision supported the view that The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of
ANTECO did not underpay, the conclusion arrived at was the opposite. Finally, the NLRC ruled that the use of 304 jurisdiction or grave abuse of discretion.[10] An extraordinary remedy, a petition for certiorari is available only and
as a divisor in converting leave credits is more favorable to the employees since a lower divisor yields a higher rate restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction
of pay. including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction.[11] It does not
The Ruling of the Court of Appeals include correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings are generally
The Court of Appeals held that the petition was insufficient in form and substance since it "does not allege the accorded not only respect but also finality.[12] A party assailing such findings bears the burden of showing that the
essential requirements of the extra-ordinary special action of certiorari." The Court of Appeals faulted petitioners for tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that
failing to recite "where and in what specific instance public respondent abused its discretion." The appellate court the extraordinary writ of certiorari will lie.[13]
characterized the allegations in the petition as "sweeping" and clearly falling short of the requirement of Section 3, We agree with the Court of Appeals that nowhere in the petition is there any acceptable demonstration that the
Rule 46 of the Rules of Court. NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction. Petitioners merely stated
The Issues generalizations and conclusions of law. Rather than discussing how the NLRC acted capriciously, petitioners
Petitioners raise the following issues: resorted to a litany of generalizations.
I. WHETHER THE COURT OF APPEALS IS CORRECT IN DISMISSING THE CASE. Petitions that fail to comply with procedural requisites, or are unintelligible or clearly without legal basis, deserve
II. WHETHER PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIM.[6] scant consideration. Section 6, Rule 65 of the Rules of Court requires that every petition be sufficient in form and
The Ruling of the Court substance before a court may take further action. Lacking such sufficiency, the court may dismiss the petition
The petition has no merit. outright.
On the sufficiency of the petition The insufficiency in substance of this petition provides enough reason to end our discussion here. However, we
Petitioners argue that the Court of Appeals erred in dismissing their petition because this Court had already ruled shall discuss the issues raised not so much to address the merit of the petition, for there is none, but to illustrate the
that their petition is sufficient in form and substance. They argue that this precludes any judgment to the contrary by extent by which petitioners have haphazardly pursued their claim.
the Court of Appeals. Petitioners cite this Court’s Resolution dated 13 January 1999 as their basis. This Resolution On the right of the petitioners to wage differentials
granted petitioners’ motion for reconsideration and set aside the dismissal of their petition for review. Petitioners claim that the Court of Appeals gravely erred in denying their claim for wage differentials. Petitioners base
Petitioners’ reliance on our 16 September 1998 Resolution is misplaced. In our Resolution, we dismissed their claim on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. Petitioners argue
petitioners’ case for failure to comply with Section 11, Rule 13 of the Rules of Court.[7] The petition lacked a written that under this provision monthly-paid employees are considered paid for all days of the month including un-worked
explanation on why service was made through registered mail and not personally. days. Petitioners assert that they should be paid for all the 365 days in a year. They argue that since in the
The error petitioners committed before the Court of Appeals is different. The appellate court dismissed their petition computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61 days every year.
for failure to comply with the first paragraph of Section 3 of Rule 46[8] in relation to Rule 65 of the Rules of Court, Petitioners’ claim is without basis
outlining the necessary contents of a petition for certiorari. This is an entirely different ground. The previous dismissal We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code.
was due to petitioners’ failure to explain why they resorted to service by registered mail. This time the content of the In Insular Bank of Asia v. Inciong,[14] we ruled as follows:
petition itself is deficient. Petitioners failed to allege in their petition the specific instances where the actions of the Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary (then
NLRC amounted to grave abuse of discretion. Minister) of Labor are null and void since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in
There is nothing in this Court’s Resolution dated 13 January 1999 that remotely supports petitioners’ argument. effect amended them by enlarging the scope of their exclusion.
What we resolved then was to reconsider the dismissal of the petition due to a procedural defect and to refer the The Labor Code is clear that monthly-paid employees are not excluded from the benefits of holiday pay. However,
case to the Court of Appeals for its proper disposition. We did not in any way rule that the petition is sufficient in form the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly-paid employees
and substance. from the said benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2 which provides that
Petitioners also argue that their petition is clear and specific in its allegation of grave abuse of discretion. They monthly-paid employees are presumed to be paid for all days in the month whether worked or not.
maintain that they have sufficiently complied with the requirement in Section 3, Rule 46 of the Rules of Court. Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis, petitioners’ claim for wage
Again, petitioners are mistaken. differentials must fail.
We quote the relevant part of their petition: Even assuming that Section 2, Rule IV of Book III is valid, petitioners’ claim will still fail. The basic rule in this
REASONS RELIED UPON FOR ALLOWANCE OF PETITION jurisdiction is “no work, no pay.” The right to be paid for un-worked days is generally limited to the ten legal holidays
12. This Honorable court can readily see from the facts and circumstances of this case, the petitioners were denied in a year.[15] Petitioners’ claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right
of their rights to be paid of 4 hours of each Saturday, 51 rest days and 10 legal holidays of every year since they to be paid for un-worked days beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay
started working with respondent ANTECO. them on Sundays, the un-worked half of Saturdays and other days that they do not work at all. Petitioners’ line of
13. The respondent NLRC while with open eyes knew that the petitioners are entitled to salary differentials consisting reasoning is not only a violation of the “no work, no pay” principle, it also gives rise to an invidious classification, a
of 4 hours pay on Saturdays, 51 rest days and 10 legal holidays plus 10% attorney’s fees as awarded by the Labor violation of the equal protection clause. Sustaining petitioners’ argument will make monthly-paid employees a
Arbiter in the above-mentioned decision, still contrary to law, contrary to existing jurisprudence issued arbitrary, privileged class who are paid even if they do not work.
without jurisdiction and in excess of jurisdiction the decision vacating and setting aside the said decision of the Labor The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. The facts
Arbiter, to the irreparable damage and prejudice of the petitioners. show that petitioners are required to work only from Monday to Friday and half of Saturday. Thus, the minimum
14. That the respondent NLRC in grave abuse of discretion in the exercise of its function, by way of evasion of allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half
positive duty in accordance with existing labor laws, illegally refused to reconsider its decision dismissing the Saturdays). Any divisor below 287 days means that ANTECO’s workers are deprived of their holiday pay for some or
petitioners’ complaints. all of the ten legal holidays. The 304 days divisor used by ANTECO is clearly above the minimum of 287 days.
15. That there is no appeal, nor plain, speedy and adequate remedy in law from the above-mentioned decision and Finally, petitioners cite Chartered Bank Employees Association v. Ople[16] as an analogous situation. Petitioners
resolution of respondent NLRC except this petition for certiorari.[9] have misread this case.

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In Chartered Bank, the workers sought payment for un-worked legal holidays as a right guaranteed by a valid law. In (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation
this case, petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void implementing equivalent to twice his regular rate; and
rule. The circumstances are also markedly different. In Chartered Bank, there was a collective bargaining (c) As used in this Article, “holiday” includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April,
agreement that prescribed the divisor. No CBA exists in this case. In Chartered Bank, the employer was liable for the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of
underpayment because the divisor it used was 251 days, a figure that clearly fails to account for the ten legal December and the day designated by law for holding a general election, which was amended by Executive Order
holidays the law requires to be paid. Here, the divisor ANTECO uses is 304 days. This figure does not deprive No. 203 issued on June 30, 1987, such that the regular holidays are now:
petitioners of their right to be paid on legal holidays. 1. New Year’s Day January 1
A final note. ANTECO’s defense is likewise based on Section 2, Rule IV of Book III of the Omnibus Rules 2. Maundy Thursday Movable Date
Implementing the Labor Code although ANTECO’s interpretation of this provision is opposite that of petitioners. It is 3. Good Friday Movable Date
deplorable that both parties premised their arguments on an implementing rule that the Court had declared void 4. Araw ng Kagitingan April 9
twenty years ago in Insular Bank. This case is cited prominently in basic commentaries.[17] And yet, counsel for both (Bataan and Corregidor Day)
parties failed to consider this. This does not speak well of the quality of representation they rendered to their clients. 5. Labor Day May 1
This controversy should have ended long ago had either counsel first checked the validity of the implementing rule 6. Independence Day June 12
on which they based their contentions. 7. National Heroes Day Last Sunday of August
WHEREFORE, the petition is DENIED. The Resoution of the Court of Appeals DISMISSING CA-G.R. SP No. 51519 8. Bonifacio Day November 30
is AFFIRMED. 9. Christmas Day December 25
SO ORDERED. 10. Rizal Day December 30
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur. In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the Voluntary Arbitrator held that
RULE IN CASE TWO REGULAR HOLIDAYS FALLING ON THE SAME DAY Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is
ASIAN TRANSMISSION CORPORATION, Petitioner, versus The Hon. COURT OF APPEALS, Thirteenth determined by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on
Division, HON. FROILAN M. BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as
representative to the Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON. amended, enumerates ten regular holidays for every year should not be interpreted as authorizing a reduction to
BIENVENIDO T. LAGUESMA in his capacity as Secretary of Labor and Employment; and DIRECTOR CHITA nine the number of paid regular holidays “just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and
G. CILINDRO in her capacity as Director of Bureau of Working Conditions, Respondents., G. R. No. 144664, 1998, is also Holy Friday or Maundy Thursday.”
2004 Mar 15, 3rd Division In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the
CARPIO MORALES, J.: Collective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the relations between
Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under Rule 65 of the 1995 Rules of Civil them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they
Procedure the nullification of the March 28, 2000 Decision[1] of the Court of Appeals denying its petition to annul 1) may fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that “[t]here is no condition,
the March 11, 1993 “Explanatory Bulletin”[2] of the Department of Labor and Employment (DOLE) entitled “Workers’ qualification or exception for any variance from the clear intent that all holidays shall be compensated.”[5]
Entitlement to Holiday Pay on April 9, 1993, Araw ng Kagitingan and Good Friday”, which bulletin the DOLE The Court of Appeals further held that “in the absence of an explicit provision in law which provides for [a] reduction
reproduced on January 23, 1998, 2) the July 31, 1998 Decision[3] of the Panel of Voluntary Arbitrators ruling that of holiday pay if two holidays happen to fall on the same day, any doubt in the interpretation and implementation of
the said explanatory bulletin applied as well to April 9, 1998, and 3) the September 18, 1998[4] Resolution of the the Labor Code provisions on holiday pay must be resolved in favor of labor.”
Panel of Voluntary Arbitration denying its Motion for Reconsideration. By the present petition, petitioners raise the following issues:
The following facts, as found by the Court of Appeals, are undisputed: I. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an DISCRETION IN ERRONEOUSLY INTERPRETING THE TERMS OF THE COLLECTIVE BARGAINING
Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their AGREEMENT BETWEEN THE PARTIES AND SUBSTITUTING ITS OWN JUDGMENT IN PLACE OF THE
basic wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal AGREEMENTS MADE BY THE PARTIES THEMSELVES
holiday], is also Araw ng Kagitingan [which is also a legal holiday]. The bulletin reads: II. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
“On the correct payment of holiday compensation on April 9, 1993 which apart from being Good Friday is also Araw DISCRETION IN HOLDING THAT ANY DOUBTS ABOUT THE VALIDITY OF THE POLICIES ENUNCIATED IN
ng Kagitingan, i.e., two regular holidays falling on the same day, this Department is of the view that the covered THE EXPLANATORY BULLETIN WAS LAID TO REST BY THE REISSUANCE OF THE SAID EXPLANATORY
employees are entitled to at least two hundred percent (200%) of their basic wage even if said holiday is unworked. BULLETIN
The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the III. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
payment of holiday pay for the same date as Araw ng Kagitingan. DISCRETION IN UPHOLDING THE VALIDITY OF THE EXPLANATORY BULLETIN EVEN WHILE ADMITTING
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng THAT THE SAID BULLEITN WAS NOT AN EXAMPLE OF A JUDICIAL, QUASI-JUDICIAL, OR ONE OF THE
Kagitingan x x x x RULES AND REGULATIONS THAT [Department of Labor and Employment] DOLE MAY PROMULGATE
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees IV. WHETHER OR NOT THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) BY
only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) ISSUING EXPLANATORY BULLETIN DATED MARCH 11, 1993, IN THE GUISE OF PROVIDING GUIDELINES ON
protested. ART. 94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF DISCRETION, AS IT LEGISLATED AND
In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing INTERPRETED LEGAL PROVISIONS IN SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE NONE ARE
between petitioner and BATLU, the controversy was submitted for voluntary arbitration. x x x x On July 31, 1998, INTENDED BY THE LAW
the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees “200% V. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, DISCRETION IN SUSTAINING THE SECRETARY OF THE DEPARTMENT OF LABOR IN REITERATING ITS
namely, Araw ng Kagitignan and Maundy Thursday.” (Emphasis and underscoring supplied) EXPLANATORY BULLETIN DATED MARCH 11, 1993 AND IN ORDERING THAT THE SAME POLICY OBTAINED
Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads: FOR APRIL 9, 1998 DESPITE THE RULINGS OF THE SUPREME COURT TO THE CONTRARY
ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, VI. WHETHER OR NOT RESPONDENTS’ ACTS WILL DEPRIVE PETITIONER OF PROPERTY WITHOUT DUE
except in retail and service establishments regularly employing less than ten (10) workers; PROCESS BY THE “EXPLANATORY BULLETIN” AS WELL AS EQUAL PROTECTION OF LAWS
The petition is devoid of merit.

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At the outset, it bears noting that instead of assailing the Court of Appeals Decision by petition for review on certiorari unworked regular holidays as provided in existing individual or collective agreement or employer practice or
under Rule 45 of the 1997 Rules of Civil Procedure, petitioner lodged the present petition for certiorari under Rule policy.”[17]
65. From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal
[S]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it in the holidays as required by law. Thus, the 1997-1998 CBA incorporates the following provision:
exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special ARTICLE XIV
civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and the decision PAID LEGAL HOLIDAYS
accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament being the The following legal holidays shall be paid by the COMPANY as required by law:
effect of his deliberate inaction. 1. New Year’s Day (January 1st)
The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a special 2. Holy Thursday (moveable)
civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil 3. Good Friday (moveable)
Procedure. Rule 45 is clear that the decisions, final orders or resolutions of the Court of Appeals in any case, i.e., 4. Araw ng Kagitingan (April 9th)
regardless of the nature of the action or proceeding involved, may be appealed to this Court by filing a petition for 5. Labor Day (May 1st)
review, which would be but a continuation of the appellate process over the original case. Under Rule 45 the 6. Independence Day (June 12th)
reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion for reconsideration. 7. Bonifacio Day [November 30]
xxx 8. Christmas Day (December 25th)
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that he has no plain, 9. Rizal Day (December 30th)
speedy and adequate remedy in the ordinary course of law against its perceived grievance. A remedy is considered 10. General Election designated by law, if declared public non-working holiday
“plain, speedy and adequate” if it will promptly relieve the petitioner from the injurious effects of the judgment and the 11. National Heroes Day (Last Sunday of August)
acts of the lower court or agency. In this case, appeal was not only available but also a speedy and adequate Only an employee who works on the day immediately preceding or after a regular holiday shall be entitled to the
remedy.[6] holiday pay.
The records of the case show that following petitioner’s receipt on August 18, 2000 of a copy of the August 10, 2000 A paid legal holiday occurring during the scheduled vacation leave will result in holiday payment in addition to normal
Resolution of the Court of Appeals denying its Motion for Reconsideration, it filed the present petition for certiorari on vacation pay but will not entitle the employee to another vacation leave.
September 15, 2000, at which time the Court of Appeals decision had become final and executory, the 15-day period Under similar circumstances, the COMPANY will give a day’s wage for November 1st and December 31st whenever
to appeal it under Rule 45 having expired. declared a holiday. When required to work on said days, the employee will be paid according to Art. VI, Sec. 3B
Technicality aside, this Court finds no ground to disturb the assailed decision. hereof.[18]
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford WHEREFORE, the petition is hereby DISMISSED.
protection to labor.[7] Its purpose is not merely “to prevent diminution of the monthly income of the workers on SO ORDERED.
account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should CONCHITA CARPIO MORALES (Associate Justice)
earn, that is, his holiday pay.”[8] It is also intended to enable the worker to participate in the national celebrations WE CONCUR: JOSE C. VITUG (Associate Justice, Chairman), ANGELINA SANDOVAL-GUTIERREZ (Associate
held during the days identified as with great historical and cultural significance. Justice), RENATO C. CORONA (Associate Justice)
Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of August), Bonifacio SERVICE INCENTIVE LEAVE
Day (November 30) and Rizal Day (December 30) were declared national holidays to afford Filipinos with a recurring AUTO BUS TRANSPORT SYSTEMS, INC., Petitioner, versus ANTONIO BAUTISTA, Respondent., G.R. No.
opportunity to commemorate the heroism of the Filipino people, promote national identity, and deepen the spirit of 156367, 2005 May 16, 2nd Division
patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working class to CHICO-NAZARIO, J.:
the development of the nation, while the religious holidays designated in Executive Order No. 203 allow the worker to Before Us is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals
celebrate his faith with his family. affirming the Decision[3] of the National Labor Relations Commission (NLRC). The NLRC ruling modified the
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave
holidays.[9] The provision is mandatory,[10] regardless of whether an employee is paid on a monthly or daily basis. pay) by deleting the award of 13th month pay to respondent.
[11] Unlike a bonus, which is a management prerogative,[12] holiday pay is a statutory benefit demandable under THE FACTS
the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.
same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and
It is elementary, under the rules of statutory construction, that when the language of the law is clear and unequivocal, Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income
the law must be taken to mean exactly what it says.[13] In the case at bar, there is nothing in the law which provides per travel, on a twice a month basis.
or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
same day. driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp
Petitioner’s assertion that Wellington v. Trajano[14] has “overruled” the DOLE March 11, 1993 Explanatory Bulletin curve without giving any warning.
does not lie. In Wellington, the issue was whether monthly-paid employees are entitled to an additional day’s pay if a Respondent averred that the accident happened because he was compelled by the management to go back to
holiday falls on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from
salary of its employees, Wellington took into account “every working day of the year including the holidays specified Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of
by law and excluding only Sunday.” In the instant case, the issue is whether daily-paid employees are entitled to be P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite
paid for two regular holidays which fall on the same day.[15] respondent’s pleas for reconsideration, the same was ignored by management. After a month, management sent
In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its him a letter of termination.
provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
man’s welfare should be the primordial and paramount consideration.[16] nonpayment of 13th month pay and service incentive leave pay against Autobus.
Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that “Nothing in
the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for

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Petitioner, on the other hand, maintained that respondent’s employment was replete with offenses involving reckless personnel under the Labor Code as those “whose actual hours of work in the field cannot be determined with
imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, reasonable certainty.”[8]
irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved. The same is true with respect to the phrase “those who are engaged on task or contract basis, purely commission
Furthermore, petitioner avers that in the exercise of its management prerogative, respondent’s employment was basis.” Said phrase should be related with “field personnel,” applying the rule on ejusdem generis that general and
terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 unlimited terms are restrained and limited by the particular terms that they follow.[9] Hence, employees engaged on
January 2000. task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter incentive leave, unless, they fall under the classification of field personnel.
Monroe C. Tabingan promulgated a Decision,[4] the dispositive portion of which reads: Therefore, petitioner’s contention that respondent is not entitled to the grant of service incentive leave just because
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of
on. It is hereby ordered DISMISSED, as it is hereby DISMISSED. propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel.
However, still based on the above-discussed premises, the respondent must pay to the complainant the following: According to Article 82 of the Labor Code, “field personnel” shall refer to non-agricultural employees who regularly
a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87; perform their duties away from the principal place of business or branch office of the employer and whose actual
b. his service incentive leave pay for all the years he had been in service with the respondent, presently hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the
computed at P13,788.05. Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees
All other claims of both complainant and respondent are hereby dismissed for lack of merit.[5] Association[10] which states that:
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the
decision on 28 September 2001, the decretal portion of which reads: employer or his representative, the workplace being away from the principal office and whose hours and days of
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides: work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific
“Section 3. Employers covered. – The Decree shall apply to all employers except to: service or performing specific work. If required to be at specific places at specific times, employees including drivers
xxx xxx xxx cannot be said to be field personnel despite the fact that they are performing work away from the principal office of
e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, the employee. [Emphasis ours]
irrespective of the time consumed in the performance thereof. xxx.” To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee
Records show that complainant, in his position paper, admitted that he was paid on a commission basis. would ever be considered a field personnel because every employer, in one way or another, exercises control over
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the
month pay to the complainant. employee in that, if the employee’s job requires that he works away from the principal office like that of a messenger
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The or a bus driver, then he is inevitably a field personnel.
other findings are AFFIRMED.[6] We are not persuaded. At this point, it is necessary to stress that the definition of a “field personnel” is not merely
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of concerned with the location where the employee regularly performs his duties but also with the fact that the
this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001. employee’s performance is unsupervised by the employer. As discussed above, field personnel are those who
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the regularly perform their duties away from the principal place of business of the employer and whose actual hours of
Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is
dispositive portion of which reads: a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s
respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.[7] time and performance are constantly supervised by the employer.
Hence, the instant petition. As observed by the Labor Arbiter and concurred in by the Court of Appeals:
ISSUES It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at
1. Whether or not respondent is entitled to service incentive leave; strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor’s reports.
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its
amended, is applicable to respondent’s claim of service incentive leave pay. mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver
RULING OF THE COURT and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt
The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis departure and arrival from their point of origin to their point of destination. In each and every depot, there is always
Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein,
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive was therefore under constant supervision while in the performance of this work. He cannot be considered a field
leave of five days with pay. personnel.[11]
Book III, Rule V: SERVICE INCENTIVE LEAVE We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a
SECTION 1. Coverage. – This rule shall apply to all employees except: field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of
(d) Field personnel and other employees whose performance is unsupervised by the employer including those petitioner’s business. Accordingly, respondent is entitled to the grant of service incentive leave.
who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled
performing work irrespective of the time consumed in the performance thereof; . . . to.
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year
been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service incentive leave
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not pay.
apply to employees classified as “field personnel.” The phrase “other employees whose performance is Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed
unsupervised by the employer” must not be understood as a separate classification of employees to which service within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.
incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of
action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period.

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It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of SO ORDERED.
the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.[12] MINITA V. CHICO-NAZARIO (Associate Justice)
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a WE CONCUR: REYNATO S. PUNO (Associate Justice, Chairman), MA. ALICIA AUSTRIA-MARTINEZ (Associate
cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a Justice), ROMEO J. CALLEJO, SR. (Associate Justice), DANTE O. TINGA (Associate Justice)
determination must be made as to the period when the act constituting a violation of the workers’ right to the benefits RICARDO G. PALOMA, Petitioner, versus PHILIPPINE AIRLINES, INC. and THE NATIONAL LABOR
being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the RELATIONS COMMISSION, Respondents., G.R. No. 148415, 2008 Jul 14, 2nd Division
money claim, said cause of action has already prescribed in accordance with Article 291.[13] VELASCO, JR., J.:
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the The Case
benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount Before us are these two consolidated petitions for review under Rule 45 separately interposed by Ricardo G. Paloma
pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount and Philippine Airlines, Inc. (PAL) to nullify and set aside the Amended Decision[1] dated May 31, 2001 of the Court
that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within of Appeals (CA) in CA-G.R. SP No. 56429, as effectively reiterated in its Resolution[2] of January 14, 2003.
three (3) years before the filing of the complaint.[14] The Facts
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of continuous service,
other benefits granted by the law to every employee. In the case of service incentive leave, the employee may as senior vice president for finance. In March 1992, or some nine (9) months before Paloma retired on November 30,
choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the 1992, PAL was privatized.
year.[15] Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 which represented his
entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As separation/retirement gratuity and accrued vacation leave pay. For the benefits thus received, Paloma signed a
enunciated by the Court in Fernandez v. NLRC:[16] document denominated Release and Quitclaim[3] but inscribed the following reservation therein: “Without prejudice
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to to my claim for further leave benefits embodied in my aide memoire transmitted to Mr. Roberto Anonas covered by
a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that “[e]very my 27 Nov. 1992 letter x x x.”
employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick leave credits which PAL
days with pay.” Service incentive leave is a right which accrues to every employee who has served “within 12 allegedly only paid the equivalent of 18 days. He anchored his entitlement on Executive Order No. (EO) 1077[4]
months, whether continuous or broken reckoned from the date the employee started working, including authorized dated January 9, 1986, and his having accumulated a certain number of days of sick leave credits, as acknowledged
absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or in a letter of Alvia R. Leaño, then an administrative assistant in PAL. Leaño’s letter dated November 12, 1992
that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as pertinently reads:
one year.” It is also “commutable to its money equivalent if not used or exhausted at the end of the year.” In other At your request, we are pleased to confirm herewith the balance of your sick leave credits as they appear in our
words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its records: 230 days.
monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such According to our existing policy, an employee is entitled to accumulate sick leave with pay only up to a maximum of
right.[17] [ talics supplied] 230 days.
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his Had there been no ceiling as mandated by Company policy, your sick leave credits would have totaled 450 days to
service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if date.[5]
the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the Answering Paloma’s written demands for conversion to cash of his accrued sick leave credits, PAL asserted having
employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation paid all of Paloma’s commutable sick leave credits due him pursuant to company policy made applicable to PAL
from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall officers starting 1990.
arise when the employer fails to pay such amount at the time of his resignation or separation from employment. The company leave policy adverted to grants PAL’s regular ground personnel a graduated sick leave benefits, those
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that having rendered at least 25 years of service being entitled to 20 days of sick leave for every year of service. An
the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to employee, under the policy, may accumulate sick leaves with pay up to 230 days. Subject to defined qualifications,
the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary sick leave credits in excess of 230 days shall be commutable to cash at the employee’s option and shall be paid in
equivalent after demand of commutation or upon termination of the employee’s services, as the case may be. lump sum on or before May 31st of the following year they were earned.[6] Per PAL’s records, Paloma appears to
The above construal of Art. 291, vis-à-vis the rules on service incentive leave, is in keeping with the rudimentary have, for the period from 1990 to 1992, commuted 58 days of his sick leave credits, broken down as follows: 20 days
principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing each in 1990 and 1991 and 18 days in 1992.
regulations, the workingman’s welfare should be the primordial and paramount consideration.[18] The policy is to Subsequently, Paloma filed before the Arbitration Branch of the National Labor Relations Commission (NLRC) a
extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, Complaint[7] for Commutation of Accrued Sick Leaves Totaling 392 days. In the complaint, docketed as NLRC-
which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.[19] NCR-Case No. 00-08-05792-94, Paloma alleged having accrued sick leave credits of 450 days commutable upon his
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation retirement pursuant to EO 1077 which allows retiring government employees to commute, without limit, all his
until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service accrued vacation and sick leave credits. And of the 450-day credit, Paloma added, he had commuted only 58 days,
incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one leaving him a balance of 392 days of accrued sick leave credits for commutation.
month from the time of his dismissal, that respondent demanded from his former employer commutation of his Ruling of the Labor Arbiter
accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus Issues having been joined with the filing by the parties of their respective position papers,[8] the labor arbiter
accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. rendered on June 30, 1995 a Decision[9] dispositively reading:
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the WHEREFORE, premises considered, respondent PHILIPPINE AIRLINE[S], INC. is hereby ordered to pay within ten
time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. (10) days from receipt hereof herein complainant Ricardo G. Paloma, the sum of Six Hundred Seventy Five
Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his Thousand Pesos (P675,000.00) representing his one Hundred sixty two days [162] accumulated sick leave credits,
money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code. plus ten (10%) percent attorney’s fees of P67,500.00, or a total sum of P742,500.00.

Labor Standards | To digest (old cases) | Ajean Tuazon| 51


SO ORDERED. coming to us after the CA, per its January 14, 2003 Resolution, denied the desired reconsideration. In net effect
The labor arbiter held that PAL is not covered by the civil service system and, accordingly, its employees, like then, PAL’s Petition for Review on Certiorari, docketed as G.R. No. 156764, assails both the Amended Decision and
Paloma, cannot avail themselves of the beneficent provision of EO 1077. This executive issuance, per the labor Resolution of the CA.
arbiter’s decision, applies only to government officers and employees covered by the civil service, exclusive of the The Issues
members of the judiciary whose leave and retirement system is covered by a special law. In G.R. No. 148415, Paloma raises the sole issue of:
However, the labor arbiter ruled that Paloma is entitled to a commutation of his alternative claim for 202 accrued sick WHETHER OR NOT THE [CA], IN HOLDING THAT E.O. NO. 1077 IS APPLICABLE TO PETITIONER AND YET
leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation for 162 accrued leave credits. APPLYING COMPANY POLICY BY AWARDING THE CASH EQUIVALENT OF ONLY 162 DAYS SICK LEAVE
Both parties appealed[10] the decision of the labor arbiter to the NLRC. CREDITS INSTEAD OF THE 450 DAYS SICK LEAVE CREDITS PETITIONER IS ENTITLED TO UNDER E.O. NO.
Ruling of the NLRC in NLRC NCR CA No. 009652-95 1077, DECIDED A QUESTION OF SUBSTANCE IN A MANNER CONTRARY TO LAW AND APPLICABLE
(NLRC-NCR-Case No. 00-08-05792-94) JURISPRUDENCE.[18]
On November 26, 1997, the First Division of the NLRC rendered a Decision affirming that of the labor arbiter, thus: In G.R. No. 156764, PAL raises the following issues for our consideration:
WHEREFORE, as recommended, both appeals are DISMISSED. The decision of Labor Arbiter Felipe T. Garduque 1. May an employee of a non-government corporation [invoke EO] 1077 which the then President Ferdinand E.
II dated June 30, 1995 is AFFIRMED. Marcos issued on January 9, 1986, solely for the benefit of government officers and employees covered by the civil
SO ORDERED.[11] service?
Both parties moved for reconsideration. In its Resolution of November 10, 1999, the NLRC, finding Paloma to have, 2. Can a judicial body modify or alter a company policy by ordering the commutation of sick leave credits which,
upon his retirement, commutable accumulated sick leave credits of 230 days, modified its earlier decision, disposing under company policy is non-commutable?[19]
as follows: The issues submitted boil down to the question of whether or not EO 1077, before PAL’s privatization, applies to its
In view of all the foregoing, our decision dated November 26, 1997, be modified by increasing the sick leave benefits employees, and corollarily, whether or not Paloma is entitled to a commutation of his accrued sick leave credits.
of complainant to be commuted to cash from 162 days to 230 days. Subsumed to the main issue because EO 1077 applies only to government employees subject to civil service law is
SO ORDERED.[12] the question of whether or not PAL—which, as early as 1960 until its privatization, had been considered as a
From the above modificatory resolution of the NLRC, PAL went to the CA on a petition for certiorari under Rule 65, government-controlled corporation—is covered by and subject to the limitations peculiar under the civil service
the recourse docketed as CA-G.R. SP No. 56429. system.
Ruling of the CA in its April 28, 2000 Decision There can be no quibbling, as a preliminary consideration, about PAL having been incorporated as a private
By a Decision dated April 28, 2000, the CA found for PAL, thus: corporation whose controlling stocks were later acquired by the GSIS, which is wholly owned by the government.
WHEREFORE, the petition is granted. Public respondent’s November 10, 1999 Resolution is set aside. And the Through the years before GSIS divested itself of its controlling interests over the airline, PAL was considered a
complaint of Ricardo Paloma is hereby DISMISSED. Without costs. government-controlled corporation, as we said as much in Phil. Air Lines Employees’ Assn. v. Phil. Air Lines, Inc.,
SO ORDERED.[13] [20] a case commenced in August 1958 and finally resolved by the Court in 1964. The late Blas Ople, former Labor
In time, Paloma sought reconsideration.[14] Secretary and a member of the 1986 Constitutional Commission, described PAL and other like entities spun off from
The May 31, 2001 Amended Decision the GSIS as “second generation corporations functioning as private subsidiaries.”[21] Before the coming into force of
On May 31, 2001, the CA issued the assailed Amended Decision reversing its April 28, 2000 Decision. The fallo of the 1973 Constitution, a subsidiary of a wholly government-owned corporation or a government corporation with
the Amended Decision reads: original charter was covered by the Labor Code. Following the ratification of the 1973 Constitution, these subsidiaries
WHEREFORE, premises considered, our Judgment, dated 28 April 2000 is hereby vacated and, set aside, and theoretically came within the pale of the civil service on the strength of this provision: “[T]he civil service embraces
another one entered reinstating the Resolution, dated 10 November 1999, issued by the public respondent National every branch, agency, subdivision and instrumentality of the Government, including every [GOCC] x x x.”[22] Then
Labor Relations Commission in NLRC NCR Case No. 00-08-05792-94 [NLRC NCR CA No. 009652-95], entitled came the 1987 Constitution which contextually delimited the coverage of the civil service only to a GOCC “with
Ricardo G. Paloma v. Philippine Airlines, Incorporated, with the only modification that the total sums granted by original charter.”[23]
Labor Arbiter Felipe T. Garduque II (P742,500.00, inclusive of the ten percent (10%) attorney’s fees), as affirmed by The Court’s Ruling
public respondent National Labor Relations Commission, First Division, in said NLRC Case No. 00-08-05792-94, Considering the applicable law and jurisprudence in the light of the undisputed factual milieu of the instant case, the
shall earn legal interest from the date of the institution of the complaint until fully paid/discharged. (Art. 2212, New setting aside of the assailed amended decision and resolution of the CA is indicated.
Civil Code). Core Issue: Applicability of EO 1077
SO ORDERED.[15] Insofar as relevant, EO 1077 dated January 9, 1986, entitled Revising the Computation of Creditable Vacation and
Justifying its amendatory action, the CA stated that EO 1077 applies to PAL and necessarily to Paloma on the Sick Leaves of Government Officers and Employees, provides:
following rationale: Section 2(1) of Article IX(B) of the 1987 Constitution applies prospectively and, thus, the WHEREAS, under existing law and civil service regulations, the number of days of vacation and sick leaves
expressed limitation therein on the applicability of the civil service law only to government-owned and controlled creditable to a government officer or employee is limited to 300 days;
corporations (GOCCs) with original charters does not preclude the applicability of EO 1077 to PAL and its then WHEREAS, by special law, members of the judiciary are not subject to such restriction;
employees. This conclusion, the CA added, becomes all the more pressing considering that PAL, at the time of the WHEREAS, it is the continuing policy of the government to institute to the extent possible a uniform and equitable
issuance of EO 1077, was still a GOCC and that Paloma had already 29 years of service at that time. The appellate system of compensation and benefits and to enhance the morale and performance in the civil service.
court also stated that since PAL had then no existing retirement program, the provisions of EO 1077 shall serve as xxxx
a retirement program for Paloma who had meanwhile acquired vested rights under the EO pursuant to Arts. 100[16] NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me
and 287[17] of the Labor Code. by the Constitution, do hereby order and direct the following:
Significantly, despite affirmatively positing the applicability of EO 1077, the Amended Decision still deferred to PAL’s Section 1. Any officer [or] employee of the government who retires or voluntary resigns or is separated from the
existing policy on the 230-day limit for accrued sick leave with pay that may be credited to its employees. service through no fault of his own and whose leave benefits are not covered by special law, shall be entitled to the
Incongruously, while the CA reinstated the November 10, 1999 Resolution of the NLRC, it decreed the commutation of all the accumulated vacation and/or sick leaves to his credit, exclusive of Saturdays, Sundays, and
implementation of the labor arbiter’s Decision dated June 30, 1995. As may be recalled, the NLRC, in its November holidays, without limitation as to the number of days of vacation and sick leaves that he may accumulate. ( mphasis
10, 1999 Resolution, allowed a 230-day sick leave commutation, up from the 162 days granted under the June 30, supplied.)
1995 Decision of the labor arbiter. \Paloma maintains that he comes within the coverage of EO 1077, the same having been issued in 1986, before he
Paloma immediately appealed the CA’s Amended Decision via a Petition for Review on Certiorari under Rule 45, severed official relations with PAL, and at a time when the applicable constitutional provision on the coverage of the
docketed as G.R. No. 148415. On the other hand, PAL first sought reconsideration of the Amended Decision, civil service made no distinction between GOCCs with original charters and those without, like PAL which was

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incorporated under the Corporation Code. Implicit in Paloma’s contention is the submission that he earned the bulk 4. An employee may accumulate sick leave with pay up to Two Hundred Thirty (230) days;
of his sick leave credits under the aegis of the 1973 Constitution when PAL, being then a government-controlled An employee who has accumulated seventy-five (75) days sick leave credit at the end of each year may, at his
corporation, was under civil service coverage. option, commute seventy-five percent (75%) of his current sick leave entitlement to cash and the other twenty-five
The contention is without merit. percent (25%) to be added to his accrued sick leave credits up to two hundred thirty (230) calendar days.
PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law The seventy-five percent (75%) commutable to cash as above provided, shall be paid up in lump sum on or before
The Court can allow that PAL, during the period material, was a government-controlled corporation in the sense that May 31st of the following year.
the GSIS owned a controlling interest over its stocks. One stubborn fact, however, remains: Through the years, Sick leave credits in excess of two hundred thirty (230) days shall be commutable to cash at the employee’s option,
PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered and shall be paid in lump sum on or before May 31st of the following year it was earned.[31] (Emphasis ours.)
government employees. It may perhaps not be amiss for the Court to take judicial notice of the fact that the civil As may be gathered from the records, accrued sick leave credits in excess of 230 days were not, if earned before
service law and rules and regulations have not actually been made to apply to PAL and its employees. Of governing 1990 when the above policy took effect, commutable to cash; they were simply forfeited. Those earned after 1990,
application to them was the Labor Code. Consider: (a) Even during the effectivity of the 1973 Constitution but prior to but still subject to the 230-day threshold rule, were commutable to cash to the extent of 75% of the employee’s
the promulgation on January 17, 1985 of the decision in No. L-64313 entitled National Housing Corporation v. Juco, current entitlement, and payable on or before May 31st of the following year, necessarily implying that the privilege to
[24] the Court no less recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise commute is time-bound.
jurisdiction over, disputes involving discipline, personnel movements, and dismissal in GOCCs, among them PAL; It appears that Paloma had, as of 1990, more than 230 days of accrued sick leave credits. Following company
[25] (b) Company policy and collective bargaining agreements (CBAs), instead of the civil service law and rules, policy, Paloma was deemed to have forfeited the monetary value of his leave credits in excess of the 230-day
govern the terms and conditions of employment in PAL. In fact, Ople rhetorically asked how PAL can be covered by ceiling. Now, then, it is undisputed that he earned additional accrued sick leave credits of 20 days in 1990 and 1991
the civil service law when, at one time, there were three (3) CBAs in PAL, one for the ground crew, one for the flight and 18 days in 1992, which he duly commuted pursuant to company policy and received with the corresponding
attendants, and one for the pilots;[26] and (c) When public sector unionism was just an abstract concept, labor cash value. Therefore, PAL is correct in contending that Paloma had received whatever was due on the commutation
unions in PAL with the right to engage in strike and other concerted activities were already active.[27] of his accrued sick leave credits in excess of the 230 days limit, specifically the 58 days commutation for 1990, 1991,
Not to be overlooked of course is the 1964 case of Phil. Air Lines Employees’ Assn., wherein the Court stated that and 1992.
“the Civil Service Law has not been actually applied to PAL.”[28] No commutation of 230 days accrued sick leave credits
Given the foregoing considerations, Paloma cannot plausibly be accorded the benefits of EO 1077 which, to stress, The query that comes next is how the 230 days accrued sick leave credits Paloma undoubtedly had when he retired
was issued to narrow the gap between the leave privileges between the members of the judiciary, on one hand, and are to be treated. Is this otherwise earned credits commutable to cash? These should be answered in the negative.
other government officers and employees in the civil service, on the other. That PAL and Paloma may have, at a The labor arbiter granted 162 days commutation, while the NLRC allowed the commutation of the maximum 230
time, come within the embrace of the civil service by virtue of the 1973 Constitution is of little moment at this days. The CA, while seemingly affirming the NLRC’s grant of 230 days commutation, actually decreed a 162-day
juncture. As held in National Service Corporation v. National Labor Relations Commission (NASECO),[29] the issue commutation. We cannot sustain any of the dispositions thus reached for lack of legal basis, for PAL’s company
of whether or not a given GOCC falls within the ambit of the civil service subject, vis-à-vis disputes respecting terms policy upon which either disposition was predicated did not provide for a commutation of the first 230 days accrued
and conditions of employment, to the jurisdiction of the Civil Service Commission or the NLRC, as the case may be, sick leave credits employees may have upon their retirement. Hence, the NLRC and the CA, by their act of allowing
resolves itself into the question of which between the 1973 Constitution, which does not distinguish between a commutation to cash, erred as they virtually read in the policy something not written or intended therein. Indeed, no
GOCC with or without an original charter, and the 1987 Constitution, which does, is in place. To borrow from the law provides for commutation of unused or accrued sick leave credits in the private sector. Commutation is allowed
1988 NASECO ruling, it is the 1987 Constitution, which delimits the coverage of the civil service, that should govern by way of voluntary endowment by an employer through a company policy or by a CBA. None of such medium
this case because it is the Constitution in place at the time the case was decided, even if, incidentally, the cause of presently obtains and it would be incongruous if the Court fills up the vacuum.
action accrued during the effectivity of the 1973 Constitution. This has been the consistent holding of the Court in Confronted with a similar situation as depicted above, the Court, in Baltazar v. San Miguel Brewery, Inc., declared as
subsequent cases involving GOCCs without original charters.[30] follows:
It cannot be overemphasized that when Paloma filed his complaint for commutation of sick leave credits, private In connection with the question of whether or not appellee is entitled to the cash value of six months accumulated
interests already controlled, if not owned, PAL. Be this as it may, Paloma, when he filed said complaint, cannot even sick leave, it appears that while under the last paragraph of Article 5 of appellant’s Rules and Regulations of the
assert being covered by the civil service and, hence, entitled to the benefits attached to civil service employment, Health, Welfare and Retirement Plan (Exhibit 3), unused sick leave may be accumulated up to a maximum of six
such as the right under EO 1077 to accumulate and commute leave credits without limit. In all, then, Paloma, while months, the same is not commutable or payable in cash upon the employee’s option.
with PAL, was never a government employee covered by the civil service law. As such, he did not acquire any In our view, the only meaning and import of said rule and regulation is that if an employee does not choose to enjoy
vested rights on the retirement benefits accorded by EO 1077. his yearly sick leave of thirty days, he may accumulate such sick leave up to a maximum of six months and enjoy this
Paloma not entitled to the benefits granted in EO 1077; existing company policy on the matter applies six months sick leave at the end of the sixth year but may not commute it to cash.[32]
What governs Paloma’s entitlement to sick leave benefits and the computation and commutation of creditable In fine, absent any provision in the applicable company policy authorizing the commutation of the 230 days accrued
benefits is not EO 1077, as the labor arbiter and originally the NLRC correctly held, but PAL’s company policy on the sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable right, insist on the
matter which, as found below, took effect in 1990. The text of the policy is reproduced in the CA’s April 28, 2000 commutation of his sick leave credits to cash.
Decision and sets out the following pertinent rules: As PAL’s senior vice-president for finance upon his retirement, Paloma knew or at least ought to have known the
POLICY company policy on accrued sick leave credits and how it was being implemented. Had he acted on that knowledge in
Regular employees shall be entitled to a yearly period of sick leave with pay, the exact number of days to be utmost good faith, these proceedings would have not come to pass.
determined on the basis of the employee’s category and length of service in the company. WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack of merit, while the petition under
RULES G.R. No. 156764 is hereby GIVEN DUE COURSE. The Amended Decision dated May 31, 2001 of the CA in CA-
A. For ground personnel G.R. SP No. 56429 and its Resolution of January 14, 2003 are hereby ANNULLED and SET ASIDE, and the CA
2. Sick leave shall be granted only upon certification by a company physician that an employee is incapable of Decision dated April 28, 2000 is accordingly REINSTATED.
discharging his duties due to illness or injury x x x. Costs against Ricardo G. Paloma.
xxxx SO ORDERED.
3. Sick leave entitlement accrues from the date of an employee’s regular employment x x x. PRESBITERO J. VELASCO, JR. (Associate Justice)
In case of direct conversion from temporary/daily/project/contract to regular status, regular employment shall be WE CONCUR: LEONARDO A. QUISUMBING (Associate Justice, Chairperson), CONCHITA CARPIO MORALES
deemed to have begun on the date of the employee’s conversion as a regular employee. (Associate Justice), DANTE O. TINGA (Associate Justice), ARTURO D. BRION (Associate Justice)
xxxx

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SERVICE CHARGES Teodoro Laurenaria for underpayment of wages; nonpayment of COLA and overtime pay; premium pay for holiday
MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, Petitioners, versus ROLANDO and rest day, and SILP.
ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO ALAMARES, EDGARDO On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a Joint Decision in favor of the employees.
TORREFRANCA, LOURDES CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS GUADES, The Labor Arbiter awarded substantially all of respondents’ money claims, and held that respondents Loveres,
AMADO MACANDOG, PATERNO LLARENA, GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL Macandog and Llarena were entitled to separation pay, while respondents Guades, Nicerio and Alamares were
TORREFRANCA, and SANTOS BROñOLA, Respondents., G.R. No. 157634, 2005 May 16, 2nd Division entitled to their retirement pay. The Labor Arbiter also held that based on the evidence presented, Josefa Po Lam is
PUNO, J.: the owner/proprietor of Mayon Hotel & Restaurant and the proper respondent in these cases.
This is a petition for certiorari to reverse and set aside the Decision issued by the Court of Appeals (CA)[1] in CA- On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the complaints were dismissed.
G.R. SP No. 68642, entitled “Rolando Adana, Wenefredo Loveres, et. al. vs. National Labor Relations Commission Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed a petition for
(NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.,” and the Resolution[2] denying petitioners’ motion for certiorari with the CA which rendered the now assailed decision.
reconsideration. The assailed CA decision reversed the NLRC Decision which had dismissed all of respondents’ After their motion for reconsideration was denied, petitioners now come to this Court, seeking the reversal of the CA
complaints,[3] and reinstated the Joint Decision of the Labor Arbiter[4] which ruled that respondents were illegally decision on the following grounds:
dismissed and entitled to their money claims. I. The Honorable Court of Appeals erred in reversing the decision of the National Labor Relations Commission
The facts, culled from the records, are as follows:[5] (Second Division) by holding that the findings of fact of the NLRC were not supported by substantial evidence
Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name of petitioner Pacita O. Po, despite ample and sufficient evidence showing that the NLRC decision is indeed supported by substantial evidence;
[6] whose mother, petitioner Josefa Po Lam, manages the establishment.[7] The hotel and restaurant employed II. The Honorable Court of Appeals erred in upholding the joint decision of the labor arbiter which ruled that
about sixteen (16) employees. private respondents were illegally dismissed from their employment, despite the fact that the reason why private
Records show that on various dates starting in 1981, petitioner hotel and restaurant hired the following people, all respondents were out of work was not due to the fault of petitioners but to causes beyond the control of petitioners.
respondents in this case, with the following jobs:[8] III. The Honorable Court of Appeals erred in upholding the award of monetary benefits by the labor arbiter in his
1. Wenefredo Loveres - Accountant and Officer-in-charge joint decision in favor of the private respondentS, including the award of damages to six (6) of the private
2. Paterno Llarena - Front Desk Clerk respondents, despite the fact that the private respondents have not proven by substantial evidence their entitlement
3. Gregorio Nicerio - Supervisory Waiter thereto and especially the fact that they were not illegally dismissed by the petitioners.
4. Amado Macandog - Roomboy IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the owner of the business
5. Luis Guades - Utility/Maintenance Worker establishment, petitioner Mayon Hotel and Restaurant, thus disregarding the certificate of registration of the business
6. Santos Broñola - Roomboy establishment ISSUED by the local government, which is a public document, and the unqualified admissions of
7. Teodoro Laurenaria - Waiter complainants-private respondents.[14]
8. Eduardo Alamares - Roomboy/Waiter In essence, the petition calls for a review of the following issues:
9. Lourdes Camigla - Cashier 1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of petitioner Mayon Hotel &
10. Chona Bumalay - Cashier Restaurant, and the proper respondent in this case?
11. Jose Atractivo - Technician 2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and Nicerio illegally dismissed?
12. Amado Alamares - Dishwasher and Kitchen Helper 3. Are respondents entitled to their money claims due to underpayment of wages, and nonpayment of holiday
13. Roger Burce - Cook pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay?
14. Rolando Adana - Waiter It is petitioners’ contention that the above issues have already been threshed out sufficiently and definitively by the
15. Miguel Torrefranca - Cook NLRC. They therefore assail the CA’s reversal of the NLRC decision, claiming that based on the ruling in Castillo v.
16. Edgardo Torrefranca - Cook NLRC,[15] it is non sequitur that the CA should re-examine the factual findings of both the NLRC and the Labor
Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and Arbiter, especially as in this case the NLRC’s findings are allegedly supported by substantial evidence.
restaurant at Rizal Street, the hotel operations of the business were suspended on March 31, 1997.[9] The We do not agree.
operation of the restaurant was continued in its new location at Elizondo Street, Legazpi City, while waiting for the There is no denying that it is within the NLRC’s competence, as an appellate agency reviewing decisions of Labor
construction of a new Mayon Hotel & Restaurant at Peñaranda Street, Legazpi City.[10] Only nine (9) of the sixteen Arbiters, to disagree with and set aside the latter’s findings.[16] But it stands to reason that the NLRC should state an
(16) employees continued working in the Mayon Restaurant at its new site.[11] acceptable cause therefore, otherwise it would be a whimsical, capricious, oppressive, illogical, unreasonable
On various dates of April and May 1997, the 16 employees filed complaints for underpayment of wages and other exercise of quasi-judicial prerogative, subject to invalidation by the extraordinary writ of certiorari.[17] And when the
money claims against petitioners, as follows:[12] factual findings of the Labor Arbiter and the NLRC are diametrically opposed and this disparity of findings is called
Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for illegal dismissal, underpayment of into question, there is, necessarily, a re-examination of the factual findings to ascertain which opinion should be
wages, nonpayment of holiday and rest day pay; service incentive leave pay (SILP) and claims for separation pay sustained.[18] As ruled in Asuncion v. NLRC,[19]
plus damages; Although, it is a legal tenet that factual findings of administrative bodies are entitled to great weight and respect, we
Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims for underpayment of wages; nonpayment of are constrained to take a second look at the facts before us because of the diversity in the opinions of the Labor
cost of living allowance (COLA) and overtime pay; premium pay for holiday and rest day; SILP; nightshift differential Arbiter and the NLRC. A disharmony between the factual findings of the Labor Arbiter and those of the NLRC opens
pay and separation pay plus damages; the door to a review thereof by this Court.[20]
Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for underpayment of wages; nonpayment of holiday and The CA, therefore, did not err in reviewing the records to determine which opinion was supported by substantial
rest day pay and SILP; evidence.
Rolando Adana, Roger Burce and Amado Alamares for underpayment of wages; nonpayment of COLA, overtime, Moreover, it is explicit in Castillo v. NLRC[21] that factual findings of administrative bodies like the NLRC are
holiday, rest day, SILP and nightshift differential pay; affirmed only if they are supported by substantial evidence that is manifest in the decision and on the records. As
Eduardo Alamares for underpayment of wages, nonpayment of holiday, rest day and SILP and night shift differential stated in Castillo:
pay; [A]buse of discretion does not necessarily follow from a reversal by the NLRC of a decision of a Labor Arbiter. Mere
Santos Broñola for illegal dismissal, underpayment of wages, overtime pay, rest day pay, holiday pay, SILP, and variance in evidentiary assessment between the NLRC and the Labor Arbiter does not automatically call for a full
damages;[13] and review of the facts by this Court. The NLRC’s decision, so long as it is not bereft of substantial support from the
records, deserves respect from this Court. As a rule, the original and exclusive jurisdiction to review a decision or

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resolution of respondent NLRC in a petition for certiorari under Rule 65 of the Rules of Court does not include a vol. I, rollo)[,] there were documentary evidences also that were submitted by Josefa showing her ownership of said
correction of its evaluation of the evidence but is confined to issues of jurisdiction or grave abuse of discretion. Thus, enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her participation and interest in the business as
the NLRC’s factual findings, if supported by substantial evidence, are entitled to great respect and even finality, merely to help and assist her daughter as the hotel and restaurant was near the former’s store, the testimonies of
unless petitioner is able to show that it simply and arbitrarily disregarded the evidence before it or had [respondents] and Josefa as well as her demeanor during the trial in these cases proves (sic) that Josefa Po Lam
misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been owns Mayon Hotel and Restaurant. [Respondents] testified that it was Josefa who exercises all the acts and
properly appreciated. (citations omitted)[22] manifestation of ownership of the hotel and restaurant like transferring employees from the Greatwall Palace
After careful review, we find that the reversal of the NLRC’s decision was in order precisely because it was not Restaurant which she and her husband Roy Po Lam previously owned; it is Josefa to whom the employees submits
supported by substantial evidence. (sic) reports, draws money for payment of payables and for marketing, attending (sic) to Labor Inspectors during
1. Ownership by Josefa Po Lam ocular inspections. Except for documents whereby Pacita Po appears as the owner of Mayon Hotel and Restaurant,
The Labor Arbiter ruled that as regards the claims of the employees, petitioner Josefa Po Lam is, in fact, the owner nothing in the record shows any circumstance or manifestation that Pacita Po is the owner of Mayon Hotel and
of Mayon Hotel & Restaurant. Although the NLRC reversed this decision, the CA, on review, agreed with the Labor Restaurant. The least that can be said is that it is absurd for a person to purchase a hotel and restaurant in the very
Arbiter that notwithstanding the certificate of registration in the name of Pacita Po, it is Josefa Po Lam who is the heart of the City of Legazpi verbally. Assuming this to be true, when [petitioners], particularly Josefa, was directed to
owner/proprietor of Mayon Hotel & Restaurant, and the proper respondent in the complaints filed by the employees. submit evidence as to the ownership of Pacita of the hotel and restaurant, considering the testimonies of
The CA decision states in part: [respondents], the former should [have] submitted the lease contract between the owner of the building where Mayon
[Despite] the existence of the Certificate of Registration in the name of Pacita Po, we cannot fault the labor arbiter in Hotel and Restaurant was located at Rizal St., Legazpi City and Pacita Po to clearly establish ownership by the latter
ruling that Josefa Po Lam is the owner of the subject hotel and restaurant. There were conflicting documents of said enterprise. Josefa failed. We are not surprised why some employers employ schemes to mislead Us in order
submitted by Josefa herself. She was ordered to submit additional documents to clearly establish ownership of the to evade liabilities. We therefore consider and hold Josefa Po Lam as the owner/proprietor of Mayon Hotel and
hotel and restaurant, considering the testimonies given by the [respondents] and the non-appearance and failure to Restaurant and the proper respondent in these cases.[28]
submit her own position paper by Pacita Po. But Josefa did not comply with the directive of the Labor Arbiter. The Petitioners’ reliance on the rules of evidence, i.e., the certificate of registration being the best proof of ownership, is
ruling of the Supreme Court in Metropolitan Bank and Trust Company v. Court of Appeals applies to Josefa Po Lam misplaced. Notwithstanding the certificate of registration, doubts were cast as to the true nature of petitioner Josefa
which is stated in this wise: Po Lam’s involvement in the enterprise, and the Labor Arbiter had the authority to resolve this issue. It was therefore
When the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to within his jurisdiction to require the additional documents to ascertain who was the real owner of petitioner Mayon
produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, Hotel & Restaurant.
and he refuses to produce such evidence, the presumption arises that the evidence[,] if produced, would operate to Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of
his prejudice, and support the case of his adversary. procedure may be relaxed in labor cases to serve the demand of substantial justice.[29] The rule of evidence
Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and restaurant, the labor arbiter relied also prevailing in court of law or equity shall not be controlling in labor cases and it is the spirit and intention of the Labor
on the testimonies of the witnesses, during the hearing of the instant case. When the conclusions of the labor arbiter Code that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily
are sufficiently corroborated by evidence on record, the same should be respected by appellate tribunals, since he is and objectively and without regard to technicalities of law or procedure, all in the interest of due process.[30] Labor
in a better position to assess and evaluate the credibility of the contending parties.[23] (citations omitted) laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the
Petitioners insist that it was error for the Labor Arbiter and the CA to have ruled that petitioner Josefa Po Lam is the fundamental requisites of due process.[31]
owner of Mayon Hotel & Restaurant. They allege that the documents they submitted to the Labor Arbiter sufficiently Similarly, the fact that the respondents’ complaints contained no allegation that petitioner Josefa Po Lam is the
and clearly establish the fact of ownership by petitioner Pacita Po, and not her mother, petitioner Josefa Po Lam. owner is of no moment. To apply the concept of judicial admissions to respondents — who are but lowly employees -
They contend that petitioner Josefa Po Lam’s participation was limited to merely (a) being the overseer; (b) receiving would be to exact compliance with technicalities of law that is contrary to the demands of substantial justice.
the month-to-month and/or year-to-year financial reports prepared and submitted by respondent Loveres; and (c) Moreover, the issue of ownership was an issue that arose only during the course of the proceedings with the Labor
visitation of the premises.[24] They also put emphasis on the admission of the respondents in their position paper Arbiter, as an incident of determining respondents’ claims, and was well within his jurisdiction.[32]
submitted to the Labor Arbiter, identifying petitioner Josefa Po Lam as the manager, and Pacita Po as the owner.[25] Petitioners were also not denied due process, as they were given sufficient opportunity to be heard on the issue of
This, they claim, is a judicial admission and is binding on respondents. They protest the reliance the Labor Arbiter ownership.[33] The essence of due process in administrative proceedings is simply an opportunity to explain one’s
and the CA placed on their failure to submit additional documents to clearly establish ownership of the hotel and side or an opportunity to seek reconsideration of the action or ruling complained of.[34] And there is nothing in the
restaurant, claiming that there was no need for petitioner Josefa Po Lam to submit additional documents considering records which would suggest that petitioners had absolute lack of opportunity to be heard.[35] Obviously, the choice
that the Certificate of Registration is the best and primary evidence of ownership. not to present evidence was made by petitioners themselves.[36]
We disagree with petitioners. We have scrutinized the records and find the claim that petitioner Josefa Po Lam is But more significantly, we sustain the Labor Arbiter and the CA because even when the case was on appeal with the
merely the overseer is not borne out by the evidence. NLRC, nothing was submitted to negate the Labor Arbiter’s finding that Pacita Po is not the real owner of the subject
First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter. Despite receipt of hotel and restaurant. Indeed, no such evidence was submitted in the proceedings with the CA nor with this Court.
the Labor Arbiter’s notice and summons, other notices and Orders, petitioner Pacita Po failed to appear in any of the Considering that petitioners vehemently deny ownership by petitioner Josefa Po Lam, it is most telling that they
proceedings with the Labor Arbiter in these cases, nor file her position paper.[26] It was only on appeal with the continue to withhold evidence which would shed more light on this issue. We therefore agree with the CA that the
NLRC that Pacita Po signed the pleadings.[27] The apathy shown by petitioner Pacita Po is contrary to human failure to submit could only mean that if produced, it would have been adverse to petitioners’ case.[37]
experience as one would think that the owner of an establishment would naturally be concerned when all her Thus, we find that there is substantial evidence to rule that petitioner Josefa Po Lam is the owner of petitioner Mayon
employees file complaints against her. Hotel & Restaurant.
Second. The records of the case belie petitioner Josefa Po Lam’s claim that she is merely an overseer. The findings 2. Illegal Dismissal: claim for separation pay
of the Labor Arbiter on this question were based on credible, competent and substantial evidence. We again quote Of the sixteen employees, only the following filed a case for illegal dismissal: respondents Loveres, Llarena, Nicerio,
the Joint Decision on this matter: Macandog, Guades, Atractivo and Broñola.[38]
Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa Po Lam claims that it is The Labor Arbiter found that there was illegal dismissal, and granted separation pay to respondents Loveres,
her daughter, Pacita Po, who owns the hotel and restaurant when the latter purchased the same from one Palanos in Macandog and Llarena. As respondents Guades, Nicerio and Alamares were already 79, 66 and 65 years old
1981, Josefa failed to submit the document of sale from said Palanos to Pacita as allegedly the sale was only verbal respectively at the time of the dismissal, the Labor Arbiter granted retirement benefits pursuant to Article 287 of the
although the license to operate said hotel and restaurant is in the name of Pacita which, despite our Order to Josefa Labor Code as amended.[39] The Labor Arbiter ruled that respondent Atractivo was not entitled to separation pay
to present the same, she failed to comply (p. 38, tsn. August 13, 1998). While several documentary evidences were because he had been transferred to work in the restaurant operations in Elizondo Street, but awarded him damages.
submitted by Josefa wherein Pacita was named therein as owner of the hotel and restaurant (pp. 64, 65, 67 to 69; Respondents Loveres, Llarena, Nicerio, Macandog and Guades were also awarded damages.[40]

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The NLRC reversed the Labor Arbiter, finding that “no clear act of termination is attendant in the case at bar” and It is confounding how petitioners have fashioned their arguments. After having admitted, in effect, that respondents
that respondents “did not submit any evidence to that effect, but the finding and conclusion of the Labor Arbiter [are] have been laid-off since April 1997, they would have this Court excuse their refusal to reinstate respondents or grant
merely based on his own surmises and conjectures.”[41] In turn, the NLRC was reversed by the CA. them separation pay because these same respondents purportedly have not proven the illegality of their dismissal.
It is petitioners contention that the CA should have sustained the NLRC finding that none of the above-named Petitioners’ arguments reflect their lack of candor and the blatant attempt to use technicalities to muddle the issues
respondents were illegally dismissed, or entitled to separation or retirement pay. According to petitioners, even the and defeat the lawful claims of their employees. First, petitioners admit that since April 1997, when hotel operations
Labor Arbiter and the CA admit that when the illegal dismissal case was filed by respondents on April 1997, they had were suspended due to the termination of the lease of the old premises, respondents Loveres, Macandog, Llarena,
as yet no cause of action. Petitioners therefore conclude that the filing by respondents of the illegal dismissal case Nicerio and Guades have not been permitted to work. Second, even after six months of what should have been just
was premature and should have been dismissed outright by the Labor Arbiter.[42] Petitioners also claim that since a temporary lay-off, the same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even
the validity of respondents’ dismissal is a factual question, it is not for the reviewing court to weigh the conflicting found that as of the time when he rendered his Joint Decision on July 2000 — or more than three (3) years after the
evidence.[43] supposed “temporary lay-off,” the employment of all of the respondents with petitioners had ceased, notwithstanding
We do not agree. Whether respondents are still working for petitioners is a factual question. And the records are that the new premises had been completed and the same operated as a hotel with bar and restaurant. This is
unequivocal that since April 1997, when petitioner Mayon Hotel & Restaurant suspended its hotel operations and clearly dismissal — or the permanent severance or complete separation of the worker from the service on the
transferred its restaurant operations in Elizondo Street, respondents Loveres, Macandog, Llarena, Guades and initiative of the employer regardless of the reasons therefor.[51]
Nicerio have not been permitted to work for petitioners. Respondent Alamares, on the other hand, was also laid-off On this point, we note that the Labor Arbiter and the CA are in accord that at the time of the filing of the complaint,
when the Elizondo Street operations closed, as were all the other respondents. Since then, respondents have not respondents had no cause of action to file the case for illegal dismissal. According to the CA and the Labor Arbiter,
been permitted to work nor recalled, even after the construction of the new premises at Peñaranda Street and the the lay-off of the respondents was merely temporary, pending construction of the new building at Peñaranda Street.
reopening of the hotel operations with the restaurant in this new site. As stated by the Joint Decision of the Labor [52]
Arbiter on July 2000, or more than three (3) years after the complaint was filed:[44] While the closure of the hotel operations in April of 1997 may have been temporary, we hold that the evidence on
[F]rom the records, more than six months had lapsed without [petitioner] having resumed operation of the hotel. record belie any claim of petitioners that the lay-off of respondents on that same date was merely temporary. On the
After more than one year from the temporary closure of Mayon Hotel and the temporary transfer to another site of contrary, we find substantial evidence that petitioners intended the termination to be permanent. First, respondents
Mayon Restaurant, the building which [petitioner] Josefa allege[d] w[h]ere the hotel and restaurant will be transferred Loveres, Macandog, Llarena, Guades, Nicerio and Alamares filed the complaint for illegal dismissal immediately
has been finally constructed and the same is operated as a hotel with bar and restaurant nevertheless, none of after the closure of the hotel operations in Rizal Street, notwithstanding the alleged temporary nature of the closure
[respondents] herein who were employed at Mayon Hotel and Restaurant which was also closed on April 30, 1998 of the hotel operations, and petitioners’ allegations that the employees assigned to the hotel operations knew about
was/were recalled by [petitioner] to continue their services... this beforehand. Second, in their position paper submitted to the Labor Arbiter, petitioners invoked Article 286 of the
Parenthetically, the Labor Arbiter did not grant separation pay to the other respondents as they had not filed an Labor Code to assert that the employer-employee relationship was merely suspended, and therefore the claim for
amended complaint to question the cessation of their employment after the closure of Mayon Hotel & Restaurant on separation pay was premature and without legal or factual basis.[53] But they made no mention of any intent to recall
March 31, 1997.[45] these respondents to work upon completion of the new premises. Third, the various pleadings on record show that
The above factual finding of the Labor Arbiter was never refuted by petitioners in their appeal with the NLRC. It petitioners held respondents, particularly Loveres, as responsible for mismanagement of the establishment and for
confounds us, therefore, how the NLRC could have so cavalierly treated this uncontroverted factual finding by ruling abuse of trust and confidence. Petitioner Josefa Po Lam’s affidavit on July 21, 1998, for example, squarely blamed
that respondents have not introduced any evidence to show that they were illegally dismissed, and that the Labor respondents, specifically Loveres, Bumalay and Camigla, for abusing her leniency and causing petitioner Mayon
Arbiter’s finding was based on conjecture.[46] It was a serious error that the NLRC did not inquire as to the legality of Hotel & Restaurant to sustain “continuous losses until it is closed.” She then asserts that respondents “are not
the cessation of employment. Article 286 of the Labor Code is clear — there is termination of employment when an entitled to separation pay for they were not terminated and if ever the business ceased to operate it was because of
otherwise bona fide suspension of work exceeds six (6) months.[47] The cessation of employment for more than six losses.”[54] Again, petitioners make the same allegation in their memorandum on appeal with the NLRC, where they
months was patent and the employer has the burden of proving that the termination was for a just or authorized alleged that three (3) years prior to the expiration of the lease in 1997, the operation of the Hotel had been sustaining
cause.[48] consistent losses, and these were solely attributed to respondents, but most especially due to Loveres’s
Moreover, we are not impressed by any of petitioners’ attempts to exculpate themselves from the charges. First, in mismanagement and abuse of petitioners’ trust and confidence.[55] Even the petition filed in this court made
the proceedings with the Labor Arbiter, they claimed that it could not be illegal dismissal because the lay-off was reference to the separation of the respondents due to “severe financial losses and reverses,” again imputing it to
merely temporary (and due to the expiration of the lease contract over the old premises of the hotel). They respondents’ mismanagement.[56] The vehemence of petitioners’ accusation of mismanagement against
specifically invoked Article 286 of the Labor Code to argue that the claim for separation pay was premature and respondents, especially against Loveres, is inconsistent with the desire to recall them to work. Fourth, petitioners’
without legal and factual basis.[49] Then, because the Labor Arbiter had ruled that there was already illegal memorandum on appeal also averred that the case was filed “not because of the business being operated by them
dismissal when the lay-off had exceeded the six-month period provided for in Article 286, petitioners raise this novel or that they were supposedly not receiving benefits from the Labor Code which is true, but because of the fact that
argument, to wit: the source of their livelihood, whether legal or immoral, was stopped on March 31, 1997, when the owner of the
It is the firm but respectful submission of petitioners that reliance on Article 286 of the Labor Code is misplaced, building terminated the Lease Contract.”[57] Fifth, petitioners had inconsistencies in their pleadings (with the NLRC,
considering that the reason why private respondents were out of work was not due to the fault of petitioners. The CA and with this Court) in referring to the closure,[58] i.e., in the petition filed with this court, they assert that there is
failure of petitioners to reinstate the private respondents to their former positions should not likewise be attributable no illegal dismissal because there was “only a temporary cessation or suspension of operations of the hotel and
to said petitioners as the private respondents did not submit any evidence to prove their alleged illegal dismissal. restaurant due to circumstances beyond the control of petitioners, and that is, the non-renewal of the lease
The petitioners cannot discern why they should be made liable to the private respondents for their failure to be contract...”[59] And yet, in the same petition, they also assert that: (a) the separation of respondents was due to
reinstated considering that the fact that they were out of work was not due to the fault of petitioners but due to severe financial losses and reverses leading to the closure of the business; and (b) petitioner Pacita Po had to close
circumstances beyond the control of petitioners, which are the termination and non-renewal of the lease contract shop and was bankrupt and has no liquidity to put up her own building to house Mayon Hotel & Restaurant.[60]
over the subject premises. Private respondents, however, argue in their Comment that petitioners themselves Sixth, and finally, the uncontroverted finding of the Labor Arbiter that petitioners terminated all the other respondents,
sought the application of Article 286 of the Labor Code in their case in their Position Paper filed before the Labor by not employing them when the Hotel and Restaurant transferred to its new site on Peñaranda Street.[61] Indeed,
Arbiter. In refutation, petitioners humbly submit that even if they invoke Article 286 of the Labor Code, still the fact in this same memorandum, petitioners referred to all respondents as “former employees of Mayon Hotel &
remains, and this bears stress and emphasis, that the temporary suspension of the operations of the establishment Restaurant.”[62]
arising from the non-renewal of the lease contract did not result in the termination of employment of private These factors may be inconclusive individually, but when taken together, they lead us to conclude that petitioners
respondents and, therefore, the petitioners cannot be faulted if said private respondents were out of work, and really intended to dismiss all respondents and merely used the termination of the lease (on Rizal Street premises) as
consequently, they are not entitled to their money claims against the petitioners.[50] a means by which they could terminate their employees.

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Moreover, even assuming arguendo that the cessation of employment on April 1997 was merely temporary, it We also agree with the Labor Arbiter and the CA that the documents petitioners submitted, i.e., affidavits executed
became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) by some of respondents during an ocular inspection conducted by an inspector of the DOLE; notices of inspection
months, pursuant to Article 286 of the Labor Code. result and Facility Evaluation Orders issued by DOLE, are not sufficient to prove payment.[76] Despite repeated
We are not impressed by petitioners’ claim that severe business losses justified their failure to reinstate respondents. orders from the Labor Arbiter,[77] petitioners failed to submit the pertinent employee files, payrolls, records,
The evidence to prove this fact is inconclusive. But more important, serious business losses do not excuse the remittances and other similar documents which would show that respondents rendered work entitling them to
employer from complying with the clearance or report required under Article 283 of the Labor Code and its payment for overtime work, night shift differential, premium pay for work on holidays and rest day, and payment of
implementing rules before terminating the employment of its workers.[63] In the absence of justifying circumstances, these as well as the COLA and the SILP – documents which are not in respondents’ possession but in the custody
the failure of petitioners to observe the procedural requirements set out under Article 284, taints their actuations with and absolute control of petitioners.[78] By choosing not to fully and completely disclose information and present the
bad faith, especially since they claimed that they have been experiencing losses in the three years before 1997. To necessary documents to prove payment of labor standard benefits due to respondents, petitioners failed to discharge
say the least, if it were true that the lay-off was temporary but then serious business losses prevented the the burden of proof.[79] Indeed, petitioners’ failure to submit the necessary documents which as employers are in
reinstatement of respondents, then petitioners should have complied with the requirements of written notice. The their possession, inspite of orders to do so, gives rise to the presumption that their presentation is prejudicial to its
requirement of law mandating the giving of notices was intended not only to enable the employees to look for cause.[80] As aptly quoted by the CA:
another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more [W]hen the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to
importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact,
alleged authorized cause of termination.[64] and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to
And even assuming that the closure was due to a reason beyond the control of the employer, it still has to accord its his prejudice, and support the case of his adversary.[81]
employees some relief in the form of severance pay.[65] Petitioners next claim that the cost of the food and snacks provided to respondents as facilities should have been
While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, included in reckoning the payment of respondents’ wages. They state that although on the surface respondents
the dismissal of employees must be made within the parameters of law and pursuant to the tenets of fair play.[66] appeared to receive minimal wages, petitioners had granted respondents other benefits which are considered part
And in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just and parcel of their wages and are allowed under existing laws.[82] They claim that these benefits make up for
or authorized cause.[67] Where there is no showing of a clear, valid and legal cause for termination of employment, whatever inadequacies there may be in compensation.[83] Specifically, they invoked Sections 5 and 6, Rule VII-A,
the law considers the case a matter of illegal dismissal.[68] which allow the deduction of facilities provided by the employer through an appropriate Facility Evaluation Order
Under these circumstances, the award of damages was proper. As a rule, moral damages are recoverable where issued by the Regional Director of the DOLE.[84] Petitioners also aver that they give five (5) percent of the gross
the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor, or was income each month as incentives. As proof of compliance of payment of minimum wages, petitioners submitted the
done in a manner contrary to morals, good customs or public policy.[69] We believe that the dismissal of the Notice of Inspection Results issued in 1995 and 1997 by the DOLE Regional Office.[85]
respondents was attended with bad faith and meant to evade the lawful obligations imposed upon an employer. The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents’
To rule otherwise would lead to the anomaly of respondents being terminated from employment in 1997 as a matter minimum wage. As stated in the Labor Arbiter’s decision:[86]
of fact, but without legal redress. This runs counter to notions of fair play, substantial justice and the constitutional While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol. II, rollo) issued by the DOLE Regional
mandate that labor rights should be respected. If doubts exist between the evidence presented by the employer and Office whereby the cost of meals given by [petitioners] to [respondents] were specified for purposes of considering
the employee, the scales of justice must be tilted in favor of the latter — the employer must affirmatively show the same as part of their wages, We cannot consider the cost of meals in the Orders as applicable to [respondents].
rationally adequate evidence that the dismissal was for a justifiable cause.[70] It is a time-honored rule that in [Respondents] were not interviewed by the DOLE as to the quality and quantity of food appearing in the applications
controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of [petitioners] for facility evaluation prior to its approval to determine whether or not [respondents] were indeed given
of agreements and writing should be resolved in the former’s favor.[71] The policy is to extend the doctrine to a such kind and quantity of food. Also, there was no evidence that the quality and quantity of food in the Orders were
greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed voluntarily accepted by [respondents]. On the contrary; while some [of the respondents] admitted that they were
policy of the State to give maximum aid and protection of labor.[72] given meals and merienda, the quality of food serve[d] to them were not what were provided for in the Orders and
We therefore reinstate the Labor Arbiter’s decision with the following modifications: that it was only when they filed these cases that they came to know about said Facility Evaluation Orders (pp. 100;
(a) Separation pay for the illegal dismissal of respondents Loveres, Macandog and Llarena; (Santos Broñola 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa herself, who applied for evaluation of the facility
cannot be granted separation pay as he made no such claim); (food) given to [respondents], testified that she did not inform [respondents] concerning said Facility Evaluation
(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at the time of dismissal were entitled to Orders (p. 34, tsn[,] August 13, 1998).
their retirement benefits pursuant to Article 287 of the Labor Code as amended;[73] and Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be
(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola. deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC,[87] the employer simply
3. Money claims cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are
The CA held that contrary to the NLRC’s ruling, petitioners had not discharged the burden of proving that the customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the
monetary claims of the respondents have been paid.[74] The CA thus reinstated the Labor Arbiter’s grant of employee; and (c) the facilities are charged at fair and reasonable value. The records are clear that petitioners failed
respondents’ monetary claims, including damages. to comply with these requirements. There was no proof of respondents’ written authorization. Indeed, the Labor
Petitioners assail this ruling by repeating their long and convoluted argument that as there was no illegal dismissal, Arbiter found that while the respondents admitted that they were given meals and merienda, the quality of food
then respondents are not entitled to their monetary claims or separation pay and damages. Petitioners’ arguments served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the
are not only tiring, repetitive and unconvincing, but confusing and confused — entitlement to labor standard benefits cases that they came to know of this supposed Facility Evaluation Orders.[88] Petitioner Josefa Po Lam herself
is a separate and distinct concept from payment of separation pay arising from illegal dismissal, and are governed by admitted that she did not inform the respondents of the facilities she had applied for.[89]
different provisions of the Labor Code. Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred
We agree with the CA and the Labor Arbiter. Respondents have set out with particularity in their complaint, position when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their
paper, affidavits and other documents the labor standard benefits they are entitled to, and which they alleged that salaries, on the ground that respondents have availed themselves of the food given by petitioners.[90] The law is
petitioners have failed to pay them. It was therefore petitioners’ burden to prove that they have paid these money clear that mere availment is not sufficient to allow deductions from employees’ wages.
claims. One who pleads payment has the burden of proving it, and even where the employees must allege More important, we note the uncontroverted testimony of respondents on record that they were required to eat in the
nonpayment, the general rule is that the burden rests on the defendant to prove nonpayment, rather than on the hotel and restaurant so that they will not go home and there is no interruption in the services of Mayon Hotel &
plaintiff to prove non payment.[75] This petitioners failed to do. Restaurant. As ruled in Mabeza, food or snacks or other convenience provided by the employers are deemed as
supplements if they are granted for the convenience of the employer. The criterion in making a distinction between a

Labor Standards | To digest (old cases) | Ajean Tuazon| 57


supplement and a facility does not so much lie in the kind (food, lodging) but the purpose.[91] Considering, therefore, SO ORDERED.
that hotel workers are required to work different shifts and are expected to be available at various odd hours, their REYNATO S. PUNO (Associate Justice)
ready availability is a necessary matter in the operations of a small hotel, such as petitioners’ business.[92] The WE CONCUR: MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice), ROMEO J. CALLEJO, SR. (Associate
deduction of the cost of meals from respondents’ wages, therefore, should be removed. Justice), DANTE O. TINGA (Associate Justice), MINITA V. CHICO-NAZARIO (Associate Justice)
We also do not agree with petitioners that the five (5) percent of the gross income of the establishment can be WAGES
considered as part of the respondents’ wages. We quote with approval the Labor Arbiter on this matter, to wit: PHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P. JOSEF, and JOSE B. ANIEVAS,
While complainants, who were employed in the hotel, receive[d] various amounts as profit share, the same cannot Petitioners, versus PHILEX BULAWAN SUPERVISORS UNION, represented by its President, JOSE D.
be considered as part of their wages in determining their claims for violation of labor standard benefits. Although PAMPLIEGA, Respondents., G.R. No. 149758, 2005 Aug 25, 1st Division
called profit share[,] such is in the nature of share from service charges charged by the hotel. This is more explained AZCUNA, J.:
by [respondents] when they testified that what they received are not fixed amounts and the same are paid not on a This is a petition for review on certiorari, with prayer for the issuance of a temporary restraining and/or status quo
monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, [petitioners] failed to submit evidence that the amounts order, assailing the Decision of the Court of Appeals in CA-G.R. SP No. 57701 promulgated on April 23, 2001 and its
received by [respondents] as profit share are to be considered part of their wages and had been agreed by them Resolution, promulgated on August 29, 2001, denying petitioner’s Motion for Reconsideration. The said Decision of
prior to their employment. Further, how can the amounts receive[d] by [respondents] be considered as profit share the Court of Appeals reversed and set aside the Resolution dated February 29, 2000 of the Voluntary Arbitrator and
when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross reinstated the Voluntary Arbitrator’s Resolution dated January 14, 2000 with modification.
receipt of an enterprise. Profits are realized after expenses are deducted from the gross income. The antecedents[1] of the case are as follows:
On the issue of the proper minimum wage applicable to respondents, we sustain the Labor Arbiter. We note that Respondent Philex Bulawan Supervisors Union (“Philex Supervisors Union”) is the sole and exclusive bargaining
petitioners themselves have admitted that the establishment employs “more or less sixteen (16) employees,”[93] representative of all supervisors of petitioner Philex Gold Philippines, Incorporated (“Philex Gold”), a gold mining
therefore they are estopped from claiming that the applicable minimum wage should be for service establishments company with mine site at Vista Alegre, Nabulao, Sipalay, Negros Occidental. On July 2, 1997, respondent union
employing 15 employees or less. entered into a Collective Bargaining Agreement (CBA) with petitioner company effective August 1, 1996 up to July
As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment 31, 2001.
of labor standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of It appears, however, that after the signing of the CBA, Philex Gold made the employees of Philex Mining Corporation
poor financial condition of the company. The payment of minimum wages is not dependent on the employer’s ability from Padcal, Tuba, Benguet, its regular supervisory employees effective July 1, 1997. Some of the so-called “ex-
to pay.[94] Padcal” supervisors began to work in the Bulawan mines of Philex Mining Corporation in 1992 as ordinary rank-and-
Thus, we reinstate the award of monetary claims granted by the Labor Arbiter. file workers. When Philex Gold was incorporated in 1996 to exclusively handle gold mining, it took over the
4. Conclusion operations of the Bulawan mines and absorbed some of the ex-Padcal employees.
There is no denying that the actuations of petitioners in this case have been reprehensible. They have terminated the Philex Gold conveyed to Philex Supervisors Union the status of the ex-Padcal supervisors in November 1997 upon
respondents’ employment in an underhanded manner, and have used and abused the quasi-judicial and judicial the insistence of the union to be informed of their standing.
processes to resist payment of their employees’ rightful claims, thereby protracting this case and causing the It turned out that the ex-Padcal supervisors were maintained under a confidential payroll, receiving a different set of
unnecessary clogging of dockets of the Court. They have also forced respondents to unnecessary hardship and benefits and higher salaries compared to the locally hired supervisors of similar rank and classification doing parallel
financial expense. Indeed, the circumstances of this case would have called for exemplary damages, as the duties and functions.
dismissal was effected in a wanton, oppressive or malevolent manner,[95] and public policy requires that these acts Philex Supervisors Union filed a Complaint[2] against Philex Gold with the National Conciliation and Mediation Board
must be suppressed and discouraged.[96] (NCMB), Bacolod City, for the payment of wage differential and damages and the rectification of the discriminatory
Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages of P10,000.00 each to all salary structure and benefits between the ex-Padcal supervisors and the local-hires.
respondents. While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed After the submission of the parties’ respective position papers and rejoinders/supplemental position papers, the
employees,[97] any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but should be Voluntary Arbitrator rendered a decision on January 14, 2000 in favor of respondent Union.
grounded on the Civil Code.[98] And the law is clear that exemplary damages can only be awarded if plaintiff shows As regards the supervisors’ wage rates[3] which was submitted by Philex Gold, the Voluntary Arbitrator held:
proof that he is entitled to moral, temperate or compensatory damages.[99] The Wage rates of the employers as classified and classed by them are not also reasonable and undiscriminatory.
As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broñola specifically claimed This is shown by the fact that the maximum rate for S-4 at P18,065 per month is higher than the minimum rate for S-
damages from petitioners, then only they are entitled to exemplary damages. [sjgs1] 5, the highest category at P13,295 a month only. The rate difference between the maximum rate of S-4 and the
Finally, we rule that attorney’s fees in the amount to P10,000.00 should be granted to each respondent. It is settled minimum rate for S-5 is P4,770, the maximum rate of S-4 being higher than the minimum rate of S-5.
that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his Simply stated, an S-4 employee getting the maximum salary of P18,065 a month will merely get a reduced or
rights and interest, he is entitled to an award of attorney's fees.[100] This case undoubtedly falls within this rule. diminished salary of P13,295 upon his promotion to S-5, the highest class or category of supervisors upon his
IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January 17, 2003 of the Court of Appeals in promotion. This condition is not an ideal labor relation but a situation which will surely ignite labor conflicts and
CA-G.R. SP No. 68642 upholding the Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V Case Nos. 04- disputes in the work place.
00079-97 and 04-00080-97 is AFFIRMED, with the following MODIFICATIONS: In whatever shade or color that we shall look upon the issue of whether or not the herein employer can be held liable
(1) Granting separation pay of one-half (1/2) month for every year of service to respondents Loveres, Macandog to pay the wage differential pay to the LOCALLY HIRED SUPERVISORS due to its obvious discriminatory wage
and Llarena; policy, one thing stands out—supervisors of the same ranks are not paid the same rates of pay.
(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares; This inequitable rates of pay being implemented by respondents result naturally into the herein employers’
(3) Removing the deductions for food facility from the amounts due to all respondents; discriminatory wage policy which Article 248 (e) of the LABOR CODE prohibits and defines as UNFAIR LABOR
(4) Awarding moral damages of P20,000.00 each for respondents Loveres, Macandog, Llarena, Guades, Nicerio, PRACTICE OF EMPLOYERS.[4]
Atractivo, and Broñola; The dispositive portion of the Decision reads:
(5) Deleting the award of exemplary damages of P10,000.00 from all respondents except Loveres, Macandog, WHEREFORE, in view of all the FOREGOING, judgment is hereby decreed ORDERING the respondent PHILEX
Llarena, Guades, Nicerio, Atractivo, and Broñola; and GOLD PHILIPPINES, INC./GERARD H. BRIMO/LEONARD P. JOSEF/JOSE B. ANIEVAS, JOINTLY and
(6) Granting attorney’s fees of P10,000.00 each to all respondents. SEVERALLY to:
The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total monetary benefits awarded and 1. Readjust the MONTHLY RATES OF PAY of locally hired SUPERVISORS in the categories of S-1 to S-
due to the employees concerned in accordance with the decision. The Labor Arbiter is ORDERED to submit his 5 RANKS in the same level/or amount with that of PADCAL SUPERVISORS of the same RANKS namely:
compliance thereon within thirty (30) days from notice of this decision, with copies furnished to the parties.

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S-1 ----------------- P13,081.60 In an Order dated June 27, 2000, the Voluntary Arbitrator issued a Writ of Execution enforcing the Resolution dated
S-2 ----------------- P13,893.60 February 29, 2000.
S-3 ----------------- P15,209.60 On June 29, 2000, Philex Gold filed a Motion to Lift Writ of Execution, which was not acted upon by the Voluntary
S-4 ----------------- P17,472.00 Arbitrator.
S-5 ----------------- P20,300.00 On July 10, 2000, Philex Gold filed a petition for review before the Court of Appeals, docketed as CA-G.R. SP No.
effective November 1, 1998 and to pay Wage differential pay from November 1, 1998 up to the date of the Decision 60065, questioning the propriety and validity of the Voluntary Arbitrator’s Order granting execution pending appeal.
to all affected locally hired supervisors. Said petition was denied for lack of merit.
2. To revise or modify its existing wage rates per supervisory ranking, making the maximum rate of a On April 23, 2001, the Court of Appeals rendered the assailed Decision, in CA-G.R. SP No. 57701, finding that
lower category lower than the minimum rate of the next higher category; and, petitioners failed to prove that they did not discriminate against the locally hired supervisors in paying them lower
salaries than the ex-Padcal supervisors. It held, thus:
3. Pay to the UNION ATTORNEY’S FEES at 5% of the total sum of the Wage differential pay awarded
within ten (10) days from receipt of this Decision. Philex Gold’s attempt to explain the disparity in the salary rates between “ex-Padcal” supervisors and the local-hires
The respondent is further ordered to deposit with the cashier of the NCMB the sum which is equivalent to the wage failed to convince Us. It presented a salary structure for supervisors classified into five categories, namely: “S-1, S-
differential pay computed at a differential of P5,501.24 per person/supervisor per month from November 1, 1998 up 2, S-3, S-4, and S-5” with different rates of pay. Each classification is further divided in terms of wage rates into
to the date of this decision, for S-1; P5,663.24 per month per supervisor, for S-2; P5,979.24 per supervisor per minimum, medium, and maximum. While the “ex-Padcal” supervisors received the maximum for each category,
month, for S-3; P7,065.75 per supervisor per month for S-4 and P8,428.46 per supervisor per month for S-5, and the presumably because of seniority in employment, longer work experience in gold mining, specialized skills, and the
ATTORNEY’S FEE which is 5% of the total wage differential pay also within ten (10) days from receipt of this “dislocation factor”, the local-hires received the minimum.
decision. This explanation is fraught with inconsistencies. First, the CBA between the parties did not disclose this multi-tiered
SO ORDERED.[5] classification of supervisors (Rollo, pp. 36-37, 46-74). Second, as found by the voluntary arbitrator in his original
Philex Supervisors Union filed a Motion for Partial Reconsideration dated January 20, 2000, seeking, among others, decision, the local-hires actually received salaries less than those they were supposed to be entitled (Rollo, p. 41).
the modification of the effectivity of the readjustment of the monthly rates of pay of the locally hired supervisors and Third, the minimum wage rate for a higher category happened to be lesser than the maximum rate of a lower
of the computation of their wage differential from November 1, 1998 to August 1, 1997 although the discrimination in category such that a supervisor with a rank of “S-1” maximum would get less upon his promotion to “S-2” minimum
wages started upon the regularization of the ex-Padcal supervisors on July 1, 1997. (Rollo, pp. 38-39, 90). And finally, this pay structure was kept from the knowledge of the union and was only
On January 25, 2000, Philex Gold also filed a motion for reconsideration, which was allegedly filed a day late, revealed in the course of the proceedings before the voluntary arbitrator. These factors only accentuate the fact
contending that it was denied due process as the Voluntary Arbitrator decided the which Philex Gold tried to hide, that is, it unduly favored the “ex-Padcal” supervisors over the local-hires through a
case without its supplemental position paper, that the decision undermined the collective bargaining process system of confidential salary structure.
between the parties relative to wage differentials, and that there was neither unlawful discrimination nor wage The long honored legal truism of “equal pay for equal work,” meaning, “persons who work with substantially equal
distortion between the ex-Padcal supervisors and the locally hired supervisors. qualification, skill, effort and responsibility, under similar conditions, should be paid similar salaries,” has been
On February 29, 2000, the Voluntary Arbitrator issued the assailed Resolution modifying his earlier Decision dated institutionalized in our jurisdiction. Such that “if an employer accords employees the same position and rank, the
January 14, 2000, this time finding that there was no discrimination in the determination of the rates of pay of the presumption is that these employees perform equal work” as “borne by logic and human experience.” The
supervisors. The Voluntary Arbitrator, however, readjusted the amount of wages of local supervisors by adding or ramification is that “(i)f the employer pays one employee less than the rest, it is not for that employee to explain why
increasing their wages in the uniform sum of P800.00 a month effective October 1, 1999 “to erase the shadows of he receives less or why the others receive more. That would be adding insult to injury. The employer has
inequities among the various grades of supervisors.” The dispositive portion of the Decision reads: discriminated against that employee; it is for the employer to explain why the employee is treated unfairly.”
WHEREFORE, IN VIEW of the foregoing, the Decision dated January 14, 2000 is hereby modified in the following (International School Alliance of Educators v. Quisumbing, et al., G.R. No. 128845, June 1, 2000).
manner, to wit: Philex Gold having failed to discharge this burden, We opt therefore to reinstate, albeit with modification, the original
1. The respondent employer is hereby ordered to re-adjust the wage rates of S-1 to S-5 supervisors by decision dated 14 January 2000 of the voluntary arbitrator as the same is duly supported by the pleadings filed
adding or increasing their wages in the uniform sum of P800.00 a month each effective October 1, 1999; and to before Us.[8]
compute and pay their differential pay from October 1, 1999 up to the time it is paid and implemented; The dispositive portion of the Decision reads:
2. The respondent is further ordered to pay Attorney’s Fee to the Union’s lawyer at 5% of the total amount WHEREFORE, premises considered, the assailed resolution of 29 February 2000 is REVERSED and SET ASIDE
of WAGE DIFFERENTIAL PAY; and a new one entered REINSTATING the 14 January 2000 decision subject to the MODIFICATION that the
3. Finally, the respondent employer is ordered to deposit to the cashier of the NCMB the WAGE readjustment of the monthly rates of pay of locally hired supervisors as well as their wage differential pay be made
DIFFERENTIAL PAY and the Attorney’s Fee adjudged within 10 days from receipt of this Resolution. effective 1 August 1997 up to the finality of this decision. This case is REMANDED to the voluntary arbitrator for the
SO ORDERED. [6] proper computation of wage differential and attorney’s fees. No costs.
On March 13, 2000, respondent Union filed a petition for review before the Court of Appeals raising the following SO ORDERED.[9]
issues: (1) whether or not the Voluntary Arbitrator erred in admitting petitioner’s motion for reconsideration which Petitioners’ motion for reconsideration was denied by the appellate court in its Resolution dated August 29, 2001.
was filed beyond the reglementary period; (2) whether or not the Voluntary Arbitrator erred in modifying his decision Petitioners thus filed this petition with a prayer for the issuance of a temporary restraining order. The Court issued a
by finding petitioner to be liable to its locally hired members in the sum of P800 per month as wage adjustment temporary restraining order enjoining the execution of the Decision of the Court of Appeals dated April 23, 2001 and
effective October 1999; and (3) whether or not the Voluntary Arbitrator erred in failing to grant 10 percent attorney’s its Resolution dated August 29, 2001 after petitioners posted a cash bond.
fees on the total awards. Petitioners raise the following issues:
On March 2, 2000, petitioners filed a Manifestation of Compliance with the Voluntary Arbitrator alleging that on 1. Section 4, Rule 43 and Luzon Development Bank [v. Association of Luzon Development Bank Employees, 249
account of its payment to respondent union members of monetary benefits (in the amount of P1,000) provided by the SCRA 162 (1995)] provide that the decision of a voluntary arbitrator becomes final after 15 days from notice of the
Amendments and Supplement to the CBA, it has complied with the Resolution dated February 29, 2000. award. Assuming the validity of service on Philex Gold’s liaison office, instead of its counsel’s address on record, did
In a Resolution dated April 4, 2000, the Voluntary Arbitrator denied[7] said Manifestation of Compliance for lack of the Court of Appeals commit an error in law by stating that the Decision dated 14 January 2000 of VA Sitjar became
merit. “final and executory” after eleven days from notice?
While CA-G.R. SP No. 57701 was pending, respondent Union filed on April 8, 2000 a Motion for Issuance of Writ of 2. Granting arguendo that Philex Gold had only a period of 10 days within which to seek reconsideration of the Sitjar
Execution of the Resolution dated February 29, 2000. Decision, did the period begin to run upon service of said Decision at an address which is not theaddress on record
or upon the actual receipt thereof by Philex Gold’s counsel?

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3. VA Sitjar found petitioners Brimo, Josef and Jose B. Anievas, in their capacity as corporate officers, jointly and Under the circumstances, reliance may be placed on the assertion of petitioners that a copy of the Decision of the
severally liable for the alleged obligation of Philex Gold to pay wage differentials to PBSU. Did the Court of Appeals Voluntary Arbitrator dated January 14, 2000 was delivered to their counsel the next day or on January 15, 2000,
commit an error in law in affirming VA Sitjar when the latter disposed of an issue not submitted to him for arbitration which must be deemed as the date of notice to counsel of said Decision.[12]
and in directing solidary liability between Philex Gold and its top officers despite the absence of any finding of malice, Hence, when petitioners’ motion for reconsideration was filed on January 25, 2000, it was filed within the 10-day
bad faith, or gross negligence? reglementary period under Article 262-A of the Labor Code. The Court of Appeals,
4. In leveling the wages of the Padcal Supervisors and the Locally-Hired Supervisors, the Court therefore, erred in holding that said motion for reconsideration was filed out of time.
of Appeals applied the egalitarian doctrine of “equal pay for equal work” in International School Alliance of Educators Second Issue : Whether the petitioners-corporate officers are solidarily liable with Philex Gold in any liability to
v. Quisumbing. Does “equal pay for equal work” unqualifiedly remove management prerogative to institute respondent Union
qualitative difference in pay and benefits on the basis of seniority, skill, experience and other valid factors in the Petitioners officers contend that they should not be adjudged solidarily liable with Philex Gold.
same class of workers doing the same kind of work?[10] The contention is meritorious.
A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf
The relevant issues in this case are as follows: and, in general, from the people comprising it.[13] The rule is that obligations incurred by the corporation, acting
(1) Whether the notice sent through petitioner company’s Liaison Office can be considered as notice to counsel; through its directors, officers and employees, are its sole liabilities.[14] However, it is possible for a corporate
(2) Whether the petitioners-corporate officers are solidarily liable with Philex Gold in any liability to respondent director, trustee or officer to be held solidarily liable with the corporation in the following instances:
Union; 1. When directors and trustees or, in appropriate cases, the officers of a corporation--
(3) Whether the doctrine of “equal pay for equal work” should not remove management prerogative to institute (a) vote for or assent to patently unlawful acts of the corporation;
difference in salary on the basis of seniority, skill, experience and the dislocation factor in the same class of (b) act in bad faith or with gross negligence in directing the corporate affairs;
supervisory workers doing the same kind of work. (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other
First Issue : Whether the notice sent through petitioner persons.
company’s Liaison Office can be considered as notice to counsel 2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof,
Petitioners contend that the Court of Appeals erred in holding that their motion for reconsideration of the Decision of did not forthwith file with the corporate secretary his written objection thereto.
the Voluntary Arbitrator dated January 14, 2000 was filed out of time. 3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily
Indeed, the Court of Appeals found that “[b]ased on the certification issued by the voluntary arbitrator himself, the liable with the Corporation.
decision was received by the respondents (petitioners herein) on 14 January 2000 (Rollo, p. 123), and they filed their 4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate
motion for reconsideration on 25 January 2000, or on the eleventh day from receipt of the decision.” The appellate action.[15]
court ruled that the late filing rendered the decision final and executory as regards the petitioners, and that the The corporate officers in this case have not been proven to fall under any of the aforecited instances; hence, they
Voluntary Arbitrator erred in admitting petitioners’ motion for reconsideration. cannot be held solidarily liable with the company in the payment of any liability.
Petitioners argue that the service of the Voluntary Arbitrator’s Decision on Philex Gold’s Liaison Office at Libertad Third Issue : Whether the doctrine of “equal pay for equal work” should not remove management prerogative to
St., Bacolod City on January 14, 2000 was improper since their counsel’s address of record was at Vista Alegre, institute difference in salary within the same supervisory level
Nabulao, Sipalay, Negros Occidental 6113. Petitioners state that Philex Gold’s Liaison Office forwarded said Petitioners submit that the “equal pay for equal work” doctrine in International School Alliance of Educators v.
Decision to their counsel only the next day or on January 15, 2000, which should be the date of notice to counsel Quisumbing,[16] which the Court of Appeals cited to support its Decision should be narrowly construed to apply to a
and the basis for computation of the period to file a motion for reconsideration of said Decision. situation where invidious discrimination exists by reason of race or ethnicity, but not where valid factors exist to
The contention is meritorious. justify distinctive treatment of employees even if they do the same work.
Section 4, Rule III of the NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings states: Petitioners explained that the ex-Padcal supervisors were paid higher because of their longer years of service,
Section 4. Service of Pleadings, Notices and Awards. – Copies of pleadings, notices or copies of [an] award may be experience, their training and skill in the underground mining method wanting in the local supervisors, and their
served through personal service or by registered mails on the parties to the dispute: Provided, that where a party is relocation to Bulawan, Negros Occidental. They assert that the differential treatment of the ex-Padcal supervisors is
represented by counsel or authorized representative, service shall be made on the latter. Service by registered mail not arbitrary, malicious or discriminatory but justified by the circumstances of their relocation and integration in the
is complete upon receipt by the addressee or his agents.[11] new mining operation in Bulawan.
In this case, petitioners were represented before the Voluntary Arbitrator by Attys. Deogracias G. Contreras Jr. The Court is not persuaded by petitioners’ contention.
and Weldy U. Manlong. Hence, under the NCMB Guidelines, service of pleadings, notices and awards should be Petitioners admit that the “same class of workers [are] doing the same kind of work.” This means that an ex-Padcal
made on petitioners’ counsel. supervisor and a locally hired supervisor of equal rank do the same kind of work. If an employer accords employees
The Court noted that in petitioners’ Position Paper and Supplemental Position Paper filed with the Voluntary the same position and rank, the presumption is that these employees perform equal work.[17] Hence, the doctrine of
Arbitrator, the address of petitioners’ counsel was indicated as Vista Alegre, Nabulao, Sipalay, Negros Occidental, “equal pay for equal work” in International School Alliance of Educators was correctly applied by the Court of
6113. However, the Decision of the Voluntary Arbitrator dated January 14, 2000 was sent through the Liaison Office Appeals.
of Philex Gold, thus: Petitioners now contend that the doctrine of “equal pay for equal work” should not remove management prerogative
ATTY. WENDY U. MANLONG to institute difference in salary on the basis of seniority, skill, experience and the dislocation factor in the same class
Counsel for the Respondents of supervisory workers doing the same kind of work.[18]
PHILEX GOLD PHILIPPINES, INC. In this case, the Court cannot agree because petitioners failed to adduce evidence to show that an ex-Padcal
GERARDO BRIMO, LEONARD P. JOSEF, supervisor and a locally hired supervisor of the same rank are initially paid the same basic salary for doing the same
JOSE B. ANIEVAS kind of work. They failed to differentiate this basic salary from any kind of salary increase or additional benefit which
C/O Liaison Office, Libertad St. may have been given to the ex-Padcal supervisors due to their seniority, experience and other factors.
Bacolod City The records only show that an ex-Padcal supervisor is paid a higher salary than a locally hired supervisor of the
Even the Court of Appeals stated that “based on the certification issued by the voluntary arbitrator himself, the same rank. Therefore, petitioner failed to prove with satisfactory evidence that it has not discriminated against the
decision was received by the respondents on 14 January 2000. . . .” Said service on Philex Gold’s Liaison Office or locally hired supervisor in view of the unequal salary.
on the petitioners themselves cannot be considered as notice in law to petitioners’ counsel. To reiterate the ruling of Philippine-Singapore Transport Services, Inc. v. NLRC,[19] which was cited by the Court of
Appeals in its Decision:
...

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It is noteworthy to state that an employer is free to manage and regulate, according to his own discretion and On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated mandating the integration of the cost of living
judgment, all phases of employment, which includes hiring, work assignments, working methods, time, place and allowance under Wage Orders Nos. 1, 2, 3, 5 and 6 into the basic wage of workers, its effectivity retroactive to 1 May
manner of work, supervision of workers, working regulations, transfer of employees, lay-off of workers, and the 1987. 5 Consequently, effective on 1 May 1987, the basic wage rate of petitioner's laborers categorized as non-
discipline, dismissal and recall of work. While the law recognizes and safeguards this right of an employer to agricultural workers was increased by P9.00 per day. 6
exercise what are clearly management prerogatives, such right should not be abused and used as a tool of Petitioner implemented the second five percent (5%) wage increase due on 1 May 1987 and thereafter added the
oppression against labor. The company’s prerogative must be exercised in good faith and with due regard to the integrated COLA. 7
rights of labor. A priori, they are not absolute prerogatives but are subject to legal limits, collective bargaining Private respondent, however, assailed the manner in which the second wage increase was effected. It argued that
agreements and the general principles of fair play and justice.[20] ( mphasis supplied.) the COLA should first be integrated into the basic wage before the 5% wage increase is computed. 8
WHEREFORE, the petition is hereby DENIED. No reversible error was committed by the Court of Appeals in its Consequently, on 15 December 1988, the union filed a complaint for underpayment of wages before the Regional
Decision in CA-G.R. SP No. 57701 and in its Resolution promulgated on August 29, 2001. The Temporary Arbitration Branch IV, Quezon City.
Restraining Order issued by the Court is LIFTED. On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the union. The dispositive part reads, thus:
WHEREFORE consistent with the tenor hereof, judgment is rendered directing respondent company to pay the wage
No costs. differentials due its rank-and-file workers retroactive to 1 May 1987.
SO ORDERED. SO ORDERED. 9
ADOLFO S. AZCUNA (Associate Justice) The Labor Arbiter ruled in this wise:
WE CONCUR: HILARIO G. DAVIDE, JR. (Chief Justice, Chairman), LEONARDO A. QUISUMBING (Associate First and foremost, the written instrument and the intention of the parties must be brought to the fore. And talking of
Justice), CONSUELO YNARES-SANTIAGO (Associate Justice), ANTONIO T. CARPIO (Associate Justice) intention, we conjure to sharp focus the provision embossed in Section 1, Article V of the collective agreement, viz:.
MARCOPPER MINING CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and Xxx xxx xxx
NATIONAL MINES AND ALLIED WORKERS' UNION (NAMAWU-MIF), respondents., G.R. No. 103525, 1996 Mar It is expressly understood that this wage increase shall be exclusive of increase in the minimum wage and/or
29, 1st Division) mandatory living allowance that may be promulgated during the life of this Agreement.
KAPUNAN, J.: The foregoing phrase albeit innocuously framed offers the cue. This ushers us to the inner sanctum of what really
Social justice and full protection to labor guaranteed by the fundamental law of this land is not some romantic notion, was the intention of the parties to the contract. Treading along its lines, it becomes readily discernible that this
high in rhetoric but low in substance. The case at bench provides yet another example of harmonizing and balancing portion of the contract is the "stop-lock" gate or known in its technical term as the "non-chargeability" clause. There
the "right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on can be no quibbling that on the strength of this provision, the wage/allowance granted under this accord cannot be
investments, and to expansion and growth." 1 credited to similar form of benefit that may be thereafter ordained by the government through legislation. That the
In this petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court, Marcopper Mining parties therefore were consciously aware at the time of the conclusion of the agreement of the never-ending rise in
Corporation impugns the decision rendered by the National Labor Relations Commission (NLRC) on 18 November the cost of living is a logical corollary. And while this upward trend may not be a welcome phenomenon, there was
1991 in RAB-IV-12-258888 dismissing petitioner's appeal, and the resolution issued by the said tribunal dated 20 the intention to yield and comply in the event of an imposition. Of course, there cannot likewise be any rivalry that if
December 1991 denying petitioner's motion for reconsideration. the Executive Order were to retroact to 2 May 1987 or a day after the last contractual increase, this question will not
There is no disagreement as to the following facts: arise. It is in this sense of fairness that we cannot allow this "one (1) day" to be an insulating medium to deny the
On 23 August 1984, Marcopper Mining Corporation, a corporation duly organized and existing under the laws of the workers the benediction endowed by Executive Order No. 178. 10
Philippines, engaged in the business of mineral prospecting, exploration and extraction, and private respondent Petitioner appealed the Labor Arbiter's decision and on 18 November 1991 the NLRC rendered its decision
NAMAWU-MIF, a labor federation duly organized and registered with the Department of Labor and Employment sustaining the Labor Arbiter's ruling. The dispositive portion states:
(DOLE), to which the Marcopper Employees Union (the exclusive bargaining agent of all rank-and-file workers of WHEREFORE in view of the foregoing, the Decision of the Labor Arbiter is hereby AFFIRMED and the appeal filed is
petitioner) is affiliated, entered into a Collective Bargaining Agreement (CBA) effective from 1 May 1984 until 30 April hereby DISMISSED for lack of merit.
1987. SO ORDERED. 11
Sec. 1, Art. V of the said Collective Bargaining Agreement provides: The NLRC declared:
Sec. 1. The COMPANY agrees to grant general wage increase to all employees within the bargaining unit as . . . Increments to the laborers' financial gratification, be they in the form of salary increases or changes in the salary
follows: scale are aimed at one thing improvement of the economic predicament of the laborers. As such, they should be
Increase per day on Effectivity viewed in the light of the State's avowed policy to protect labor. Thus, having entered into an agreement with its
the Basic Wage employees, an employer may not be allowed to renege on its obligation under a collective bargaining agreement
May 1, 1985 5% May 1, 1986 5% should, at the same time, the law grants the employees the same or better terms and conditions of employment.
It is expressly understood that this wage increase shall be exclusive of any increase in the minimum wage and/or Employee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless
mandatory living allowance that may be promulgated during the life of this Agreement. 2 otherwise provided by the agreement itself or by law. (Meycauayan College v. Hen. Franklin N. Drilon, 185 SCRA
Prior to the expiration of the aforestated Agreement, on 25 July 1986, petitioner and private respondent executed a 50). 12
Memorandum of Agreement (MOA) wherein the terms of the CBA, specifically on matters of wage increase and Petitioner's motion for reconsideration was denied by the NLRC in its resolution dated 20 December 1991.
facilities allowance, were modified as follows: In the present petition, Marcopper challenges the NLRC decision on the following grounds:
1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all employees and workers within the I. PUBLIC RESPONDENT NLRC ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION
bargaining units (sic) as follows. OF LABOR ARBITER JOAQUIN TANODRA DIRECTING MARCOPPER TO PAY WAGE DIFFERENTIALS DUE ITS
(a) 5% effective May 1, 1986. RANK-AND-FILE EMPLOYEES RETROACTIVE TO 1 MAY 1987 CONSIDERING THAT SANS E.O 178, THE
This will mean that the members of the bargaining unit will get an effective increase of 10% from May 1, 1986. FUNDAMENTAL MEANING OF THE BASIC WAGE IS CLEARLY DIFFERENT FROM, AND DOES NOT INCLUDE
(b) 5% effective May 1, 1987. THE COLA AT THE TIME THE CBA WAS ENTERED INTO. THUS, PUBLIC RESPONDENTS READING OF THE
2. The COMPANY hereby grants an increase of the facilities allowance from P50.00 to P100.00 per month effective CBA, AS AMENDED BY THE MEMORANDUM OF AGREEMENT DATED 25 JULY 1986, ULTIMATELY
May 1, 1986. 3 DISREGARDED THE ORDINARY MEANING OF THE PHRASE "BASIC WAGE", OTHERWISE INTENDED BY THE
In compliance with the amended CBA, petitioner implemented the initial 5% wage increase due on 1 May 1986. 4 PARTIES DURING THE TIME THE CBA WAS EXECUTED.
II. THE LABOR ARBITER AND PUBLIC RESPONDENT NLRC'S RELIANCE ON THE LAST PARAGRAPH OF
SECTION 1, ARTICLE V OF THE CBA WHICH STATES: "IT IS EXPRESSLY UNDERSTOOD THAT THIS WAGE

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INCREASE SHALL BE EXCLUSIVE OF ANY INCREASE IN THE MINIMUM WAGE AND/OR MANDATORY LIVING The principle that the CBA is the law between the contracting parties stands strong and true. 17 However, the
ALLOWANCE THAT MAY BE PROMULGATED DURING THE LIFE OF THIS AGREEMENT" IS MISPLACED AND present controversy involves not merely an interpretation of CBA provisions. More importantly, it requires a
WITHOUT BASIS BECAUSE SAID PROVISION HARDLY OFFERS A HINT AS TO WHAT BASIC WAGE THE determination of the effect of an executive order on the terms and the conditions of the CBA. This is, and should be,
PARTIES HAD IN MIND AT THE TIME THEY EXECUTED THE CBA AS AMENDED BY THE MEMORANDUM OF the focus of the instant case.
AGREEMENT. It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant by the term "basic
III. PETITIONER COMPUTED THE 5% WAGE INCREASE BASED ON THE UNINTEGRATED BASIC WAGE IN wage" at the time the CBA and MOA were executed because there is no question that as of 1 May 1987, as
ACCORDANCE WITH THE INTENT AND TERMS OF THE CBA, AS AMENDED BY THE MEMORANDUM OF mandated by E.O. No. 178, the basic wage of workers, or the statutory minimum wage, was increased with the
AGREEMENT. THIS WAS IN FULL ACCORD AND IN FAITHFUL COMPLIANCE WITH E.O 178. HENCE, integration of the COLA. As of said date, then, the term "basic wage" includes the COLA. This is what the law
PETITIONER DID NOT COMMIT ANY UNDERPAYMENT. ordains and to which the collective bargaining agreement of the parties must conform.
IV. THE DOCTRINE OF LIBERAL INTERPRETATION IN FAVOR OF LABOR IN CASE OF DOUBT IS NOT Petitioner's arguments eventually lose steam in the light of the fact that compliance with the law is mandatory and
APPLICABLE TO THE INSTANT CASE. 13 beyond contractual stipulation by and between the parties; consequently, whether or not petitioner intended the basic
Stripped of the non-essentials, the question for our resolution is what should be the basis for the computation of the wage to include the COLA becomes immaterial. There is evidently nothing to construe and interpret because the law
CBA increase, the basic wage without the COLA or the so-called "integrated" basic wage which, by mandate of E.O. is clear and unambiguous. Unfortunately for petitioner, said law, by some uncanny coincidence, retroactively took
No. 178, includes the COLA. effect on the same date the CBA increase became effective. Therefore, there cannot be any doubt that the
It is petitioner's contention that the basic wage referred to in the CBA pertains to the "unintegrated" basic wage. computation of the CBA increase on the basis of the "integrated" wage does not constitute a violation of the CBA.
Petitioner maintains that the rules on interpretation of contracts, particularly Art. 1371 of the New Civil Code which Petitioner's contention that under the Rules Implementing E.O. No. 178, the definition of the term "basic wage" has
states that: remained unchanged is off the mark since said definition expressly allows integration of monetary benefits into the
Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts regular pay of employees:
shall be principally considered. Chapter 1. Definition of Terms and Coverage.
should govern. Accordingly, applying the aforequoted provision in the case at bench, petitioner concludes that it was Sec. 1. Definition of Terms.
clearly not the intention of the parties (petitioner and private respondent) to include the COLA in computing the Xxx xxx xxx
CBA/MOA mandated increase since the MOA was entered into a year before E.O. No. 178 was enacted even (j) "Basic Wage" means all regular remuneration or earnings paid by an employer for services rendered on normal
though their effectivity dates coincide. In other words, the situation "contemporaneous" to the execution of the working days and hours but does not include cost-of-living allowances, profit-sharing payments, premium payments,
amendatory MOA was that there was yet no law requiring the integration of the COLA into the basic wage. 14 13th month pay, and other monetary benefits which are not considered as part of or integrated into the regular salary
Petitioner, therefore, cannot be compelled to undertake an obligation it never assumed or contemplated under the of the employee on the date the Order became effective.
CBA or MOA. What E.O. No. 178 did was exactly to integrate the COLA under Wage Orders Nos. 1, 2, 3, 5 and 6 into the basic
Siding with the petitioner, the Solicitor General opines that for the purpose of complying with the obligations imposed pay so as to increase the statutory daily minimum wage. Section 2 of the Rules is quite explicit:
by the CBA, the integrated COLA should not be considered due to the exclusivity of the benefits under the said CBA Sec. 2. Amount to be Integrated. Effective on the dates specified, as a result of the integration, the basic rate of
and E.O. No. 178. He explains thus: covered workers shall be increased by the following amounts:
A collective bargaining agreement is a contractual obligation. It is distinct from an obligation imposed by law. The Integration of monetary benefits into the basic pay of workers is not a new method of increasing the minimum wage.
terms and conditions of a CBA constitute the law between the parties. Thus, employee benefits derived from either 18 But even so, we are still guided by our ruling in Davao Integrated Port Stevedoring Services v. Abarquez, 19
the law or a contract should be treated as distinct and separate from each other.(Meycauayan College vs. Drilon, which we herein reiterate:
supra.) While the terms and conditions of the CBA constitute the law between the parties, it is not, however, an ordinary
xxx xxx xxx contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the
Very clearly, the CBA and E.O. 178 provided for the exclusiveness of the benefits to be given or awarded to the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and
employees of petitioner. Thus, when petitioner computed the 5% wage increase based on the unintegrated basic capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good.
wage, it complied with its contractual obligations under the CBA. When it thereafter integrated the COLA into the As such it must be construed liberally rather than narrowly and technically, and the courts must place a practical and
basic wage, it complied also with the mandate of E.O. 178. Petitioner, therefore, complied with its contractual realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is
obligations in the CBA as well as with the legal mandate of the law. Consequently, petitioner is not guilty of intended to serve.
underpayment. Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the pendulum
To follow the theory of private respondent, that is to integrate first the COLA into the basic wage and thereafter of judgment swings to and fro and the forces are equal on both sides, the same must be stilled in favor of labor."
compute the 5% wage increase therefrom, would violate the "exclusiveness" of the benefits granted under the CBA While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be resolved in favor of
and under E.O. 178. 15 labor, 20 it insists that what is involved here is the amended CBA which is essentially a contract between private
Private respondent counters by asserting that the purpose, nature and essence of CBA negotiation is to obtain wage persons. What petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to accord
increases and benefits over and above what the law provides and that the principle of non-diminution of benefits utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold..
should prevail. Philippine Telegraph & Telephone Corporation v. NLRC, 21 we categorically stated that:
The NLRC, which filed its own comment, likewise, made the following assertions: When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier influence
. . . However, to state outright that the parties intended the basic wage to remain invariable even after the advent of of the latter should be counter-balanced by sympathy and compassion the law must accord the underprivileged
EO 178 is unfounded and presumptuous a claim as such inevitably works to the utmost disadvantage of the workers worker.
and runs counter to the constitutional guarantee of affording protection to labor. Evidently, the rationale for the Likewise, in Terminal Facilities and Services Corporation v. NLRC, 22 we declared:
integration of the COLA with the basic wage was primarily to increase the base wage for purposes of computation of Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy.
such items as overtime and premium pay, fringe benefits, etc. To adopt the statement and claim of the petitioner The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We are bound to
would then redound to depriving the workers of the full benefits the law intended for them, which in the final analysis ensure its fruition.
was solely for the purpose of alleviating their plight due to the continuous undue hardship they suffer caused by the WHEREFORE, premises considered, the petition is hereby DISMISSED.
ever escalating prices of prime commodities. 16 SO ORDERED.
We rule for the respondents.. Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.

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13th MONTH PAY leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves with pay in the CBA should be
SEVILLA TRADING COMPANY, petitioner, vs. A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS included in the base figure in the computation of their 13th-month pay.
UNION - SUPER, respondents., G.R. No. 152456, 2004 Apr 28, 2nd Division) On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary, excluding
PUNO, J.: benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its computation
On appeal is the Decision[1] of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining of the 13th-month pay, it merely rectified the mistake its personnel committed in the previous years.
the Decision[2] of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:
subsequent Resolution[3] dated 06 March 2002 denying petitioner’s Motion for Reconsideration. WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:
The facts of the case are as follows: 1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union leave,
For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic bereavement leave and other leave with pay in the CBA, premium for work done on rest days and special holidays,
corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in and pay for regular holidays in the computation of the 13th-month pay to all covered and entitled employees;
its computation of the 13th-month pay of its employees, the amount of other benefits received by the employees 2. The company is hereby ordered to pay corresponding backwages to all covered and entitled employees arising
which are beyond the basic pay. These benefits included: from the exclusion of said benefits in the computation of 13th-month pay for the year 1999.
(a) Overtime premium for regular overtime, legal and special holidays;
(b) Legal holiday pay, premium pay for special holidays; Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of
(c) Night premium; Appeals, a “Manifestation and Motion for Time to File Petition for Certiorari” on January 19, 2001. A month later, on
(d) Bereavement leave pay; February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the
(e) Union leave pay; nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that assuming the
(f) Maternity leave pay; old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-
(g) Paternity leave pay; basic benefits actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior
(h) Company vacation and sick leave pay; and years. It must exclude those non-basic benefits which, in the first place, were not included in the original
(i) Cash conversion of unused company vacation and sick leave. computation. The appellate court denied due course to, and dismissed the petition.
Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:
payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the 1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13TH-
process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non- MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT
basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It LEGAL BASIS.
cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, 2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH
Sec. 2(b) which stated that: WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.[4]
“Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the arbitrator is a
but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit- petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under Rule 65.
sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the Section 1 of Rule 43 states:
regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. RULE 43
Petitioner then effected a change in the computation of the thirteenth month pay, as follows: Appeals from the Court of Tax Appeals and
13th-month pay = net basic pay Quasi-Judicial Agencies to the Court of Appeals
12 months SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals
where: and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise
net basic pay = gross pay – (non-basic pay or other benefits) of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment
Now excluded from the base figure used in the computation of the thirteenth month pay are the following: Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security
a) Overtime premium for regular overtime, legal and special holidays; Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National
b) Legal holiday pay, premium pay for special holidays; Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of
c) Night premium; Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation
d) Bereavement leave pay; Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
e) Union leave pay; Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [ mphasis
f) Maternity leave pay; supplied.]
g) Paternity leave pay; It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an
h) Company vacation and sick leave pay; and appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal
i) Cash conversion of unused vacation/sick leave. within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a
Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate workers copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the
represented by private respondent Sevilla Trading Workers Union – SUPER (Union, for short), a duly organized and 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a
registered union, through the Grievance Machinery in their Collective Bargaining Agreement, contested the new “Manifestation and Motion for Time to File Petition for Certiorari,” and on February 19, 2001, it filed a petition for
computation and reduction of their thirteenth month pay. The parties failed to resolve the issue. certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of
On March 24, 2000, the parties submitted the issue of “whether or not the exclusion of leaves and other related appeal but failed to use it.
benefits in the computation of 13th-month pay is valid” to respondent Accredited Voluntary Arbitrator Tomas E. A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review
Semana (A.V.A. Semana, for short) of the National Conciliation and Mediation Board, for consideration and on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action that
resolution. cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43,
The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees’ benefits as in the case at bar), especially if such loss or lapse was occasioned by one’s own neglect or error in the choice of
provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like sick leave, vacation remedies.[5]

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Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its petition Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then
for certiorari on February 19, 2001. More particularly, the decision of A.V.A. Semana became final and executory Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary
upon the lapse of the fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of Appeals and in the computation of the 13th-month pay.
is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the decision of A.V.A. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit
Semana. sharing payments indicate the intention to strip basic salary of other payments which are properly considered as
Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a proper “fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances and monetary benefits which are not
action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. considered or integrated as part of the basic salary” shows also the intention to strip basic salary of any and all
Semana. “Grave abuse of discretion” has been interpreted to mean “such capricious and whimsical exercise of additions which may be in the form of allowances or “fringe” benefits.
judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more empathic
despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the
evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.”[6] computation of the 13th-month pay.
We find nothing of that sort in the case at bar. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which
On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and jurisprudence. defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is
A.V.A. Semana is correct in holding that petitioner’s stance of mistake or error in the computation of the thirteenth dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from
month pay is unmeritorious. Petitioner’s submission of financial statements every year requires the services of a the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal
certified public accountant to audit its finances. It is quite impossible to suggest that they have discovered the of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of
alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to
operations. This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to include all remunerations and earnings within the definition of basic salary.
support its contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay, The all-embracing phrase “earnings and other remunerations” which are deemed not part of the basic salary includes
petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and
“corrected” computation of the thirteenth month pay. There was no explanation whatsoever why its inclusion of non- special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic
basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard
despite the clarity of statute and jurisprudence at that time. to find any “earnings and other remunerations” expressly excluded in the computation of the 13th-month pay. Then
The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,[7] which petitioner the exclusionary provision would prove to be idle and with no purpose.
Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-of-living allowance In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application
(COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30 October of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees, such as
1984), increased the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by 22 days, which is maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the
the number of working days in the company. The Union disagreed with the computation, claiming that the daily 13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioner’s
COLA rate of P3.00 should be multiplied by 30 days, which has been the practice of the company for several years. payroll personnel is inexcusable.
We upheld the contention of the petitioner corporation. To answer the Union’s contention of company practice, we In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:[9]
ruled that: The “Supplementary Rules and Regulations Implementing P.D. No. 851” which put to rest all doubts in the
Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely
with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid
employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in
have been practiced over a long period of time, and must be shown to have been consistent and deliberate . . . The December 1981, after promulgation of the aforequoted San Miguel decision on February 24, 1981, when petitioner
test of long practice has been enunciated thus: purportedly “discovered” its mistake.
. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees’
covered by the law requiring payment of holiday pay.” (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, 94 thirteenth month pay, without the payments for sick, vacation and maternity leave, premium for work done on rest
SCRA 270 [1979]) days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim
Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for of mistake.
the conversion of the daily allowance to its monthly equivalent was laid down. A company practice favorable to the employees had indeed been established and the payments made pursuant
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees
law . . . cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Sec. 10 of the Rules and
In the above quoted case, the grant by the employer of benefits through an erroneous application of the law due to Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the Philippines which prohibit the
absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally diminution or elimination by the employer of the employees’ existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA
discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct when it pointed out that 267 (1983)]
as early as 1981, this Court has held in San Miguel Corporation vs. Inciong[8] that: With regard to the length of time the company practice should have been exercised to constitute voluntary employer
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any
the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs.
basic pay is excluded as basis in the computation of the mandatory bonus. Associated Labor Unions,[10] the company practice lasted for six (6) years. In another case, Davao Integrated Port
Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed Stevedoring Services vs. Abarquez,[11] the employer, for three (3) years and nine (9) months, approved the
not part of the basic salary: commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174; Tiangco vs. Leogardo, Jr.,[12] the employer carried on the practice of giving a fixed monthly emergency allowance
b) Profit sharing payments; from November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held
c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn.
the employee at the time of the promulgation of the Decree on December 16, 1975. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for

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unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we [14] Notwithstanding the absence of a contractual agreement on the grant of 13th month pay, compliance with the
rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without same is mandatory under the law. Moreover, JPL failed to show that it was exempt from paying service incentive
violating Art. 100 of the Labor Code: leave pay. JPL filed a motion for reconsideration of the said resolution, but the same was denied on 25 January
Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be construed to 2002.[15]
eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation In the instant petition for review, JPL claims that the Court of Appeals committed reversible error in rendering the
of this Code. assailed Decision and Resolution.[16] The instant case does not fall under any of the instances where separation
IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated pay is due, to wit: installation of labor-saving devices, redundancy, retrenchment or closing or cessation of business
27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED. operation,[17] or disease of an employee whose continued employment is prejudicial to him or co-
SO ORDERED. employees,[18] or illegal dismissal of an employee but reinstatement is no longer feasible.[19] Meanwhile, an
Quisumbing, Austria-Martinez, and Tinga, JJ., concur. employee who voluntarily resigns is not entitled to separation unless stipulated in the employment contract, or the
Callejo, Sr., J., no part. collective bargaining agreement, or is sanctioned by established practice or policy of the employer.[20] It argues that
JPL MARKETING PROMOTIONS, Petitioner, versus COURT OF APPEALS, NATIONAL LABOR RELATIONS private respondents’ good record and length of service, as well as the social justice precept, are not enough to
COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT, Respondents., G.R. No. warrant the award of separation pay. Gonzales and Aninipot were employed by JPL for more than four (4) years,
151966, 2005 Jul 8, 2nd Division) while Abesa rendered his services for more than two (2) years, hence, JPL claims that such short period could not
Tinga, J.: have shown their worth to JPL so as to reward them with payment of separation pay.[21]
This is a petition for review of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 62631 dated 03 October In addition, even assuming arguendo that private respondents are entitled to the benefits awarded, the computation
2001 and its Resolution[2] dated 25 January 2002 denying petitioner’s Motion for Reconsideration, affirming the thereof should only be from their first day of employment with JPL up to 15 August 1996, the date of termination of
Resolution of the National Labor Relations Commission (NLRC), Second Division, dated 27 July 2000, awarding CMC’s contract, and not up to the finality of the 27 July 2000 resolution of the NLRC.[22] To compute separation
separation pay, service incentive leave pay, and 13th month pay to private respondents. pay, 13th month pay, and service incentive leave pay up to 27 July 2000 would negate the findings of both the Court
JPL Marketing and Promotions (hereinafter referred to as “JPL”) is a domestic corporation engaged in the business of Appeals and the NLRC that private respondents were not unlawfully terminated.[23] Additionally, it would be
of recruitment and placement of workers. On the other hand, private respondents Noel Gonzales, Ramon Abesa III erroneous to compute service incentive leave pay from the first day of their employment up to the finality of the
and Faustino Aninipot were employed by JPL as merchandisers on separate dates and assigned at different NLRC resolution since an employee has to render at least one (1) year of service before he is entitled to the same.
establishments in Naga City and Daet, Camarines Norte as attendants to the display of California Marketing Thus, service incentive leave pay should be counted from the second year of service.[24]
Corporation (CMC), one of petitioner’s clients. On the other hand, private respondents maintain that they are entitled to the benefits being claimed as per the ruling
On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in the of this Court in Serrano v. NLRC, et al.[25] They claim that their dismissal, while not illegal, was tainted with bad
Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996.[3] They were advised to wait for further notice faith.[26] They allege that they were deprived of due process because the notice of termination was sent to them
as they would be transferred to other clients. However, on 17 October 1996,[4] private respondents Abesa and only two (2) days before the actual termination.[27] Likewise, the most that JPL offered to them by way of settlement
Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V was the payment of separation pay of seven (7) days for every year of service.[28]
complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and payment Replying to private respondents’ allegations, JPL disagrees that the notice it sent to them was a notice of actual
for moral damages.[5] Aninipot filed a similar case thereafter. termination. The said memo merely notified them of the end of merchandising for CMC, and that they will be
After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings, the complaints transferred to other clients.[29] Moreover, JPL is not bound to observe the thirty (30)-day notice rule as there was no
were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the dismissal to speak of. JPL counters that it was private respondents who acted in bad faith when they sought
complaints for lack of merit.[6] The Labor Arbiter found that Gonzales and Abesa applied with and were employed employment with another establishment, without even the courtesy of informing JPL that they were leaving for good,
by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period given by much less tender their resignation.[30] In addition, the offer of seven (7) days per year of service as separation pay
law to JPL to provide private respondents a new assignment. Thus, they may be considered to have unilaterally was merely an act of magnanimity on its part, even if private respondents are not entitled to a single centavo of
severed their relation with JPL, and cannot charge JPL with illegal dismissal.[7] The Labor Arbiter held that it was separation pay.[31]
incumbent upon private respondents to wait until they were reassigned by JPL, and if after six months they were not The case thus presents two major issues, to wit: whether or not private respondents are entitled to separation pay,
reassigned, they can file an action for separation pay but not for illegal dismissal.[8] The claims for 13th month pay 13th month pay and service incentive leave pay, and granting that they are so entitled, what should be the reckoning
and service incentive leave pay was also denied since private respondents were paid way above the applicable point for computing said awards.
minimum wage during their employment.[9] Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due to any of
Private respondents appealed to the NLRC. In its Resolution,[10] the Second Division of the NLRC agreed with the these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the
Labor Arbiter’s finding that when private respondents filed their complaints, the six-month period had not yet expired, employer's business; and (e) when the employee is suffering from a disease and his continued employment is
and that CMC’s decision to stop its operations in the areas was beyond the control of JPL, thus, they were not prohibited by law or is prejudicial to his health and to the health of his co-employees. However, separation pay shall
illegally dismissed. However, it found that despite JPL’s effort to look for clients to which private respondents may be be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes other
reassigned it was unable to do so, and hence they are entitled to separation pay.[11] Setting aside the Labor than serious misconduct or those reflecting on his moral character, but only when he was illegally dismissed.[32] In
Arbiter’s decision, the NLRC ordered the payment of: addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the
1. Separation pay, based on their last salary rate and counted from the first day of their employment with the payment of separation pay to an employee entitled to reinstatement but the establishment where he is to be
respondent JPL up to the finality of this judgment; reinstated has closed or has ceased operations or his present position no longer exists at the time of reinstatement
2. Service Incentive Leave pay, and 13th month pay, computed as in No.1 hereof.[12] for reasons not attributable to the employer.
Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, imputing The common denominator of the instances where payment of separation pay is warranted is that the employee was
grave abuse of discretion on the part of the NLRC. It claimed that private respondents are not by law entitled to dismissed by the employer.[33] In the instant case, there was no dismissal to speak of. Private respondents were
separation pay, service incentive leave pay and 13th month pay. simply not dismissed at all, whether legally or illegally. What they received from JPL was not a notice of termination
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there of employment, but a memo informing them of the termination of CMC’s contract with JPL. More importantly, they
was no illegal dismissal, it justified the award of separation pay on the grounds of equity and social justice.[13] The were advised that they were to be reassigned. At that time, there was no severance of employment to speak of.
Court of Appeals rejected JPL’s argument that the difference in the amounts of private respondents’ salaries and the Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or
minimum wage in the region should be considered as payment for their service incentive leave and 13th month pay. undertaking for a period not exceeding six (6) months, wherein an employee/employees are placed on the so-called
“floating status.” When that “floating status” of an employee lasts for more than six months, he may be considered to

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have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation, interests of management but never should the scale be so tilted if the result is an injustice to the employer. Justitia
and this would apply to suspension either of the entire business or of a specific component thereof.[34] nemini neganda est (Justice is to be denied to none).[43]
As clearly borne out by the records of this case, private respondents sought employment from other establishments WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of Appeals in CA-
even before the expiration of the six (6)-month period provided by law. As they admitted in their comment, all three of G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted. Petitioner is ordered to pay
them applied for and were employed by another establishment after they received the notice from JPL.[35] JPL did private respondents their 13th month pay commencing from the date of employment up to 15 August 1996, as well
not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to as service incentive leave pay from the second year of employment up to 15 August 1996. No pronouncement as to
separation pay. costs.
The Court is not inclined in this case to award separation pay even on the ground of compassionate justice. The SO ORDERED.
Court of Appeals relied on the cases[36] wherein the Court awarded separation pay to legally dismissed employees DANTE O. TINGA (Associate Justice)
on the grounds of equity and social consideration. Said cases involved employees who were actually dismissed by WE CONCUR: REYNATO S. PUNO (Associate Justice, Chairman), MA. ALICIA AUSTRIA-MARTINEZ (Associate
their employers, whether for cause or not. Clearly, the principle applies only when the employee is dismissed by the Justice), ROMEO J. CALLEJO, SR. (Associate Justice), MINITA V. CHICO-NAZARIO (Associate Justice)
employer, which is not the case in this instance. In seeking and obtaining employment elsewhere, private LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION, Petitioner, versus NATIONAL LABOR
respondents effectively terminated their employment with JPL. RELATIONS COMMISSION and COLEGIO DE SAN JUAN DE LETRAN CALAMBA, INC., Respondents., G.R.
In addition, the doctrine enunciated in the case of Serrano[37] cited by private respondents has already been No. 156225, 2008 Jan 29, 3rd Division
abandoned by our ruling in Agabon v. National Labor Relations Commission.[38] There we ruled that an employer AUSTRIA-MARTINEZ, J.:
is liable to pay indemnity in the form of nominal damages to a dismissed employee if, in effecting such dismissal, the Assailed in the present Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision[1] of the
employer failed to comply with the requirements of due process. However, private respondents are not entitled to Court of Appeals (CA) promulgated on May 14, 2002 in CA-G.R. SP No. 61552 dismissing the special civil action for
the payment of damages considering that there was no violation of due process in this case. JPL’s memo dated 13 certiorari filed before it; and the Resolution[2] dated November 28, 2002, denying petitioner's Motion for
August 1996 to private respondents is not a notice of termination, but a mere note informing private respondents of Reconsideration.
the termination of CMC’s contract and their re-assignment to other clients. The thirty (30)-day notice rule does not The facts of the case are as follows:
apply. On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint[3] against Colegio de
respondents. Said benefits are mandated by law and should be given to employees as a matter of right. San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members.
Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees a 13th month pay Petitioner alleged in its Position Paper that:
not later than 24 December of every year. However, employers not paying their employees a 13th month pay or its xxxx
equivalent are not covered by said law.[39] The term “its equivalent” was defined by the law’s implementing 2) [It] has filed this complaint in behalf of its members whose names and positions appear in the list hereto attached
guidelines as including Christmas bonus, mid-year bonus, cash bonuses and other payment amounting to not less as Annex “A”.
than 1/12 of the basic salary but shall not include cash and stock dividends, cost-of-living-allowances and all other 3) In the computation of the thirteenth month pay of its academic personnel, respondent does not include as basis
allowances regularly enjoyed by the employee, as well as non-monetary benefits.[40] therefor their compensation for overloads. It only takes into account the pay the faculty members receive for their
On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave benefit of five teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8) hours a day.
(5) days with pay, enjoyed by an employee who has rendered at least one year of service. Unless specifically 4) Respondent has not paid the wage increases required by Wage Order No. 5 to its employees who qualify
excepted, all establishments are required to grant service incentive leave to their employees. The term “at least one thereunder.
year of service” shall mean service within twelve (12) months, whether continuous or broken reckoned from the date 5) Respondent has not followed the formula prescribed by DECS Memorandum Circular No. 2 dated March 10, 1989
the employee started working.[41] The Court has held in several instances that “service incentive leave is clearly in the computation of the compensation per unit of excess load or overload of faculty members. This has resulted in
demandable after one year of service.”[42] the diminution of the compensation of faculty members.
Admittedly, private respondents were not given their 13th month pay and service incentive leave pay while they were 6) The salary increases due the non-academic personnel as a result of job grading has not been given. Job grading
under the employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage. The Court has been an annual practice of the school since 1980; the same is done for the purpose of increasing the salaries of
rules that the difference between the minimum wage and the actual salary received by private respondents cannot non-academic personnel and as the counterpart of the ranking systems of faculty members.
be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the 7) Respondent has not paid to its employees the balances of seventy (70%) percent of the tuition fee increases for
same import as the said benefits contemplated by law. Thus, as properly held by the Court of Appeals and by the the years 1990, 1991 and 1992.
NLRC, private respondents are entitled to the 13th month pay and service incentive leave pay. 8) Respondent has not also paid its employees the holiday pay for the ten (10) regular holidays as provided for in
However, the Court disagrees with the Court of Appeals’ ruling that the 13th month pay and service incentive leave Article 94 of the Labor Code.
pay should be computed from the start of employment up to the finality of the NLRC resolution. While computation 9) Respondent has refused without justifiable reasons and despite repeated demands to pay its obligations
for the 13th month pay should properly begin from the first day of employment, the service incentive leave pay mentioned in paragraphs 3 to 7 hereof.
should start a year after commencement of service, for it is only then that the employee is entitled to said benefit. On x x x x[4]
the other hand, the computation for both benefits should only be up to 15 August 1996, or the last day that private The complaint was docketed as NLRC Case No. RAB-IV-10-4560-92-L.
respondents worked for JPL. To extend the period to the date of finality of the NLRC resolution would negate the On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner.
absence of illegal dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to On March 10, 1993, petitioner filed its Reply.
require JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for
service to JPL beyond that date. These benefits are given by law on the basis of the service actually rendered by the money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE).
employee, and in the particular case of the service incentive leave, is granted as a motivation for the employee to On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L, respondent filed with Regional
stay longer with the employer. There is no cause for granting said incentive to one who has already terminated his Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by petitioner in January 1994.
relationship with the employer. Subsequently, these three cases were consolidated. The case for money claims originally filed by petitioner with the
The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. DOLE was later docketed as NLRC Case No. RAB-IV-11-4624-92-L, while the petition to declare the subject strike
It should be made clear that when the law tilts the scale of justice in favor of labor, it is but recognition of the inherent illegal filed by respondent was docketed as NLRC Case No. RAB-IV-3-6555-94-L.
economic inequality between labor and management. The intent is to balance the scale of justice; to put the two On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision with the
parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the following dispositive portion:

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WHEREFORE, premises considered, judgment is hereby rendered, as follows: Respondent argues that Agustilo is not applicable to the present case because in the former case, the findings of
1. The money claims cases (RAB-IV-10-4560-92-L and RAB-IV-11-4624-92-L) are hereby dismissed for lack of fact of the LA and the NLRC are at variance with each other; while in the present case, the findings of fact and
merit; conclusions of law of the LA and the NLRC are the same.
2. The petition to declare strike illegal (NLRC Case No. RAB-IV-3-6555-94-L) is hereby dismissed, but the officers of Respondent also avers that in a special civil action for certiorari, the discretionary power to review factual findings of
the Union, particularly its President, Mr. Edmundo F. Marifosque, Sr., are hereby reprimanded and sternly warned the NLRC rests upon the CA; and that absent any findings by the CA of the need to resolve any unclear or
that future conduct similar to what was displayed in this case will warrant a more severe sanction from this Office. ambiguous factual findings of the NLRC, the grant of the writ of certiorari is not warranted.
SO ORDERED.[5] Further, respondent contends that even granting that the factual findings of the CA, NLRC and the LA may be
Both parties appealed to the NLRC. reviewed in the present case, petitioner failed to present valid arguments to warrant the reversal of the assailed
On July 28, 1999, the NLRC promulgated its Decision[6] dismissing both appeals. Petitioner filed a Motion for decision.
Reconsideration[7] but the same was denied by the NLRC in its Resolution[8] dated June 21, 2000. Respondent avers that the DOLE Order is an administrative regulation which interprets the 13th-Month Pay Law
(P.D. No. 851) and, as such, it is mandatory for the LA to apply the same to the present case.
Petitioner then filed a special civil action for certiorari with the CA assailing the above-mentioned NLRC Decision and Moreover, respondent contends that the Legal Services Office of the DOLE issued an opinion dated March 4, 1992,
Resolution. [12] that remunerations for teaching in excess of the regular load, which includes overload pay for work performed
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. within an eight-hour work day, may not be included as part of the basic salary in the computation of the 13th-month
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, pay unless this has been included by company practice or policy; that petitioner intentionally omitted any reference to
2002. the above-mentioned opinion of the Legal Services Office of the DOLE because it is fatal to its cause; and that the
Hence, herein petition for review based on the following assignment of errors: DOLE Order is an affirmation of the opinion rendered by the said Office of the DOLE.
I. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE FACTUAL FINDINGS OF THE Furthermore, respondent claims that, contrary to the asseveration of petitioner, prior to the issuance of the DOLE
NATIONAL LABOR RELATIONS COMMISSION CANNOT BE REVIEWED IN CERTIORARI PROCEEDINGS. Order, the prevailing rule is to exclude excess teaching load, which is akin to overtime, in the computation of a
II. THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RULE SQUARELY ON THE ISSUE OF teacher's basic salary and, ultimately, in the computation of his 13th-month pay.
WHETHER OR NOT THE PAY OF FACULTY MEMBERS FOR TEACHING OVERLOADS SHOULD BE INCLUDED As to respondent's alleged non-payment of petitioner's consolidated money claims, respondent contends that the
AS BASIS IN THE COMPUTATION OF THEIR THIRTEENTH MONTH PAY. findings of the LA regarding these matters, which were affirmed by the NLRC and the CA, have clear and convincing
III. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DECISION OF THE NATIONAL factual and legal bases to stand on.
LABOR RELATIONS COMMISSION IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND IN NOT GRANTING The Court’s Ruling
PETITIONER'S MONETARY CLAIMS.[9] The Court finds the petition bereft of merit.
Citing Agustilo v. Court of Appeals,[10] petitioner contends that in a special civil action for certiorari brought before As to the first and third assigned errors, petitioner would have this Court review the factual findings of the LA as
the CA, the appellate court can review the factual findings and the legal conclusions of the NLRC. affirmed by the NLRC and the CA, to wit.
As to the inclusion of the overloads of respondent's faculty members in the computation of their 13th-month pay, With respect to the alleged non-payment of benefits under Wage Order No. 5, this Office is convinced that after the
petitioner argues that under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, promulgated lapse of the one-year period of exemption from compliance with Wage Order No. 5 (Exhibit “1-B), which exemption
by the Secretary of Labor on November 16, 1987, the basic pay of an employee includes remunerations or earnings was granted by then Labor Minister Blas Ople, the School settled its obligations to its employees, conformably with
paid by his employer for services rendered, and that excluded therefrom are the cash equivalents of unused vacation the agreement reached during the management-employees meeting of June 26, 1985 (Exhibits “4-B” up to “4-D”,
and sick leave credits, overtime, premium, night differential, holiday pay and cost-of-living allowances. Petitioner also Exhibit “6-x-1”). The Union has presented no evidence that the settlement reached during the June 26, 1985
claims that since the pay for excess loads or overloads does not fall under any of the enumerated exclusions and meeting was the result of coercion. Indeed, what is significant is that the agreement of June 26, 1985 was signed by
considering that the said overloads are being performed within the normal working period of eight hours a day, it only Mr. Porferio Ferrer, then Faculty President and an officer of the complaining Union. Moreover, the samples from the
follows that the overloads should be included in the computation of the faculty members' 13th-month pay. payroll journal of the School, identified and offered in evidence in these cases (Exhibits “1-C” and 1-D”), shows that
To support its argument, petitioner cites the opinion of the Bureau of Working Conditions of the DOLE that payment the School paid its employees the benefits under Wage Order No. 5 (and even Wage Order No. 6) beginning June
of teaching overload performed within eight hours of work a day shall be considered in the computation of the 13th- 16, 1985.
month pay.[11] Under the circumstances, therefore, the claim of the Union on this point must likewise fail.
Petitioner further contends that DOLE-DECS-CHED-TESDA Order No. 02, Series of 1996 (DOLE Order) which was The claim of the Union for salary differentials due to the improper computation of compensation per unit of excess
relied upon by the LA and the NLRC in their respective Decisions cannot be applied to the instant case because the load cannot hold water for the simple reason that during the Schoolyears in point there were no classes from June 1-
DOLE Order was issued long after the commencement of petitioner's complaints for monetary claims; that the 14 and October 17-31. This fact was not refuted by the Union. Since extra load should be paid only when actually
prevailing rule at the time of the commencement of petitioner's complaints was to include compensations for performed by the employees, no salary differentials are due the Union members.
overloads in determining a faculty member's 13th-month pay; that to give retroactive application to the DOLE Order The non-academic members of the Union cannot legally insist on wage increases due to “Job Grading”. From the
issued in 1996 is to deprive workers of benefits which have become vested and is a clear violation of the records it appears that “Job Grading” is a system adopted by the School by which positions are classified and
constitutional mandate on protection of labor; and that, in any case, all doubts in the implementation and evaluated according to the prescribed qualifications therefor. It is akin to a merit system whereby salary increases
interpretation of labor laws, including implementing rules and regulations, should be resolved in favor of labor. are made dependent upon the classification, evaluation and grading of the position held by an employee.
Lastly, petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, The system of Job Grading was initiated by the School in Schoolyear 1989-1990. In 1992, just before the first of the
failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the two money claims was filed, a new Job Grading process was initiated by the School.
Decision of the NLRC. Under the circumstances obtaining, it cannot be argued that there were repeated grants of salary increases due to
In its Comment, respondent contends that the ruling in Agustilo is an exception rather than the general rule; that the Job Grading to warrant the conclusion that some benefit was granted in favor of the non-academic personnel that
general rule is that in a petition for certiorari, judicial review by this Court or by the CA in labor cases does not go so could no longer be eliminated or banished under Article 100 of the Labor Code. Since the Job Grading exercises of
far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its the School were neither consistent nor for a considerable period of time, the monetary claims attendant to an
determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction; increase in job grade are non-existent.
that before a party may ask that the CA or this Court review the factual findings of the NLRC, there must first be a The claim of the Union that its members were not given their full share in the tuition fee increases for the
convincing argument that the NLRC acted in a capricious, whimsical, arbitrary or despotic manner; and that in its Schoolyears 1989-1990, 1990-1991 and 1991-1992 is belied by the evidence presented by the School which
petition for certiorari filed with the CA, herein petitioner failed to prove that the NLRC acted without or in excess of consists of the unrefuted testimony of its Accounting Coordinator, Ms. Rosario Manlapaz, and the reports
jurisdiction or with grave abuse of discretion. extrapolated from the journals and general ledgers of the School (Exhibits “2”, “2-A” up to “2-G”). The evidence

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indubitably shows that in Schoolyear 1989-1990, the School incurred a deficit of P445,942.25, while in Schoolyears The foregoing definition was based on Article 83 of the Labor Code which provides that “the normal hours of work of
1990-1991 and 1991-1992, the School paid out, 91% and 77%, respectively, of the increments in the tuition fees any employee shall not exceed eight (8) hours a day.” This means that the basic salary of an employee for the
collected. purpose of computing the 13th-month pay shall include all remunerations or earnings paid by an employer for
As regards the issue of non-payment of holiday pay, the individual pay records of the School's employees, a sample services rendered during normal working hours.
of which was identified and explained by Ms. Rosario Manlapaz (Exhibit “3”), shows that said School employees are 2. Overload work/pay
paid for all days worked in the year. Stated differently, the factor used in computing the salaries of the employees is Overload on the other hand means “the load in excess of the normal load of private school teachers as prescribed by
365, which indicates that their regular monthly salary includes payment of wages during all legal holidays.[13] the Department of Education, Culture and Sports (DECS) or the policies, rules and standards of particular private
This Court held in Odango v. National Labor Relations Commission[14] that: schools.” In recognition of the peculiarities of the teaching profession, existing DECS and School Policies and
The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of Regulations for different levels of instructions prescribe a regular teaching load, the total actual teaching or
jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and classroom hours of which a teacher can generally perform in less than eight (8) hours per working day. This is
restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction because teaching may also require the teacher to do additional work such as handling an advisory class, preparation
including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include of lesson plans and teaching aids, evaluation of students and other related activities. Where, however a teacher is
correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings are generally accorded engaged to undertake actual additional teaching work after completing his/her regular teaching load, such additional
not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted work is generally referred to as overload. In short, additional work in excess of the regular teaching load is overload
capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the work. Regular teaching load and overload work, if any, may constitute a teacher's working day.
extraordinary writ of certiorari will lie.[15] Where a teacher is required to perform such overload within the eight (8) hours normal working day, such overload
In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the petition is there any compensation shall be considered part of the basic pay for the purpose of computing the teacher's 13th-month pay.
acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess “Overload work” is sometimes misunderstood as synonymous to “overtime work” as this term is used and understood
of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which in the Labor Code. These two terms are not the same because overtime work is work rendered in excess of normal
supports the labor tribunals' findings of fact. working hours of eight in a day (Art. 87, Labor Code). Considering that overload work may be performed either within
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme or outside eight hours in a day, overload work may or may not be overtime work.
Court, unless patently erroneous.[16] It is not the function of the Supreme Court to analyze or weigh all over again 3. Concluding Statement
the evidence already considered in the proceedings below.[17] In a petition for review on certiorari, this Court’s In the light of the foregoing discussions, it is the position of this Department that all basic salary/wage representing
jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of payments earned for actual work performed during or within the eight hours in a day, including payments for
are devoid of support in the records or are glaringly erroneous.[18] Firm is the doctrine that this Court is not a trier of overload work within eight hours, form part of basic wage and therefore are to be included in the computation of
facts, and this applies with greater force in labor cases.[19] Findings of fact of administrative agencies and quasi- 13th-month pay mandated by PD 851, as amended.[24] nderscoring supplied)
judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally On the other hand, the Legal Services Department of the DOLE holds in its opinion of March 4, 1992 that
accorded not only great respect but even finality.[20] They are binding upon this Court unless there is a showing of remunerations for teaching in excess of the regular load shall be excluded in the computation of the 13th-month pay
grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the unless, by school policy, the same are considered as part of the basic salary of the qualified teachers.[25]
evidence on record.[21] We find none of these exceptions in the present case. This opinion is later affirmed by the DOLE Order, pertinent portions of which are quoted below:
In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings xxx
of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no 2. In accordance with Article 83 of the Labor Code of the Philippines, as amended, the normal hours of work of
cogent basis to reverse the same, as in this case.[22] school academic personnel shall not exceed eight (8) hours a day. Any work done in addition to the eight (8) hours
The second assigned error properly raises a question of law as it involves the determination of whether or not a daily work shall constitute overtime work.
teacher's overload pay should be considered in the computation of his or her 13th-month pay. In resolving this issue, 3. The normal hours of work of teaching or academic personnel shall be based on their normal or regular teaching
the Court is confronted with conflicting interpretations by different government agencies. loads. Such normal or regular teaching loads shall be in accordance with the policies, rules and standards prescribed
On one hand is the opinion of the Bureau of Working Conditions of the DOLE dated December 9, 1991, February 28, by the Department of Education, Culture and Sports, the Commission on Higher Education and the Technical
1992 and November 19, 1992 to the effect that if overload is performed within a teacher's normal eight-hour work per Education and Skills Development Authority. Any teaching load in excess of the normal or regular teaching load shall
day, the remuneration that the teacher will get from the additional teaching load will form part of the basic wage.[23] be considered as overload. Overload partakes of the nature of temporary extra assignment and compensation
This opinion is affirmed by the Explanatory Bulletin on the Inclusion of Teachers' Overload Pay in the 13th-Month therefore shall be considered as an overload honorarium if performed within the 8-hour work period and does not
Pay Determination issued by the DOLE on December 3, 1993 under then Acting DOLE Secretary Cresenciano B. form part of the regular or basic pay. Overload performed beyond the eight-hour daily work is overtime work.[26]
Trajano. Pertinent portions of the said Bulletin read as follows: mphasis supplied)
1. Basis of the 13th-month pay computation It was the above-quoted DOLE Order which was used by the LA as basis for ruling against herein petitioner.
The Revised Implementing Guidelines of the 13th-Month Pay Law (P.D. 851, as amended) provides that an The petitioner’s claim that the DOLE Order should not be made to apply to the present case because said Order was
employee shall be entitled to not less than 1/12 of the total basic salary earned within a calendar year for the issued only in 1996, approximately four years after the present case was initiated before the Regional Arbitration
purpose of computing such entitlement. The basic wage of an employee shall include: Branch of the NLRC, is not without basis. The general rule is that administrative rulings and circulars shall not be
“x x x all remunerations or earnings paid by his employer for services rendered but do not include allowances or given retroactive effect.[27]
monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash Nevertheless, it is a settled rule that when an administrative or executive agency renders an opinion or issues a
equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost- statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for
of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the it is the courts that finally determine what the law means.[28]
computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are In the present case, while the DOLE Order may not be applicable, the Court finds that overload pay should be
treated as part of the basic salary of the employees.” excluded from the computation of the 13th-month pay of petitioner's members.
Basic wage is defined by the Implementing Rules of RA 6727 as follows: In resolving the issue of the inclusion or exclusion of overload pay in the computation of a teacher's 13th-month pay,
“Basic Wage” means all remuneration or earnings paid by an employer to a worker for services rendered on normal it is decisive to determine what “basic salary” includes and excludes.
working days and hours but does not include cost of living allowances, 13th-month pay or other monetary benefits In this respect, the Court's disquisition in San Miguel Corporation v. Inciong[29] is instructive, to wit:
which are not considered as part of or integrated into the regular salary of the workers xxx.

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Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour,
the determination of his 13th month pay. Any compensations or remunerations which are deemed not part of the while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to
basic pay is excluded as basis in the computation of the mandatory bonus. the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic
Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is
not part of the basic salary: dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174; such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for
b) Profit sharing payments; determining a teacher's 13th-month pay.
c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are
the employee at the time of the promulgation of the Decree on December 16, 1975. AFFIRMED.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then SO ORDERED.
Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice)
and in the computation of the 13th-month pay. WE CONCUR: CONSUELO YNARES-SANTIAGO (Associate Justice, Chairperson), RENATO C. CORONA
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit (Associate Justice), ANTONIO EDUARDO B. NACHURA (Associate Justice) RUBEN T. REYES (Associate Justice)
sharing payments indicate the intention to strip basic salary of other payments which are properly considered as
“fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances and monetary benefits which are not
considered or integrated as part of the basic salary” shows also the intention to strip basic salary of any and all PROHIBITION REGARDING WAGES
additions which may be in the form of allowances or “fringe” benefits. ([1992V551] COMMANDO SECURITY AGENCY, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic and NEMESIO DECIERDO, respondent., G.R. No. 95844, 1992 July 20, 1st Division)
in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the GRIÑO-AQUINO, J.:
computation of the 13th-month pay. Petitioner assails the resolutions of the National Labor Relations Commission dated May 26, 1989 and September
While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which 25, 1990, affirming with modification the decision of the Labor Arbiter in NLRC Case No. 11-0200075-88.
defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is Private respondent Nemesio Decierdo was a security guard of the petitioner since February 1981. In April 1987,
dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from petitioner entered into a contract to provide guarding services to the Alsons Development and Investment
the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal Corporation (ALSONS for brevity) at its Aldevinco Building on Claro M. Recto Avenue, Davao City, for a period of
of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of one year, i.e., from April 11, 1987 to April 10, 1988, unless renewed under such terms and conditions as may be
broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to mutually acceptance. The number of guards to be assigned by the petitioner would depend on ALSON's demand,
include all remunerations and earnings within the definition of basic salary. sometimes two (2) guards on a daily shift, and sometimes four (4) guards. Decierdo was one of the guards assigned
The all-embracing phrase “earnings and other remunerations” which are deemed not part of the basic salary includes to the Aldevinco Building by the petitioner.
within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and On February 9, 1988, Maria Mila D. Samonte, Properties Administration Head on ALSONS, requested the petitioner
special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary for a "periodic reshuffling" of guards.
and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find The pertinent portion of her letter reads:
any “earnings and other remunerations” expressly excluded in the computation of the 13th-month pay. Then the "Our corporation offers spaces to tenants including services of maintenance and security. The latter causes us to
exclusionary provision would prove to be idle and with no purpose. hire your agency's services. It is therefore clearly understood that Aldevinco assures tenants of security of their
This conclusion finds strong support under the Labor Code of the Philippines. To cite a few provisions: properties found in Aldevinco's compound, and likewise Commando Security Service Agency assures Aldevinco the
“Art. 87 – Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid same.
for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent "We hope that the above shall be clearly explained to the incoming guards, we requested for a period reshuffling. We
thereof.” do extend our gratitude to your immediate services in response to or request in the past." (pp. 45-A-46, Rollo.)
It is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary, Pursuant to that reasonable request of its client, petitioner on February 10, 1988 served the following recall order on
for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules Decierdo:
and Regulations Implementing Presidential Decree 851. "Report to this HQs for instruction. You are hereby recalled from your present post at Aldevinco Bldg. as per Rotation
In Article 93 of the same Code, paragraph Policy Order by the management effective 11 February 1988." (p. 46, Rollo.)
“c.) work performed on any special holiday shall be paid an additional compensation of at least thirty percent On the same date, February 10, 1988, Detail Order 02-016 was issued to Decierdo assigning him to the Pacific Oil
(30%) of the regular wage of the employee.” Company in Bunawan, Davao City, with instruction to report to the manager, but Decierdo refused to accept the
It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional assignment as shown by the annotation at the bottom of the Order, viz:
compensation other than and added to the regular wage or basic salary. For similar reason it shall not be considered "Refused to accept assignment he is going to rest for a while." (p. 54, Rollo.)
in the computation of the 13th -month pay.[30] On February 11, 1988, which was the effective date of the detail order, Decierdo filed a complaint for illegal
In the same manner that payment for overtime work and work performed during special holidays is considered as dismissal, unfair labor practice, underpayment of wages, overtime pay, night premium, 13th month pay, holiday pay,
additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing rest day pay and incentive leave pay.
to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is On June 28, 1988, the Executive Labor Arbiter rendered a decision, the dispositive portion of which reads as follows:
being paid for additional work performed in excess of the regular teaching load. "WHEREFORE, in consideration of all the foregoing, judgment is hereby rendered:
The peculiarity of an overload lies in the fact that it may be performed within the normal eight-hour working day. This "1. Ordering respondent Commando Security Agency to pay complaint Security Agency to pay complainant
is the only reason why the DOLE, in its explanatory bulletin, finds it proper to include a teacher's overload pay in the Nemesio Decierdo the total amount of THIRTY-THREE THOUSAND EIGHT HUNDRED SEVENTY-SEVEN AND
determination of his or her 13th-month pay. However, the DOLE loses sight of the fact that even if it is performed 92/100 PESOS (P33,877.92). as salary, holiday and rest day pay differentials, 13th month pay differentials and
within the normal eight-hour working day, an overload is still an additional or extra teaching work which is performed service incentive leave pay; and
after the regular teaching load has been completed. Hence, any pay given as compensation for such additional work "2. Dismissing the complaint for illegal dismissal, unfair labor practice, overtime pay and night premium for lack of
should be considered as extra and not deemed as part of the regular or basic salary. merit." (pp. 19-20, Rollo.)

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Petitioner appealed to the NLRC which on May 26, 1989, affirmed with modification the decision of the Labor Arbiter, have met head-on the accuracy of correctness of the computations and not skirt the issue by dwelling merely on
to wit: technicalities by complaining that the records were irregularly procured." (p. 56, Rollo.)
"WHEREFORE, the appealed Decision is hereby AFFIRMED with the modification that the amount of P1,498.39 Petitioner's contention that Decierdo is estopped from complaining about the 25% deduction from his salary
representing complainant's accountability with (sic) respondent is hereby ordered deducted from the total award." (p. representing petitioner's share in procuring job placement for him, is not well taken. That provision of the
58, Rollo.) employment contract was illegal and inequitous, hence, null and void.
Hence, this petition for certiorari alleging that the NLRC gravely abused its discretion: The constitutional provisions on social justice (Sections 9 and 10, Article II) and protection to labor (Sec. 18, Article
1. in failing to make a clear pronouncement that Decierdo had abandoned his employment as he went on AWOL II) in the declaration of Principles and State Policies, impose upon the courts the duty to be ever vigilant in protecting
and therefore is considered resigned; the rights of workers who are placed in a contractually disadvantaged position and who sign waivers or provisions
2. in denying petitioner due process of law, or a right to be heard; contrary to law and public policy (Mercury Drug Co., Inc. vs. Dayao, 117 SCRA 99, 116). We affirm the NLRC's ruling
3. in not considering that Decierdo is in estoppel; and that:
4. in not holding that petitioner is entitled to a 25% share of his monthly salary as agreed between them. "It goes without saying that respondent may not deduct its so-called 'share' from the salaries of its guards without the
The petition for certiorari is without merit. latter's express consent and if such deductions are not allowed by law. This is notwithstanding any previous
The first ground of the petition is not well taken for the NLRC did find that Decierdo had given up his job and chose agreement or understanding between them. Any such agreement or contract is void ab initio being contrary to law
separation pay in lieu or reinstatement. and public policy (Mercury Drug Co. vs. Nardo Dayao, G.R. No. 30432, September 30, 1982)." (pp. 57-58, Rollo.)
"Anent the first issue, suffice it to state that there was no need for the Executive Labor Arbiter to fix a period within WHEREFORE, finding no abuse of discretion on the part of the National
which to require complainant to report for work considering that the latter is no longer interested in his job and had Labor Relations Commission in rendering the assailed decision, the petition for certiorari is DISMISSED for lack of
claimed for separation benefits in lieu of reinstatement. Why respondent had begrudged the Labor Arbiter's 'failure' to merit.
fix a return-to-work period escapes us considering that the Labor Arbiter practically found complainant to have SO ORDERED.
abandoned his job and, besides, complainant's claims for separation pay was not granted. If there was anyone who Cruz (Chairman), Medialdea and Bellosillo, JJ., concur.
should have been interested in being recalled to work, it should have been complainant himself and not respondent." ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES,
(pp. 54-55, Rollo.) JOEL ORDENIZA and AMADO CENTENO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
As a result, the NLRC dismissed the charge of illegal dismissal and unfair labor practice against the petitioner and (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.), respondents., G.R. No. 119268, 2000 Feb
denied Decierdo's claim for separation pay. 23, 2nd Division)
Regarding the petitioner's allegation that it was denied due process, we have time and again pointed out that QUISUMBING, J.:
procedural due process merely requires notice and opportunity to be heard (Var Orient Shipping Company vs. This special civil action for certiorari seeks to annul the decision1 [Rollo, pp. 16-22.] of public respondent
Achacoso, 161 SCRA 732, Bermejo vs. Barrios, 31 SCRA 764) which the petitioner was given when it filed its promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution2 [Id. at 23.] dated December
position paper. The petitioner was properly notified and even took part in the conciliation conference for the amicable 13, 1994 which denied petitioners motion for reconsideration.
settlement of the case. It was aware of the nature and specifics of the charges against it but failed to refute them Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the
expecting that a hearing would be called. However, the Labor Arbiter proceeded to decide the case based on the operation of "Goodman Taxi." Petitioners used to drive private respondent’s taxicabs every other day on a 24-hour
parties' position papers, the records submitted by petitioner, and the report and the computations made by the work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00
Corporate Auditing Examiner regarding the sums which Decierdo was entitled to recover. That procedure complied daily. Nevertheless, private respondent admittedly regularly deducts from petitioners’ daily earnings the amount of
with the Revised Rules of the NLRC, particularly Sections 2 and 3, which provide: P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form
"Sec. 2. Submission of position papers. During the immediately thereafter, the Labor Arbiter shall require the a labor union to protect their rights and interests.
parties to simultaneously submit to him their respective verified position papers, which shall cover only the issues Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when
raised in the complaint, accompanied by all supporting