Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 85333 February 26, 1990 CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC., respondents. Wellington B. Lachica for petitioners. Adolpho M. Guerzon for respondent Union. GANCAYCO, J.: Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members, granted under a collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization of the same by a majority of the union members? This is the main issue for resolution in the instant petition for certiorari. As gleaned from the records of the case, the pertinent facts are as follows: On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to as the Union), as the collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines), Inc. (hereinafter referred to as the Company) concluded a new collective bargaining agreement with the latter. 1 Among the compensation benefits granted to the employees was a general salary increase to be given in lump sum including recomputation of actual commissions earned based on the new rates of increase. On the same day, the president of the Union submitted to the Company the ratification by the union members of the new CBA and authorization for the Company to deduct union dues equivalent to P10.00 every payday or P20.00 every month and, in addition, 10% by way of special assessment, from the CBA lump-sum pay granted to the union members. The last one among the aforementioned is the subject of the instant petition. As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the special assessment sought to be levied is "to put up a cooperative and credit union; purchase vehicles and other items needed for the benefit of the officers and the general membership; and for the payment for services rendered by union officers, consultants and others." 2 There was also an additional proviso stating that the "matter of allocation ... shall be at the discretion of our incumbent Union President." This "Authorization and CBA Ratification" was obtained by the Union through a secret referendum held in separate local membership meetings on various dates. 3 The total membership of the Union was about 800. Of this number, 672 members originally authorized the 10% special assessment, while 173 opposed the same. 4 Subsequently however, one hundred seventy (170) members of the Union submitted documents to the Company stating that although they have ratified the new CBA, they are withdrawing or disauthorizing the deduction of any amount from their CBA lump sum. Later, 185 other union members submitted similar documents expressing the same intent. These members, numbering 355 in all (170 + 185), added to the original oppositors of 173, turned the tide in favor of disauthorization for the special assessment, with a total of 528 objectors and a remainder of 272 supporters. 5 On account of the above-mentioned disauthorization, the Company, being in a quandary as to whom to remit the payment of the questioned amount, filed an action for interpleader with the Bureau of Labor Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular rank-and-file employees of the Company and bona fide members of the Union, filed a motion/complaint for intervention therein in two groups of 161 and 94, respectively. They claimed to be among those union members who either did not sign any individual written authorization, or having signed one, subsequently withdrew or retracted their signatures therefrom.

Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article 222(b) of the Labor Code. Article 222(b) provides as follows: ART. 222. Appearances and Fees. xxx xxx xxx (b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union; Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. On the other hand, Article 241(o) mandates that: ART. 241. Rights and conditions of membership in a labor organization. xxx xxx xxx (o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction; As authority for their contention, petitioners cited Galvadores v. Trajano, 6 wherein it was ruled that no check-offs from any amount due employees may be effected without individual written authorizations duly signed by the employees specifically stating the amount, purpose, and beneficiary of the deduction. In its answer, the Union countered that the deductions not only have the popular indorsement and approval of the general membership, but likewise complied with the legal requirements of Article 241 (n) and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special assessment had been duly approved in a general membership meeting and that the collection of a special fund for labor education and research is mandated. Article 241(n) of the Labor Code states that ART. 241. Rights and conditions of membership in a labor organization. xxx xxx xxx (n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessments or fees. The record shall be attested to by the president; Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988 whereby he directed the Company to remit the amount it had kept in trust directly to the rank-and-file personnel without delay. On appeal to the Bureau of Labor Relations, however, the order of the Med-Arbiter was reversed and set aside by the respondent-Director in a resolution dated August 19, 1988 upholding the claim of the Union that the special assessment is authorized under Article 241 (n) of the Labor Code, and that the Union has complied with the requirements therein. Hence, the instant petition.

Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting to lack or excess of jurisdiction when she held Article 241 (n) of the Labor Code to be the applicable provision instead of Article 222(b) in relation to Article 241(o) of the same law. According to petitioners, a cursory examination and comparison of the two provisions of Article 241 reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a special assessment is not a matter of major policy affecting the entire union membership but is one which concerns the individual rights of union members. Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o), the Union has nevertheless failed to comply with the procedure to legitimize the questioned special assessment by: (1) presenting mere minutes of local membership meetings instead of a written resolution; (2) failing to call a general membership meeting; (3) having the minutes of three (3) local membership meetings recorded by a union director, and not by the union secretary as required; (4) failing to have the list of members present included in the minutes of the meetings; and (5) failing to present a record of the votes cast. 7 Petitioners concluded their argument by citing Galvadores. After a careful review of the records of this case, We are convinced that the deduction of the 10% special assessment by the Union was not made in accordance with the requirements provided by law. Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the instant case. The principle "that employees are protected by law from unwarranted practices that diminish their compensation without their known edge and consent" 8 is in accord with the constitutional principle of the State affording full protection to labor. 9 The respondent-Union brushed aside the defects pointed out by petitioners in the manner of compliance with the legal requirements as "insignificant technicalities." On the contrary, the failure of the Union to comply strictly with the requirements set out by the law invalidates the questioned special assessment. Substantial compliance is not enough in view of the fact that the special assessment will diminish the compensation of the union members. Their express consent is required, and this consent must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed. The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers to "check-off" of a special assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the Company a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. In addition, the secretary of the organization must record the minutes of the meeting which, in turn, must include, among others, the list of all the members present as well as the votes cast. As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of paragraph (n). It held local membership meetings on separate occasions, on different dates and at various venues, contrary to the express requirement that there must be a general membership meeting. The contention of the Union that "the local membership meetings are precisely the very general meetings required by law" 10 is untenable because the law would not have specified a general membership meeting had the legislative intent been to allow local meetings in lieu of the latter. It submitted only minutes of the local membership meetings when what is required is a written resolution adopted at the general meeting. Worse still, the minutes of three of those local meetings held were recorded by a union director and not by the union secretary. The minutes submitted to the Company contained no list of the members present and no record of the votes cast. Since it is quite evident that the Union did not comply with the law at every turn, the only conclusion that may be made therefrom is that there was no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code. Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that a special assessment may be validly checked-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that the majority of the union members had already withdrawn their individual authorizations. A withdrawal of individual authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that "no check-offs from any amounts due employees may be effected without an individual written authorization signed by the employees ... " is applicable.

The Union points out, however, that said disauthorizations are not valid for being collective in form, as they are "mere bunches of randomly procured signatures, under loose sheets of paper." 11 The contention deserves no merit for the simple reason that the documents containing the disauthorizations have the signatures of the union members. The Court finds these retractions to be valid. There is nothing in the law which requires that the disauthorization must be in individual form. Moreover, it is well-settled that "all doubts in the implementation and interpretation of the provisions of the Labor Code ... shall be resolved in favor of labor." 12 And as previously stated, labor in this case refers to the union members, as employees of the Company. Their mere desire to establish a separate bargaining unit, albeit unproven, cannot be construed against them in relation to the legality of the questioned special assessment. On the contrary, the same may even be taken to reflect their dissatisfaction with their bargaining representative, the respondent-Union, as shown by the circumstances of the instant petition, and with good reason. The Med-Arbiter correctly ruled in his Order that: The mandate of the majority rank and file have (sic) to be respected considering they are the ones directly affected and the realities of the high standards of survival nowadays. To ignore the mandate of the rank and file would enure to destabilizing industrial peace and harmony within the rank and file and the employer's fold, which we cannot countenance. Moreover, it will be recalled that precisely union dues are collected from the union members to be spent for the purposes alluded to by respondent. There is no reason shown that the regular union dues being now implemented is not sufficient for the alleged expenses. Furthermore, the rank and file have spoken in withdrawing their consent to the special assessment, believing that their regular union dues are adequate for the purposes stated by the respondent. Thus, the rank and file having spoken and, as we have earlier mentioned, their sentiments should be respected. Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only the collection of a special fund for labor and education research is mandated, as correctly pointed out by the Union. The two other purposes, namely, the purchase of vehicles and other items for the benefit of the union officers and the general membership, and the payment of services rendered by union officers, consultants and others, should be supported by the regular union dues, there being no showing that the latter are not sufficient to cover the same. The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney's fees, negotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement from being imposed on any individual union member. The collection of the special assessment partly for the payment for services rendered by union officers, consultants and others may not be in the category of "attorney's fees or negotiations fees." But there is no question that it is an exaction which falls within the category of a "similar charge," and, therefore, within the coverage of the prohibition in the aforementioned article. There is an additional proviso giving the Union President unlimited discretion to allocate the proceeds of the special assessment. Such a proviso may open the door to abuse by the officers of the Union considering that the total amount of the special assessment is quite considerable P1,027,694.33 collected from those union members who originally authorized the deduction, and P1,267,863.39 from those who did not authorize the same, or subsequently retracted their authorizations. 13 The former amount had already been remitted to the Union, while the latter is being held in trust by the Company. The Court, therefore, stakes down the questioned special assessment for being a violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code. WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby ordered to immediately remit the amount of P1,267,863.39 to the respective union members from whom the said amount was withheld. No pronouncement as to costs. This decision is immediately executory. SO ORDERED. Narvasa, Grio-Aquino and Medialdea, JJ., concur.

Cruz, J., took no part. Footnotes

1 Page 4, Rollo. 2 Page 10, Rollo. 3 Page 96, Rollo. 4 Page 34, Rollo. 5 Page 35, Rollo. 6 144 SCRA 138 (1986). 7 Page 12, Rollo. 8 Emphasis supplied. 9 Section 3, Article XIII, 1987 Constitution. 10 Page 105, Rollo. 11 Pages 108-109, Rollo. 12 Article 4, Labor Code. 13 Page 5, Rollo.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 77875 February 4, 1993 PHILIPPINE AIRLINES, INC., petitioner, vs. ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS COMMISSION, respondents. Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D. Ungos, Jr. for petitioner. Adolpho M. Guerzon for private respondents. REGALADO, J.: The instant petition for certiorari seeks to set aside the decision of The National Labor Relations Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1 containing the following disposition:
WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and another one entered, declaring the suspension of complainants to be illegal and consequently, respondent PAL is directed to pay complainants their salaries corresponding to the respective period(s) of their suspension, and to delete the disciplinary action from complainants' service records. 2

These material facts recited in the basic petition are virtually undisputed and we reproduce the same hereunder: 1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services Department of petitioner. Their duties and responsibilities, among others, are: Prepares meal orders and checklists, setting up standard equipment in accordance with the requirements of the type of service for each flight; skiing, binning, and inventorying of Commissary supplies and equipment. 2. On various occasions, several deductions were made from their salary. The deductions represented losses of inventoried items charged to them for mishandling of company properties . . . which respondents resented. Such that on August 21, 1984, individual respondents, represented by the union, made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad, Manager for Catering. . . . 3. As there was no action taken on said representation, private respondents filed a formal grievance on November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining Agreement between petitioner and the union. . . . The topics which the union wanted to be discussed in the said grievance were the illegal/questionable salary deductions and inventory of bonded goods and merchandise being done by catering service personnel which they believed should not be their duty. 4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad, Manager for Catering, who at the time was on vacation leave. . . . 5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply was made to their grievance which "was duly received by your secretary" and

considering that petitioner had only five days to resolve the grievance as provided for in the CBA, said grievance as believed by them (private respondents) was deemed resolved in their favor. . . . 6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and scheduled a meeting on December 12, 1984. . . . 7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp inventory on December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct the same on December 10 and 12. 8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved the grievance by denying the petition of individual respondents and adopted the position that inventory of bonded goods is part of their duty as catering service personnel, and as for the salary deductions for losses, he rationalized: 1. It was only proper that employees are charged for the amount due to mishandling of company property which resulted to losses. However, loss may be cost price 1/10 selling price. 9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3, 1985 wrote by an inter-office memorandum addressed to the grievants, individual respondents herein, for them to explain on (sic) why no disciplinary action should be taken against them for not conducting ramp inventory. . . . 10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth as: 4. Since the grievance step 1 was not decided and no action was done by your office within 5 days from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is deemed resolved in PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension ranging from 7 days to 30 days were (sic) imposed depending on the number of infractions committed. *

12. After the penalty of suspension was meted down, PALEA filed another grievance asking for lifting of, or at least, holding in abeyance the execution of said penalty. The said grievance was forthwith denied but the penalty of suspension with respect to respondent Ramos was modified, such that his suspension which was originally from January 15, 1985 to April 5, 1985 was shortened by one month and was lifted on March 5, 1985. The union, however, made a demand for the reimbursement of the salaries of individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was filed before the Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3

Private respondents appealed the decision of the labor arbiter to respondent commission which rendered the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for reconsideration having been denied, it interposed the present petition. The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned decision. Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination, but is limited to issues of jurisdiction and grave abuse of discretion. 4 It has not been shown

that respondent NLRC has unlawfully neglected the performance of an act which the law specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner from the exercise of a right to which it is entitled. The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining Agreement, (hereinafter, CBA), to wit: Sec. 2 Processing of Grievances xxx xxx xxx
STEP 1 Any employee who believes that he has a justifiable grievance shall take the matter up with his shop steward. If the shop steward feels there is justification for taking the matter up with the Company, he shall record the grievance on the grievance form heretofore agreed upon by the parties. Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and discussed by the shop steward with the division head. The division head shall answer the grievance within five (5) days from the date of presentation by inserting his decision on the grievance form, signing and dating same, and returning one copy to the shop steward. If the division head fails to act within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party . If the division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis of the decision made, and shall not be eligible for further appeal. 5 (Emphasis ours.)

Petitioner submits that since the grievance machinery was established for both labor and management as a vehicle to thresh out whatever problems may arise in the course of their relationship, every employee is duty bound to present the matter before management and give the latter an opportunity to impose whatever corrective measure is possible. Under normal circumstances, an employee should not preempt the resolution of his grievance; rather, he has the duty to observe the status quo. 6 Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus, Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and its discussion between the shop steward and the division head who in this case is Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive period. 8 Petitioner has sorely missed the point. It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes such sympathy, but because of the one-sided relation between labor and capital. 9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The purpose is to place the workingman on an equal plane with management with all its power and influence in negotiating for the advancement of his interests and the defense of his rights. 10 Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privileges in life should have more privileges in law. 11 It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section 2 of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the date of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved party." It is not disputed that the grievants knew that division head Reynaldo Abad was then "on leave" when they filed their grievance which was received by Abad's secretary. 13 This knowledge, however, should not prevent the application of the CBA. On this score, respondent NLRC aptly ruled:
. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act within the reglementary period, complainants, believing in good faith that the effect of the CBA had already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter. In this

regard, respondent PAL argued that Reynaldo Abad was on leave at the time the grievance was presented. This, however, is of no moment, for it is hard to believe that everything under Abad's authority would have to stand still during his absence from office. To be sure, it is to be expected that someone has to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on the part of PAL management, but certainly, complainants should not be made to suffer the consequences. 14

Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires the personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an officer-in-charge to look into the grievance and possibly make his recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked into the grievance upon returning to work, for it must be remembered that the grievants are workingmen who suffered salary deductions and who rely so much on their meager income for their daily subsistence and survival. Besides, it is noteworthy that when these employees first presented their complaint on August 21, 1984, petitioner failed to act on it. It was only after a formal grievance was filed and after Mr. Abad returned to work on December 7, 1984 that petitioner decided to turn an ear to their plaints. As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear the dire effects thereof. Much as the latter were willing to discuss their grievance with their employer, the latter closed the door to this possibility by not assigning someone else to look into the matter during Abad's absence. Thus, private respondents should not be faulted for believing that the effects of the CBA in their favor had already stepped into the controversy. If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the resolution of labor problems, the complaints of the workers in particular, and hide under the cloak of its officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this should be allowed, the workingmen will suffer great injustice for they will necessarily be at the mercy of their employer. That could not have been the intendment of the pertinent provision of the CBA, much less the benevolent policy underlying our labor laws. ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is immediately executory. SO ORDERED. Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.
#

Footnotes
1 Per Presiding Commissioner Edna Bonto-Perez and Commissioners Daniel M. Lucas, Jr. and Mirasol V. Corleto. 2 Original Record, 119. * Private respondents were meted the penalty of suspension without pay as follows: Alberto Santos, Jr., from January 15 to April 5, 1985 (Exh. H, Original Record, 45); Regino Duran, from January 15 to February 4, 1985 (Exh. I, ibid., 46); Gilbert Antonio, from January 15 to 21, 1985 (Exh. J, ibid., 47); and Houdiel Magadia, from January 15 to February 4, 1985 (Exh. K, ibid., 48). 3 Petition, 2-5; Rollo, 3-6. 4 Pan Pacific Industrial Sales, Inc. vs. NLRC, et al., 194 SCRA 633 (1991). 5 Exhibit S; Original Record, 57. 6 Petition, 8; Rollo, 9. 7 Ibid., 8-9; Rollo, 9-10. 8 Ibid., 9, Rollo, 10. 9 Reliance Surety and Insurance Co., Inc. vs. NLRC, et al., 193 SCRA 365 (1991). 10 Dagupan Bus Company, Inc. vs. NLRC, et al., 191 SCRA 328 (1990). 11 Ditan vs. POEA, et al., 191 SCRA 823 (1990). 12 Exhibit E; Original Record, 42. 13 Original Record, 105. 14 Ibid., 118-119. 15 Petition, 9-10; Rollo, 10-11. 16 Original Record, 119.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 78409 September 14, 1989 NORBERTO SORIANO, petitioner, vs. OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and NATIONAL LABOR RELATIONS COMMISSION (Second Division), respondents. R. C. Carrera Law Firm for petitioner. Elmer V. Pormento for private respondents. FERNAN, C.J.: This is a petition for certiorari seeking to annul and set aside the decision of public respondent National Labor Relations Commission affirming the decision of the Philippine Overseas Employment Administration in POEA Case No. (M)85-12-0953 entitled "Norberto Soriano v. Offshore Shipping and Manning Corporation and Knut Knutsen O.A.S.", which denied petitioner's claim for salary differential and overtime pay and limited the reimbursement of his cash bond to P15,000.00 instead of P20,000.00. In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed Second Marine Engineer, sought employment and was hired by private respondent Knut Knutsen O.A.S. through its authorized shipping agent in the Philippines, Offshore Shipping and Manning Corporation. As evidenced by the Crew Agreement, petitioner was hired to work as Third Marine Engineer on board Knut Provider" with a salary of US$800.00 a month on a conduction basis for a period of fifteen (15) days. He admitted that the term of the contract was extended to six (6) months by mutual agreement on the promise of the employer to the petitioner that he will be promoted to Second Engineer. Thus, while it appears that petitioner joined the aforesaid vessel on July 23, 1985 he signed off on November 27, 1985 due to the alleged failure of private respondent-employer to fulfill its promise to promote petitioner to the position of Second Engineer and for the unilateral decision to reduce petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made to shoulder his return airfare to Manila. In the Philippines, petitioner filed with the Philippine Overseas Employment Administration (POEA for short), a complaint against private respondent for payment of salary differential, overtime pay, unpaid salary for November, 1985 and refund of his return airfare and cash bond allegedly in the amount of P20,000.00 contending therein that private respondent unilaterally altered the employment contract by reducing his salary of US$800.00 per month to US$560.00, causing him to request for his repatriation to the Philippines. Although repatriated, he claims that he failed to receive payment for the following: 1. Salary for November which is equivalent to US$800.00; 2. Leave pay equivalent to his salary for 16.5 days in the sum of US$440.00; 3. Salary differentials which is equivalent to US$240.00 a month for four (4) months and one (1) week in the total sum of US$1,020,00; 4. Fixed overtime pay equivalent to US$240.00 a month for four (4) months and one (1) week in the sum of US$1,020.00; 5. Overtime pay for 14 Sundays equivalent to US$484.99; 6. Repatriation cost of US$945.46; 7. Petitioner's cash bond of P20,000.00.
1

In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment Administration or POEA found that petitioner-complainant's total monthly emolument is US$800.00 inclusive of fixed overtime as shown and proved in the Wage Scale submitted to the Accreditation Department of its Office which would therefore not entitle petitioner to any salary differential; that the version of complainant that there was in effect contract substitution has no grain of truth because although the Employment Contract seems to have corrections on it, said corrections or alterations are in conformity with the Wage Scale duly approved by the POEA; that the withholding of a certain amount due petitioner was justified to answer for his repatriation expenses which repatriation was found to have been requested by petitioner himself as shown in the entry in his Seaman's Book; and that petitioner deposited a total amount of P15,000.00 only instead of P20,000.00 cash bond. 2 Accordingly, respondent POEA ruled as follows: VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby ordered to pay complainant, jointly and severally within ten (10) days from receipt hereof the amount of P15,000.00 representing the reimbursement of the cash bond deposited by complainant less US$285.83 (to be converted to its peso equivalent at the time of actual payment). Further, attorney's fees equivalent to 10 % of the aforesaid award is assessed against respondents. All other claims are hereby dismissed for lack of merit. SO ORDERED. 3 Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National Labor Relations Commission. Complainant-petitioner's appeal was dismissed for lack of merit while respondents' appeal was dismissed for having been filed out of time. Petitioner's motion for reconsideration was likewise denied. Hence this recourse. Petitioner submits that public respondent committed grave abuse of discretion and/or acted without or in excess of jurisdiction by disregarding the alteration of the employment contract made by private respondent. Petitioner claims that the alteration by private respondent of his salary and overtime rate which is evidenced by the Crew Agreement and the exit pass constitutes a violation of Article 34 of the Labor Code of the Philippines. 6 On the other hand, public respondent through the Solicitor General, contends that, as explained by the POEA: "Although the employment contract seems to have corrections, it is in conformity with the Wage Scale submitted to said office. 7 Apparently, petitioner emphasizes the materiality of the alleged unilateral alteration of the employment contract as this is proscribed by the Labor Code while public respondent finds the same to be merely innocuous. We take a closer look at the effects of these alterations upon petitioner's right to demand for his differential, overtime pay and refund of his return airfare to Manila. A careful examination of the records shows that there is in fact no alteration made in the Crew Agreement 8 or in the Exit Pass. 9 As the original data appear, the figures US$800.00 fall under the column salary, while the word "inclusive" is indicated under the column overtime rate. With the supposed alterations, the figures US$560.00 were handwritten above the figures US$800.00 while the figures US$240.00 were also written above the word "inclusive". As clearly explained by respondent NLRC, the correction was made only to specify the salary and the overtime pay to which petitioner is entitled under the contract. It was a mere breakdown of the total amount into US$560.00 as basic wage and US$240.00 as overtime pay. Otherwise stated, with or without the amendments the total emolument that petitioner would receive under the agreement as approved by the POEA is US$800.00 monthly with wage differentials or overtime pay included. 10 Moreover, the presence of petitioner's signature after said items renders improbable the possibility that petitioner could have misunderstood the amount of compensation he will be receiving under the contract. Nor has petitioner advanced any explanation for statements contrary or inconsistent with what appears in the records. Thus, he claimed: [a] that private respondent extended the duration of the employment contract indefinitely, 11 but admitted

in his Reply that his employment contract was extended for another six (6) months by agreement between private respondent and himself: 12 [b] that when petitioner demanded for his overtime pay, respondents repatriated him13 which again was discarded in his reply stating that he himself requested for his voluntary repatriation because of the bad faith and insincerity of private respondent; 14 [c] that he was required to post a cash bond in the amount of P20,000.00 but it was found that he deposited only the total amount of P15,000.00; [d] that his salary for November 1985 was not paid when in truth and in fact it was petitioner who owes private respondent US$285.83 for cash advances 15 and on November 27, 1985 the final pay slip was executed and signed; 16 and [e] that he finished his contract when on the contrary, despite proddings that he continue working until the renewed contract has expired, he adamantly insisted on his termination. Verily, it is quite apparent that the whole conflict centers on the failure of respondent company to give the petitioner the desired promotion which appears to be improbable at the moment because the M/V Knut Provider continues to be laid off at Limassol for lack of charterers. 17 It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the very purpose for which they were passed. This Court has in many cases involving the construction of statutes always cautioned against narrowly interpreting a statute as to defeat the purpose of the legislator and stressed that it is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result (of injustice or absurdity) and that therefore "a literal interpretation is to be rejected if it would be unjust or lead to absurd results." 18 There is no dispute that an alteration of the employment contract without the approval of the Department of Labor is a serious violation of law. Specifically, the law provides:

Article 34 paragraph (i) of the Labor Code reads: Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority: xxxx (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the Department of Labor. In the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly analyzed the questioned annotations as not constituting an alteration of the original employment contract but only a clarification thereof which by no stretch of the imagination can be considered a violation of the above-quoted law. Under similar circumstances, this Court ruled that as a general proposition, exceptions from the coverage of a statute are strictly construed. But such construction nevertheless must be at all times reasonable, sensible and fair. Hence, to rule out from the exemption amendments set forth, although they did not materially change the terms and conditions of the original letter of credit, was held to be unreasonable and unjust, and not in accord with the declared purpose of the Margin Law. 19 The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both parties. In the instant case, the alleged amendment served to clarify what was agreed upon by the parties and approved by the Department of Labor. To rule otherwise would go beyond the bounds of reason and justice. As recently laid down by this Court, the rule that there should be concern, sympathy and solicitude for the rights and welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts reasonably arising from the evidence or in the interpretation of agreements and writings should be resolved in the former's favor, is not an unreasonable or unfair rule. 20 But to disregard the employer's own rights and interests solely on the basis of that concern and solicitude for labor is unjust and unacceptable. Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor Relations Commission which have acquired expertise because their jurisdiction is confined to specific matters are

generally accorded not only respect but at times even finality if such findings are supported by substantial evidence. 21 In fact since Madrigal v. Rafferty 22 great weight has been accorded to the interpretation or construction of a statute by the government agency called upon to implement the same. 23 WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor Relations Commission is AFFIRMED in toto. SO ORDERED. Gutierrez, Jr., Bidin, and Cortes, JJ., concur. Feliciano, J., is on leave. Footnotes
1 Rollo, p. 109. 2 POEA Decision, Rollo, pp. 11-16. 3 Rollo, p. 16. 4 Rollo, p. 44. 5 Rollo, p. 45. 6 Rollo, p. 6. 7 Rollo, p. 15. 8 Rollo, p. 44. 9 Rollo, p. 45. 10 Rollo, p. 9. 11 Rollo, p. 12. 12 Rollo, p. 95. 13 Rollo, p. 12. 14 Rollo, p. 96. 15 Rollo, p. 15. 16 Rollo, p. 13. 17 Rollo, p. 13. 18 Bello v. C.A., 56 SCRA 518 (1974). 19 Filipino Pipe and Foundry Corporation v. Central Bank, 23 SCRA 1053-1054 (1968). 20 Stanford Microsystems, inc. v. NLRC, 157 SCRA 415 (1988). 21 Baby Bus v. Minister of Labor, 158 SCRA 225 (1988); Manila Mandarin Employees Union v. NLRC, et al., 154 SCRA 369 (1987). 22 38 Phil. 414 (1918). 23 Philippine Apparel Workers Union v. National Labor Relations Commission, 106 SCRA 474 (1981), Melencio- Herrera, J., dissenting.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 46739

September 23, 1939

PAMPANGA BUS COMPANY, INC., petitioner, vs. PAMBUSCO EMPLOYEES' UNION, INC, respondent. L.D. Lockwood for petitioner. Jose Alejandrino for respondent. MORAN, J.: On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees' Union, Inc., new employees or laborers it may need to replace members of the union who may be dismissed from the service of the company, with the proviso that, if the union fails to provide employees possessing the necessary qualifications, the company may employ any other persons it may desire. This order, in substance and in effect, compels the company, against its will, to employ preferentially, in its service, the members of the union. We hold that the court has no authority to issue such compulsory order. The general right to make a contract in relation to one's business is an essential part of the liberty of the citizens protected by the due-process clause of the Constitution. The right of the laborer to sell his labor to such person as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. "If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression." (Mills vs. United States Printing Co., 99 App. Div., 605; 91 N.Y.S., 185, 189-192.) Section of Commonwealth Act No. 213 confers upon labor organizations the right "to collective bargaining with employers for the purpose of seeking better working and living conditions, fair wages, and shorter working hours for laborers, and, in general, to promote the material, social and moral well-being of their members." The term "collective bargaining" denotes, in common usage as well as in legal terminology, negotiations looking toward a collective agreement. This provision in granting to labor unions merely the right of collective bargaining, impliedly recognizes the employer's liberty to enter or not into collective agreements with them. Indeed, we know of no provision of the law compelling such agreements. Such a fundamental curtailment of freedom, if ever intended by law upon grounds of public policy, should be effected in a manner that is beyond all possibility of doubt. The supreme mandates of the Constitution should not be loosely brushed aside. As held by the Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell (245 U. S., 229; 62 Law. ed., 260, 276): . . . Whatever may be the advantages of "collective bargaining," it is not bargaining at all, in any just sense, unless it is voluntary on both sides. The same liberty which enables men to form unions, and through the union to enter into agreements with employers willing to agree, entitles other men to remain independent of the union, and other employers to agree with them to employ no man who owes any allegiance or obligation to the union. In the latter case, as in the former, the parties are entitled to be protected by the law in the enjoyment of the benefits of any unlawful agreements they make. This court repeatedly has held that the employer is as free to make non-membership in a union a condition or employment, as the working man is free to join the union, and that this is a part of the constitutional rights of personal liberty and private property, not to be taken away by legislation, unless through some proper exercise of the paramount police power. (Adair vs. United States, 208 U.S., 161, 174; 52 Law. ed., 436, 442; 28 Sup. Ct. Rep., 277; 13 Ann. Cas., 764; Coppage vs. Kansas, 236 U.S., 1, 14; 59 Law. ed., 441, 446; L.R.A., 1915C, 960; 35 Sup. Ct. Rep., 240.) The freedom of contract guaranteed by the Constitution may be limited by law through a proper exercise of the paramount police power. Thus, in order to promote industrial peace, certain limitations to the employer's right to select his employees or to discharge them, are provided in section 21 of Commonwealth Act No. 103 and section 5 of Commonwealth Act No. 213, which reads as follows:

It shall be unlawful for any employer to discharge or to threaten to discharge, or in any other manner discriminate against, any laborer or employee because such person has testified or is about to testify, or because such employer believes that he may testify in any investigation, proceeding or public hearing conducted by the Court or any board of inquiry. (Sec. 21, Commonwealth Act No. 103.) Any person or persons, landlord or landlords, corporation or corporations or their agents, partnership or partnerships of their agents, who intimidate or coerce any employee or laborer or tenant under his or their employ, with the intent of preventing such employee or laborer or tenant from joining any registered legitimate labor organization of his own choosing, or, who dismiss or threaten to dismiss such employee or laborer or tenant from his employment for having joined, or for being a member of, any registered legitimate labor organization, shall be guilty of a felony and shall be punished by imprisonment of not exceeding one year or a fine not exceeding one thousand pesos, or both, at the discretion of the court. (Sec. 5, Commonwealth Act No. 213.) These two provisions were, however, patterned after the Wagner Act, and the Supreme Court of the United States, in the case of National Labor Relations Board vs. Jones & Laughlin Steel Corporation (301 U.S., 1; 81 Law. ed., 893, 916), said: The Act (Wagner Act) does not compel agreements between employers and employees. It does not compel any agreement whatever. It does not prevent employer 'from refusing to make a collective contract and hiring individuals on whatever terms' the employer "may be unilateral action determine." The Act expressly provides in sec. 9 (a) that any individual employee or a group of employees shall have the right at any time to present grievances to their employer. The theory of the Act is that free opportunity for negotiation with accredited representatives of employees is likely to promote industrial peace and may bring about the adjustments and agreements which the Act in itself does not attempt to compel. As we said in Texas & N.O.R. Co. vs. Brotherhood of R. & S.S. Clerks (281 U.S., 548; 74 Law. ed., 1034; 50 S. Ct., 427, supra), and repeated in Virginian R. Co. vs. System Federation, R. E. D. (300 U. S., 515, ante, 789; 57 S. Ct., 592), the cases of Adair vs. United States (208 U.S., 161; 52 Law. ed., 436; 28 S. Ct., 277; 13 Ann. Cas., 764), and Coppage vs. Kansas (236 U.S., 1; 59 Law. ed., 441; 35 S. Ct., 240; L.R.A. 1915C, 960), are inapplicable to legislation of this character. The Act does not interfere with the normal exercise of the right of the employer to select its employees or to discharge them. The employer may not, under cover of that right, intimidate or coerce its employees with respect to their selforganization and representation, and, on the other hand, the board is not entitled to make its authority a pretext for interference with the right of discharge when that right is exercised for other reasons than such intimidation and coercion. This ruling was reiterated and confirmed in the Association Press vs. National Labor Relations Board (301 U.S., 103; 81 Law. ed., 953, 960, 961). Thus considered, the order appealed from is hereby reversed, with costs against the respondent Pambusco Employees' Union, Inc. Avancea, C.J., Villa-Real, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 75704 July 19, 1989 RUBBERWORLD (PHILS.), INC. and ELPIDIO HIDALGO, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and NESTOR MALABANAN,respondents. MEDIALDEA, J.: This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the respondent National Labor Relations Commission dated June 17, 1986 (p. 23, Rollo) in NLRC NCR Case No. 62158-84 entitled "Nestor Malabanan and Jonathan Transmil, Complainants, versus Rubberworld (Phils.), Inc. and Elpidio Hidalgo, Respondents," reversing the decision of the Labor Arbiter which dismissed the complaint for illegal dismissal for lack of merit. The antecedent facts are as follows: Respondent Malabanan was employed by petitioner Rubberworld (Phils.), Inc. on September 25,1978 as an ordinary clerk. In May, 1980, he was promoted to the position of production scheduler with a corresponding salary increase. He was again transferred to the Inventory Control Section as stock clerk on September 1, 1983. On April 6,1984, Elpidio Hidalgo, the Plant I General Manager of petitioner company, received a copy of the Financial Audit Report from the Internal Audit Department of the company showing a significant material variance between the year-end actual inventory and that of the Cards (SC)/EDP Control Records. As a result thereof, Noel Santiago, Section Head of the Inventory Control Section, where respondent Malabanan was assigned, conducted an investigation of the reported discrepancies in the stock cards upon the request of the Plant General Manager. Santiago then submitted his report to the general manager recommending the dismissal of respondent Malabanan. Consequently, Malabanan's case was endorsed to the Human Resources Division of petitioner company, which conducted a reinvestigation on the matter and which affirmed the recommendation of the Inventory Control Section Head for the termination of employment of respondent Malabanan. On June 6, 1984, respondent Malabanan was dismissed by petitioner company. On June 16, 1984, respondent Malabanan, along with another complainant named Jonathan Transmit, filed a complaint for unfair labor practice and illegal dismissal against petitioner company alleging that they (respondent Malabanan and complainant Transmil) were members of the monthly salaried employees' union affiliated with TUPAS; that petitioner company forced them to disaffiliate from the union; and that due to their refusal to resign from the union, they were ultimately dismissed from employment by petitioner company. Petitioner company on the other hand, denied complainants' allegations and averred that respondent Malabanan's dismissal was due to gross and habitual neglect of his duty and not due to his union affiliation. During the hearing of the case, the other complainant, Jonathan Transmil withdrew from the case since he already found another employment abroad. On January 30, 1985, the Labor Arbiter rendered a decision (pp. 17- 22, Rollo), the dispositive portion of which reads: WHEREFORE, premises considered, this case should be, as it is hereby, DISMISSED, for lack of merit. SO ORDERED.

Respondent Malabanan appealed from the adverse decision to the respondent Commission. On June 17, 1986, respondent Commission reversed the appealed decision of the Labor Arbiter and stated, inter alia: Confronted with this factual backgrounds, we find ourselves inclined to the view that the appealed decision merits a reversal. xxx WHEREFORE, premises considered, the appealed decision should be, as it is hereby REVERSED. Consequently, the respondents are directed to reinstate complainant Nestor Malabanan to his former position as production scheduler, with full backwages from the time he was illegally terminated up to actual reinstatement, without loss of seniority rights and benefits appurtenant thereto. SO ORDERED. (pp. 23-27, Rollo) The petitioner company moved for a reconsideration on the ground that the respondent Commission's decision is not in accordance with facts and evidence on record. On July 23, 1986, the said motion for reconsideration was denied. On September 3, 1986, petitioner filed the instant petition contending that the respondent Commission committed grave abuse of discretion amounting to lack of jurisdiction in reversing the Labor Arbiter's decision. The two issues to be resolved in the instant case are: (1) whether or not the dismissal of respondent Malabanan is tainted with unfair labor practice; and (2) whether or not a just and valid cause exists for the dismissal of private respondent Malabanan. Petitioner alleges that the National Labor Relations Commission gravely erred in concluding that the demotion of Malabanan from production scheduler to a stock clerk at the Stock and Inventory Section was intended to discourage Malabanan from union membership. It argued that the Labor Arbiter was correct in finding that the private respondent had not shown ample proof to the effect that he was a member of a labor organization prior to his transfer to another position. We believe that the foregoing contentions are impressed with merit. Art. 248 of the Labor Code, PD No. 442, as amended, provides: Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; xxx The question of whether an employee was dismissed because of his union activities is essentially a question of fact as to which the findings of the administrative agency concerned are conclusive and binding if supported by substantial evidence. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. It means such evidence which affords a substantial basis from which the fact in issue can be reasonably inferred (Philippine Metal Foundries, Inc. v. Court of Industrial Relations, et. al., No. L- 34948-49, May 15, 1979, 90 SCRA 135). The findings of the Labor Arbiter on the non-existence of unfair labor practice on the part of the company are more in accord and supported by the evidence submitted by the parties in the instant case, to wit: Complainant had stated that he was a member of the monthly salaried employees union affiliated with TUPAS. He, however, offered no proof to support his allegation. In fact, no evidence was presented to prove the existence of such union. We (note] from the records that, as the usual practice, in cases like this one, complainant is usually supported by the union of which he is a member. And ordinarily, the union itself is impleaded as a co- complainant. Such circumstances, surprisingly, [are] not present in this case. In fact, complainant categorically alleged that he had solicited the services of the PAFLU Labor Union in filing this case. It is, indeed, surprising that complainant had to solicit the help of a labor union (PAFLU) of

which he was not a member instead of soliciting the aid of the labor union (TUPAS) of which he was allegedly a member. These circumstances alone [destroy] the credibility of complainant's allegations. (p. 21, Rollo). Nowhere in the records can We find that the company actually performed positive acts to restrain the union participation of private respondent. For one, it is doubtful whether Malabanan was really engaged in the organization of a labor union affiliated with the federation TUPAS. The only evidence presented by him to prove this contention is his affidavit and that of his father. It is therefore, not in accordance with ordinary experience and common practice that the private respondent pursued his battle alone, without the aid and support of his comembers in the union and his federation especially in a case of serious nature as this one involving company intervention with union activity. As a rule, it is the prerogative of the company to promote, transfer or even demote its employees to other positions when the interests of the company reasonably demand it. Unless there are instances which directly point to interference by the company with the employees' right to self-organization, the transfer of private respondent should be considered as within the bounds allowed by law. Furthermore, although private respondent was transferred to a lower position, his original rank and salary remained undiminished, which fact was not refuted or questioned by private respondent. In view of the foregoing conclusions of the Labor Arbiter, We are compelled to agree with the latter that the petitioner company did not commit any unfair labor practice in transferring and thereafter dismissing private respondent. The remaining issue to be resolved on this point is whether the dismissal of respondent Malabanan was for a just and lawful cause. Article 282 of the Labor Code, as amended, provides: Article 282. Termination by employer. An employer may terminate an employment for any of the following just causes: xxx b) Gross and habitual neglect by the employee of his duties; x x x. Petitioner contends that private respondent Malabanan was guilty of gross negligence when he caused the posting of incorrect entries in the stock card without counter checking the actual movement status of the items at the warehouse, thereby resulting into unmanageable inaccuracies in the data posted in the stock cards. The respondent Commission correctly ruled: Penultimately, even assuming for the sake of argument that herein complainant 'posted entries in the stock card without counter checking the actual movement status of the items at the warehouse, thereby resulting in an inaccurate posting of data on the stock cards," to our impression does not constitute as a just cause for dismissal. Records show that he was only transferred to the Inventory Control Section on September 1, 1983 and was not so familiar and experienced as a stock clerk, and prior to his transfer, the record shows no derogatory records in terms of his performance. His failure to carry out efficiently his duties as a stock clerk is not so gross and habitual. In other words he was not notoriously negligent to warrant his severance from the service. Considering that there is nothing on record that shows that he wilfully defied instructions of his superior with regards to his duties and that he gained personal benefit of the discrepancy, his dismissal is unwarranted. (p. 26, Rollo). It does not appear that private respondent Malabanan is an incorrigible offender or that what he did inflicted serious damage to the company so much so that his continuance in the service would be patently inimical to the employer's interest. Assuming, in gratia argumenti that the private respondent had indeed committed the said mistakes in the posting of accurate data, this was only his first infraction with regard to his duties. It would thus be cruel and unjust to mete out the drastic penalty of dismissal, for it is not proportionate to the gravity of the misdeed. In fact, the promotion of the private respondent from the position of ordinary clerk to production scheduler establishes the presumption that his performance of his work is acceptable to the company. The petitioner even

admitted that it was due to heavy financial and business reverses that the company assigned the private respondent to the position of Stock Clerk and not because of his unsatisfactory performance as production scheduler (p. 6, Rollo). It has been held that there must be fair and reasonable criteria to be used in selecting employees to be dismissed (Asiaworld Publishing House, Inc. v. Ople, No. L-56398, July 23, 1987, 152 SCRA 219). It is worthy to note that the prerogative of management to dismiss or lay-off an employee must be done without abuse of discretion, for what is at stake is not only petitioner's position, but also his means of livelihood. This is so because the preservation of the lives of the citizens is a basic duty of the State, more vital than the peservation of corporate profits (Euro-Linea, Phils., Inc. v. NLRC, L-75782, December 1, 1987,156 SCRA 79). The law regards the worker with compassion. Our society is a compassionate one. Where a penalty less punitive would suffice, whatever missteps may be committed by the worker should not be visited by the supreme penalty of dismissal. This is not only because of the law's concern for the working man. There is in addition, his family to consider. After all, labor determinations should not only be secundum rationem but also secundum caritatem (Almira, et al., v. BF Goodrich Philippines, Inc., et al., G.R. No. L-34974, July 25, 1974, 58 SCRA 120). ACCORDINGLY, the petition is DISMISSED for lack of merit. However, the decision of the public respondent is hereby MODIFIED to the effect that petitioner company is ordered to reinstate private respondent Nestor Malabanan to the position of stock clerk or substantially equivalent position, with the same rank and salary he is enjoying at the time of his termination, with three years backwages and without loss of seniority rights and benefits appurtenant thereto. Should the reinstatement of the private respondent as herein ordered be rendered impossible by the supervention of circumstances which prevent the same, the petitioner is further ordered to pay private respondent separation pay equivalent to one (1) month's salary for every year of service rendered, computed at his last rate of salary. SO ORDERED. Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 76633 October 18, 1988 EASTERN SHIPPING LINES, INC., petitioner, vs. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents. Jimenea, Dala & Zaragoza Law Office for petitioner. The Solicitor General for public respondent. Dizon Law Office for respondent Kathleen D. Saco. CRUZ, J.: The private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas Employment Administration (POEA) for the death of her husband. The decision is challenged by the petitioner on the principal ground that the POEA had no jurisdiction over the case as the husband was not an overseas worker. Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by the Social Security System and should have been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the position papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses. The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissal on the ground of non-exhaustion of administrative remedies. Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations Commission, on the theory inter alia that the agency should be given an opportunity to correct the errors, if any, of its subordinates. This case comes under one of the exceptions, however, as the questions the petitioner is raising are essentially questions of law. 1 Moreover, the private respondent himself has not objected to the petitioner's direct resort to this Court, observing that the usual procedure would delay the disposition of the case to her prejudice. The Philippine Overseas Employment Administration was created under Executive Order No. 797, promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to protect their rights. It replaced the National Seamen Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with "original and exclusive jurisdiction over all cases, including money claims, involving employee-employer relations arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen." These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA, include "claims for death, disability and other benefits" arising out of such employment. 2 The petitioner does not contend that Saco was not its employee or that the claim of his widow is not compensable. What it does urge is that he was not an overseas worker but a 'domestic employee and consequently his widow's claim should have been filed with Social Security System, subject to appeal to the Employees Compensation Commission. We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985. Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment of a worker outside the Philippines, including employment on board vessels plying international waters, covered by a valid contract. 3 A contract worker is described as "any person working or who has worked overseas under a valid employment contract and shall include seamen" 4 or "any person working overseas or who

has been employed by another which may be a local employer, foreign employer, principal or partner under a valid employment contract and shall include seamen." 5 These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while under a contract of employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country. 6 It is worth observing that the petitioner performed at least two acts which constitute implied or tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is its submission of its shipping articles to the POEA for processing, formalization and approval in the exercise of its regulatory power over overseas employment under Executive Order NO. 797. 7 The second is its payment 8 of the contributions mandated by law and regulations to the Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social and welfare services to Filipino overseas workers." Significantly, the office administering this fund, in the receipt it prepared for the private respondent's signature, described the subject of the burial benefits as "overseas contract worker Vitaliano Saco." 9 While this receipt is certainly not controlling, it does indicate, in the light of the petitioner's own previous acts, that the petitioner and the Fund to which it had made contributions considered Saco to be an overseas employee. The petitioner argues that the deceased employee should be likened to the employees of the Philippine Air Lines who, although working abroad in its international flights, are not considered overseas workers. If this be so, the petitioner should not have found it necessary to submit its shipping articles to the POEA for processing, formalization and approval or to contribute to the Welfare Fund which is available only to overseas workers. Moreover, the analogy is hardly appropriate as the employees of the PAL cannot under the definitions given be considered seamen nor are their appointments coursed through the POEA. The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen for overseas employment. A similar contract had earlier been required by the National Seamen Board and had been sustained in a number of cases by this Court. 10 The petitioner claims that it had never entered into such a contract with the deceased Saco, but that is hardly a serious argument. In the first place, it should have done so as required by the circular, which specifically declared that "all parties to the employment of any Filipino seamen on board any ocean-going vessel are advised to adopt and use this employment contract effective 01 February 1984 and to desist from using any other format of employment contract effective that date." In the second place, even if it had not done so, the provisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate of the police power of the State. 11 But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle of nondelegation of legislative power. It contends that no authority had been given the POEA to promulgate the said regulation; and even with such authorization, the regulation represents an exercise of legislative discretion which, under the principle, is not subject to delegation. The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797, reading as follows: ... The governing Board of the Administration (POEA), as hereunder provided shall promulgate the necessary rules and regulations to govern the exercise of the adjudicatory functions of the Administration (POEA). Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself prescribed a standard shipping contract substantially the same as the format adopted by the POEA. The second challenge is more serious as it is true that legislative discretion as to the substantive contents of the law cannot be delegated. What can be delegated is the discretion to determine how the law may be enforced, notwhat the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot be abdicated or surrendered by the legislature to the delegate. Thus, in Ynot v. Intermediate Apellate Court 12 which annulled Executive Order No. 626, this Court held: We also mark, on top of all this, the questionable manner of the disposition of the confiscated property as prescribed in the questioned executive order. It is there authorized that the seized property shall be distributed to charitable institutions and other similar institutions as the

Chairman of the National Meat Inspection Commission may see fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities for partiality and abuse, and even corruption. One searches in vain for the usual standard and the reasonable guidelines, or better still, the limitations that the officers must observe when they make their distribution. There is none. Their options are apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named can supply the answer, they and they alone may choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a 'roving commission a wide and sweeping authority that is not canalized within banks that keep it from overflowing,' in short a clearly profligate and therefore invalid delegation of legislative powers. There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz, the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such that when it reaches the delegate the only thing he will have to do is enforce it. 13 Under the sufficient standard test, there must be adequate guidelines or stations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running riot. 14 Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not allowed to step into the shoes of the legislature and exercise a power essentially legislative. The principle of non-delegation of powers is applicable to all the three major powers of the Government but is especially important in the case of the legislative power because of the many instances when its delegation is permitted. The occasions are rare when executive or judicial powers have to be delegated by the authorities to which they legally certain. In the case of the legislative power, however, such occasions have become more and more frequent, if not necessary. This had led to the observation that the delegation of legislative power has become the rule and its non-delegation the exception. The reason is the increasing complexity of the task of government and the growing inability of the legislature to cope directly with the myriad problems demanding its attention. The growth of society has ramified its activities and created peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend. Specialization even in legislation has become necessary. To many of the problems attendant upon present-day undertakings, the legislature may not have the competence to provide the required direct and efficacious, not to say, specific solutions. These solutions may, however, be expected from its delegates, who are supposed to be experts in the particular fields assigned to them. The reasons given above for the delegation of legislative powers in general are particularly applicable to administrative bodies. With the proliferation of specialized activities and their attendant peculiar problems, the national legislature has found it more and more necessary to entrust to administrative agencies the authority to issue rules to carry out the general provisions of the statute. This is called the "power of subordinate legislation." With this power, administrative bodies may implement the broad policies laid down in a statute by "filling in' the details which the Congress may not have the opportunity or competence to provide. This is effected by their promulgation of what are known as supplementary regulations, such as the implementing rules issued by the Department of Labor on the new Labor Code. These regulations have the force and effect of law. Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed thereby has been applied in a significant number of the cases without challenge by the employer. The power of the POEA (and before it the National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient standard guiding the delegate in the exercise of the said authority. That standard is discoverable in the executive order itself which, in creating the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas Filipino workers to "fair and equitable employment practices." Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" in People v. Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16 "public convenience and welfare" in Calalang v. Williams 17 and "simplicity, economy and efficiency" in Cervantes v. Auditor General, 18 to mention only a few cases. In the United States, the "sense and experience of men" was accepted in Mutual Film Corp. v. Industrial Commission, 19 and "national security" in Hirabayashi v. United States. 20

It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In addition, as already observed, she also received a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers. These payments will not preclude allowance of the private respondent's claim against the petitioner because it is specifically reserved in the standard contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984, that Section C. Compensation and Benefits. 1. In case of death of the seamen during the term of his Contract, the employer shall pay his beneficiaries the amount of: a. P220,000.00 for master and chief engineers b. P180,000.00 for other officers, including radio operators and master electrician c. P 130,000.00 for ratings. 2. It is understood and agreed that the benefits mentioned above shall be separate and distinct from, and will be in addition to whatever benefits which the seaman is entitled to under Philippine laws. ... 3. ... c. If the remains of the seaman is buried in the Philippines, the owners shall pay the beneficiaries of the seaman an amount not exceeding P18,000.00 for burial expenses. The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the National Seamen Board on July 12,1976, providing an follows: Income Benefits under this Rule Shall be Considered Additional Benefits. All compensation benefits under Title II, Book Four of the Labor Code of the Philippines (Employees Compensation and State Insurance Fund) shall be granted, in addition to whatever benefits, gratuities or allowances that the seaman or his beneficiaries may be entitled to under the employment contract approved by the NSB. If applicable, all benefits under the Social Security Law and the Philippine Medicare Law shall be enjoyed by the seaman or his beneficiaries in accordance with such laws. The above provisions are manifestations of the concern of the State for the working class, consistently with the social justice policy and the specific provisions in the Constitution for the protection of the working class and the promotion of its interest. One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied due process because the same POEA that issued Memorandum Circular No. 2 has also sustained and applied it is an uninformed criticism of administrative law itself. Administrative agencies are vested with two basic powers, the quasi-legislative and the quasi-judicial. The first enables them to promulgate implementing rules and regulations, and the second enables them to interpret and apply such regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its own revenue regulations, the Central Bank on its own circulars, the Securities and Exchange Commission on its own rules, as so too do the Philippine Patent Office and the Videogram Regulatory Board and the Civil Aeronautics Administration and the Department of Natural Resources and so on ad infinitumon their respective administrative regulations. Such an arrangement has been accepted as a fact of life of modern governments and cannot be considered violative of due process as long as the cardinal rights laid down by Justice Laurel in the landmark case of Ang Tibay v. Court of Industrial Relations 21 are observed. Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of the private respondent, in line with the express mandate of the Labor Code and the principle that those with less in life should have more in law.

When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker. This is only fair if he is to be given the opportunity and the right to assert and defend his cause not as a subordinate but as a peer of management, with which he can negotiate on even plane. Labor is not a mere employee of capital but its active and equal partner. WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered. Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur. Footnotes
1 Bagatsing v. Ramirez, 74 SCRA 306; Del Mar v. Phil. Veterans Administration, 51 SCRA 340; Aguilar v. Valencia, 40 SCRA 210; Begosa v. PVA 32 SCRA 446; Tapales v. President and Board of Regents, 7 SCRA 553; Pascual v. Nueva Ecija Provincial Board, 106 Phil. 466; Mondano v. Silvosa 97 Phil. 143. 2 Sec. I (d), Rule I, Book VI (1985 Rules). 3 Sec. 1 x Rule 11, Book I (1985 Rules). 4 Sec. l(g), Rule II, Book I (1985 Rules). 5 Sec. 1 (g), Rule 11, Book I (1984 Rules). 6 Rollo, p. 171 (POEA Decision, p. 8). 7 Ibid., pp. 169-170 (POEA Decision, pp. 6-7). 8 Rollo, pp. 213-217. 9 Annex "A" of Private Respondent's Comment (Rollo, p. 230). 10 Bagong Filipinas Overseas Corp. v. NLRC, 135 SCRA 278; Virgen v. NLRC, 125 SCRA 577; orse Management v. NSB, et al., 117 SCRA 486; Virgen v. NLRC, 115 SCRA 347. 11 Stone v. Mississippi, 101 US 814, 12 148 SCRA 669. 13 People v. Vera 65 Phil. 56. 14 Cervantes v. Auditor General, 91 Phil. 359; People v. Rosen that 68 Phil. 328. 15 Supra. 16 70 Phil. 340. 17 70 Phil. 726. 18. Supra. 19 236 U.S. 247. 20 320 U.S. 99. 21 69 Phil. 635.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. L-50999 March 23, 1990 JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vs NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents. Raul E. Espinosa for petitioners. Lucas Emmanuel B. Canilao for petitioner A. Manuel. Atienza, Tabora, Del Rosario & Castillo for private respondent. MEDIALDEA, J.: This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service. The antecedent facts are as follows: Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made. The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which petitioners are members, contains the following provision (p. 71, Rollo): ARTICLE XIV Retirement Gratuity Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment. (Emphasis supplied) On the other hand, Article 284 of the Labor Code then prevailing provides: Art. 284. Reduction of personnel. The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide: xxx Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to prevent losses or other similar causes, or where the employee suffers from a disease and his continued employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year. xxx Sec. 10. Basis of termination pay. The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. (Emphasis supplied) On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo): RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company. SO ORDERED. The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit. Hence, the present petition. On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision appealed from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss the petition as to him. The issue is whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay. The petition is impressed with merit. Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit; (f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person affiliated with the employer. Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations attached to the word remuneration or earnings. Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC,

et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989. We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the monthly salary of petitioner for the purpose of computation of their separation pay. Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo): The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any indication that commission is part of salary. We can say that commission by itself may be considered a wage. This is not something novel for it cannot be gainsaid that certain types of employees like agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on commission earned. Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination pay due to one who is sought to be legally separated from the service is 'his latest salary rates. x x x. Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'. The above terms found in those Articles and the particular Rules were intentionally used to express the intent of the framers of the law that for purposes of separation pay they mean to be specifically referring to salary only. .... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should be controlling in matters concerning termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law and that of a particularor specific provision, the latter should prevail. On its part, the NLRC ruled (p. 110, Rollo): From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task, piece or commission basis or other method of calculating the same. It does not, however, mean that commission, allowances or analogous income necessarily forms part of the employee's salary because to do so would lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent the employee from insisting that emergency living allowance, 13th month pay, overtime, and premium pay, and other fringe benefits should be added to the computation of their separation pay. This situation, to our mind, is not the real intent of the Code and its rules. We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means

a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions. The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners. We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remuneration services rendered which contributed to the increase of income of Zuellig . Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that some salesman do not received any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of life. Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing the separation pay, We held that: The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment. The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said separation pay. SO ORDERED. Narvasa (Chairman), Cruz, Gancayco and Grio-Aquino, JJ., concur

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-28952 December 29, 1971 BENITO C. MANUEL, petitioner, vs. GENERAL AUDITING OFFICE, respondent. Bengzon, Villegas & Zarraga for petitioner. Office of the Solicitor General Antonio P. Barredo and Solicitor Buenaventura J. Guerrero for respondent. FERNANDO, J.: This Court is faced with a question raised for the first time in this petition for the review of a ruling of an order of respondent General Auditing Office. It is whether or not an elective official may be entitled in the event that he voluntarily retires or be separated from the service without fault on his part to the commutation of his vacation and sick leave. The answer of respondent was in the negative, relying primarily on a civil service rule purportedly in accordance with the applicable Administrative Code provision. In thus denying the claim of petitioner, there was a neglect or disregard of the controlling section of such Code 1 as well as of the equally controlling statutory language in another enactment, which specifically speaks of both an elective or appointive official as being entitled, to such benefits under such circumstances. 2 A reversal is thus indicated. The facts are undisputed. Petitioner Benito C. Manuel applied for retirement, effective December 31, 1967, according to law, 3 after having to his credit more than (20) years of service in the government, included in which were four successive terms as Mayor of Lingayen, Pangasinan from January 1, 1952 to December 31, 1967. Such application was approved on December 5, 1967. He had likewise sought the commutation of his vacation and sick leave, filing with the Municipal Treasurer of Lingayen, Pangasinan on December 22, 1967 a communication to that effect. In his memorandum filed with respondent General Auditing Office to which the matter was referred, he stressed that he was entitled to unused vacation and sick leave earned from May 31, 1957 (date of effectivity Republic Act No. 1616) to December 31, 1967, or a period of 10 years and 7 months, and since his highest salary was P600.00 a month, the total amount which should accrue to him is P6,000.00, (one month for every year). Respondent Office in turn asked for the view of the Commission of Civil Service in an indorsement dated January 25, 196 The reply, coming on February 22, 1968 was that such claim for the commutation of the money value of his leave from January 1, 1952 to December 31, 1967 could not favorably considered. Such a conclusion was based on his reading of Section 2187 of the Revised Administrate Code, 4 which for him implied that such a leave must be enjoyed during the year in which earned and that it could not be cumulative. There was likewise reliance on Section 9 of Civil Service Rule XVI which speaks categorically to that effect. 5 Respondent General Auditing Office on March 1, 1968 ruled that his application for commutation of his leave earned as Mayor during the period from January 1, 1952 to December 31, 1967 could not thus be allowed in audit. Hence this appeal to this Court. The appeal is meritorious. As was clearly pointed out in the able brief of counsel for petitioner, the Bengzon, Villegas & Zarraga Law Firm, the controlling statutory provisions call for a reversal of the ruling of respondent. 1. It is expressly provided under Section 286 of the Revised Administrative Code that vacation and sick leave shall be cumulative, any part thereof not taken within the calendar year earned being carried over the succeeding years with the employee voluntarily retiring or being separated from the service without fault on his part, being entitled to the commutation of all such accumulated vacation or sick leave to his credit provided that it shall in no case exceed ten (10) months. 6 The statute 7 providing for voluntary retirement is even more explicit. Thus: "Retirement is likewise allowed to any official or employee, appointive or elective, regardless of age and employment status, who has rendered a total of at least twenty years of service, the last three years of which are continuous. 8Further: "Officials and employees retired under this Act shall be entitled to the commutation of the unused vacation and sick leave, based on the highest rate received, which they have to their credit at the time of retirement." 9 There cannot be the least doubt therefore that the petitioner, who was a municipal mayor and as such an elective official for sixteen (16) years, having to his credit four (4) successive terms as Mayor of Lingayen, Pangasinan could not be denied his plea for the commutation for vacation and sick leave. The law speaks categorically including him within its terms. It must, as insisted by counsel for petitioner, be obeyed. Whatever rights are granted petitioner must be respected. There is here no room interpretation, simply the application of legal norms from any ambiguity. 10

2. Why then did respondent decide otherwise? It may have been due to a misreading of Section 2187 of the Revised Administrative Code. What must have misled respondent was a failure to take due note that this section deals solely with a situation when a municipal mayor is absent from his office because of illness. It does not cover therefore the specific case here presented of the right of the elective official to a commutation of his vacation and sick leave upon his retirement or separation from the service through no fault of his own. Moreover it must have felt justified in view of the endorsement of the Commission of the Civil Service, who applied Section 9 of Civil Service Rule XVI, included in which is the express injunction that the leave is not cumulative. Further reflection ought to have cautioned it that certainly this rule is far from being applicable as on its face it is based on the aforesaid Section 2187, which as noted is not in point. If, however, to be considered as having pertinence and relevance, it cannot as an administrative order supplant the plain and explicit statutory command. Why such should be the case is explained in a recent decision, Teoxon v. Member of the Board of Administrators . 11 Thus: "The recognition of the power of administrative officials to promulgate rules in the implementation of the statute, necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United States v. Barrias decided in 1908. Then came, in a 1914 decision, United States v. Tupasi Molina, a delineation of the scope of such competence. Thus: 'Of course the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid.' In 1936, in People v. Santos, this Court expressed its disapproval of an administrative order that would amount to an excess of the regulatory power vested in an administrative official. We reaffirmed such a doctrine in a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, 'the mandate of the Act must prevail and must be followed.' Justice Barrera, speaking for the Court in Victorias Milling Company, Inc. v. Social Security Commission, citing Parker as well as Davis did tersely sum up the matter thus: 'A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom ... . On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.' " 12 The succeeding paragraph in such a decision is likewise in point. Thus: "It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires adherence to, departure from, its provisions. No deviation is allowable. In the terse language of the present Chief Justice, administrative agency 'cannot amend an act of Congress.' " 13 3. Nothing can be clearer therefore than that the claim of petitioner to a commutation of his vacation and sick leave not exceeding ten (10) months must be upheld, inasmuch as the facts show that the total amount sought to be paid to him was precisely in accordance with the controlled legal provisions. The ruling now on review must be versed and petitioner's plea granted. WHEREFORE, the ruling of March 1, 1968 of respondent office refusing to allow in audit the claim of petitioner Benito C. Manuel for commutation of his leave earned as Mayor for the period January 1, 1952 to December 31, 1967 is reversed and the application of petition for such commutation granted. Without pronouncement as to costs. Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Villamor and Makasiar, concur. Footnotes
1 Section 286, Revised Administrative Code (1917) as last amended by Rep. Act No. 1081 (1954). 2 Rep. Act No. 4968 amending Com. Act No. 186 (1967). 3 Rep. Act No. 1616 (1957) amending Com. Act No. 186 (1936). 4 The portion of Section 2187 of the Revised Administrate Code relied upon follows: "The mayor shall receive full salary when absent from the municipality upon occasion of any meeting of mayors convoked by the provincial board or when absent therefrom upon any other business the performance of which is required of him by express provision of law or competent administrative authority or, if the general funds of the municipality permit, when he is absent from his office because of his illness contracted

through no fault of his own, provided the absence in the latter case does not exceed thirty days during the year, which fact must be attested by an affidavit of the interested party and by a medical certificate or, if there be no physician in the locality, by a health officer's certificate; ... ." 5 Such a rule reads: "Sec. 9. If the general funds of the municipality permit, Municipal Mayors may receive full salary when absent due to illness contracted through no fault of their own: Provided, That such absences are duly attested and do not exceed 30 days during the year. This leave is not accumulative." 6 Section 286 as last amended by Rep. Act No. 1081 insofar as relevant reads thus: When vacation leave and sick leave may be taken. Vacation leave and sick leave shall be cumulative and any part thereof which may not be taken within the calendar year in which earned and may be carried over to the succeeding years, but whenever any officer, employee, or laborer of the Government of the Philippines shall voluntarily resign or be separated from the service through no fault of his own, he shall be entitled to the commutation of all accumulated vacation and/or sick leave to his credit:Provided, That the total vacation leave and sick leave that can accumulate to the credit of any officer or employee shall, in no case, exceed ten months: ... ." 7 Com. Act No. 186 (1936) as amended by Rep. Act No. 4968 (1967). 8 Section 6 of Rep. Act No. 4968 amending Com. Act No. 186. 9 Ibid. 10 Cf. People v. Mapa, L-22301, Aug. 30, 1967, 20 SC 1164; Pacific Oxygen & Acetylene Co. v. Central Bank, L-218 March 1, 1968, 22 SCRA 917; Dequito v. Lopez, L-27757, March 28, 1968, 22 SCRA 1352; Padilla v. City of Pasay, L-24039, June 29, 1968, 23 SCRA 1349; Garcia v. Vasquez, L-26808, March 28, 1969, 27 SCRA 505; La Perla Cigar & Cigarette Factory v. Capapas L27948 & 28001-11, July 31, 1969, 28 SCRA 1085; Mobil Oil Phil., Inc. v. Diocares L-26371, Sept. 30, 1969, 29 SCRA 656; Luzon Surety Co., Inc. v. De Garcia, L-25659, Oct. 31, 1969, 30 SCRA 111; Vda. de Macabenta v. Davao Stevedore Terminal Company, L-27489, April 30, 1970, 32 SCRA 553; Republic Flour Mills, Inc. v. Commissioner of Customs, L-28463, May 31, 1971; Maritime Company of the Philippines v. Reparations Commission, L-29203, July 26, 1971; Allied Brokerage Corp. v. The Commissioner of Customs, L-27641, Aug. 31, 1971. 11 L-25619, June 30, 1970, 33 SCRA 585. 12 Ibid, pp. 588-689. 13 Ibid, p. 589.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-63915 April 24, 1985 LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners, vs. HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents. ESCOLIN, J.: Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders. Specifically, the publication of the following presidential issuances is sought: a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847. b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278. c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65. d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 16301649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244. e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857. f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123. g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439. The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged nonpublication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:

SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant. Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty, they need not show any specific interest for their petition to be given due course. The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431]. Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said: We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead to error' No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The circumstances which surround this case are different from those in the United States, inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and represent the people in cases of this character. The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally empowered to represent the people, has entered his appearance for respondents in this case. Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect, publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code: Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect. Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows: Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by law; and [5] such documents or classes of documents as the President of the Philippines shall determine from time to time to have general applicability and legal effect, or which he may authorize so to be published. ... The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one. Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansaand for the diligent ones, ready access to the legislative recordsno such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5 The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication. The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they have been circularized to all concerned. 6 It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7: In a time of proliferating decrees, orders and letters of instructions which all form part of the law of the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the official government repository promulgate and publish the texts of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents. The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling

effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank 8 to wit: The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court. Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified." From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever been implemented or enforced by the government. InPesigan vs. Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall take effect immediately. WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect. SO ORDERED. Relova, J., concurs. Aquino, J., took no part. Concepcion, Jr., J., is on leave.

Separate Opinions FERNANDO, C.J., concurring (with qualification):

There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect. I shall explain why. 1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette. From the pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out. It is true that what is decided now applies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity. 2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. 1 I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. 2 3. It suffices, as was stated by Judge Learned Hand, that law as the command of the government "must be ascertainable in some form if it is to be enforced at all. 3 It would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, "if it is unknown and unknowable. 4 Publication, to repeat, is thus essential. What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential Issuances" could be open to question. Matters deemed settled could still be inquired into. I am not prepared to hold that such an effect is contemplated by our decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex post facto character becomes evident. 5 In civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged presidential decree or executive act was issued under the police power, the nonimpairment clause of the Constitution may not always be successfully invoked. There must still be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. 6 In traditional terminology, there could arise then a question of unconstitutional application. That is as far as it goes. 4. Let me make therefore that my qualified concurrence goes no further than to affirm that publication is essential to the effectivity of a legislative or executive act of a general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a constitutional command. A later legislative or executive act which has the force and effect of law can legally provide for a different rule. 5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I find myself therefore unable to yield assent to such a pronouncement.

I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion. Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur. TEEHANKEE, J., concurring: I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are commanded to obey before they can be punished for its violation, 1 citing the settled principle based on due process enunciated in earlier cases that "before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said contents and its penalties. Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official repository where they are duly published) that "Ignorance of the law excuses no one from compliance therewith. Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the law itself. This proviso perforce refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such publication. 2 To sustain respondents' misreading that "most laws or decrees specify the date of their effectivity and for this reason, publication in the Official Gazette is not necessary for their effectivity 3 would be to nullify and render nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate effectivity or an earlier effectivity date in the law itself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for its proper dissemination. MELENCIO-HERRERA, J., concurring: I agree. There cannot be any question but that even if a decree provides for a date of effectivity, it has to be published. What I would like to state in connection with that proposition is that when a date of effectivity is mentioned in the decree but the decree becomes effective only fifteen (15) days after its publication in the Official Gazette, it will not mean that the decree can have retroactive effect to the date of effectivity mentioned in the decree itself. There should be no retroactivity if the retroactivity will run counter to constitutional rights or shall destroy vested rights. PLANA, J., concurring (with qualification): The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazetterequired by any statute as a prerequisite for their effectivity, if said laws already provide for their effectivity date. Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a law with a built-in provision as to when it will take effect. Secondly, it clearly recognizes that each law may provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law may prescribe that it shall be published elsewhere than in the Official Gazette.

Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said law is simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said law does not provide that publication in the Official Gazette is essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and how it will take effect. Only a higher law, which is the Constitution, can assume that role. In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. Cuevas and Alampay, JJ., concur. GUTIERREZ, Jr., J., concurring: I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette. DE LA FUENTE, J., concurring: I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof.

Footnotes
1 Section 6. The right of the people to information on matters of public concern shag be recognized, access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, shag be afforded the citizens subject to such limitation as may be provided by law. 2 Anti-Chinese League vs. Felix, 77 Phil. 1012; Costas vs. Aidanese, 45 Phil. 345; Almario vs. City Mayor, 16 SCRA 151;Parting vs. San Jose Petroleum, 18 SCRA 924; Dumlao vs. Comelec, 95 SCRA 392. 3 16 Phil. 366, 378. 4 Camacho vs. Court of Industrial Relations, 80 Phil 848; Mejia vs. Balolong, 81 Phil. 486; Republic of the Philippines vs. Encamacion, 87 Phil. 843; Philippine Blooming Mills, Inc. vs. Social Security System, 17 SCRA 1077; Askay vs. Cosalan, 46 Phil. 179. 5 1 Manresa, Codigo Civil 7th Ed., p. 146. 6 People vs. Que Po Lay, 94 Phil. 640; Balbuena et al. vs. Secretary of Education, et al., 110 Phil. 150. 7 82 SCRA 30, dissenting opinion. 8 308 U.S. 371, 374. 9 93 Phil.. 68,. 10 The report was prepared by the Clerk of Court after Acting Director Florendo S. Pablo Jr. of the Government Printing Office, failed to respond to her letter-request regarding the respective dates of publication in the Official Gazette of the presidential issuances listed therein. No report has been submitted by the Clerk of Court as to the publication or non-publication of other presidential issuances. 11 129 SCRA 174. Fernando, CJ.: 1 Separate Opinion of Justice Plana, first paragraph. He mentioned in tills connection Article 7, Sec. 21 of the Wisconsin Constitution and State ex rel. White v. Grand Superior Ct., 71 ALR 1354, citing the Constitution of Indiana, U.S.A 2 Ibid, closing paragraph. 3 Learned Hand, The Spirit of Liberty 104 (1960). 4 Cardozo, The Growth of the Law, 3 (1924). 5 Cf. Nunez v. Sandiganbayan, G.R. No. 50581-50617, January 30, 1982, 111 SCRA 433. 6 Cf. Alalayan v. National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172. Teehankee, J.: 1 People vs. de Dios, G.R. No. 11003, Aug. 3l, 1959, per the late Chief Justice Paras. 2 Notes in brackets supplied. 3 Respondents: comment, pp. 14-15. Plana, J.: * See e.g., Wisconsin Constitution, Art. 7, Sec. 21: "The legislature shall provide publication of all statute laws ... and no general law shall be in force until published." See also S ate ex rel. White vs. Grand Superior Ct., 71 ALR 1354, citing Constitution of Indiana, U.S.A.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-69870 November 29, 1988 NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners, vs. THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents. G.R. No. 70295 November 29,1988 EUGENIA C. CREDO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L. PEREZ, respondents. The Chief Legal Counsel for respondents NASECO and Arturo L. Perez. Melchor R. Flores for petitioner Eugenia C. Credo. PADILLA, J.: Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National Labor Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16 January 1985 denying motions for reconsideration of said decision. Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which provides security guards as well as messengerial, janitorial and other similar manpower services to the Philippine National Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10 March 1980. 1 Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance and Special Project and Evaluation Department of NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11 October 1983, regarding certain entry procedures in the company's Statement of Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's instructions to place some corrections/additional remarks in the Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain further the said instructions, [Credo] showed resentment and behaved in a scandalous manner by shouting and uttering remarks of disrespect in the presence of her co-employees." 2 On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in connection with the administrative charges filed against her. After said meeting, on the same date, Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3 Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry of Labor and Employment, Manila, against NASECO for placing her on forced leave, without due process. 4 Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on Personnel Affairs deliberated and evaluated a number of past acts of misconduct or infractions attributed to her. 5 As a result of this deliberation, said committee resolved: 1. That, respondent [Credo] committed the following offenses in the Code of Discipline, viz: OFFENSE vs. Company Interest & Policies No. 3 Any discourteous act to customer, officer and employee of client company or officer of the Corporation. OFFENSE vs. Public Moral No. 7 Exhibit marked discourtesy in the course of official duties or use of profane or insulting language to any superior officer.

OFFENSE vs. Authority No. 3 Failure to comply with any lawful order or any instructions of a superior officer. 2. That, Management has already given due consideration to respondent's [Credo] scandalous actuations for several times in the past. Records also show that she was reprimanded for some offense and did not question it. Management at this juncture, has already met its maximum tolerance point so it has decided to put an end to respondent's [Credo] being an undesirable employee. 6 The committee recommended Credo's termination, with forfeiture of benefits.
7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she was being charged with certain offenses. Notably, these offenses were those which NASECO's Committee on Personnel Affairs already resolved, on 22 November 1983 to have been committed by Credo. In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to explain her side in connection with the charges filed against her; however, due to her failure to do so, 8 she was handed a Notice of Termination, dated 24 November 1983, and made effective 1 December 1983. 9 Hence, on 6 December 1983, Credo filed a supplemental complaint for illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her dismissal and lack of opportunity to be heard. 10 After both parties had submitted their respective position papers, affidavits and other documentary evidence in support of their claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credo separation pay equivalent to one half month's pay for every year of service. 11 Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or substantially equivalent position, with six (6) months' backwages and without loss of seniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim for attorney's fees, moral and exemplary damages. As a consequence, both parties filed their respective motions for reconsideration, 12 which the NLRC denied in a resolution of 16 January 1985. 13 Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of discretion the dispositive portion of the 28 November 1984 decision which ordered Credo's reinstatement with backwages. 14 Petitioners contend that in arriving at said questioned order, the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated the requirements mandated by law on termination, 2) petitioners failed in the burden of proving that the termination of Credo was for a valid or authorized cause, 3) the alleged infractions committed by Credo were not proven or, even if proved, could be considered to have been condoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause. 15 On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the dispositive portion of the 28 November 1984 decision which dismissed her claim for attorney's fees, moral and exemplary damages and limited her right to backwages to only six (6) months. 16 As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides that: Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. xxx xxx xxx Section 5. Answer and Hearing. The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

Section 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor. 17 These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices of dismissal before a termination of employment can be legally effected. These are the notice which apprises the employee of the particular acts or omissions for which his dismissal is sought and the subsequent notice which informs the employee of the employer's decision to dismiss him. Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to labor 18(which encompasses the right to security of tenure) and the broader dictates of procedural due process necessarily mandate that notice of the employer's decision to dismiss an employee, with reasons therefor, can only be issued after the employer has afforded the employee concerned ample opportunity to be heard and to defend himself. In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although she was apprised and "given the chance to explain her side" of the charges filed against her, this chance was given so perfunctorily, thus rendering illusory Credo's right to security of tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident from the fact that the compliance with the injunction to apprise her of the charges filed against her and to afford her a chance to prepare for her defense was dispensed in only a day. This is not effective compliance with the legal requirements aforementioned. The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated 24 November 1983 and made effective 1 December 1983 shows that NASECO was already bent on terminating her services when she was informed on 1 December 1983 of the charges against her, and that any hearing which NASECO thought of affording her after 24 November 1983 would merely be pro forma or an exercise in futility. Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the company's Statement of Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC correctly held that: ... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that, "In the process of her testimony/explanations she again exhibited a conduct unbecoming in front of NASECO Officers and argued to Mr. S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact that she was inside the office of the Acctg. General Manager." Let it be noted, however, that the Report did not even describe how the so called "conduct unbecoming" or "discourteous manner" was done by complainant. Anent the "sarcastic" argument of complainant, the purported transcript 19 of the meeting held on 7 November 1983 does not indicate any sarcasm on the part of complainant. At the most, complainant may have sounded insistent or emphatic about her work being more complete than the work of Ms. de Castro, yet, the complaining officer signed the work of Ms. de Castro and did not sign hers. As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failed to place same corrections/additional remarks in the Statement of Billings Adjustments as instructed. However, under the circumstances obtaining, where complainant strongly felt that she was being discriminated against by her superior in relation to other employees, we are of the considered view and so hold, that a reprimand would have sufficed for the infraction, but certainly not termination from services. 20 As this Court has ruled: ... where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. It is not only because of the law's concern for the working man. There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. 21 Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes for dismissal Credo's previous and repeated acts of insubordination, discourtesy and sarcasm towards her superior officers, alleged to have been committed from 1980 to July 1983. 22 If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised her voice" in a discussion with NASECO's Acting head of the Personnel Administration 23 no disciplinary measure

was taken or meted against her. Nor was she even reprimanded when she allegedly talked 'in a shouting or yelling manner" with the Acting Manager of NASECO's Building Maintenance and Services Department in 1980 24 or when she allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control Consultant in 1981. 25But then, in sharp contrast to NASECO's penchant for ignoring the aforesaid acts of misconduct, when Credo committed frequent tardiness in August and September 1983, she was reprimanded. 26 Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for having performed in the job "at least [satisfactorily]" 27 and she was then rated "Very Satisfactory" 28as regards job performance, particularly in terms of quality of work, quantity of work, dependability, cooperation, resourcefulness and attendance. Considering that the acts or omissions for which Credo's employment was sought to be legally terminated were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent the reason which gave rise to [the employee's] separation from employment, there is no intention on the part of the employer to dismiss the employee concerned." 29 And, as a result of having been wrongfully dismissed, Credo is entitled to three (3) years of backwages without deduction and qualification. 30 However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in her favor can only be justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent manner.31 A judicious examination of the record manifests no such conduct on the part of management. However, in view of the attendant circumstances in the case, i.e., lack of due process in effecting her dismissal, it is reasonable to award her moral damages. And, for having been compelled to litigate because of the unlawful actuations of NASECO, a reasonable award for attorney's fees in her favor is in order. In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to order Credo's reinstatement. NASECO claims that, as a government corporation (by virtue of its being a subsidiary of the National Investment and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in turn is a government owned corporation), the terms and conditions of employment of its employees are governed by the Civil Service Law, rules and regulations. In support of this argument, NASECO cites National Housing Corporation vs. JUCO, 33 where this Court held that "There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service law and civil service rifles and regulations." It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to Credo and other employees similarly situated, because under the same 1973 Constitution ,but prior to the ruling inNational Housing Corporation vs. Juco, this Court had recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving terms and conditions of employment in government owned or controlled corporations, among them, the National Service Corporation (NASECO). <re|| an1w> 34 Furthermore, in the matter of coverage by the civil service of government-owned or controlled corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided that: The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. ... 35 On the other hand, the 1987 Constitution provides that: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charter. 36 (Emphasis supplied) Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing . Corporation case in the following manner The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article XII-B of the constitution. It would be possible for a regular ministry of government to create a

host of subsidiary corporations under the Corporation Code funded by a willing legislature. A governmentowned corporation could create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive restrains of the open market nor to the terms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but through incorporations under the general law. The Constitutional amendment including such corporations in the embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist. 37 appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law. The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and meaning in the use of the phrase "with original charter." Thus THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized. MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong provision. I refer to Section 1, subparagraph I which reads: The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations. My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissioner please state his previous question? MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the Civil Service Commission, says: "including government-owned or controlled corporations.' Does that include a corporation, like the Philippine Airlines which is government-owned or controlled? MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine Airlines controlled by the government in the sense that the majority of stocks are owned by the government? MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiary corporation. The GSIS is owned by the government. Would this be covered because the provision says "including government-owned or controlled corporations." MR. FOZ. The Philippine Airlines was established as a private corporation. Later on, the government, through the GSIS, acquired the controlling stocks. Is that not the correct situation? MR. ROMULO. That is true as Commissioner Ople is about to explain. There was apparently a Supreme Court decision that destroyed that distinction between a government-owned corporation created under the Corporation Law and a government-owned corporation created by its own charter. MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco to the effect that all government corporations irrespective of the manner of creation, whether by special charter or by the private Corporation Law, are deemed to be covered by the civil service because of the wide-embracing definition made in this section of the existing 1973 Constitution. But we recall the response to the question of Commissioner Ople that our intendment in this provision is just to give a general description of the civil service. We are not here to make any declaration as to whether employees of government-owned or controlled corporations are barred from the operation of laws, such as the Labor Code of the Philippines.

MR. ROMULO. Yes. MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been mentioned by both sides. MR. ROMULO. I yield part of my time. THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized. MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1 (1), may I volunteer some information that may be helpful both to the interpellator and to the Committee. Following the proclamation of martial law on September 21, 1972, this issue of the coverage of the Labor Code of the Philippines and of the Civil Service Law almost immediately arose. I am, in particular, referring to the period following the coming into force and effect of the Constitution of 1973, where the Article on the Civil Service was supposed to take immediate force and effect. In the case of LUZTEVECO, there was a strike at the time. This was a government-controlled and government-owned corporation. I think it was owned by the PNOC with just the minuscule private shares left. So, the Secretary of Justice at that time, Secretary Abad Santos, and myself sat down, and the result of that meeting was an opinion of the Secretary of Justice which 9 became binding immediately on the government that government corporations with original charters, such as the GSIS, were covered by the Civil Service Law and corporations spun off from the GSIS, which we called second generation corporations functioning as private subsidiaries, were covered by the Labor Code. Samples of such second generation corporations were the Philippine Airlines, the Manila Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these companies I have mentioned as examples, except for the Manila Hotel, had collective bargaining agreements. In the Philippine Airlines, there were, in fact, three collective bargaining agreements; one, for the ground people or the PALIA one, for the flight attendants or the PASAC and one for the pilots of the ALPAC How then could a corporation like that be covered by the Civil Service law? But, as the Chairman of the Committee pointed out, the Supreme Court decision in the case of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the Hyatt are now considered under that decision covered by the Civil Service Law. I also recall that in the emergency meeting of the Cabinet convened for this purpose at the initiative of the Chairman of the Reorganization Commission, Armand Fabella, they agreed to allow the CBA's to lapse before applying the full force and effect of the Supreme Court decision. So, we were in the awkward situation when the new government took over. I can agree with Commissioner Romulo when he said that this is a problem which I am not exactly sure we should address in the deliberations on the Civil Service Law or whether we should be content with what the Chairman said that Section 1 (1) of the Article on the Civil Service is just a general description of the coverage of the Civil Service and no more. Thank you, Mr. Presiding Officer. MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if the Committee puts on records that it is not their intent by this provision and the phrase "including government-owned or controlled corporations" to cover such companies as the Philippine Airlines. MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was made, my proposal was really to eliminate, to drop from the provision, the phrase "including government- owned or controlled corporations." MR. ROMULO. Would the Committee indicate that is the intent of this provision? MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make such a statement in the face of an absolute exclusion of government-owned or controlled corporations. However, this does not preclude the Civil Service Law to prescribe different rules and procedures, including emoluments for employees of proprietary corporations, taking into consideration the nature of their operations. So, it is a general coverage but it does not preclude a distinction of the rules between the two types of enterprises.

MR. FOZ. In other words, it is something that should be left to the legislature to decide. As I said before, this is just a general description and we are not making any declaration whatsoever. MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive understanding of the coverage and the Gentleman wants to exclude government-owned or controlled corporations like Philippine Airlines, then the recourse is to offer an amendment as to the coverage, if the Commissioner does not accept the explanation that there could be a distinction of the rules, including salaries and emoluments. MR. ROMULO. So as not to delay the proceedings, I will reserve my right to submit such an amendment. xxx xxx xxx THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized. MR. ROMULO. On page 2, line 5, I suggest the following amendment after "corporations": Add a comma (,) and the phrase EXCEPT THOSE EXERCISING PROPRIETARY FUNCTIONS. THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say? SUSPENSION OF SESSION MR. MONSOD. May we have a suspension of the session? THE PRESIDING OFFICER (Mr. Trenas). The session is suspended. It was 7:16 p.m. RESUMPTION OF SESSION At 7:21 p.m., the session was resumed. THE PRESIDING OFFICER (Mr. Trenas). The session is resumed. Commissioner Romulo is recognized. MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now read as follows: "including government-owned or controlled corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is to indicate that government corporations such as the GSIS and SSS, which have original charters, fall within the ambit of the civil service. However, corporations which are subsidiaries of these chartered agencies such as the Philippine Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil service. THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say? MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what exactly do we mean? MR. ROMULO. We mean that they were created by law, by an act of Congress, or by special law. MR. FOZ. And not under the general corporation law. MR. ROMULO. That is correct. Mr. Presiding Officer. MR. FOZ. With that understanding and clarification, the Committee accepts the amendment. MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law are out. MR. ROMULO. That is correct: 38

On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a government-owned or controlled corporation without original charter. Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on the effectivity of the principle of social justice embodied in the 1935 Constitution, said: Certainly, this principle of social justice in our Constitution as generously conceived and so tersely phrased, was not included in the fundamental law as a mere popular gesture. It was meant to (be) a vital, articulate, compelling principle of public policy. It should be observed in the interpretation not only of future legislation, but also of all laws already existing on November 15, 1935. It was intended to change the spirit of our laws, present and future. Thus, all the laws which on the great historic event when the Commonwealth of the Philippines was born, were susceptible of two interpretations strict or liberal, against or in favor of social justice, now have to be construed broadly in order to promote and achieve social justice. This may seem novel to our friends, the advocates of legalism but it is the only way to give life and significance to the above-quoted principle of the Constitution. If it was not designed to apply to these existing laws, then it would be necessary to wait for generations until all our codes and all our statutes shall have been completely charred by removing every provision inimical to social justice, before the policy of social justice can become really effective. That would be an absurd conclusion. It is more reasonable to hold that this constitutional principle applies to all legislation in force on November 15, 1935, and all laws thereafter passed. WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination, or if such reinstatement is not possible, to place her in a substantially equivalent position, with three (3) years backwages, from 1 December 1983, without qualification or deduction, and without loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees. If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in addition to her backwages and damages as above described, separation pay equivalent to one-half month's salary for every year of service, to be computed on her monthly salary at the time of her termination on 1 December 1983. SO ORDERED. Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur. Narvasa, J., is on leave. Gutierrez, Jr., J., in the result. Separate Opinions CRUZ, J., concurring: While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my disappointment over still another avoidable ambiguity in the 1987 Constitution. It is clear now from the debates of the Constitutional Commission that the government-owned or controlled corporations included in the Civil Service are those with legislative charters. Excluded are its subsidiaries organized under the Corporation Code. If that was the intention, the logical thing, I should imagine, would have been to simply say so. This would have avoided the suggestion that there are corporations with duplicate charters as distinguished from those with original charters.

All charters are original regardless of source unless they are amended. That is the acceptable distinction. Under the provision, however, the charter is still and always original even if amended as long it was granted by the legislature. It would have been clearer, I think, to say "including government owned or controlled corporations with legislative charters." Why this thought did not occur to the Constitutional Commission places one again in needless puzzlement. Footnotes
* Signed by Guillermo C. Medina, Presiding Commissioner, Gabriel M. Gatchalian and Miguel B. Varela, Commissioners; the last one concurring in the result. 1 Rollo (G.R. No. 69870), p. 122 2 Ibid., p. 123. 3 Ibid. 4 Ibid., p. 22. 5 Ibid., p. 62. 6 Ibid., p. 63. 7 Ibid. 8 Ibid., p. 66. 9 Ibid., p. 65. 10 Ibid., p. 25. 11 Ibid., p. 104. 12 Ibid., p. 126. 13 Ibid., p. 148. 14 Ibid., p. 8. 15 Ibid. 16 Rollo, (G.R. No. 70295), p. 8. 17 Rule XIV, Book V, Implementing Rules and Regulations. 18 Constitution (1973), Art. II, Sec. 9; Constitution (1 987), Art. II, Sec. 18; Labor Code, Art. III. 19 Rollo, (G.R. No. 69870), p. 57-59. 20 Ibid., p. 125. 21 Almira vs. B.F. Goodrich Philippine, Inc., 58 SCRA 120. 22 Rollo, (G.R. No. 69870), p. 2-5. 23 Ibid., p. 13. 24 Ibid. 25 Ibid. 26 Ibid. 27 Ibid., p. 91. 28 Ibid., p. 78. 29 Pepito vs. Secretary of Labor, 98 SCRA 454. 30 Ibid. 31 Civil Code, Art. 2232. 32 Rollo (G.R. No. 70295), p. 125. 33 134 SCRA 172. 34 Philippine Air Line, Inc. vs. NLRC, 124 SCRA 583; Philippine Air Lines, Inc. vs. NLRC, 126 SCRA 223 and National Service Corporation vs. Leogardo, Jr., 130 SCRA 502. 35 Constitution, 1973, Art. II-B, Sec. I(1). 36 Constitution (1987), Art. IX-B, Sec. 2(l). 37 134 SCRA 182-183. 38 Record of the Constitutional Commission, Vol. I, pp. 583-585.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-49677 May 4, 1989 TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES, petitioner, vs. NATIONAL HOUSING CORPORATION and ATTY. VIRGILIO SY, as Officer-in-Charge of the Bureau of Labor Relations, respondents. Bonifacio V. Tupaz for petitioner. The Government Corporate Counsel for respondent NHC. Raul E. Espinosa for intervenor PACIWU. REGALADO, J.: The employees of the public sector comprise the largest bloc of workers in our national work force. Governmental bureaucracy is continually being reorganized to cope with the growing complexity of the problems and needs of political and administrative governance. As the increase in the number of government employees grows space, the need to enhance their welfare correspondingly becomes more imperative. While it may be assumed that the Government is exerting efforts to advance the interests of its employees, it is quite understandable that the employees themselves should actively seek arrangements where by they can participate more meaningfully in management and employment relationships. There is, thus, a proliferation of unions or employees' organizations, each seeking concomitant representational recognition. The antecedent facts which led to the filing of this special civil action for certiorari are clear and undisputed. The juridical status and relevant circumstances of respondent corporation have been established in a case of illegal dismissal filed against it, as previously decided by the Court and hereinafter discussed. However, submitted this time for Our resolution is a controversy on the propriety of and requirements for certification elections in government-owned or controlled corporations like the respondent. Respondent National Housing Corporation (hereinafter referred to as NHC) is a corporation organized in 1959 in accordance with Executive Order No. 399, otherwise known as the Uniform Charter of Government Corporations, dated January 1, 1951. Its shares of stock are and have been one hundred percent (100%) owned by the Government from its incorporation under Act 459, the former corporation law. The government entities that own its shares of stock are the Government Service Insurance System, the Social Security System, the Development Bank of the Philippines, the National Investment and Development Corporation and the People's Homesite and Housing Corporation. 1 Petitioner Trade Unions of the Philippines and Allied Services (TUPAS, for brevity) is a legitimate labor organization with a chapter in NHC. On July 13, 1977, TUPAS filed a petition for the conduct of a certification election with Regional Office No. IV of the Department of Labor in order to determine the exclusive bargaining representative of the workers in NHC. It was claimed that its members comprised the majority of the employees of the corporation. 2 The petition was dismissed by med-arbiter Eusebio M. Jimenez in an order, dated November 7, 1977, holding that NHC "being a government-owned and/or controlled corporation its employees/workers are prohibited to form, join or assist any labor organization for purposes of collective bargaining pursuant to Section 1, Rule II, Book V of the Rules and Regulations Implementing the Labor Code." 3 From this order of dismissal, TUPAS appealed to the Bureau of Labor Relations 4 where, acting thereon in BLR Case No. A-984-77 (RO4-MED-1090-77), Director Carmelo C. Noriel reversed the order of dismissal and ordered the holding of a certification election. 5 This order was, however, set aside by Officer-in-Charge Virgilio S.J. Sy in his resolution of November 21, 1978 6 upon a motion for reconsideration of respondent NHC. In the instant petition for certiorari, TUPAS seeks the reversal of the said resolution and prays that a certification election be held among the rank and file employees of NHC. In retrospect, it will be recalled that in a former case of illegal dismissal involving the same respondent corporation,7 We had ruled that the employees of NHC and of other government owned or controlled corporations were governed by civil service laws, rules and regulations pursuant to the 1973 Constitution which provided that "the civil service embraces every branch, agency, subdivision and instrumentality of the government, including government-owned or controlled corporations." 8 It was therein stressed that to allow subsidiary corporations to be excluded from the civil service laws would be to permit the circumvention or emasculation of the above-quoted constitutional provision. As perceptively analyzed

therein, "(i)t would be possible for a regular ministry of government to create a host of subsidiary corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could create several subsidiary corporations. These subsidiary corporation rations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive restraints of the open market nor to the terms and conditions of civil service employment." The rule, however, was modified in the 1987 Constitution, the corresponding provision whereof declares that "(t)he civil service embraces all branches, subdivisions, instrumentalities and agencies of the government, including government-owned or controlled corporations with original charters." 9 Consequently, the civil service now covers only government owned or controlled corporations with original or legislative charters, that is those created by an act of Congress or by special law, and not those incorporated under and pursuant to a general legislation. As We recently held ..., the situations sought to be avoided by the 1973 Constitution and expressed by this Court in the National Housing Corporation case ... appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned controlled corporations with original charters and therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law. 10 While the aforecited cases sought different reliefs, that is, reinstatement consequent to illegal dismissal, the samelis mota determinative of the present special civil action was involved therein. The workers or employees of NHC undoubtedly have the right to form unions or employees' organizations. The right to unionize or to form organizations is now explicitly recognized and granted to employees in both the governmental and the private sectors. The Bill of Rights provides that "(t)he right of the people, including those employed in the public and private sectors, to form unions, associations or societies for purposes not contrary to law shall not be abridged" 11 This guarantee is reiterated in the second paragraph of Section 3, Article XIII, on Social Justice and Human Rights, which mandates that the State "shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law ...." Specifically with respect to government employees, the right to unionize is recognized in Paragraph (5), Section 2, Article IX B 12 which provides that "(t)he right to self-organization shall not be denied to government employees." The rationale of and justification for this innovation which found expression in the aforesaid provision was explained by its proponents as follows: ... The government is in a sense the repository of the national sovereignty and, in that respect, it must be held in reverence if not in awe. It symbolizes the unity of the nation, but it does perform a mundane task as well. It is an employer in every sense of the word except that terms and conditions of work are set forth through a Civil Service Commission. The government is the biggest employer in the Philippines. There is an employer-employee relationship and we all know that the accumulated grievances of several decades are now beginning to explode in our faces among government workers who feel that the rights afforded by the Labor Code, for example, to workers in the private sector have been effectively denied to workers in government in what looks like a grotesque, (sic) a caricature of the equal protection of the laws. For example, ... there were many occasions under the old government when wages and cost of living allowances were granted to workers in the private sector but denied to workers in the government for some reason or another, and the government did not even state the reasons why. The government employees were being discriminated against. As a general rule, the majority of the world's countries now entertain public service unions. What they really add up to is that the employees of the government form their own association. Generally, they do not bargain for wages because these are fixed in the budget but they do acquire a forum where, among other things, professional and self-development is (sic) promoted and encouraged. They also act as watchdogs of their own bosses so that when graft and corruption is committed, generally, it is the unions who are no longer afraid by virtue of the armor of self-organization that become the public's own allies for detecting graft and corruption and for exposing it.... 13

There is, therefore, no impediment to the holding of a certification election among the workers of NHC for it is clear that they are covered by the Labor Code, the NHC being a government-owned and/or controlled corporation without an original charter. Statutory implementation of the last cited section of the Constitution is found in Article 244 of the Labor Code, as amended by Executive Order No. 111, thus: ... Right of employees in the public service Employees of the government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. The records do not show that supervening factual events have mooted the present action. It is meet, however, to also call attention to the fact that, insofar as certification elections are concerned, subsequent statutory developments have rendered academic even the distinction between the two types of government-owned or controlled corporations and the laws governing employment relations therein, as hereinbefore discussed. For, whether the employees of NHC are covered by the Labor Code or by the civil service laws, a certification election may be conducted. For employees in corporations and entities covered by the Labor Code, the determination of the exclusive bargaining representative is particularly governed by Articles 255 to 259 of said Code. Article 256 provides for the procedure when there is a representation issue in organized establishments, while Article 257 covers unorganized establishments. These Labor Code provisions are fleshed out by Rules V to VII, Book V of the Omnibus Implementing Rules. With respect to other civil servants, that is, employees of all branches, subdivisions, instrumentalities and agencies of the government including government-owned or controlled corporations with original charters and who are, therefore, covered by the civil service laws, the guidelines for the exercise of their right to organize is provided for under Executive Order No. 180. Chapter IV thereof, consisting of Sections 9 to 12, regulates the determination of the "sole and exclusive employees representative"; Under Section 12, "where there are two or more duly registered employees' organizations in the appropriate organization unit, the Bureau of Labor Relations shall, upon petition order the conduct of certification election and shall certify the winner as the exclusive representative of the rank-and-file employees in said organizational unit." Parenthetically, note should be taken of the specific qualification in the Constitution that the State "shall guarantee the rights of all workers to self-organization, collective bargaining, and peaceful concerted activities, including the right to strike in accordance with law" and that they shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law." 14 (Emphasis supplied.) ON THE FOREGOING CONSIDERATIONS, the assailed resolution of the Bureau of Labor Relations, dated November 21, 1978, is ANNULLED and SET ASIDE and the conduct of a certification election among the affected employees of respondent National Housing Corporation in accordance with the rules therefor is hereby GRANTED. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento, Cortes Grio Aquino and Medialdea, JJ., concur. Gancayco, J., on leave. Footnotes
1 Rollo, 191; National Housing Corporation vs. Juco, et al., 134 SCRA 172 (1985). 2 lbid., 14; Annex A. 3 Ibid., 20, Annex B. 4 lbid., 21, Annex C. 5 lbid., 27, Annex D. 6 lbid., 31, Annex E. 7 National Housing Corporation vs. Juco et al., ante. 8 Sec. 1, Art. XII B. 9 Section 2 (1), Art. IX B. 10 National Service Corporation, et al. vs. The Hon. Third Division, National Labor Relations Commission, etc., et al., G.R. No. 69870, Nov. 29, 1988; see also Bliss Development Corporation vs. National Labor Relations Commission, et al., G.R. No. 82824, Resolution, Jan. 18, 1989. 11 Sec. 8, Art. III, 1987 Constitution.

12 Constitutional Commissions; B. The Civil Service Commission. 13 Records of the Constitutional Commission, Vol. 1, 567. 14 Sec. 3 (2nd par.), Art. XIII.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 98107 August 18, 1997 BENJAMIN C. JUCO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSING CORPORATION, respondents. HERMOSISIMA, JR., J.: This is a petition for certiorari to set aside the Decision of the National Labor Relations Commission (NLRC) dated March 14, 1991, which reversed the Decision dated May 21, 1990 of Labor Arbiter Manuel R Caday, on the ground of lack of jurisdiction. Petitioner Benjamin C. Juco was hired as a project engineer of respondent National Housing Corporation (NHC) from November 16, 1970 to May 14, 1975. On May 14, 1975, he was separated from the service for having been implicated in a crime of theft and/or malversation of public funds. On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC with the Department of Labor. On September 17, 1977, the Labor Arbiter rendered a decision dismissing the complaint on the ground that the NLRC had no jurisdiction over the case. 1 Petitioner then elevated the case to the NLRC which rendered a decision on December 28, 1982, reversing the decision of the Labor Arbiter. 2 Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court and on January 17, 1985, we rendered a decision, the dispositive portion thereof reads as follows: WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent National Labor Relations Commission is SET ASIDE. The decision of the Labor Arbiter dismissing the case before it for lack of jurisdiction is REINSTATED. 3 On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for illegal dismissal, with preliminary mandatory injunction. 4 On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the ground that the Civil Service Commission has no jurisdiction over the case. 5 On April 11, 1989, the Civil Service Commission issued an order dismissing the complaint for lack of jurisdiction. It ratiocinated that: The Board finds the comment and/or motion to dismiss meritorious. It was not disputed that NHC is a government corporation without an original charter but organized/created under the Corporation Code. Article IX, Section 2 (1) of the 1987 Constitution provides: The civil service embraces all branches, subdivisions, instrumentalities and agencies of the Government, including government owned and controlled corporations with original charters. (emphasis supplied) From the aforequoted constitutional provision, it is clear that respondent NHC is not within the scope of the civil service and is therefore beyond the jurisdiction of this Board. Moreover, it is pertinent to state that the 1987 Constitution was ratified and became effective on February 2, 1987. WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed. 6

On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal dismissal with preliminary mandatory injunction against respondent NHC. 7 On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that petitioner was illegally dismissed from his employment by respondent as there was evidence in the record that the criminal case against him was purely fabricated, prompting the trial court to dismiss the charges against him. Hence, he concluded that the dismissal was illegal as it was devoid of basis, legal or factual. He further ruled that the complaint is not barred by prescription considering that the period from which to reckon the reglementary period of four years should be from the date of the receipt of the decision of the Civil Service Commission promulgated on April 11, 1989. He also ratiocinated that: It appears . . . complainant filed the complaint for illegal dismissal with the Civil Service Commission on January 6, 1989 and the same was dismissed on April 11, 1989 after which on April 28, 1989, this case was filed by the complainant. Prior to that, this case was ruled upon by the Supreme Court on January 17, 1985 which enjoined the complainant to go to the Civil Service Commission which in fact, complainant did. Under the circumstances, there is merit on the contention that the running of the reglementary period of four (4) years was suspended with the filing of the complaint with the said Commission. Verily, it was not the fault of the respondent for failing to file the complaint as alleged by the respondent but due to, in the words of the complainant, a "legal knot" that has to be untangled. 8 Thereafter, the Labor Arbiter rendered a decision, the dispositive portion of which reads: Premises considered, judgment is hereby rendered declaring the dismissal of the complainant as illegal and ordering the respondent to immediately reinstate him to his former position without loss of seniority rights with full back wages inclusive of allowance and to his other benefits or equivalent computed from the time it is withheld from him when he was dismissed on March 27, 1977, until actually reinstated. 9 On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March 14, 1991, the NLRC promulgated a decision which reversed the decision of Labor Arbiter Manuel R. Caday on the ground of lack of jurisdiction. 10 The primordial issue that confronts us is whether or not public respondent committed grave abuse of discretion in holding that petitioner is not governed by the Labor Code. Under the laws then in force, employees of government-owned and/or controlled corporations were governed by the Civil Service Law and not by the Labor Code. Hence, Article 277 of the Labor Code (PD 442) then provided: The terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations shall be governed by the Civil Service Law, rules and regulations . . . . The 1973 Constitution, Article II-B, Section 1(1), on the other hand provided: The Civil Service embraces every branch, agency, subdivision and instrumentality of the government, including government-owned or controlled corporations. Although we had earlier ruled in National Housing Corporation v. Juco, 11 that employees of government-owned and/or controlled corporations, whether created by special law or formed as subsidiaries under the general Corporation Law, are governed by the Civil Service Law and not by the Labor Code, this ruling has been supplanted by the 1987 Constitution. Thus, the said Constitution now provides: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government owned or controlled corporations with original charter. (Article IX-B, Section 2[1])

In National Service Corporation (NASECO) v. National Labor Relations Commission, 12 we had the occasion to apply the present Constitution in deciding whether or not the employees of NASECO are covered by the Civil Service Law or the Labor Code notwithstanding that the case arose at the time when the 1973 Constitution was still in effect. We ruled that the NLRC has jurisdiction over the employees of NASECO on the ground that it is the 1987 Constitution that governs because it is the Constitution in place at the time of the decision. Furthermore, we ruled that the new phrase "with original charter" means that government-owned and controlled corporations refer to corporations chartered by special law as distinguished from corporations organized under the Corporation Code. Thus, NASECO which had been organized under the general incorporation statute and a subsidiary of the National Investment Development Corporation, which in turn was a subsidiary of the Philippine National Bank, is exluded from the purview of the Civil Service Commission. We see no cogent reason to depart from the ruling in the aforesaid case. In the case at bench, the National Housing Corporation is a government owned corporation organized in 1959 in accordance with Executive Order No. 399, otherwise known as the Uniform Charter of Government Corporation, dated January 1, 1959. Its shares of stock are and have been one hundred percent (100%) owned by the Government from its incorporation under Act 1459, the former corporation law. The government entities that own its shares of stock are the Government Service Insurance System, the Social Security System, the Development Bank of the Philippines, the National Investment and Development Corporation and the People's Homesite and Housing Corporation. 13 Considering the fact that the NHA had been incorporated under Act 1459, the former corporation law, it is but correct to say that it is a government-owned or controlled corporation whose employees are subject to the provisions of the Labor Code. This observation is reiterated in the recent case of Trade Union of the Philippines and Allied Services (TUPAS) v. National Housing Corporation, 14 where we held that the NHA is now within the jurisdiction of the Department of Labor and Employment, it being a government-owned and/or controlled corporation without an original charter. Furthermore, we also held that the workers or employees of the NHC (now NHA) undoubtedly have the right to form unions or employee's organization and that there is no impediment to the holding of a certification election among them as they are covered by the Labor Code. Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction because the rule now is that the Civil Service now covers only government-owned or controlled corporations with original charters. 15 Having been incorporated under the Corporation Law, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the National Labor Relations Commission. One final point. Petitioners have been tossed from one forum to another for a simple illegal dismissal case. It is but apt that we put an end to his dilemna in the interest of justice. WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is hereby REVERSED and the Decision of the Labor Arbiter dated May 21, 1990 is REINSTATED. SO ORDERED. Padilla, Bellosillo, Vitug and Kapunan, JJ., concur. Footnotes
1 Rollo, pp. 20-21. 2 Id., pp. 22-26. 3 Id., pp. 27-37. 4 Id., pp. 38-42. 5 Id., pp. 43-47. 6 Id., p. 52. 7 Id., pp. 53-58. 8 Id., p. 68. 9 Id., p. 69. 10 Id., pp. 78-86. 11 134 SCRA 172 (1985). 12 168 SCRA 122 [1988]. 13 National Housing Corporation vs. Juco, 134 SCRA 172 (1985). 14 173 SCRA 33 (1989). 15 PNOC-Energy Development Corporation v. NLRC, 201 SCRA 487 [1991] The NHC (now NHA).

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET TAILORING and/or RODOLFO ZAPANTA, respondents. Balguma, Macasaet & Associates for petitioners. Teresita Gandionco Oledan for private respondents. NOCON, J.: A basic factor underlying the exercise of rights and the filing of claims for benefits under the Labor Code and other presidential issuances or labor legislations is the status and nature of one's employment. Whether an employeremployee relationship exist and whether such employment is managerial in character or that of a rank and file employee are primordial considerations before extending labor benefits. Thus, petitioners in this case seek a definitive ruling on the status and nature of their employment with Broad Street Tailoring and pray for the nullification of the resolution dated May 12, 1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV- 21558-78-T affirming the decision of Labor Arbiter Ernilo V. Pealosa dated May 28, 1979, which held eleven of them as independent contractors and the remaining one as employee but of managerial rank. The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring shop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant manager would be absent. He saw to it that their work conformed with the pattern he had prepared and if not, he had them redone, repaired or resewn. The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did not fill up any time record since they did not observe regular or fixed hours of work. They were allowed to perform their work at home especially when the volume of work, which depended on the number of job orders, could no longer be coped up with. From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not properly notifying his employer, he was considered to have abandoned his work. In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor, Villuga claimed that he was refused admittance when he reported for work after his absence, allegedly due to his active participation in the union organized by private respondent's tailors. He further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive leave pay and 13th month pay. Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that they were dismissed from their employment because they joined the Philippine Social Security Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped working because private respondents gave them few pieces of work to do after learning of their membership with PSSLU. All the petitioners laid claims under the different labor standard laws which private respondent allegedly violated. On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissal of the complaint for unfair labor practices, illegal dismissal and other money claims except petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the decision states as follows: WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the sum of ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for the years 1976, 1977 and 1978. His other claims in this case are hereby denied for lack of merit.

The complaint insofar as the other eleven (11) complainants are concerned should be, as it is hereby dismissed for want of jurisdiction. 1 On appeal, the National Labor Relations Commission affirmed the questioned decision in a resolution dated May 12, 1986, the dispositive portion of which states as follows: WHEREFORE, premises considered, the decision appealed from is, as it is hereby AFFIRMED, and the appeal dismissed. 2 Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner Gabriel M. Gatchalian rendered a dissenting opinion which states as follows: I am for upholding employer-employee relationship as argued by the complainants before the Labor Arbiter and on appeal. The further fact that the proposed decision recognizes complainant's status as piece-rate worker all the more crystallizes employer-employee relationship the benefits prayed for must be granted. 3 Hence, petitioners filed this instant certiorari case on the following grounds: 1. That the respondent National Labor Relations Commission abused its discretion when it ruled that petitioner/complainant, Elias Villuga falls within the category of a managerial employee; 2. . . . when it ruled that the herein petitioners were not dismissed by reason of their union activities; 3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit were not employees of private respondents but were contractors. 4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and services for Sundays and Legal Holidays; and 5. . . . when it failed to grant petitioners their respective claims under the provisions of P.D. Nos. 925, 1123 and 851. 4 Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty consists of the performance of work directly related to management policies; (2) that he customarily and regularly exercises discretion and independent judgment in the performance of his functions; (3) that he regularly and directly assists in the management of the establishment; and (4) that he does not devote his twenty per cent of his time to work other than those described above. Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary work or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any of the management policies, as there is a manager and an assistant manager who perform said functions. It is true that in the absence of the manager the assistant manager, he distributes and assigns work to employees but such duty, though involving discretion, is occasional and not regular or customary. He had also the authority to order the repair or resewing of defective item but such authority is part and parcel of his function as cutter to see to it that the items cut are sewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting." Elias Villuga does not participate in policy-making. Rather, the functions of his position involve execution of approved and established policies. InFranklin Baker Company of the Philippines v. Trajano, 5 it was held that employees who do not participate in policy-making but are given ready policies to execute and standard practices to observe are not managerial employees. The test of "supervisory or managerial status" depends on whether a person possesses authority that is not merely routinary or clerical in nature but one that requires use of independent judgment. In other words, the functions of the position are not managerial in nature if they only execute approved and established policies leaving little or no discretion at all whether to implement said policies or not. 6 Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the Labor

Code, on the ground that he is a managerial employee is unwarranted. He is definitely a rank and file employee hired to perform the work of the cutter and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid by the month does not exclude him from the benefits of holiday pay as held in the case ofInsular Bank of America Employees Union v. Inciong. 7 He should therefore be paid in addition to the 13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, and service incentive leave pay. As to the dismissal of the charge for unfair labor practices of private respondent consisting of termination of employment of petitioners and acts of discrimination against members of the labor union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was aware of petitioners' alleged union membership on February 22, 1978 as the notice of union existence in the establishment with proposal for recognition and collective bargaining negotiation was received by management only an March 3, 1978. Indeed, self-serving allegations without concrete proof that the private respondent knew of their membership in the union and accordingly reacted against their membership do not suffice. Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal of the employee to resume his employment. Mere absence is not sufficient, it must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. 8 At any rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly established by the presentation of a medical certificate is not justified. 9 In the case at bar, however, considering that petitioner Villuga absented himself for four (4) days without leave and without submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be paid separation pay where reinstatement can no longer be effected in view of the long passage of time or because of the realities of the situation. 10 But petitioner should not be granted backwages in addition to reinstatement as the same is not just and equitable under the circumstances considering that he was not entirely free from blame. 11 As to the other eleven petitioners, there is no clear showing that they were dismissed because the circumstances surrounding their dismissal were not even alleged. However, we disagree with the finding of respondent Commission that the eleven petitioners are independent contractors. For an employer-employee relationship to exist, the following elements are generally considered: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's conduct."

12

Noting that the herein petitioners were oftentimes allowed to perform their work at home and were paid wages on a piece-rate basis, the respondent Commission apparently found the second and fourth elements lacking and ruled that "there is no employer-employee relationship, for it is clear that respondents are interested only in the result and not in the means and manner and how the result is obtained." Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is no argument that herein petitioners were not employees. The term "wage" has been broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. . . ." The facts of this case indicate that payment by the piece is just a method of compensation and does not define the essence of the relation. 13 The petitioners were allowed to perform their work at home does not likewise imply absence of control and supervision. The control test calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right. 14 In determining whether the relationship is that of employer and employee or one of an independent contractor, "each case must be determined on its own facts and all the features of the relationship are to be considered." 15Considering that petitioners who are either sewers, repairmen or ironer, have been in the employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering services which are desirable or necessary for the business of private respondent, and observing management's approved standards set for their respective lines of work as well as the customers' specifications, petitioners should be considered employees, not independent contractors. Independent contractors are those who exercise independent employment, contracting to do a piece of work according to their own methods and without being subjected to control of their employer except as to the result of

their work. By the nature of the different phases of work in a tailoring shop where the customers' specifications must be followed to the letter, it is inconceivable that the workers therein would not be subjected to control. In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring department, although paid weekly wages on piece work basis, are employees not independent contractors. Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim for separation pay should also be defined for lack of evidence that they were in fact dismissed by private respondent. They should be paid, however, their 13th month pay under P.D. 851, since they are employees not independent contractors. WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National Labor Relations Commission is hereby MODIFIED by awarding (a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay and separation pay, in addition to his 13th month pay; and (b) in favor of the rest of the petitioners, their respective 13th month pay. The case is hereby REMANDED to the National Labor Relations Commission for the computation of the claims herein-above mentioned. SO ORDERED. Narvasa C.J., Padilla, Regalado and Puno, JJ., concur. Footnotes
1 Rollo, pp. 12-13. 2 Ibid, p. 17. 3 Ibid. 4 Rollo, pp. 5-9. 5 G.R. No. 75039, 157 SCRA 416 (1988). 6 Southern Philippines Federation of Labor (SPFL) v. Calleja, G.R. No. 80882, 172 SCRA 676 (1989). 7 G.R. No. 52415, 132 SCRA 663 (1984). 8 Flexo Manufacturing Corporation v. NLRC, et al. G.R. No. 55971, 135 SCRA 145 (1985); Nueva Ecija Electric Cooperative, Inc. v. Minister of Labor, et al., G.R. No. 61965, 184 SCRA 25 (1990). 9 Atlas Consolidated Mining and Development Corporation v. NLRC, et al., G.R. No. 75751, 190 SCRA 505 (1990). 10 Esmalin v. NLRC, G.R. No. 67880, 177 SCRA 537 (1989). 11 See San Miguel Corporation v. NLRC, G.R. No. 60067, 115 SCRA 907 (1982). 12 Singer Sewing Machine Co. v. Drilon, G.R. No. 91307, 193 SCRA 270 (1991); Deferia v. National Labor Relations Commission, G.R. Nos. 92777-78, 195 SCRA 224 (1991); Hijos de F. Escao, Inc. v. NLRC, G.R. No. 59229, 201 SCRA 63 (1991). 13 Dy Keh Beng v. International Labor and Marine Union of the Philippines, et al., G.R. No. L-32245, 90 SCRA 161 (1979). 14 Feati University v. Bautista, et al., G.R. No. 21500, 18 SCRA 1191 (1966). 15 56 CJS 45. 16 G.R. No. 53590, 131 SCRA 72 (1984).

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 104658. April 7, 1993. PILIPINAS SHELL PETROLEUM CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS and CLARITA T. CAMACHO, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Yolanda Quisumbing-Javellana & Associates for private respondent. SYLLABUS 1. LABOR LAWS AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP; FACTORS CONSIDERED IN DETERMINING EXISTENCE THEREOF; CASE AT BAR. It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of a power to control the putative employee's conduct, although the latter is the most important element . . . As aptly held by the trial court, petitioner did not exercise control and supervision over Feliciano with regard to the manner in which he conducted the hydro-pressure test. All that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano the request of private respondent for a hydro-pressure test, to determine any possible leakages in the storage tanks in her gasoline station. The mere hiring of Feliciano by petitioner for that particular task is not the form of control and supervision contemplated by law which may be the basis for establishing an employer-employee relationship between petitioner and Feliciano. The fact that there was no such control is further amplified by the absence of any shell representative in the job site at the time when the test was conducted. Roberto Mitra was never there. Only Feliciano and his men were. True, it was petitioner who sent Feliciano to private respondent's gasoline station to conduct the hydro-pressure test as per the request of private respondent herself. But this single act did not automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring is required. It must further be established that petitioner is the one who is paying Feliciano's salary on a regular basis; that it has the power to dismiss said employee, and more importantly, that petitioner has control and supervision over the work of Feliciano. The last requisite was sorely missing in the instant case. 2. ID.; JOB CONTRACTING; REQUISITES; HALLMARKS OF INDEPENDENT CONTRACTOR. Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides: "Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." Feliciano is independently maintaining a business under a duly registered business name, "JFS Repair and Maintenance Service," and is duly registered with the Bureau of Domestic Trade. He does not enjoy a fixed salary but instead charges a lump sum consideration for every piece of work he accomplishes. If he is not able to finish his work, he does not get paid, as what happened in this case. Further, Feliciano utilizes his own tools and equipment and has a complement of workers. Neither is he required to work on a regular basis. Instead, he merely awaits calls from clients such as petitioner whenever repairs and maintenance services are requested. Moreover, Feliciano does not exclusively service petitioner because he can accept other business but not from other oil companies. All these are the hallmarks of an independent contractor. 3. CIVIL LAW; QUASI-DELICTS; INDEPENDENT CONTRACTOR RESPONSIBLE FOR HIS OWN ACTS AND OMISSIONS. Being an independent contractor, Feliciano is responsible for his own acts and omissions. As he alone was in control over the manner of how he was to undertake the hydro-pressure test, he alone must bear the consequences of his negligence, if any, in the conduct of the same. DECISION CAMPOS, JR., J p: Was the hydro-pressure test of the underground storage tank in private respondent Clarita T. Camacho's gasoline station conducted by an independent contractor or not? A negative answer will make petitioner Pilipinas Shell Petroleum Corporation (Shell, for brevity) liable for the said independent contractor's acts or omissions; otherwise, no. This is the issue that this Court is called upon to resolve in this case. The facts are as follows: Private respondent Clarita T. Camacho (private respondent for short) was the operator of a gasoline station in Naguilian Road, Baguio City, wherein she sells petitioner Shell's petroleum products. Sometime in April 1983, private respondent requested petitioner to conduct a hydro-pressure test on the underground storage tanks of the said station in order to determine whether or not the sales losses she was incurring for the past several months

were due to leakages therein. Petitioner acceded to the said request and on April 27, 1983, one Jesus "Jessie" Feliciano together with other workers, came to private respondent's station with a Job Order from petitioner to perform the hydro-pressure test. On the same day, Feliciano and his men drained the underground storage tank which was to be tested of its remaining gasoline. After which, they filled the tank with water through a water hose from the deposit tank of private respondent. Then, after requesting one of private respondent's gasoline boys to shut off the water when the tank was filled, Feliciano and his men left. At around 2:00 a.m. the following day, private respondent saw that the water had reached the lip of the pipe of the underground storage tank and so, she shut off the water faucet. At around 5:30 a.m., private respondent's husband opened the station and started selling gasoline. But at about 6:00 a.m., the customers who had bought gasoline returned to the station complaining that their vehicles stalled because there was water in the gasoline that they bought. On account of this, private respondent was constrained to replace the gasoline sold to the said customers. However, a certain Eduardo Villanueva, one of the customers, filed a complaint with the police against private respondent for selling the adulterated gasoline. In addition, he caused the incident to be published in two local newspapers. Feliciano, who arrived later that morning, did not know what caused the water pollution of the gasoline in the adjacent storage tank. So he called up Nick Manalo, Superintendent of Shell's Poro Point Installation at San Fernando, La Union, and referred the matter to the latter. Manalo went up to Baguio in the afternoon to investigate. Thereafter, he and Feliciano again filled with water the underground storage tank undergoing hydropressure test whereat they noticed that the water was transferring to the other tanks from whence came the gasoline being sold. Manalo asked permission from Shell's Manila Office to excavate the underground pipes of the station. Upon being granted permission to do so, Feliciano and his men began excavating the driveway of private respondent's station in order to expose the underground pipeline. The task was continued by one Daniel "Danny" Pascua who replaced Feliciano, Pascua removed the corroded pipeline and installed new independent vent pipe for each storage tank. Meanwhile, petitioner undertook to settle the criminal complaint filed by Villanueva. Subsequently, Villanueva filed an Affidavit of Desistance, 1 declaring, inter alia "THAT, after careful evaluation of the surrounding circumstances, especially the explanation of the representatives of SHELL Phils., that the gasoline tanks of Mrs. Camacho were subject to Hydro test, in such a way that water was used for the said test, I believe that she may not have had anything to do with the filling of water in the tank of my car; xxx xxx xxx THAT, said representatives of SHELL Phils. have interceded for and in behalf of Mrs. Camacho and have fully satisfied my claim against her. THAT, in view of all the foregoing I do not intend to prosecute the case and I am therefore asking for the dismissal of the case against Mrs. Camacho." Thereafter, private respondent demanded from petitioner the payment of damages in the amount of P10,000.00. Petitioner, instead, offered private respondent additional credit line and other beneficial terms, which offer was, however, rejected. cdrep Subsequently, or on October 12, 1983, private respondent filed before the trial court a complaint for damages against petitioner due to the latter's alleged negligence in the conduct of the hydro-pressure test in her gasoline station. For its part, petitioner denied liability because, according to it, the hydro-pressure test on the underground storage tanks was conducted by an independent contractor. The trial court dismissed private respondent's complaint for damages for the reason that: "The hydro-pressure test which brought about the incident was conducted by Jesus Feliciano, who was neither an employee nor agent nor representative of the defendant. Jesus Feliciano is responsible for his own acts and omissions. He alone was in control of the manner of how he is to undertake the hydro-pressure test.

Considering that the conduct of said hydro-pressure test was under the sole and exclusive control and supervision of Jesus Feliciano, the overflow with water causing the same to sip into the adjoining tank cannot be attributed to the fault or negligence of defendant. 2 From the adverse decision of the trial court, private respondent appealed to the Court of Appeals which court reversed the decision of the trial court. Thus, "PREMISES CONSIDERED, the decision being appealed from is hereby SET ASIDE and, in lieu thereof, another rendered ordering defendant to pay plaintiff: 1. P100,000.00 as moral damages; 2. P2,639.25 and P15,000.00 representing the actual losses suffered by plaintiff as a result of the water pollution of the gasoline. No costs. SO ORDERED." 3 Petitioner moved to have the above decision reconsidered but the same was denied in a Resolution dated March 9, 1992. Hence, this recourse. As stated at the very outset, the pivotal issue in this case is whether or not petitioner should be held accountable for the damage to private respondent due to the hydro-pressure test conducted by Jesus Feliciano. It is a well-entrenched rule that an employer-employee relationship must exist before an employer may be held liable for the negligence of his employee. It is likewise firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of a power to control the putative employee's conduct, 4 although the latter is the most important element. 5 In this case, respondent Court of Appeals held petitioner liable for the damage caused to private respondent as a result of the hydro-pressure test conducted by Jesus Feliciano due to the following circumstances: 6 1. Feliciano was hired by petitioner; 2. He received his instructions from the Field Engineer of petitioner, Mr. Roberto Mitra; 3. While he was at private respondent's service station, he also received instructions from Nick Manalo, petitioner's Poro Point Depot Superintendent; 4. Instructions from petitioner's Manila Office were also relayed to him while he was at .the job site at Baguio City; 5. His work was under the constant supervision of petitioner's engineer; 6. Before he could complete the work, he was instructed by Mr. Manalo, petitioner's Superintendent, to discontinue the same and it was turned over to Daniel Pascua, who was likewise hired by petitioner. Based on the foregoing, respondent Court of Appeals concluded that Feliciano was not an independent contractor but was under the control and supervision of petitioner in the performance of the hydro-pressure test, hence, it held petitioner liable for the former's acts and omissions. We are not in accord with the above finding of respondent Court of Appeals. As aptly held by the trial court, petitioner did not exercise control and supervision over Feliciano with regard to the manner in which he conducted the hydro-pressure test. All that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano the request of private respondent for a hydro-pressure test, to determine any possible leakages in the storage tanks in her gasoline station. The mere hiring of Feliciano by petitioner for that particular task is not the form of control

and supervision contemplated by may be the basis for establishing an employer-employee relationship between petitioner and Feliciano. The fact that there was no such control is further amplified by the absence of any Shell representative in the job site time when the test was conducted. Roberto Mitra was never there. Only Feliciano and his men were. True, it was petitioner who sent Feliciano to private respondent's gasoline station in conduct the hydro-pressure test as per the request of private respondent herself. But this single act did not automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring is required. It must further be established that petitioner is the one who is paying Felicia's salary on a regular basis; that it has the power to dismiss said employee, and more importantly, that petitioner has control and supervision over the work of Feliciano. The last requisite was sorely missing in the instant case. A careful perusal of the records will lead to the conclusion that Feliciano is an independent contractor. Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides: "Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." Feliciano is independently maintaining a business under a duly registered business name, "JFS Repair and Maintenance Service," and is duly registered with the Bureau of Domestic Trade. 7 He does not enjoy a fixed salary but instead charges a lump sum consideration for every piece of work he accomplishes. 8 If he is not able to finish his work, he does not get paid, as what happened in this case. 9 Further, Feliciano utilizes his own tools and equipment and has a complement of workers. Neither is he required to work on a regular basis. Instead, he merely awaits calls from clients such as petitioner whenever repairs and maintenance services are requested. Moreover, Feliciano does not exclusively service petitioner because he can accept other business but not from other oil companies. 10 All these are the hallmarks of an independent contractor. Being an independent contractor, Feliciano is responsible for his own acts and omissions. As he alone was in control over the manner of how he was to undertake the hydro-pressure test, he alone must bear the consequences of his negligence, if any, in the conduct of the same. Anent the issue of damages, the same has been rendered moot by the failure of private respondent to establish an employer-employee relationship between petitioner and Feliciano. Absent said relationship, petitioner cannot be held liable for the acts and omissions of the independent contractor, Feliciano. WHEREFORE, premises considered, the appealed decision of respondent Court of Appeals is hereby SET ASIDE and the decision of the trial court REINSTATED. Without pronouncement as to costs. SO ORDERED. Narvasa, C .J ., Padilla, Regalado and Nocon, JJ ., concur. Footnotes
1. Rollo, p. 63. 2. Decision, "Clarita T. Camacho vs. Pilipinas Shell Petroleum Corporation," Civil Case No. 83-20735, December 17, 1985, Judge Bernardo P. Pardo; Rollo, p. 94. 3. Penned by Justice Jorge S. Imperial; concurred in by Justices Manuel C. Herrera and Arturo B. Buena; Rollo, p. 53. 4. Hijos de F. Escao, Inc. vs. NLRC, 201 SCRA 63 (1991). 5. Besa vs. Trajano, 146 SCRA 501 (1986). 6. Supra, note 4 at p. 50. 7. Exhibit "3", Original Records, p. 258; TSN, February 7, 1985, pp. 24-26. 8. Ibid., p. 31.

9. TSN, March 28, 1985, pp. 30-31. 10. TSN, February 7, 1985, pp. 24-29.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 114733 January 2, 1997 AURORA LAND PROJECTS CORP. Doing business under the name "AURORA PLAZA" and TERESITA T. QUAZON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and HONORIO DAGUI, respondents.

HERMOSISIMA, JR., J.: The question as to whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. 1 In light of this observation, it behooves this Court to be ever vigilant in Checking the unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on investments at the expense of the lowly workingman. This petition for certiorari seeks the reversal of the Resolution 2 of public respondent National Labor Relations Commission dated March 16, 1994 affirming with modification the decision of the Labor Arbiter, dated May 25, 1992, finding petitioners liable to pay private respondent the total amount of P195,624.00 as separation pay and attorney's fees. The relevant antecedents: Private respondent Honorio Dagui was hired by Doa Aurora Suntay Tanjangco in 1953 to take charge of the maintenance and repair of the Tanjangco apartments and residential buildings. He was to perform carpentry, plumbing, electrical and masonry work. Upon the death of Doa Aurora Tanjangco in 1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of all the Tanjangco properties. On June 8, 1991, private respondent Dagui received the shock of his life when Mrs. Quazon suddenly told him: "Wala ka nang trabaho mula ngayon," 3 on the alleged ground that his work was unsatisfactory. On August 29, 1991, private respondent, who was then already sixty-two (62) years old, filed a complaint for illegal dismissal with the Labor Arbiter. On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered judgment, the decretal portion of which reads: IN VIEW OF ALL THE FOREGOING, respondents Aurora Plaza and/or Teresita Tanjangco Quazon are hereby ordered to pay the complainant the total amount of ONE HUNDRED NINETY FIVE THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P195,624.00) representing complainant's separation pay and the ten (10%) percent attorney's fees within ten (10) days from receipt of this Decision. All other issues are dismissed for lack of merit. 4 Aggrieved, petitioners Aurora Land Projects Corporation and Teresita T. Quazon appealed to the National Labor Relations Commission. The Commission affirmed, with modification, the Labor Arbiter's decision in a Resolution promulgated on March 16, 1994, in the following manner: WHEREFORE, in view of the above considerations, let the appealed decision be as it is hereby AFFIRMED with (the) MODIFICATION that complainant must be paid separation pay in the amount of P88,920.00 instead of P177,840.00. The award of attorney's fees is hereby deleted. 5 As a last recourse, petitioners filed the instant petition based on grounds not otherwise succinctly and distinctly ascribed, viz: I RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING THE LABOR ARBITER'S DECISION SOLELY ON THE BASIS OF ITS STATEMENT THAT "WE FAIL TO FIND ANY REASON OR JUSTIFICATION TO DISAGREE WITH THE LABOR ARBITER IN HIS FINDING THAT HONORIO DAGUI WAS DISMISSED BY THE RESPONDENT" (p. 7, RESOLUTION), DESPITE AND WITHOUT EVEN BOTHERING TO CONSIDER THE GROUNDS STATED IN PETITIONERS' APPEAL MEMORANDUM WHICH ARE PLAINLY MERITORIOUS. II

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN FINDING THAT COMPLAINANT WAS EMPLOYED BY THE RESPONDENTS MORE SO "FROM 1953 TO 1991" (p. 3, RESOLUTION). III RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AWARDING SEPARATION PAY IN FAVOR OF PRIVATE RESPONDENT MORE SO FOR THE EQUIVALENT OF 38 YEARS OF ALLEGED SERVICE. IV RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING BOTH PETITIONERS LIABLE FOR SEPARATION PAY. 6 It is our impression that the crux of this petition rests on two elemental issues: (1) Whether or not private respondent Honorio Dagui was an employee of petitioners; and (2) If he were, whether or not he was illegally dismissed. Petitioners insist that private respondent had never been their employee. Since the establishment of Aurora Plaza, Dagui served therein only as a job contractor. Dagui had control and supervision of whoever he would take to perform a contracted job. On occasion, Dagui was hired only as a "tubero" or plumber as the need arises in order to unclog sewerage pipes. Every time his services were needed, he was paid accordingly. It was understood that his job was limited to the specific undertaking of unclogging the pipes. In effect, petitioners would like us to believe that private respondent Dagui was an independent contractor, particularly a job contractor, and not an employee of Aurora Plaza. We are not persuaded. Section 8, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor Code provides in part: There is job contracting permissible under the Code if the following conditions are met: xxx xxx xxx (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. Honorio Dagui earns a measly sum of P180.00 a day (latest salary). 7 Ostensibly, and by no stretch of the imagination can Dagui qualify as a job contractor. No proof was adduced by the petitioners to show that Dagui was merely a job contractor, and it is absurd to expect that private respondent, with such humble resources, would have substantial capital or investment in the form of tools, equipment, and machineries, with which to conduct the business of supplying Aurora Plaza with manpower and services for the exclusive purpose of maintaining the apartment houses owned by the petitioners herein. The bare allegation of petitioners, without more, that private respondent Dagui is a job contractor has been disbelieved by the Labor Arbiter and the public respondent NLRC. Dagui, by the findings of both tribunals, was an employee of the petitioners. We are not inclined to set aside these findings. The issue whether or not an employer-employee relationship exists in a given case is essentially a question of fact. 8 As a rule, repetitious though it has become to state, this Court does not review supposed errors in the decision of the NLRC which raise factual issues, because factual findings of agencies exercising quasi-judicial functions [like public respondent NLRC] are accorded not only respect but even finality, aside from the consideration that this Court is essentially not a trier of facts. 9 However, we deem it wise to discuss this issue full-length if only to bolster the conclusions reached by the labor tribunals, to which we fully concur. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of

wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. 10 It is the socalled "control test," and that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished, 11 which constitute the most important index of the existence of the employer-employee relationship. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. 12 All these elements are present in the case at bar. Private respondent was hired in 1953 by Doa Aurora Suntay Tanjangco (mother of Teresita Tanjangco-Quazon), who was then the one in charge of the administration of the Tanjangco's various apartments and other properties. He was employed as a stay-in worker performing carpentry, plumbing, electrical and necessary work (sic) needed in the repairs of Tanjangco's properties. 13 Upon the demise of Doa Aurora in 1982, petitioner Teresita Tanjangco-Quazon took over the administration of these properties and continued to employ the private respondent, until his unceremonious dismissal on June 8, 1991. 14 Dagui was not compensated in terms of profits for his labor or services like an independent contractor. Rather, he was paid on a daily wage basis at the rate of P180.00. 15 Employees are those who are compensated for their labor or services by wages rather than by profits. 16 Clearly, Dagui fits under this classification. Doa Aurora and later her daughter petitioner Teresita Quazon evidently had the power of dismissal for cause over the private respondent. 17 Finally, the records unmistakably show that the most important requisite of control is likewise extant in this case. It should be borne in mind that the power of control refers merely to the existence of the power and not to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the former has a right to wield the power. 18 The establishment of petitioners is engaged in the leasing of residential and apartment buildings. Naturally, private respondent's work therein as a maintenance man had to be performed within the premises of herein petitioners. In fact, petitioners do not dispute the fact that Dagui reports for work from 7:00 o'clock in the morning until 4:00 o'clock in the afternoon. It is not farfetched to expect, therefore, that Dagui had to observe the instructions and specifications given by then Doa Aurora and later by Mrs. Teresita Quazon as to how his work had to be performed. Parenthetically, since the job of a maintenance crew is necessarily done within company premises, it can be inferred that both Doa Aurora and Mrs. Quazon could easily exercise control on private respondent whenever they please. The employment relationship established, the next question would have to be: What kind of an employee is the private respondent regular, casual or probationary? We find private respondent to be a regular employee, for Article 280 of the Labor Code provides: Regular and Casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. As can be gleaned from this provision, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. 19 Whichever standard is applied, private respondent qualifies as a regular employee. As aptly ruled by the Labor Arbiter:

. . . As owner of many residential and apartment buildings in Metro Manila, the necessity of maintaining and employing a permanent stay-in worker to perform carpentry, plumbing, electrical and necessary work needed in the repairs of Tanjangco's properties is readily apparent and is in fact needed. So much so that upon the demise of Doa Aurora Tanjangco, respondent's daughter Teresita Tanjangco-Quazon apparently took over the administration of the properties and continued to employ complainant until his outright dismissal on June 8, 1991. . . . 20 The jobs assigned to private respondent as maintenance man, carpenter, plumber, electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. Moreover, such a continuing need for his services by herein petitioners is sufficient evidence of the necessity and indispensability of his services to petitioners' business or trade. Private respondent Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year, that is, beginning 1953 until 1982, under Doa Aurora; and then from 1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine (29) and nine (9) years respectively. Owing to private respondent's length of service, he became a regular employee, by operation of law, one year after he was employed in 1953 and subsequently in 1982. In Baguio Country Club Corp., v. NLRC, 21 we decided that it is more in consonance with the intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day immediately after the end of his first year of service. To rule otherwise is to impose a burden on the employee which is not sanctioned by law. Thus, the law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Petitioners argue, however, that even assuming arguendo that private respondent can be considered an employee, he cannot be classified as a regular employee. He was merely a project employee whose services were hired only with respect to a specific job and only while the same exists, 22 thus falling under the exception of Article 280, paragraph 1 of the Labor Code. Hence, it is claimed that he is not entitled to the benefits prayed for and subsequently awarded by the Labor Arbiter as modified by public respondent NLRC. The circumstances of this case in light of settled case law do not, at all, support this averment. Consonant with a string of cases beginning with Ochoco v. NLRC, 23 followed by Philippine National Construction Corporation v.NLRC, 24 Magante v. NLRC, 25 and Capitol Industrial Construction Corporation v. NLRC, 26 if truly, private respondent was employed as a "project employee," petitioners should have submitted a report of termination to the nearest public employment office everytime his employment is terminated due to completion of each project, as required by Policy Instruction No. 20, which provides: Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of project in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes . Throughout the duration of private respondent's employment as maintenance man, there should have been filed as many reports of termination as there were projects actually finished, if it were true that private respondent was only a project worker. Failure of the petitioners to comply with this simple, but nonetheless compulsory, requirement is proof that Dagui is not a project employee. 27 Coming now to the second issue as to whether or not private respondent Dagui was illegally dismissed, we rule in the affirmative. Jurisprudence abound as to the rule that the twin requirements of due process, substantive and procedural, must be complied with, before a valid dismissal exists. 28 Without which the dismissal becomes void. 29 The twin requirements of notice and hearing constitute the essential elements of due process. This simply means that the employer shall afford the worker ample opportunity to be beard and to defend himself with the assistance of his representative, if he so desires. 30 As held in the case of Pepsi Cola Bottling Co. v. NLRC: 31 The law requires that the employer must furnish the worker sought to be dismissed with two written noticesbefore termination of employee can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which

informs the employee of the employer's decision to dismiss him (Section 13, BP 130; Sections, 2-6, Rule XIV, Book V Rules and Regulations Implementing the Labor Code as amended), Failure to comply with the requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of which, any judgment reached by management is void and inexistent. (Tingson, Jr. v. NLRC, 185 SCRA 498 [1990]; National Service Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA 365 [1990]. These mandatory requirements were undeniably absent in the case at bar. Petitioner Quazon dismissed private respondent on June 8, 1991, without giving him any written notice informing the worker herein of the cause for his termination. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. He was simply told: "Wala ka nang trabaho mula ngayon," allegedly because of poor workmanship on a previous job. 32 The undignified manner by which private respondent's services were terminated smacks of absolute denial of the employee's right to due process and betrays petitioner Quazon's utter lack of respect for labor. Such an attitude indeed deserves condemnation. The Court, however, is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. No backwages were awarded. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. They are separate and distinct from each other. In the event that reinstatement is no longer possible, as in this case, 33 separation pay is awarded to the employee. The award of separation pay is in lieu of reinstatement and not of backwages. In other words, an illegally dismissed employee is entitled to (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages. 34 Payment of backwages is specifically designed to restore an employee's income that was lost because of his unjust dismissal. 35 On the other hand, payment of separation pay is intended to provide the employee money during the period in which he will be looking for another employment. 36 Considering, however, that the termination of private respondent Dagui was made on June 8, 1991 or after the effectivity of the amendatory provision of Republic Act No. 6715 on March 21, 1989, private respondent's backwages should be computed on the basis of said law. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sansbackwages. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, 37 law and jurisprudence authorize a tribunal to consider errors, although unassigned, if they involve (1) errors affecting the lower court's jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical errors. 38 In this case, the failure of the Labor Arbiter and the public respondent NLRC to award backwages to the private respondent, who is legally entitled thereto having been illegally dismissed, amounts to a "plain error" which we may rectify in this petition, although private respondent Dagui did not bring any appeal regarding the matter, in the interest of substantial justice. The Supreme Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 39 Rules of procedure are mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. 40 Thus, substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. 41 Petitioner Quazon argues that, granting the petitioner corporation should be held liable for the claims of private respondent, she cannot be made jointly and severally liable with the corporation, notwithstanding the fact that she is the highest ranking officer of the company, since Aurora Plaza has a separate juridical personality. We disagree. In the cases of Maglutac v. National Labor Relations Commission, 42 Chua v. National Labor Relations Commission, 43 and A.C. Ransom Labor Union-CCLU v. National Labor Relations Commission 44 we were consistent in holding that the highest and most ranking officer of the corporation, which in this case is petitioner Teresita Quazon as manager of Aurora Land Projects Corporation, can be held jointly and severally liable with the corporation for the payment of the unpaid money claims of its employees who were illegally dismissed. In this case, not only was Teresita Quazon the most ranking officer of Aurora Plaza at the time of the termination of the private respondent, but worse, she had a direct hand in the private respondent's illegal dismissal. A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. 45 Here, the failure of petitioner Quazon to observe

the mandatory requirements of due process in terminating the services of Dagui evinced malice and bad faith on her part, thus making her liable. Finally, we must address one last point. Petitioners aver that, assuming that private respondent can be considered an employee of Aurora Plaza, petitioners cannot be held liable for separation pay for the duration of his employment with Doa Aurora Tanjangco from 1953 up to 1982. If petitioners should be held liable as employers, their liability for separation pay should only be counted from the time Dagui was rehired by the petitioners in 1982 as a maintenance man. We agree. Petitioners' liability for separation pay ought to be reckoned from 1982 when petitioner Teresita Quazon, as manager of Aurora Plaza, continued to employ private respondent. From 1953 up to the death of Doa Aurora sometime in 1982, private respondent's claim for separation pay should have been filed in the testate or intestate proceedings of Doa Aurora. This is because the demand for separation pay covered by the years 1953-1982 is actually a money claim against the estate of Doa Aurora, which claim did not survive the death of the old woman. Thus, it must be filed against her estate in accordance with Section 5, Rule 86 of the Revised Rules of Court, to wit: Sec. 5. Claims which must be filed under tire notice. If not filed, barred; exceptions . All claims for money against the decedent, arising from contract , express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. . . . WHEREFORE, the instant petition is partly GRANTED and the Resolution of the public respondent National Labor Relations Commission dated March 16, 1994 is hereby MODIFIED in that the award of separation pay against the petitioners shall be reckoned from the date private respondent was re-employed by the petitioners in 1982, until June 8, 1991. In addition to separation pay, full backwages are likewise awarded to private respondent, inclusive of allowances, and other benefits or their monetary equivalent pursuant to Article 279 46 of the Labor Code, as amended by Section 34 of Republic Act No. 6715, computed from the time he was dismissed on June 8, 1991 up to the finality of this decision, without deducting therefrom the earnings derived by private respondent elsewhere during the period of his illegal dismissal, pursuant to our ruling in Osmalik Bustamante, et al. v. National Labor Relations Commission. 47 No costs. SO ORDERED. Padilla, Bellosillo, Vitug and Kapunan, JJ., concur. Footnotes
1 Brotherhood Labor Unity Movement of the Philippines v. Zamora, 147 SCRA 49, 54 [1987], citingMafinco Trading Corporation v. Ople, 70 SCRA 139 [1976]. 2 Docketed as NLRC NCR CA 00344-92 and NLRC NCR 00-08-05033-91. 3 Rollo, 202. 4 Rollo, p. 70-71. 5 Rollo, p. 78. 6 Petition, p. 17; Rollo, p. 22. 7 Rollo, p. 73. 8 Cathedral School of Technology v. National Labor Relations Commission, 214 SCRA 551, 558 [1992] citing RJL Martinez Fishing Corporation v. National Labor Relations Commission, 127 SCRA 454 [1984]; Murillo v. Sun Valley Realty, Inc., 163 SCRA 271 [1988]. 9 Bernardo Jimenez and Jose Jimenez v. National Labor Relations Commission, G.R. No. 116960, April 2, 1996. 10 Ibid., citing Canlubang Security Agency v. National Labor Relations Commission, 216 SCRA 280 [1992]; Ruga v. National Labor Relations Commission, 181 SCRA 266 [1990]; Makati Haberdashery, Inc. v. National Labor Relations Commission, 179 SCRA 448 [1989]. 11 Investment Planning Corporation of the Phils. v. Social Security System, 21 SCRA 924, 929 [1967]. 12 Dy Keh Beng v. International Labor and Marine Union of the Philippines, 90 SCRA 161, 167 [1979]. 13 Rollo, pp. 67-68. 14 Ibid. 15 Supra.

16 People v. Distributors Division, Smoked Fish Workers Union, Local No. 20377, Sup. 7 N.Y. 2d 185,187 in "Words and Phrases," loc. cit. 17 Supra. 18 MAM Realty Development Corporation v. National Labor Relations Commission, 244 SCRA 797, 800-801 [1995], citing Zanotte Shoes/Leonardo Lorenzo v. National Labor Relations Commission, 241 SCRA 261 [1995]; Dy Keh Beng v. International Labor and Marine Union of the Philippines, 90 SCRA 161 [1979]. 19 Philippine Geothermal, Inc. v. National Labor Relations Commission, 189 SCRA 211, 215 [1990] citing Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Olalia v. Drilon, 185 SCRA 190 (1990]. 20 Rollo, pp. 67-68. 21 206 SCRA 643, 650 [1992]. 22 Rollo, p. 34. 23 120 SCRA 774 [1983]. 24 174 SCRA 191 [1989]. 25 185 SCRA 21 [1990]. 26 221 SCRA 469 [1993]. 27 See Supra., Note 24 at 194. 28 Nitto Enterprises v. National Labor Relations Commission, 248 SCRA 654, 662 [1995] citingCentury Textile Mills, Inc. v. National Labor Relations Commission, 161 SCRA 528 [1988]; Gold City Integ. Port Services, Inc. v. National Labor Relations Commission, 189 SCRA 811 [1990]; Kwikway Eng. Works v. NLRC, 195 SCRA 526 [1991]. 29 Ibid. 30 Ibid. 31 210 SCRA 277, 286 [1992]. 32 Supra. 33 Rollo, p. 70. 34 Torillo v. Leogardo, Jr., 197 SCRA 471, 477 [1991]. 35 Lopez, Jr. v. National Labor Relations Commission, 245 SCRA 644, 650 [1995] citing General Textile Inc. v. National Labor Relations Commission, 243 SCRA 232 [1995]. 36 Ibid., citing A' Prime Security Services, Inc. v. National Labor Relations Commission, 220 SCRA 142 [1993]. 37 Philippine Airlines, Inc. v. Court of Appeals, 185 SCRA 110, 123 [1990], citing Aparri v. CA, 13 SCRA 611, Dy v. Kuizon, 113 Phil. 592; Borromeo v. Zaballero, 109 Phil. 332. 38 Santos vs. Court of Appeals, 221 SCRA 42, 46 [1993], citing Section 7, Rule 51 of the Revised Rules of Court, which can be applied by analogy in this case. 39 Regalado, Florenz D., Remedial Law Compendium, Vol. I, 5th Revised Edition, p. 378, citingOrtigas, Jr. v. Lufthansa German Airlines, L-28773, June 30, 1975; Soco v. Militante, L-58961, June 28, 1983. 40 Radio Communications of the Philippines, Inc. v. NLRC, 210 SCRA 222, 227 [1992], citing Piczon v. Court of Appeals, 190 SCRA 31 [1990]. 41 Ibid. 42 189 SCRA 767 [1990]. 43 182 SCRA 353 [1990]. 44 142 SCRA 269 [1986]. 45 Businessday Information Systems and Services, Inc. v. NLRC, 221 SCRA 9, 14 [1993]. 46 Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 47 G.R. No. 111651, November 28, 1996.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 152459

June 15, 2006

EMELITA LEONARDO, CONRADO BARGAMENTO, EMELITA NUEZ, RODOLFO GRABAN, and ROBERTO GRABAN, Petitioners, vs. COURT OF APPEALS and DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for review assailing the 29 June 2001 Decision 1 and 20 February 2002 Resolution2 of the Court of Appeals in CA-G.R. SP No. 51160. The Court of Appeals set aside the Decision of the National Labor Relations Commission (NLRC) which sustained the Labor Arbiters Decision holding Digital Telecommunications Philippines, Inc. (DIGITEL) jointly and severally liable with Balagtas Telephone Company (BALTEL) and its proprietor Domingo de Asis.3 The Antecedent Facts BALTEL holds the franchise from the Municipality of Balagtas, Bulacan to operate a telephone service in the municipality. BALTEL also has authority from the National Telecommunications Commission (NTC) to operate in the municipality. BALTEL hired Emelita Leonardo, Conrado Bargamento, Emelita Nuez, Rodolfo Graban, and Roberto Graban ("petitioners") for various positions4 in the company. On 22 April 1991,5 BALTEL6 and DIGITEL entered into a management contract.7 Under the terms of the contract, DIGITEL was to provide personnel, consultancy and technical expertise in the management, administration, and operation of BALTELs telephone service in Balagtas, Bulacan. DIGITEL also undertook to improve the internal and external plants of BALTELs telephone system and to handle customer relations and such other matters necessary for the efficient management and operation of the telephone system. In a letter8 dated 27 January 1994, BALTEL informed the NTC that it would cease to operate effective 28 February 1994 because it was no longer in a financial position to continue its operations. On 17 February 1994, BALTEL assigned to DIGITEL its buildings and other improvements on a parcel of land in Balagtas, Bulacan covered by OCT No. O-7280 where BALTEL conducted its business operations. The assignment was in partial payment of BALTELs obligation to DIGITEL which as of 31 December 1993 amounted to P712,471.74. On 28 February 1994, petitioners employment ceased. They executed separate, undated and similarly worded quitclaims acknowledging receipt of various amounts representing their claims from BALTEL. In their quitclaims, petitioners absolved and released BALTEL from all monetary claims that arose out of their employer-employee relationship with the company. Petitioners also acknowledged that BALTEL closed its operations due to serious business losses. On 1 March 1994, petitioners filed a complaint against BALTEL and Domingo De Asis for recovery of salary differential and attorneys fees. Petitioners later filed a supplemental complaint to include illegal dismissal as additional cause of action and to implead DIGITEL as additional respondent. DIGITEL denied having any liability on the ground that it was not petitioners employer. In its 29 May 1995 Decision, 9 Labor Arbiter Dominador B. Saludares ruled as follows: WHEREFORE, premises considered, judgment is hereby entered in favor of the complainants and against respondents Balagtas Telephone System and/or Domingo de Asis and Digital Telecommunications Phils., Inc. ordering the latter, jointly and severally as follows: 1. To pay the sum of P14,950.00 representing the unpaid salaries of all the five (5) complainants for the month of February 1994; 2. To pay another sum of P4,486.44 representing the unpaid overtime pay of complainants Emelita Leonardo, Conrado Bargamento and Emelita Nuez for February 1994;

3. To pay the sum of P71,400.00 as salary differential of the complainants; 4. To pay the backwages of all complainants from the date they were dismissed on February 28, 1994 up to this writing computed in the sum total of P224,250.00, less their separation pay which they have received; 5. To pay the sum of P31,508.64 as attorneys fees which is equivalent to ten (10%) percent of the amount of the award; and 6. To immediately reinstate all the complainants to their former or equivalent positions under the same terms and conditions prevailing prior to their dismissal or separation including payment of their prevailing basic salaries and all other benefits or at the option of the employer merely reinstate in the payroll also with the payment of their salaries and all other benefits in accordance with Article 223 of the Labor Code, as amended by R.A. No. 6715. Respondents are further ordered to submit upon receipt hereof their compliance with the reinstatement aspect. SO DECIDED.10 DIGITEL appealed the Labor Arbiters Decision before the NLRC. In its 29 December 1997 Decision, 11 the NLRC dismissed the appeal. DIGITEL moved for the reconsideration of the NLRC Decision. In its 29 July 1998 Decision,12 the NLRC denied DIGITELs motion for reconsideration. DIGITEL filed a petition for review before this Court. In its 2 December 1998 Resolution, this Court referred the case to the Court of Appeals pursuant to St. Martin Funeral Homes v. NLRC.13 The Ruling of the Court of Appeals In its 29 June 2001 Decision, the Court of Appeals reversed and set aside the NLRC Decision insofar as it held DIGITEL severally liable with BALTEL and Domingo de Asis. The Court of Appeals ruled that DIGITEL is not the successor-in-interest of BALTEL. The Court of Appeals held that the records do not show that DIGITEL became the absolute owner of BALTEL, or that DIGITEL absorbed BALTELs employees. The Court of Appeals further ruled that there was no showing that DIGITEL acquired BALTELs franchise. The Court of Appeals ruled: WHEREFORE, the petition is GRANTED. The assailed decision of the National Labor Relations Commission is ANNULLED and SET ASIDE insofar as it held petitioner jointly and severally liable with Balagtas Telephone Company and Domingo de Asis for the obligations of the two to private respondents, with the result that private respondents complaint against petitioner before the labor arbiter is DISMISSED. SO ORDERED.14 Petitioners moved for the reconsideration of the Court of Appeals Decision. In its 20 February 2002 Resolution, the Court of Appeals denied petitioners motion for reconsideration for lack of merit. Hence, the petition before this Court. Petitioners allege that the Court of Appeals erred in disregarding the factual findings of both the Labor Arbiter and the NLRC which should have been given more weight by appellate tribunals. The Issues The petition raises the following issues: 1. Whether DIGITEL is the successor-in-interest of BALTEL; and 2. Whether an employer-employee relationship exists between petitioners and DIGITEL. The Ruling of This Court The petition has no merit.

The Court of Appeals has the power to review the decisions of the NLRC and to pass upon factual issues raised by the parties. In R & E Transport, Inc. v. Latag,15 this Court held: The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled issue. As early as St. Martin Funeral Homes v. NLRC, we have definitively ruled that the proper remedy to ask for the review of a decision of the NLRC is a special civil action for certiorari under Rule 65 of the Rules of Court, and that such petition should be filed with the CA in strict observance of the doctrine on the hierarchy of courts. Moreover, it has already been explained that under Section 9 of Batas Pambansa (BP) 129, as amended by Republic Act 7902, the CA pursuant to the exercise of its original jurisdiction over petitions for certiorari was specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. We agree with petitioners that factual findings of quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. However, this rule is not absolute. When there is a showing that the factual findings of administrative bodies were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.16 In this case, the Court of Appeals found "nothing in the records [to support] the conclusion that DIGITEL became the absolute owner of BALTEL or that the former absorbed the latters employees." Hence, the Court of Appeals is justified in reviewing the factual findings of both the Labor Arbiter and the NLRC. DIGITEL is not BALTELs Successor-in-Interest Petitioners allege that DIGITEL took over the ownership of BALTEL, and as the new owner, DIGITEL then absorbed petitioners as employees. The Court of Appeals correctly held that DIGITEL is not BALTELs successor-in-interest. It is not disputed that BALTEL has the franchise to operate a telephone system in Balagtas, Bulacan. It is also not disputed that on 21 April 1991, BALTEL and DIGITEL entered into a management contract which: 2. Appoints and contracts Digital Telecommunications Philippines, Inc. (Digitel for short), a corporation organized and existing under the laws of the Philippines, to provide personnel, consultancy and technical expertise in the management, administration and operation of the telephone service/system in Balagtas, Bulacan; to improve the internal and external plants of such system, provided that any improvement, whether by addition or replacement, shall belong to Digitel unless such improvement(s) is fully reimbursed; to handle customer relations and such other matters necessary for the efficient management and operation of said telephone service/system. 3. Subject to paragraph B, defines the terms of this Appointment and Agreement to one (1) year from date hereof unless renewed for another term at the option of Digitel. 4. Agrees to reimburse Digitel for all expenses incurred in the performance of its aforesaid services provided that such expenses do not exceed the net operating cash revenues of said telephone service/system unless otherwise mutually agreed upon by the herein parties in writing. 5. Grants Digitel the right of first option to buy the franchise and the telephone system, provided that the purchase shall be subject to the prior approval of the Municipal Council of Balagtas, Bulacan, the NTC and the DOTC. For this purpose, Digitel shall remit to Estela de Asis as attorney-in-fact of Domingo de Asis the amount ofP415,000.00, as option money, which shall be deducted from a mutually agreed purchase price in the event Digitel exercises the option by written notice to Estela or Domingo de Asis within 180 days from date hereof. In the event there is no agreement on the purchase price, then such price shall be the net asset value (original cost less depreciation) of all the serviceable equipment as of the date hereof. 17 The contract gives DIGITEL the option to buy BALTELs franchise. However, the records do not show that DIGITEL exercised the option. Petitioners failed to show that DIGITEL eventually purchased BALTELs franchise and telephone system. The Court also notes that the purchase shall be subject to the prior approval of the Municipal Council of Balagtas, Bulacan, the NTC and the Department of Transportation and Communications (DOTC). The records do not show that DIGITEL sought the approval of the Municipal Council of Balagtas,

Bulacan, the NTC or the DOTC to purchase BALTELs franchise. When BALTEL eventually discontinued its operations, Estela de Asis informed the NTC of the cessation of its operations. On DIGITELs continued operations in Balagtas, Bulacan, we adopt the findings of the Court of Appeals that it is pursuant to a Financial Lease Agreement18 entered into by DOTC and DIGITEL. Under the Financial Lease Agreement, the DOTC grants DIGITEL the exclusive right to lease, operate, and develop DOTCs local exchange facilities and to perform the telecommunications services in the cities or municipalities covered by the Financial Lease Agreement. Under Project NTP I-1,19 Balagtas, Bulacan is among the municipalities covered by the Financial Lease Agreement. There is No Employer-Employee Relationship Between DIGITEL and Petitioners To determine the existence of an employer-employee relationship, the Court has to resolve who has the power to select the employees, who pays for their wages, who has the power to dismiss them, and who exercises control in the methods and the results by which the work is accomplished. 20 The most important element of an employeremployee relationship is the control test. Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. 21 In this case, DIGITEL undoubtedly has the power of control. However, DIGITELs exercise of the power of control necessarily flows from the exercise of its responsibilities under the management contract which includes providing for personnel, consultancy and technical expertise in the management, administration, and operation of the telephone system. Thus, the control test has no application in this case. The Court notes that DIGITEL did not hire petitioners. BALTEL had already employed petitioners when BALTEL entered into the management contract with DIGITEL. We also agree with the Court of Appeals that the fact that DIGITEL uses its payslips does not necessarily imply that DIGITEL pays petitioners salaries. As pointed out by the Court of Appeals, DIGITEL introduced its own financial and accounting systems to BALTEL and it included the use of DIGITELs payslips for accounting purposes. The management contract provides that BALTEL shall reimburse DIGITEL for all expenses incurred in the performance of its services and this includes reimbursement of whatever amount DIGITEL paid or advanced to BALTELs employees. Finally, DIGITEL has no power to dismiss BALTELs employees. When DIGITEL wanted to dismiss Roberto Graban for habitual tardiness, BALTEL did not approve DIGITELs recommendation. In the end, Roberto Graban was just suspended from work. In sum, no employer-employee relationship exists between petitioners and DIGITEL. Hence, DIGITEL is not solidarily liable with BALTEL and Domingo de Asis to petitioners. WHEREFORE, we DENY the petition. We AFFIRM the 29 June 2001 Decision and 20 February 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 51160. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson CONCHITA CARPIO MORALES Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice DANTE O. TINGA Asscociate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBING Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ARTEMIO V. PANGANIBAN Chief Justice Footnotes
1

Penned by Associate Justice Edgardo P. Cruz with Associate Justices Ramon Mabutas, Jr. and Roberto A. Barrios, concurring. Rollo, pp. 315-324. 2 Penned by Associate Justice Edgardo P. Cruz with Associate Justices Delilah Vidallon Magtolis and Roberto A. Barrios, concurring. Id. at 34. 3 Also referred to as Domingo Asis. 4 Emelita Leonardo was hired in 1988 as telephone operator; Conrado Bargamento was hired in 1977 as collector; Emelita Nuez was hired in 1984 as telephone operator; Rodolfo Graban was hired in 1971 as telephone lineman and Roberto Graban was hired in 1990 as telephone lineman. Rollo, pp. 315-316. 5 21 April 1991 in the Decision of the Court of Appeals. 6 The agreement was signed by Estela L. de Asis, attorney-in-fact of Domingo de Asis who owns the franchise to operate the telephone system. 7 Denominated as "Appointment and Agreement." 8 Signed by Estela de Asis. Rollo, p. 107. 9 Id. at 69-81. 10 Id. at 79-81. 11 Penned by Commissioner Vicente S.E. Veloso with Commissioner Alberto R. Quimpo, concurring. CA rollo, pp. 16-22. 12 Penned by Commissioner Vicente S.E. Veloso with Commissioners Rogelio L. Rayala and Alberto R. Quimpo, concurring. Id. at 24-26. 13 356 Phil. 811 (1998). 14 Rollo, pp. 323-324. 15 G.R. No. 155214, 13 February 2004, 422 SCRA 698, at 703-704. 16 Id. 17 Rollo, pp. 92-93. 18 Id. at 287-309. 19 Id. at 313. 20 Miguel v. JCT Group, Inc., G.R. No. 157752, 16 March 2005, 453 SCRA 529. 21 Abante, Jr. v. Lamadrid Bearing & Parts Corporation, G.R. No. 159890, 28 May 2004, 430 SCRA 368.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 159333

July 31, 2006

ARSENIO T. MENDIOLA, petitioner, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PACIFIC FOREST RESOURCES, PHILS., INC. and/or CELLMARK AB, respondents.

DECISION PUNO, J.: On appeal are the Decision1 and Resolution2 of the Court of Appeals, dated January 30, 2003 and July 30, 2003, respectively, in CA-G.R. SP No. 71028, affirming the ruling 3 of the National Labor Relations Commission (NLRC), which in turn set aside the July 30, 2001 Decision4 of the labor arbiter. The labor arbiter declared illegal the dismissal of petitioner from employment and awarded separation pay, moral and exemplary damages, and attorney's fees. The facts are as follows: Private respondent Pacific Forest Resources, Phils., Inc. (Pacfor) is a corporation organized and existing under the laws of California, USA. It is a subsidiary of Cellulose Marketing International, a corporation duly organized under the laws of Sweden, with principal office in Gothenburg, Sweden. Private respondent Pacfor entered into a "Side Agreement on Representative Office known as Pacific Forest Resources (Phils.), Inc."5 with petitioner Arsenio T. Mendiola (ATM), effective May 1, 1995, "assuming that PacforPhils. is already approved by the Securities and Exchange Commission [SEC] on the said date." 6 The Side Agreement outlines the business relationship of the parties with regard to the Philippine operations of Pacfor. Private respondent will establish a Pacfor representative office in the Philippines, to be known as Pacfor Phils, and petitioner ATM will be its President. Petitioner's base salary and the overhead expenditures of the company shall be borne by the representative office and funded by Pacfor/ATM, since Pacfor Phils. is equally owned on a 50-50 equity by ATM and Pacfor-usa. On July 14, 1995, the SEC granted the application of private respondent Pacfor for a license to transact business in the Philippines under the name of Pacfor or Pacfor Phils. 7 In its application, private respondent Pacfor proposed to establish its representative office in the Philippines with the purpose of monitoring and coordinating the market activities for paper products. It also designated petitioner as its resident agent in the Philippines, authorized to accept summons and processes in all legal proceedings, and all notices affecting the corporation. 8 In March 1997, the Side Agreement was amended through a "Revised Operating and Profit Sharing Agreement for the Representative Office Known as Pacific Forest Resources (Philippines)," 9 where the salary of petitioner was increased to $78,000 per annum. Both agreements show that the operational expenses will be borne by the representative office and funded by all parties "as equal partners," while the profits and commissions will be shared among them. In July 2000, petitioner wrote Kevin Daley, Vice President for Asia of Pacfor, seeking confirmation of his 50% equity of Pacfor Phils.10 Private respondent Pacfor, through William Gleason, its President, replied that petitioner is not a part-owner of Pacfor Phils. because the latter is merely Pacfor-USA's representative office and not an entity separate and distinct from Pacfor-USA. "It's simply a 'theoretical company' with the purpose of dividing the income 50-50."11 Petitioner presumably knew of this arrangement from the start, having been the one to propose to private respondent Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on taxes.12 Petitioner claimed that he was all along made to believe that he was in a joint venture with them. He alleged he would have been better off remaining as an independent agent or representative of Pacfor-USA as ATM Marketing Corp.13 Had he known that no joint venture existed, he would not have allowed Pacfor to take the profitable business of his own company, ATM Marketing Corp. 14 Petitioner raised other issues, such as the rentals of office furniture, salary of the employees, company car, as well as commissions allegedly due him. The issues were not resolved, hence, in October 2000, petitioner wrote Pacfor-USA demanding payment of unpaid commissions and office furniture and equipment rentals, amounting to more than one million dollars. 15 On November 27, 2000, private respondent Pacfor, through counsel, ordered petitioner to turn over to it all papers, documents, files, records, and other materials in his or ATM Marketing Corporation's possession that belong to Pacfor or Pacfor Phils.16 On December 18, 2000, private respondent Pacfor also required petitioner to remit more than three hundred thousand-peso Christmas giveaway fund for clients of Pacfor Phils. 17 Lastly, private respondent Pacfor withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to it possession of the service car.18

Private respondent Pacfor likewise sent letters to its clients in the Philippines, advising them not to deal with Pacfor Phils. In its letter to Intercontinental Paper Industries, Inc., dated November 21, 2000, private respondent Pacfor stated: Until further notice, please course all inquiries and communications for Pacific Forest Resources (Philippines) to: Pacific Forest Resources 200 Tamal Plaza, Suite 200 Corte Madera, CA, USA 94925 (415) 927 1700 phone (415) 381 4358 fax Please do not send any communication to Mr. Arsenio "Boy" T. Mendiola or to the offices of ATM Marketing Corporation at Room 504, Concorde Building, Legaspi Village, Makati City, Philippines. 19 In another letter addressed to Davao Corrugated Carton Corp. (DAVCOR), dated December 2000, private respondent directed said client "to please communicate directly with us on any further questions associated with these payments or any future business. Do not communicate with [Pacfor] and/or [ATM]." 20 Petitioner construed these directives as a severance of the "unregistered partnership" between him and Pacfor, and the termination of his employment as resident manager of Pacfor Phils. 21 In a memorandum to the employees of Pacfor Phils., dated January 29, 2001, he stated: I received a letter from Pacific Forest Resources, Inc. demanding the turnover of all records to them effective December 19, 2000. The company records were turned over only on January 26, 2001. This means our jobs with Pacific Forest were terminated effective December 19, 2000. I am concerned about your welfare. I would like to help you by offering you to work with ATM Marketing Corporation. Please let me know if you are interested.22 On the basis of the "Side Agreement," petitioner insisted that he and Pacfor equally own Pacfor Phils. Thus, it follows that he and Pacfor likewise own, on a 50/50 basis, Pacfor Phils.' office furniture and equipment and the service car. He also reiterated his demand for unpaid commissions, and proposed to offset these with the remaining Christmas giveaway fund in his possession.23 Furthermore, he did not renew the lease contract with Pulp and Paper, Inc., the lessor of the office premises of Pacfor Phils., wherein he was the signatory to the lease agreement.24 On February 2, 2001, private respondent Pacfor placed petitioner on preventive suspension and ordered him to show cause why no disciplinary action should be taken against him. Private respondent Pacfor charged petitioner with willful disobedience and serious misconduct for his refusal to turn over the service car and the Christmas giveaway fund which he applied to his alleged unpaid commissions. Private respondent also alleged loss of confidence and gross neglect of duty on the part of petitioner for allegedly allowing another corporation owned by petitioner's relatives, High End Products, Inc. (HEPI), to use the same telephone and facsimile numbers of Pacfor, to possibly steal and divert the sales and business of private respondent for HEPI's principal, International Forest Products, a competitor of private respondent.25 Petitioner denied the charges. He reiterated that he considered the import of Pacfor President William Gleason's letters as a "cessation of his position and of the existence of Pacfor Phils." He likewise informed private respondent Pacfor that ATM Marketing Corp. now occupies Pacfor Phils.' office premises, 26 and demanded payment of his separation pay.27 On February 15, 2001, petitioner filed his complaint for illegal dismissal, recovery of separation pay, and payment of attorney's fees with the NLRC. 28 In the meantime, private respondent Pacfor lodged fresh charges against petitioner. In a memorandum dated March 5, 2001, private respondent directed petitioner to explain why he should not be disciplined for serious misconduct and conflict of interest. Private respondent charged petitioner anew with serious misconduct for the latter's alleged act of fraud and misrepresentation in authorizing the release of an additional peso salary for himself, besides the dollar salary agreed upon by the parties. Private respondent also accused petitioner of disloyalty and representation of conflicting interests for having continued using the Pacfor Phils.' office for

operations of HEPI. In addition, petitioner allegedly solicited business for HEPI from a competitor company of private respondent Pacfor.29 Labor Arbiter Felipe Pati ruled in favor of petitioner, finding there was constructive dismissal. By directing petitioner to turn over all office records and materials, regardless of whether he may have retained copies, private respondent Pacfor virtually deprived petitioner of his job by the gradual diminution of his authority as resident manager. Petitioner's position as resident manager whose duty, among others, was to maintain the security of its business transactions and communications was rendered meaningless. The dispositive portion of the decision of the Labor Arbiter reads: WHEREFORE, premises considered, judgment is hereby rendered ordering herein respondents Cellmark AB and Pacific Forest Resources, Inc., jointly and severally to compensate complainant Arsenio T. Mendiola separation pay equivalent to at least one month for every year of service, whichever is higher (sic), as reinstatement is no longer feasible by reason of the strained relations of the parties equivalent to five (5) months in the amount of $32,000.00 plus the sum of P250,000.00; pay complainant the sum of P500,000.00 as moral and exemplary damages and ten percent (10%) of the amounts awarded as and for attorney's fees. All other claims are dismissed for lack of basis. SO ORDERED.30 Private respondent Pacfor appealed to the NLRC which ruled in its favor. On December 20, 2001, the NLRC set aside the July 30, 2001 decision of the labor arbiter, for lack of jurisdiction and lack of merit. 31 It held there was no employer-employee relationship between the parties. Based on the two agreements between the parties, it concluded that petitioner is not an employee of private respondent Pacfor, but a full co-owner (50/50 equity). The NLRC denied petitioner's Motion for Reconsideration. 32 Petitioner was not successful on his appeal to the Court of Appeals. The appellate court upheld the ruling of the NLRC. Petitioner's Motion for Reconsideration33 of the decision of the Court of Appeals was denied. Hence, this appeal.34 Petitioner assigns the following errors: A. The Respondent Court of Appeals committed reversible error and abused its discretion in rendering judgment against petitioner since jurisdiction has been acquired over the subject matter of the case as there exists employer-employee relationship between the parties. B. The Respondent Court of Appeals committed reversible error and abused its discretion in ruling that jurisdiction over the subject matter cannot be waived and may be alleged even for the first time on appeal or considered by the court motu prop[r]io.35 The first issue is whether an employer-employee relationship exists between petitioner and private respondent Pacfor. Petitioner argues that he is an industrial partner of the partnership he formed with private respondent Pacfor, and also an employee of the partnership. Petitioner insists that an industrial partner may at the same time be an employee of the partnership, provided there is such an agreement, which, in this case, is the "Side Agreement" and the "Revised Operating and Profit Sharing Agreement." The Court of Appeals denied the appeal of petitioner, holding that "the legal basis of the complaint is not employment but perhaps partnership, co-ownership, or independent contractorship." Hence, the Labor Code cannot apply. We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-ownership exists between the parties.

In a partnership, the members become co-owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members. 36 The property or stock of the partnership forms a community of goods, a common fund, in which each party has a proprietary interest. 37 In fact, the New Civil Code regards a partner as a co-owner of specific partnership property. 38 Each partner possesses a joint interest in the whole of partnership property. If the relation does not have this feature, it is not one of partnership. 39 This essential element, the community of interest, or co-ownership of, or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. Petitioner is not a part-owner of Pacfor Phils. William Gleason, private respondent Pacfor's President established this fact when he said that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50. He stressed that petitioner knew of this arrangement from the very start, having been the one to propose to private respondent Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on taxes. Thus, the parties in this case, merely shared profits. This alone does not make a partnership. 40 Besides, a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter.41 This doctrine is based on the following considerations: (1) that the mutual agency between the partners, whereby the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers, would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively; and, (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation.42 No such authorization has been proved in the case at bar. Be that as it may, we hold that on the basis of the evidence, an employer-employee relationship is present in the case at bar. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. 43 In the instant case, all the foregoing elements are present. First, it was private respondent Pacfor which selected and engaged the services of petitioner as its resident agent in the Philippines. Second, as stipulated in their Side Agreement, private respondent Pacfor pays petitioner his salary amounting to $65,000 per annum which was later increased to $78,000. Third, private respondent Pacfor holds the power of dismissal, as may be gleaned through the various memoranda it issued against petitioner, placing the latter on preventive suspension while charging him with various offenses, including willful disobedience, serious misconduct, and gross neglect of duty, and ordering him to show cause why no disciplinary action should be taken against him. Lastly and most important, private respondent Pacfor has the power of control over the means and method of petitioner in accomplishing his work. The power of control refers merely to the existence of the power, and not to the actual exercise thereof. The principal consideration is whether the employer has the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right to control, which constitutes the test of the existence of an employer-employee relationship.44 In the case at bar, private respondent Pacfor, as employer, clearly possesses such right of control. Petitioner, as private respondent Pacfor's resident agent in the Philippines, is, exactly so, only an agent of the corporation, a representative of Pacfor, who transacts business, and accepts service on its behalf. This right of control was exercised by private respondent Pacfor during the period of November to December 2000, when it directed petitioner to turn over to it all records of Pacfor Phils.; when it ordered petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils.; and, when it withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to it the possession of the service car. It was also during this period when private respondent Pacfor sent letters to its clients in the Philippines, particularly Intercontinental Paper Industries, Inc. and DAVCOR, advising them not to deal with petitioner and/or Pacfor Phils. In its letter to DAVCOR, private respondent Pacfor replied to the client's request for an invoice payment extension, and formulated a revised payment program for DAVCOR. This is one unmistakable proof that private respondent Pacfor exercises control over the petitioner. Next, we shall determine if petitioner was constructively dismissed from employment. The evidence shows that when petitioner insisted on his 50% equity in Pacfor Phils., and would not quit however, private respondent Pacfor began to systematically deprive petitioner of his duties and benefits to make him feel

that his presence in the company was no longer wanted. First, private respondent Pacfor directed petitioner to turn over to it all records of Pacfor Phils. This would certainly make the work of petitioner very difficult, if not impossible. Second, private respondent Pacfor ordered petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils. Then it ordered petitioner to transfer title and turn over to it the possession of the service car. It also advised its clients in the Philippines, particularly Intercontinental Paper Industries, Inc. and DAVCOR, not to deal with petitioner and/or Pacfor Phils. Lastly, private respondent Pacfor appointed a new resident agent for Pacfor Phils.45 Although there is no reduction of the salary of petitioner, constructive dismissal is still present because continued employment of petitioner is rendered, at the very least, unreasonable. 46 There is an act of clear discrimination, insensibility or disdain by the employer that continued employment may become so unbearable on the part of the employee so as to foreclose any choice on his part except to resign from such employment. 47 The harassing acts of the private respondent are unjustified. They were undertaken when petitioner sought clarification from the private respondent about his supposed 50% equity on Pacfor Phils. Private respondent Pacfor invokes its rights as an owner. Allegedly, its issuance of the foregoing directives against petitioner was a valid exercise of management prerogative. We remind private respondent Pacfor that the exercise of management prerogative is not absolute. "By its very nature, encompassing as it could be, management prerogative must be exercised in good faith and with due regard to the rights of labor verily, with the principles of fair play at heart and justice in mind." The exercise of management prerogative cannot be utilized as an implement to circumvent our laws and oppress employees.48 As resident agent of private respondent corporation, petitioner occupied a position involving trust and confidence. In the light of the strained relations between the parties, the full restoration of an employment relationship based on trust and confidence is no longer possible. He should be awarded separation pay, in lieu of reinstatement. IN VIEW WHEREOF, the petition is GRANTED. The Court of Appeals' January 30, 2003 Decision in CA-G.R. SP No. 71028 and July 30, 2003 Resolution, affirming the December 20, 2001 Decision of the National Labor Relations Commission, are ANNULED and SET ASIDE. The July 30, 2001 Decision of the Labor Arbiter is REINSTATED with theMODIFICATION that the amount of P250,000.00 representing an alleged increase in petitioner's salary shall be deducted from the grant of separation pay for lack of evidence. SO ORDERED. Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur. Footnotes
1 2 3

CA rollo, pp. 1058-1072. Id. at 1105. Id. at 28-37. 4 Id. at 118-139. 5 Id. at 682-683. 6 Id. at 683. 7 Rollo, p. 63. 8 Id. at 64. 9 CA rollo, p. 684. Other terms of the revised agreement include: a) ATM and Pacfor-USA shall jointly manage Pacfor Phils. b) Pacfor-Phils. will earn commissions at 1.5% of F.O.B. value, the computation of which shall be shown in a credit memo issued by Cellmark/Pacfor. c) Losses, if any, will be reimbursed by Cellmark/Pacfor to ATM for ATM's share of the loss, for two consecutive years beginning with the first year of loss. d) The revised agreement shall take effect on January 1, 1997. e) Cash paid to the representative office by Pacific Paper belongs to Pacfor and will be held in trust by ATM. 10 Id. at 685. 11 Rollo, p. 528. 12 Id. at 527. 13 Ibid. 14 Id. at 532. 15 Id. at 539. 16 Id. at 541. 17 Id. at 544. 18 Id. at 545. 19 CA rollo, p. 829. 20 Id. at 828. 21 Rollo, pp. 546-550.

22 23

Id. at 553. Id. at 546-550. 24 Id. at 560. 25 Id. at 554-558. 26 Id. at 560. 27 Id. at 561. 28 CA rollo, p. 652. 29 Rollo, pp. 562-563. 30 Id. at 150. 31 Id. at 231-240. 32 CA rollo, pp. 333-335. 33 Id. at 84-86. 34 Rollo, pp. 14-36. 35 Id. at 27. 36 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed., citing Nelson v. Abraham, 177 P.2d 931 (1947); Henry v. Darnall, 246 Ill.App. 250 (1927), cited inNotes of Decisions, 7 U.L.A. 15 (1949). 37 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed., citing Darden v. Cox, 123 So.2d 68 (1960). 38 Art. 1811 (1st par.). 39 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed. 40 Fortis v. Gutierrez Hermanos, 6 Phil. 100 (1906). 41 J.M. Tuason v. Bolanos, 95 Phil. 106 (1954); Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed., citing 60 A.L.R.2d 917; 6 Fletcher, Cyclopedia of Corporations, Sec. 2520 (1950). 42 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed., citing 13 Am.Jur. 830; 60 A.L.R.2d 913. 43 Sy v. Court of Appeals, G.R. No. 142293, February 27, 2003, 398 SCRA 301, citing Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401, 420 (1998);Maraguinot, Jr. v. NLRC, 284 SCRA 539, 552 (1998); APP Mutual Benefit Association, Inc. v. NLRC, 267 SCRA 47, 57 (1997); Aurora Land Projects Corp. v. NLRC, 266 SCRA 48, 59 (1997); Encyclopedia Britannica (Phils.), Inc. v. NLRC, 264 SCRA 1, 6-7 (1996). 44 Feati University v. Bautista, G.R. No. L-21278, December 27, 1966, 18 SCRA 1191, 1217, citing Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261; 300 Ill. 487. 45 CA rollo, pp. 724-733. 46 Philippine Japan Active Carbon Corp. v. NLRC, G.R. No. 83239, March 8, 1989, 171 SCRA 164. 47 Unicorn Safety Glass, Inv. v. Basarte, G.R. No. 154689, November 25, 2004, 444 SCRA 287. 48 Ibid.

Republic of the Philippines SUPREME COURT FIRST DIVISION

G.R. No. 145443. March 18, 2005 RAQUEL P. CONSULTA, Petitioner, vs. COURT OF APPEALS, PAMANA PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA TOLENTINO,Respondents. DECISION CARPIO, J.:

The Case This is a petition for review1 assailing the Decision of 28 April 2000 and Resolution of 9 October 2000 promulgated by the Court of Appeals ("appellate court") 2 in CA-G.R. SP No. 50462. The appellate court reversed the Resolution of the National Labor Relations Commission ("NLRC") which in turn affirmed the Labor Arbiters Decision. The Antecedent Facts Pamana Philippines, Inc. ("Pamana") is engaged in health care business. Raquel P. Consulta ("Consulta") was a Managing Associate of Pamana. Consultas appointment dated 1 December 1987 states: We are pleased to formally confirm your appointment and confer upon you the authority as MANAGING ASSOCIATE (MA) effective on December 1, 1987 up to January 2, 1988. Your area of operation shall be within Metro Manila. In this capacity, your principal responsibility is to organize, develop, manage, and maintain a sales division and a full complement of agencies and Health Consultants (HealthCons) and to submit such number of enrollments and revenue attainments as may be required of your position in accordance with pertinent Company policies and guidelines. In pursuit of this objective, you are hereby tasked with the responsibilities of recruiting, training and directing your Supervising Associates (SAs) and the Health Consultants under their respective agencies, for the purpose of promoting our corporate Love Mission. In the performance of such duties, you are expected to uphold and promote the Companys interests and good image and to abide by its principles and established norms of conduct necessary and appropriate in the discharge of your functions. The authority as MA likewise vests upon you command responsibility for the actions of your SAs and HealthCons; the Company therefore reserves the right to debit your account for any accountabilities/financial obligations arising therefrom. By your acceptance of this appointment, it is understood that you must represent the Company on an exclusive basis, and must not engage directly or indirectly in activities, nor become affiliated in official or unofficial capacity with companies or organizations which compete or have the same business as Pamana. It is further understood that his [sic] self-inhibition shall be effective for a period of one year from date of official termination with the Company arising from any cause whatsoever. In consideration of your undertaking the assignment and the accompanying duties and responsibilities, you shall be entitled to compensation computed as follows: On Initial Membership Fee Entrance Fee 5% Medical Fee 6% On Subsequent Membership Fee 6% You are likewise entitled to participate in sales contests and such other incentives that may be implemented by the Company. This appointment is on a non-employer-employee relationship basis, and shall be in accordance with the Company Guidelines on Appointment, Reclassification and Transfer of Sales Associates. 3 Sometime in 1987, Consulta negotiated with the Federation of Filipino Civilian Employees Association ("FFCEA") working at the United States Subic Naval Base for a Health Care Plan for the FFCEA members. Pamana issued Consulta a Certification4 dated 23 November 1987, as follows: This certifies that the Emerald Group under Ms. Raquel P. Consulta, as Managing Consultant, is duly authorized to negotiate for and in behalf of PAMANA with the Federation of Filipino Civilian Employees Association covering all U.S. facilities in the Philippines, the coverage of FFCEA members under the Pamana Golden Care Health Plans.

Upon such negotiation and eventual execution of the contract agreements, entitlements of all benefits due the Emerald Group in its [sic] entirely including its [sic] Supervising Consultants and Health Consultants, by of commissions, over-rides and other package of benefits is hereby affirmed, obligated and confirmed as long as the contracts negotiated and executed are in full force and effect, including any and all renewals made. And provided further that the herein authorized consultants remain in active status with the Pamana Golden Care sales group. 5 On 4 March 1988, Pamana and the U.S. Naval Supply Depot signed the FFCEA account. Consulta, claiming that Pamana did not pay her commission for the FFCEA account, filed a complaint for unpaid wages or commission against Pamana, its President Razul Z. Requesto ("Requesto"), and its Executive Vice-President Aleta Tolentino ("Tolentino"). The Rulings of the Labor Arbiter and the NLRC In a Decision promulgated on 23 June 1993, Labor Arbiter Alex Arcadio Lopez ruled, as follows: ACCORDINGLY, respondent is hereby ordered to pay complainant her unpaid commission to be computed as against actual transactions between respondent PAMANA and the contracting Department of U.S. Naval Supply Depot upon presentation of pertinent document. Respondent is further ordered to pay ten (10%) percent attorneys fees. SO ORDERED.6 Pamana, Requesto and Tolentino ("Pamana et al.") appealed the Decision of the Labor Arbiter. In a Resolution7 promulgated on 22 July 1994, the NLRC dismissed the appeal and affirmed the Decision of the Labor Arbiter. In its Order promulgated on 3 October 1994, the NLRC denied the motion for reconsideration of Pamana et al. Pamana et al. filed a petition for certiorari before this Court. In compliance with this Courts resolution dated 6 February 1995, the Office of the Solicitor General submitted a Manifestation in Lieu of Comment praying to grant the petition on the ground that Consulta was not an employee of Pamana. On 23 November 1998, this Court referred the case to the appellate court pursuant to St. Martin Funeral Home v. NLRC.8 The Decision of the Appellate Court In its Decision promulgated on 28 April 2000, the appellate court reversed the NLRC Decision. The appellate court ruled that Consulta was a commission agent, not an employee of Pamana. The appellate court also ruled that Consulta should have litigated her claim for unpaid commission in an ordinary civil action. Hence, Consultas recourse to this Court. The Issues The issues are: 1. Whether Consulta was an employee of Pamana. 2. Whether the Labor Arbiter had jurisdiction over Consultas claim for unpaid commission. The Ruling of the Court We affirm the Decision of the appellate court. Consulta was an independent agent and not an employee of Pamana. The Four-Fold Test

In Viaa v. Al-Lagadan,9 the Court first laid down the four-fold test to determine the existence of an employeremployee relationship. The four elements of an employer-employee relationship, which have since been adopted in subsequent jurisprudence,10 are (1) the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control. The power to control is the most important of the four elements. In Insular Life Assurance Co., Ltd. v. NLRC,11 the Court explained the scope of the power to control, thus: x x x It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. In the present case, the power to control is missing. Pamana tasked Consulta to organize, develop, manage, and maintain a sales division, submit a number of enrollments and revenue attainments in accordance with company policies and guidelines, and to recruit, train and direct her Supervising Associates and Health Consultants.12However, the manner in which Consulta was to pursue these activities was not subject to the control of Pamana. Consulta failed to show that she had to report for work at definite hours. The amount of time she devoted to soliciting clients was left entirely to her discretion. The means and methods of recruiting and training her sales associates, as well as the development, management and maintenance of her sales division, were left to her sound judgment. Consulta claims that the documents she submitted show that Pamana had control on the conduct of her work and the means and methods to accomplish the work. However, the documents only prove the absence of the power to control. The Minutes of the meeting on 31 May 1988 of the Managing Associates with Fely Whitfield, VicePresident for Sales of Pamana, reflect the following: At this point Mrs. Whitfield gave some pointers on recruitment and selling techniques and reminded the group that the success of an agency is still people. The more recruits you have the better is your chance to achieve your quota. She also announced June be made a recruitment month, and told the MAs to remind their associates that if you cannot sell to a prospect then recruit him or her. She also discussed extensively the survey method of selling and recruitment and that the sales associates should be more aggressive in their day to day sales activity. She reminded the MAs to fill up their recruitment requirements to be able to participate in the monthly and quarterly contest . xxx 4. Recruitment Campaign In connection with the Recruitment Campaign for June, Mr. R. Canon 13 requested for Management support. He suggested that a recruitment Advertisement be placed in a leading Metropolitan daily Newspaper. The cost of which was unanimously suggested by MAs that Management should share at least 50% . 5. MAs agreed to pay in advance their share for the salary of the MAs Secretary .14 (Emphasis supplied) The Minutes of the 7 June 1988 meeting reflect the following: III. PRODUCTION & RECRUITMENT INCENTIVES

To help the MAs in their recruitment drive Mrs. Whitfield suggested some incentives to be undertaken by the MAs like (1) cash incentives for associates that bring in a recruit, (2) cash incentives based on production brought in by these new recruits. She said that MAs, as businessm[e]n should invest time, effort & money to their work, because it will redown [sic] to their own good anyway, that the success of their agency should not depend solely on what management could give as incentives but also on incentives of MAs within their agencies. It should be a concerted effort. After a thorough discussion on the pros & cons of the suggestions it was agreed that a P10.00 per recruit be given to the associate that will recruit and an additional cash prize based on production of these new recruits. 15 Clearly, the Managing Associates only received suggestions from Pamana on how to go about their recruitment and sales activities. They could adopt the suggestions but the suggestions were not binding on them. They could adopt other methods that they deemed more effective. Further, the Managing Associates had to ask the Management of Pamana to shoulder half of the advertisement cost for their recruitment campaign. They shelled out their own resources to bolster their recruitment. They shared in the payment of the salaries of their secretaries. They gave cash incentives to their sales associates from their own pocket. These circumstances show that the Managing Associates were independent contractors, not employees, of Pamana. Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor. 16 Without results, Consultas labor was her own burden and loss. Her right to compensation, or to commission, depended on the tangible results of her work17 - whether she brought in paying recruits. Consultas appointment paper provides: In consideration of your undertaking the assignment and the accompanying duties and responsibilities, you shall be entitled to compensation computed as follows: On Initial Membership Fee Entrance Fee 5% Medical Fee 6% On Subsequent Membership Fee 6% You are likewise entitled to participation in sales contests and such other incentives that may be implemented by the Company.18 The Guidelines on Appointment of Associates show that a Managing Associate received the following commissions and bonuses: 3. Compensation Package of Regular MAs Regular MAs shall be entitled to the following compensation and benefits: 3.1 Compensation a) Personal Production Individual/Family Institutional Acct. commission 30% 30% bonus 40% b) Group Production overriding commission 6% 6%

bonus 5% 3.2 Benefits Participation in all sales contests corresponding to the MA position plus any such other benefits as may be provided for the MA on regular status.19 Aside from commissions, bonuses and other benefits that depended solely on actual sales, Pamana did not pay Consulta any compensation for managing her sales division, or for recruiting and training her sales consultants. As a Managing Associate, she was only entitled to commissions, bonuses and other benefits, which depended solely on her sales and on the sales of her group. The Exclusivity Provision Consultas appointment had an exclusivity provision. The appointment provided that Consulta must represent Pamana on an exclusive basis. She must not engage directly or indirectly in activities of other companies that compete with the business of Pamana. However, the fact that the appointment required Consulta to solicit business exclusively for Pamana did not mean that Pamana exercised control over the means and methods of Consultas work as the term control is understood in labor jurisprudence. 20 Neither did it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with Pamanas business. The prohibition applied for one year after the termination of the contract with Pamana. In one of their meetings, one of the Managing Associates reported that he was transferring his sales force and account from another company to Pamana.21 The exclusivity provision was a reasonable restriction designed to prevent similar acts prejudicial to Pamanas business interest. Article 1306 of the Civil Code provides that "[t]he contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy." Jurisdiction over Claim for Unpaid Commission There being no employer-employee relationship between Pamana and Consulta, the Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultas money claim. Article 217 of the Labor Code provides: ART. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. Consulta filed her action under Article 217(a)(6) of the Labor Code. However, since there was no employeremployee relationship between Pamana and Consulta, the Labor Arbiter should have dismissed Consultas claim for unpaid commission. Consultas remedy is to file an ordinary civil action to litigate her claim. WHEREFORE, the petition is DISMISSED and the Decision of the Court of Appeals in CA-G.R. SP No. 50462 is AFFIRMED in toto. SO ORDERED. Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur. Footnotes
1 2

Under Rule 45 of the 1997 Rules of Civil Procedure. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Fermin A. Martin, Jr. and Romeo A. Brawner, concurring. 3 Rollo, p. 73. 4 Signed by its President Razul Z. Requesto. 5 Rollo, p. 75. 6 Ibid., p. 64. 7 Penned by Commissioner Alberto R. Quimpo, with Presiding Commissioner Bartolome S. Carale and Commissioner Vicente S.E. Veloso, concurring. 8 356 Phil. 811 (1998). CA Records, p. 193. 9 99 Phil. 408 (1956). 10 Sonza v. ABS-CBN Broadcasting Corporation, G.R. No. 138051, 10 June 2004; Abante v. Lamadrid, G.R. No. 159890, 28 May 2004; Sy v. Court of Appeals, 446 Phil. 404 (2003); Tiu v. NLRC, 324 Phil. 202 (1996). 11 G.R. No. 84484, 15 November 1989, 179 SCRA 459. 12 Rollo, p. 73. 13 Raul P. Canon is one of the Managing Associates. 14 Rollo, pp. 103, 105. 15 Ibid., p. 109. 16 See Investment Planning Corp. of the Phil. v. SSS, 129 Phil 143 (1967). 17 Ibid. 18 Rollo, p. 73. 19 Ibid., p. 79. 20 See AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, 28 January 1997, 267 SCRA 47. 21 Rollo, p. 99.