[G.R. No. 105963.

August 22, 1996]

PAL
EMPLOYEES
SAVINGS
AND
LOAN
ASSOCIATION, INC. (PESALA), petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and
ANGEL V. ESQUEJO, respondent.
DECISION
PANGANIBAN, J.:
Is an employee entitled to overtime pay for work
rendered in excess of eight hours a day, given the fact
that his employment contract specifies a twelve-hour
workday at a fixed monthly salary rate that is above
the legal minimum wage? This is the principal question
answered by this Court in resolving this petition which
challenges the validity and legality of the Decision [1] of
public
respondent
National
Labor
Relations
[2]
Commission promulgated on April 23, 1992 in NLRC
NCR CA No. 002522-91 entitled Angel V. Esquejo vs.
PAL Employees Savings and Loan Association which
Decision modified (slightly as to amount) the earlier
decision[3] dated November 11, 1991 of the labor
arbiter granting private respondents claim for overtime
pay.

overtime pay and non-payment of the P25.00 statutory

minimum wage increase mandated by Republic Act No.
6727.
Subsequently,
private
respondent
filed
a
supplemental complaint for illegal suspension with
prayer for reinstatement and payment of backwages.
However, before the case was submitted for resolution,
private respondent filed a Motion to Withdraw
Supplemental Complaint on the ground that a separate
action for illegal suspension, illegal dismissal, etc. had
been filed and was pending before another labor
arbiter. Hence, the issue decided by public respondent
and which is under review by this Court in this petition
involves only his claim for overtime pay.
On November 26, 1990, private respondent filed
his position paper[4] with the labor arbiter alleging the
following facts constituting his cause of action:

The Facts and the Case Below

Complainant (herein private respondent) started

working with respondent (PESALA) sometime last
March 1, 1986 as a company guard and was receiving
a monthly basic salary of P1,990.00 plus an
emergency allowance in the amount of P510.00. He
was required to work a (sic) twelve (12) hours a day, a
(sic) xerox copies of his appointment are hereto
attached and marked as Annexes C and D of this
position paper;

On October 10, 1990, private respondent filed with

public respondent a complaint docketed as NLRC
NCR Case No. 10-05457-90 for non-payment of

That on December 10, 1986, respondent Board of

Directors in its board meeting held on November 21,
1986 approved a salary adjustment for the

complainant increasing his monthly basic salary to

P2,310.00 and an emergency allowance of P510.00, a
xerox copy of the salary adjustment is hereto attached
and marked as Annex E hereof;
That on August 25, 1987, because of his impressive
performance on his assigned job, another adjustment
was approved by the President of the association
increasing his monthly basic salary to P2,880.00, a
xerox copy of the salary adjustment is hereto attached
and marked as Annex F hereof;
That from January 4, 1988 up to June 1990, several
salary adjustments were made by the respondent on
the monthly basic salary of the complainant including
a letter of appreciation for being as (sic) one of the
outstanding performers during the first half of 1988,
the latest salary prior to the filing of the complaint was
P3,720.00, a (sic) xerox copies of all the documents
relative to the salary adjustments are hereto attached
and marked as annexes G, H, I, J and K of this position
paper;
That during his entire period of employment with
respondent, the former was required to perform
overtime work without any additional compensation
from the latter. It was also at this point wherein the
respondent refused to give the P25.00 increase on the
minimum wage rates as provided for by law. On
October 12, 1990, complainant was suspended for the
period of thirty seven (37) days for an offense
allegedly committed by the respondent sometime last
August 1989.

On December 13, 1990, petitioner PESALA filed its

position paper[5] alleging among other things:
On 01 March, 1986, complainant was appointed in a
permanent status as the company guard of
respondent. In the Appointment Memorandum dated
February 24, 1986 which has the conformity of
complainant, it is expressly stipulated therein that
complainant is to receive a monthly salary of
P1,900.00 plus P510.00 emergency allowance for a
twelve (12) hours work per day with one (1) day off. A
copy of said appointment memorandum is hereto
attached as Annex A and made an integral part hereof.
On 01 December, 1986, the monthly salary of
complainant was increased to P2,310.00 plus P510.00
emergency allowance. Later, or on 01 January, 1988,
the monthly salary of complainant was again increased
to P3,420.00. And still later, or on 01 February, 1989,
complainants monthly salary was increased to
P3,720.00. Copies of the memoranda evidencing said
increase are hereto attached as Annexes B, B-1 and B2 and are made integral parts hereof.
On 29 November, 1989, the manager of respondent
in the person of Sulpicio Jornales wrote to complainant
informing the latter that the position of a guard will be
abolished effective November 30, 1989, and that
complainant will be re-assigned to the position of a
ledger custodian effective December 1, 1989.
Pursuant to the above-mentioned letter-agreement
of Mr. Jornales, complainant was formally appointed by
respondent as its ledger custodian on December 1,
1989. The monthly salary of complainant as ledger

custodian starting on December 1, 1989 was

P3,720.00 for forty (40) working hours a week or eight
(8) working hours a day. A copy of said Appointment
memorandum is hereto attached as Annex C and made
an integral part hereof.
On
29
August,
1990,
complainant
was
administratively charged with serious misconduct or
disobedience of the lawful orders of respondent or its
officers, and gross and habitual neglect of his duties,
committed as follows:
1. Sometime in August, 1989, you (referring to
complainant Esquejo) forwarded the checks
corresponding to the withdrawals of Mr. Jose
Jimenez and Mr. Anselmo dela Banda of Davao
and Iloilo Station, respectively, without the
signature of the Treasurer and the President of
PESALA, in violation of your duty and function
that you should see to it that the said checks
should be properly signed by the two PESALA
officials before you send out said checks of
their addresses. As a result of which, there was
a substantial delay in the transmission of the
checks to its owners resulting to an
embarrassment on the part of the PESALA
officers and damage and injury to the
receipients (sic) of the checks since they
needed the money badly.
2. Sometime in August, 1989, before you
(complainant) went on your vacation, you
failed to leave or surrender the keys of the
office, especially the keys to the main and
back doors which resulted to damage, injury
and embarrassment to PESALA. This is a gross

violation of your assigned duties and you

disobeyed the instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted
charges against him and was given the opportunity to
be heard and present evidence in his behalf as shown
by the Notice of Hearing (Annex D hereof) sent to
him.Complainant did in fact appeared (sic) at the
hearing, assisted by his counsel, Atty. Mahinardo G.
Mailig, and presented his evidence in the form of a
Counter-Affidavit. A copy of said Counter-Affidavit is
hereto attached as Annex E and made an integral part
hereof.
On 12 October, 1990, after due deliberation on the
merits of the administrative charges filed against
herein complainant, the Investigating Officer in the
person of Capt. Rogelio Enverga resolved the same
imposing a penalty of suspension of herein
complainant, thus:
PENALTY: 1. For the first offense, you (referring to
complainant
Esquejo)
are
suspended for a period of thirty (30)
working days without pay effective
October 15, 1990.
2. For

the

second offense, your (sic) are

suspended for a period of seven (7)
working days without pay effective
from the date the first suspension
will expire.

On March 7, 1991, private respondent filed a

detailed and itemized computation of his money
claims totaling P107,495.90, to which petitioner filed
its comment on April 28, 1991. The computation filed
on March 7, 1991 was later reduced to P65,302.80. To
such revised computation, the petitioner submitted its
comment on April 28, 1991.

No motion for reconsideration of the Decision was

filed by the petitioner.[6]

Thereafter, labor arbiter Cornelio L. Linsangan

rendered a decision dated November 11, 1991
granting overtime pay as follows:

x x x Petitioner did not appeal the Decision of

respondent NLRC. When it became final, the parties
were called to a conference on June 29, 1992 to
determine the possibility of the parties voluntary
compliance with the Decision (Order of Labor Arbiter
Linsangan, dated July 23, 1992).

WHEREFORE, judgment is hereby rendered:

1. Granting the claim for overtime pay
covering the period October 10, 1987 to
November 30, 1989 in the amount of
P28,344.55.
2. The claim for non-payment of P25.00
salary increase pursuant to Republic Act
No. 6727 is dismissed for lack of merit.
Aggrieved by the aforesaid decision, petitioner
appealed to public respondent NLRC only to be
rejected on April 23, 1992 via the herein assailed
Decision, the dispositive portion of which reads as
follows:
WHEREFORE, premises considered, the award is
reduced to an amount of TWENTY EIGHT THOUSAND
SIXTY-SIX PESOS AND 45/100 (P28,066.45). In all other
respects, the Decision under review is hereby
AFFIRMED and the appeal DISMISSED for lack of merit.

What transpired afterwards is narrated by the

Solicitor General in his memorandum, [7] which we
presume to be correct since petitioner did not
contradict the same in its memorandum:

x x x In their second conference, held on July 15,

1992, petitioner proposed to private respondent a
package compromise agreement in settlement of all
pending claims. Private respondent for his part
demanded P150,000.00 as settlement of his complaint
which was turned down by petitioner as too
excessive. Unfortunately, no positive results were
achieved.
As a result, a pleading was filed by petitioner
captioned: Motion to Defer Execution and Motion to ReCompute alleged overtime pay. Petitioner states that
quite recently, the Employee Payroll Sheets pertaining
to the salaries, overtime pay, vacation and sick leave
of Angel Esquejo were located.
x x x Petitioners Motion to Defer Execution and
Motion to Re-Compute respondents overtime pay was
denied in an Order dated July 23, 1992.

x x x Petitioner moved to reconsider the Denial

Order on July 27, 1992. Private respondent opposed.
In the meantime, petitioner filed the instant special
civil action for certiorari before this Court on July 10,
1992. Later, on July 17, 1992, citing as reason that x x
x quite recently, the Employee Payroll Sheets which
contained the salaries and overtime pay received by
respondent Esquejo were located in the bodega of the
petitioner and based on said Payroll Sheets, it appears
that substantial overtime pay have been paid to
respondent Esquejo in the amount of P24,283.22 for
the period starting January 1987 up to November
1989, petitioner asked this Court for the issuance of a
temporary restraining order or writ of preliminary
injunction. On the same date of July 17, 1992, a
Supplemental Petition Based On Newly Discovered
Evidence was filed by petitioner to which was attached
photocopies of payroll sheets of the aforestated
period.
On July 29, 1992, this Court issued a temporary
restraining order enjoining the respondents from
enforcing the Decision dated April 23, 1992 issued in
NLRC NCR CA No. 002522-91, the case below subject
of the instant petition.
The Issues
For issues have been raised by the petitioner in its
effort to obtain a reversal of the assailed Decision, to
wit:

I
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT IS ENTITLED TO OVERTIME PAY WHEN
THE SAME IS A GROSS CONTRAVENTION OF THE
CONTRACT OF EMPLOYMENT BETWEEN PETITIONER
AND RESPONDENT ESQUEJO AND A PATENT VIOLATION
OF ARTICLES 1305, 1306 AND 1159 OF THE CIVIL
CODE.
II
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
OF DISCRETION IN AWARDING OVERTIME PAY OF
P28,066.45 TO PRIVATE RESPONDENT WHEN THE
SAME IS A CLEAR VIOLATION OF ARTICLE 22 OF THE
CIVIL CODE ON UNJUST ENRICHMENT.
III
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED
OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT WAS NOT PAID THE OVERTIME PAY
BASED ON THE COMPUTATION OF LABOR ARBITER
CORNELIO LINSANGAN WHICH WAS AFFIRMED BY SAID
RESPONDENT NLRC WHEN THE SAME IS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE AND IT,
THEREFORE, VIOLATED THE CARDINAL PRIMARY
RIGHTS OF PETITIONER AS PRESCRIBED IN ANG TIBAY
VS. CIR 69 PHIL. 635.
IV

WHETHER OR NOT THE PETITIONERS SUPPLEMENTAL

PETITION BASED ON NEWLY DISCOVERED EVIDENCE
MAY BE ADMITTED AS PART OF ITS EVIDENCE IT BEING
VERY VITAL TO THE JUDICIOUS DETERMINATION OF THE
CASE.(Rollo, p. 367)
In essence the above issues boil down to this query:
Is an employee entitled to overtime pay for work
rendered in excess of the regular eight hour day given
the fact that he entered into a contract of labor
specifying a work-day of twelve hours at a fixed
monthly rate above the legislative minimum wage?
The Courts Ruling
At the outset, we would like to rectify the statement
made by the Solicitor General that the petitioner did
not
appeal
from
the
Decision
of
(public)
respondent NLRC. The elevation of the said case by
appeal is not possible. The only remedy available from
an order or decision of the NLRC is a petition
for certiorari under Rule 65 of the Rules of Court
alleging lack or excess of jurisdiction or grave abuse of
discretion.[8] The general rule now is that the special
civil action of certiorari should be instituted within a
period of three months. [9] Hence, when the petition
was filed on July 10, 1992, three months had not yet
elapsed from petitioners receipt of the assailed
Decision (should really be from receipt of the order
denying the motion for reconsideration).
However, aside from failing to show clearly grave
abuse of discretion on the part of respondent NLRC,

which we shall discuss shortly, the petitioner also

failed to comply with the mandatory requirement of
filing a motion for reconsideration from the Decision of
the Public respondent before resorting to the remedy
of certiorari. We have previously held that:
x x x. The implementing rules of respondent NLRC
are unequivocal in requiring that a motion for
reconsideration of the order, resolution, or decision of
respondent commission should be seasonably filed as
a precondition for pursuing any further or subsequent
remedy, otherwise the said order, resolution, or
decision shall become final and executory after ten
calendar days from receipts thereof. Obviously, the
rationale therefor is that the law intends to afford the
NLRC an opportunity to rectify such errors or mistakes
it may have lapsed into before resort to the courts of
justice can be had. This merely adopts the rule that
the function of a motion for reconsideration is to point
to the court the error that it may have committed and
to give it a chance to correct itself.[10]
Additionally, the allegations in the petition clearly
show that petitioner failed to file a motion for
reconsideration of the assailed Resolution before filing
the instant petition. As correctly argued by private
respondent Rolando Tan, such failure constitutes a
fatal infirmity x x x. The unquestioned rule in his
jurisdiction is that certiorari will lie only if there is no
appeal or any other plain, speedy and adequate
remedy in the ordinary course of law against the acts
of public respondent. In the instant case, the plain and
adequate remedy expressly provided by law was a
motion for reconsideration of the assailed decision,
based on palpable or patent errors, to be made under

oath and filed within ten (10) calendar days from

receipt of the questioned decision. And for failure to
avail of the correct remedy expressly provided by law,
petitioner has permitted the subject Resolution to
become final and executory after the lapse of the ten
day period within which to file such motion for
reconsideration.[11]

TO :

In brief, the filing of the instant petition was

premature and did not toll the running of the 3 month
period. Thus, the assailed Decision became final and
executory. On this ground alone, this petition must
therefore be dismissed.

plus P510.00 emergency

However, in view of the importance of the

substantial query raised in the petition, we have
resolved to decide the case on the merits also.

TO :

The First Issue: Was Overtime Pay Included?

REMARKS : To confirm permanent

The main disagreement between the parties centers

on how the contract of employment of the private
respondent should be interpreted. The terms and
conditions thereof read as follows:
Date: February 24, 1986

STATUS : PERMANENT
EFFECTIVE DATE : MARCH 1, 1986
FROM : P1,990.00 per month

allowance
SALARY :

------------------------------

appointment as company
guard who will render 12
hours a day with one (1)
day off

NAME : ESQUEJO, ANGEL

------------------------------

NATURE OF ACTION : APPOINTMENT

RECOMMENDED BY: APPROVED BY:

FROM :

(Signed) (Signed)

POSITION TITLE : COMPANY GUARD

SULPICIO B. JORNALES CATALINO F. BANEZ

12 months = P1,413.00 monthly

salary

(Signed)
The hourly overtime pay is computed as follows:
ANGEL V. ESQUEJO[12]
54/8 hours = P6.75 x 4 hrs. = P27.00
Petitioner faults the public respondent when it said
that there was no meeting of minds between the
parties, since the employment contract explicitly
states without any equivocation that the overtime pay
for work rendered for four (4) hours in excess of the
eight (8) hour regular working period is already
included in the P1,990.00 basic salary. This is very
clear from the fact that the appointment states 12
hours a day work.[13] By its computations,[14] petitioner
tried to illustrate that private respondent was paid
more than the legally required minimum salary then
prevailing.
To prove its contention, petitioner argues that:
The legal minimum wage prescribed by our statutes,
the legally computed overtime pay and the monthly
salaries being paid by petitioner to respondent Esquejo
would show that indeed, the overtime pay has always
been absorbed and included in the said agreed
monthly salaries.
In 1986, the legal minimum salary of Esquejo is
computed as follows (per Appointment Memoranda
dated February 4, 1986 and June 6, 1986 [Annex C and
D of Annex B of this Petition]):
54 x 314 days

P27.00 x 1.25 = P33.75 x 20 (should be 26) days

= P887.50
(should be P877.50)
P1,413.00 - legal minimum wage
+ 887.50(877.50) - legal overtime pay
P2,290.50 - amount due to respondent
Esquejo under the law
P2,500.00 - gross salary of Esquejo per
contract
-2,290.50
P 209.50 - Difference (Rollo, p. 371).
On the other hand, private respondent in his position
paper claims that overtime pay is not so incorporated
and should be considered apart from the P1,990.00
basic salary.[15]

We find for the private respondent and uphold the

respondent NLRCs ruling that he is entitled to overtime
pay.

the extra 4 hours overtime pay after the lapse of 4

years and claim only now that the same is not included
in the terms of the employment contract. [16]

Based on petitioners own computations, it appears

that the basic salary plus emergency allowance given
to private respondent did not actually include the
overtime pay claimed by private respondent. Following
the computations it would appear that by adding the
legal minimum monthly salary which at the time was
P1,413.00 and the legal overtime pay P877.50, the
total amount due the private respondent as basic
salary should have been P2,290.50. By adding the
emergency cost of living allowance (ECOLA) of
P510.00 as provided by the employment contract, the
total basic salary plus emergency allowance should
have amounted to P2,800.50. However, petitioner
admitted that it actually paid private respondent
P1,990.00 as basic salary plus P510.00 emergency
allowance or a total of only P2,500.00. Undoubtedly,
private respondent was shortchanged in the amount of
P300.50. Petitioners own computations thus clearly
establish that private respondents claim for overtime
pay is valid.

We disagree. Public respondent correctly found no

such agreement as to overtime pay. In fact, the
contract was definite only as to the number of hours of
work to be rendered but vague as to what is covered
by the salary stipulated. Such ambiguity was resolved
by the public respondent, thus:

Side Issue: Meeting of the Minds?

The petitioner contends that the employment
contract between itself and the private respondent
perfectly satisfies the requirements of Article 1305 of
the Civil Code as to the meeting of the minds such that
there was a legal and valid contract entered into by
the parties. Thus, private respondent cannot be
allowed to question the said salary arrangements for

In resolving the issue of whether or not complainants

overtime pay for the four (4) hours of work rendered in
excess of the normal eight hour work period is
incorporated in the computation of his monthly salary,
respondent invokes its contract of employment with
the complainant. Said contract appears to be in the
nature of a document identifiable as an appointment
memorandum which took effect on March 1, 1986
(Records, p. 56) by virtue of which complainant
expressed conformity to his appointment as company
guard with a work period of twelve (12) hours a day
with one (1) day off. Attached to this post is a basic
salary of P1,990.00 plus P510.00 emergency
allowance. It is (a) cardinal rule in the interpretation of
a contract that if the terms thereof are clear and leave
no doubt upon the intention of the contracting parties,
then the literal meaning of its stipulations shall
control. (Art. 1370, Civil Code of the Philippines). To
this,
respondent
seeks
refuge. Circumstances,
however, do not allow us to consider this rule in the
light of complainants claim for overtime pay which is
an evident indication that as to this matter, it cannot
be said that there was a meeting of the minds
between the parties, it appearing that respondent

considered the four (4) hours work in excess of the

eight hours as overtime work and compensated by
way of complainants monthly salary while on the
latters part, said work rendered is likewise claimed as
overtime work but yet unpaid in view of complainants
being given only his basic salary. Complainant claims
that the basic salary could not possibly include therein
the overtime pay for his work rendered in excess of
eight
hours. Hence,
respondents
Appointment
Memorandum cannot be taken and accorded credit as
it is so worded in view of this ambiguity. We therefore
proceed to determine the issue in the light of existing
law related thereto. While it is true that the
complainant received a salary rate which is higher that
the minimum provided by law, it does not however
follow that any additional compensation due the
complainant can be offset by his salary in excess of
the minimum, especially in the absence of an express
agreement to that effect. To consider otherwise would
be in disregard of the rule of nondiminution of benefits
which are above the minimum being extended to the
employees. Furthermore, such arrangement is likewise
in disregard of the manner required by the law on how
overtime compensation must be determined. There is
further the possibility that in view of subsequent
increases in the minimum wage, the existing salary for
twelve (12) hours could no longer account for the
increased wage level together with the overtime rate
for work rendered in excess of eight hours. This fertile
ground for a violation of a labor standards provision
can be effectively thwarted if there is a clear and
definite delineation between an employees regular and
overtime compensation. It is, further noted that a
reading of respondents Appointment Memoranda
issued to the complainant on different dates (Records,
pp. 56-60) shows that the salary being referred to by

the respondent which allegedly included complainants

overtime pay, partakes of the nature of a basic salary
and as such, does not contemplate any other
compensation above thereof including complainants
overtime pay. We
therefore
affirm
complainants
entitlement to the latter benefit.[17]
Petitioner also insists that private respondents delay
in asserting his right/claim demonstrates his
agreement to the inclusion of overtime pay in his
monthly salary rate. This argument is specious. First of
all, delay cannot be attributed to the private
respondent. He was hired on March 1, 1986. His
twelve-hour work periods continued until November
30, 1989. On October 10, 1990 (just before he was
suspended) he filed his money claims with the labor
arbiter. Thus, the public respondent in upholding the
decision of the arbiter computed the money claims for
the three year period from the date the claims were
filed, with the computation starting as of October 10,
1987 onwards.
In connection with the foregoing, we should add
that even if there had been a meeting of the minds in
the instant case, the employment contract could not
have effectively shielded petitioner from the just and
valid claims of private respondent. Generally speaking,
contracts are respected as the law between the
contracting parties, and they may establish such
stipulations, clauses, terms and conditions as they
may see fit; and for as long as such agreements are
not contrary to law, morals, good customs, public
policy or public order, they shall have the force of law

between them.[18] However, x x x, while it is the

inherent and inalienable right of every man to have
the utmost liberty of contracting, and agreements
voluntarily and fairly made will be held valid and
enforced in the courts, the general right to contract is
subject to the limitation that the agreement must not
be in violation of the Constitution, the statute or some
rule of law (12 Am. Jur. pp. 641-642). [19] And under the
Civil Code, contracts of labor are explicitly subject to
the police power of the State because they are not
ordinary contracts but are impressed with public
interest.[20] Inasmuch as in this particular instance the
contract is question would have been deemed in
violation of pertinent labor laws, the provisions of said
laws would prevail over the terms of the contract, and
private respondent would still be entitled to overtime
pay.
Moreover, we cannot agree with petitioners
assertion that by judging the intention of the parties
from their contemporaneous acts it would appear that
the failure of respondent Esquejo to claim such alleged
overtime pay since 1986 clearly demonstrate(s) that
the agreement on his gross salary as contained in his
appointment paper is conclusive on the matter of the
inclusion of overtime pay. (Rollo, pp. 13-15; also, Rollo,
pp. 378-380). This is simply not the case here. The
interpretation of the provision in question having been
put in issue, the Court is constrained to determine
which interpretation is more in accord with the intent
of the parties.[21] To ascertain the intent of the parties,
the Court is bound to look at their contemporaneous

and subsequent acts.[22] Private respondents silence

and failure to claim his overtime pay since 1986
cannot be considered as proving the understanding on
his part that the rate provided in his employment
contract covers overtime pay. Precisely, that is the
very question raised by private respondent with the
arbiter, because contrary to the claim of petitioner,
private respondent believed that he was not paid his
overtime pay and that such pay is not covered by the
rate agreed upon and stated in his Appointment
Memorandum. The
subsequent
act
of
private
respondent in filing money claims negates the theory
that there was clear agreement as to the inclusion of
his overtime pay in the contracted salary rate. When
an employee fails to assert his right immediately upon
violation thereof, such failure cannot ipso facto be
deemed as a waiver of the oppression. We must
recognize that the worker and his employer are not
equally situated. When a worker keeps silent inspite of
flagrant violations of his rights, it may be because he
is seriously fearful of losing his job. And the dire
consequences thereof on his family and his
dependents prevent him from complaining. In short,
his thoughts of sheer survival weigh heavily against
launching an attack upon his more powerful employer.
The petitioner contends that the agreed salary rate
in the employment contract should be deemed to
cover overtime pay, otherwise serious distortions in
wages would result since a mere company guard will
be receiving a salary much more that the salaries of
other employees who are much higher in rank and

position than him in the company. (Rollo, p. 16) We

find this argument flimsy and undeserving of
consideration. How can paying an employee the
overtime pay due him cause serious distortions in
salary rates or scales? And how can other employees
be aggrieved when they did not render any overtime
service?

payment to respondent Esquejo which will result in

double payment for the overtime work rendered by
paid employee.[26] Also, per petitioner, (n)othing in the
Labor Code nor in the Rules and Regulations issued in
the implementation thereof prohibits the manner of
paying the overtime pay (by) including the same in the
salary.[27]

Petitioners allegation that private respondent is

guilty of laches is likewise devoid of merit. Laches is
defined as failure or neglect for an unreasonable and
unexplained length of time to do that which, by
exercising due diligence, could or should have been
done earlier. It is negligence or omission to assert a
right within an unreasonable time, warranting the
presumption that the party entitled to assert it has
either abandoned or declined to assert it. [23] The
question of laches is addressed to the sound discretion
of the court, and since it is an equitable doctrine, its
application is controlled by equitable considerations. It
cannot work to defeat justice or to perpetrate fraud
and injustice.[24] Laches cannot be charged against any
worker when he has not incurred undue delayin the
assertion of his rights. Private respondent filed his
complaint
within
the
three-year
reglementary
period. He did not sleep on his rights for an
unreasonable length of time.[25]

This is begging the issue. To reiterate, the main

question raised before the labor tribunals is whether
the provision on wages in the contract of employment
already included the overtime pay for four (4) working
hours rendered six days a week in excess of the
regular eight-hour work. And we hold that the tribunals
below were correct in ruling that the stipulated pay did
not include overtime.Hence, there can be no undue
enrichment in claiming what legally belongs to private
respondent.

Second Issue: Unjust Enrichment?

Petitioner contends that the award of overtime pay
is plain and simple unjust and illegal enrichment. Such
award in effect sanctioned and approved the grant of

Third Issue: Basis of NLRCs Decision?

Petitioner assails respondent NLRC for adopting that
portion of the decision of the labor arbiter, which reads
as follows:
x x x Our conclusion is quite clear considering the
fact that at the time of his employment in March 1986,
during which the minimum wage was P37.00 a day for
8 hours work, complainants total take-home-pay
working 12 hours a day including ECOLA, was only
P2,500.00 a month. And immediately prior to his
appointment as Ledger Custodian effective December
1, 1989, with the working hours reduced to 8 hours or

40 hours a week, complainants monthly salary was

P3,420.00 (instead of P5,161.01 minimum monthly
with 4 hours overtime work everyday, or a difference
of P1,741.01 a month).
Accordingly, the claim for overtime pay reckoned
from October 10, 1987 up to November 30, 1989
should be, as it is hereby, granted.[28] (Rollo, p. 201).
Petitioner believes that by adopting the abovequoted
portion
of
the
arbiters
decision,
respondent NLRC violated the cardinal rule that its
decisions
must
be
supported
by
substantial
evidence.In
doing
so,
petitioner
claims
that
the NLRC violated its primary rights as enunciated in
the case of Ang Tibay vs. CIR.[29] In other words,
petitioner holds the view that the arbiters decision
failed to explain how the amount of P5,161.01 was
arrived at.[30]
Petitioner is in error. The public respondent did not
adopt in toto the aforequoted portion of the arbiters
decision. It made its own computations and arrived at
a slightly different amount, with a difference of
P278.10 from the award granted by the labor
arbiter. To refute petitioners claim, public respondent
attached (as Annexes 1, 1-A 1-B and 1-C) to its
Comment, the computations made by the labor arbiter
in arriving at the sum of P5,161.00. On the other hand,
public respondent made its own computation in its
assailed Decision and arrived at a slightly different
figure from that computed by the labor arbiter:

Respondent claims that the award of P28,344.55 is

bereft of any factual basis. Records show that as per
computation of the office of the Fiscal Examiner,
(Records, p. 116) the said amount was arrived at. The
computation was however based on the assumption
that
the
complainant
regularly
reported
for
work. Records however show that the complainant
absented himself from work for one day in August
1989. (Records, p. 63) For this unworked day, no
overtime pay must be due. As to the rest of his period
of employment subject to the three year limitation rule
which dates from October 10, 1987 up to his
appointment as Ledger Custodian on December 1,
1989 after which is regular work period was already
reduced to eight hours, there being no showing that
the complainant absented himself from work, and he
being then required to work for a period of twelve
hours daily, We therefore rule on complainants
entitlement to overtime compensation for the duration
of the aforesaid period in excess of one working
day. Consequently, complainants overtime pay shall be
computed as follows:
OVERTIME PAY: (4 HRS/DAY)
October 10, 1987 December 13, 1987
= 2.10 mos.
P54/8 hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75
December 14, 1987 June 30, 1989 =
18.53 mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00

P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20

July 1, 1989 November 30, 1989 = 5 mos.
P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos.
= P6,952.50(P6,953.125)
TOTAL OVERTIME PAY
P28,066.45(P28,067.075) (Rollo, pp. 210-212).
Prescinding therefrom, it is evident that petitioner
had
no
basis
to
argue
that
respondent NLRC committed any grave abuse of
discretion in quoting the questioned portion of the
labor arbiters holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996,
petitioner alleges in part:
2. That only recently, the petitioner was able to
locate the Employees Payroll Sheets which contained
the salaries, overtime pay, vacation and sick leaves of
respondent Esquejo which pertains to the period
starting from January 1, 1987 up to November
1989. Therefore, said total amount of overtime pay
paid to and received by respondent Esquejo should be
deducted from the computed amount of P28,066.45
based on the questioned decision. (Rollo, p. 220).

Contrary to petitioners claim however, said

documents consisting of payroll sheets, cannot be
considered as newly-discovered evidence since said
papers were in its custody and possession all along,
petitioner being the employer of private respondent.
Furthermore, petitioner offers no satisfactory
explanation why these documents were unavailable at
the time the case was being heard by the labor
arbiter. In its Memorandum, petitioner excused itself
for its failure to present such evidence before the labor
arbiter
and
respondent NLRC by
saying
that
petitioner(s office) appeared to be in disorder or in a
state of confusion since the then officers (of petitioner)
were disqualified by the Monetary Board on grounds of
misappropriation of funds of the association and other
serious irregularities. There was no formal turn-over of
the documents from the disqualified set of officers to
the new officers of petitioner. [31] We find such excuse
weak and unacceptable, the same not being
substantiated by any evidence on record.Moreover,
payroll records are normally not in the direct custody
and possession of corporate officers but of their
subordinates, i.e., payroll clerks and the like. In the
normal course of business, such payroll sheets are not
the subject of formal turnovers by outgoing officers to
their successors in office. And if indeed it is true that
petitioner had been looking for such records or
documents during the pendency of the case with the
labor arbiter and with public respondent, petitioner
never alleged such search before the said labor
tribunals a quo. Hence, such bare allegations of facts

cannot now be fairly appreciated in this petition

for certiorari, which is concerned only with grave
abuse of discretion or lack (or excess) of jurisdiction.

examine and evaluate the evidence the evidence

presented (or which ought to have been presented) in
the tribunals below.[33]

The Solicitor General quotes with approval a portion

of private respondents Opposition to petitioners
motion for reconsideration thus:

WHEREFORE, in
view
of
the
foregoing
considerations,
the
Petition
is DISMISSED,
the
temporary restraining order issued on July 30,
1992 LIFTED, and the assailed decision of the public
respondent AFFIRMED. Costs against petitioner.

It is clear from the payroll, although the substantial

pages thereof do not show that the net amount
indicated therein have been received or duly
acknowledged to have been received by the
complainant, THAT OVERTIME PAYMENTS THAT WERE
MADE
REFER
TO
WORK
RENDERED
DURING
COMPLAINANTS OFF DAYS. What has been rightfully
claimed by the complainant and awarded by this
Honorable Office is the overtime works (sic) rendered
by the complainant daily for six (6) days a week
computed at four (4) hours per day. This computation
is based on the evidence thus submitted by the
parties. All appointments issued by the respondent
carries (sic) with it (sic) that the basic salary of the
complainant is equivalent to 12 hours work everyday
for six (6) days a week, hence, the four (4) hours
overtime daily was not considered and therefore not
paid by the respondent. (Rollo, p. 327).
It has been consistently held that factual issues are
not proper subjects of a petition for certiorari, as the
power of the Supreme Court to review labor cases is
limited to questions of jurisdiction and grave abuse of
discretion.[32] The introduction in this petition of socalled newly discovered evidence is unwarranted. This
Court is not a trier of facts and it is not its function to

SO ORDERED.
Narvasa,
C.J.
(Chairman),
Melo and Francisco, JJ., concur.

Davide,

Jr.,

G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES,
petitioner, vs. RUBEN V. ABARQUEZ, in his capacity as
an
accredited
Voluntary
Arbitrator
and
THE
ASSOCIATION
OF
TRADE
UNIONS
(ATU-TUCP),
respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions
(ATUTUCP).
SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR

RELATIONS; COLLECTIVE BARGAINING AGREEMENT;
DEFINED; NATURE THEREOF; CONSTRUCTION TO BE
PLACED THEREON. A collective bargaining
agreement (CBA), as used in Article 252 of the Labor
Code, refers to a contract executed upon request of
either the employer or the exclusive bargaining
representative incorporating the agreement reached
after negotiations with respect to wages, hours of work
and all other terms and conditions of employment,
including proposals for adjusting any grievances or
questions arising under such agreement. While the
terms and conditions of a CBA constitute the law
between the parties, it is not, however, an ordinary
contract to which is applied the principles of law
governing ordinary contracts. A CBA, as a labor
contract within the contemplation of Article 1700 of
the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely
contractual in nature but impressed with public
interest, thus, it must yield to the common good. As
such, it must be construed liberally rather than
narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated
and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. It is thus
erroneous for petitioner to isolate Section 1, Article VIII
of the 1989 CBA from the other related section on sick
leave with pay benefits, specifically Section 3 thereof,
in its attempt to justify the discontinuance or
withdrawal of the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick
leave benefit to regular intermittent workers. The
manner they were deprived of the privilege previously

recognized and extended to them by petitionercompany during the lifetime of the CBA of October 16,
1985 until three (3) months from its renewal on April
15, 1989, or a period of three (3) years and nine (9)
months, is not only tainted with arbitrariness but
likewise discriminatory in nature. It must be noted that
the 1989 CBA has two (2) sections on sick leave with
pay benefits which apply to two (2) distinct classes of
workers in petitioner's company, namely: (1) the
regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and
are governed by Section 1, Article VIII of the 1989 CBA;
and (2) intermittent field workers who are members of
the regular labor pool and the present regular extra
labor pool as of the signing of the agreement on April
15, 1989 or those workers who have irregular working
days and are governed by Section 3, Article VIII of the
1989 CBA. It is not disputed that both classes of
workers are entitled to sick leave with pay benefits
provided they comply with the conditions set forth
under Section 1 in relation to the last paragraph of
Section 3, to wit: (1) the employee-applicant must be
regular or must have rendered at least one year of
service with the company; and (2) the application
must be accompanied by a certification from a
company-designated physician. the phrase "herein sick
leave privilege," as used in the last sentence of
Section 1, refers to the privilege of having a fixed 15day sick leave with pay which, as mandated by Section
1, only the non-intermittent workers are entitled to.
This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick
leave, not to exceed 15 days, extended to intermittent
workers under Section 3 depending on the number of
hours of service rendered to the company, including
overtime pursuant to the schedule provided therein. It

is only fair and reasonable for petitioner-company not

to stipulate a fixed 15-day sick leave with pay for its
regular intermittent workers since, as the term
"intermittent" implies, there is irregularity in their
work-days. Reasonable and practical interpretation
must be placed on contractual provisions. Interpetatio
fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may
continue to have efficacy rather than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND
PURPOSE. Sick leave benefits, like other economic
benefits stipulated in the CBA such as maternity leave
and vacation leave benefits, among others, are by
their nature, intended to be replacements for regular
income which otherwise would not be earned because
an employee is not working during the period of said
leaves. They are non-contributory in nature, in the
sense that the employees contribute nothing to the
operation of the benefits. By their nature, upon
agreement of the parties, they are intended to
alleviate the economic condition of the workers.
4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR;
CASE AT BAR. Petitioner-company's objection to the
authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick
leave with pay benefits of intermittent workers in his
decision is misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the herein public
respondent is the necessary consequence of the
exercise of his arbitral power as Voluntary Arbitrator
under Article 261 of the Labor Code "to hear and
decide all unresolved grievances arising from the
interpretation or implementation of the Collective
Bargaining Agreement." We, therefore, find that no

grave abuse of discretion was committed by public

respondent in issuing the award (decision). Moreover,
his interpretation of Sections 1 and 3, Article VIII of the
1989 CBA cannot be faulted with and is absolutely
correct.
5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION
AGAINST ELIMINATION OR DIMINUTION OF BENEFITS;
BENEFITS
GRANTED
PURSUANT
TO
COMPANY
PRACTICE OR POLICY CANNOT BE PEREMPTORILY
WITHDRAWN. Whatever doubt there may have been
early on was clearly obliterated when petitionercompany recognized the said privilege and paid its
intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits
during the lifetime of the CBA of October 16, 1985
until three (3) months from its renewal on April 15,
1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing
benefit, the petitioner-company may not unilaterally
withdraw, or diminish such benefits. It is a fact that
petitioner-company had, on several instances in the
past, granted and paid the cash equivalent of the
unenjoyed portion of the sick leave benefits of some
intermittent workers. Under the circumstances, these
may be deemed to have ripened into company
practice or policy which cannot be peremptorily
withdrawn.
DECISION
ROMERO, J p:
In this petition for certiorari, petitioner Davao
Integrated Port Services Corporation seeks to reverse
the Award 1 issued on September 10, 1991 by

respondent Ruben V. Abarquez, in his capacity as

Voluntary Arbitrator of the National Conciliation and
Mediation Board, Regional Arbitration Branch XI in
Davao City in Case No. AC-211-BX1-10-003-91 which
directed petitioner to grant and extend the privilege of
commutation of the unenjoyed portion of the sick
leave with pay benefits to its intermittent field workers
who are members of the regular labor pool and the
present regular extra pool in accordance with the
Collective Bargaining Agreement (CBA) executed
between petitioner and private respondent Association
of Trade Unions (ATU-TUCP), from the time it was
discontinued and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services
(petitioner-company) and private respondent ATU-TUCP
(Union), the exclusive collective bargaining agent of
the rank and file workers of petitioner-company,
entered into a collective bargaining agreement (CBA)
on October 16, 1985 which, under Sections 1 and 3,
Article VIII thereof, provide for sick leave with pay
benefits each year to its employees who have
rendered at least one (1) year of service with the
company, thus:
"ARTICLE VIII
Section 1. Sick Leaves The Company agrees to grant
15 days sick leave with pay each year to every regular
non-intermittent worker who already rendered at least
one year of service with the company. However, such
sick leave can only be enjoyed upon certification by a
company designated physician, and if the same is not
enjoyed within one year period of the current year, any

unenjoyed portion thereof, shall be converted to cash

and shall be paid at the end of the said one year
period. And provided however, that only those regular
workers of the company whose work are not
intermittent, are entitled to the herein sick leave
privilege.
xxx xxx xxx
Section 3. All intermittent field workers of the
company who are members of the Regular Labor Pool
shall be entitled to vacation and sick leaves per year of
service with pay under the following schedule based
on the number of hours rendered including overtime,
to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7
901 925 8 8
926 1,050 9 9
1,051 1,125 10 10
1,126 1,200 11 11
1,201 1,275 12 12

1,276 1,350 13 13

901 925 8 8

1,351 1,425 14 14

926 1,050 9 9

1,426 1,500 15 15

1,051 1,125 10 10

The conditions for the availment of the herein vacation

and sick leaves shall be in accordance with the above
provided Sections 1 and 2 hereof, respectively."

1,126 1,200 11 11

Upon its renewal on April 15, 1989, the provisions for

sick leave with pay benefits were reproduced under
Sections 1 and 3, Article VIII of the new CBA, but the
coverage of the said benefits was expanded to include
the "present Regular Extra Labor Pool as of the signing
of this Agreement." Section 3, Article VIII, as revised,
provides, thus:

1,276 1,350 13 13

"Section 3. All intermittent field workers of the

company who are members of the Regular Labor Pool
and present Regular Extra Labor Pool as of the signing
of this agreement shall be entitled to vacation and sick
leaves per year of service with pay under the following
schedule based on the number of hours rendered
including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7

1,201 1,275 12 12

1,351 1,425 14 14
1,426 1,500 15 15
The conditions for the availment of the herein vacation
and sick leaves shall be in accordance with the above
provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985
until three (3) months after its renewal on April 15,
1989, or until July 1989 (a total of three (3) years and
nine (9) months), all the field workers of petitioner who
are members of the regular labor pool and the present
regular extra labor pool who had rendered at least 750
hours up to 1,500 hours were extended sick leave with
pay benefits. Any unenjoyed portion thereof at the end
of the current year was converted to cash and paid at
the end of the said one-year period pursuant to
Sections 1 and 3, Article VIII of the CBA. The number of
days of their sick leave per year depends on the
number of hours of service per calendar year in
accordance with the schedule provided in Section 3,
Article VIII of the CBA.

The commutation of the unenjoyed portion of the sick

leave with pay benefits of the intermittent workers or
its conversion to cash was, however, discontinued or
withdrawn when petitioner-company under a new
assistant manager, Mr. Benjamin Marzo (who replaced
Mr. Cecilio Beltran, Jr. upon the latter's resignation in
June 1989), stopped the payment of its cash
equivalent on the ground that they are not entitled to
the said benefits under Sections 1 and 3 of the 1989
CBA.
The Union objected to the said discontinuance of
commutation or conversion to cash of the unenjoyed
sick leave with pay benefits of petitioner's intermittent
workers contending that it is a deviation from the true
intent of the parties that negotiated the CBA; that it
would violate the principle in labor laws that benefits
already extended shall not be taken away and that it
would result in discrimination between the nonintermittent and the intermittent workers of the
petitioner-company.
Upon failure of the parties to amicably settle the issue
on the interpretation of Sections 1 and 3, Article VIII of
the 1989 CBA, the Union brought the matter for
voluntary arbitration before the National Conciliation
and Mediation Board, Regional Arbitration Branch XI at
Davao City by way of complaint for enforcement of the
CBA. The parties mutually designated public
respondent Ruben Abarquez, Jr. to act as voluntary
arbitrator.
After the parties had filed their respective position
papers, 2 public respondent Ruben Abarquez, Jr. issued
on September 10, 1991 an Award in favor of the Union
ruling that the regular intermittent workers are entitled

to commutation of their unenjoyed sick leave with pay

benefits under Sections 1 and 3 of the 1989 CBA, the
dispositive portion of which reads:
"WHEREFORE, premises considered, the management
of the respondent Davao Integrated Port Stevedoring
Services Corporation is hereby directed to grant and
extend the sick leave privilege of the commutation of
the unenjoyed portion of the sick leave of all the
intermittent field workers who are members of the
regular labor pool and the present extra pool in
accordance with the CBA from the time it was
discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned
ruling of public respondent, hence, the instant petition.
Petitioner-company argued that it is clear from the
language and intent of the last sentence of Section 1,
Article VIII of the 1989 CBA that only the regular
workers whose work are not intermittent are entitled to
the benefit of conversion to cash of the unenjoyed
portion of sick leave, thus: ". . . And provided,
however, that only those regular workers of the
Company whose work are not intermittent are entitled
to the herein sick leave privilege."
Petitioner-company further argued that while the
intermittent workers were paid the cash equivalent of
their unenjoyed sick leave with pay benefits during the
previous
management
of
Mr.
Beltran
who
misinterpreted Sections 1 and 3 of Article VIII of the
1985 CBA, it was well within petitioner-company's
rights to rectify the error it had committed and stop

the payment of the said sick leave with pay benefits.

An error in payment, according to petitioner-company,
can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in
Article 252 of the Labor Code, refers to a contract
executed upon request of either the employer or the
exclusive bargaining representative incorporating the
agreement reached after negotiations with respect to
wages, hours of work and all other terms and
conditions of employment, including proposals for
adjusting any grievances or questions arising under
such agreement.
While the terms and conditions of a CBA constitute the
law between the parties, 3 it is not, however, an
ordinary contract to which is applied the principles of
law governing ordinary contracts. 4 A CBA, as a labor
contract within the contemplation of Article 1700 of
the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely
contractual in nature but impressed with public
interest, thus, it must yield to the common good. As
such, it must be construed liberally rather than
narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated
and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1,
Article VIII of the 1989 CBA from the other related
section on sick leave with pay benefits, specifically
Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of

commutation or conversion to cash of the unenjoyed

portion of the sick leave benefit to regular intermittent
workers. The manner they were deprived of the
privilege previously recognized and extended to them
by petitioner-company during the lifetime of the CBA
of October 16, 1985 until three (3) months from its
renewal on April 15, 1989, or a period of three (3)
years and nine (9) months, is not only tainted with
arbitrariness but likewise discriminatory in nature.
Petitioner-company is of the mistaken notion that since
the privilege of commutation or conversion to cash of
the unenjoyed portion of the sick leave with pay
benefits is found in Section 1, Article VIII, only the
regular non-intermittent workers and no other can
avail of the said privilege because of the proviso found
in the last sentence thereof.
It must be noted that the 1989 CBA has two (2)
sections on sick leave with pay benefits which apply to
two (2) distinct classes of workers in petitioner's
company, namely: (1) the regular non-intermittent
workers or those workers who render a daily eight-hour
service to the company and are governed by Section
1, Article VIII of the 1989 CBA; and (2) intermittent
field workers who are members of the regular labor
pool and the present regular extra labor pool as of the
signing of the agreement on April 15, 1989 or those
workers who have irregular working days and are
governed by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are
entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in
relation to the last paragraph of Section 3, to wit: (1)
the employee-applicant must be regular or must have
rendered at least one year of service with the

company; and (2) the application must be

accompanied by a certification from a companydesignated physician.
Sick leave benefits, like other economic benefits
stipulated in the CBA such as maternity leave and
vacation leave benefits, among others, are by their
nature, intended to be replacements for regular
income which otherwise would not be earned because
an employee is not working during the period of said
leaves. 6 They are non-contributory in nature, in the
sense that the employees contribute nothing to the
operation of the benefits. 7 By their nature, upon
agreement of the parties, they are intended to
alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to
Section 3, Article VIII of the 1989 CBA in light of the
facts and circumstances attendant in the instant case,
we find and so hold that the last sentence of Section 1,
Article VIII of the 1989 CBA, invoked by petitionercompany does not bar the regular intermittent workers
from the privilege of commutation or conversion to
cash of the unenjoyed portion of their sick leave with
pay benefits, if qualified. For the phrase "herein sick
leave privilege," as used in the last sentence of
Section 1, refers to the privilege of having a fixed 15day sick leave with pay which, as mandated by Section
1, only the non-intermittent workers are entitled to.
This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick
leave, not to exceed 15 days, extended to intermittent
workers under Section 3 depending on the number of
hours of service rendered to the company, including
overtime pursuant to the schedule provided therein. It
is only fair and reasonable for petitioner-company not

to stipulate a fixed 15-day sick leave with pay for its

regular intermittent workers since, as the term
"intermittent" implies, there is irregularity in their
work-days. Reasonable and practical interpretation
must be placed on contractual provisions. Interpetatio
fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may
continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical
distinction readily discernible in Section 1, in relation
to Section 3, Article VIII of the 1989 CBA between the
two classes of workers in the company insofar as sick
leave with pay benefits are concerned. Any other
distinction would cause discrimination on the part of
intermittent workers contrary to the intention of the
parties that mutually agreed in incorporating the
questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties
to the CBA clearly intended the same sick leave
privilege to be accorded the intermittent workers in
the same way that they are both given the same
treatment with respect to vacation leaves - noncommutable and non-cumulative. If they are treated
equally with respect to vacation leave privilege, with
more reason should they be on par with each other
with respect to sick leave privileges. 9 Besides, if the
intention were otherwise, during its renegotiation, why
did not the parties expressly stipulate in the 1989 CBA
that regular intermittent workers are not entitled to
commutation of the unenjoyed portion of their sick
leave with pay benefits?
Whatever doubt there may have been early on was
clearly
obliterated
when
petitioner-company

recognized the said privilege and paid its intermittent

workers the cash equivalent of the unenjoyed portion
of their sick leave with pay benefits during the lifetime
of the CBA of October 16, 1985 until three (3) months
from its renewal on April 15, 1989. Well-settled is it
that the said privilege of commutation or conversion to
cash, being an existing benefit, the petitioner-company
may not unilaterally withdraw, or diminish such
benefits. 10 It is a fact that petitioner-company had, on
several instances in the past, granted and paid the
cash equivalent of the unenjoyed portion of the sick
leave benefits of some intermittent workers. 11 Under
the circumstances, these may be deemed to have
ripened into company practice or policy which cannot
be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the
authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick
leave with pay benefits of intermittent workers in his
decision is misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the herein public
respondent is the necessary consequence of the
exercise of his arbitral power as Voluntary Arbitrator
under Article 261 of the Labor Code "to hear and
decide all unresolved grievances arising from the
interpretation or implementation of the Collective
Bargaining Agreement." We, therefore, find that no
grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover,
his interpretation of Sections 1 and 3, Article VIII of the
1989 CBA cannot be faulted with and is absolutely
correct.
WHEREFORE, in view of the foregoing, the petition is
DISMISSED. The award (decision) of public respondent

dated September 10, 1991 is hereby AFFIRMED. No

costs.
SO ORDERED.

G.R. No. 79182 September 11, 1991

PNOC-ENERGY
DEVELOPMENT
CORPORATION, petitioner,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
(Third
Division)
and
DANILO
MERCADO, respondents.
Bacorro & Associates for petitioner.
Alberto L. Dalmacion for private respondent.

PARAS, J.:p
This is a petition for certiorari to set aside the
Resolution * dated July 3, 1987 of respondent National
Labor Relations Commission (NLRC for brevity) which
affirmed the decision dated April 30, 1986 of Labor
Arbiter Vito J. Minoria of the NLRC, Regional Arbitration
Branch No. VII at Cebu City in Case No. RAB-VII-055685 entitled "Danilo Mercado, Complainant, vs.

Philippine National Oil Company-Energy Development

Corporation, Respondent", ordering the reinstatement
of complainant Danilo Mercado and the award of
various monetary claims.

2. In the same transaction stated above,

the supplier agreed to give the company
a discount of P70.00 which Danilo
Mercado did not report to the company;

The factual background of this case is as follows:

3. On March 28, 1985, Danilo Mercado

was instructed to contract the services of
Fred R. Melon of Dumaguete City, for the
fabrication of rubber stamps, for the total
amount of P28.66. Danilo Mercado paid
the amount of P20.00 to Fred R. Melon
and appropriated for his personal use the
balance of P8.66.

Private respondent Danilo Mercado was first employed

by herein petitioner Philippine National Oil CompanyEnergy Development Corporation (PNOC-EDC for
brevity) on August 13, 1979. He held various positions
ranging from clerk, general clerk to shipping clerk
during his employment at its Cebu office until his
transfer
to
its
establishment
at
Palimpinon,
Dumaguete, Oriental Negros on September 5, 1984.
On June 30, 1985, private respondent Mercado was
dismissed. His last salary was P1,585.00 a month basic
pay plus P800.00 living allowance (Labor Arbiter's
Decision, Annex "E" of Petition, Rollo, p. 52).
The grounds for the dismissal of Mercado are allegedly
serious acts of dishonesty committed as follows:
1. On ApriI 12, 1985, Danilo Mercado was
ordered to purchase 1,400 pieces of nipa
shingles from Mrs. Leonardo Nodado of
Banilad, Dumaguete City, for the total
purchase price of Pl,680.00. Against
company policy, regulations and specific
orders, Danilo Mercado withdrew the nipa
shingles from the supplier but paid the
amount of P1,000.00 only. Danilo Mercado
appropriated the balance of P680.00 for
his personal use;

In addition, private respondent, Danilo

Mercado violated company rules and
regulations in the following instances:
1. On June 5, 1985, Danilo Mercado was
absent from work without leave, without
proper turn-over of his work, causing
disruption and delay of company work
activities;
2. On June 15, 1985, Danilo Mercado went
on vacation leave without prior leave,
against company policy, rules and
regulations. (Petitioner's Memorandum,
Rollo, p. 195).
On September 23, 1985, private respondent Mercado
filed a complaint for illegal dismissal, retirement
benefits, separation pay, unpaid wages, etc. against
petitioner PNOC-EDC before the NLRC Regional
Arbitration Branch No. VII docketed as Case No. RABVII-0556-85.

After private respondent Mercado filed his position

paper on December 16, 1985 (Annex "B" of the
Petition, Rollo, pp. 28-40), petitioner PNOC-EDC filed its
Position Paper/Motion to Dismiss on January 15, 1986,
praying for the dismissal of the case on the ground
that the Labor Arbiter and/or the NLRC had no
jurisdiction over the case (Annex "C" of the Petition,
Rollo, pp. 41-45), which was assailed by private
respondent Mercado in his Opposition to the Position
Paper/Motion to Dismiss dated March 12, 1986 (Annex
"D" of the Petition, Rollo, pp. 46-50).
The Labor Arbiter ruled in favor of private respondent
Mercado. The dispositive onion of said decision reads
as follows:
WHEREFORE, in view of the foregoing,
respondents are hereby ordered:
1) To reinstate complainant to his former
position with full back wages from the
date of his dismissal up to the time of his
actual reinstatement without loss of
seniority rights and other privileges;
2) To pay complainant the amount of
P10,000.00 representing his personal
share of his savings account with the
respondents;
3) To pay complainants the amount of
P30,000.00 moral damages; P20,000.00
exemplary damages and P5,000.00
attorney's fees;

4) To pay complainant the amount of

P792.50 as his proportionate 13th month
pay for 1985.
Respondents are hereby further ordered
to deposit the aforementioned amounts
with this Office within ten days from
receipt of a copy of this decision for
further disposition.
SO
ORDERED.
(Labor Arbiter's Decision, Rollo, p. 56)
The appeal to the NLRC was dismissed for lack of merit
on July 3, 1987 and the assailed decision was affirmed.
Hence, this petition.
The issues raised by petitioner in this instant petition
are:
1. Whether or not matters of employment
affecting the PNOC-EDC, a governmentowned and controlled corporation, are
within the jurisdiction of the Labor Arbiter
and the NLRC.
2. Assuming the affirmative, whether or
not the Labor Arbiter and the NLRC are
justified in ordering the reinstatement of
private respondent, payment of his
savings, and proportionate 13th month
pay and payment of damages as well as
attorney's fee.

Petitioner PNOC-EDC alleges that it is a corporation

wholly owned and controlled by the government; that
the Energy Development Corporation is a subsidiary of
the Philippine National Oil Company which is a
government entity created under Presidential Decree
No. 334, as amended; that being a government-owned
and controlled corporation, it is governed by the Civil
Service Law as provided for in Section 1, Article XII-B of
the 1973 Constitution, Section 56 of Presidential
Decree No. 807 (Civil Service Decree) and Article 277
of Presidential Decree No. 442, as amended (Labor
Code).
The 1973 Constitution provides:
The Civil Service embraces every branch,
agency, subdivision and instrumentality
of the government including governmentowned or controlled corporations.
Petitioner PNOC-EDC argued that since Labor Arbiter
Minoria rendered the decision at the time when the
1973 Constitution was in force, said decision is null
and void because under the 1973 Constitution,
government-owned and controlled corporations were
governed by the Civil Service Law. Even assuming that
PNOC-EDC has no original or special charter and
Section 2(i), Article IX-B of the 1987 Constitution
provides that:
The Civil Service embraces all branches,
subdivision,
instrumentalities
and
agencies of the Government, including
government-owned
or
controlled
corporations with original charters.

such circumstances cannot give validity to the decision

of the Labor Arbiter (Ibid., pp. 192-193).
This issue has already been laid to rest in the case
of PNOC-EDC vs. Leogardo, 175 SCRA 26 (July 5, 1989),
involving the same petitioner and the same issue,
where this Court ruled that the doctrine that
employees
of
government-owned
and/or
con
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, has been supplanted by
the present Constitution. "Thus, under the present
state of the law, the test in determining whether a
government-owned or controlled corporation is subject
to the Civil Service Law are the manner of its creation,
such that government corporations created by special
charter are subject to its provisions while those
incorporated under the General Corporation Law are
not within its coverage."
Specifically, the PNOC-EDC having been incorporated
under the General Corporation Law was held to be a
government owned or controlled corporation whose
employees are subject to the provisions of the Labor
Code (Ibid.).
The fact that the case arose at the time when the 1973
Constitution was still in effect, does not deprive the
NLRC of jurisdiction on the premise that it is the 1987
Constitution that governs because it is the Constitution
in place at the time of the decision (NASECO v. NLRC,
G.R. No. 69870, 168 SCRA 122 [1988]).
In the case at bar, the decision of the NLRC was
promulgated on July 3, 1987. Accordingly, this case

falls squarely under the rulings of the aforementioned

cases.
As regards the second issue, the record shows that
PNOC-EDC's accusations of dishonesty and violations
of company rules are not supported by evidence.
Nonetheless, while acknowledging the rule that
administrative bodies are not governed by the strict
rules of evidence, petitioner PNOC-EDC alleges that
the labor arbiter's propensity to decide the case
through the position papers submitted by the parties is
violative of due process thereby rendering the decision
null and void (Ibid., p. 196).
On the other hand, private respondent contends that
as can be seen from petitioner's Motion for
Reconsideration and/or Appeal dated July 28, 1986
(Annex "F" of the Petition, Rollo, pp. 57- 64), the latter
never questioned the findings of facts of the Labor
Arbiter but simply limited its objection to the lack of
legal basis in view of its stand that the NLRC had no
jurisdiction over the case (Private Respondent's
Memorandum, Rollo, p. 104).
Petitioner PNOC-EDC filed its Position Paper/Motion to
Dismiss dated January 15, 1986 (Annex "C" of the
Petition Rollo, pp. 41-45) before the Regional
Arbitration Branch No. VII of Cebu City and its Motion
for Reconsideration and/or Appeal dated July 28, 1986
(Annex "F" of the Petition, Rollo, pp. 57-64) before the
NLRC of Cebu City. Indisputably, the requirements of
due process are satisfied when the parties are given
an opportunity to submit position papers. What the
fundamental law abhors is not the absence of previous
notice but rather the absolute lack of opportunity to
ventilate a party's side. There is no denial of due

process where the party submitted its position paper

and flied its motion for reconsideration (Odin Security
Agency vs. De la Serna, 182 SCRA 472 [February 21,
1990]).
Petitioner's
subsequent
Motion
for
Reconsideration and/or Appeal has the effect of curing
whatever irregularity might have been committed in
the proceedings below (T.H. Valderama and Sons, Inc.
vs. Drilon, 181 SCRA 308 [January 22, 1990]).
Furthermore, it has been consistently held that
findings of administrative agencies which have
acquired expertise because their jurisdiction is
confined to specific matters are accorded not only
respect but even finality (Asian Construction and
Development Corporation vs. NLRC, 187 SCRA 784
[July 27, 1990]; Lopez Sugar Corporation vs. Federation
of Free Workers, 189 SCRA 179 [August 30, 1990]).
Judicial review by this Court does not go so far as to
evaluate the sufficiency of the evidence but is limited
to issues of jurisdiction or grave abuse of discretion
(Filipinas Manufacturers Bank vs. NLRC, 182 SCRA 848
[February 28, 1990]). A careful study of the records
shows no substantive reason to depart from these
established principles.
While it is true that loss of trust or breach of
confidence is a valid ground for dismissing an
employee, such loss or breach of trust must have
some basis (Gubac v. NLRC, 187 SCRA 412 [July 13,
1990]). As found by the Labor Arbiter, the accusations
of petitioner PNOC-EDC against private respondent
Mercado have no basis. Mrs. Leonardo Nodado, from
whom the nipa shingles were purchased, sufficiently
explained in her affidavit (Rollo, p. 36) that the total
purchase price of P1,680.00 was paid by respondent
Mercado as agreed upon. The alleged discount given

by Mrs. Nodado is not supported by evidence as well

as the alleged appropriation of P8.66 from the cost of
fabrication of rubber stamps. The Labor Arbiter,
likewise, found no evidence to support the alleged
violation of company rules. On the contrary, he found
respondent Mercado's explanation in his affidavit
(Rollo, pp. 38-40) as to the alleged violations to be
satisfactory. Moreover, these findings were never
contradicted by petitioner petitioner PNOC-EDC.
PREMISES CONSIDERED, the petition is DENIED and
the resolution of respondent NLRC dated July 3, 1987 is
AFFIRMED with the modification that the moral
damages are reduced to Ten Thousand (P10,000.00)
Pesos, and the exemplary damages reduced to Five
Thousand (P5,000.00) Pesos.
SO ORDERED.

international humanitarian and voluntary work. It is

duly registered with the United National Economic and
Social Council (ECOSOC) and enjoys Consultative
Status, Category II. It was one of the agencies
accredited by the Philippine Government to operate
the refugee processing center at Sabang, Morong,
Bataan.

G.R. No. 110187 September 4, 1996

JOSE
G.
EBRO
III, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
INTERNATIONAL
CATHOLIC
MIGRATION
COMMISSION, JON DARRAH, ALEX DY-REYES,
CARRIE
WILSON,
and
MARIVIC
SOLIVEN, respondents.

On June 24, 1985, private respondent ICMC employed

petitioner Jose G. Ebro III to teach "English as a Second
Language and Cultural Orientation Training Program"
at the refugee processing center. The employment
contract provided in pertinent part:
Salary: Your monthly salary for the first 6
months probationary period is P3,155.00
inclusive of cost of living allowance. Upon
being made regular after successful
completion of the six (6) months
probationary period your monthly salary
will be adjusted to P3,445.00 inclusive of
cost of living allowance
xxx xxx xxx

MENDOZA, J.:
This is a petition for certiorari to set aside the order
dated October 13, 1992 and the resolution dated
March 3, 1993 of the National Labor Relations
Commission (NLRC). 1
The antecedent facts are as follows:
Private respondent International Catholic Migration
Commission (ICMC) is a non-profit agency engaged in

Termination of Employment: Employment

may be terminated by ICMC in any of the
following situations:
a A cessation or reduction in program
operations, by Department of State order,
b.
Unsuccessful
completion
of
probationary period, at any time during
that period,

c For due cause, in cases of violation of

provisions detailed in ICMC Personnel
Policies and administrative regulations,
d. For just and authorized causes
expressly provided for or authorized by
law,
e. For reasons of inadequate or deficient
professional
performance
based
on
relevant
guidelines
and
procedures
relating to the position,
f. In cases where, as a member of the
PRPC community, ICMC is directed to take
action.
If either party wishes to terminate
employment, a notice of two (2) weeks
should be given in writing to the party.
After six months, ICMC notified petitioner that effective
December 21, 1985, the latter's services were
terminated for his failure to meet the requirements of
"1. classroom performance . . . up to the standards set
in the Guide for Instruction; 2. regular attendance in
the mandated teacher training, and in the schedule
team meetings, one-on-one conferences with the
supervisor, etc.; and 3. compliance with ICMC and
PRPC policies and procedures."
On February 4, 1986, petitioner filed a complaint for
illegal dismissal, unfair labor practice, underpayment
of wages, accrued leave pay, 14th month pay,
damages, attorney's fees., and expenses of litigation.
The complaint was filed against private respondents

ICMC and its Project Director Jon Darrah, Personnel

Officer Alex Dy-Reyes, Program Officer of the Cultural
Orientation Program Carrie Wilson, and Supervisor of
the Cultural Orientation Program Marivic Soliven.
Petitioner alleged that there was no objective
evaluation of his performance to warrant his dismissal
and that he should have been considered a regular
employee from the start because ICMC failed to
acquaint him with the standards under which he must
qualify as such. He prayed for reinstatement with
backwages; P3,155.00 for probationary and P3,445.00
for regular salary adjustments; value of lodging or
dormitory privileges; cost of insurance coverage for
group life, medical, death, dismemberment and
disability benefits; moral, and exemplary, and nominal
damages plus interest on the above claims with
attorney's fees.
Answering the complaint, ICMC claimed that petitioner
failed to quality for regular employment because he
showed no interest in improving his professional
performance both in and out of the classroom after he
had been periodically evaluated (observation summary
from August 20 to October 2, 1985 and evaluation
summary of December 14, 1985); that petitioner was
paid his salary up to December 31, 1985, two weeks
pay in lieu of notice, and 14th month pay pro-rata; and
that his accrued leave balance already been converted
to cash.
After the parties had formally offered their evidence,
private respondents submitted their memorandum on
July 31, 1989 in which, among other things, they
invoked ICMC's diplomatic immunity on the basis of
the Memorandum of Agreement signed on July 15,
1988 between the Philippines government and ICMC.

The Labor Arbiter held that petitioner's legal immunity

under the Memorandum could not be given retroactive
effect since "[that would] deprive complainant's
property right without due process and impair the
obligation of contract of employment." In addition, he
expressed doubt about petitioner's legal immunity on
the ground that it was provided for by agreement and
not through an act of Congress. Accordingly, the Labor
Arbiter ordered ICMC to reinstate petitioner as regular
teacher without loss of seniority rights and to pay him
one year backwages, other benefits, and ten percent
attorney's fees for a total sum of P70,944.85.
Both parties appealed to the NLRC. On August 13,
1990, petitioner moved to dismiss private respondent's
appeal because of the latter's failure to post a
cash/surety bond. In its order of October 13, 1992,
however, the NLRC ordered the case dismissed on the
ground that, under the Memorandum of Agreement
between the Philippine government and ICMC, the
latter was immune from suit.
Petitioner moved for reconsideration, arguing among
other things, that the Memorandum of Agreement
could not be given retroactive effect and that in any
case ICMC had waived its immunity by consenting to
be sued.
However, petitioner's motion was denied by the NLRC
in its resolution dated March 4, 1993. 2 Hence this
petitioner presenting the following issues:
a) Whether private respondents have
perfected their appeal and whether public
respondent may, on appeal, entertain or

review private
immunity;

respondents'

claim

of

b) Whether a mere Memorandum of

Agreement entered into by the Secretary
of Foreign Affairs with respondent
International
Catholic
Migration
Commission, which is not a law, can
divest the Labor Arbiter and the National
Labor Relations Commission of their
jurisdiction over the subject matter and
over the persons of respondents in the
pending case;
c)
Whether
the
Memorandum
of
Agreement may be given retroactive
effect;
d) Whether the dismissal of the based on
the claim of immunity will deprive
petitioner of his property without due
process of law;
e) Whether the dismissal of the case
based on the claim of immunity will result
in the impairment of the obligations
assumed by respondent International
Catholic Migration Commission under its
contract of employment with petitioner;
f) Assuming for the sake of argument that
the Memorandum of Agreement has
validly conferred immunity on private
respondent's whether they may be
considered as having waived such
immunity;

g) Upon the same consideration, whether

private respondents may be considered
estopped from claiming immunity.
The basic issue in this case is whether the
Memorandum of Agreement executed on July 15, 1988
ICMC immunity from suit. The Court holds it did.
Consequently, both the Labor Arbiter and the NLRC
had no jurisdiction over the case.
First. Petitioner's contention that the Memorandum of
Agreement is not an act of Congress which is needed
to "repeal or supersede" the provision of the Labor
Code on the jurisdiction of the NLRC and of the Labor
Arbiter is untenable. The grant of immunity to ICMC is
in virtue of the Convention on the Privileges and
Immunities of Specialized Agencies of the United
Nations, adopted by the UN General Assembly on
November 21, 1947, and concurred in by the Philippine
Senate on May 17, 1949. This Convention has the force
and effect of law, considering that under the
Constitution, the Philippines adopts the generally
accepted principles of international law as part of the
law of the land. 3 The Memorandum of Agreement in
question
merely
carries
out
the
Philippine
government's obligation under the Convention.
In International
Catholic
Migration
Commission
v. Calleja, 4 this Court explained the grant of immunity
to ICMC in this wise:
The grant of immunity from local
jurisdiction to ICMC . . . is clearly
necessitated
by
their
international
character and respective purposes. The
objective is to avoid the danger of
partiality and interference by the host

country in their internal workings. The

exercise of jurisdiction by the Department
of Labor in these instances would defeat
the very purpose of immunity, which is to
shield
the
affairs
of
international
organizations,
in
accordance
with
international practice, from political
pressure or control by the host country to
the prejudice of member State of the
organization,
and
to
ensure
the
unhampered
performance
of
their
functions.
Second. Petitioner argues that in any case ICMC's
immunity can not apply because this case was filed
below before the signing of the Memorandum on July
15, 1988. Petitioner cites in support the statement of
this Court in the aforesaid case ofInternational Catholic
Migration Commission v. Calleja, 5 distinguishing that
case from an earlier case 6 also involving ICMC,
wherein the NLRC, as well as the Court, took
cognizance of a complaint against ICMC for payment of
salary for the unexpired portion of a six-month
probationary. The Court held: 7
[N]ot only did the facts of said
controversy [ICMC v. NLRC, 169 SCRA 606
(1989)] occur between 1983-1985, or
before the grant to ICMC on 15 July 1988
of the status of a specialized agency with
corresponding
immunities,
but
also
because ICMC in that case did not invoke
its immunity and, therefore, may be
deemed to have waived it, assuming that
during that period (1983-1985) it was

tacitly recognized
immunity.

as

enjoying

such

Here, according to petitioner, his employment

and subsequent dismissal by ICMC took place in
1985, prior to the execution of the Memorandum
of Agreement on July 15, 1988 and, therefore,
like in the 1989 ICMC case, the Memorandum
should not be made to apply to him.
This Court did not really reject ICMC's invocation of
immunity for causes of action accruing prior to the
execution of the Memorandum. It left open the
possibility that ICMC may have been tacitly enjoying
diplomatic immunity beforehand. It is important to
note that in the 1989 case ICMC did not invoke its
immunity
notwithstanding
the
fact
that
the
Memorandum took effect while the case was pending
before the Court. 8
Moreover, in the 1990 ICMC case, ICMC's immunity
was in fact upheld despite the fact that at the case
arose, the Memorandum recognizing ICMC's status as
a specialized agency had not yet been signed. In that
case, the petition for certification election among its
rank and file employees was filed on July 14, 1986 and
the order directing a certification election was made
when ICMC's request for recognition as a specialized
agency was still pending in the Department of Foreign
Affairs. Yet this Court held that the subsequent
execution of the Memorandum was a bar to the
granting of the petition for certification election.
The scope of immunity of the ICMC contained in the
Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations is

instructive. Art. III, 4 of the Convention provides for

immunity from "every form of legal process." Thus,
even if private respondents had been served summons
and subpoenas prior to the execution of the
Memorandum, they, as officers of ICMC, can claim
immunity under the same in order to prevent
enforcement of an adverse judgment, since a writ of
execution is "a legal process" within the meaning of
Article III, 4. 9
Third. Another question is whether ICMC can invoke its
immunity because it only did so in its memorandum
before the Labor Arbiter. It is contended that ICMC
waived its immunity in any event. Art III 4 of the
Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations requires,
however, that the waiver of the privilege must be
express. There was no such waiver of immunity in this
case. Nor can ICMC be estopped from claiming
diplomatic immunity since estoppel does not operate
to confer jurisdiction to a tribunal that has none over a
cause of action. 10
Fourth. Finally, neither can it be said that recognition
of ICMC's immunity from suit deprives petitioner of due
process. As pointed out in International Catholic
Commission v. Calleja, 11 petitioner is not exactly
without remedy for whatever violation of rights it may
have suffered for the following reason:
Section 31 of the Convention on the
Privileges
and
Immunities
of
the
Specialized Agencies of the United
Nations provides that "each specialized
agency
shall
make
provision
for
appropriate modes of settlement of: (a)

disputes arising out of contracts or other

disputes of private character to which the
specialized agency is a party." Moreover,
pursuant to Article IV of the Memorandum
of Agreement between ICMC and the
Philippine Government, whenever there is
any abuse of privilege by ICMC, the
Government is free to withdraw the
privileges and immunities accorded. Thus:
Article IV. Cooperation with Government
Authorities. 1. The Commission shall
cooperate
at all
times
with
the
appropriate
authorities
of
the
Government to ensure the observance of
Philippine laws, rules and regulations,
facilitate the proper administration of
justice and prevent the occurrences of
any abuse of the privileges and
immunities granted is officials and alien
employees in Article III of this Agreement
of the Commission.
2. In the event that the Government
determines that there has been an abuse
of the privileges and immunities granted
under this Agreement, consultations shall
be held between the Government and the
Commission to determine whether any
such abuse has occurred and, if so, the
Government shall withdraw the privileges
and immunities granted the Commission
and its officials.
WHEREFORE, the petitioner is DISMISSED for lack of
merit.

SO ORDERED.

G.R. No. 85519 February 15, 1990

UNIVERSITY OF STO. TOMAS, FR. MAXIMO
MARINA
O.P.
AND
GILBERTO
L.
GAMEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
HONORABLE LABOR ARBITER BIENVENIDO S.
HERNANDEZ AND BASILIO E. BORJA, respondents.
Abad, Leao & Associates for petitioners.
Antonio B. Fidelino for private respondent.

GANCAYCO, J.:
The herein private respondent Dr. Basilio E. Borja was
first appointed as "affiliate faculty" in the Faculty of
Medicine and Surgery at the University of Sto. Tomas
(UST for short) on September 29, 1976. In the second
semester of the school year 1976-77 he was appointed
instructor with a load of twelve (12) hours a week. He
was reappointed instructor for the school year 1977-78
with a load of nine (9) hours a week in the first
semester and two (2) hours a week in the second. On
June 10, 1978 he was appointed as Instructor III for the
school year 1978-79. His load for the first semester
was eight (8) hours a week, and for the second
semester, seven (7) hours a week.
On March 19, 1979 Dean Gilberto Gamez observed
that Dr. Borja should not be reappointed based on the
evaluation sheet that shows his sub-standard and
inefficient performance. 1 Nevertheless in view of the
critical shortage of staff members in the Department
of Neurology and Psychiatry Dr. Gamez recommended
the reappointment of Dr. Borja, after informing the
latter of the negative feedbacks regarding his teaching
and his promise to improve his performance. Thus on
July 27, 1979 he was extended a reappointment as
Instructor III in the school year 1979-80. He was given
a load of six (6) hours a week. In all these
appointments he was a part time instructor.
At the end of the academic year, it appearing that Dr.
Borja had not improved his performance in spite of his
assurances of improvement, his reappointment was
not recommended.

In July, 1982 he filed a complaint in the National Labor

Relations Commission (NLRC for short) for illegal
dismissal against the UST. After the submission of the
pleadings and due proceedings the labor arbiter
rendered a decision on July 19, 1984, the dispositive
part of which reads as follows:
WHEREFORE this Office finds in favor of
the complainant. The respondents (sic)
university are hereby ordered to effect
the
immediate
reinstatement
of
complainant to his former position with
full backwages, rights and benefits
appertaining
thereto.
Respondent
university is likewise ordered to pay the
complainant the sum of FIVE HUNDRED
THOUSAND PESOS (P500,000.00) as and
by way of moral damages and another 1
0% of the gross amount due him, and as
and by way of attorney's fees.
Respondents are hereby ordered to effect
this decision immediately. 2
The UST appealed therefrom to the NLRC which in due
course rendered a decision on September 30, 1988,
modifying the appealed decision as follows:
WHEREFORE, premises considered, the
appealed decision is hereby AFFIRMED
with
a
modification
limiting
the
backwages to three (3) years without
qualification or deduction, computed at
P660.00 per month, ordering respondents
to pay complainant P100,000.00 as and
for actual or compensatory damages,

ordering respondents to pay complainant

P300,000.00 as and for moral damages,
and further ordering them to pay
complainant P100,000.00 as and for
exemplary damages.

E. BORJA HAD BEEN CONSTRUCTIVELY

TERMINATED, HIS APPOINTMENT HAVING
MERELY LAPSED IN ACCORDANCE WITH
ITS TERMS AS ACCEPTED BY THE
COMPLAINANT-APPELLEE BORJA.

Finally, respondents are ordered to pay to

complainant the sum of ten (10%)
percent of the total sum due as and for
attorney's fees. 3

III

Hence the instant petition for certiorari and prohibition

with a prayer for the issuance of a writ of preliminary
injunction and restraining order that was filed by the
UST and its officers wherein it is alleged that the public
respondent NLRC committed the following errors:
I
THE
HONORABLE
NATIONAL
LABOR
RELATIONS COMMISSION COMMITTED
SERIOUS
REVERSIBLE
ERRORS
OF
SUBSTANCE AMOUNTING TO GRAVE
ABUSE OF DISCRETION AND/OR LACK OR
EXCESS OF JURISDICTION IN FINDING
THAT BASILIO E. BORJA ACQUIRED
TENURE, THE SAID FINDING BEING
CLEARLY CONTRARY TO THE EVIDENCE AT
HAND AND DEVOID OF BASIS IN LAW.

THE HONORABLE NLRC COMMITTED A

SERIOUS
AND
GRAVE
ERROR
IN
AFFIRMING,
ALBEIT
REDUCING
THE
AWARD OF THE HONORABLE LABOR
ARBITER A QUO OF CLEARLY EXCESSIVE,
UNJUST,
UNCONSCIONABLE
AND
SHOCKING
MORAL
DAMAGES
OF
P300,000.00 AND IN AWARDING MOTU
PROPIO EXEMPLARY DAMAGES IN THE
AMOUNT OF P100,000.00 IN GRAVE
ABUSE OF ITS DISCRETION AMOUNTING
TO EXCESS OF JURISDICTION. 4
The petition is impressed with merit.
In the questioned decision of the public respondent
NLRC it found that private respondent had earned to
his credit eight (8) semesters or four (4) academic
years of professional duties with the UST and that he
has met the requirements to become a regular
employee under the three (3) years requirement in the
Manual of Regulations for Private Schools.

II
THE HONORABLE NLRC COMMITTED A
SERIOUS AND REVERSIBLE ERROR AND
GRAVELY ABUSED ITS DISCRETION IN
HOLDING THAT THE SERVICES OF BASILIO

The appealed decision is correct insofar as it declares

that it is the Manual of Regulations for Private Schools,
not the Labor Code, that determines the acquisition of
regular or permanent status of faculty members in an
educational institution, but the Court disagrees with

the observation that it is only the completion of three

(3) years of service that is required to acquire such
status.
According to Policy Instructions No. 11 issued by the
Department of Labor and Employment, "the
probationary employment of professors, instructors
and teachers shall be subject to standards established
by the Department of Education and Culture." Said
standards are embodied in paragraph 75 of the Manual
of Regulations for Private Schools, to wit:
75. Full time teachers who have rendered
three consecutive years of satisfactory
service shall be considered permanent."
(Emphasis supplied)
The legal requisites, therefore, for acquisition by a
teacher of permanent employment, or security of
tenure, are as follows:
1) the teacher is a full time teacher;
2) the teacher must have rendered
consecutive years of service; and

three

(3)

3) such service must have been satisfactory.

Now, the Manual of Regulations also states that "a fulltime teacher" is "one whose total working day is
devoted to the school, has no other regular
remunerative employment and is paid on a regular
monthly basis regardless of the number of teaching
hours" (Par. 77); and that in college, "the nominal

teaching load of a full-time instructor shall be eighteen

hours a week" (par. 78).
It follows that a part-time member of the faculty
cannot acquire permanence in employment under the
Manual of Regulations in relation to the Labor Code.
Hence, the crucial question is whether or not the
private
respondent
was
a full-time
or
parttime member of the faculty during the three (3) years
that he served in the petitioner-university's College of
Medicine. Stated otherwise, the question is (1) whether
or not the said respondent's "total working day .....
(was) devoted to the school" and he had "no other
regular remunerative employment" and was "paid on a
regular monthly basis regardless of the number of
teaching hours;" and/or (2) whether or not his normal
teaching load was eighteen (18) hours a week.
It cannot be said that respondent's total working day
was devoted to the school alone. It is clear from the
record that he was practising his profession as a doctor
and maintaining a clinic in the hospital for this purpose
during the time that he was given a teaching load. In
other words, he had another regular remunerative
work aside from teaching. His total working day was
not, therefore, devoted to the school. Indeed, his
salaries from teaching were computed by the
respondent Commission itself at only an average
of P660.00 per month; he, therefore, had to have other
sources of income, and this of course was his selfemployment as a practising psychiatrist. That the
compensation for teaching had to be averaged also
shows that he was not paid on a regular monthly basis.
Moreover, there is absolutely no evidence that he
performed other functions for the school when not

teaching. All things considered, it would appear that

teaching was only a secondary occupation or
"sideline," his professional practice as a psychiatrist
being his main vocation.
The record also discloses that he never had a normal
teaching load of eighteen (18) hours a week during the
time that he was connected with the university. The
only evidence on this equally vital issue was presented
by the petitioner through the affidavit of Dr. Gilberts
Gamez who was the dean of the medical school during
the time material to the proceedings at bar. His sworn
declaration is to the effect that as "affiliate faculty"
member of the Department of Neurology and
Psychiatry
from
September
29,1976,
private
respondent had no teaching functions: that in fact,
when he was appointed in September, 1976, classes
for the first semester were already nearing their end;
that as "affiliate faculty" he was merely an observer
acquainting himself with the functions of an instructor
while awaiting issuance of a formal appointment as
such; that in the school year 1977-78 he had a
teaching load of nine (9) hours a week in the first
semester and two (2) hours a week in the second
semester; that in the school year 1978-1979 he had a
load of eight (8) hours a week in the first semester
andseven (7) hours a week in the second semester;
that in the school year 1979-1980 he had a load of six
(6) hours a week in each semester. This evidence does
not appear to have been refuted at all by the private
respondent, and has inexplicably been ignored by
public respondent. No discussion of this particular
point is found in the decisions of the Labor Arbiter or
the NLRC.

The private respondent, therefore, could not be

regarded as a full- time teacher in any aspect. He
could not be regarded as such because his total
working day was not devoted to the school and he had
other regular remunerative employment. Moreover, his
average teaching load was only 6.33 hours a week.
In view of the explicit provisions of the Manual of
Regulations above-quoted, and the fact that private
respondent was not a full- time teacher, he could not
have and did not become a permanent employee even
after the completion of three (3) years of service.
Having found that private respondent did not become
a permanent employee of petitioner UST, it
correspondingly follows that there was no duty on the
part of petitioner UST to reappoint private respondent
as Instructor, the temporary appointment having
lapsed. Such appointment is a matter addressed to the
discretion of said petitioner.
The findings, therefore, of the public respondent NLRC
that private respondent was constructively terminated
is without lawful basis. By the same token, the order
for reinstatement of private respondent with
backwages plus an award of actual or compensatory,
moral and exemplary damages must be struck down.
WHEREFORE, the petition is hereby GRANTED. The
questioned orders of public respondent NLRC dated
September 13, 1988 and public respondent labor
arbiter Bienvenido S. Hernandez dated July 19,1988
are hereby SET ASIDE and another judgment is hereby
rendered DISMISSING the complaint of private
respondent, without pronouncement as to costs.

SO ORDERED.
CHICO-NAZARIO, J.:
Assailed in this Petition for Review
on Certiorari[1] under Rule 45 of the Rules of Court is
the Decision[2] of the Court of Appeals dated 7
November 2006 in CA-G.R. SP No. 90083. The
appellate courts Decision granted the Special Civil
Action for Certiorari filed by respondent San Sebastian
College-Recoletos, Manila (SSC-R), and annulled the
Decision[3] dated 23 November 2004 and the
JACKQUI R. MORENO,
Petitioner,

- versus -

Resolution[4] dated 31 March 2005 of the National

G.R. No. 175283
Labor Relations Commission (NLRC) in NLRC-NCR-CA
Present:
No. 037175-03.
AUSTRIA-MARTINEZ,
Acting Chairperson,
The undisputed facts of the case are as follows:
TINGA,*
CHICO-NAZARIO,
NACHURA, and Respondent SSC-R is a domestic corporation and an
REYES, JJ.
educational institution duly registered under the laws

of the Philippines, located in C. M. Recto Avenue,

SAN SEBASTIAN COLLEGEPromulgated:
Quiapo, Manila.
RECOLETOS, MANILA,
Respondent.
March 28, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - On 16 January 1999, SSC-R employed petitioner
- - - - - - - - - - -x
Jackqui R. Moreno (Moreno) as a teaching fellow. On 23
October 2000, Moreno was appointed as a full-time
DECISION

college faculty member.[5] Then, on 22 October

2001, Moreno became a member of the permanent

college faculty.[6] She was also offered the

chairmanship[7] of the Business Finance and
Accountancy Department of her college on 13
September 2002.
Subsequently, reports and rumors of Morenos

permission is granted, the total teaching

load should not exceed the maximum
allowed by CHED rules and
regulations. Faculty members are
required to report all other teaching
assignments elsewhere within two (2)
weeks from start of the classes every
semester.

unauthorized external teaching engagements allegedly

circulated and reached SSC-R. The Human Resource
Department of the school thereafter conducted a
formal investigation on the said activities. On 24
October 2002, the Department submitted its report,
[8]

which stated that Moreno indeed had unauthorized

teaching assignments at the Centro Escolar University

during the first semester of the School Year 20022003, and at the College of the Holy Spirit, Manila,
during the School Years 2000-2001, 2001-2002 and the
first semester of School Year 2002-2003.
On 27 October 2002, Moreno received a
memorandum[9] from the Dean of her college, requiring
her to explain the reports regarding her unauthorized
teaching engagements. The said activities allegedly
violated Section 2.2 of Article II of SSC-Rs Faculty
Manual,[10] which reads:
Administrative permission is required for
all full-time faculty members to teach
part-time elsewhere. If ever teaching

On 28 October 2002, Moreno sent a written

explanation[11] in which she admitted her failure to
secure any written permission before she taught in
other schools. Morenoexplained that the said teaching
engagements were merely transitory in nature as the
aforesaid schools urgently needed lecturers and that
she was no longer connected with
them.Moreno further stated that it was never her
intention to jeopardize her work in SSC-R and that she
merely wanted to improve her familys poor financial
conditions.
A Special Grievance Committee was then formed in
order to investigate and make recommendations
regarding Morenos case. The said committee was
composed of Dean Abraham Espejo of
the College of Law, as chairman, and Messrs. Dindo
Bunag and Ramon Montierro, as members.

In a letter[12] dated 11 November 2002, the grievance

because she needed to support her mother and sister,

committee required Moreno to answer the following

her masteral studies, and her sisters canteen business,

series of questions concerning her case, to wit:

all of which coincided with the payment of the

emergency loan from the SSC-R administrators that

1.

Did you teach in other schools

without first obtaining the consent of
your superiors in SSC-R?

paid for her mothers illness; that she did not deny

2.

Did you ever go beyond the

maximum limit for an outside load?

deserved a second chance.

3.

Did you ever truthfully disclose

completely to your superiors at SSC-R
any outside Load?

On the same day that Moreno sent her letter, the

4.

Do you deny teaching in CEU?

5.

Do you deny teaching at Holy

Spirit?

teaching part-time in the aforementioned schools; and

that she did not wish to resign because she felt she

grievance committee issued its resolution,[14] which

unanimously found that she violated the prohibition
against a full-time faculty having an unauthorized
external teaching load. The majority of the grievance
committee members recommended Morenos dismissal
from employment in accordance with the school
manual, but Dean Espejo dissented and called only for

Moreno answered the above queries in a

letter

[13]

a suspension for one semester.

dated 12 November 2002. Moreno admitted

she did not formally disclose her teaching loads at the

Thereafter, SSC-R sent a letter[15] to Moreno that was

College of the Holy Spirit and at the Centro Escolar

signed by the College President, informing her that

University for fear that the priest administrators may

they had approved and adopted the findings and

no longer grant her permission, as prior similar

recommendations of the grievance committee and, in

requests had already been declined; that the Dean of

accordance therewith, her employment was to be

her college was aware of her external teaching loads;

terminated effective 16 November 2002.

that she went beyond the maximum limit for an

outside load in the School Years 2000 until 2002,

Moreno thus instituted with the NLRC a complaint for

SSC-R Faculty Manual. The Labor Arbiter held that SSC-

illegal termination against SSC-R, docketed as NLRC-

R had adequately discharged the burden of proof

NCR Case No. 11-10077-02, seeking reinstatement,

imposed by law in dismissing Moreno. Except for her

money claims, backwages, separation pay if

unpaid salary for fifteen (15) days, which was not

reinstatement is not viable, and attorneys fees.

controverted, the rest of Morenos money claims were

denied for being unsubstantiated.

In the Decision

[16]

dated 30 April 2003, Labor Arbiter

Veneranda C. Guerrero dismissed Morenos complaint

On appeal by Moreno, the NLRC reversed the rulings of

for lack of merit, thus:

the Labor Arbiter in a Decision dated 23 November

2004, the relevant portion of which reads:

WHEREFORE, premises considered,

judgment is hereby rendered dismissing
the complaint for illegal dismissal for lack
of merit. Respondent San Sebastian
College-Recoletos is hereby ordered to
pay complainant Jackqui R. Moreno the
amount of NINE THOUSAND ONE
HUNDRED FORTY THREE AND 75/100
PESOS (P9,143.75) representing her
unpaid salaries.
All other claims are DISMISSED for
lack of merit.

The Labor Arbiter ruled that Morenos due acceptance

of the appointment as a member of the Permanent
Faculty meant that she was bound to the condition
therein not to accept any outside teaching
assignments without permission. Morenos admission of
her violation was likewise said to have rendered her
liable for the penalty of dismissal as provided for in the

The four (4) applications for leave of

absence adduced in evidence by the
respondent [SSC-R] are all undated. If
the absences indicated in the said
documents were the only absences
incurred by the complainant [Moreno] in
her four-year tenure, it cannot be said
that she had a poor attendance. In fact,
the contrary would be true. On the other
hand, it is conceded that in the yearly
evaluation of the performance of
teachers, she consistently landed among
the five best teachers. Thus, neither can
it be said that her moonlighting activities
adversely affected her work
performance. Likewise, the undisputed
fact that she was asked to be the
chairman of Business Finance and
Accountancy for SY 2002-2003 should be
considered. This last circumstance could
only mean that she was very good at her
job.

There are other extenuating

circumstances that should have been
taken into consideration in determining
the propriety of the penalty of dismissal
meted upon the complainant. These
circumstances are the fact that it was her
first offense in four years of unblemished
employment, and the fact that she
candidly admitted her fault. x x x
Moreover, it is settled that the existence
of some rules agreed upon between the
employer and employee on the subject
of dismissal cannot preclude the State
from inquiring whether its rigid
application would work too harshly on
the employee. (Gelmart Industries Phils.
Inc. vs. NLRC, 176 SCRA 295 cited
in Caltex Refinery Employees Association
vs. NLRC, 246 SCRA 271).
Thus, in the instant case, it must be
concluded that the penalty of dismissal
meted upon the complainant [Moreno]
was too harsh and unreasonable under
the circumstances. At most, a one-year
suspension with a warning against the
repetition of the same offense would
have been more in keeping with the
generally accepted principles of law.
WHEREFORE, the decision appealed from
is hereby REVERSED. The respondent
[SSC-R] is hereby ordered to REINSTATE
the complainant [Moreno] to her former

position, and to pay her full backwages

counted from November 16, 2003 up to
the date of her actual reinstatement.[17]

SSC-R filed a Motion for Reconsideration[18] of the NLRC

Decision, which was denied for lack of merit in a
Resolution[19] dated 31 March 2005.
Thus, SSC-R instituted with the Court of Appeals a
Petition for Certiorari under Rule 65 of the Rules of
Court, with a prayer for the issuance of a temporary
restraining order and/or a writ of preliminary
injunction,[20] docketed as CA-G.R. SP No. 90083,
alleging grave abuse of discretion on the part of the
NLRC.
In a Decision[21] dated 7 November 2006, the appellate
court granted the petition and annulled the Decision
dated 23 November 2004, and Resolution dated 31
March 2005 of the NLRC. In reinstating the Decision of
the Labor Arbiter dated 30 April 2003, the Court of
Appeals ruled in this wise:
In the case at bar, there is clearly grave
abuse of discretion on the part of the
NLRC when it reversed the Decision of
the Labor Arbiter. Its conclusions are
highly prejudicial to the interests of
herein petitioner [SSC-R], considering the

glaring infractions committed by private

respondent [Moreno], which she even
expressly admitted.
xxxx
Willful disobedience of the employers
lawful orders, as a just cause for
dismissal of an employee, envisages the
concurrence of at least two (2) requisites:
the employees assailed conduct must
have been willful or intentional, the
willfulness being characterized by a
wrongful or perverse attitude; and the
order violated must have been
reasonable, lawful, made known to the
employee and must pertain to the duties
which he had been engaged to
discharge.
The foregoing requisites are all present in
this case. The prohibition against
unauthorized outside teaching
engagements found in the Faculty
Manual and in private respondents
[Moreno] appointment letter are deemed
reasonable under the circumstances. In
fact, the petitioners [SSC-R] policy is
actually permissive since it allows other
teaching engagements so long as its
president approves of the same.
Concededly, this policy was made known
to private respondent [Moreno] for as
mentioned earlier, it is found not only in
the Faculty Manual, but more
importantly, it is explicitly stated in her

appointment letter. By her own

admission, it cannot be clearer that, in
spite of her knowledge thereof, private
respondent [Moreno] willfully disobeyed
the said prohibition. When she accepted
the teaching opportunities offered to her
by other schools and altogether
concealed the same from the petitioner
[SSC-R], she risked being
administratively held liable
therefor. Thus, the excuses she raised
upon the petitioners [SSC-R] discovery of
such concealment deserve scant
consideration.
The policy is obviously in connection with
the private respondents [Moreno] duties
as a faculty member. It is designed to
ensure that the petitioners [SSC-R]
teaching staff is well fit to function
accordingly, not only for its benefit, but
chiefly, for the students who are under
their care and instruction. Private
respondent [Moreno] argues that
notwithstanding her violations, her
commitments with petitioner [SSC-R]
were never compromised. Be that as it
may, this fact cannot absolve her. She
may be fit at the time when her
infractions were revealed, but there is no
assurance that her health would not
deteriorate in time if she persists in
carrying on a heavy workload.
xxxx

WHEREFORE, the instant petition

is GRANTED. The 23 November
2004 Decision and the 31 March
2005 Resolution of the National Labor
Relations Commission (Second Division)
are herebyANNULLED and SET
ASIDE. The National Labor Relations
Commission is permanently enjoined
from executing its 31 March
2005 Resolution. The Decision of the
Labor Arbiter dated 30 April 2003is
hereby REINSTATED and AFFIRMED.

to secure the necessary permission is too harsh and

undeserved a penalty.
The most basic of tenets in employee
termination cases is that no worker shall be dismissed
from employment without the observance of
substantive and procedural due process. Substantive
due process means that the ground upon which the
dismissal is based is one of the just or authorized
causes enumerated in the Labor Code. Procedural due

Accordingly, Moreno now impugns before this Court

the Court of Appeals Decision dated 07 November
2006 raising the following issues:
I.

process, on the other hand, requires that an employee

be apprised of the charge against him, given
reasonable time to answer the same, allowed ample
opportunity to be heard and defend himself, and
assisted by a representative if the employee so
desires.[22] The employee must be furnished two

WHETHER OR NOT THE DISMISSAL OF

PETITIONER WAS PROPER AND LAWFUL.

written notices: the first notice apprises the employee

II.

dismissal is sought, and the second is a subsequent

WHETHER OR NOT PETITIONER IS

ENTITLED TO THE RELIEF SHE SEEKS
AGAINST RESPONDENT.

decision to dismiss him.[23]

of the particular acts or omissions for which his

notice which informs the employee of the employer's

Article 282 of the Labor Code provides for the

just causes for the termination of employment, to wit:

Moreno insists that her right to security of

tenure is a more significant consideration in this case
than the strict application of a school policy. She
laments that her dismissal from employment for failing

(a) Serious misconduct or willful

disobedience by the employee of
the lawful orders of his employer or

representative in connection with

his work;
(b) Gross and habitual neglect by the
employee of his duties;
(c) Fraud or willful breach by the employee
of the trust reposed in him by his
employer or duly authorized
representative;

aforementioned Section 2.2 of Art. II of the SSCR Faculty Manual, in accordance with Section 45[25] of
the Manual of Regulations for Private Schools, and
which prohibition was likewise contained in Morenos
employment contract.[26] In so doing, Moreno allegedly
committed serious misconduct and willful disobedience
against the school, and thereby submitted herself to
the corresponding penalty provided for in both

(d) Commission of a crime or offense by

the employee against the person of
his employer or any immediate
member of his family or his duly
authorized representatives; and

the Faculty Manual and the employment contract,

(e) Other causes analogous to the

foregoing.

that Moreno has indeed committed misconduct against

In termination cases, the burden of proof rests

on the employer to show that the dismissal is for just
cause. When there is no showing of a clear, valid and
legal cause for the termination of employment, the law

which is termination for cause.

On the basis of the evidence on record, the Court finds

respondent SSC-R. Her admitted failure to obtain the

required permission from the school before she
engaged in external teaching engagements is a clear
transgression of SSC-Rs policy. However, said

considers the matter a case of illegal dismissal and the

misconduct falls below the required level of gravity

burden is on the employer to prove that the

that would warrant dismissal as a penalty.

termination was for a valid or authorized cause. [24]

Respondent SSC-R contends that Morenos
dismissal from employment was valid because she
knowingly violated the prohibition embodied in the

Under Art. 282(a) of the Labor Code, willful

disobedience of the employers lawful orders as a just
cause for termination of employment envisages the

concurrence of at least two requisites: (1) the

employees assailed conduct must have been willful or
intentional, the willfulness being characterized by
a "wrongful and perverse attitude"; and (2) the
order violated must have been reasonable, lawful,
made known to the employee and must pertain to the
duties which he has been engaged to discharge. [27]

Similarly, with respect to serious misconduct, the

Court has already ruled in National Labor Relations
Commission v. Salgarino[28] that:

In order to constitute serious

misconduct which will warrant the
dismissal of an employee under
paragraph (a) of Article 282 of the Labor
Code, it is not sufficient that the act or
conduct complained of has violated some
established rules or policies. It is
equally important and required that
the act or conduct must have been
performed with wrongful
intent. (Emphasis ours.)

After examining the records of the case, the

Court finds that SSC-R miserably failed to prove
that Morenos misconduct was induced by a perverse
and wrongful intent as required in Art. 282(a) of the

Misconduct is defined as improper

or wrong conduct. It is the transgression
of some established and definite rule of
action, a forbidden act, a dereliction of
duty, willful in character and implies
wrongful intent and not mere error of
judgment. The misconduct to be serious
within the meaning of the act must be of
such a grave and aggravated
character and not merely trivial or
unimportant. Such misconduct, however
serious, must nevertheless be in
connection with the work of the employee
to constitute just cause from his
separation.

Labor Code. SSC-R merely anchored Morenos alleged

bad faith on the fact that she had full knowledge of the
policy that was violated and that it was relatively easy
for her to secure the required permission before she
taught in other schools. This posture is utterly lacking.

It bears repeating that it is the employer that

has the burden of proving the lawful cause sustaining

the dismissal of the employee. Even equipoise is not

afterthought,[31] considering that no evidence was

enough; the employer must affirmatively show

offered to support them and that Morenos salary was

rationally adequate evidence that the dismissal was

allegedly one of the highest among the universities in

for a justifiable cause.[29]

the country.

In the present case, SSC-R failed to adduce any

In addition, even if dismissal for cause is the

concrete evidence to prove that Moreno indeed

prescribed penalty for the misconduct herein

harbored perverse or corrupt motivations in violating

committed, in accordance with the SSC-R Faculty

the aforesaid school policy. In her letter of explanation

Manual and Morenos employment contract, the Court

to the grievance committee dated 12 November

finds the same to be disproportionate to the offense.

2002, Moreno explained in detail her role as the

breadwinner and the grave financial conditions of her

Time and again, we have ruled that while an

family. As previous requests for permission had already

employer enjoys a wide latitude of discretion in the

been denied, Moreno was thus prompted to engage in

promulgation of policies, rules and regulations on

illicit teaching activities in other schools, as she

work-related activities of the employees, those

desperately needed them to augment her

directives, however, must always be fair and

income. Instead of submitting controverting evidence,

reasonable, and the corresponding penalties, when

SSC-R simply dismissed the above statements as

prescribed, must be commensurate to the offense

nothing more than a lame excuse[30] and are clearly an

involved and to the degree of the infraction. [32]

a bad precedent[35] for the other faculty members who

Special circumstances were present in the case
at bar which should have been properly taken into

comply with the school policies is too speculative for

this Court to even consider.

account in the imposition of the appropriate

penalty. Moreno, in this case, had readily admitted her

Finally, the Court notes that in Morenos contract

misconduct, which was undisputedly the first she has

of employment,[36] one of the provisions therein

ever committed against the school. Her teaching

categorically stated that should a violation of any of

abilities and administrative skills remained apparently

the terms and conditions thereof be committed, the

unaffected by her external teaching engagements, as

penalty that will be imposed would either

she was found by the grievance committee to be one

be suspension or dismissal from employment. Thus,

of the better professors in the Accounting

contrary to its position from the beginning, SSC-R

Department[33] and she was even offered the

clearly had the discretion to impose a lighter penalty

Chairmanship of her college.[34] Also, the fact

of suspension and was not at all compelled to

that Moreno merely wanted to alleviate her familys

dismiss Moreno under the circumstances, just because

poor financial conditions is a justification that SSC-R

the Faculty Manual said so.

failed to refute. SSC-R likewise failed to prove any

resulting material damage or prejudice on its part as a

With regard to the observance of procedural due

consequence of Morenos misconduct. The claim by

process, neither of the parties has put the same into

SSC-R that the imposition of a lesser penalty would set

issue. Indeed, based on the evidence on

record, Moreno was served with the required twin

observance of procedural due process, it nonetheless

notices and was afforded the opportunity to be

failed to discharge its burden of proving the legality

heard. The first notice was embodied in the

of Morenos termination from employment. Thus, the

memorandum[37] dated 27 October 2002 sent by her

imposed penalty of dismissal is hereby declared as

College Dean, which required her to explain her

invalid.

unauthorized teaching assignments. The letter[38] by

SSC-R that informed Moreno that her services were

In so ruling, this Court does not depreciate the

being terminated effective 16 November

misconduct committed by Moreno. Indeed, SSC-R has

2002 constituted the second required

adequate reasons to impose sanctions on

notice. Moreno was also given the opportunity to

her. However, this should not be dismissal from

explain her side when the special grievance committee

employment. Because of the serious implications of

asked her a series of questions pertaining to their

this penalty, our Labor Code decrees that an employee

investigation in a letter[39] dated 11 November

cannot be dismissed, except for the most serious

2002 and to which she replied likewise through a

causes.[41]

letter[40] dated 12 November 2002.

Considering the presence of extenuating
circumstances in the instant case, the Court deems it
In light of the foregoing, the Court holds that the

appropriate to impose the penalty of suspension of one

dismissal of petitioner Moreno failed to comply with

(1) year on Moreno, to be counted from 16 November

the substantive aspect of due process. Despite SSC-Rs

2002, the effective date of her illegal

dismissal. However, given the period of time in

which Moreno was actually prevented from working in

from a dismissed employee where exceptional

the respondent school, the said suspension should

circumstances are availing.[44]

already be deemed served.

Furthermore, the Court holds that Moreno should be

In the present case, the good faith of SSC-R is

reinstated to her former position, without loss of

apparent. The termination of Moreno from her

seniority rights and other privileges, but without

employment cannot be said to have been carried out

payment of backwages.
As a general rule, the normal consequences of a
finding that an employee has been illegally dismissed
are, firstly, that the employee becomes entitled to

in a malevolent, arbitrary or oppressive

manner. Indeed, the only mistake that the respondent
school has committed was to strictly apply the

reinstatement without loss of seniority rights; and

provisions of its Faculty Manual and its contract

secondly, the payment of backwages corresponding to

with Morenowithout regard for the aforementioned

the period from his illegal dismissal up to his actual

reinstatement. The two forms of relief are, however,
distinct and separate from each other. Though the
grant of reinstatement commonly carries with it an
award of backwages, the appropriateness or non-

special circumstances that were attendant in this

case. Even then, Morenos right to procedural due
process was fully respected, as she was given the

availability of one does not carry with it the

required twin notices and an ample opportunity to be

inappropriateness or non-availability of the other. [42]

heard. This fact was not even disputed

In accordance with Durabuilt Recapping Plant & Co. v.

National Labor Relations Commission,[43] the Court
may not only mitigate, but also absolve entirely, the
liability of the employer to pay backwages where good
faith is evident. Likewise, backwages may be withheld

by Moreno herself.
With respect to Morenos claim for moral and
exemplary damages, the same were never
satisfactorily pleaded and substantiated.[45] Thus, they

are hereby denied. Neither isMoreno entitled to the

hereby REVERSED.Respondent San Sebastian

award of the monetary claims[46] in her petition, as no

College-Recoletos, Manila, is hereby ordered to

basis and proof for the grant thereof were ever

reinstate Petitioner Jackqui R. Moreno without loss of

adduced.

seniority rights and other privileges. No

The Court cannot likewise award attorneys fees

to Moreno in view of the above-mentioned finding of
good faith on the part of SSC-R[47]. It is a well-settled
principle that even if a claimant is compelled to litigate
with third persons or to incur expenses to protect the
claimants rights, attorneys fees may still not be
awarded where no sufficient showing of bad faith could
be reflected in a partys persistence in a case other
than an erroneous conviction of the righteousness of
his cause.[48]

WHEREFORE, the Petition for Review

is GRANTED. The Decision of the Court of Appeals in
CA-G.R. SP No 90083 dated 7 November 2006 is

pronouncement as to cost.
SO ORDERED.

Before us are these two consolidated petitions

for review under Rule 45 separately interposed by
Ricardo G. Paloma and Philippine Airlines, Inc. (PAL) to
nullify and set aside the Amended
Decision[1] dated May 31, 2001 of the Court of Appeals
(CA) in CA-G.R. SP No. 56429, as effectively reiterated
RICARDO G. PALOMA, G.R. No. 148415
Petitioner,
- versus - Present:
QUISUMBING, J., Chairperson,
PHILIPPINE AIRLINES, INC. CARPIO MORALES,
and THE NATIONAL LABOR TINGA,
RELATIONS COMMISSION, VELASCO, JR., and
Respondents. BRION, JJ.
x-------------------------------------------x

in its Resolution[2] of January 14, 2003.

PHILIPPINE AIRLINES, INC., G.R. No. 156764

Petitioner,

finance. In March 1992, or some nine (9) months

The Facts
Paloma worked with PAL from September 1957,
rising from the ranks to retire, after 35 years of
continuous service, as senior vice president for
before Paloma retired on November 30, 1992, PAL was
privatized.

- versus - Promulgated:
RICARDO G. PALOMA,
Respondent. July 14, 2008
x--------------------------------------------------------------------------------------- x
DECISION

By way of post-employment benefits, PAL paid

Paloma the total amount of PhP 5,163,325.64 which
represented his separation/retirement gratuity and
accrued vacation leave pay. For the benefits thus

VELASCO, JR., J.:

received, Paloma signed a document

The Case

denominated Release and Quitclaim[3] but inscribed

the following reservation therein: Without prejudice to

my claim for further leave benefits embodied in my

aide memoire transmitted to Mr. Roberto Anonas
covered by my 27 Nov. 1992 letter x x x.

Answering Palomas written demands for

conversion to cash of his accrued sick leave credits,
PAL asserted having paid all of Palomas commutable

The leave benefits Paloma claimed being

entitled to refer to his 450-day accrued sick leave

sick leave credits due him pursuant to company policy

made applicable to PAL officers starting 1990.

credits which PAL allegedly only paid the equivalent of

18 days. He anchored his entitlement on Executive
Order No. (EO) 1077

[4]

dated January 9, 1986, and his

The company leave policy adverted to grants

PALs regular ground personnel a graduated sick leave

having accumulated a certain number of days of sick

benefits, those having rendered at least 25 years of

leave credits, as acknowledged in a letter of Alvia R.

service being entitled to 20 days of sick leave for

Leao, then an administrative assistant in PAL. Leaos

every year of service. An employee, under the policy,

letter dated November 12, 1992 pertinently reads:

may accumulate sick leaves with pay up to 230

At your request, we are pleased to

confirm herewith the balance of your sick
leave credits as they appear in our
records: 230 days.
According to our existing policy, an
employee is entitled to accumulate sick
leave with pay only up to a maximum of
230 days.
Had there been no ceiling as
mandated by Company policy, your sick
leave credits would have totaled 450 days
to date.[5]

days. Subject to defined qualifications, sick leave

credits in excess of 230 days shall be commutable to
cash at the employees option and shall be paid in lump
sum on or before May 31st of the following year they
were earned.[6] Per PALs records, Paloma appears to
have, for the period from 1990 to 1992, commuted 58
days of his sick leave credits, broken down as follows:
20 days each in 1990 and 1991 and 18 days in 1992.

Subsequently, Paloma filed before the

Arbitration Branch of the National Labor Relations
Commission (NLRC) a Complaint[7] for Commutation of
Accrued Sick Leaves Totaling 392 days. In the
complaint, docketed as NLRC-NCR-Case No. 00-0805792-94, Paloma alleged having accrued sick leave
credits of 450 days commutable upon his retirement
pursuant to EO 1077 which allows retiring government

WHEREFORE, premises considered,

respondent PHILIPPINE AIRLINE[S], INC. is
hereby ordered to pay within ten (10)
days from receipt hereof herein
complainant Ricardo G. Paloma, the sum
of Six Hundred Seventy Five Thousand
Pesos (P675,000.00) representing his one
Hundred sixty two days [162]
accumulated sick leave credits, plus ten
(10%) percent attorneys fees of
P67,500.00, or a total sum of
P742,500.00.
SO ORDERED.

employees to commute, without limit, all his accrued

vacation and sick leave credits. And of the 450-day
credit, Paloma added, he had commuted only 58 days,

The labor arbiter held that PAL is not covered by

leaving him a balance of 392 days of accrued sick

the civil service system and, accordingly, its

leave credits for commutation.

employees, like Paloma, cannot avail themselves of

the beneficent provision of EO 1077. This executive
issuance, per the labor arbiters decision, applies only
to government officers and employees covered by the

Ruling of the Labor Arbiter

civil service, exclusive of the members of the judiciary

whose leave and retirement system is covered by a

Issues having been joined with the filing by the

parties of their respective position papers,
arbiter rendered on June 30, 1995 a
Decision

[9]

dispositively reading:

[8]

special law.

the labor
However, the labor arbiter ruled that Paloma is
entitled to a commutation of his alternative claim for
202 accrued sick leave credits less 40 days for 1990

and 1991. Thus, the grant of commutation for 162

accumulated sick leave credits of 230 days, modified

accrued leave credits.

its earlier decision, disposing as follows:

Both parties appealed[10] the decision of the

labor arbiter to the NLRC.

In view of all the foregoing, our

decision dated November 26, 1997, be
modified by increasing the sick leave
benefits of complainant to be commuted
to cash from 162 days to 230 days.
SO ORDERED.[12]

Ruling of the NLRC in NLRC NCR CA No. 00965295

(NLRC-NCR-Case No. 00-08-05792-94)

From the above modificatory resolution of the

NLRC, PAL went to the CA on a petition for certiorari

On November 26, 1997, the First Division of the NLRC

under Rule 65, the recourse docketed as CA-G.R. SP

rendered a Decision affirming that of the labor arbiter,

No. 56429.

thus:
Ruling of the CA in its April 28, 2000 Decision
WHEREFORE, as recommended,
both appeals are DISMISSED. The decision
of Labor Arbiter Felipe T. Garduque II
dated June 30, 1995 is AFFIRMED.
SO ORDERED.

By a Decision dated April 28, 2000, the CA found

for PAL, thus:

[11]

Both parties moved for reconsideration. In its

Resolution of November 10, 1999, the NLRC, finding
Paloma to have, upon his retirement, commutable

WHEREFORE, the petition is

granted. Public respondents November
10, 1999 Resolution is set aside. And the
complaint of Ricardo Paloma is hereby
DISMISSED. Without costs.
SO ORDERED.[13]

paid/discharged.(Art. 2212, New Civil

Code).
In time, Paloma sought reconsideration.[14]
The May 31, 2001 Amended Decision
On May 31, 2001, the CA issued the assailed
Amended Decision reversing its April 28,
2000 Decision. The fallo of the Amended Decision
reads:

SO ORDERED.[15]

Justifying its amendatory action, the CA stated

that EO 1077 applies to PAL and necessarily to Paloma
on the following rationale: Section 2(1) of Article IX(B)
of the 1987 Constitution applies prospectively and,
thus, the expressed limitation therein on the
applicability of the civil service law only to

WHEREFORE, premises considered,

our Judgment, dated 28 April 2000 is
hereby vacated and, set aside, and
another one entered reinstating the
Resolution, dated 10 November 1999,
issued by the public respondent National
Labor Relations Commission in NLRC NCR
Case No. 00-08-05792-94 [NLRC NCR CA
No. 009652-95], entitled Ricardo G.
Paloma v. Philippine Airlines,
Incorporated, with the only modification
that the total sums granted by Labor
Arbiter Felipe T. Garduque II
(P742,500.00, inclusive of the ten percent
(10%) attorneys fees), as affirmed by
public respondent National Labor
Relations Commission, First Division, in
said NLRC Case No. 00-08-05792-94, shall
earn legal interest from the date of the
institution of the complaint until fully

government-owned and controlled corporations

(GOCCs) with original charters does not preclude the
applicability of EO 1077 to PAL and its then employees.
This conclusion, the CA added, becomes all the more
pressing considering that PAL, at the time of the
issuance of EO 1077, was still a GOCC and that Paloma
had already 29 years of service at that time. The
appellate court also stated that since PAL had then no
existing retirement program, the provisions of EO 1077
shall serve as a retirement program for Paloma who
had meanwhile acquired vested rights under the EO
pursuant to Arts. 100[16] and 287[17] of the Labor Code.

Significantly, despite affirmatively positing the

The Issues

applicability of EO 1077, the Amended Decision still

deferred to PALs existing policy on the 230-day limit
for accrued sick leave with pay that may be credited to

In G.R. No. 148415, Paloma raises the sole

issue of:

its employees. Incongruously, while the CA reinstated

the November 10, 1999 Resolution of the NLRC, it
decreed the implementation of the labor arbiters
Decision dated June 30, 1995. As may be recalled, the
NLRC, in its November 10, 1999 Resolution, allowed a
230-day sick leave commutation, up from the 162 days
granted under the June 30, 1995 Decision of the labor
arbiter.
Paloma immediately appealed the CAs Amended
Decision via a Petition for Review on Certiorari under
Rule 45, docketed as G.R. No. 148415. On the other
hand, PAL first sought reconsideration of the Amended

WHETHER OR NOT THE [CA], IN HOLDING

THAT E.O. NO. 1077 IS APPLICABLE TO
PETITIONER AND YET APPLYING COMPANY
POLICY BY AWARDING THE CASH
EQUIVALENT OF ONLY 162 DAYS SICK
LEAVE CREDITS INSTEAD OF THE 450
DAYS SICK LEAVE CREDITS PETITIONER IS
ENTITLED TO UNDER E.O. NO. 1077,
DECIDED A QUESTION OF SUBSTANCE IN
A MANNER CONTRARY TO LAW AND
APPLICABLE JURISPRUDENCE.[18]

In G.R. No. 156764, PAL raises the following issues

for our consideration:
1.

May an employee of a nongovernment corporation [invoke EO]

1077 which the then President
Ferdinand E. Marcos issued on January
9, 1986, solely for the benefit of
government officers and employees
covered by the civil service?

2.

Can a judicial body modify or alter a

company policy by ordering the
commutation of sick leave credits

Decision, coming to us after the CA, per its January 14,

2003 Resolution, denied the desired reconsideration. In
net effect then, PALs Petition for Review on Certiorari,
docketed as G.R. No. 156764, assails both the
Amended Decision and Resolution of the CA.

which, under company policy is noncommutable?[19]

Employees Assn. v. Phil. Air Lines, Inc.,[20] a case

commenced in August 1958 and finally resolved by the

The issues submitted boil down to the question

of whether or not EO 1077, before PALs privatization,
applies to its employees, and corollarily, whether or
not Paloma is entitled to a commutation of his accrued
sick leave credits. Subsumed to the main issue
because EO 1077 applies only to government
employees subject to civil service law is the question
of whether or not PALwhich, as early as 1960 until its
privatization, had been considered as a governmentcontrolled corporationis covered by and subject to the
limitations peculiar under the civil service system.
There can be no quibbling, as a preliminary
consideration, about PAL having been incorporated as
a private corporation whose controlling stocks were
later acquired by the GSIS, which is wholly owned by
the government. Through the years before GSIS
divested itself of its controlling interests over the
airline, PAL was considered a government-controlled
corporation, as we said as much in Phil. Air Lines

Court in 1964. The late Blas Ople, former Labor

Secretary and a member of the 1986 Constitutional
Commission, described PAL and other like entities spun
off from the GSIS as second generation corporations
functioning as private subsidiaries.[21] Before the
coming into force of the 1973 Constitution, a
subsidiary of a wholly government-owned corporation
or a government corporation with original charter was
covered by the Labor Code. Following the ratification
of the 1973 Constitution, these subsidiaries
theoretically came within the pale of the civil service
on the strength of this provision: [T]he civil service
embraces every branch, agency, subdivision and
instrumentality of the Government, including every
[GOCC] x x x.[22] Then came the 1987 Constitution
which contextually delimited the coverage of the civil
service only to a GOCC with original charter.[23]
The Courts Ruling

Considering the applicable law and

jurisprudence in the light of the undisputed factual
milieu of the instant case, the setting aside of the
assailed amended decision and resolution of the CA is
indicated.
Core Issue: Applicability of EO 1077
Insofar as relevant, EO 1077 dated January 9,
1986, entitled Revising the Computation of Creditable
Vacation and Sick Leaves of Government Officers and
Employees, provides:
WHEREAS, under existing law and civil
service regulations, the number of days of
vacation and sick leaves creditable to a
government officer or employee is limited
to 300 days;
WHEREAS, by special law, members of
the judiciary are not subject to such
restriction;
WHEREAS, it is the continuing policy of
the government to institute to the extent
possible a uniform and equitable system
of compensation and benefits and to
enhance the morale and performance in
the civil service.

xxxx
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by
virtue of the powers vested in me by the
Constitution, do hereby order and direct
the following:
Section 1. Any officer [or] employee of
the government who retires or voluntary
resigns or is separated from the service
through no fault of his own and whose
leave benefits are not covered by special
law, shall be entitled to the commutation
of all the accumulated vacation and/or
sick leaves to his credit, exclusive of
Saturdays, Sundays, and
holidays, without limitation as to the
number of days of vacation and sick
leaves that he may
accumulate. (Emphasis supplied.)
Paloma maintains that he comes within the
coverage of EO 1077, the same having been issued in
1986, before he severed official relations with PAL, and
at a time when the applicable constitutional provision
on the coverage of the civil service made no
distinction between GOCCs with original charters and
those without, like PAL which was incorporated under
the Corporation Code. Implicit in Palomas contention is
the submission that he earned the bulk of his sick

leave credits under the aegis of the 1973 Constitution

decision in No. L-64313 entitled National Housing

when PAL, being then a government-controlled

Corporation v. Juco,[24] the Court no less recognized the

corporation, was under civil service coverage.

applicability of the Labor Code to, and the authority of

the NLRC to exercise jurisdiction over, disputes

The contention is without merit.

involving discipline, personnel movements, and

dismissal in GOCCs, among them PAL; [25] (b) Company

PAL never ceased to be operated as a private

corporation, and was not subjected to the Civil
Service Law

policy and collective bargaining agreements (CBAs),

instead of the civil service law and rules, govern the
terms and conditions of employment in PAL. In fact,

The Court can allow that PAL, during the period

Ople rhetorically asked how PAL can be covered by the

material, was a government-controlled corporation in

civil service law when, at one time, there were three

the sense that the GSIS owned a controlling interest

(3) CBAs in PAL, one for the ground crew, one for the

over its stocks.One stubborn fact, however,

flight attendants, and one for the pilots;[26] and (c)

remains: Through the years, PAL functioned as a

When public sector unionism was just an abstract

private corporation and managed as such for profit.

concept, labor unions in PAL with the right to engage

Their personnel were never considered government

in strike and other concerted activities were already

employees. It may perhaps not be amiss for the Court

active.[27]

to take judicial notice of the fact that the civil service

law and rules and regulations have not actually been

Not to be overlooked of course is the 1964 case

made to apply to PAL and its employees. Of governing

of Phil. Air Lines Employees Assn., wherein the Court

application to them was the Labor Code. Consider: (a)

stated that the Civil Service Law has not been actually

Even during the effectivity of the 1973 Constitution but

applied to PAL.[28]

prior to the promulgation on January 17, 1985 of the

Given the foregoing considerations, Paloma

at the time the case was decided, even if, incidentally,

cannot plausibly be accorded the benefits of EO 1077

the cause of action accrued during the effectivity of

which, to stress, was issued to narrow the gap

the 1973 Constitution. This has been the consistent

between the leave privileges between the members of

holding of the Court in subsequent cases involving

the judiciary, on one hand, and other government

GOCCs without original charters. [30]

officers and employees in the civil service, on the

other. That PAL and Paloma may have, at a time, come

It cannot be overemphasized that when Paloma

within the embrace of the civil service by virtue of the

filed his complaint for commutation of sick leave

1973 Constitution is of little moment at this

credits, private interests already controlled, if not

juncture. As held in National Service Corporation v.

owned, PAL. Be this as it may, Paloma, when he filed

National Labor Relations Commission (NASECO),[29] the

said complaint, cannot even assert being covered by

issue of whether or not a given GOCC falls within the

the civil service and, hence, entitled to the benefits

ambit of the civil service subject, vis--vis disputes

attached to civil service employment, such as the right

respecting terms and conditions of employment, to the

under EO 1077 to accumulate and commute leave

jurisdiction of the Civil Service Commission or the

credits without limit. In all, then, Paloma, while with

NLRC, as the case may be, resolves itself into the

PAL, was never a government employee covered by

question of which between the 1973 Constitution,

the civil service law. As such, he did not acquire any

which does not distinguish between a GOCC with or

vested rights on the retirement benefits accorded by

without an original charter, and the 1987 Constitution,

EO 1077.

which does, is in place. To borrow from the

1988NASECO ruling, it is the 1987 Constitution, which
delimits the coverage of the civil service, that should
govern this case because it is the Constitution in place

Paloma not entitled to the benefits granted in

EO 1077; existing company policy on the matter
applies

What governs Palomas entitlement to sick leave

benefits and the computation and commutation of
creditable benefits is not EO 1077, as the labor arbiter
and originally the NLRC correctly held, but PALs
company policy on the matter which, as found below,
took effect in 1990. The text of the policy is
reproduced in the CAs April 28, 2000 Decision and sets
out the following pertinent rules:
POLICY
Regular employees shall be entitled
to a yearly period of sick leave with pay,
the exact number of days to be
determined on the basis of the employees
category and length of service in the
company.
RULES
A.

For ground personnel

2. Sick leave shall be granted only

upon certification by a company physician
that an employee is incapable of
discharging his duties due to illness or
injury x x x.
xxxx

3. Sick leave entitlement accrues from

the date of an employees regular
employment x x x.
In case of direct conversion from
temporary/daily/project/contract to
regular status, regular employment shall
be deemed to have begun on the date of
the employees conversion as a regular
employee.
xxxx
4. An employee may accumulate
sick leave with pay up to Two
Hundred Thirty (230) days;
An employee who has accumulated
seventy-five (75) days sick leave credit at
the end of each year may, at his option,
commute seventy-five percent (75%) of
his current sick leave entitlement to cash
and the other twenty-five percent (25%)
to be added to his accrued sick leave
credits up to two hundred thirty (230)
calendar days.
The seventy-five percent (75%)
commutable to cash as above provided,
shall be paid up in lump sum on or before
May 31st of the following year.
Sick leave credits in excess of two
hundred thirty (230) days shall be
commutable to cash at the
employees option, and shall be paid

in lump sum on or before May 31st of

the following year it was earned.
[31]
(Emphasis ours.)

correct in contending that Paloma had received

whatever was due on the commutation of his accrued
sick leave credits in excess of the 230 days limit,

As may be gathered from the records, accrued

sick leave credits in excess of 230 days were not, if

specifically the 58 days commutation for 1990, 1991,

and 1992.

earned before 1990 when the above policy took effect,

commutable to cash; they were simply forfeited. Those

No commutation of 230 days accrued sick leave

earned after 1990, but still subject to the 230-day

credits

threshold rule, were commutable to cash to the extent

of 75% of the employees current entitlement, and

The query that comes next is how the 230 days

payable on or before May 31st of the following year,

accrued sick leave credits Paloma undoubtedly had

necessarily implying that the privilege to commute is

when he retired are to be treated. Is this otherwise

time-bound.

earned credits commutable to cash? These should be

answered in the negative.

It appears that Paloma had, as of 1990, more

than 230 days of accrued sick leave credits. Following

The labor arbiter granted 162 days

company policy, Paloma was deemed to have forfeited

commutation, while the NLRC allowed the

the monetary value of his leave credits in excess of the

commutation of the maximum 230 days. The CA, while

230-day ceiling. Now, then, it is undisputed that he

seemingly affirming the NLRCs grant of 230 days

earned additional accrued sick leave credits of 20 days

commutation, actually decreed a 162-day

in 1990 and 1991 and 18 days in 1992, which he duly

commutation. We cannot sustain any of the

commuted pursuant to company policy and received

dispositions thus reached for lack of legal basis, for

with the corresponding cash value. Therefore, PAL is

PALs company policy upon which either disposition was

predicated did not provide for a commutation of the

first 230 days accrued sick leave credits employees
may have upon their retirement. Hence, the NLRC and
the CA, by their act of allowing commutation to cash,
erred as they virtually read in the policy something not
written or intended therein. Indeed, no law provides for
commutation of unused or accrued sick leave credits in

same is not commutable or payable in

cash upon the employees option.
In our view, the only meaning and
import of said rule and regulation is that if
an employee does not choose to enjoy his
yearly sick leave of thirty days, he may
accumulate such sick leave up to a
maximum of six months and enjoy this six
months sick leave at the end of the sixth
year but may not commute it to cash.[32]

the private sector. Commutation is allowed by way of

voluntary endowment by an employer through a
company policy or by a CBA. None of such medium
presently obtains and it would be incongruous if the
Court fills up the vacuum.

In fine, absent any provision in the applicable

company policy authorizing the commutation of the
230 days accrued sick leave credits existing upon
retirement, Paloma may not, as a matter of
enforceable right, insist on the commutation of his sick

Confronted with a similar situation as depicted

leave credits to cash.

above, the Court, in Baltazar v. San Miguel Brewery,

Inc., declared as follows:
In connection with the question of
whether or not appellee is entitled to the
cash value of six months accumulated
sick leave, it appears that while under the
last paragraph of Article 5 of appellants
Rules and Regulations of the Health,
Welfare and Retirement Plan (Exhibit 3),
unused sick leave may be accumulated
up to a maximum of six months, the

As PALs senior vice-president for finance upon

his retirement, Paloma knew or at least ought to have
known the company policy on accrued sick leave
credits and how it was being implemented. Had he
acted on that knowledge in utmost good faith, these
proceedings would have not come to pass.

WHEREFORE, the petition under G.R. No.

148415 is hereby DISMISSED for lack of merit, while

GOVERNMENT SERVICE
INSURANCE SYSTEM,
Petitioner,

G.R. No. 157038

the petition under G.R. No. 156764 is hereby GIVEN

DUE COURSE. The Amended Decision dated May 31,

Present:

2001 of the CA in CA-G.R. SP No. 56429 and its

CARPIO, J., Chairperson,

Resolution of January 14, 2003 are

LEONARDO-DE CASTRO,

versus -

hereby ANNULLED and SET ASIDE, and the CA

BRION,

Decision dated April 28, 2000 is

DEL CASTILLO, and

accordingly REINSTATED.

ABAD, JJ.
Costs against Ricardo G. Paloma.
SO ORDERED.

Promulgated:

JEAN E. RAOET,
Respondent.

December 23, 2009

x ---------------------------------------------------------------------------------------- x
DECISION
BRION, J.:

In this Petition for Review on Certiorari,

[1]

petitioner Government Service Insurance System

(GSIS) seeks to set aside the Court of Appeals (CA)

of construction activities of Lateral E and E-1.He was

also tasked to review and check the structural plan
and the facilities.[4]

Decision[2] datedFebruary 3, 2003 in CA-G.R. SP. No.

72820, which overturned and set aside the July 24,
2002 decision[3] of the Employees Compensation

In 2000, Francisco was diagnosed

Commission (ECC) in ECC Case No. GM-13079-302,

with Hypertension, Severe, Stage III, Coronary Artery

and granted respondent Jean Raoets (respondent)

Disease, and he was confined at the Region I Medical

claim for income benefits arising from her husbands

Center from July 16 to July 25, 2000.[5] As the GSIS

death.

considered this a work-related condition, Francisco was

BACKGROUND FACTS

awarded 30 days Temporary Total Disability benefits,

plus reimbursement of medical expenses incurred
during treatment.

The respondents husband, Francisco M. Raoet

(Francisco), entered government service on July 16,
1974 as an Engineer Trainee at the National Irrigation
Administration (NIA).On July 5, 1978, he was appointed
as Junior Civil Engineer, and on April 22, 1981, he rose
to the rank of Irrigation Engineer B. On August 1, 1998,
he was promoted to the position of Engineer A the

On May 5, 2001, Francisco was rushed to the Dr.

Marcelo M. Chan Memorial Hospital because he was
vomiting blood.[6] He was pronounced dead on arrival
at the hospital. His death certificate listed the causes
of his death as follows:

position he held until his death on May 5, 2001. As

Engineer A, Francisco supervised the implementation

CAUSES OF DEATH

supporting the respondents claim. Since Francisco had

Immediate cause: Cardiac Arrest

no prior history of consultation relating to peptic ulcer

Antecedent cause: Acute Massive

Hemorrhage

and no autopsy was performed to ascertain the cause

Underlying cause: T/C Bleeding Peptic

Ulcer Disease[7]

Peptic Ulcer Disease was the reason for his demise.

of his death, the ECC could not conclude that Bleeding

The respondent elevated the case to the CA

The respondent, as widow, filed with the GSIS on
May 24, 2001 a claim for income benefits accruing

through a Petition for Review. She cited the following

supporting grounds:

from the death of her husband, pursuant to

Presidential Decree No. 626 (P.D. 626), as

1.

Employees Compensation
Commission failed to consider that
peptic ulcer is an on and off disease
which does not need confinement in a
hospital or clinic or submission to a
Doctor of Medicine because it can be
cured by self-medication.

2.

The Employees Compensation

Commission failed to consider also
that there were medical treatment of
Francisco Raoet of occupational and
compensable diseases other than
peptic ulcer as shown by the medical

amended. On August 31, 2001, the GSIS denied the

claim on the ground that the respondent did not
submit any supporting documents to show that
Franciscos death was due to peptic ulcer.

On appeal, the ECC affirmed the findings of the

GSIS in its decision of July 24, 2002. According to the
ECC, it could not determine if Franciscos death was
compensable due to the absence of documents

findings of certificates, Xerox copies of

which are attached to this petition.
II.

Whether or not the ailment Acute

Massive Hemorrhage t/c Bleeding

The CA reversed

[8]

the ECC decision. The

Peptic Ulcer Disease, which caused the

appellate court held that while the Amended Rules on

death of the late Francisco, is work-

Employees Compensation does not list peptic ulcer as

connected or whether there was any

an occupational disease, Franciscos death should be

proof to show that the risk of

compensable since its immediate cause was cardiac

contracting the same was increased

arrest. Thus, the CA ordered the GSIS to pay the

by factors attendant to his

respondents claim for death benefits under P.D. 626,

employment.

as amended.
The GSIS, this time, appealed through the
present petition, raising the following issues:

The GSIS reasons out that since the cause of

Franciscos death was peptic ulcer, a disease not
included in the occupational diseases listed in Annex A

I.

Whether or not the CA was correct

in reversing the decision of the ECC
and the GSIS denying the respondents
claim for income benefit under P.D.
626, as amended, for the death of her
husband, Francisco.

of the Amended Rules on Employees Compensation,

proof must be shown that the risk of contracting the
disease was increased by his working conditions. The
respondent failed to present any such evidence to
support her claim apart from her bare allegations. In
fact, Franciscos medical records disclose that he did
not consult his doctors regarding peptic ulcer. Since no

autopsy was performed to ascertain the cause of

The GSIS also points out that the employees

death, no assurance exists that Bleeding Peptic

compensation trust fund is presently empty, and

Ulcer was indeed the cause of his death.

claims on this fund are being paid by the GSIS from

advances coming from its other funds. Accordingly, the
GSIS argues that the trust fund would suffer if benefits

The GSIS further argues that Franciscos other

ailments, i.e., his hypertension and coronary artery

are paid to claimants who are not entitled under the

law.

disease, had already been awarded the maximum

benefits commensurate to the degree of his disability
when he was granted 30 days Temporary Total

In contrast, the respondent claims that the

Disability benefits, plus reimbursement of medical

issues the GSIS raised are essentially questions of fact

expenses incurred in the treatment of these

which the Court is now barred from resolving in a

illnesses. Thus, no death benefit for the same diseases

petition for review oncertiorari. Thus, she posits that

can be claimed.

the petition should be denied.

THE COURTS RULING

We deny the petition for lack of merit.

The Procedural issue

From the perspective of the CA decision, the

A petition for review under Rule 45 of the Rules

issue is not so much the actual cause of death, but a

of Court opens a case for review only on questions of

reading of the cause of death from the point of view of

law, not questions of fact. A question of law exists

compensability.This is essentially a legal issue,

when the doubt centers on what the law is on a certain

touching as it does on the issue of

set of facts. A question of fact exists when the doubt

compensability. Hence, it is likewise within the power

is on the truth or falsity of the alleged facts. [9]

of this Court to review in this Rule 45 petition.

In raising questions regarding Franciscos cause

of death and its compensability, the GSIS, at first
blush, appears to be raising a basic question of fact
the actual cause of Franciscos death. Its question,

Factors
determining
compensabilit
y of death

however, is not on the truth or falsity of the claimed

cause of death, but on whether evidence exists
supporting the claimed cause of death. Posed in this
manner, the question is not purely a factual one as it

P.D. 626, as amended, defines compensable

involves the appreciation of how evidence is to be

sickness as "any illness definitely accepted as an

viewed, and whether such evidence supports or rejects

occupational disease listed by the Commission, or any

the claimed cause of death. Thus, it is a question we

illness caused by employment subject to proof by the

can rule upon in this petition.

employee that the risk of contracting the same is

increased by the working conditions."

Section 1 (b), Rule III of the Amended Rules on

Employees' Compensation implements P.D. 626 and
requires that for sickness and the resulting disability or
death to be compensable, it must be an "occupational
disease" included in the list provided (Annex "A"), with
the conditions attached to the listed sickness duly
satisfied; otherwise, the claimant must show proof that

The GSIS maintains that the respondents claim

for income benefits should be denied because she
failed to present any proof, documentary or otherwise,
that peptic ulcer was the underlying cause for
Franciscos death.

the risk of contracting the illness is increased by his

working conditions. In plainer terms, to be entitled to
compensation, a claimant must show that the

We disagree with this position, as we find that

sickness is either: (1) a result of an occupational

the respondent submitted sufficient proof of the cause

disease listed under Annex "A" of the Amended

of her husbands death when she presented his death

Rules on Employees' Compensation under the

certificate. InPhilippine American Life Insurance

conditions Annex A sets forth; or (2) if not so

Company v. CA,[11] we held that death

listed, that the risk of contracting the disease is

certificates and the notes by a municipal health

increased by the working conditions.[10]

officer prepared in the regular performance of his

duties are prima facie evidence of facts therein
stated. A duly-registered death certificate is

Based on Franciscos death certificate, the

immediate cause of his death was cardiac arrest; the
antecedent cause was acute massive hemorrhage, and
the underlying cause was bleeding peptic ulcer
disease.

considered a public document and the entries

found therein are presumed correct, unless the
party who contests its accuracy can produce positive
evidence establishing a contrary conclusion. We also
ruled in People v. Datun[12] that adeath certificate

establishes the fact of death and its immediate,

and ignored the underlying cause of death peptic

antecedent, and underlying causes.

ulcer. According to the CA, Franciscos death is

compensable even if peptic ulcer is not a listed
occupational disease, since Francisco died due to a

Since neither the GSIS nor the ECC presented

listed cause cardiac arrest.

any evidence to refute that cardiac arrest was the

immediate cause, and peptic ulcer was the underlying
cause of Franciscos death, we accept as established, in

The CA is apparently wrong in its conclusion as

accordance with the death certificate, that the

it viewed in isolation the immediate cause of death

underlying cause of Franciscos demise was peptic

(cardiac arrest), disregarding that what brought about

ulcer.

the cardiac arrest was the ultimate underlying cause

peptic ulcer. This error, however, does not signify that
Franciscos death is not compensable because peptic

The CA
decision and
Peptic Ulcer
as
Compensable
Illness

ulcer itself, under specific conditions, is a compensable

illness.

Contrary to the CAs conclusion, peptic ulcer is a

compensable cause of death, pursuant to ECC
Resolution No. 1676 dated January 29, 1981, which
unmistakably provides that peptic ulcer is a

In the assailed decision, the CA focused on

Franciscos immediate cause of death cardiac arrest

compensable disease listed under Annex A,

provided the claimant is in an occupation that

involves prolonged emotional or physical stress,
as among professional people, transport workers
and the like.[13]

Peptic Ulcer is defined as:

[A]n ulceration of the mucous membrane

of the esophagus, stomach or duodenum,
caused by the action of the acid gastric
juice.

Peptic ulcer is most common among

persons who are chronically anxious
or irritated, or who otherwise suffer
from mental tension. It occurs about
three times as often in men as in women.
Symptoms include a pain or gnawing
sensation in the epigastric region. The
pain occurs from 1 to 3 hours after eating,
and is usually relieved by eating or taking
an antacid drug. Vomiting, sometimes
preceded by nausea, usually follows a
severe bout of pain.

COMPLICATIONS. If ulcers are untreated,

bleeding can occur, leading to anemia
and therefore weakness and impaired
health. Blood may be vomited, and
appears brownish and like coffee
groundsbecause of the digestive effect
of gastric secretions on the hemoglobin.
There may be blood in the stools, giving
them a tarry black color. In acute cases
sudden hemorrhage can occur and
may be fatal if not treated properly.

xxxx

Worry and anxiety can contribute to

the development of an ulcer and
prevent it from healing. If emotional
tensions persist, an ulcer that has been
healed by medical treatment can return.
Therefore, every effort is made to help
the patient relax. Sometimes counseling
or psychotherapy is helpful in relieving
emotional strain.[14] [Emphasis supplied.]

Based on the Annex A list and the

accompanying requisite condition for compensability,
the question that really confronts us is: did
Franciscos occupation involve prolonged

emotional or physical stress to make his death

responsibilities. He had to supervise the construction

due to peptic ulcer compensable?

activities of Lateral E and E-1, and review the

structural plan and facilities.[17] The stresses these
responsibilities carried did not abate for Francisco

A significant point to appreciate in considering

this question is that based on the GSIS own records,
[15]

Francisco was diagnosed with Hypertension,

when he returned from his Temporary Total Disability;

he occupied the same position without change of
responsibilities until his death on May 5, 2001. Thus,

Severe, Stage III, Coronary Artery Disease, and

Francisco had continuous exposure to prolonged

confined at the Region I Medical Center in July 2000.

emotional stress that would qualify his peptic ulcer a

The GSIS found this ailment work-connected and

stress-driven ailment as a compensable cause of

awarded Francisco 30 days Temporary Total Disability

death.

benefits. This finding assumes importance in the

present case because the established underlying
causes of the combination of these diseases are,

In arriving at this conclusion, we stress that in

among others,the stressful nature and pressures

determining the compensability of an illness, we do

inherent in an occupation.[16] This was what the

not require that the employment be the sole factor in

GSIS acknowledged in recognizing Franciscos

the growth, development, or acceleration of a

total temporary disability.

claimants illness to entitle him to the benefits provided

for. It is enough that his employment contributed, even
if only in a small degree, to the development of the

As already mentioned, Francisco worked as

Engineer A with the NIA, a job with enormous

disease.[18] In the recent case of GSIS v. Vicencio, we

said:[19]

manifested their physical effects on Franciscos health

It is well-settled that the degree of
proof required under P.D. No. 626 is
merely substantial evidence, which
means, such relevant evidence as a
reasonable mind might accept as
adequate to support a conclusion. What
the law requires is a reasonable
work-connection and not a direct
causal relation. It is enough that the
hypothesis on which the workmans claim
is based is probable. Medical opinion to
the contrary can be disregarded
especially where there is some basis in
the facts for inferring a workconnection. Probability, not certainty,
is the touchstone. It is not required
that the employment be the sole
factor in the growth, development or
acceleration of a claimants illness to
entitle him to the benefits provided
for. It is enough that his employment
contributed, even if to a small
degree, to the development of the
disease. [Emphasis supplied.]

and body; the initial and most obvious were the

hypertension and coronary artery disease that the
GSIS itself recognized. Less obvious, but nevertheless
arising from the same pressures and stresses, were
the silent killers, like peptic ulcer, that might not have
attracted Franciscos attention to the point of driving
him to seek immediate and active medical
intervention. Ultimately, when the ulcer-producing
stresses did not end, his ulcer bled profusely, affecting
his heart and causing its arrest. In this manner,
Francisco died. That his widow should now be granted
benefits for Franciscos death is a conclusion we cannot
avoid and is, in fact, one that we should gladly make
as a matter of law and social justice.

Purpose of P.D. 626

In this case, the chain of causation that led to the
peptic ulcer is too obvious to be disregarded. The
pressures of Franciscos work constant, continuing and
consistent at his level of responsibility inevitably

Understandably, the GSIS may accuse us of

leniency in the grant of compensation benefits in light

of the jurisprudential trends in this area of law. Our

must, to ensure that the constitutional objectives are

leniency, however, is not due to our individual

achieved. This is simply what we are doing in this case.

predilections or liberal leanings; it proceeds mainly

from the character of P.D. 626 as a social legislation
whose primordial purpose is to provide meaningful
protection to the working class against the hazards of

Acting on this same role, we remind the GSIS

disability, illness, and other contingencies resulting in

that when it is called upon to determine the

loss of income. In employee compensation, persons

compensability of an employees disease or death, the

charged by law to carry out the Constitutions social

present state of the State Insurance Fund cannot be an

justice objectives should adopt a liberal attitude in

excuse to avoid the payment of compensation. If the

deciding compensability claims and should not

State Insurance Fund lacks the financial capacity, it is

hesitate to grant compensability where a reasonable

not the responsibility of the insured civil servant, but

measure of work-connection can be inferred. Only this

rather of the State to fill in the deficiency and ensure

kind of interpretation can give meaning and substance

the solvency of the State Insurance Fund. This is the

to the laws compassionate spirit as expressed in

clear mandate of Article 184 of the Labor Code, which

Article 4 of the Labor Code that all doubts in the

reads:

implementation and interpretation of the provisions of

the Labor Code, including their implementing rules and
regulations, should be resolved in favor of labor.
[20]

When the implementors fail to reach up to these

standards, this Court, as guardian of the Constitution,

necessarily has to take up the slack and order what we

Article 184. Government

guarantee. The Republic of
the Philippines guarantees the benefits
prescribed under this Title, and accepts
general responsibility for the solvency of
the State Insurance Fund. In case of
deficiency, the same shall be covered by

supplemental appropriations from the

national government.

In Biscarra v. Republic, we explicitly said:[21]

The fear that this humane, liberal and

progressive view will swamp the
Government with claims for continuing
medical, hospital and surgical services
and as a consequence unduly drain the
National Treasury, is no argument against
it; because the Republic of the
Philippines as a welfare State, in
providing for the social justice
guarantee in our Constitution,
assumes such risk. This assumption of
such a noble responsibility is, as
heretofore stated, only just and equitable
since the employees to be benefited
thereby precisely became permanently
injured or sick while invariably devoting
the greater portion of their lives to the
service of our country and
people. Human beings constitute the
most valuable natural resources of
the nation and therefore should
merit the highest solicitude and the
greatest protection from the State to
relieve them from unbearable agony.
They have a right to entertain the hope
that during the few remaining years of

their life some dedicated institution or

gifted individual may produce a remedy
or cure to relieve them from the painful or
crippling or debilitating or humiliating
effects of their injury or ailment, to fully
and completely rehabilitate them and
develop their "mental, vocational and
social potential," so that they will remain
useful and productive citizens. [Emphasis
supplied]

The GSIS, therefore, cannot use the excuse of

the State Insurance Funds present lack of capital to
refuse paying income benefits to the respondent,
whose husband devoted 27 years of his life to
government service and whose death was caused by
an ailment aggravated by the emotional stresses and
pressures of his work.

WHEREFORE, premises considered, we

hereby DENY the petition for lack of merit. No costs.

SO ORDERED.

C
hairperson,
- versus -

TINGA,
VELASCO, and
BRION, JJ.

SAMAHAN NG MGA MANGGAGAWA

SA ARCO METAL-NAFLU (SAMARMNAFLU),
ted:

Promulga
Respondent.
May

14, 2008
ARCO METAL PRODUCTS, CO., G.R. No. 170734
x--------------------------------------------------------------------------x

INC., and MRS. SALVADOR UY,

Petitioners,

Presen

t:

QUISU

DECISION

MBING, J.,
TINGA, J.:

This treats of the Petition for Review[1] of the

Resolution[2] and
Decision[3] of the Court of Appeals dated 9 Decem
ber 2005 and 29 September 2005, respectively in CAG.R. SP No. 85089 entitled

1. Rante Lamadrid
Sickness
2003 to 27 February 2004
2. Alberto Gamban
2003 to 1 July 2003
Samahan ng mga Manggagawa sa Arco Metal-NAFLU
(SAMARM-NAFLU) v. Arco Metal Products Co., Inc.

27 August

Suspension 10 June

3. Rodelio Collantes
Sickness
2003 to February 2004

August

and/or Mr. Salvador Uy/Accredited Voluntary Arbitrator

Apron M. Mangabat,[4] which ruled that the 13th month
pay, vacation leave and sick leave conversion to cash
shall be paid in full to the employees of petitioner

Respondent protested the prorated scheme,

regardless of the actual service they rendered within a

claiming that on several occasions petitioner did not

year.

prorate the payment of the same benefits to seven (7)

employees who had not served for the full 12
months. The payments were made in 1992, 1993,
Petitioner is a company engaged in the

1994, 1996, 1999, 2003, and 2004. According to

manufacture of metal products, whereas respondent is

respondent, the prorated payment violates the rule

the labor union of petitioners rank and file

against diminution of benefits under Article 100 of the

employees. Sometime in December 2003, petitioner

Labor Code. Thus, they filed a complaint before the

th

paid the 13 month pay, bonus, and leave encashment

National Conciliation and Mediation Board

of three union members in amounts proportional to the

(NCMB). The parties submitted the case for voluntary

service they actually rendered in a year, which is less

arbitration.

than a full twelve (12) months. The employees were:

The voluntary arbitrator, Apron M. Mangabat,

that petitioner erred in paying full

ruled in favor of petitioner and found that the giving

employees. The appellate court noted that aside from

of the contested benefits in full, irrespective of the

the affidavit of petitioners officer, it has not presented

actual service rendered within one year has

any evidence in support of its position that it has no

not ripened into a practice. He noted the affidavit of

voluntary practice of granting the contested benefits in

Joselito Baingan, manufacturing group head of

full and without regard to the service actually rendered

petitioner, which states that the giving in full of the

within the year. It also questioned why it took

benefit was a mere error. He also interpreted the

petitioner eleven (11) years before it was able to

phrase for each year of service found in the

discover the alleged error. The dispositive portion of

pertinent CBA provisions to mean that an employee

the courts decision reads:

must have rendered one year of service in order to be

entitled to the full benefits provided in the CBA. [5]

Unsatisfied, respondent filed a Petition for

Review[6] under Rule 43 before the Court of Appeals,
imputing serious error to Mangabats conclusion. The
Court of Appeals ruled that the CBA did not intend to
foreclose the application of prorated payments of
leave benefits to covered employees. The appellate
court found that petitioner, however, had an existing
voluntary practice of paying the aforesaid benefits in
full to its employees, thereby rejecting the claim

WHEREFORE, premises
considered, the instant petition is
hereby GRANTED and the Decision of
Accredited Voluntary Arbiter Apron M.
Mangabat in NCMB-NCR Case No. PM-12345-03, dated June 18, 2004 is
hereby AFFIRMED WITH
MODIFICATION in that the 13th month
pay, bonus, vacation leave and sick leave
conversions to cash shall be paid to the
employees in full, irrespective of the actual
service rendered within a year.[7]

Petitioner moved for the reconsideration of the

decision but its motion was denied, hence this petition.

Petitioner submits that the Court of Appeals

erred when it ruled that the grant of 13th month pay,
bonus, and leave encashment in full regardless of
actual service rendered constitutes voluntary employer
practice and, consequently, the prorated payment of
the said benefits does not constitute diminution of
benefits under Article 100 of the Labor Code. [8]

The petition ultimately fails.

First, we determine whether the intent of the CBA
provisions is to grant full benefits regardless of service
actually rendered by an employee to the company.
According to petitioner, there is a one-year cutoff in
the entitlement to the benefits provided in the CBA

Section 1. Employees/workers
covered by this agreement who have
rendered at least one (1) year of
service shall be entitled to sixteen (16)
days vacation leave with pay for each
year of service. Unused leaves shall not be
cumulative but shall be converted into its
cash equivalent and shall become due and
payable every 1st Saturday of December of
each year.

which is evident from the wording of its pertinent

provisions as well as of the existing law.

We agree with petitioner on the first issue. The

However, if the 1st Saturday of

December falls in December 1, November
30 (Friday) being a holiday, the
management will give the cash conversion
of leaves in November 29.

applicable CBA provisions read:

ARTICLE XIV-VACATION LEAVE

Section 2. In case of resignation or

retirement of an employee, his vacation
leave shall be paid proportionately to his
days of service rendered during the year.

ARTICLE XV-SICK LEAVE

Section 1. Employees/workers
covered by this agreement who have
rendered at least one (1) year of

service shall be entitled to sixteen (16)

days of sick leave with pay for each year
of service. Unused sick leave shall not be
cumulative but shall be converted into its
cash equivalent and shall become due and
payable every 1st Saturday of December of
each year.

Section 2. Sick Leave will only be

granted to actual sickness duly certified by
the Company physician or by a licensed
physician.

Section 3. All commutable earned

leaves will be paid proportionately upon
retirement or separation.

Section 1. The Company shall

grant six (6) days emergency leave to
employees covered by this agreement and
if unused shall be converted into cash and
become due and payable on the
1st Saturday of December each year.

Section 2. Employees/workers
covered by this agreement who have
rendered at least one (1) year of
service shall be entitled to seven (7) days
of Paternity Leave with pay in case the
married employees legitimate spouse
gave birth. Said benefit shall be noncumulative and non-commutative and
shall be deemed in compliance with the
law on the same.

Section 3. Maternity leaves for

married female employees shall be in
accordance with the SSS Law plus a cash
grant of P1,500.00 per month.

xxx
ARTICLE XVI EMERGENCY LEAVE,
ETC.
ARTICLE XVIII- 13TH MONTH PAY &
BONUS

Section 1. The Company shall

grant 13th Month Pay to all employees
covered by this agreement. The basis of
computing such pay shall be the basic
salary per day of the employee multiplied
by 30 and shall become due and payable
every 1st Saturday of December.

Section 2. The Company shall

grant a bonus to all employees as
practiced which shall be distributed on the
2nd Saturday of December.

On the second issue, however, petitioner

founders.
Section 3. That the Company
further grants the amount of Two
Thousand Five Hundred Pesos (P2,500.00)
as signing bonus plus a free CBA Booklet.
[9]
(Underscoring ours)
There is no doubt that in order to be entitled to

As a general rule, in petitions for review under

Rule 45, the Court, not being a trier of facts, does not
normally embark on a re-examination of the evidence

the full monetization of sixteen (16) days of vacation

presented by the contending parties during the trial of

and sick leave, one must have rendered at least one

the case considering that the findings of facts of the

year of service. The clear wording of the provisions

Court of Appeals are conclusive and binding on the

does not allow any other interpretation. Anent the

Court.[10] The rule, however, admits of several

13th month pay and bonus, we agree with the findings

exceptions, one of which is when the findings of the

of Mangabat that the CBA provisions did not give any

Court of Appeals are contrary to that of the lower

meaning different from that given by the law, thus it

tribunals. Such is the case here, as the factual

should be computed at 1/12 of the total compensation

conclusions of the Court of Appeals differ from that of

which an employee receives for the whole calendar

the voluntary arbitrator.

year. The bonus is also equivalent to the amount of

the 13th month pay given, or in proportion to the actual
service rendered by an employee within the year.

Petitioner granted, in several instances, full

benefits to employees who have not served a full year,
thus:

Name

Reason

erroneously made and they occurred in isolated cases

Duration
1. Percival
Bernas
Sickness
November 1992

in the years 1992, 1993, 1994, 1999, 2002 and

2003. According to petitioner, it was only in 2003 that
July 1992 to

the accounting department discovered the error when

there were already three (3) employees involved with

2. Cezar Montero
Sickness
Dec. 1992 to February 1993

21

3. Wilson Sayod
1994 to July 1994

May

Sickness

4. Nomer Becina
Suspension 1
Sept. 1996 to 5 Oct. 1996
5. Ronnie Licuan
Sickness
Nov. 1999 to 9 Dec. 1999

6. Guilbert Villaruel
Sickness
Aug. 2002 to 4 Feb. 2003

23

7. Melandro Moque
Sickness
2003 to 30 Sept. 2003[11]

prolonged absences and the error was corrected by

implementing the pro-rata payment of benefits
pursuant to law and their existing CBA.[12] It adds that
the seven earlier cases of full payment of
benefits went unnoticed considering the proportion
of one employee concerned (per year) vis vis the 170
employees of the company. Petitioner describes the
situation as a clear oversight which should not be
taken against it.[13] To further bolster its case, petitioner

29 Aug.

argues that for a grant of a benefit to be considered a

practice, it should have been practiced over a long
period of time and must be shown to be consistent,
deliberate and intentional, which is not what happened
in this case. Petitioner tries to make a case out of the

Petitioner claims that its full payment of

fact that the CBA has not been modified to incorporate

benefits regardless of the length of service to the

the giving of full benefits regardless of the length of

company does not constitute voluntary employer

service, proof that the grant has not ripened into

practice. It points out that the payments had been

company practice.

We disagree.
Any benefit and supplement being enjoyed by
employees cannot be reduced, diminished,
discontinued or eliminated by the employer.[14] The
principle of non-diminution of benefits is founded on
the Constitutional mandate to "protect the rights of
workers and promote their welfare,[15] and to afford
labor full protection.[16] Said mandate in turn is the
basis of Article 4 of the Labor Code which states that
all doubts in the implementation and interpretation of
this Code, including its implementing rules and
regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the
right of employees to benefits which were voluntarily
given by the employer and which ripened into
company practice. Thus in Davao Fruits Corporation
v. Associated Labor Unions, et al.[17] where an
employer had freely and continuously included in the
computation of the 13th month pay those items that
were expressly excluded by the law, we held that the
act which was favorable to the employees though not
conforming to law had thus ripened into a practice and

could not be withdrawn, reduced, diminished,

discontinued or eliminated. In Sevilla Trading
Company v. Semana,[18] we ruled that the employers
act of including non-basic benefits in the computation
of the 13th month pay was a voluntary act and had
ripened into a company practice which cannot be
peremptorily withdrawn. Meanwhile
in Davao Integrated Port Stevedoring Services v.
Abarquez,[19] the Court ordered the payment of the
cash equivalent of the unenjoyed sick leave benefits to
its intermittent workers after finding that said workers
had received these benefits for almost four years until
the grant was stopped due to a different interpretation
of the CBA provisions. We held that the
employer cannot
unilaterally withdraw the existing privilege of
commutation or conversion to cash given to said
workers, and as also noted that the employer had in
fact granted and paid said cash equivalent of the
unenjoyed portion of the sick leave benefits to some
intermittent workers.

In the years 1992, 1993, 1994, 1999, 2002 and

2003, petitioner had adopted a policy of freely,

period less than one (1) year or twelve

(12) months in accordance with the CBA
provision relative thereto.

voluntarily and consistently granting full benefits to its

employees regardless of the length of service
rendered. True, there were only a total of seven
employees who benefited from such a practice, but it
was an established practice nonetheless. Jurisprudence
has not laid down any rule specifying a minimum
number of years within which a company
practice must be exercised in order to constitute

6. It was never the intention much

less the policy of the management to
grant the aforesaid benefits to the
employees in full regardless of whether or
not the employee has
rendered services to the company for
the entire year, otherwise, it would be
unjust and inequitable not only to the
company but to other employees as well.
[24]

voluntary company practice.[20] Thus, it can be six (6)

years,[21] three (3) years,[22] or even as short as two (2)
years.[23] Petitioner cannot shirk away from its
responsibility by merely claiming that it was a mistake
or an error, supported only by an affidavit of its
manufacturing group head portions of which read:

In cases involving money claims of employees,

the employer has the
burden of proving that the employees did receive
the wages and benefits and that the same were

5. 13th month pay, bonus, and cash

conversion of unused/earned vacation
leave, sick leave and emergency leave
are computed and paid in full to
employees who rendered services to the
company for the entire year and
proportionately to those employees who
rendered service to the company for a

paid in accordance with law. [25]Indeed, if petitioner

wants to prove that it merely erred in giving full
benefits, it could have easily presented other proofs,
such as the names of other employees who did not
fully serve for one year and thus were given prorated

benefits. Experientially, a perfect attendance in the

workplace is always the goal but it is seldom achieved.
There must have been other employees who had
reported for work less than a full year and who, as a
consequence received only prorated benefits. This
could have easily bolstered petitioners theory of
mistake/error, but sadly, no evidence to that effect was
presented.

IN VIEW HEREOF, the petition is DENIED. The

Decision of the Court of Appeals in CA-G.R. SP No.
85089 dated 29 September 2005 is and its
Resolution dated 9 December 2005 are hereby
AFFIRMED.

SO ORDERED.

MANOLO A. PEAFLOR,
Petitioner,

G.R. No. 177114

BRION, J.:

Present:
-

Petitioner Manolo A. Peaflor (Peaflor) seeks the

versus -

reversal of the Court of Appeals (CA)

CARPIO, J., Chairperson,
decision[1] dated December 29, 2006 and its
BRION,
resolution[2] dated March 14, 2007, through the present
DEL CASTILLO,

OUTDOOR CLOTHING
MANUFACTURING
CORPORATION,NATHANIEL T.
SYFU, President, MEDYLENE M.
DEMOGENA, Finance Manager,
and PAUL U. LEE, Chairman,
Respondents.

ABAD, and
PEREZ, JJ.

petition for review on certiorari filed under Rule 45 of

the Rules of Court. The assailed CA decision affirmed
the September 24, 2002 decision[3] of the National
Labor Relations Commission (NLRC) that in turn
reversed the August 15, 2001 decision[4] of the Labor
Arbiter.[5]

Promulgated:

January 21, 2010

THE FACTUAL ANTECEDENTS

x ------------------------------------------------------------------------------------------x

Peaflor was hired on September 2, 1999 as

DECISION

probationary Human Resource Department (HRD)

Manager of respondent Outdoor Clothing
Manufacturing Corporation (Outdoor Clothing or the

company). As HRD head, Peaflor was expected to (1)

When Outdoor Clothing began undertaking its alleged

secure and maintain the right quality and quantity of

downsizing program due to negative business returns,

people needed by the company; (2) maintain the

Peaflor alleged that his department had been singled

harmonious relationship between the employees and

out. On the pretext of retrenchment, Peaflors two staff

management in a role that supports organizational

members were dismissed, leaving him as the only

goals and individual aspirations; and (3) represent the

member of Outdoor Clothings HRD and compelling him

company in labor cases or proceedings. Two staff

to perform all personnel-related work. He worked as a

members were assigned to work with him to assist him

one-man department, carrying out all clerical,

in undertaking these functions.

administrative and liaison work; he personally went to

various government offices to process the companys
papers.

Peaflor claimed that his relationship with Outdoor

Clothing went well during the first few months of his
employment; he designed and created the companys

When an Outdoor Clothing employee, Lynn

Policy Manual, Personnel Handbook, Job Expectations,

Padilla (Padilla), suffered injuries in a bombing incident,

and Organizational Set-Up during this period. His woes

the company required Peaflor to attend to her

began when the companys Vice President for

hospitalization needs; he had to work outside office

Operations, Edgar Lee (Lee), left the company after a

premises to undertake this task. As he was acting on

big fight between Lee and Chief Corporate Officer

the companys orders, Peaflor considered himself to be

Nathaniel Syfu (Syfu). Because of his close association

on official business, but was surprised when the

with Lee, Peaflor claimed that he was among those who

company deducted six days salary corresponding to

bore Syfus ire.

the time he assisted Padilla. According to Finance

Manager Medylene Demogena (Demogena), he failed
to submit his trip ticket, but Peaflor belied this claim as
a trip ticket was required only when a company vehicle

was used and he did not use any company vehicle

Peaflor then filed a complaint for illegal dismissal with

when he attended to his off-premises work. [6]

the labor arbiter, claiming that he had been

constructively dismissed. He included in his complaint
a prayer for reinstatement and payment of backwages,

After Peaflor returned from his field work on March 13,

2000, his officemates informed him that while he was
away, Syfu had appointed Nathaniel Buenaobra
(Buenaobra) as the new HRD Manager. This information
was confirmed by Syfus memorandum of March 10,
2000 to the entire office stating that Buenaobra was
the concurrent HRD and Accounting Manager. [7] Peaflor
was surprised by the news; he also felt betrayed and
discouraged. He tried to talk to Syfu to clarify the
matter, but was unable to do so. Peaflor claimed that
under these circumstances, he had no option but to
resign. He submitted a letter to Syfu declaring his
irrevocable resignation from his employment with
Outdoor Clothing effective at the close of office hours
on March 15, 2000.[8]

illegally deducted salaries, damages, attorneys fees,

and other monetary claims.
Outdoor Clothing denied Peaflors allegation of
constructive dismissal. It posited instead that Peaflor
had voluntarily resigned from his work. Contrary to
Peaflors statement that he had been dismissed from
employment upon Syfus appointment of Buenaobra as
the new HRD Manager on March 10, 2000, Peaflor had
in fact continued working for the company until his
resignation on March 15, 2000. The company cited as
evidence the security report that Peaflor himself
prepared and signed on March 13, 2000.[9]
Outdoor Clothing disclaimed liability for any of
Peaflors monetary claims. Since Peaflor had voluntarily
resigned, Outdoor Clothing alleged that he was not
entitled to any backwages and damages. The company
likewise denied making any illegal deduction from
Peaflors salary; while deductions were made, they were
due to Peaflors failure to report for work during the
dates the company questioned. As a probationary

employee, he was not yet entitled to any leave credit

for his unauthorized absences. In a memorandum

that would offset his absences.

dated March 3, 2000 addressed to Syfu, Buenaobra

In his August 15, 2001 decision, the labor arbiter found

accepted the appointment.[12]

that Peaflor had been illegally dismissed.[10] Outdoor

Peaflor contested Syfus March 1, 2000 memorandum,

Clothing was consequently ordered to reinstate Peaflor

Buenaobras March 3, 2000 memorandum, and the

to his former or to an equivalent position, and to pay

AWOL memoranda, claiming these pieces of evidence

him his illegally deducted salary for six days,

were fabricated and were never presented before the

proportionate 13th month pay, attorneys fees, moral

labor arbiter. He pointed out that nothing in this

and exemplary damages.

resignation letter indicated that it was submitted to

Outdoor Clothing appealed the labor arbiters decision

with the NLRC. It insisted that Peaflor had not been
constructively dismissed, claiming that Peaflor
tendered his resignation on March 1, 2000 because he
saw no future with the corporation due to its dire
financial standing. Syfu alleged that he was compelled
to appoint Buenaobra as concurrent HRD Manager

and received by Syfu on March 1, 2000. He claimed

that it was submitted on March 15, 2000, the same
date he made his resignation effective. The AWOL
memoranda could not be relied on, as he was never
furnished copies of these. Moreover, he could not be on
prolonged absence without official leave, as his
residence was just a few meters away from the office.

through a memorandum dated March 1, 2000 to cover

The NLRC apparently found Outdoor Clothings

the position that Peaflor would soon vacate.[11] The

submitted memoranda sufficient to overturn the labor

appointment was also made to address the personnel

arbiters decision.[13] It characterized Peaflors

matters that had to be taken cared of while Peaflor was

resignation as a response, not to the allegedly

on unauthorized leave. Incidentally, Outdoor Clothing

degrading and hostile treatment that he was subjected

alleged that Peaflor had already been given two

to by Syfu, but to Outdoor Clothings downward

notices, on March 6 and 11, 2000 (absence without

financial spiral. Buenaobras appointment was made

official leave memoranda or the AWOL memoranda),

only after Peaflor had submitted his resignation letter,

and this was made to cover the vacancy Peaflors

filed.[15] Faced with these CA actions, Peaflor filed with

resignation would create. Thus, Peaflor was not eased

us the present petition for review on certiorari.

out from his position as HRD manager. No malice

THE PARTIES ARGUMENTS

likewise was present in the companys decision to

dismiss Peaflors two staff members; the company
simply exercised its management prerogative to

the NLRC and the CA, he had been constructively

address the financial problems it faced. Peaflor, in fact,

drafted the dismissal letters of his staff members. In
the absence of any illegal dismissal, no basis existed
for the monetary awards the labor arbiter granted.
Peaflor anchored his certiorari petition with the CA on
the claim that the NLRC decision was tainted with
grave abuse of discretion, although he essentially
adopted the same arguments he presented before the
labor arbiter and the NLRC.
In a decision dated December 29, 2006,

Peaflor insists that, contrary to the findings of

dismissed from his employment with Outdoor
Clothing. He alleges that the dismissal of his two staff
members, the demeaning liaison work he had to
perform as HRD Manager, the salary deduction for his
alleged unauthorized absences, and the appointment
of Buenaobra as the new HRD manager even before he
tendered his resignation, were clear acts of
discrimination that made his continued employment
with the Outdoor Clothing unbearable. He was thus
forced to resign.

[14]

the

CA affirmed the NLRCs decision, stating that Peaflor

failed to present sufficient evidence supporting his
claim that he had been constructively dismissed. The
CA ruled that Peaflors resignation was knowingly and
voluntarily made. Accordingly, it dismissed
Peaflors certiorari petition. It likewise denied the
motion for reconsideration that Peaflor subsequently

Outdoor Clothing claims that Peaflor voluntarily

resigned from his work and his contrary allegations
were all unsubstantiated. The HRD was not singled out
for retrenchment, but was simply the first to lose its
staff members because the company had to
downsize. Thus, all HRD work had to be performed by
Peaflor. Instead of being grateful that he was not
among those immediately dismissed due to the

companys retrenchment program, Peaflor

factual findings below are not binding on us, and we

unreasonably felt humiliated in performing work that

retain the authority to pass on the evidence presented

logically fell under his department; insisted on having

and draw conclusions therefrom. [18]

a full staff complement; absented himself from work

without official leave; and demanded payment for his
unauthorized absences.
THE ISSUE and THE COURTS RULING
The Court finds the petition meritorious.

The petition turns on the question of whether

Peaflors undisputed resignation was a voluntary or a
forced one, in the latter case making it a constructive
dismissal equivalent to an illegal dismissal. A critical
fact necessary in resolving this issue is whether
Peaflor filed his letter of resignation before or

A preliminary contentious issue is Outdoor Clothings

after the appointment of Buenaobra as the

argument that we should dismiss the petition outright

new/concurrent HRD manager. This question also

because it raises questions of facts, not the legal

gives rise to the side issue of when Buenaobras

questions that should be raised in a Rule 45 petition. [16]

appointment was made. If the resignation letter was

We see no merit in this argument as the rule

that a Rule 45 petition deals only with legal issues is
not an absolute rule; it admits of exceptions. In the
labor law setting, we wade into factual issues when
conflict of factual findings exists among the labor
arbiter, the NLRC, and the CA. This is the exact
situation that obtains in the present case since the
labor arbiter found facts supporting the conclusion that
there had been constructive dismissal, while the NLRCs
and the CAs factual findings contradicted the labor
arbiters findings.[17] Under this situation, the conflicting

submitted before Syfus appointment of Buenaobra as

new HRD manager, little support exists for Peaflors
allegation that he had been forced to resign due to the
prevailing abusive and hostile working
environment. Buenaobras appointment would then be
simply intended to cover the vacancy created by
Peaflors resignation. On the other hand, if the
resignation letter was submitted after the
appointment of Buenaobra, then factual basis exists
indicating that Peaflor had been constructively
dismissed as his resignation was a response to the

unacceptable appointment of another person to a

namely, the AWOL memoranda of March 6 and 11,

position he still occupied.

2000, allegedly sent to Penaflor.

The question of when Peaflor submitted his resignation

Several reasons arising directly from these pieces of

letter arises because this letter undisputably made

evidence lead us to conclude that Peaflor did indeed

was undated. Despite Peaflors claim of having

submit his resignation letter on March, 15, 2000, i.e.,

impressive intellectual and academic credentials,

[19]

his

resignation letter, for some reason, was undated. Thus,

the parties have directly opposing claims on the
matter. Peaflor claims that he wrote and filed the letter
on the same date he made his resignation
effective March 15, 2000. Outdoor Clothing, on the
other hand, contends that the letter was submitted
on March 1, 2000, for which reason Syfu issued a
memorandum of the same date appointing Buenaobra
as the concurrent HRD manager; Syfus memorandum
cited Peaflors intention to resign so he could devote
his time to teaching. The company further cites in
support of its case Buenaobras March 3,
2000 memorandum accepting his
appointment. Another piece of evidence is the Syfu
memorandum of March 10, 2000, which informed the
office of the appointment of Buenaobra as the
concurrent Head of HRD the position that Peaflor
occupied. Two other memoranda are alleged to exist,

on the same day that it was submitted.

First, we regard the Syfu memorandum of March
1, 2000 and the memorandum of Buenaobra of March
3, 2000 accepting the position of HRD Head to be
highly suspect.In our view, these memoranda, while
dated, do not constitute conclusive evidence of their
dates of preparation and
communication. Surprisingly, Peaflor was never
informed about these memoranda when they directly
concerned him, particularly the turnover of
responsibilities to Buenaobra if indeed Peaflor had
resigned on March 1, 2000 and a smooth turnover to
Buenaobra was intended. Even the recipients of these
communications do not appear to have signed for and
dated their receipt. The AWOL memoranda, to be sure,
should have been presented with proof of service if
they were to have any binding effect on Peaflor.

Second,we find it surprising that these pieces of

Buenaobra as concurrent Accounting and HRD

evidence pointing to a March 1, 2000 resignation

Manager. In contrast with the suspect memoranda we

specifically, Syfus March 1, 2000 memorandum to

discussed above, this memorandum properly bore

Buenaobra about Penaflors resignation and

signatures acknowledging receipt and dates of receipt

Buenaobras own acknowledgment and acceptance

by at least five company officials, among them the

were only presented to the NLRC on appeal, not before

readable signature of Demogene and one Agbayani;

the labor arbiter. The matter was not even mentioned

three of them acknowledged receipt on March 13,

in the companys position paper filed with the labor

2000, showing that indeed it was only on that day that

arbiter.

[20]

While the presentation of evidence at the

the appointment of Buenaobra to the HRD position was

NLRC level on appeal is not unheard of in labor cases,

disclosed. This evidence is fully consistent with

[21]

Peaflors position that it was only in the afternoon

still sufficient explanation must be adduced to

explain why this irregular practice should be allowed.

of March 13, 2000 that he was told, informally at that,

In the present case, Outdoor Clothing totally failed to

that Buenaobra had taken over his position. It explains

explain the reason for its omission. This failure, to us,

as well why as late as March 13, 2000, Peaflor still

is significant, as these were the clinching pieces of

prepared and signed a security report, [22] and is fully

evidence that allowed the NLRC to justify the reversal

consistent with his position that on that day he was

of the labor arbiters decision.

still working on the excuse letter of certain sales

Third, the circumstances and other evidence

surrounding Peaflors resignation support his claim that

personnel of the company.[23]

We note that the company only belatedly

he was practically compelled to resign from the

questioned the motivation that Peaflor cited for his

company.

discriminatory treatment, i.e., that he was caught in

Foremost among these is the memorandum

of March 10, 2000 signed by Syfu informing the whole
office (To: All concerned) about the designation of

the bitter fight between Syfu and Lee, then Vice

President for Operations, that led the latter to leave
the company.[24] After Lee left, Peaflor alleged that

those identified with Lee were singled out for adverse

probationary period would have ended and he would

treatment, citing in this regard the downsizing of HRD

have become a regular employee. We find it highly

that occurred on or about this time and which resulted

unlikely that Peaflor would resign on March 1, 2000

in his one-man HRD operation. We say this downsizing

and would then simply leave given his undisputed

was only alleged as the company totally failed despite

record of having successfully worked within his

Penaflors claim of discriminatory practice to adduce

probationary period on the companys Policy Manual,

evidence showing that there had indeed been a

Personnel Handbook, Job Expectations, and

legitimate downsizing. Other than its bare claim that it

Organizational Set-up. It does not appear sound and

was facing severe financial problems, Outdoor Clothing

logical to us that an employee would tender his

never presented any evidence to prove both the

resignation on the very same day he was entitled by

reasons for its alleged downsizing and the fact of such

law to be considered a regular employee, especially

downsizing. No evidence was ever offered to rebut

when a downsizing was taking place and he could have

Peaflors claim that his staff members were dismissed

availed of its benefits if he would be separated from

to make his life as HRD Head difficult. To be sure,

the service as a regular employee. It was strange, too,

Peaflors participation in the termination of his staff

that he would submit his resignation on March 1,

members employment cannot be used against him, as

2000 and keep completely quiet about this

the termination of employment was a management

development until its effective date on March 15,

decision that Peaflor, at his level, could not have

2000. In the usual course, the turnover alone of

effectively contested without putting his own job on

responsibilities and work loads to the successor in a

the line.

small company would have prevented the matter from

being completely under wraps for 10 days before any
announcement was ever made. That Peaflor was

Peaflors own service with the company deserves

close scrutiny. He started working for the company
on September 2, 1999 so that by March 1, 2000, his

caught by surprise by the turnover of his post to

Buenaobra is in fact indicated by the companys own
evidence that Peaflor still submitted a security report

on March 13, 2000. On the whole, Peaflors record with

made under compulsion or under circumstances

the company is not that of a company official who

approximating compulsion, such as when an

would simply and voluntarily tender a precipitate

employees act of handing in his resignation was a

resignation on the excuse that he would devote his

reaction to circumstances leaving him no alternative

time to teaching a lame excuse at best considering

but to resign.[27] In sum, the evidence does not support

that March is the month the semester usually ends and

the existence of voluntariness in Peaflors resignation.

is two or three months away from the start of another

school year.
In our view, it is more consistent with human
experience that Peaflor indeed learned of the
appointment of Buenaobra only on March 13, 2000 and
reacted to this development through his resignation
letter after realizing that he would only face hostility
and frustration in his working environment. Three very
basic labor law principles support this conclusion and
militate against the companys case.
The first is the settled rule that in employee

Another basic principle is that expressed in

Article 4 of the Labor Code that all doubts in the
interpretation and implementation of the Labor Code
should be interpreted in favor of the workingman. This
principle has been extended by jurisprudence to cover
doubts in the evidence presented by the employer and
the employee.[28] As shown above, Peaflor has, at very
least, shown serious doubts about the merits of the
companys case, particularly in the appreciation of the
clinching evidence on which the NLRC and CA

termination disputes, the employer bears the burden

decisions were based. In such contest of evidence, the

of proving that the employees dismissal was for just

cited Article 4 compels us to rule in Peaflors

and valid cause.[25]That Peaflor did indeed file a letter

favor. Thus, we find that Peaflor was constructively

of resignation does not help the companys case as,

dismissed given the hostile and discriminatory working

other than the fact of resignation, the company must

environment he found himself in, particularly

still prove that the employee voluntarily resigned.

evidenced by the escalating acts of unfairness against

[26]

him that culminated in the appointment of another

There can be no valid resignation where the act was

HRD manager without any prior notice to him. Where

respectively. We REINSTATE the decision of the labor

no less than the companys chief corporate officer was

arbiter dated August 15, 2001, with

against him, Peaflor had no alternative but to resign

theMODIFICATION that, due to the strained relations

from his employment.

[29]

between the parties, respondents are additionally

ordered to pay separation pay equivalent to the
petitioners one months salary.

Last but not the least, we have repeatedly given

significance in abandonment and constructive
dismissal cases to the employees reaction to the

Costs against the respondents.

termination of his employment and have asked the

question: is the complaint against the employer merely
a convenient afterthought subsequent to an

SO ORDERED.

abandonment or a voluntary resignation? We find from

the records that Peaflor sought almost immediate
official recourse to contest his separation from service
through a complaint for illegal dismissal.[30] This is not
the act of one who voluntarily resigned; his immediate
complaints characterize him as one who deeply felt
that he had been wronged.

HILARIO S. RAMIREZ,
Petitioner,

G.R. No. 182626

Present:

WHEREFORE, we GRANT the petitioners

petition for review on certiorari, and REVERSE the

- versus -

decision and resolution of the Court of Appeals in CAG.R. SP No. 87865 promulgated on December 29,
2006 and March 14, 2007,

HON. COURT OF APPEALS, Cebu

CORONA, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

City, HON. NLRC, 4thDivision,

Cebu City and MARIO S.
Promulgated: service incentive leaves with claims for moral and
VALCUEBA,
exemplary damages and attorneys fees, against Hilario
Respondents.
December 4, 2009
Ramirez (Ramirez). Valcueba claimed that Ramirez
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
hired him as mechanic on 28 May 1999. By 2002, he
was paid a daily wage of P140.00, which was increased
DECISION

to P165.00 a day in 2003 and to P190.00 in 2005. He

was not paid for holidays and rest days. He was not

CHICO-NAZARIO, J.:

also paid the complete amount of his 13th month

pay. On 27 February 2006, Josephine Torres, secretary

This is a Petition for Review under Rule 45 of the Rules

of Ramirez, informed Valcueba that he would not be

of Court assailing the (a) 13 July 2007 Resolution [1] of

allowed to return to work unless he agreed to work

the Court of Appeals which dismissed the Petition

on pakyaw basis.[4] Aggrieved, he filed this case.

for Certiorariunder Rule 65 filed by petitioner Hilario

Ramirez for failure to properly verify his petition and to

Ramirez, on the other hand, presented a

state material dates and (b) the 7 March 2008

different version of the antecedents, asserting that

Resolution[2] of the same court denying petitioners

Valcueba was first hired as construction worker, then

Motion for reconsideration.

as helper of the mechanic, and eventually as

mechanic. There were three categories of mechanics

The facts are:

at the workplace. First were the mechanics assigned to

Respondent Mario Valcueba (Valcueba) filed a

specific stations. Second were the mechanics paid

Complaint[3] for illegal dismissal and nonpayment of

onpakyaw basis; and finally, those who were classified

wage differential, 13th month pay differential, holiday

as rescue/emergency mechanics. Valcueba belonged

pay, premium pay for holidays and rest days, and

to the last category. As emergency/rescue mechanic,

he was assigned to various stations to perform

duty, nor did he file an application for a leave of

emergency/rescue work. On 26 February 2006, while

absence when he failed to report for work that day.

he was assigned at the Babag station, Ramirez

directed him to proceed to Calawisan, Lapu-lapuCity,

After hearing, the Labor Arbiter rendered her decision,

as a unit had developed engine trouble and the

where she pointed out that:

mechanic assigned in that area was absent. Valcueba

did not report to the Calawisan station. In fact, he did
not report for work anymore, as he allegedly intended
to return to Mindanao.[5]
Further, Ramirez insisted that Valcueba was
never terminated from his employment. On the
contrary, it was the latter who abandoned his
job. On 26 February 2006, Valcueba, as rescue or
emergency mechanic, temporarily assigned at Babag
Station, did not report at Calawisan, Lapulapu City when Ramirez ordered him to answer an
emergency call, which required him to fix Ramirezs
troubled taxi unit. The mechanic assigned in the area
was then absent at that time. The refusal of Valcueba
to obey the lawful order of Ramirez was bolstered by
his failure to report for work the following day, 27
February 2006. Valcueba advanced no reason
regarding his failure to answer an emergency call of

The allegation of complainant that his

refusal to work on pakiao basis prompted
respondent Hilario Ramirez to dismiss him
from the service is not substantiated by
any piece of evidence. Not even a
declaration under oath by any affiant
attesting to the credibility of
complainants allegation is presented. No
documentary evidence purporting to
clearly indicate that complainant was
discharged was submitted for Our
judicious consideration. A fortiori, there is
reason for Us to doubt complainants
submission that he was dismissed from
his employment grounded on
disobedience to the lawful order of
respondent.
On the side of respondent Ramirez, he
insisted that complainant was never
terminated from his employment. On the
contrary, he alleged that it was
complainant who abandoned his job. As
rescue or emergency mechanic
temporarily assigned at Babag Station,
on February 26, 2006, complainant did
not report at Calawisan, Lapu-

Lapu City when respondent Ramirez

ordered him to answer an emergency call,
which required him to fix the respondents
troubled taxi unit. The mechanic assigned
in the area was then absent at that
time. The refusal of complainant to obey
the lawful order of respondent Ramirez is
bolstered by his failure to report for work
the following day, February 27,
2006. Complainant advanced no reason
as to why he failed to answer an
emergency call of duty nor did he file an
application for a leave of absence when
he failed to report for work that day.
Nonetheless, as the records are bereft of
any evidence that respondent sent
complainant a letter which advised the
latter to report for work, We do not rule
out a case of abandonment because the
overt act of not answering an emergency
call is not insufficient to constitute
abandonment.
Consequently, there being no dismissal
nor abandonment involved in this case, it
is best that the parties to this case should
be restored to their previous employment
relations. Complainant must go back to
work within ten (10) days from receipt of
this judgment, while respondent must
accept complainant back to work, also
within ten (10) days from receipt of this
decision.[6]

In the end, the Labor Arbiter decreed:

WHEREFORE, VIEWED FROM THE
FOREGOING, judgment is hereby rendered
declaring respondent HILARIO RAMIREZ,
OWNER OF H.R. TAXI, NOT GUILTY of
illegally dismissing complainant from the
service, it appearing that there is no
dismissal to speak of in this
case. Consequently, complainant is
ordered to report back for work within ten
(10) days from receipt hereof, and
respondent Hilario Ramirez must
complainant (sic) back to work as soon as
the latter would express his intention to
report for work or within the same period
of ten (10) days from receipt hereof,
whichever comes first. Proof of
compliance hereof, must be submitted
within the same period (sic), complainant
would be guilty of abandonment and
respondent of illegal dismissal.
In addition, respondent HILARIO
RAMIREZ, owner of H.R. Taxi, is hereby
ordered to pay complainant MARIO S.
VALCUEBA the following:
a. Wage Differential - P30,538.00
b. 13th Month Pay - 15,287.98
Total Award - P45,825.98
Philippine currency, within ten (10) days
from receipt hereof, through the Cashier
of this Arbitration Branch.

Other claims are DISMISSED for failure to

substantiate.[7]

Records show that Ramirez received the Labor Arbiters

decision on 5 June 2006. He filed a Motion for
Reconsideration and/or Memorandum of Appeal with
Urgent Motion to Reduce Appeal Bond[8] on the 9th day
of the reglementary period or on 14 June 2006 before

entertained and his appeal is dismissed

for non-perfection due to lack of an
appeal bond.
The NLRC then held:
WHEREFORE, premises considered,
the appeal of respondent is hereby
DISMISSED for non-perfection due to want
of an appeal bond.[10]

the National Labor Relations Commission (NLRC).

Ramirez filed a Motion for Reconsideration, which the
Resolving the motion, the NLRC issued a

NLRC resolved in a Resolution dated 20 December

Resolution[9] dated 29 September 2006, which reads:

2006 in this wise:

Upon a careful perusal of the

motion to reduce bond, however, the
Commission found that the same does
not comply with Section 6, Rule VI of the
NLRC Rules of Procedure.
xxxx
Respondent has not offered a
meritorious ground for the reduction of
the appeal bond and the amount
of P10,000.00 he posted is not a
reasonable amount in relation to the
monetary award
ofP45,825.98. Consequently, his motion
to reduce appeal bond shall not be

The mere filing of a motion to reduce

bond without complying with the
requisites of meritorious grounds and
posting of a bond in a reasonable amount
in relation to the monetary award does
not stop the running of the period to
perfect an appeal. Thus, respondents
failure to abide with the requisites so
mentioned has not perfected his
appeal. Verily, since the assailed Decision
of the Labor Arbiter contains a monetary
award in favor of complainant, it
behooves upon respondent to post the
required bond.

While the filing of a motion to reduce

bond can be considered as a motion of
preference in case of an appeal, the same
holds true only when such motion
complies with the requirements stated
above.Consequently, respondents motion
to reduce bond which missed to comply
with such requisites does not deserve to
be entertained nor to be given a preferred
resolution.
WHEREFORE, premises considered, the
motion for reconsideration of respondent
is hereby DENIED for lack of merit.[11]

The decision of the Labor Arbiter became final and

executory on 19 February 2007 and was entered in the

the dismissal resolution issued by the Court of Appeals

be set aside and in its stead to give due course to this
petition by dismissing the unwarranted claims imposed
by the NLRC for being highly speculative, with no
evidence to support of (sic).[15]
The issues are:
I
PUBLIC RESPONDENT COURT OF APPEALS
ERRED IN NOT CONSIDERING THE
SUBSTANTIAL COMPLIANCE OF THE FILED
PETITION.

Book of Entries of Judgment on 4 May 2007.[12]

II

Ramirez went up to the Court of Appeals. The case was

THE DISMISSAL RESOLUTION (ANNEX A)

HAS NOT RESOLVED THE LEGAL ISSUES
RAISED IN CA-G.R. SP NO. 02614.[16]

docketed as CA-G.R. SP No. 02614. In a resolution

dated 13 July 2007,[13] the Court of Appeals dismissed
the Petition outright for failure of Ramirez to properly

The case presents no novel issue.

verify his petition and to state material dates.

We first resolve the propriety of dismissal by the NLRC.
Ramirezs Motion for Reconsideration was denied by
the Court of Appeals in a resolution dated 7 March

At the outset, it should be stressed that the right to

2008;[14] hence, this petition where Ramirez prays that

appeal is not a natural right or a part of due process; it

is merely a statutory privilege, and may be exercised

only in the manner prescribed by and in accordance
with the provisions of law. The party who seeks to avail
himself of the same must comply with the
requirements of the rules. Failing to do so, he loses the
right to appeal.[17]
Article 223 of the Labor Code provides for the
procedure in case of appeal to the NLRC:
Art. 223. Appeal. - Decisions, awards, or
orders of the Labor Arbiter are final and
executory unless appealed to the
Commission by any or both parties within
ten (10) calendar days from receipt of
such decisions, awards, or orders. Such
appeal may be entertained only on any of
the following grounds:
a. If there is prima facie evidence
of abuse of discretion on the
part of the Labor Arbiter;
b. If the decision, order or award
was secured through fraud
or coercion, including graft
and corruption;
c. If made purely on questions of
law; and

d. If serious errors in the finding of

facts are raised which would
cause grave or irreparable
damage or injury to the
appellant.
In case of a judgment involving a
monetary award, an appeal by the
employer may be perfected only
upon the posting of a cash or surety
bond issued by a reputable bonding
company duly accredited by the
Commission in the amount
equivalent to the monetary award in
the judgment appealed
from. (Emphasis supplied.)

Sections 4(a) and 6 of Rule VI of the New Rules of

Procedure of the NLRC, as amended, reaffirms the
explicit jurisdictional principle in Article 223 even as it
allows in justifiable cases the reduction of the appeal
bond. The relevant provision states:
SECTION 4. REQUISITES FOR PERFECTION
OF APPEAL. - (a) The appeal shall be: 1)
filed within the reglementary period
provided in Section 1 of this Rule; 2)
verified by the appellant himself in
accordance with Section 4, Rule 7 of the
Rules of Court, as amended; 3) in the
form of a memorandum of appeal which

shall state the grounds relied upon and

the arguments in support thereof, the
relief prayed for, and with a statement of
the date the appellant received the
appealed decision, resolution or order; for
in three (3) legibly type written or printed
copies; and 5) accompanied by i) proof
payment of the required appeal fee; ii)
posting of a cash or surety bond as
provided in Section 6 of this Rule; iii) a
certificate of non-forum shopping; and iv)
proof of service upon the other parties.
xxxx
SECTION 6. BOND. In case the decision of
the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by
the employer may be perfected only upon
the posting of a bond, which shall either
be in the form of cash deposit or surety
bond equivalent in amount to the
monetary award, exclusive of damages
and attorney's fees.
xxxx
No motion to reduce bond shall be
entertained except on meritorious
grounds, and only upon the posting of a
bond in a reasonable amount in relation
to the monetary award.
The mere filing of a motion to reduce
bond without complying with the
requisites in the preceding paragraphs

shall not stop the running of the period to

perfect an appeal.

Under the Rules, appeals involving monetary awards

are perfected only upon compliance with the following
mandatory requisites, namely: (1) payment of the
appeal fees; (2) filing of the memorandum of appeal;
and (3) payment of the required cash or surety bond.
[18]

The posting of a bond is indispensable to the

perfection of an appeal in cases involving monetary
awards from the decision of the labor arbiter. The
intention of the lawmakers to make the bond a
mandatory requisite for the perfection of an appeal by
the employer is clearly expressed in the provision that
an appeal by the employer may be perfected only
upon the posting of a cash or surety bond. The word
only in Articles 223 of the Labor Code makes it
unmistakably plain that the lawmakers intended the
posting of a cash or surety bond by the employer to be
the essential and exclusive means by which an
employer's appeal may be perfected. The word may
refers to the perfection of an appeal as optional on the

part of the defeated party, but not to the compulsory

when Ramirez sought a reduction of the bond, he

posting of an appeal bond, if he desires to appeal. The

merely said that the bond was excessive and baseless

meaning and the intention of the legislature in

without amplifying why he considered it as such. [21]

enacting a statute must be determined from the

Colby Construction and Management Corporation v.

language employed; and where there is no ambiguity

National Labor Relations Commission[22] succinctly

in the words used, then there is no room for

elucidates that an employer who files a motion to

construction.[19]

reduce the appeal bond is still required to post the full

Clearly, the filing of the bond is not only mandatory

amount of cash or surety bond within the ten-day

but also a jurisdictional requirement that must be

reglementary period, even pending resolution of his

complied with in order to confer jurisdiction upon the

motion.

NLRC. Non-compliance with the requirement renders

Very recently, in Mcburnie v. Guanzon, the respondents

the decision of the Labor Arbiter final and

therein filed their memorandum of appeal and motion

executory. This requirement is intended to assure the

to reduce bond on the 10th or last day of the

workers that if they prevail in the case, they will

reglementary period.Although they posted an initial

receive the money judgment in their favor upon the

appeal bond, the same was inadequate compared to

dismissal of the employer's appeal.

the monetary award. The Court found no basis for

therein respondents contention that the awards of the

It is intended to discourage employers from using an

Labor Arbiter were null and excessive. We emphasized

appeal to delay or evade their obligation to satisfy

in that case that it behooves the Court to give utmost

their employees just and lawful claims. [20]

regard to the legislative and administrative intent to

In this case, although Ramirez posted an appeal bond,

strictly require the employer to post a cash or surety

the same was insufficient, as it was not equivalent to

bond securing the full amount of the monetary award

the monetary award of the Labor Arbiter. Moreover,

within the 10-day reglementary period. Nothing in

the Labor Code or the NLRC Rules of Procedure

same failed to elucidate why the amount of the bond

authorizes the posting of a bond that is less

was either unjustified or prohibitive.

than the monetary award in the judgment, or

In Calabash Garments, Inc. v. National Labor Relations

deems such insufficient posting as sufficient to

Commission,[25] it was held that a substantial monetary

perfect the appeal.[23]

award, even if it runs into millions, does not

By stating that the bond is excessive and baseless

necessarily give the employer-appellant a `meritorious

without more, and without proof that he is incapable of

case and does not automatically warrant a reduction of

raising the amount of the bond, Ramirez did not even

the appeal bond.

It is clear from both the Labor Code and
the NLRC Rules of Procedure that there is
legislative and administrative intent to
strictly apply the appeal bond
requirement, and the Court should give
utmost regard to this intention. There is a
concession to the employer, in excluding
damages and attorney's fees from the
computation of the appeal bond. Not even
the filing of a motion to reduce bond is
deemed to stay the period for requiring
an appeal. Nothing in the Labor Code
or the NLRC Rules of Procedure
authorizes the posting of a bond that
is less than the monetary award in
the judgment, or would deem such
insufficient postage as sufficient to
perfect the appeal.

come near to substantially complying with the

requirements of Art. 223 of the Labor Code and NLRC
Rule of Procedure. Given that Ramirez is involved in
taxi business, he has not shown that he had difficulty
raising the amount of the bond or was unable to raise
the amount specified in the award of the Labor Arbiter.
All given, the NLRC justifiably denied the motion to
reduce bond, as it had no basis upon which it could
actually and completely determine Ramirezs motion to
reduce bond. We have consistently enucleated that a
mere claim of excessive bond without more does not
suffice. Thus, in Ong v. Court of Appeals,[24] this Court
held that the NLRC did not act with grave abuse of
discretion when it denied petitioners motion, for the

On the other hand, Article 223 indubitably

requires that the appeal be perfected only
upon the posting of the cash or surety
bond which is equivalent to the monetary
award in the judgment appealed from.

The clear intent of both statutory and

procedural law is to require the employer
to post a cash or surety bond securing the
full amount of the monetary award within
the ten (10)-day reglementary period.
While the bond may be reduced upon
motion by the employer, there is that
proviso in Rule VI, Section [6] that the
filing of such motion does not stay the
reglementary period. The qualification
effectively requires that unless the
NLRC grants the reduction of the
cash bond within the ten (10)-day
reglementary period, the employer is
still expected to post the cash or
surety bond securing the full amount
within the said ten (10)-day period. If
the NLRC does eventually grant the
motion for reduction after the
reglementary period has elapsed, the
correct relief would be to reduce the cash
or surety bond already posted by the
employer within the ten (10)-day period.
[26]
(Emphases supplied.)

justifiable causes and circumstances, but none obtains

in this case. The NLRC had, therefore, the full
discretion to grant or deny Ramirezs motion to reduce
the amount of the appeal bond. The finding of the
labor tribunal that Ramirez did not present sufficient
justification for the reduction thereof cannot be said to
have been done with grave abuse of discretion. [27]
While Section 6, Rule VI of the NLRCs New Rules of
Procedure allows the Commission to reduce the
amount of the bond, the exercise of the authority is
not a matter of right on the part of the movant, but lies
within the sound discretion of the NLRC upon a
showing of meritorious grounds.[28]
It is daylight-clear from the foregoing that while the

While in certain instances, we allow a relaxation in the

application of the rules to set right an arrant injustice,
we never intend to forge a weapon for erring litigants
to violate the rules with impunity. The liberal
interpretation and application of rules apply only to
proper cases of demonstrable merit and under

bond may be reduced upon motion by the employer,

this is subject to the conditions that (1) the motion to
reduce the bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to
the monetary award is posted by the appellant;
otherwise, the filing of the motion to reduce bond shall
not stop the running of the period to perfect an

appeal. The qualification effectively requires that

petition of Ramirez. The Court of Appeals found that he

unless the NLRC grants the reduction of the cash bond

committed the following fatal defects in his petition:

within the 10-day reglementary period, the employer

is still expected to post the cash or surety bond
securing the full amount within the said 10-day
period.
We have always stressed that Article 223, which
prescribes the appeal bond requirement, is a rule of
jurisdiction and not of procedure. There is little leeway
for condoning a liberal interpretation thereof, and
certainly none premised on the ground that its
requirements are mere technicalities. It must be
emphasized that there is no inherent right to an appeal
in a labor case, as it arises solely from grant of statute,
namely, the Labor Code.
For the same reason, we have repeatedly emphasized
that the requirement for posting the surety bond is not

1. Failure of petitioner to properly verify

the petition in accordance with A.M. No.
00-2-10-SC amending Section 4, Rule 7 in
relation to Section 1, Rule 65 of the Rules
of Court which now requires that a
pleading must be verified by an affidavit
that the affiant has read the pleading and
the allegations therein are true and
correct of his personal knowledge or
based on authentic records, as a
consequence of which the petition is
treated as an unsigned pleading, which
under Section 3, Rule 7 of the Rules of
Court, produces no legal effect.
2. Petitioner failed to indicate in the
petition the material dates showing when
notice of the resolution subject hereof
was received and when the motion for
reconsideration was filed in violation of
Section 3, Rule 46 of the Rules of Court. [30]

merely procedural but jurisdictional and cannot be

trifled with. Non-compliance with such legal
requirements is fatal and has the effect of rendering
the judgment final and executory.[29]
That settled, we next resolve the issue of whether or
not the Court of Appeals correctly dismissed the

On Ramirezs failure to verify his petition, it is true that

verification is merely a formal requirement intended to
secure an assurance that matters that are alleged are
true and correct.Thus, the court may simply order the
correction of unverified pleadings or act on them and

waive strict compliance with the rules.[31] However, this

For the same reasons above, we also find no reversible

Court invariably sustains the Court of Appeals

error in the assailed resolution of the Court of Appeals

dismissal of the petition on technical grounds under

dismissing Ramirezs petition on the ground of failure to

this provision, unless considerations of equity and

state material dates, because in filing a special civil

substantial justice present cogent reasons to hold

action for certiorari without indicating the requisite

otherwise. In Moncielcoji Corporation v. National Labor

material date therein, Ramirez violated basic tenets of

Relations Commission,[32] the Court states the rationale

remedial law, particularly Rule 65 of the Rules of Court,

which states:

Rules of procedure are tools designed to

promote efficiency and orderliness as well
as to facilitate attainment of justice, such
that strict adherence thereto is
required. The application of the Rules
may be relaxed only when rigidity would
result in a defeat of equity and
substantial justice. But, petitioner has not
presented any persuasive reason for this
Court to be liberal, even pro hac
vice. Thus, we sustain the dismissal of its
petition by the Court of Appeals on
technical grounds.

Again as in the NLRC, Ramirez has not shown any

justifiable ground to set aside technical rules for his

SECTION 1. Petition for certiorari. x x x.

xxxx
The petition shall be accompanied by a
certified true copy of the judgment, order
or resolution subject thereof, copies of all
pleadings and documents relevant and
pertinent thereto, and a sworn
certification of non-forum shopping as
provided in the third paragraph of Section
3, Rule 46.

On the other hand, the pertinent provision under Rule

46 is explicit:

failure to comply with the requirement regarding the

verification of his petition.

Sec. 3. Contents and filing of petition;

effect of non-compliance with
requirements. x x x .

In actions filed under Rule 65, the petition

shall further indicate the material dates
showing when notice of the judgment or
final order or resolution subject thereof
was received, when a motion for new trial
or reconsideration, if any, was filed and
when notice of the denial thereof was
received.
xxxx
The failure of the petitioner to comply
with any of the foregoing requirements
shall be sufficient ground for the dismissal
of the petition.

Rule 65, Section 1 (2nd par.) and Rule 46, Section 3

(2nd par.).
As explicitly stated in the aforementioned Rule, failure
to comply with any of the requirements shall be
sufficient ground for the dismissal of the petition.
The rationale for this strict provision of the Rules of
Court is not difficult to appreciate. In Santos v. Court of
Appeals,[33] the court explains that the requirement is
for purpose of determining the timeliness of the
petition, thus:

There are three material dates that must be stated in a

petition for certiorari brought under Rule 65. First, the
date when notice of the judgment or final order or
resolution was received; second, the date when a
motion for new trial or for reconsideration was filed;
and third, the date when notice of the denial thereof
was received. In the case before us, the petition filed
with the Court of Appeals failed to indicate when the
notice of the NLRC Resolution was received and when
the Motion for Reconsideration was filed, in violation of

The requirement of setting forth the three

(3) dates in a petition for certiorari under
Rule 65 is for the purpose of determining
its timeliness. Such a petition is required
to be filed not later than sixty (60) days
from notice of the judgment, order or
Resolution sought to be assailed.
Therefore, that the petition
for certiorari was filed forty-one (41) days
from receipt of the denial of the motion
for reconsideration is hardly relevant. The
Court of Appeals was not in any position
to determine when this period
commenced to run and whether the
motion for reconsideration itself was filed
on time since the material dates were not
stated. x x x.

decision of the Labor Arbiter is already final and

In the instant case, the petition was bereft of any

executory and binding upon this Court.[35]

persuasive explanation as to why Ramirez failed to

observe procedural rules properly. [34]

The relaxation of procedural rules cannot be made

without any valid reasons proffered for or underpinning

Quite apparent from the foregoing is that the Court of

it. To merit liberality, Ramirez must show reasonable

Appeals did not err, much less commit grave abuse of

cause justifying his non-compliance with the rules and

discretion, in denying due course to and dismissing the

must convince the court that the outright dismissal of

petition forcertiorari for its procedural defects.

the petition would defeat the administration of

Ramirezs failure to verify and state material dates as

substantive justice. The desired leniency cannot be

required under the rules warranted the outright

accorded, absent valid and compelling reasons for

dismissal of his petition.

such procedural lapse. The appellate court saw no

compelling need meriting the relaxation of the rules;

We are not unmindful of exceptional cases where this

neither do we see any.[36]

Court has set aside procedural defects to correct a

patent injustice. However, concomitant to a liberal

WHEREFORE, premises considered, the petition

application of the rules of procedure should be an

is DENIED for lack of merit. The Resolutions of the

effort on the part of the party invoking liberality to at

Court of Appeals dated 13 July 2007 and 7 March

least explain its failure to comply with the rules.

2008 and the Resolutions of the NLRC dated 29

September 2006 and 20 December

In sum, we find no sufficient justification to set aside

the NLRC and Court of Appeals resolutions. Thus, the

2006 are AFFIRMED. Costs against petitioner.

SO ORDERED.

DANILO ESCARIO,
PANFILO AGAO,
ARSENIO AMADOR,
ELMER COLICO,
ROMANO DELUMEN, DOMINADOR
AGUILO, OLYMPIO GOLOSINO,
RICARDO LABAN,
LORETO MORATA,
ROBERTO TIGUE,
GILBERT VIBAR,
THOMAS MANCILLA, JR., NESTOR
LASTIMOSO,
JIMMY MIRABALLES,
JAILE OLISA, ISIDRO SANCHEZ,
ANTONIO SARCIA, OSCAR
CONTRERAS, ROMEO ZAMORA,
MARIANO GAGAL, ROBERTO
MARTIZANO, DOMINGO

G.R. No. 160302

Present:

CARPIO MORALES, Chairperso

PERALTA,*
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

Promulgated:

SANTILLICES, ARIEL ESCARIO,

HEIRS OF FELIX LUCIANO, AND
MALAYANG SAMAHAN NG MGA
MANGGAGAWA SA BALANCED
FOODS,
Petitioners,

We apply this principle in resolving this

September 27, 2010

-versus NATIONAL LABOR RELATIONS

COMMISSION (THIRD DIVISION),
PINAKAMASARAP CORPORATION,
DR. SY LIAN TIN, AND DOMINGO
TAN,
Respondents.
x----------------------------------------------------------------------------------------x

appeal via a petition for review on certiorari of the

decision dated August 18, 2003 of the Court of Appeals
(CA),[1] affirming the decision dated November 29,
2001 rendered by the National Labor Relations
Commission (NLRC) directing their reinstatement of
the petitioners to their former positions without
backwages, or, in lieu of reinstatement, the payment
of separation pay equivalent to one-half month per
year of service.[2]

DECISION
Antecedents

BERSAMIN, J.:

The petitioners were among the regular employees of

respondent Pinakamasarap Corporation (PINA), a

Conformably with the long honored principle

corporation engaged in manufacturing and selling food

of a fair days wage for a fair days labor, employees

seasoning. They were members of petitioner Malayang

dismissed for joining an illegal strike are not entitled to

Samahan ng mga Manggagawa sa Balanced Foods

backwages for the period of the strike even if they are

(Union).

reinstated by virtue of their being merely members of

the striking union who did not commit any illegal act
during the strike.

At 8:30 in the morning of March 13, 1993, all the

officers and some 200 members of the Union walked

officers, except Caete, had thereby lost their

employment.[4]

out of PINAs premises and proceeded to the barangay

office to show support for Juanito Caete, an officer of

On April 28, 1993, the Union filed a notice of

the Union charged with oral defamation by Aurora

strike, claiming that PINA was guilty of union busting

Manor, PINAs personnel manager, and Yolanda Fabella,

through the constructive dismissal of its officers.

Manors secretary.[3] It appears that the proceedings in

[5]

the barangay resulted in a settlement, and the officers

which a majority of 190 members of the Union voted

and members of the Union all returned to work

to strike.[6] The strike was held in the afternoon of June

thereafter.

15, 1993.[7]

As a result of the walkout, PINA preventively

On May 9, 1993, theUnion held a strike vote, at

PINA retaliated by charging the petitioners with

suspended all officers of the Union because of

ULP and abandonment of work, stating that they had

the March 13, 1993 incident. PINA terminated the

violated provisions on strike of the collective

officers of the Union after a month.

bargaining agreement (CBA), such as: (a) sabotage by

the insertion of foreign matter in the bottling of

On April 14, 1993, PINA filed a complaint for

company products; (b) decreased production output by

unfair labor practice (ULP) and damages. The

slowdown; (c) serious misconduct, and willful

complaint was assigned to then Labor Arbiter Raul

disobedience and insubordination to the orders of the

Aquino, who ruled in his decision dated July 13,

Management and its representatives; (d) disruption of

1994 that the March 13, 1993 incident was an illegal

the work place by invading the premises and

walkout constituting ULP; and that all the Unions

perpetrating commotion and disorder, and by causing

fear and apprehension; (e) abandonment of work since

June 28, 1993 despite notices to return to work

individually sent to them; and (f) picketing within the
company premises on June 15, 1993 that effectively

WHEREFORE, all the foregoing premises

being considered, judgment is hereby
rendered declaring the subject strike to
be illegal.

the National Labor Relations Commission (NLRC)

The complainants prayer for

decertification of the respondent union
being outside of the jurisdiction of this
Arbitration Branch may not be given due
course.
And finally, the claims for moral and
exemplary damages for want of factual
basis are dismissed.
SO ORDERED.[11]

issued a temporary restraining order (TRO), enjoining

On appeal, the NLRC sustained the finding that

the Unions officers and members to cease and desist

the strike was illegal, but reversed the LAs ruling that

from barricading and obstructing the entrance to and

there was abandonment, viz:

barred with the use of threat and intimidation the

ingress and egress of PINAs officials, employees,
suppliers, and customers. [8]
On September 30, 1994, the Third Division of

exit from PINAs premises, to refrain from committing

any and all forms of violence, and to remove all forms
of obstructions such as streamers, placards, or human
barricade.[9]
On November 29, 1994, the NLRC granted the
writ of preliminary injunction.[10]
On August 18, 1998, Labor Arbiter Jose G. de Vera (LA)
rendered a decision, to wit:

However, we disagree with the

conclusion that respondents union
members should be considered to have
abandoned their employment.
Under Article 264 of the Labor Code,
as amended, the union officers who
knowingly participate in the illegal strike
may be declared to have lost their
employment status. However, mere
participation of a union member in the
illegal strike does not mean loss of
employment status unless he participates
in the commission of illegal acts during
the strike. While it is true that
complainant thru individual memorandum

directed the respondents to return to

work (pp. 1031-1112, Records) there is no
showing that respondents deliberately
refused to return to work. A worker who
joins a strike does so precisely to assert
or improve the terms and conditions of
his work. If his purpose is to abandon his
work, he would not go to the trouble of
joining a strike (BLTB v. NLRC, 212 SCRA
794).
WHEREFORE, premises considered,
the Decision appealed from is hereby
MODIFIED in that complainant company is
directed to reinstate respondents named
in the complaint to their former positions
but without backwages. In the event that
reinstatement is not feasible complainant
company is directed to pay respondents
separation pay at one (1/2) half month
per year of service.
SO ORDERED.[12]

On August 18, 2003, the CA affirmed the NLRC.

[13]

In denying the petitioners claim for full backwages,

the CA applied the third paragraph of Article 264(a)

instead of Article 279 of the Labor Code, explaining
that the only instance under Article 264 when a
dismissed employee would be reinstated with full
backwages was when he was dismissed by reason of
an illegal lockout; that Article 264 was silent on the
award of backwages to employees participating in a
lawful strike; and that a reinstatement with full
backwages would be granted only when the dismissal
of the petitioners was not done in accordance with
Article 282 (dismissals with just causes) and Article
283 (dismissals with authorized causes) of the Labor
Code.

Following the denial of their motion for

reconsideration, the petitioners assailed the NLRCs
decision through a petition for certiorari in the Court of
Appeals (CA), claiming that the NLRC gravely abused
its discretion in not awarding backwages pursuant to
Article 279 of the Labor Code, and in not declaring
their strike as a good faith strike.

The CA disposed thus:[14]

WHEREFORE, premises considered,
the Petition is DISMISSED for lack of merit
and the assailed 29 November
2001 Decision of respondent Commission
in NLRC NRC CA No. 009701-95 is hereby
AFFIRMED in toto. No costs.

SO ORDERED.[15]

Labor Code, is Applicable

On October 13, 2003, the CA denied the petitioners

motion for reconsideration.[16]

The petitioners contend that they are entitled to

full backwages by virtue of their reinstatement, and

Hence, this appeal via petition for review on certiorari.

submit that applicable to their situation is Article 279,

not the third paragraph of Article 264(a), both of

Issue

the Labor Code.

The petitioners posit that they are entitled to full

We do not agree with the petitioners.

backwages from the date of dismissal until the date of

actual reinstatement due to their not being found to

Article 279 provides:

have abandoned their jobs. They insist that the CA

decided the question in a manner contrary to law and
jurisprudence.
Ruling
We sustain the CA, but modify the decision on
the amount of the backwages in order to accord with
equity and jurisprudence.
I
Third Paragraph of Article 264 (a),

Article 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
isunjustly 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.

procedural. Substantive due process requires the

in the commission of illegal acts during a

strike may be declared to have lost his
employment status; Provided, That mere
participation of a worker in a lawful strike
shall not constitute sufficient ground for
termination of his employment, even if a
replacement had been hired by the
employer during such lawful strike.

attendance of any of the just or authorized causes for

xxx

By its use of the phrase unjustly dismissed,

Article 279 refers to a dismissal that is unjustly
done, that is, the employer dismisses the employee
without observing due process, either substantive or

terminating an employee as provided under Article

278 (termination by employer), or Article 283 (closure

Contemplating two causes for the dismissal of

of establishment and reduction of personnel), or Article

an employee, that is: (a) unlawful lockout; and (b)

284 (disease as ground for termination), all of

participation in an illegal strike, the third paragraph of

the Labor Code; while procedural due process

Article 264(a) authorizes the award of full backwages

demands compliance with the twin-notice requirement.

only when the termination of employment is a

[17]

consequence of an unlawful lockout. On the

consequences of an illegal strike, the provision
In contrast, the third paragraph of Article 264(a)

states:

distinguishes between a union officer and a union

member participating in an illegal strike. A union

Art. 264. Prohibited activities. (a) xxx

Any worker whose employment has
been terminated as a consequence of an
unlawful lockout shall be entitled to
reinstatement with full backwages. Any
union officer who knowingly participates
in an illegal strike and any worker or
union officer who knowingly participates

officer who knowingly participates in an illegal strike is

deemed to have lost his employment status, but a
union member who is merely instigated or induced to
participate in the illegal strike is more benignly
treated. Part of the explanation for the benign
consideration for the union member is the policy of
reinstating rank-and-file workers who are misled into

supporting illegal strikes, absent any finding that such

workers committed illegal acts during the period of the

The petitioners argument cannot be sustained.

illegal strikes.[18]
The petitioners participation in the illegal strike
The petitioners were terminated for joining a

was precisely what prompted PINA to file a complaint

strike that was later declared to be illegal. The NLRC

to declare them, as striking employees, to have lost

ordered their reinstatement or, in lieu of

their employment status. However, the NLRC

reinstatement, the payment of their separation pay,

ultimately ordered their reinstatement after finding

because they were mere rank-and-file workers whom

that they had not abandoned their work by joining the

the Unions officers had misled into joining the illegal

illegal strike. They were thus entitled only to

strike. They were not unjustly dismissed from work.

reinstatement, regardless of whether or not the strike

Based on the text and intent of the two aforequoted

was the consequence of the employers ULP,

provisions of the Labor Code, therefore, it is plain that

[19]

Article 264(a) is the applicable one.

the employment relation.[20]

II
Petitioners not entitled to backwages
despite their reinstatement:
A fair days wage for a fair days labor

considering that a strike was not a renunciation of

As a general rule, backwages are granted to

indemnify a dismissed employee for his loss of
earnings during the whole period that he is out of his
job. Considering that an illegally dismissed employee

The petitioners argue that the finding of no

is not deemed to have left his employment, he is

abandonment equated to a finding of illegal dismissal

entitled to all the rights and privileges that accrue to

in their favor. Hence, they were entitled to full

him from the employment.[21] The grant of backwages

backwages.

to him is in furtherance and effectuation of the public

objectives of the Labor Code, and is in the nature of a

not obtain in the case at bar. (emphasis

supplied)

command to the employer to make a public reparation

for his illegal dismissal of the employee in violation of

The petitioners herein do not deny their participation

the Labor Code.[22]

in the June 15, 1993 strike. As such, they did not suffer
any loss of earnings during their absence from work.

That backwages are not granted to employees

Their reinstatement sans backwages is in order, to

participating in an illegal strike simply accords with the

conform to the policy of a fair days wage for a fair

reality that they do not render work for the employer

days labor.

during the period of the illegal strike.[23] According

to G&S Transport Corporation v. Infante:[24]

Under the principle of a fair days wage for a fair

days labor, the petitioners were not entitled to the

With respect to backwages, the

principle of a fair days wage for a fair
days labor remains as the basic factor in
determining the award thereof. If there
is no work performed by the
employee there can be no wage or
pay unless, of course, the laborer
was able, willing and ready to work
but was illegally locked out,
suspended or dismissed or otherwise
illegally prevented from working. xxx
In Philippine Marine Officers Guild v.
Compaia Maritima, as affirmed
in Philippine Diamond Hotel and Resort v.
Manila Diamond Hotel Employees Union,
the Court stressed thatfor this
exception to apply, it is required that
the strike be legal, a situation that does

wages during the period of the strike (even if the strike

might be legal), because they performed no work
during the strike. Verily, it was neither fair nor just that
the dismissed employees should litigate against their
employer on the latters time.[25]Thus, the Court deleted
the award of backwages and held that the striking
workers were entitled only to reinstatement
in Philippine Diamond Hotel and Resort, Inc. (Manila
Diamond Hotel) v. Manila Diamond Hotel
Employees Union,[26] considering that the striking
employees did not render work for the employer
during the strike.

return to work upon being so ordered or after the

III
Appropriate Amount for Separation Pay
Is One Month per Year of Service

employer has offered to reinstate him.[27]

However, separation pay is made an alternative
relief in lieu of reinstatement in certain circumstances,

The petitioners were ordered reinstated because

like: (a) when reinstatement can no longer be effected

they were union members merely instigated or

in view of the passage of a long period of time or

induced to participate in the illegal strike. By joining

because of the realities of the situation; (b)

the strike, they did not renounce their employment

reinstatement is inimical to the employers interest; (c)

relation with PINA but remained as its employees.

reinstatement is no longer feasible; (d) reinstatement

does not serve the best interests of the parties

The absence from an order of reinstatement of

involved; (e) the employer is prejudiced by the workers

an alternative relief should the employer or a

continued employment; (f) facts that make execution

supervening event not within the control of the

unjust or inequitable have supervened; or (g) strained

employee prevent reinstatement negates the very

relations between the employer and employee. [28]

purpose of the order. The judgment favorable to the

employee is thereby reduced to a mere paper victory,

Here, PINA manifested that the reinstatement of

for it is all too easy for the employer to simply refuse

the petitioners would not be feasible because: (a) it

to have the employee back. To safeguard the spirit of

would inflict disruption and oppression upon the

social justice that the Court has advocated in favor of

employer; (b) petitioners [had] stayed away for more

the working man, therefore, the right to reinstatement

than 15 years; (c) its machines had depreciated and

is to be considered renounced or waived only when the

had been replaced with newer, better ones; and (d) it

employee unjustifiably or unreasonably refuses to

now sold goods through independent distributors,

thereby abolishing the positions related to sales and

refused reinstatement. In Association of Independent

distribution.[29]

Unions in the Philippines v. NLRC,[33] the Court allowed

separation pay equivalent to one month salary per

Under the circumstances, the grant of

year of service considering that eight years had

separation pay in lieu of reinstatement of the

elapsed since the employees had staged their illegal

petitioners was proper. It is not disputable that the

strike.

grant of separation pay or some other financial

assistance to an employee is based on equity, which

Here, we note that this case has dragged for

has been defined as justice outside law, or as being

almost 17 years from the time of the illegal strike.

ethical rather than jural and as belonging to the sphere

Bearing in mind PINAs manifestation that the positions

of morals than of law.[30] This Court has granted

that the petitioners used to hold had ceased to exist

separation pay as a measure of social justice even

for various reasons, we hold that separation pay

when an employee has been validly dismissed, as long

equivalent to one month per year of service in lieu of

as the dismissal has not been due to serious

reinstatement fully aligns with the aforecited rulings of

misconduct or reflective of personal integrity or

the Court on the matter.

morality.[31]

WHEREFORE, we affirm the decision

dated August 18, 2003 of the Court of Appeals, subject

What is the appropriate amount for separation pay?

to the modification to the effect that in lieu of

reinstatement the petitioners are granted backwages

In G & S Transport,[32] the Court awarded

equivalent of one month for every year of service.

separation pay equivalent to one month salary per

year of service considering that 17 years had passed
from the time when the striking employees were

SO ORDERED.