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Realda vs. New Age Graphics, Inc. G.R. No.

192190, April 25, 2012


RESOLUTION
REYES, J.:
The petitioner, who was the former machine operator of respondent New Age Graphics Inc.
(Graphics, Inc.), files this petition for review under Rule 45 of the Rules of Court of the Decision [1] dated
June 9, 2009 and Resolution [2] dated April 14, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
106928. By way of its June 9, 2009 Decision, the CA reversed and set aside the March 31, 2008
Decision[3] and October 28, 2008 Resolution[4] of the National Labor Relations Commission (NLRC) in
NLRC LAC No. 10-002759-07 affirming the August 15, 2007 Decision [5] of Labor Arbiter Danna M.
Castillon (LA Castillon), which found the petitioner to be illegally dismissed.

insubordination or willful disobedience of the reasonable and lawful order of


petitioner. These orders were made with [regard] to his duties to the company as a
punctual employee and as the sole and exclusive operator of the printing machine
provided to him by petitioner. Therefore, the obligation to answer rests upon him who is
alleged to have committed infractions against his employer, otherwise he is deemed to
have waived his right to be heard and would be made to suffer the consequences of such
refusal.
Private respondent is also accused of insubordination for the reason that he
stubbornly refused to follow the orders of his General Manager to show the latter and
check on the computer using the CMYK guide, whether the colors he is running in his
printing machine are correct. After initially following the said order, and confirming that
the first color, cyan, running in the machine was correct, he failed to observe the same
procedure on the second color magenta and did not even bother to remedy it after it was
pointed out by the Computer Graphic Artist supervising him. Since this was not the first
time he was reprimanded for carelessly rushing the work assigned to him, disregarding
certain procedures to ensure the quality of the same and thereby resulting in mediocre
products which earn the ire of the companys clientele, his stubborn refusal to change
shows a clear act of insubordination against private respondent.
xxx

The CA exonerated the petitioner from the charges of destroying Graphics, Inc.s property and
disloyalty to Graphics, Inc. and its objectives. However, the CA ruled that the petitioners unjustified
refusal to render overtime work, unexplained failure to observe prescribed work standards, habitual
tardiness and chronic absenteeism despite warning and non-compliance with the directive for him to
explain his numerous unauthorized absences constitute sufficient grounds for his termination. Specifically:
On the ground of repeated violations of companys rules and regulations,
namely: insubordination, deliberate slowdown of work, habitual tardiness, absence
without official leave and inefficiency; We find that public respondent commission, in
affirming labor arbiter Castillon, rushed into conclusion that petitioner has failed to
convince the commission a quo on what company rules and regulations private
respondent had committed. x x x
The foregoing, notwithstanding, we find that private respondent should be
dismissed on the ground of willful disobedience of the warning and memoranda issued
by petitioner. To be validly dismissed on the ground of willful disobedience requires 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 had been engaged to
discharge.
Private respondents continued refusal to acknowledge receipt and to present his
defense against the notice of suspension and of dismissal, render him guilty of

Private respondent has pending work on La Salleo Magazine on May 25-26,


2004, but refused to do overtime in order to finish the same. Aside from this, he has two
other works required for him to finish, mainly: PCU-Manila Brochure and Hijas de
Maria souvenir program. In procuring absences during the times when workload was
heavy, the printing deadlines for the months of April and May were not met and
petitioner incurred losses from overtime pay for the other employees who were forced to
take on the work left by private respondent and from penalties imposed by clients for
every day of delay after the deadlines set for the delivery of the printed materials.
xxx
Furthermore, private respondents refusal to render overtime work when
required upon him, contributed to losses incurred by the petitioner. Public respondent
commission has erred in ruling that rendition of the same is not mandatory. Art. 89 of
the Labor Code empowers the employer to legally compel his employees to perform
overtime work against their will to prevent serious loss or damage, to wit:
xxxx
In the present case, petitioners business is a printing press whose production
schedule is sometimes flexible and varying. It is only reasonable that workers are
sometimes asked to render overtime work in order to meet production deadlines.
On or before May 26, 2004, private respondent was asked to render overtime
work but he refused to do so despite the rush orders of customers and petitioners need to
meet its deadlines set by the former. In fact, he reneged on his promise to do the same,
after being issued an Overtime Slip Form by Mylene Altovar, and instead went out with

another individual, as attested by his wife after calling the company to inform it of such
absence. He knew that he was going to be unavailable for work on the following day, but
instead of trying to finish his work before that date by rendering overtime, due to the
rush in meeting the deadlines, he opted to forego with the same, and thereby rejecting
the order of petitioner.
xxx
Petitioner further alleges habitual tardiness on the part of private respondent for
which he received a warning notice in April and May 2004. For the month of January
and February 2004 alone, he reported late for work 23 times and on May 2004, just prior
to his suspension, he was yet again late for 6 times. The Daily Time Records of private
respondent contained the entries which [were] personally written by him. x x x
Finally, on petitioners allegation on private respondents absences without
official leave, We hold that the latters actions were indeed unjustified. Despite the
warning issued to private respondent by petitioner on his AWOLs during the month of
April and May, and instead of reporting to the company to deny or to refute the basis for
recommendation of dismissal, he absented himself from Jun. 15 to Jul. 15, 2004, which
prompted to (sic) the termination of his employment. The ruling of the labor arbiter that
since the final recommendation of petitioner was dismissal for cause, private respondent
cannot be faulted for his failure to report for work on Jun. 15 does not hold water. What
was given to private respondent on Jun. 15, 2004 was indeed in the form of a notice of
dismissal. However, it was only recommended that he be dismissed from his
employment and is still given the opportunity to present his defense to deny or refute the
said recommendation of company.[6] x x x (Citations omitted)

Nonetheless, while the CA recognized the existence of just causes for petitioners dismissal, it
found the petitioner entitled to nominal damages in the amount of P5,000.00 due to Graphics, Inc.s failure
to observe the procedural requirements of due process.
Private respondent was not accorded due process when petitioner issued and
served to the former the written notice of dismissal dated Jun. 15, 2004. A careful
perusal of the records will show that the notice issued by the employer gives the
employee only twenty-four (24) hours to answer and put up his defenses against the
accusations laid upon him by the company, in contravention with the rule of a reasonable
period as construed in King of Kings Transport v. Mamac. Moreover, the scheduled
hearing in front of Leticia D. Lago was on the same date at 1:00 p.m., which left private
respondent with no recourse to secure the services of a counsel, much less prepare a
good rebuttal against the alleged evidences for the valid dismissal of the former.
xxxx
x x x Considering that petitioner has made efforts in the past to afford private respondent
the opportunity to be able to defend himself, but the latter, instead of availing such

remedy, rejected the same; We have taken this into consideration, and impose
[P]5,000.00 as the penalty for the employers failure to comply with the due process
requirement.[7] (Citations omitted)

This Court finds no cogent reason to reverse the assailed issuances of the CA.

First, the petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes
willful disobedience. Taking this in conjunction with his inclination to absent himself and to report late for
work despite being previously penalized, the CA correctly ruled that the petitioner is indeed utterly defiant
of the lawful orders and the reasonable work standards prescribed by his employer.

This particular issue is far from being novel as this Court had the opportunity in R.B. Michael
Press v. Galit[8] to categorically state that an employer has the right to require the performance of overtime
service in any of the situations contemplated under Article 89 of the Labor Code and an employees noncompliance is willful disobedience.Thus:
For willful disobedience to be a valid cause for dismissal, these two elements
must concur: (1) the employees assailed conduct must have been willful, that is,
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 had been engaged to discharge.
In the present case, there is no question that petitioners order for respondent to
render overtime service to meet a production deadline complies with the second
requisite. Art. 89 of the Labor Code empowers the employer to legally compel his
employees to perform overtime work against their will to prevent serious loss or
damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform
overtime work in any of the following cases:
xxxx
(c) When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or damage to
the employer or some other cause of similar nature;

xxx
In the present case, petitioners business is a printing press whose production
schedule is sometimes flexible and varying. It is only reasonable that workers are
sometimes asked to render overtime work in order to meet production deadlines.
xxx
The issue now is, whether respondents refusal or failure to render overtime
work was willful; that is, whether such refusal or failure was characterized by a
wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga, willfulness was described
as "characterized by a wrongful and perverse mental attitude rendering the employees
act inconsistent with proper subordination." The fact that respondent refused to provide
overtime work despite his knowledge that there is a production deadline that needs to be
met, and that without him, the offset machine operator, no further printing can be had,
shows his wrongful and perverse mental attitude; thus, there is willfulness.
Respondents excuse that he was not feeling well that day is unbelievable and
obviously an afterthought. He failed to present any evidence other than his own assertion
that he was sick.Also, if it was true that he was then not feeling well, he would have
taken the day off, or had gone home earlier, on the contrary, he stayed and continued to
work all day, and even tried to go to work the next day, thus belying his excuse, which
is, at most, a self-serving statement.
After a re-examination of the facts, we rule that respondent unjustifiably
refused to render overtime work despite a valid order to do so. The totality of his
offenses against petitioner R.B. Michael Press shows that he was a difficult
employee. His refusal to render overtime work was the final straw that broke the camels
back, and, with his gross and habitual tardiness and absences, would merit dismissal
from service.[9] (Citations omitted)

mandated to check whether the colors that would be printed are in accordance with the clients
specifications and for him to do so, he must consult the General Manager and the color guide used by
Graphics, Inc. before making a full run. Unfortunately, he failed to observe this simple procedure and
proceeded to print without making sure that the colors were at par with the clients demands. This resulted
to delays in the delivery of output, client dissatisfaction, and additional costs on Graphics, Inc.s part.

Security of tenure is indeed constitutionally guaranteed. However, this should not be indiscriminately
invoked to deprive an employer of its management prerogatives and right to shield itself from
incompetence, inefficiency and disobedience displayed by its employees. The procedure laid down by
Graphics, Inc. which the petitioner was bound to observe does not appear to be unreasonable or
unnecessarily difficult. On the contrary, it is necessary and relevant to the achievement of Graphics, Inc.s
objectives. The petitioners non-compliance is therefore hard to comprehend.

While a penalty in the form of suspension had already been imposed on the petitioner for his
habitual tardiness and repeated absenteeism, the principle of totality of infractions sanctions the act of
Graphics, Inc. of considering such previous infractions in decreeing dismissal as the proper penalty for his
tardiness and unauthorized absences incurred afterwards, in addition to his refusal to render overtime work
and conform to the prescribed work standards. In Merin v. National Labor Relations Commission,[10] this

Noticeably, this case and R.B. Michael Press share a parallelism. Similar to the dismissed employee in the
above-quoted case, the petitioner exhibited willful disobedience to a reasonable order from his employer
and this Court does not find any reason why petitioner should be accorded a different treatment.

Second, the petitioners failure to observe Graphics, Inc.s work standards constitutes inefficiency that is a
valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to
mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted
reasonable period, or by producing unsatisfactory results. As the operator of Graphics, Inc.s printer, he is

Court expounded on the principle of totality of infractions as follows:


The totality of infractions or the number of violations committed during the
period of employment shall be considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by petitioner should not be taken
singly and separately. Fitness for continued employment cannot be compartmentalized
into tight little cubicles of aspects of character, conduct and ability separate and
independent of each other. While it may be true that petitioner was penalized for his
previous infractions, this does not and should not mean that his employment record
would be wiped clean of his infractions. After all, the record of an employee is a
relevant consideration in determining the penalty that should be meted out since an
employee's past misconduct and present behavior must be taken together in determining
the proper imposable penalty[.] Despite the sanctions imposed upon petitioner, he
continued to commit misconduct and exhibit undesirable behavior on board. Indeed, the

employer cannot be compelled to retain a misbehaving employee, or one who is guilty of


acts inimical to its interests.[11](Citations omitted)

only proffers a general denial of the claim that Graphics, Inc. earned the ire of its clients due to the
defective output resulting from the petitioners failure to comply with the prescribed work standards.

This Court cannot condone the petitioners attempt to belittle his habitual tardiness and
absenteeism as these are manifestation of lack of initiative, diligence and discipline that are adverse to

Even assuming as true the petitioners claim that such complaint gave rise to ill-feelings on

Graphics, Inc.s interest. In Challenge Socks Corporation v. Court of Appeals,[12] this Court said that it

Graphics, Inc.s part, he cannot reasonably and validly suggest that the respondents have stripped

reflects an indifferent attitude to and lack of motivation in work. It is inimical to the general productivity

themselves of the right to dismiss him for his deliberate disobedience and lack of discipline in regularly

and business of the employer. This is especially true when it occurred frequently and repeatedly within an

and punctually reporting for work.

extensive period of time and despite several warnings.


Undoubtedly, Graphics, Inc. complied with the substantive requirements of due process in
This Court cannot likewise agree to the petitioners attempt to brush aside his refusal to render overtime
work as inconsequential when Graphics, Inc.s order for him to do so is justified by Graphics, Inc.s
contractual commitments to its clients. Such an order is legal under Article 89 of the Labor Code and the
petitioners unexplained refusal to obey is insubordination that merits dismissal from service.

The petitioner harped on the improper motivations of Graphics, Inc. in ordering his dismissal,
primary of which was the complaint he filed before the Department of Labor and Employment that
eventually led to the finding of violations of laws on labor standards and tax regulations. However, the
petitioner fails to convince that he is not the incorrigible employee portrayed by the evidence presented by
the respondents. The petitioner does not deny that he had been habitually tardy and absent and continued
being so even after he had been warned and thereafter suspended. Neither does he deny that he refused to
render overtime work and that Graphics, Inc. had a legally acceptable reason for requiring him to do
so. The petitioner can only argue that his refusal is not tantamount to willful disobedience, which of
course, is disagreeable. In fact, the petitioners refusal despite knowledge that his regular presence at work
and extended hours thereat on some occasions were necessary for Graphics, Inc. to meet its obligations to
its clients does not only suggest willfulness on his part but even bad faith. On the other hand, the petitioner

effecting employee dismissal. However, the same cannot be said insofar as the procedural requirements are
concerned. In King of Kings Transport, Inc. v. Mamac,[13] this Court laid down the manner by which the
procedural due requirements of due process can be satisfied:
To clarify, the following should be considered in terminating the services of
employees:
(1)
The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus Rules means every
kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least five
(5) calendar days from receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the complaint. Moreover, in
order to enable the employees to intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts and circumstances that will serve
as basis for the charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which company rules, if any,
are violated and/or which among the grounds under Art. 282 is being charged against the
employees.
(2)
After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given the opportunity
to: (1) explain and clarify their defenses to the charge against them; (2) present evidence
in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to
defend themselves personally, with the assistance of a representative or counsel of their

choice. Moreover, this conference or hearing could be used by the parties as an


opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination indicating that: (1)
all circumstances involving the charge against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment.[14]

As correctly observed by the CA, Graphics, Inc. failed to afford the petitioner with a reasonable
opportunity to be heard and defend itself. An administrative hearing set on the same day that the petitioner
received the memorandum and the twenty-four (24) hour period for him to submit a written explanation
are far from being reasonable.

Furthermore, there is no indication that Graphics, Inc. issued a second notice, informing the petitioner of
his dismissal. The respondents admit that Graphics, Inc. decided to terminate the petitioners employment
after he ceased reporting for work from the time he received the memorandum requiring him to explain
and subsequent to his failure to submit a written explanation. However, there is nothing on record showing

National Labor Relations Commission,[15] on which the CA relied in the Assailed Decision and was
reiterated in Genuino v. National Relations Commission[16] as follows:
In view of Citibank's failure to observe due process, however, nominal damages
are in order but the amount is hereby raised to PhP 30,000 pursuant to Agabon v.
NLRC. The NLRC's order for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due process
by the private respondent warrants the payment of indemnity in the
form of nominal damages. The amount of such damages is addressed
to the sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case
at bar, we deem it proper to fix it at [P]30,000.00. We believe this
form of damages would serve to deter employers from future
violations of the statutory due process rights of employees.At the very
least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules.
Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of
due process under the CA's March 31, 2000 Resolution in CA-G.R. SP No. 51532 is
increased to PhP 30,000.[17]

that Graphics, Inc. placed its decision to dismiss in writing and that a copy thereof was sent to the
petitioner.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. SP No. 106928 is AFFIRMED with MODIFICATION in that respondent New Age Graphics,

Notably, the respondents do not question the findings of the CA. The respondents chose not to convince

Inc. is hereby ordered to pay petitioner Billy M. Realda nominal damages in the amount of Thirty

this Court otherwise by not filing an appeal, which reasonably suggests that Graphics, Inc.s failure to

Thousand Pesos (P30,000.00).

comply with the procedural requirements of due process is admitted.

Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as his right to
procedural due process was not respected despite the presence of just causes for his dismissal is affirmed,
this Court finds the CA to have erred in fixing the amount that the Company is liable to pay. The CA
should have taken cognizance of the numerous cases decided by this Court where the amount of nominal
damages was fixed at P30,000.00 if the dismissal was for a just cause. One of such cases is Agabon v.

ABDULJUAHID R. PIGCAULAN vs SECURITY and CREDIT INVESTIGATION, INC. and/or


RENE AMBY REYES, G.R. No. 173648, January 16, 2012

premium of 30% in addition to their basic salary whenever they were required to work on Sundays and 200% of their
salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the
years 1998 and 1999. In support thereof, copies of payroll listings [8] and lists of employees who received their

DECISION

13th month pay for the periods December 1997 to November 1998 and December 1998 to November 1999 [9] were
presented. In addition, respondents contended that Canoys and Pigcaulans monetary claims should only be limited to

DEL CASTILLO, J.:

the past three years of employment pursuant to the rule on prescription of claims.
It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer
that the burden of proving payment of these claims rests.

Ruling of the Labor Arbiter

This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of the Court of Appeals

Giving credence to the itemized computations and representative daily time records submitted by Canoy and

(CA) in CA-G.R. SP No. 85515, which granted the petition for certiorarifiled therewith, set aside the March 23,

Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their monetary claims in his Decision [10] dated June 6,

[3]

[4]

2004 and June 14, 2004 Resolutions of the National Labor Relations Commission (NLRC), and dismissed the

2002. The Labor Arbiter held that the payroll listings presented by the respondents did not prove that Canoy and

complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against respondent

Pigcaulan were duly paid as same were not signed by the latter or by any SCII officer. The 13th month payroll was,

Security and Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes.Likewise

however, acknowledged as sufficient proof of payment, for it bears Canoys and Pigcaulans signatures. Thus, without

[5]

[6]

assailed is the June 28, 2006 Resolution denying Canoys and Pigcaulans Motion for Reconsideration.

indicating any detailed computation of the judgment award, the Labor Arbiter ordered the payment of overtime pay,
holiday pay, service incentive leave pay and proportionate 13 thmonth pay for the year 2000 in favor of Canoy and

Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs different
clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter separate complaints [7] for
underpayment of salaries and non-payment of overtime, holiday, rest day, service incentive leave and 13th month
pays. These complaints were later on consolidated as they involved the same causes of action.

Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their
salary differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for
Abduljuahid Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for
service incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan
as proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack of
sufficient basis to make an award.
SO ORDERED.[11]

Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of
hours served and their wages for the same. They likewise presented itemized lists of their claims for the corresponding
periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits
under the law; that the salaries they received were above the statutory minimum wage and the rates provided by the
Philippine Association of Detective and Protective Agency Operators (PADPAO) for security guards; that their
holiday pay were already included in the computation of their monthly salaries; that they were paid additional

Ruling of the National Labor Relations Commission


Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no representative daily time record
was presented by Canoy and Pigcaulan. On the contrary, respondents asserted that the payroll listings they submitted
should have been given more probative value. To strengthen their cause, they attached to their Memorandum on
Appeal payrolls[12] bearing the individual signatures of Canoy and Pigcaulan to show that the latter have received their

salaries, as well as copies of transmittal letters [13] to the bank to show that the salaries reflected in the payrolls were
directly deposited to the ATM accounts of SCIIs employees.

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a Resolution [19] dated
June 28, 2006.

The NLRC, however, in a Resolution [14] dated March 23, 2004, dismissed the appeal and held that the
evidence show underpayment of salaries as well as non-payment of service incentive leave benefit. Accordingly, the

Hence, the present Petition for Review on Certiorari.

Labor Arbiters Decision was sustained. The motion for reconsideration thereto was likewise dismissed by the NLRC
Issues

in a Resolution[15] dated June 14, 2004.


Ruling of the Court of Appeals
In respondents petition for certiorari with prayer for the issuance of a temporary restraining order and preliminary
injunction[16] before the CA, they attributed grave abuse of discretion on the part of the NLRC in finding that Canoy
and Pigcaulan are entitled to salary differentials, service incentive leave pay and proportionate 13 th month pay and in
arriving at amounts without providing sufficient bases therefor.
The CA, in its Decision[17] dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases mentioned in the
questioned rulings to support the conclusions made. Consequently, it dismissed all the monetary claims of Canoy and

The petition ascribes upon the CA the following errors:


I. The Honorable Court of Appeals erred when it dismissed the complaint on mere
alleged failure of the Labor Arbiter and the NLRC to observe the prescribed form of decision,
instead of remanding the case for reformation of the decision to include the desired detailed
computation.
II. The Honorable Court of Appeals erred when it [made] complainants suffer the
consequences of the alleged non-observance by the Labor Arbiter and NLRC of the prescribed
forms of decisions considering that they have complied with all needful acts required to support
their claims.
III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly
due to absence of legal and factual [bases] despite attendance of substantial evidence in the
records.[20]

Pigcaulan on the following rationale:


First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at
all events, as far as practicable, the decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for
being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998 to 1999
indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by
Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are indeed
entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed
salaries and benefits despite the absence of proof that Reyes deliberately or maliciously designed
to evade SCIIs alleged financial obligation; hence the Labor Arbiter ignored that SCII has a
corporate personality separate and distinct from Reyes. To justify solidary liability, there must be
an allegation and showing that the officers of the corporation deliberately or maliciously designed
to evade the financial obligation of the corporation.[18]

It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan as
petitioners, it appears from its body that it is being filed solely by Pigcaulan. In fact, the Verification and Certification
of Non-Forum Shopping was executed by Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by the
rules. And even so, the rules do not mandate that a detailed computation of how the amount awarded was arrived at
should be embodied in the decision. Instead, a statement of the nature or a description of the amount awarded and the
specific figure of the same will suffice.Besides, his and Canoys claims were supported by substantial evidence in the
form of the handwritten detailed computations which the Labor Arbiter termed as representative daily time records,
showing that they were not properly compensated for work rendered. Thus, the CA should have remanded the case
instead of outrightly dismissing it.

In their Comment,[21] respondents point out that since it was only Pigcaulan who filed the petition, the CA
Decision has already become final and binding upon Canoy. As to Pigcaulans arguments, respondents submit that

was brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has
already become final and executory as to him.

they were able to present sufficient evidence to prove payment of just salaries and benefits, which bits of evidence
were unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces of

Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he

evidence and properly appreciated them. Hence, it was correct in dismissing the claims for failure of Canoy and

is not one of the petitioners therein. Suffice it to state that it would have been different had the said petition been filed

Pigcaulan to discharge their burden to disprove payment.

in behalf of both Canoy and Pigcaulan. In such a case, subsequent submission of a verification may be allowed as
non-compliance therewith or a defect therein does not necessarily render the pleading, or the petition as in this case,
that his filing of the present petition redounds

fatally defective.[24] The court may order its submission or correction, or act on the pleading if the attending

likewise to Canoys benefit since their complaints were consolidated below.As such, they maintain that any kind of

circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice

disposition made in favor or against either of them would inevitably apply to the other. Hence, the institution of the

may be served thereby. Further, a verification is deemed substantially complied with when one who has ample

petition solely by Pigcaulan does not render the assailed Decision final as to Canoy. Nonetheless, in said reply they

knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters

Pigcaulan, this time joined by Canoy, asserts in his Reply

appended Canoys affidavit

[23]

[22]

where he verified under oath the contents and allegations of the petition filed by

Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any

alleged in the petition have been made in good faith or are true and correct. [25] However, even if it were so, we note
that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

action or claim in another court or tribunal involving the same issues.He likewise explains in said affidavit that his
absence during the preparation and filing of the petition was caused by severe financial distress and his failure to

The filing of a certificate of non-forum shopping is mandatory so much so


that non-compliance could only be tolerated by special circumstances and compelling reasons. [26] This Court has held

inform anyone of his whereabouts.


Our Ruling

that when there are several petitioners, all of them must execute and sign the certification against forum shopping;
otherwise, those who did not sign will be dropped as parties to the case.[27] True, we held that in some cases, execution

The assailed CA Decision is considered final as to Canoy.

by only one of the petitioners on behalf of the other petitioners constitutes substantial compliance with the rule on the
filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or defense.

We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear

[28]

from the petitions prefatory which is phrased as follows:

complaints were consolidated because they both sought the same reliefs against the same respondents. This does not,

COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this


Honorable Court x x x. (Emphasis supplied.)

We, however, find that common interest is not present in the instant petition. To recall, Canoys and Pigcaulans

however, mean that they share a common interest or defense. The evidence required to substantiate their claims may
not be the same. A particular evidence which could sustain Canoys action may not effectively serve as sufficient to
support Pigcaulans claim.

Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent with this, the body of the
petition refers only to a petitioner and never in its plural form petitioners.Aside from the fact that the Verification and
Certification of Non-Forum Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and
particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is
the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is therefore, no doubt, that the petition

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable cause for
his failure to join Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to
be prudent in pursuing his claims against SCII, especially so, if he was indeed suffering from financial
distress. However, Canoy failed to advance any justifiable reason why he did not inform anyone of his whereabouts
when he knows that he has a pending case against his former employer. Sadly, his lack of prudence and diligence

cannot merit the courts consideration or sympathy. It must be emphasized at this point that procedural rules should not
ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly employing less
than ten (10) workers;

be ignored simply because their non-observance may result in prejudice to a partys substantial rights. The Rules of
Court should be followed except only for the most persuasive of reasons.[29]
Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent

xxxx

pleadings, although apparently filed under his and Canoys name, as solely filed by the former.
While Article 95 of the Labor Code provides:

There was no substantial evidence to support the grant of


overtime pay.

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive of five days with
pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13 th month
pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations

xxxx

they submitted which he considered as representative daily time records to substantiate the award of salary
differentials. The NLRC then sustained the award on the ground that there was substantial evidence of underpayment
of salaries and benefits.

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work.
[30]

Likewise, express provision of the law entitles him to service incentive leave benefit for he rendered service for

more than a year already. Furthermore, under Presidential Decree No. 851,[31] he should be paid his 13th month
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations are

pay. As employer, SCII has the burden of proving that it has paid these benefits to its employees.[32]

self-serving, unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly overtime
pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative daily time
records, as termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis to prove
that the two were underpaid of their salaries. We find nothing in the records which could substantially support
Pigcaulans contention that he had rendered service beyond eight hours to entitle him to overtime pay and during
Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service beyond the
normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive
leave pay and proportionate 13th month pay for year
2000.

However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received
their salaries as well as benefits which it claimed are already integrated in the employees monthly salaries. However,
the documents presented do not prove SCIIs allegation. SCII failed to show any other concrete proof by means of
records, pertinent files or similar documents reflecting that the specific claims have been paid. With respect to
13th month pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat, the
burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule that one who
pleads payment has the burden of proving it. Even when the plaintiff alleges non-payment, still the general rule is that
the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. [33] Since SCII
failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay,
service incentive leave benefits and proportionate 13th month pay for the year 2000.
The CA erred in dismissing the claims instead of
remanding the case to the Labor Arbiter for a detailed
computation of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary
awards granted. Such failure, however, should not result in prejudice to the substantial rights of the party. While we
disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of
right, to his holiday pay, service incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in
dismissing Pigcaulans claims in its entirety.
Consistent with the rule that all money claims arising from an employer-employee relationship shall be filed within
three years from the time the cause of action accrued, [34] Pigcaulan can only demand the amounts due him for the
period within three years preceding the filing of the complaint in 2000. Furthermore, since the records are insufficient
to use as bases to properly compute Pigcaulans claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED. The Decision dated
February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No. 85515
are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby declared ENTITLED to holiday
pay and service incentive leave pay for the years 1997-2000 and proportionate 13th month pay for the year 2000.
The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount and to make a
detailed computation of the monetary benefits due Abduljuahid R. Pigcaulan which Security and Credit Investigation
Inc. should pay without delay.

hours in the afternoon. Herein complainant managed to comply with such requirement
without prejudice to company's interest.
Consequently, the hearings on the issue of termination and the counter-complaint for illegal dismissal were
consolidated and jointly held before Labor Arbiter Miguel P. Soriano, Jr., docketed respectively as NLRC
Case Nos. RB-IV-9962-77 and RB-IV-1154-77.
GLOBAL INCORPORATED, petitioner, vs. HON. COMMISSIONERS DIEGO D. ATIENZA,
GERONIMO Q. QUADRA and CLETO T. VILLATUYA, and CLARITA ROSAL
PARAS, J.:
The instant petition for "Certiorari, mandamus with Preliminary Injunction and/or Restraining Order",
seeks a review of the Decision dated June 28, 1979 of the National labor Relations Commission, which
modified on appeal the decision of the Labor Arbiter Miguel P. Soriano, Jr. in NLRC Case Nos. RB-IV9962-77 and RB-IV-11544-77 entitled "Clarita Rosal vs. Global Incorporated"
From the records, what appear undisputed are the following:
Clarita Rosal, herein private respondent, commenced her employment with petitioner Global Incorporated
in February, 1970, as a "Sales Clerk" with a salary of P450.00 a month.

On May 31, 1978, the Labor Arbiter rendered his decision, the dispositive portion of which reads
WHEREFORE, all things considered, this complaint for illegal dismissal, overtime
compensation and premium pay is hereby ordered DISMISSED for lack of merit.
Accordingly, the clearance for complainant's termination is hereby GRANTED.
SO ORDERED.
Clarita Rosal appealed the aforesaid decision to the National Labor Relations Commission. On June 28,
1979, respondents, Commissioners Diego Atienza and Geronimo Quadra modified the appealed decision
as follows:
WHEREFORE, responsive to the foregoing, the following dispositions are made:

On November 11, 1976 Global Inc. filed with the Department of Labor, Regional Office No. 4, an
application for clearance to terminate the services of Clarita Rosal, for having violated company rules and
regulations by incurring repeated absences and tardiness. (Case No. T-IV-11-7480-76) The subject
employee was placed under preventive suspension on November 16, 1976 pending resolution of the
application for clearance.

(a) respondent is ordered to pay complainant overtime pay at the rate of one hour
everyday starting Nov. 1, 1974 to Nov. 16, 1976 when she was suspended;

On December 3, 1976, Clarita Rosal filed her opposition to the clearance application as well as a countercomplaint against Global Inc., for illegal dismissal, overtime pay and premium pay. (Case No. RB-IV9962-77)

(c) the decision of the Labor Arbiter granting clearance to terminate the services of the
complainant is affirmed.

On February 3, 1977, the officer-in-charge of Regional Office No. 4, Ministry of labor, Vicente Leogardo,
Jr. lifted the preventive suspension of Clarita Rosal, finding her suspension not warranted, and reinstated
her to her former position without loss of rights and with full backwages from the time of preventive
suspension up to the date of her actual reinstatement. On the said issue of preventive suspension, the
officer-in-charge opined.

(b) respondent is likewise ordered to pay complainant backwages from Dec. 2, 1976 to
May 31, 1978;

Compliance with the above orders is strictly enjoined and the respondent-appellee is
further ordered to submit to the Commission proof of compliance with this Decision
after ten (10) days from receipt of the same.
SO ORDERED.
Respondent Commissioner Cleto T. Villatuya voted to affirm the Labor Arbiter's decision.

. . . , it appears that the continued presence of the subject employee does not pose a
serious and imminent threat to the life or property of the employer or co-employees. Her
tardiness does not in any way pose serious threat to the property of the employer. As
sales clerk, she was required to prepare reports and submit them before closing of office

Hence, the instant petition praying that after hearing, judgment be rendered reversing or declaring the
assailed decision null and void and affirming in toto the decision of the Labor Arbiter Miguel P. Soriano,
Jr.; to order the private respondent Clarita Rosal to pay the petitioner the sum of Two Thousand Pesos
(P2,000), as and for attorney's fees and to pay costs of suit; and that pending the adjudication of the case

on the merits, a writ of preliminary injunction or restraining order be issued against the respondents or
their representatives restraining them from executing or enforcing the assailed decision.
In the Resolution of this Court dated Oct. 17, 1979 respondents were required to file their comment within
ten (10) days from notice. In the same resolution, a temporary restraining order was issued enjoining the
respondents from enforcing and/or carrying out the assailed decision.
In the subsequent Resolution dated March 21, 1980 this Court, acting on the Petition as well as the
respondents' Comments and petitioner's Reply to the said Comments resolved to give due course to the
petition and required the parties to file their respective memoranda, after which the case was deemed
submitted for decision.
Petitioner takes issue with the ruling of the National Labor Relations Commission granting backwages and
overtime pay in favor of private respondent Clarita Rosal. Thus, it argues , that if both the Labor Arbiter
who tried the case and the National Labor Relations Commission which reviewed the same, found the
grounds of absenteeism and tardiness as valid and just causes to terminate the employment of Clarita
Rosal, the inevitable conclusion is that the preventive suspension on the same grounds is likewise just and
valid. If the suspension is just and valid, she is not entitled to backwages. (Be it noted that under the Rules
of the Ministry, an employee placed unjustly under preventive suspension is entitled to be paid her wages,
even if she does not work during said period). On the issue of overtime pay, it is the contention of
petitioner that the grant of overtime pay in favor of Clarita Rosal at the rate of one hour everyday starting
Nov. 1, 1974 to Nov. 16, 1976 is not justified as there is nothing in the record except her bare allegations
which would show that she truly and actually rendered said overtime work. Besides it is highly
improbable, if not impossible for Clarita Rosal to have rendered continuous overtime services from Nov.
1, 1974 to Nov. 16, 1976, or a period of two (2) years including Sundays and holidays.
After a careful review of the evidence on record as well as the arguments of both parties, We rule
1. On the issue of overtime pay, We agree with the conclusion of the labor Arbiter that the same should be
denied for want of sufficient factual and legal basis. The evidence on record shows that the office hours of
the petitioner are from 8:00 in the morning to 5:00 in the afternoon, with noon break from 12:00 noon to
1:00 p.m. from Monday thru Saturday. No employee is authorized to work after office hours, during
Sundays and Holidays unless required by a written memorandum from the General Manager. During the
period from Nov. 1, 1974 to Nov. 16, 1976, no employee of the company was never required to work after
5:00 in the afternoon. Neither did the company require any employee to work during Sundays or Holidays
except on Nov. 1, 1976, on which date respondent Clarita Rosal was requested to work through a written
memorandum signed by the General Manager. Respondent Rosal admitted this, and that she was properly
compensated for her work on said date (Exh. "10").

in the afternoon, Rosal's time records show that she regularly left the office at or a few minutes after 5:00
o'clock in the afternoon. The records where there were no time-outs in the afternoon were sufficiently
explained by petitioner's witness as due to a mechanical defect in the office bundy clock. The same
omission of time-outs was found in the records of the other employees, but only respondent complained.
2. On the issue of backwages, the National Labor Relation Commission ordered petitioner to pay Clarita
Rosal "backwages from Dec. 2, 1976 to May 31, 1978", the date when Asst. Secretary Vicente Leogardo,
Jr., rendered his decision lifting the preventive suspension of Clarita Rosal and ordering petitioner to
reinstate her to her former position without loss of rights and with full backwages from the time of
preventive suspension up to the date of her actual reinstatement.
We agree. We note that this decision of the Labor Arbiter ordering reinstatement had not been complied
with. Neither was it appealed by petitioner, therefore, the decision had become final and executory. To
exempt petitioner from the payment of backwages would be to give premium to the blant disregard of
orders of the Ministry of Labor. Moreover, it would be in consonance with compassionate justice that
Clarita Rosal be paid backwages during the period that she was supposed to be reinstated.
Note that the only ground for the imposition of preventive suspension is provided for under Sec. 4, Rule
XIV of the Implementing Regulations of the Ministry of Labor which readsSEC. 4. Preventive suspension. The employer may place the employee concerned under
preventive suspension only if the continued employment of the employee poses a serious
and imminent threat to the life or property of the employer or of the co-employees. Any
preventive suspension before the filing of the application shall be considered worked
days, and shall be duly paid as such if the continued presence of the employee concerned
does not pose a serious threat to the life and property of the employer or of the coemployees.
As aptly held by Asst. Secretary Leogardo Jr. (Officer-in-charge of Regional Office No. IV of the Ministry
of Labor), the continued presence of Clarita Rosal never posed a serious and imminent threat to the life or
property of the employer or co-employees as would warrant her preventive suspension.
Accordingly, the assailed decision of the National Labor Relations Commissions is MODIFIED as
follows:
(a) the decision granting clearance to terminate the services of private respondent Clarita Rosal is
affirmed;
(b) petitioner is ordered to pay private respondent backwages from Dec. 2, 1976 to May 31, 1978;

The claim of Clarita Rosal that she rendered overtime work from Nov. 1, 1974 to Nov. 16, 1976 has not
been substantiated by adequate evidence. Her time records for said period show that she had no time-in
and time-out during Sundays and Holidays. Except for some time records where there were no time-outs

(c) petitioner is ordered to pay costs of suit.

SO ORDERED.

Subsequently, an urgent petition was presented in Court on October 15, 1952 by the Atok-Big Wedge
Mining Company for authority to stop operations and lay off employees and laborers, for the reason that
due to the heavy losses, increased taxes, high cost of materials, negligible quantity of ore deposits, and the
enforcement of the Minimum Wage Law, the continued operation of the company would lead to its
immediate bankruptcy and collapse (Rec. pp. 100-109). To avert the closure of the company and the
consequent lay-off of hundreds of laborers and employees, the Court, instead of hearing the petition on the
merits, convened the parties for voluntary conciliation and mediation. After lengthy discussions and
exchange of views, the parties on October 29, 1952 reached an agreement effective from August 4, 1952 to
December 31, 1954 (Rec. pp. 18-23). The Agreement in part provides:
I
That the petitioner, Atok-Big Wedge Mining Company, Incorporated, agrees to abide by whatever
decision that the Supreme Court may render with respect to Case No. 523-V (G.R. 5276) and
Case No. 523-1 (10) (G.R. 5594).
xxx

xxx

xxx

III
xxx

ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, petitioner,


vs.
ATOK-BIG WEDGE MINING COMPANY, INCORPORATED, respondents.
Pablo C. Sanidad for petitioner.
Roxas and Sarmiento for respondents.

xxx

xxx

That the petitioner, Atok-Big Wedge Mining Company, Incorporated, and the respondent, AtokBig Wedge Mutual Benefit Association, agree that the following facilities heretofore given or
actually being given by the petitioner to its workers and laborers, and which constitute as part of
their wages, be valued as follows:

Rice ration

P.55 per day

REYES, J. B. L., J.:


On September 4, 1950, the petitioner labor union, the Atok-Big Wedge Mutual Benefit Association,
submitted to the Atok-Big Wedge Mining Co., Inc. (respondent herein) several demands, among which
was an increase of P0.50 in daily wage. The matter was referred by the mining company to the Court of
Industrial Relations for arbitration and settlement (Case No. 523-V). In the course of conciliatory
measures taken by the Court, some of the demands were granted, and others (including the demand for
increased wages) rejected, and so, hearings proceeded and evidence submitted on the latter. On July 14,
1951, the Court rendered a decision (Record, pp. 25-32) fixing the minimum wage at P2.65 a day with the
rice ration, or P3.20 without rice ration; denying the deduction from such minimum wage, of the value of
housing facilities furnished by the company to the laborers, as well as the efficiency bonus given to them
by the company; and ordered that the award be made effective retroactively from the date of the demand,
September 4, 1950, as agreed by the parties. From this decision, the mining company appealed to this
Court (G.R. No. L-5276).

Housing facility

40 per day

All other facilities such as recreation


facilities, medical treatment to dependents
of laborers, school facilities, rice ration
during off-days, water, light, fuel, etc.,
equivalent to at least

85 per day

It is understood that the said amount of facilities valued at the abovementioned prices, may be charged in
full or partially by the Atok-Big Wedge Mining Company, Inc., against laborer or employee, as it may see
fit pursuant to the exigencies of its operation.

The agreement was submitted to the Court for approval and on December 26, 1952, was approved by the
Court in an order giving it effect as an award or decision in the case (Rec., p. 24).
Later, Case No. G.R. No. L-5276 was decided by this Court (promulgated March 3, 1953), affirming the
decision of the Court of Industrial Relations fixing the minimum cash wage of the laborers and employees
of the Atok-Big Wedge Mining Co. at P3.20 cash, without rice ration, or P2.65, with rice ration. On June
13, 1953, the labor union presented to the Court a petition for the enforcement of the terms of the
agreement of October 29, 1952, as allegedly modified by the decision of this Court in G.R. No. L-5276
and the provisions of the Minimum Wage Law, which has since taken effect, praying for the payment of
the minimum cash wage of P3.45 a day with rice ration, or P4.00 without rice ration, and the payment of
differential pay from August 4, 1952, when the award became effective. The mining company opposed the
petition claiming that the Agreement of October 29, 1952 was entered into by the parties with the end in
view that the company's cost of production be not increased in any way, so that it was intended to
supersede whatever decision the Supreme Court would render in G.R. No. L-5276 and the provisions of
the Minimum Wage Law with respect to the minimum cash wage payable to the laborers and employees.
Sustaining the opposition, the Court of Industrial Relations, in an order issued on September 22, 1953
(Rec. pp. 44-49), denied the petition, upon the ground that when the Agreement of the parties of October
29, 1952 was entered into by them, they already knew the decision of said Court (although subject to
appeal to the Supreme Court) fixing the minimum cash wage at P3.20 without rice ration, or P2.65 with
rice ration, as well as the provisions of the Minimum Wage Law requiring the payment of P4 minimum
daily wage in the provinces effective August 4, 1952; so that the parties had intended to be regulated by
their Agreement of October 29, 1952. On the same day, the Court issued another order (Rec. pp. 50-55),
denying the claim of the labor union for payment of an additional 50 per cent based on the basic wage of
P4 for work on Sundays and holidays, holding that the payments being made by the company were within
the requirements of the law. Its motion for the reconsideration of both orders having been denied, the labor
union filed this petition for review by certiorari.
The first issue submitted to us arises from an apparent contradiction in the Agreement of October 29,
1952. By paragraph III thereof, the parties by common consent evaluated the facilities furnished by the
Company to its laborers (rice rations, housing, recreation, medical treatment, water, light, fuel, etc.) at
P1.80 per day, and authorized the company to have such value "charge in full or partially against any
laborer or employee as it may see fit"; while in paragraph I, the Company agreed to abide by the decision
of this Court (pending at the time the agreement was had) in G.R. No. L-5594; and as rendered, the
decision was to the effect that the Company could deduct from the minimum wage only the value of the
rice ration.
It is contended by the petitioner union that the two provisions should be harmonized by holding paragraph
III (deduction of all facilities) to be merely provisional, effective only while this Court had not rendered its
decision in G.R. No. L-5594; and that the terms of said paragraph should be deemed superseded by the
decision from the time the latter became final, some four or five months after the agreement was entered
into; in consequence, (it is claimed), the laborers became entitled by virtue of said decision to the
prevailing P4.00 minimum wage with no other deduction than that of the rice ration, or a net cash wage of
P3.45.
This contention, in our opinion, is untenable. The intention of the parties could not have been to make the
arrangement in paragraph III a merely provisional arrangement pending the decision of the Supreme Court
for "this agreement" was expressly made retroactive and effective as of August 4, 1952, and to be in force
up to and including December 31, 1954" (Par. IV). When concluded on October 29, 1952, neither party

could anticipate the date when the decision of the Supreme Court would be rendered; nor is any reason
shown why the parties should desire to limit the effects of the decision to the period 1952-1954 if it was to
supersede the agreement of October 29, 1952.
To ascertain the true import of paragraph I of said Agreement providing that the respondent company
agreed to abide by whatever decision the Supreme Court would render in G.R. No. L-5276, it is important
to remember that, as shown by the records, the agreement was prompted by an urgent petition filed by the
respondent mining company to close operations and lay-off laborers because of heavy losses and the full
enforcement of the Minimum Wage Law in the provinces, requiring it to pay its laborers the minimum
wage of P4; to avoid such eventuality, through the mediation of the Court of Industrial Relations, a
compromise was reached whereby it was agreed that the company would pay the minimum wage fixed by
the law, but the facilities then being received by the laborers would be evaluated and charged as part of the
wage, but without in any way reducing the P2.00 cash portion of their wages which they were receiving
prior to the agreement (hearing of Oct. 28, 1952, CIR, t.s.n. 47). In other words, while it was the objective
of the parties to comply with the requirements of the Minimum Wage Law, it was also deemed important
that the mining company should not have to increase the cash wages it was then paying its laborers, so that
its cost of production would not also be increased, in order to prevent its closure and the lay-off of
employees and laborers. And as found by the Court below in the order appealed from (which finding is
conclusive upon us), "it is this eventuality that the parties did not like to happen, when they have executed
the said agreement" (Rec. p. 49). Accordingly, after said agreement was entered into, the Company started
paying its laborers a basic cash or "take-home" wage of P2.20 (Rec. p. 9), representing the difference
between P4 (minimum wage) and P1.80 (value of all facilities).
With this background, the provision to abide by our decision in G.R. No. L-5276 can only be interpreted
thus: That the company agreed to pay whatever award this Court would make in said case from the date
fixed by the decision (which was that of the original demand, September 4, 1950) up to August 3, 1952
(the day previous to the effectivity of the Compromise Agreement) and from August 4, 1954 to December
31, 1954, they are to be bound by their agreement of October 29, 1952.
This means that during the first period (September 4, 1950 to August 3, 1952), only rice rations given to
the laborers are to be regarded as forming part of their wage and deductible therefrom. The minimum
wage was then fixed (by the Court of Industrial Relations, and affirmed by this Court) at P3.20 without
rice ration, or P2.65 with rice ration. Since the respondent company had been paying its laborers the basic
cash or "take-home" wage of P2 prior to said decision and up to August 3, 1952, the laborers are entitled to
a differential pay of P0.65 per working day from September 4, 1950 (the date of the effectivity of the
award in G.R. L-5276) up to August 3, 1952.
From August 4, 1952, the date when the Agreement of the parties of October 29, 1952 became effective
(which was also the date when the Minimum Wage Law became fully enforceable in the provinces), the
laborers should be paid a minimum wage of P4 a day. From this amount, the respondent mining company
is given the right to charge each laborer "in full or partially", the facilities enumerated in par. III of the
Agreement; i.e., rice ration at P0.55 per day, housing facility at P0.40 per day, and other facilities
"constitute part of his wages". It appears that the company had actually been paying its laborers the
minimum wage of P2.20 since August 4, 1952; hence they are not entitled to any differential pay from this
date.
Petitioner argues that to allow the deductions stipulated in the Agreement of October 29, 1952 from the
minimum daily wage of P4 would be a waiver of the minimum wage fixed by the law and hence null and

void, since Republic Act No. 602, section 20, provides that "no agreement or contract, oral or written, to
accept a lower wage or less than any other under this Act, shall be valid". An agreement to deduct certain
facilities received by the laborers from their employer is not a waiver of the minimum wage fixed by the
law. Wage, as defined by section 2 of Republic Act No. 602, "includes the fair and reasonable value as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee." Thus, the law permits the deduction of such facilities from the laborer's
minimum wage of P4, as long as their value is "fair and reasonable". It is not here claimed that the
valuations fixed in the Agreement of October 29, 1952 are not fair and reasonable. On the contrary, the
agreement expressly states that such valuations:

work. Petitioner union insists, however, that this 50 per cent additional compensation should be computed
on the minimum wage of P400 and not on the "cash portion" of the laborer's wage of P2.20, under the
provisions of the Agreement of October 29, 1952 and the Minimum Wage Law.

"have been arrived at after careful study and deliberation by both representatives of both parties,
with the assistance of their respective counsels, and in the presence of the Honorable Presiding
Judge of the Court of Industrial Relations" (Rec. p. 2).

The minimum legal additional compensation for work on Sundays and legal holidays is, therefore, 25 per
cent of the laborer's regular renumeration. Under the Minimum Wage Law, this minimum additional
compensation is P1 a day (25 per cent of P4, the minimum daily wage).

Neither is it claimed that the parties, with the aid of the Court of Industrial Relations in a dispute pending
before it, may not fix by agreement the valuation of such facilities, without referring the matter to the
Department of Labor.
Petitioner also argues that to allow the deductions of the facilities appearing in the Agreement
referred to, would be contrary to the mandate of section 19 of the law, that "nothing in this
Act . . . justify an employer . . . in reducing supplements furnished on the date of enactment.
The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations promulgated
by the Wage Administration Office to implement the Minimum Wage Law (Ch. 1, [c]), as:
extra renumeration or benefits received by wage earners from their employees and include but are
not restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave;
overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits;
profit-sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or other
bonuses other than those paid as a reward for extra output or time spent on the job.
"Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or
received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are
items of expense necessary for the laborer's and his family's existence and subsistence, so that by express
provision of the law (sec. 2 [g]) they form part of the wage and when furnished by the employer are
deductible therefrom since if they are not so furnished, the laborer would spend and pay for them just the
same. It is thus clear that the facilities mentioned in the agreement of October 29, 1952 do not come within
the term "supplements" as used in Art. 19 of the Minimum Wage Law.
For the above reasons, we find the appeal from the Order of the Court a quo of September 22, 1953
denying the motion of the petitioner labor union for the payment of the minimum wage of P3.45 per day
plus rice ration, or P4 without rice ration, to be unmeritorious and untenable.
The second question involved herein relates to the additional compensation that should be paid by the
respondent company to its laborers for work rendered on Sundays and holidays. It is admitted that the
respondent company is paying an additional compensation of 50 per cent based on the basic "cash portion"
of the laborer's wage of P2.20 per day; i.e., P1.10 additional compensation for each Sunday or holiday's

SEC. 4. Commonwealth Act No. 444 (otherwise known as the Eight Hour Labor Law) provides:
No person, firm, or corporations, business establishment or place or center of labor shall compel
an employee or laborer to work during Sundays and holidays, unless he is paid an additional sum
of at least twenty-five per centum of his regular renumeration:

While the respondent company computes the additional compensation given to its laborers for work on
Sundays and holidays on the "cash portion" of their wages of P2.20, it is giving them 50 per cent thereof,
or P1.10 a day. Considering that the minimum additional compensation fixed by the law is P1 (25 per cent
of P4), the compensation being paid by the respondent company to its laborers is even higher than such
minimum legal additional compensation. We, therefore, see no error in the holding of the Court a quo that
the respondent company has not violated the law with respect to the payment of additional compensation
for work rendered by its laborers on Sundays and legal holidays.
Finding no reason to sustain the present petition for review, the same is, therefore, dismissed, with costs
against the petitioner Atok-Big Wedge Mutual Benefit Association.

negotiations between petitioner and respondent union in 1997 (for the last two years of the collective
bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner offered the
amount of four thousand pesos (P4,000.00) to each employee as an early conclusion bonus. Petitioner
claims that this bonus was promised as a unilateral incentive for the speeding up of negotiations between
the parties and to encourage respondent union to exert their best efforts to conclude a CBA. Upon
conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus.[3]
In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to
negotiate a new CBA. Petitioner and respondent union began their negotiations. OnOctober 22, 1999, after
eleven meetings, respondent union expressed dissatisfaction at the outcome of the negotiations and
declared a deadlock. A few days later, on October 26, 1999, respondent union filed a Notice of Strike with
the National Conciliation and Mediation Board (NCMB), Region IV in Calamba, Laguna, due to the
bargaining deadlock.[4]
A conciliation and mediation conference was held on October 30, 1999 at the NCMB in
Imus, Cavite, before Conciliator Jose L. Velasco. The conciliation meetings started with eighteen
unresolved items between petitioner and respondent union. At the meeting on November 20, 1999,
respondent union accepted petitioners proposals on fourteen items, [5] leaving the following items
unresolved: wages, rice subsidy, signing, and retroactive bonus.[6]

PHILIPPINE APPLIANCE CORPORATION (PHILACOR), petitioner, vs. THE COURT OF


APPEALS, THE HONORABLE SECRETARY OF LABOR BIENVENIDO E.
LAGUESMA and UNITED PHILACOR WORKERS UNION-NAFLU, respondents.
DECISION
YNARES-SANTIAGO, J.:
Before us is an appeal by certiorari under Rule 45 of the Rules of Court which seeks to set aside the
decision[1] of the Court of Appeals in CA-G.R. SP No. 59011, denying due course to petitioner Philippine
Appliance Corporations partial appeal, as well as the Resolution [2] of the same court, dated August 10,
2001, denying the motion for reconsideration.
Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators, freezers
and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected collective
bargaining representative of the rank-and-file employees of petitioner. During the collective bargaining

Petitioner and respondent union failed to arrive at an agreement concerning these four remaining
items. On January 18, 2000, respondent union went on strike at the petitioners plant at Barangay
Maunong, Calamba, Laguna and at its washing plant at Paraaque, Metro Manila. The strike lasted for
eleven days and resulted in the stoppage of manufacturing operations as well as losses for petitioner,
which constrained it to file a petition before the Department of Labor and Employment (DOLE). Labor
Secretary Bienvenido Laguesma assumed jurisdiction over the dispute and, on January 28, 2000, ordered
the striking workers to return to work within twenty-four hours from notice and directed petitioner to
accept back the said employees.[7]
On April 14, 2000, Secretary Laguesma issued the following Order:[8]
In view of the foregoing, we fix the wage increases at P30 per day for the first year and P25 for the second
year.
The rice subsidy and retroactive pay base are maintained at their existing levels and rates.
Finally, this Office rules in favor of Companys proposal on signing bonus. We believe that a P3,000 bonus
is fair and reasonable under the circumstances.
WHEREFORE, premises considered, Philippine Appliance Corporation and United Philacor Workers
Union-NAFLU are hereby directed to conclude a Collective Bargaining Agreement for the period July 1,

1999 to June 30, 2001. The agreement is to incorporate the disposition set forth above and includes other
items already agreed upon in the course of negotiation and conciliation.
SO ORDERED. (Emphasis supplied)
On April 27, 2000, petitioner filed a Partial Motion for Reconsideration [9] stating that while it
accepted the decision of Secretary Laguesma, it took exception to the award of the signing
bonus. Petitioner argued that the award of the signing bonus was patently erroneous since it was not part of
the employees salaries or benefits or of the collective bargaining agreement. It is not demandable or
enforceable since it is in the nature of an incentive. As no CBA was concluded through the mutual efforts
of the parties, the purpose for the signing bonus was not served. On May 22, 2000, Secretary Laguesma
issued an Order[10] denying petitioners motion. He ruled that while the bargaining negotiations might have
failed and the signing of the agreement was delayed, this cannot be attributed solely to respondent
union. Moreover, the Secretary noted that the signing bonus was granted in the previous CBA.
On June 2, 2000, petitioner filed a Petition for Certiorari with the Court of Appeals docketed as CAG.R. SP No. 59011 which was dismissed. The Labor Secretarys award of the signing bonus was affirmed
since petitioner itself offered the same as an incentive to expedite the CBA negotiations. This offer was not
withdrawn and was still outstanding when the dispute reached the DOLE. As such, petitioner can no
longer adopt a contrary stand and dispute its own offer.
Petitioner filed a Motion for Reconsideration but the same was denied. Hence this petition for review
raising a lone issue, to wit:
THE HONORABLE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT RENDERED A DECISION NOT IN ACCORD WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT, SPECIFICALLY THE CALTEX DOCTRINE OF 1997.
The petition is meritorious.
Petitioner invokes the doctrine laid down in the case of Caltex v. Brillantes,[11] where it was held
that the award of the signing bonus by the Secretary of Labor was erroneous. The said case involved
similar facts concerning the CBA negotiations between Caltex (Philippines), Inc. and the Caltex Refinery
Employees Association (CREA). Upon referral of the dispute to the DOLE, then Labor Secretary
Brillantes ruled, inter alia:
Fifth, specifically on the issue of whether the signing bonus is covered under the maintenance of existing
benefits clause, we find that a clarification is indeed imperative. Despite the expressed provision for a
signing bonus in the previous CBA, we uphold the principle that the award for a signing bonus should
partake the nature of an incentive and premium for peaceful negotiations and amicable resolution of
disputes which apparently are not present in the instant case. Thus, we are constrained to rule that the
award of signing bonus is not covered by the maintenance of existing benefits clause.

On appeal to this Court, it was held:


Although proposed by [CREA], the signing bonus was not accepted by [Caltex Philippines, Inc.]. Besides,
a signing bonus is not a benefit which may be demanded under the law. Rather, it is now claimed by
petitioner under the principle of maintenance of existing benefits of the old CBA. However, as clearly
explained by [Caltex], a signing bonus may not be demanded as a matter of right. If it is not agreed upon
by the parties or unilaterally offered as an additional incentive by [Caltex], the condition for awarding it
must be duly satisfied. In the present case, the condition sine qua non for its granta non-strike was not
complied with.
In the case at bar, two things militate against the grant of the signing bonus: first, the non-fulfillment
of the condition for which it was offered, i.e., the speedy and amicable conclusion of the CBA
negotiations; and second, the failure of respondent union to prove that the grant of the said bonus is a long
established tradition or a regular practice on the part of petitioner.Petitioner admits, and respondent union
does not dispute, that it offered an early conclusion bonus or an incentive for a swift finish to the CBA
negotiations. The offer was first made during the 1997 CBA negotiations and then again at the start of the
1999 negotiations. The bonus offered is consistent with the very concept of a signing bonus.
In the case of MERALCO v. The Honorable Secretary of Labor,[12] we stated that the signing bonus is
a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between
the employer and the union. In that case, we sustained the argument of the Solicitor General, viz:
When negotiations for the last two years of the 1992-1997 CBA broke down and the parties sought the
assistance of the NCMB, but which failed to reconcile their differences, and when petitioner MERALCO
bluntly invoked the jurisdiction of the Secretary of Labor in the resolution of the labor dispute, whatever
goodwill existed between petitioner MERALCO and respondent union disappeared. . . .
Verily, a signing bonus is justified by and is the consideration paid for the goodwill that existed in the
negotiations that culminated in the signing of a CBA.[13]
In the case at bar, the CBA negotiation between petitioner and respondent union failed
notwithstanding the intervention of the NCMB. Respondent union went on strike for eleven days and
blocked the ingress to and egress from petitioners two work plants. The labor dispute had to be referred to
the Secretary of Labor and Employment because neither of the parties was willing to compromise their
respective positions regarding the four remaining items which stood unresolved. While we do not fault any
one party for the failure of the negotiations, it is apparent that there was no more goodwill between the
parties and that the CBA was clearly not signed through their mutual efforts alone. Hence, the payment of
the signing bonus is no longer justified and to order such payment would be unfair and unreasonable for
petitioner.

[14]

Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable obligation.
True, it may nevertheless be granted on equitable considerations as when the giving of such bonus has

been the companys long and regular practice. [15] To be considered a regular practice, however, the giving
of the bonus should have been done over a long period of time, and must be shown to have been consistent
and deliberate.[16] The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowing fully well that said employees are not covered by
the law requiring payment thereof. [17] Respondent does not contest the fact that petitioner initially offered a
signing bonus only during the previous CBA negotiation. Previous to that, there is no evidence on record
that petitioner ever offered the same or that the parties included a signing bonus among the items to be
resolved in the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established
practice considering that the same was given only once, that is, during the 1997 CBA negotiation.
WHEREFORE, premises considered, the instant petition is GRANTED. The decision of the Court
of Appeals in CA-G.R. SP No. 59011 affirming the Order of the Secretary of Labor and Employment,
directing petitioner Philippine Appliance Corporation to pay each of its employees a signing bonus in the
amount of Three Thousand Pesos (P3,000.00), is hereby REVERSED and SET ASIDE. No
pronouncement as to costs.
SO ORDERED.

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. vs EASTERN EMPLOYEES


G.R. No. 185665, February 8, 2012
DECISION
MENDOZA, J.:

Before the Court is a petition for review on certiorari seeking modification of the June 25, 2008
Decision[1] of the Court of Appeals (CA) and its December 12, 2008 Resolution,[2] in CA-G.R. SP No.
91974, annulling the April 28, 2005 Resolution[3] of the National Labor Relations Commission (NLRC) in
NLRC-NCR-CC-000273-04 entitled In the Matter of the Labor Dispute in Eastern Telecommunications,
Philippines, Inc.
The Facts
As synthesized by the NLRC, the facts of the case are as follows, viz:
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the
business of providing telecommunications facilities, particularly leasing international
date lines or circuits, regular landlines, internet and data services, employing
approximately 400 employees.
Eastern Telecoms Employees Union (ETEU) is the certified exclusive
bargaining agent of the companys rank and file employees with a strong following of
147 regular members. It has an existing collecti[ve] bargaining agreement with the
company to expire in the year 2004 with a Side Agreement signed on September 3,
2001.

In essence, the labor dispute was a spin-off of the companys plan to defer
payment of the 2003 14th, 15th and 16th month bonuses sometime in April 2004. The
companys main ground in postponing the payment of bonuses is due to allege continuing
deterioration of companys financial position which started in the year 2000. However,
ETPI while postponing payment of bonuses sometime in April 2004, such payment
would also be subject to availability of funds.
Invoking the Side Agreement of the existing Collective Bargaining Agreement
for the period 2001-2004 between ETPI and ETEU which stated as follows:
4. Employment Related Bonuses. The Company confirms that
the 14th, 15th and 16th month bonuses (other than 13th month pay) are
granted.
The union strongly opposed the deferment in payment of the bonuses by filing a
preventive mediation complaint with the NCMB on July 3, 2003, the purpose of which
complaint is to determine the date when the bonus should be paid.
In the conference held at the NCMB, ETPI reiterated its stand that payment of
the bonuses would only be made in April 2004 to which date of payment, the union
agreed. Thus, considering the agreement forged between the parties, the said agreement
was reduced to a Memorandum of Agreement. The union requested that the President of
the company should be made a signatory to the agreement, however, the latter refused to
sign. In addition to such a refusal, the company made a sudden turnaround in its position
by declaring that they will no longer pay the bonuses until the issue is resolved through
compulsory arbitration.

and evidence in support thereof after which submission, they agreed to have the case
considered submitted for decision.[4]

In its position paper,[5] the Eastern Telecoms Employees Union (ETEU) claimed that Eastern
Telecommunications Philippines, Inc. (ETPI) had consistently and voluntarily been giving out 14 th month
bonus during the month of April, and 15th and 16th month bonuses every December of each year (subject
bonuses) to its employees from 1975 to 2002, even when it did not realize any net profits. ETEU posited
that by reason of its long and regular concession, the payment of these monetary benefits had ripened into
a company practice which could no longer be unilaterally withdrawn by ETPI. ETEU added that this longstanding company practice had been expressly confirmed in the Side Agreements of the 1998-2001 and
2001-2004 Collective Bargaining Agreements (CBA) which provided for the continuous grant of these
bonuses in no uncertain terms. ETEU theorized that the grant of the subject bonuses is not only a company
practice but also a contractual obligation of ETPI to the union members.
ETEU contended that the unjustified and malicious refusal of the company to pay the subject
bonuses was a clear violation of the economic provision of the CBA and constitutes unfair labor
practice (ULP). According to ETEU, such refusal was nothing but a ploy to spite the union for bringing
the matter of delay in the payment of the subject bonuses to the National Conciliation and Mediation

The companys change in position was contained in a letter dated April 14,
2004 written to the union by Mr. Sonny Javier, Vice-President for Human Resources and
Administration, stating that the deferred release of bonuses had been superseded and
voided due to the unions filing of the issue to the NCMB on July 18, 2003. He declared
that until the matter is resolved in a compulsory arbitration, the company cannot and will
not pay any bonuses to any and all union members.
Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground of unfair
labor practice for failure of ETPI to pay the bonuses in gross violation of the economic
provision of the existing CBA.

Board (NCMB). It prayed for the award of moral and exemplary damages as well as attorneys fees for the
unfair labor practice allegedly committed by the company.
On the other hand, ETPI in its position paper,[6] questioned the authority of the NLRC to take
cognizance of the case contending that it had no jurisdiction over the issue which merely involved the
interpretation of the economic provision of the 2001-2004 CBA Side Agreement. Nonetheless, it
maintained that the complaint for nonpayment of 14 th, 15th and 16th month bonuses for 2003 and 14th month

On May 19, 2004, the Secretary of Labor and Employment, finding that the
company is engaged in an industry considered vital to the economy and any work
disruption thereat will adversely affect not only its operation but also that of the other
business relying on its services, certified the labor dispute for compulsory arbitration
pursuant to Article 263 (q) of the Labor Code as amended.

bonus for 2004 was bereft of any legal and factual basis. It averred that the subject bonuses were not part

Acting on the certified labor dispute, a hearing was called on July 16,
2004 wherein the parties have submitted that the issues for resolution are (1) unfair labor
practice and (2) the grant of 14th, 15th and 16th month bonuses for 2003, and 14th month
bonus for 2004. Thereafter, they were directed to submit their respective position papers

of the bonuses due to the unabated huge losses that the company had continuously experienced. It claimed

of the legally demandable wage and the grant thereof to its employees was an act of pure gratuity and
generosity on its part, involving the exercise of management prerogative and always dependent on the
financial performance and realization of profits. It posited that it resorted to the discontinuance of payment
that it had been suffering serious business losses since 2000 and to require the company to pay the subject
bonuses during its dire financial straits would in effect penalize it for its past generosity. It alleged that the

non-payment of the subject bonuses was neither flagrant nor malicious and, hence, would not amount to

that the NLRC committed grave abuse of discretion when it ruled that ETPI is not contractually bound to

unfair labor practice.

give said bonuses to the union members.

Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side Agreement was a mere
affirmation that the distribution of bonuses was discretionary to the company, premised and conditioned on
the success of the business and availability of cash. It submitted that said bonus provision partook of the
nature of a one-time grant which the employees may demand only during the year when the Side
Agreement was executed and was never intended to cover the entire term of the CBA. Finally, ETPI
emphasized that even if it had an unconditional obligation to grant bonuses to its employees, the drastic
decline in its financial condition had already legally released it therefrom pursuant to Article 1267 of the
Civil Code.
On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs complaint and held that
ETPI could not be forced to pay the union members the 14 th, 15th and 16thmonth bonuses for the year 2003
and the 14th month bonus for the year 2004 inasmuch as the payment of these additional benefits was
basically a management prerogative, being an act of generosity and munificence on the part of the
company and contingent upon the realization of profits. The NLRC pronounced that ETPI may not be

In its assailed June 25, 2008 Decision, the CA declared that the Side Agreements of the 1998 and
2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to its employees without
qualification or condition. It also found that the grant of said bonuses has already ripened into a company
practice and their denial would amount to diminution of the employees benefits. It held that ETPI could
not seek refuge under Article 1267 of the Civil Code because this provision would apply only when the
difficulty in fulfilling the contractual obligation was manifestly beyond the contemplation of the parties,
which was not the case therein. The CA, however, sustained the NLRC finding that the allegation of ULP
was devoid of merit. The dispositive portion of the questioned decision reads:
WHEREFORE, premises considered, the instant petition is GRANTED and the
resolution of the National Labor Relations Commission dated April 28, 2005 is hereby
ANNULLED and SET ASIDE. Respondent Eastern Telecommunications Philippines,
Inc. is ordered to pay the members of petitioner their 14 th, 15th and 16th month bonuses
for the year 2003 and 14th month for the year 2004. The complaint for unfair labor
practice against said respondent is DISMISSED.
SO ORDERED.[9]

obliged to pay these extra compensations in view of the substantial decline in its financial condition.

ISSUES

Likewise, the NLRC found that ETPI was not guilty of the ULP charge elaborating that no sufficient and
substantial evidence was adduced to attribute malice to the company for its refusal to pay the subject
bonuses. The dispositive portion of the resolution reads:
WHEREFORE, premises considered, the instant complaint is hereby
DISMISSED for lack of merit.
SO ORDERED.[7]

Respondent ETEU moved for reconsideration but the motion was denied by the NLRC in its
Resolution dated August 31, 2005.
Aggrieved, ETEU filed a petition for certiorari[8] before the CA ascribing grave abuse of
discretion on the NLRC for disregarding its evidence which allegedly would prove that the subject
bonuses were part of the union members wages, salaries or compensations. In addition, ETEU asserted

Dissatisfied, ETPI now comes to this Court via Rule 45, raising the following errors allegedly
committed by the CA, to wit:
I.
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT
ANNULLED AND SET ASIDE THE RESOLUTIONS OF THE NLRC
DISREGARDING THE WELL SETTLED RULE THAT A WRIT OF
CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF
ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
II.
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT
DISREGARDED THE RULE THAT FINDINGS OF FACTS OF QUASIJUDICIAL BODIES ARE ACCORDED FINALITY IF THEY ARE SUPPORTED
BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE CONCLUSIONS

OF THE NLRC WERE BASED ON SUBSTANTIAL AND OVERWHELMING


EVIDENCE AND UNDISPUTED FACTS.
III.
IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO
CONSIDER THAT THE BONUS GIVEN BY EASTERN COMMUNICATIONS
TO ITS EMPLOYEES IS NOT DEPENDENT ON THE REALIZATION OF
PROFITS.
IV.
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN
IT DISREGARDED THE UNDISPUTED FACT THAT EASTERN
COMMUNICATIONS IS SUFFERING FROM TREMENDOUS FINANCIAL
LOSSES, AND ORDERED EASTERN COMMUNICATIONS TO GRANT THE
BONUSES REGARDLESS OF THE FINANCIAL DISTRESS OF EASTERN
COMMUNICATIONS.

situation greatly declined due to tremendous and extraordinary losses it sustained beginning the year 2000.
It claims that it cannot be compelled to act liberally and confer upon its employees additional benefits over
and above those mandated by law when it cannot afford to do so. It posits that so long as the giving of
bonuses will result in the financial ruin of an already distressed company, the employer cannot be forced to
grant the same.
ETPI further avers that the act of giving the subject bonuses did not ripen into a company practice
arguing that it has always been a contingent one dependent on the realization of profits and, hence, the
workers are not entitled to bonuses if the company does not make profits for a given year. It asseverates
that the 1998 and 2001 CBA Side Agreements did not contractually afford ETEU a vested property right to
a perennial payment of the bonuses. It opines that the bonus provision in the Side Agreement allows the
giving of benefits only at the time of its execution. For this reason, it cannot be said that the grant has

V.

ripened into a company practice. In addition, it argues that even if such traditional company practice

THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN


IT ARRIVED AT THE CONCLUSION THAT THE GRANT OF BONUS GIVEN
BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES HAS RIPENED
INTO A COMPANY PRACTICE.[10]

exists, the CA should have applied Article 1267 of the Civil Code which releases the obligor from the
performance of an obligation when it has become so difficult to fulfill the same.
It is the petitioners stance that the CA should have dismissed outright the respondent unions

A careful perusal of the voluminous pleadings filed by the parties leads the Court to conclude that
this case revolves around the following core issues:
1. Whether or not petitioner ETPI is liable to pay 14 th, 15th and 16th month bonuses for
the year 2003 and 14th month bonus for the year 2004 to the members of respondent
union; and

petition for certiorari alleging that no question of jurisdiction whatsoever was raised therein but, instead,
what was being sought was a judicial re-evaluation of the adequacy or inadequacy of the evidence on
record. It claims that the CA erred in disregarding the findings of the NLRC which were based on
substantial and overwhelming evidence as well as on undisputed facts. ETPI added that the CA court
should have refrained from tackling issues of fact and, instead, limited itself on issues of jurisdiction and

2. Whether or not the CA erred in not dismissing outright ETEUs petition for certiorari.

grave abuse of jurisdiction amounting to lack or excess of it.

ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th month bonuses for the

The Courts Ruling

year 2003 and 14th month bonus for the year 2004 contending that they are not part of the demandable

As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts, does

wage or salary and that their grant is conditional based on successful business performance and the

not normally embark on a re-examination of the evidence presented by the contending parties during the

availability of company profits from which to source the same. To thwart ETEUs monetary claims, it

trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court.

insists that the distribution of the subject bonuses falls well within the companys prerogative, being an act

The rule, however, admits of several exceptions, one of which is when the findings of the appellate court

of pure gratuity and generosity on its part. Thus, it can withhold the grant thereof especially since it is

are contrary to those of the trial court or the lower administrative body, as the case may be. [11] Considering

currently plagued with economic difficulties and financial losses. It alleges that the companys fiscal

the incongruent factual conclusions of the CA and the NLRC, this Court finds Itself obliged to resolve it.

the 2001-2004 CBA Side Agreement,[17] which was signed on September 3, 2001. The provision, which
The pivotal question determinative of this controversy is whether the members of ETEU are

was similarly worded, states:

entitled to the payment of 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for
year 2004.

Employment-Related Bonuses
The Company confirms that the 14th, 15th and 16th month bonuses (other than the
13th month pay) are granted.

After an assiduous assessment of the record, the Court finds no merit in the petition.
A reading of the above provision reveals that the same provides for the giving of 14th, 15th and
From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right.

[12]

16th month bonuses without qualification. The wording of the provision does not allow any other

The grant of a bonus is basically a management

interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the

prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous

benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the

burden of granting bonuses or other benefits aside from the employees basic salaries or wages. [13]

company. Terse and clear, the said provision does not state that the subject bonuses shall be made to
depend on the ETPIs financial standing or that their payment was contingent upon the realization of

A bonus, however, becomes a demandable or enforceable obligation when it is made part of the

profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the

wage or salary or compensation of the employee. [14] Particularly instructive is the ruling of the Court

employees. In fine, the payment of these bonuses was not related to the profitability of business

in Metro Transit Organization, Inc. v. National Labor Relations Commission,[15] where it was written:

operations.

Whether or not a bonus forms part of wages depends upon the circumstances
and conditions for its payment. If it is additional compensation which the employer
promised and agreed to give without any conditions imposed for its payment, such as
success of business or greater production or output, then it is part of the wage. But if it is
paid only if profits are realized or if a certain level of productivity is achieved, it cannot
be considered part of the wage. Where it is not payable to all but only to some
employees and only when their labor becomes more efficient or more productive, it is
only an inducement for efficiency, a prize therefore, not a part of the wage.

The records are also bereft of any showing that the ETPI made it clear before or during the
execution of the Side Agreements that the bonuses shall be subject to any condition. Indeed, if ETPI and
ETEU intended that the subject bonuses would be dependent on the company earnings, such intention
should have been expressly declared in the Side Agreements or the bonus provision should have been
deleted altogether. In the absence of any proof that ETPIs consent was vitiated by fraud, mistake or duress,
it is presumed that it entered into the Side Agreements voluntarily, that it had full knowledge of the

The consequential question that needs to be settled, therefore, is whether the subject bonuses are

contents thereof and that it was aware of its commitment under the contract. Verily, by virtue of its

demandable or not. Stated differently, can these bonuses be considered part of the wage, salary or

incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become

compensation making them enforceable obligations?

more than just an act of generosity on the part of ETPI but a contractual obligation it has
undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union members from 1998 to

The Court believes so.

2002 by virtue of the Side Agreements evidently negates its argument that the giving of the subject
bonuses is a management prerogative.

In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a provision
for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement,[16] as well as in

From the foregoing, ETPI cannot insist on business losses as a basis for disregarding its
undertaking. It is manifestly clear that although it incurred business losses of 149,068,063.00 in the year

2000, it continued to distribute 14th, 15th and 16th month bonuses for said year. Notwithstanding such huge
The Court is not persuaded.

losses, ETPI entered into the 2001-2004 CBA Side Agreement on September 3, 2001 whereby it
contracted to grant the subject bonuses to ETEU in no uncertain terms. ETPI continued to sustain losses

The parties to the contract must be presumed to have assumed the risks of unfavorable

for the succeeding years of 2001 and 2002 in the amounts of 348,783,013.00 and 315,474,444.00,
respectively. Still and all, this did not deter it from honoring the bonus provision in the Side Agreement as
it continued to give the subject bonuses to each of the union members in 2001 and 2002 despite its alleged
precarious financial condition. Parenthetically, it must be emphasized that ETPI even agreed to the

developments. It is, therefore, only in absolutely exceptional changes of circumstances that equity
demands assistance for the debtor.[19] In the case at bench, the Court determines that ETPIs claimed
depressed financial state will not release it from the binding effect of the 2001-2004 CBA Side Agreement.

payment of the 14th, 15th and 16th month bonuses for 2003 although it opted to defer the actual grant in
ETPI appears to be well aware of its deteriorating financial condition when it entered into the

April 2004. All given, business losses could not be cited as grounds for ETPI to repudiate its obligation
under the 2001-2004 CBA Side Agreement.

2001-2004 CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of ETEU.
Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its business losses

The Court finds no merit in ETPIs contention that the bonus provision confirms the grant of the
subject bonuses only on a single instance because if this is so, the parties should have included such
limitation in the agreement. Nowhere in the Side Agreement does it say that the subject bonuses shall be

in the year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be said that the
difficulty in complying with its obligation under the Side Agreement was manifestly beyond the
contemplation of the parties. Besides, as held in Central Bank of the Philippines v. Court of Appeals,
[20]

conferred once during the year the Side Agreement was signed. The Court quotes with approval the
observation of the CA in this regard:

mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation. Contracts,

once perfected, are binding between the contracting parties. Obligations arising therefrom have the force
of law and should be complied with in good faith. ETPI cannot renege from the obligation it has freely

ETPI argues that assuming the bonus provision in the Side Agreement of the
2001-2004 CBA entitles the union members to the subject bonuses, it is merely in the
nature of a one-time grant and not intended to cover the entire term of the CBA. The
contention is untenable. The bonus provision in question is exactly the same as that
contained in the Side Agreement of the 1998-2001 CBA and there is no denying that
from 1998 to 2001, ETPI granted the subject bonuses for each of those years. Thus,
ETPI may not now claim that the bonus provision in the Side Agreement of the 20012004 CBA is only a one-time grant.[18]

assumed when it signed the 2001-2004 CBA Side Agreement.


Granting arguendo that the CBA Side Agreement does not contractually bind petitioner ETPI to
give the subject bonuses, nevertheless, the Court finds that its act of granting the same has become an
established company practice such that it has virtually become part of the employees salary or wage. A
bonus may be granted on equitable consideration when the giving of such bonus has been the companys
long and regular practice. In Philippine Appliance Corporation v. Court of Appeals,[21] it was pronounced:

ETPI then argues that even if it is contractually bound to distribute the subject bonuses to ETEU
members under the Side Agreements, its current financial difficulties should have released it from the
obligatory force of said contract invoking Article 1267 of the Civil Code. Said provision declares:
Article 1267. When the service has become so difficult as to be manifestly
beyond the contemplation of the parties, the obligor may also be released therefrom, in
whole or in part.

To be considered a regular practice, however, the giving of the bonus should


have been done over a long period of time, and must be shown to have been consistent
and deliberate. The test or rationale of this rule on long practice requires an indubitable
showing that the employer agreed to continue giving the benefits knowing fully well that
said employees are not covered by the law requiring payment thereof.

The records show that ETPI, aside from complying with the regular 13th month bonus, has been
further giving its employees 14th month bonus every April as well as 15 thand 16th month bonuses every

December of the year, without fail, from 1975 to 2002 or for 27 years whether it earned profits or not. The
considerable length of time ETPI has been giving the special grants to its employees indicates a unilateral
and voluntary act on its part to continue giving said benefits knowing that such act was not required by
law. Accordingly, a company practice in favor of the employees has been established and the payments
made by ETPI pursuant thereto ripened into benefits enjoyed by the employees.

WESLEYAN UNIVERSITY VS WESLEYAN


DECISION

The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without violating

DEL CASTILLO, J.:

Article 100 of the Labor Code:


Art. 100. Prohibition against elimination or diminution of benefits. Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.

The rule is settled that any benefit and supplement being enjoyed by the employees cannot be

A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate labor
organization concerning the terms and conditions of employment.1 Like any other contract, it has the force
of law between the parties and, thus, should be complied with in good faith.2 Unilateral changes or
suspensions in the implementation of the provisions of the CBA, therefore, cannot be allowed without the
consent of both parties.
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the September 25, 2007
Decision4 and the February 5, 2008 Resolution5 of the Court of Appeals (CA) in CA-G.R. SP No. 97053.

reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of

Factual Antecedents

benefits is founded on the constitutional mandate to protect the rights of workers and to promote their
welfare and to afford labor full protection.[22]

Interestingly, ETPI never presented countervailing evidence to refute ETEUs claim that the

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly


organized and existing under the laws of the Philippines.6 Respondent Wesleyan University-Philippines
Faculty and Staff Association, on the other hand, is a duly registered labor organization7 acting as the sole
and exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.8

company has been continuously paying bonuses since 1975 up to 2002 regardless of its financial state. Its

In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.10

failure to controvert the allegation, when it had the opportunity and resources to do so, works in favor of

On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya), issued
a Memorandum11 providing guidelines on the implementation of vacation and sick leave credits as well as
vacation leave commutation. The pertinent portions of the Memorandum read:

ETEU. Time and again, it has been held that should doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter.[23]

1. VACATION AND SICK LEAVE CREDITS


WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of the Court of Appeals
and its December 12, 2008 Resolution are AFFIRMED.

SO ORDERED.

Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a qualified
employee earns an equivalent of 1.25 days credit each for VL and SL. Vacation Leave and Sick
Leave credits of 15 days become complete at the cut off date of May 31 of each year. (Example,
only a total of 5 days credit will be given to an employee for each of sick leave [or] vacation
leave, as of month end September, that is, 4 months from June to September multiplied by 1.25
days). An employee, therefore, who takes VL or SL beyond his leave credits as of date will have
to file leave without pay for leaves beyond his credit.
2. VACATION LEAVE COMMUTATION

Only vacation leave is commuted or monetized to cash. Vacation leave commutation is effected
after the second year of continuous service of an employee. Hence, an employee who started
working June 1, 2005 will get his commutation on May 31, 2007 or thereabout.12
On August 25, 2005, respondents President, Cynthia L. De Lara (De Lara) wrote a letter 13 to Atty.
Maglaya informing him that respondent is not amenable to the unilateral changes made by petitioner.14 De
Lara questioned the guidelines for being violative of existing practices and the CBA, 15 specifically
Sections 1 and 2, Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff who are
entitled to receive shall enjoy fifteen (15) days vacation leave with pay annually.

a. Faculty The last day of the School Year, coincident with his attainment of age sixty (60) with
at least five (years) of unbroken, credited service.
b. Staff Upon reaching the age of sixty (60) with at least five (5) years of unbroken, credited
service.
SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional retirement prior to
his compulsory retirement. His number of years of service in the University shall be the basis of
computing x x x his retirement benefits regardless of his chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum equivalent to 100% of the
members final monthly salary for compulsory retirement.
For optional retirement, the vesting schedule shall be:

1.1 All unused vacation leave after the second year of service shall be converted into cash and be paid to
the entitled employee at the end of each school year to be given not later than August 30 of each year.
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall enjoy fifteen
(15) days sick leave with pay annually.16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which petitioner
advised respondent to file a grievance complaint on the implementation of the vacation and sick leave
policy.17 In the same meeting, petitioner announced its plan of implementing a one-retirement
policy,18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary
Arbitrator. During the hearing, respondent submitted affidavits to prove that there is an established
practice of giving two retirement benefits, one from the Private Education Retirement Annuity Association
(PERAA) Plan and another from the CBA Retirement Plan. Sections 1, 2, 3 and 4 of Article XVI of the
CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be automatic for all fulltime, regular staff and tenured faculty of the University, except the University President. Membership in
the Plan shall commence on the first day of the month coincident with or next following his statement of
Regular/Tenured Employment Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of each Member
shall be as follows:

x x x x19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision20 declaring the one-retirement policy
and the Memorandum dated August 16, 2005 contrary to law. The dispositive portion of the Decision
reads:
WHEREFORE, the following award is hereby made:
1. The assailed University guidelines on the availment of vacation and sick leave credits and
vacation leave commutation are contrary to law. The University is consequently ordered to
reinstate the earlier scheme, practice or policy in effect before the issuance of the said guidelines
on August 16, 2005;
2. The "one retirement" policy is contrary to law and is hereby revoked and rescinded. The
University is ordered x x x to resume and proceed with the established practice of extending to
qualified employees retirement benefits under both the CBA and the PERAA Plan.
3. The other money claims are denied.21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Rule 43 of the Rules of
Court.
On September 25, 2007, the CA rendered a Decision22 finding the rulings of the Voluntary Arbitrator
supported by substantial evidence. It also affirmed the nullification of the one-retirement policy and the
Memorandum dated August 16, 2005 on the ground that these unilaterally amended the CBA without the
consent of respondent.23Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.

SO ORDERED.24
Petitioner moved for reconsideration but the same was denied by the CA in its February 5, 2008
Resolution.25

In addition, petitioner claims that the Memorandum dated August 16, 2005, which provides for the
guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation,
is valid because it is in full accord with existing policy.34
Respondents Arguments

Issues
Hence, this recourse by petitioner raising the following issues:
a.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrators ruling
that the Affidavits submitted by Respondent WU-PFSA are substantial evidence as defined by the rules
and jurisprudence that would substantiate that Petitioner WU-P has long been in the practice of granting its
employees two (2) sets of Retirement Benefits.

Respondent belies the claims of petitioner and asserts that there are two retirement plans as the PERAA
Retirement Plan, which has been implemented for more than 30 years, is different from the CBA
Retirement Plan.35 Respondent further avers that it has always been a practice of petitioner to give two
retirement benefits36and that this practice was established by substantial evidence as found by both the
Voluntary Arbitrator and the CA.37
As to the Memorandum dated August 16, 2005, respondent asserts that it is arbitrary and contrary to the
CBA and existing practices as it added qualifications or limitations which were not agreed upon by the
parties.38
Our Ruling

b.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrators ruling
that a university practice of granting its employees two (2) sets of Retirement Benefits had already been
established as defined by the law and jurisprudence especially in light of the illegality and lack of
authority of such alleged grant.

The Petition is bereft of merit.

c.

The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the
benefit is based on an express policy, a written contract, or has ripened into a practice.40 To be considered a
practice, it must be consistently and deliberately made by the employer over a long period of time. 41

Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrators ruling
that it is incumbent upon Petitioner WU-P to show proof that no Board Resolution was issued granting two
(2) sets of Retirement Benefits.

An exception to the rule is when "the practice is due to error in the construction or application of a
doubtful or difficult question of law."42 The error, however, must be corrected immediately after its
discovery;43 otherwise, the rule on Non-Diminution of Benefits would still apply.

d.

The practice of giving two retirement


benefits to petitioners employees is
supported by substantial evidence.

Whether x x x the [CA] committed grave and palpable error in revoking the 16 August 2005 Memorandum
of Petitioner WU-P for being contrary to extant policy.26
Petitioners Arguments
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same.27 It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees.28 Assuming, without admitting, that two retirement benefits were
released,29 petitioner insists that these were done by mere oversight or mistake as there is no Board
Resolution authorizing their release.30 And since these benefits are unauthorized and irregular, these cannot
ripen into a company practice or policy.31 As to the affidavits submitted by respondent, petitioner claims
that these are self-serving declarations,32and thus, should not be given weight and credence.33

In this case, respondent was able to present substantial evidence in the form of affidavits to support its
claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement
benefits as early as 1997.44 Petitioner, on the other hand, failed to present any evidence to refute the
veracity of these affidavits. Petitioners contention that these affidavits are self-serving holds no water. The
retired employees of petitioner have nothing to lose or gain in this case as they have already received their
retirement benefits. Thus, they have no reason to perjure themselves. Obviously, the only reason they
executed those affidavits is to bring out the truth. As we see it then, their affidavits, corroborated by the
affidavits of incumbent employees, are more than sufficient to show that the granting of two retirement
benefits to retiring employees had already ripened into a consistent and deliberate practice.
Moreover, petitioners assertion that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same is not supported by any evidence. There is nothing in Article XVI of
the CBA to indicate or even suggest that the "Plan" referred to in the CBA is the PERAA Plan. Besides,
any doubt in the interpretation of the provisions of the CBA should be resolved in favor of respondent. In

fact, petitioners assertion is negated by the announcement it made during the LMC Meeting on February
8, 2006 regarding its plan of implementing a "one-retirement plan." For if it were true that petitioner was
already implementing a one-retirement policy, there would have been no need for such announcement.
Equally damaging is the letter-memorandum45 dated May 11, 2006, entitled "Suggestions on the defenses
we can introduce to justify the abolition of double retirement policy," prepared by the petitioners legal
counsel.
These circumstances, taken together, bolster the finding that the two-retirement policy is a
practice.1wphi1 Thus, petitioner cannot, without the consent of respondent, eliminate the two-retirement
policy and implement a one-retirement policy as this would violate the rule on non-diminution of benefits.

WILLIAM ENDELISEO BARROGA vs DATA CENTER COLLEGE OF THE PHILIPPINES,


G.R. No. 174158, June 27, 2011
DECISION

As a last ditch effort to abolish the two-retirement policy, petitioner contends that such practice is illegal or
unauthorized and that the benefits were erroneously given by the previous administration. No evidence,
however, was presented by petitioner to substantiate its allegations.

DEL CASTILLO, J.:

Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator, as affirmed
by the CA, that there is substantial evidence to prove that there is an existing practice of giving two
retirement benefits, one under the PERAA Plan and another under the CBA Retirement Plan.

equally recognizing its right to conduct its own legitimate business affairs.

Our labor laws are enacted not solely for the purpose of protecting the working class but also the management by

This Petition for Review on Certiorari[2] seeks the reversal of the Resolutions dated May 15, 2006 [3] and August 4,
The Memorandum dated August 16,
2005 is contrary to the existing CBA.

2006[4] of the Court of Appeals (CA) in CA-G.R. SP No. 93991, which dismissed petitioner William Endeliseo
Barrogas Petition for Certiorari for procedural infirmities, as well as the Decision [5] dated August 25, 2005 and

Neither do we find any reason to disturb the findings of the CA that the Memorandum dated August 16,
2005 is contrary to the existing CBA.

Resolution[6] dated January 31, 2006 of the National Labor Relations Commission (NLRC), with respect to the

Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to 15 days sick
leave and 15 days vacation leave with pay every year and that after the second year of service, all unused
vacation leave shall be converted to cash and paid to the employee at the end of each school year, not later
than August 30 of each year.

its President and General Manager, Wilfred Bactad.

The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits are not
automatic as leave credits would be earned on a month-to-month basis. This, in effect, limits the available
leave credits of an employee at the start of the school year. For example, for the first four months of the
school year or from June to September, an employee is only entitled to five days vacation leave and five
days sick leave.46 Considering that the Memorandum dated August 16, 2005 imposes a limitation not
agreed upon by the parties nor stated in the CBA, we agree with the CA that it must be struck down.

On November 11, 1991, petitioner was employed as an Instructor in Data Center College Laoag City branch in

dismissal of petitioners claim of constructive dismissal against respondents Data Center College of the Philippines and
Factual Antecedents

Ilocos Norte. In a Memorandum[7] dated June 6, 1992, respondents transferred him to University of Northern
Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program. Petitioner was informed through a
letter[8] dated June 6, 1992 that he would be receiving, in addition to his monthly salary, a P1,200.00 allowance for
board and lodging during his stint as instructor in UNP-Vigan. In 1994, he was recalled to Laoag campus. On October

In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving no doubt on
the intention of the parties, the literal meaning of the stipulation shall govem.47

3, 2003, petitioner received a Memorandum[9] transferring him to Data Center College Bangued, Abra branch as Head
for Education/Instructor due to an urgent need for an experienced officer and computer instructor thereat.

48

However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is mandated
by no less than the Constitution.49
WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007 Decision and the
February 5, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97053 are hereby AFFIRMED.
SO ORDERED.

However, petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father and the
absence of additional remuneration to defray expenses for board and lodging which constitutes implicit diminution of
his salary.[10]

permanent capacity. The Labor Arbiter held that the exclusion of his allowance for board, lodging and transportation
On November 10, 2003, petitioner filed a Complaint

[11]

for constructive dismissal against respondents. Petitioner

was not constructive dismissal, enunciating that the concept of non-diminution of benefits under Article 100 of the

alleged that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay and would cause

Labor Code prohibits the elimination of benefits that are presently paid to workers to satisfy the requirements of

personal inconvenience and hardship. He argued that although he was being transferred to Abra branch supposedly

prevailing minimum wage rates. Since the benefit claimed by petitioner is beyond the coverage of the minimum wage

with the same position he was then holding in Laoag branch as Head for Education, he later learned through a

law, its non-inclusion in his re-assignment is not considered a violation. The Labor Arbiter also denied petitioners

Memorandum

[12]

from the administrator of Abra branch that he will be re-assigned merely as an instructor, thereby

relegating him from an administrative officer to a rank-and-file employee. Moreover, the elimination of his allowance

claim for overload honorarium for failure to present sufficient evidence to warrant entitlement to the same. The claim
for damages was likewise denied.

for board and lodging will result to an indirect reduction of his salary which is prohibited by labor laws. Petitioner also
claimed that when he questioned the indefinite suspension of the scholarship for post-graduate studies extended to him

Ruling of the National Labor Relations Commission

[13]

by respondents, the latter became indifferent to his legitimate grievances which eventually led to his prejudicial reassignment. He averred that his transfer is not indispensable to the schools operation considering that respondents

In a Decision[16] dated August 25, 2005, the NLRC affirmed the findings of the Labor Arbiter that there was no

even suggested that he take an indefinite leave of absence in the meantime if only to address his personal difficulties.

constructive dismissal. It ruled that the management decision to transfer petitioner was well within the rights of

[14]

Petitioner thus prayed for his reinstatement and backwages. Further, as Head for Education at Data Center College

respondents in consonance with petitioners contract of employment and which was not sufficiently shown to have

Laoag branch, petitioner asked for the payment of an overload honorarium as compensation for the additional

been exercised arbitrarily by respondents. It agreed with the Labor Arbiter that petitioners designation as Head for

teaching load in excess of what should have been prescribed to him. Exemplary damages and attorneys fees were

Education was temporary for which he could not invoke any tenurial security. Further, the NLRC held that it was not

likewise prayed for.

proven with certainty that the transfer would unduly prejudice petitioners financial situation. The NLRC, however,
found petitioner to be entitled to overload honorarium pursuant to CHED Memorandum Order No. 25 for having

For their part, respondents claimed that they were merely exercising their management prerogative to transfer

assumed the position of Head for Education, albeit on a temporary basis. The NLRC disposed of the case as follows:

employees for the purpose of advancing the schools interests. They argued that petitioners refusal to be transferred to
Abra constitutes insubordination. They claimed that petitioners appointment as instructor carries a proviso of possible
re-assignments to any branch or tie-up schools as the schools necessity demands. Respondents argued that petitioners
designation as Head for Education in Laoag branch was merely temporary and that he would still occupy his original

WHEREFORE, premises considered, the decision under review is hereby MODIFIED by


ordering the respondent Data Center College of the Philippines, to pay the complainant the sum of
SEVENTY THREE THOUSAND SEVEN THUNDRED [sic] THIRTY and 39/100 Pesos
(P73,730.39), representing overload honorarium.

plantilla item as instructor at his proposed assignment in Abra branch. Respondents denied liability to petitioners

All other claims are DISMISSED for lack of merit.

monetary claims.

SO ORDERED.[17]

Ruling of the Labor Arbiter


On September 24, 2004, the Labor Arbiter rendered a Decision [15] dismissing the Complaint for lack of merit. The
Labor Arbiter ruled that there was no demotion in rank as petitioners original appointment as instructor on November
11, 1991 conferred upon respondents the right to transfer him to any of the schools branches and that petitioners
designation as Head for Education can be withdrawn anytime since he held such administrative position in a non-

From this Decision, both parties filed their respective motion for partial reconsideration. Petitioner assailed the NLRC
Decision insofar as it dismissed his claims for reinstatement, backwages, damages and attorneys fees.[18] Respondents,
for their part, questioned the NLRCs award of overload honorarium in favor of petitioner. These motions were denied
by the NLRC in a Resolution dated January 31, 2006.[19]
Ruling of the Court of Appeals

Issues
Both parties filed petitions for certiorari before the CA. Respondents petition for certiorari was docketed as CAG.R. SP No. 94205, which is not subject of the instant review. On the other hand, petitioner filed on April 7, 2006, a
Petition for Certiorari

[20]

Hence, this petition assigning the following errors:

with the CA docketed as CA-G.R. SP No. 93991 assailing the NLRCs finding that no

constructive dismissal existed.Realizing his failure to attach the requisite affidavit of service of the petition upon
respondents, petitioner filed on April 27, 2006, an Ex-Parte Manifestation and Motion [21] to admit the attached
affidavit of service and registry receipt in compliance with the rules.

THE HONORABLE COURT OF APPEALS PATENTLY COMMITTED REVERSIBLE


ERROR IN DISMISSING THE PETITION FOR CERTIORARI [UNDER RULE 65] OF THE
PETITIONER BY GIVING PRECEDENT TO TECHNICALITIES RATHER THAN THE
MERITORIOUS GROUNDS ASSERTED THEREIN.

Petition is DISMISSED outright due to the following infirmities:

THE PUBLIC RESPONDENT, NATIONAL LABOR RELATIONS COMMISSION,


SERIOUSLY ERRED IN ITS CONSLUSIONS OF LAW IN RENDERING IT[S] ASSAILED
DECISION AND RESOLUTION STATING THAT THE PETITIONER WAS NOT
CONSTRUCTIVELY DISMISSED, THUS, NOT ENTITLED TO REINSTATEMENT,
BACKWAGES, AND ATTORNEYS FEES.[25]

1.
there is no statement of material dates as to when the petitioner received the
assailed decision dated August 25, 2005 and when he filed a Motion for Reconsideration thereof;

Petitioner imputes grave abuse of discretion on the CA in not giving due course to his petition despite

On May 15, 2006, the CA dismissed the petition in CA-G.R. SP No. 93991 in a Resolution which reads:

2.

there is no affidavit of service attached to the petition;

3.
these initiatory pleadings and the respondents Motion for Reconsideration of
the Decision dated August 25, 2005 are not attached to the petition.
SO ORDERED. [22]
Petitioner filed a Motion for Reconsideration[23] alleging that the material dates of receipt of the NLRC Decision and
the filing of his motion for reconsideration are explicitly stated in his Partial Motion for Reconsideration which was

substantial compliance with the requisite formalities as well as on the NLRC in not ruling that he was constructively
dismissed by respondents.
Our Ruling
Petitioners substantial compliance calls
for the relaxation of the rules. Therefore, the CA should
have given due course to the petition.

attached as an annex to the petition and was made an integral part thereof. As to the absence of the affidavit of service,
petitioner argued that there is no legal impediment for the belated admission of the affidavit of service as it was duly

The three material dates which should be stated in the petition for certiorari under Rule 65 are the dates

filed before the dismissal of the petition. As for his failure to attach respondents motion for reconsideration, petitioner

when the notice of the judgment was received, when a motion for reconsideration was filed and when the notice of the

manifested that a separate petition for certiorari has been filed by respondents and is pending with the CA, docketed

denial of the motion for reconsideration was received.[26] These dates should be reflected in the petition to enable the

as CA-G.R. SP No. 94205, where the denial of said motion is at issue.

reviewing court to determine if the petition was filed on time. [27] Indeed, petitioners petition before the CA stated only
the date of his receipt of the NLRCs Resolution denying his motion for partial reconsideration. It failed to state when

On August 4, 2006, the CA issued the following Resolution:


Due to non-compliance despite opportunity afforded to comply, petitioners June 9,
2006 Motion for Reconsideration is hereby DENIED for
lack of merit.
SO ORDERED.

[24]

petitioner received the assailed NLRC Decision and when he filed his partial motion for reconsideration. However,
this omission is not at all fatal because these material dates are reflected in petitioners Partial Motion for
Reconsideration attached as Annex N of the petition. In Acaylar, Jr. v. Harayo,[28] we held that failure to state these
two dates in the petition may be excused if the same are evident from the records of the case. It was further ruled by

this Court that the more important material date which must be duly alleged in the petition is the date of receipt of the

or disdain by an employer which becomes unbearable for the employee to continue his employment. [32] Petitioner

resolution of denial of the motion for reconsideration. In the case at bar, petitioner has duly complied with this rule.

alleges that the real purpose of his transfer is to demote him to the rank of an instructor from being the Head for
Education performing administrative functions. Petitioner further argues that his re-assignment will entail an indirect

Next, the CA dismissed the petition for failure to attach an affidavit of service. However, records show that

reduction of his salary or diminution of pay considering that no additional allowance will be given to cover for board

petitioner timely rectified this omission by submitting the required affidavit of service even before the CA dismissed

and lodging expenses. He claims that such additional allowance was given in the past and therefore cannot be

his petition.

discontinued and withdrawn without violating the prohibition against non-diminution of benefits.

Thirdly, petitioners failure to attach respondents motion for reconsideration to the assailed NLRC decision is

These allegations are bereft of merit.

not sufficient ground for the CA to outrightly dismiss his petition. The issue that was raised in respondents motion for
reconsideration is the propriety of the NLRCs grant of overload honorarium in favor of petitioner. This particular issue

Petitioner was originally appointed as instructor in 1991 and was given additional administrative functions as Head for

was not at all raised in petitioners petition for certiorari with the CA, therefore, there is no need for petitioner to

Education during his stint in Laoag branch. He did not deny having been designated as Head for Education in a

append a copy of this motion to his petition. Besides, as already mentioned, the denial of respondents motion for

temporary capacity for which he cannot invoke any tenurial security. Hence, being temporary in character, such

reconsideration has been assailed by respondents before the CA docketed as CA-G.R. SP No. 94205. At any rate, the

designation is terminable at the pleasure of respondents who made such appointment.[33] Moreover, respondents right

Rules do not specify the documents which should be appended to the petition except that they should be relevant to

to transfer petitioner rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter

the judgment, final order or resolution being assailed. Petitioner is thus justified in attaching the documents which he

and the NLRC both relied on the condition laid down in petitioners employment contract that respondents have the

[29]

believed are sufficient to make out a prima facie case.

prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is
management prerogative for employers to transfer employees on just and valid grounds such as genuine business

The Court has time and again upheld the theory that the rules of procedure are designed to secure and not to

necessity.[34] It is also important to stress at this point that respondents have shown that it was experiencing some

override substantial justice.[30] These are mere tools to expedite the decision or resolution of cases, hence, their strict

financial constraints. Because of this, respondents opted to temporarily suspend the post-graduate studies of petitioner

and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice

and some other employees who were given scholarship grants in order to prioritize more important expenditures.[35]

must be avoided.[31] The CA thus should not have outrightly dismissed petitioners petition based on these procedural
lapses.

Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted with bad
faith. As a matter of fact, respondents displayed commiseration over the health condition of petitioners father when

Petitioners transfer is not tantamount to constructive


dismissal.

they suggested that he take an indefinite leave of absence to attend to this personal difficulty. Also, during the time
when respondents directed all its administrative officers to submit courtesy resignations, petitioners letter of

Nevertheless, the instant petition merits dismissal on substantial grounds. After a careful review of the records and the
arguments of the parties, we do not find any sufficient basis to conclude that petitioners re-assignment amounted to
constructive dismissal.
Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or
because of a demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility

resignation was not accepted.[36] This bolsters the fact that respondents never intended to get rid of petitioner. In fine,
petitioners assertions of bad faith on the part of respondents are purely unsubstantiated conjectures.
The Court agrees with the Labor Arbiter that there was no violation of the prohibition on diminution of
benefits. Indeed, any benefit and perks being enjoyed by employees cannot be reduced and discontinued, otherwise,
the constitutional mandate to afford full protection to labor shall be offended. [37] But the rule against diminution of

benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a
long period which is consistent and deliberate.[38]

Petitioner failed to present any other evidence that respondents committed to provide the additional allowance or that
they were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily

Petitioner was granted a monthly allowance for board and lodging during his stint as instructor in UNP-Vigan, Ilocos
Sur as evinced in a letter dated June 6,
1992 with the condition stated in the following tenor:
Please be informed that during your assignment at our tie-up at UNP-VIGAN, ILOCOS SUR ,
you will be receiving a monthly Board and Lodging of Pesos: One Thousand Two Hundred x x x
(P1,200.00).
However, you are only entitled to such allowance, if you are assigned to the said tie-up
and the same will be changed or forfeited depending upon the place of your next reassignment.
[39]
(Italics supplied.)

withdrawn. Moreover, there is no conclusive proof that petitioners basic salary will be reduced as it was not shown
that such allowance is part of petitioners basic salary. Hence, there will be no violation of the rule against diminution
of pay enunciated under Article 100 of the Labor Code.[40]
WHEREFORE, the Resolutions dated May 15, 2006 and August 4, 2006 of the Court of Appeals in CA-G.R. SP
No. 93991 are SET ASIDE. The Decision dated August 25, 2005 and Resolution dated January 31, 2006 of the
National Labor Relations Commission in NLRC Case No. RAB I-12-1242-03 (LC) insofar as it found
respondents Data Center College of thePhilippines and Wilfred Bactad not liable for constructive dismissal,
are AFFIRMED.