1

LABOR STANDARDS The Court of Industrial Relations, on January 19, 1963 after trial,
CONDITIONS OF EMPLOYMENT rendered its decision on the petition for differential pay (CIR Case No.
A. HOURS OF WORK 1642-V). It found therein that the petitioners-workers are engaged
G.R. No. L-21348 June 30, 1966 on pakiao or piece-work basis, and, therefore, are not entitled to
RED V COCONUT PRODUCTS, LTD., petitioner, overtime pay under the Eight-Hour Labor Law (Sec. 2, CA 444); that
vs. their petition for night shift differentials based on the collective
COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, bargaining agreements is meritorious because the company having
ALBERTO DELA CRUZ, ET AL., respondents. paid night differentials indiscriminately to the night shift workers of
Group A and Group B alike, the payments should be uniform and equal
BENGZON, J.P., J.:
for the night shifts of both groups, that is, P.90. It therefore ordered
Red V Coconut Products, Ltd. is a corporation with principal office and payment of the deficiency in said differentials to the workers of Group
place of business at Lucena City. It has in that city a desiccated coconut B.
factory. In said factory, it has several hundred workers. About 800 of
Red V Coconut Products, Ltd. moved for reconsideration of said
said workers are members of Tanglaw ng Paggawa labor union.
decision on January 29, 1963. The Court of Industrial Relations en
Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into banc denied said motion by resolution of February 25, 1963. And,
a collective bargaining agreement on July 15, 1958. Subsequently, hence, Red V Coconut Products, Ltd. filed this petition for review herein.
however, on October 5, 1961, the aforementioned company and union
Petitioner herein contends that the present case involves a mere
entered into another collective bargaining agreement, to expire on
money claim over which the Court of Industrial Relations has no
October 31, 1965.
jurisdiction.1
The 1958 collective bargaining agreement provided among other things
It is exiomatic that to determine the issue of jurisdiction resort is to be
for payment of differentials to night shift workers in the desiccated
made to the allegations in the petition or complaint. 2 The petition for
coconut factory.1äwphï1.ñët
shift differential in the present case, it is true, did not expressly mention
The 1961 collective bargaining agreement retained the same the Eight-Hour Labor Law. Nonetheless, it clearly asserted that (1)
arrangement. It stated: petitioners-laborers "are working in the Red V Coconut Products, Ltd."
The present shift differential will remain in effect, namely, 35¢ and (2) they "work in two (2) shifts (Blue and Red shifts) consisting of
for the second shift and 55¢ for the third Shift. approximately 12 hours each shift." Accordingly, from the said
In the factory, there are two groups of workers, the three-shift group — allegations, it is proper to regard the petition, as the Court of Industrial
let us call it Group A — and the two — shift group — which we shall call Relations did, as one for overtime pay by workers still employed by the
Group B. As observed by the parties thereto, differentials were paid to company. As such it falls within the jurisdiction of the Court of Industrial
workers, under the 1958 and 1961 contracts, thus: Relations. For the same is in effect an assertion not of a simple money
claim but, as respondent court rightly held, of a claim for overtime pay
Hours of
Differentials by workers who are employees of the company. 3
Work
During the trial, as stated, evidence was adduced to the effect that the
Group A — 1st shift 4 A.M. — 12 Noon (8 Hrs.) None aforesaid petitioners-workers were engaged on a piece-work basis.
The same, however, does not appear from the petition or complaint
2nd 12 filed with the respondent court. It therefore cannot affect its jurisdiction
— 8 P.M. (8 Hrs.) .35 over the case, which was already acquired. For jurisdiction, once
shift Noon
acquired, continues until final adjudication of the litigation. 4
3rd shift 8 P.M. — 4 A.M. (8 Hrs.) .55 Furthermore, although the Eight-Hour Labor Law provides that it does
not cover those workers who prefer to be paid on piece-work basis (Sec.
Group B — (12 2, CA 444), nothing in said law precludes an agreement for the payment
1st shift 4 A.M. — 4 P.M. None of overtime compensation to piece-workers. And in agreeing to the
Hrs.)
provision for payment of shift differentials to the petitioners-workers
2nd (12 aforementioned, in the bargaining agreement, as well as in actually
4 P.M. — 4 A.M. .55 paying to them said differentials, though not in full, the company in
shift Hrs.)
effect freely adhered to an application and implementation of the Eight-
On January 17, 1962, Tanglaw ng Paggawa and some 300 workers in Hour Labor Law, or its objectives, to said workers. It should be
the above-stated factory, members of the said union, who belong to observed that while the provision in the bargaining agreements speaks
Group B, filed a petition in the Court of Industrial Relations. Petitioners of shift differentials for the "second shift" and the "third shift" and Group
therein alleged that the petitioners-workers are shellers, parers, B has no third shift, said Group B has a second shift, which performs
counters and haulers in the two shifts (Group B) consisting of 12 hours work equivalent to that of the corresponding shifts of Group A. It follows
each shift, the first shift from 4: 00 A.M. to 4: 00 P.M. and the second that respondent court did not err in ordering the company to pay the full
shift from 4 P.M. to 4 A.M.; that said workers change shift assignments and equivalent amount of said differentials (P.90) corresponding, under
every week; that, accordingly, all of them work from 4 A.M. to 4 P.M. the bargaining agreements, to the workers who performed 12 hours of
(first shift) for two alternate weeks per month and from 4 P.M. to 4 A.M. work, from 4 P.M. to 4 A.M.
(second shift) likewise for two alternate weeks in a month; that although And, finally, the laborers in question are not strictly under the full
said workers perform work from 4 P.M. to 4 A.M., they receive only P.55 concept of piece-workers as contemplated by law for the reason that
differential pay for the corresponding hours of night work; that their their hours of work — that is, 12 hours per shift — are fixed by the
nightwork is equivalent to the nightwork of the 2nd and 3rd shifts of employer. As ruled by this Court in Lara v. Del Rosario, 94 Phil. 780,
Group A combined, so that they should receive what the 2nd and 3rd 781-782, the philosophy underlying the exclusion of piece workers from
shifts of Group A, combined, receive as differential pay, namely, P.90 the Eight-Hour Labor Law is that said workers are paid depending upon
(P.75 plus P.35); that, therefore, they are entitled to payment of P.35 the work they do "irrespective of the amount of time employed" in doing
more as differential pay, since up to the time of the petition, they said work. Such freedom as to hours of work does not obtain in the
received only P.55 per night as differential pay. case of the laborers herein involved, since they are assigned by the
Said additional P.35 was asked by the petitioners-workers of Group B employer to work in two shifts for 12 hours each shift. Thus it cannot be
f or work done by them from 4 P.M. to 4 A.M. Their claim referred to the said that for all purposes these workers fall outside the law requiring
time from July 15, 1958 to the date of the petition, allegedly at P186.90 payment of compensation for work done in excess of eight hours. At
per sheller, parer, counter and hauler, or a total sum of P65,228.10 least for the purpose of recovering the full differential pay stipulated in
more or less. the bargaining agreement as due to laborers who perform 12 hours of
Respondent company therein filed on January 28, 1962 a motion to work under the night shift, said laborers should be deemed pro tanto or
dismiss, stating that the Court of Industrial Relations has no jurisdiction to that extent within the scope of the afore-stated law.
over the case for the reason that the claim asserted in the petition is a Wherefore, the decision and resolution of the Court of Industrial
simple money claim and that an interpretation of a contract (the Relations under review are affirmed. So ordered.
collective bargaining agreement is involved, which pertains to the
regular courts.
The Court of Industrial Relations denied said motion by resolution of
February 17, 1962 ruling that the claim is for unpaid overtime pay of G.R. No. 109156 July 11, 1996
laborers still employed by the company. Said court likewise denied a STOLT-NIELSEN MARINE SERVICES (PHILS.) INC., petitioner,
motion for reconsideration of the resolution. Red V Coconut Products, vs.
Ltd. filed its answer on May 2, 1962. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE
In the meanwhile, on April 25, 1962, Tanglaw ng Paggawa filed with OVERSEAS EMPLOYMENT ADMINISTRATION and MEYNARDO J.
the Court of Industrial Relations a new and independent petition HERNANDEZ, respondent.
alleging unfair labor practice against Red V Coconut Products, ROMERO, J.:p
Ltd. (CIR Case No. 3150 ULP). It was asserted therein that the
Private respondent Meynardo J. Hernandez was hired by petitioner
company refused to grant 15 days leave with pay to the members of
Stolt-Nielsen marine Services (Phils.) Inc. (STOLT-NIELSEN, for short)
the union in violation of the 1961 collective bargaining agreement.
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as radio officer of board M/T Stolt Condor for a period of ten months. radio operator does not include the carrying of the luggage of any
He boarded the vessel on January 20, 1990. seaman or explaining to said seaman the reason for his repatriation.
On April 26, 1990, the ship captain ordered private respondent to carry Thus, concluded the NLRC, his termination on this ground was not
the baggage of crew member Lito Loveria who was being repatriated. proper and, therefore, had every right to the monetary award. The
He refused to obey the order out of fear in view of the utterance of the NLRC likewise granted private respondent's claim for fixed overtime
said crew member "makakasaksak ako" and also because he did not pay and attorney's fees.
perceive such task as one of his duties as radio officer. As a result of Petitioner, having moved for reconsideration without success, is before
such refusal, private respondent was ordered to disembark on April 30, this court on certiorari.
1990 and was himself repatriated on May 15, 1990. He was paid his The issues posed for resolution in this case are: (a) whether private
salaries and wages only up to May 16, 1990. respondent was legally dismissed on the ground of gross
On June 21, 1990, private respondent filed before the public insubordination and serious misconduct; and (b) whether private
respondent POEA a complaint for illegal dismissal and breach of respondent was entitled to the award of overtime pay.
contract paying for, among all things, payment of his salaries, wages, With respect to the first issue, petitioner Stolt-Nielsen emphasizes how
overtime and other benefits due to him for the unexpired portion of the "(e)mployment on board ocean-going vessels is totally different from
contract which was six (6) months and three (3) days. land-based ones in that the former strict and faithful compliance of all
Petitioner STOLT-NIELSEN in its answer alleged that on April 26, 1990, lawful commands and orders of the master or captain of the vessel is
private respondent refused to follow the "request" of the master of the of paramount and crucial importance." Petitioner then cites Part I,
vessel to explain to Lolito Loveria the reason for the latter's repatriation Section A (2) of the POEA Standard Employment Contract which
and to assist him in carrying his baggage, all in violation of Article XXIV, provides:
Section 1 of the Collective Bargaining Agreement (CBA) and the POEA 2. The seaman binds himself to the following:
Standard Contract. Hence, private respondent, after being afforded the "a. to faithfully comply with and observe
opportunity to explain his side, was dismissed for gross insubordination the terms and conditions of this contract,
and serious misconduct. violation of which shall be subject to
In reply, he denied that the master of the vessel requested him to disciplinary action pursuant to appendix 2
explain to Loveria the reason for the latter's repatriation. of this crew contract.
Thereafter, POEA Administrator Jose N. Sarmiento rendered an award xxx xxx xxx
in favor of private respondent, as follows: d. To be obedient to the lawful commands
The issue to be resolved is whether or not complainant was of the master or any person who shall
legally dismissed. succeed him."
We rule in the affirmative. It likewise adverts to Article XXIV, Section 1 of the CBA, viz:
Record shows that on April 26, 1990, complainant was Authority of the Master
directed by the master of the vessel to carry the luggage of Sec. 1. It is understood and agreed that nothing contained in
an outgoing seaman offshore. Complainant, however, this is intended or shall be construed so as to restrict in any
refused to obey the said order, hence, his dismissal from his way the superiority of the master or to prevent the obedience
employment. of the crew to any lawful order of any superior officer.
Evaluating the reason for complainant's dismissal, we find the (Emphasis ours)
penalty imposed too severe considering the violation Petitioner contends that since the captain's order to assist the
committed. To our mind, a warning would have been sufficient crew member who was being repatriated in carrying his
since this was the first offense committed. Moreover, as radio baggage is lawful, private respondent's refusal to obey the
officer, it is not one of his official duties to carry the luggage command is wilful, thus warranting his dismissal.
of outgoing seaman. Article 282 of the Labor Code provides in part:
In the light of the foregoing, we hold that complainant's Art. 282. Termination by Employer . — An
dismissal due to the aforesaid incident arbitrary, whimsical employer may terminate an employment
and contrary to human nature and experience, hence, not for any of the following causes: a) Serious
justified. Accordingly, he is entitled to his salaries for the misconduct or wilful disobedience by the
unexpired portion of his contract computed as follows: employee of the lawful orders of his
1. Remaining portion of his contract — 6 months employer or representative in connection
& 3 days with his work;
2. Basic salary — US$1,024.00 xxx xxx xxx
3. Fixed Overtime — 420.001 Wilful disobedience of the employers lawful orders, as a just cause for
———————— the dismissal of an employee, envisages the concurrence of at least
Total US$ 1,434.00 two (2) requisites: the employee's assailed conduct must have been
4. Salary/day = ($1,434/30 days) = US$47.8/day wilful or intentional, the wilfulness characterized by a "wrongful and
5. Salary for 3 days — ($47.8 x 3) = US$143.4 perverse attitude"; and the order violated must be reasonable, lawful,
6. Salary for 6 months — ($1,434 x 6) = US$8,604.00 made known to the employee and must pertain to the duties which he
7. Salary for the unexpired had been engaged to discharged.4
portion of his contract The Court agrees that by virtue of the aforementioned CBA and POEA
(basic salary + fixed O.T.) Standard Contract provisions cited by the petitioner, private respondent
for 6 months and 3 days is indeed bound to obey the lawful commands of the captain of the ship,
(US$8,604 + 143.4) = US$8,747.40 but only as long as these pertain to his duties. The order to carry the
Complainant's claim for day's leave with pay for the unexpired luggage of a crew member, while being lawful, is not part of the duties
portion of the contract is hereby denied since the same is only of a radio officer. Assuming Arguendo that lawful commands of a ship
given during actual service. captain are supposed to be obeyed by the complement of the ship,
The claim for damages is hereby denied for want of private respondent's so-called "act of disobedience" does not warrant
jurisdiction. the supreme penalty of dismissal.
Complaint is however entitled to five (5%) percent of the total In Gold City Integrated Port Services, Inc. v. NLRC,5 the Court Ruled:
award as and by way of attorney's fees. . . . We believe that not every case of insubordination or wilful
WHEREFORE, PREMISES CONSIDERED, judgment is disobedience by an employee of a lawful work-connected
hereby rendered ordering respondent to pay complainant the order of the employer or its representative is reasonably
following or its peso equivalent at the time of payment: penalized with dismissal. For one thing, Article 282 (a) refers
1. EIGHT THOUSAND SEVEN HUNDRED FORTY SEVEN to "serious misconduct or wilful disobedience —". There must
& 40/100 US DOLLARS (US$8,747.40) or its peso equivalent be reasonable proportionality between, on the one hand, the
at the time of payment, as salaries for the unexpired portion wilful disobedience by the employee and, on the other hand,
of his contract. the penalty imposed therefor. . .
2. Five percent (5%) of the total award as and by way of In instant case, the POEA found that private respondent's actuation
attorney's fees. which led to his dismissal was the first and only act of disobedience
during his service with the petitioner. Furthermore, examination of the
All other claims are hereby DENIED for lack of merit.
circumstances surrounding private respondent's disobedience shows
SO ORDERED.2 that the repatriated seaman's utterance of "makakasaksak ako" so
Aggrieved, petitioner Stolt-Nelson appealed to the National Labor instilled fear in private respondent that he was deterred from carrying
Relations Commission. (NLRC). out the order of the captain. Hence, his act could not be rightfully
The NLRC, in a resolution3 dated November 27, 1992, concurred with characterized as one motivated by a "wrongful and perverse attitude."
the PEOA Administrator in ruling that private respondent, having been Besides, said incident posed no serious or substantial danger to the
illegally dismissed, was, therefore, entitled to the monetary award. It well-being of his other co-employees or of the general public doing
further stated that the private respondent's duty as a radio officer or
 3

business with petitioner employer. Neither did such behavior threaten 3. ordering respondent to pay the complainant the
substantial prejudice to the business of his employer. sum of P31,149.56 representing the underpayment
In light of the foregoing, we agree with the NLRC that termination of the of wages.
private respondent's services was a disproportionately heavy penalty. 4. dismissing all other issues far lack of merit.
Coming to the second issue involving the award of overtime pay, the The assailed Resolution denied petitioner's motion for reconsideration
NLRC in its assailed resolution states: for lack of merit.
Anent the overtime pay, compliant alleged that he is entitled The Facts
thereto as the same is a fixed overtime pay. The respondents The facts as found by the labor arbiter are as follows: 7
failed to controvert said allegations. In short, the A case of illegal dismissal and underpayment of
complainant's claim for overtime pay was undisputed and for wages [was] filed by MS. EPIFANIA ANTONIO
this reason, the grant of this claim must be upheld. 6 [private respondent herein] against PULP AND
Petitioner, on the other hand, cites this Court's PAPER DISTRIBUTORS INC., [petitioner
pronouncement in Cagampan v. NLRC,7 thus: herein] . . . .
As regards to the question of overtime pay, the NLRC cannot In filing the present complaint, complainant in her
be faulted for disallowing the payment of said pay because it position paper alleges that she was a regular
merely straightened out the distorted interpretation asserted employee of the . . . corporation having served
by the petitioners and defined the correct interpretation of the thereat as Wrapper sometime in September 1975.
provision on overtime pay embodied in the contract On November 29, 1991, for unknown reasons, she
conformably with settled doctrines on the matter. Notably, the was advised verbally of her termination and was
NLRC ruling on the disallowance of overtime pay is ably given a prepared form of Quitclaim and Release
supported by the fact that petitioners never produced any which she refused to sign. Instead she brought the
proof of actual performance of overtime work. present complaint for illegal dismissal.
Petitioners have conveniently adopted the view that the In charging the [herein petitioner] of underpayment
"guaranteed or fixed overtime pay of 30% of the basic salary of wages, complainant in the same position paper
per month" embodied in their employment contract should be alleges that, rarely during her employment with the
awarded to them as part of a "package benefit." They have respondent she received her salary, a salary which
theorized that even without sufficient evidence of actual was in accordance with the minimum wage law. She
rendition of overtime work they would automatically be was not paid overtime pay, holiday pay and five-day
entitled to overtime pay. Their theory is erroneous for being service incentive leave pay, hence she is claiming
illogical and unrealistic. Their thinking even runs counter to for payments thereof by instituting the present case.
the intention behind the provision. The contract provision Respondent on the otherhand [sic] denied having
means that the fixed overtime pay of 30% would be a basis terminated the services of the complainant and
for computing the overtime pay if and when overtime work alleges inter alia that starting 1989 the orders from
would be rendered. Simply stated, the rendition of overtime customers became fewer and dwindled to the point
work and the submission of sufficient proof that the said work that it is no longer practical to maintain the present
was actually performed are conditions to be satisfied before number of packer/wrappers. Maintaining the same
a seaman could be entitled to overtime pay which would be number of packers/wrappers would mean less pay
computed on the basis of 30% of the basic monthly salary. In because the work allocation is no longer the same
short, the contract provision guarantees the right to overtime as it was. Such being the case, the respondent has
pay but the entitlement to such benefit must first be to reduce temporarily the number of
established. Realistically speaking, a seaman, by the very packers/wrappers. Complainant was among those
nature of his job, stays on board a ship or vessel beyond the who were temporarily laid-off from work.
regular eight-hour work schedule. For the employer to give Complainant last worked with the company on June
him overtime pay for the extra hours when he might be 29, 1991.
sleeping or attending to his personal chores or even just As regards complainant's allegation that on
lulling away his time would be extremely unfair and November 29, 1991, she was forced to sign a
unreasonable. quitclaim and release by the respondent, the latter
Petitioner's argument is well taken. A close scrutiny of the computation clarified that considering that five months from the
of the monetary award8 shows that the award for overtime was for the time the complainant last worked with the company,
remaining six (6) months and three (3) days of private respondent's the management decided to release the
contract at which time he was no longer rendering services as he had complainant and give her a chance to look for
already been repatriated. In light of our aforequoted ruling another job in the meantime that no job is available
in Cagampan v. NLRC, said award for overtime should be, as it is for her with the company. In other words,
hereby, disallowed for being unjustified. complainant was given the option and considering
WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the that she did not sign the documents referred to as
modification that the award for overtime pay should be DELETED. the Quitclaim and Release, the respondent did not
insist, and did not terminate the services of the
complainant. It was just surprise [sic] to receive the
present complaint. In fact, respondent added that
G.R. No. 116593 September 24, 1997 the reason why the complainant was called on
PULP AND PAPER, INC., petitioner, November 29, 1991 was not to work but to receive
vs. her 13th month pay of P636.70 as shown by the
NATIONAL LABOR RELATIONS COMMISSION AND EPIFANIA voucher she signed (Annex-A, Respondent).
ANTONIO, respondents. As regards the claim of the complainant for
underpayment, respondent did not actually denied
(sic) the same but give [sic] the reservation that
PANGANIBAN, J.:
should the same be determined by this Office it is
In the absence of wage rates specially prescribed for piece-rate willing to settle the same considering the fact that
workers, how should the separation pay and salary differential of such complainant herein being paid by results, it is not in
workers be computed? a proper position to determine whether the
Statement of the Case complainant was underpaid or not.
This is the main question raised in the instant petition for certiorari, filed The Issues
under Rule 65 of the Rules of Court, to set aside and annul National Petitioner couched the main issue in this wise:8
Labor Relations Commission's1 Decision2 promulgated on September
Did the Public Respondent NLRC act correctly in
24, 1993 and Resolution3 dated December 16, 1993 in NLRC NCR CA
affirming in toto the decision rendered by the labor
No. 004041-92.4 Public respondent's assailed Decision affirmed in
arbitration branch a quo in NLRC NCR Case no. 00-
toto Labor Arbiter Eduardo J. Carpio's decision5 dated October 6, 1992,
01-00494-92?
which disposed thus:6
While it expressly admits that private respondent is entitled to
IN VIEW OF ALL THE FOREGOING, judgement
separation pay, petitioner raises nonetheless the following queries: "(a)
[sic] is hereby rendered:
Are the factors in determining the amount of separation pay for a 'piece-
1. dismissing the complaint for illegal dismissal for rate worker' the same as that of a 'time-worker'? (b) Is a worker, who
lack of merit; was terminated for lack of work, entitled to separation pay at the rate of
2. ordering respondent Pulp and Papers one-month's pay for every year of service?"9 The petition is based on
Distributors Inc. to pay complainant Efipania (sic) the following "grounds":
Antonio the sum of P49.088.00 representing her I
separation pay; and
 4

Public Respondent NLRC committed grave abuse "(h)er salary depended upon the number of 'reams of bond paper' she
of discretion and serious reversible error when it packed per day." Petitioner contends that private respondent's work
affirmed in toto the award of separation pay in favor "depended upon the number and availability of purchase orders from
of private respondent, without bases in fact and in customers." Petitioner adds that, oftentimes, "packers/wrappers only
law. work three to four hours a day." Thus, her separation pay "must be
II based on her latest actual compensation per piece or on the minimum
Public Respondent NLRC committed grave abuse wage per piece as determined by Article 101 of the Labor Code,
of discretion and serious reversible error when it whichever is higher, and not on the daily minimum wage applicable to
affirmed in toto the award of underpayment in favor time-workers." 11
of private respondent, without bases in fact and in Compensation of Pieceworkers
law. In the absence of wage rates based on time and motion studies
The Public Respondent's Ruling determined by the labor secretary or submitted by the employer to the
In dismissing the appeal of petitioner, public respondent reasoned: 10 labor secretary for his approval, wage rates of piece-rate workers must
It is true that all the above circumstances cited by be based on the applicable daily minimum wage determined by the
the [herein petitioner] are not present in the case at Regional Tripartite Wages and Productivity Commission. To ensure the
bar, hence, separation pay based on those payment of fair and reasonable wage rates, Article 101 12 of the Labor
circumstances is not owing to the [herein private Code provides that "the Secretary of Labor shall regulate the payment
respondent]. However, it is quite obvious that of wages by results, including pakyao, piecework and other nontime
[petitioner] missed the legal and factual basis why work." The same statutory provision also states that the wage rates
separation pay was awarded by the Labor Arbiter. should be based, preferably, on time and motion studies, or those
In the first place, the [petitioner] admits that the arrived at in consultation with representatives of workers' and
complainant-appellee was temporarily laid off on employers' organizations. In the absence of such prescribed wage
June 29, 1991. This means that there was a rates for piece-rate workers, the ordinary minimum wage rates
temporary suspension of employer-employee prescribed by the Regional Tripartite Wages and Productivity Boards
relationship between the appellant and the appellee. should apply. This is in compliance with Section 8 of the Rules
Lay-off is a temporary termination initiated by the Implementing Wage Order Nos. NCR-02 and NCR-02-A — the
employer, but without prejudice to the reinstatement prevailing wage order at the time of dismissal of private
or recall of the workers who have been temporarily respondent, viz: 13
separated. The reasons for laying off employees Sec. 8. Workers Paid by Results. — a) All workers
are varied: lack of work, shutdown for repairs, paid by results including those who are paid on
business reverses, and the like. Always, however, piece work, takay, pakyaw, or task basis, shall
there is the expectation that the employees who receive not less than the applicable minimum wage
have been laid off will be recalled or rehired. This rates prescribed under the Order for the normal
situation is governed by Rule I, Section 12, of Book working hours which shall not exceed eight (8)
VI of the Implementing Rules and Regulations of the hours work a day, or a proportion thereof for work
Labor Code, which provides: of less than the normal working hours.
Sec. 12. Suspension of The adjusted minimum wage rates for workers paid
Relationship. — The employer- by results shall be computed in accordance with the
employee relationship shall be following steps:
deemed suspended in case of 1) Amount of increase in AMW x 100 = %
suspension of operation of the increase Previous AMW
business or undertaking of the 2) Existing rate/piece x % increase = increase in
employer for a period not rate/piece;
exceeding six (6) months . . . . 3) Existing rate/piece + increase in rate/piece =
From June 29, 1991 up to the time the complainant- adjusted rate/piece.
appellee filed her complaint on January 21, 1992, b) The wage rates of workers who are paid by
there was more than six (6) months that already results shall continue to be established in
elapse (sic) and yet, the appellant failed to recall the accordance with Art. 101 of the Labor Code, as
appellee to let her resume working. If the appellant amended and its implementing regulations.
was not yet in a possession to recall or reinstate the (Emphasis supplied.)
appellee after six (6) months, up to when shall On November 29, 1991, private respondent was orally informed of the
appellant let her keep in waiting. Of course, she termination of her employment. Wage Order No. NCR-02, in effect at
cannot be allowed to wait interminably. That is the the time, set the minimum daily wage for non-agricultural workers like
reason why the law imposes a period of six (6) private respondent at P118.00. 14 This was the rate used by the labor
months within which the resumption of employer- arbiter in computing the separation pay of private respondent. We
employee relationship must be resumed in cannot find any abuse of discretion, let alone grave abuse, in the order
temporary lay-offs. Otherwise, any employer can, in of the labor arbiter which was later affirmed by the NLRC.
the guise of a temporary lay-off, close its doors to Moreover, since petitioner employed piece-rate workers, it should have
an employee for more than six months and their inquired from the secretary of labor about their prescribed specific wage
claim that the lay-off has ripened into termination rates. In any event, there being no such prescribed rates, petitioner,
and try to get away from any liability. The award of after consultation with its workers, should have submitted for the labor
separation pay is hereby declared in order. secretary's approval time and motion studies as basis for the wage
On the second issue raised by the (petitioner) on rates of its employees. This responsibility of the employer is clear under
appeal, We are also for the Labor Arbiter's ruling Section 8, Rule VII, Book III of the Omnibus Rules Implementing the
upholding the appellee's right to salary differential in Labor Code:
the amount computed. Sec. 8. Payment by result. (a) On petition of any
The argument interposed by the [petitioner] based interested party, or upon its initiative, the
on Art. 101 of the Labor Code, in relation to Rule VII, Department of Labor shall use all available devices,
Section (8), Book III of the Omnibus Implementing including the use of time and motion studies and
Rule and Regulations, will not lie in the case at bar. consultations with representatives of employers'
In the first place, pursuant to the provision of law and workers' organizations, to determine whether
cited by the [petitioner], all time and motion studies, the employees in any industry or enterprise are
or any other schemes or devices to determine being compensated in accordance with the
whether the employees paid by results are being minimum wage requirements of this Rule.
compensated in accordance with the minimum (b) The basis for the establishment of rates for piece,
wage requirements, shall only be approved on output or contract work shall be the performance of
petition of the interested employer. Thus, it is the an ordinary worker of minimum skill or ability.
fault of the [petitioner] on whose initiative, a time (c) An ordinary worker of minimum skill or ability is
and motion study or any other similar scheme is not the average worker of the lowest producing group
yet available in its establishment. representing 50% of the total number of employees
The Court's Ruling engaged in similar employment in a particular
The appeal is not meritorious. establishment, excluding learners, apprentices and
First Issue: Computation of Minimum Wage handicapped workers employed therein.
Petitioner argues that private respondent was a piece-rate worker and (d) Where the output rates established by the
not a time-worker. Since private respondent's employment as employer do not conform with the standards
"(p)acker/(w)rapper" in 1975 until her separation on June 29, 1991, prescribed herein, or with the rates prescribed by
 5

the Department of Labor in an appropriate order, the award of separation pay made by public respondent, 20 for
the employees shall be entitled to the difference employees constructively dismissed are entitled to separation pay.
between the amount to which they are entitled to Because she did not ask for more, we cannot give her more. We repeat:
receive under such prescribed standards or rates she appealed neither the decision of the labor arbiter nor that of the
and that actually paid them by employer. NLRC. Hence, she is not entitled to any affirmative relief.
In the present case, petitioner as the employer unquestionably failed to Furthermore, we cannot sustain petitioner's claim that private
discharge the foregoing responsibility. Petitioner did not submit to the respondent was retrenched. For retrenchment to be considered a
secretary of labor a proposed wage rate — based on time and motion ground for termination, the employer must serve a written notice on the
studies and reached after consultation with the representatives from workers and the Department of Labor and Employment at least one
both workers' and employers' organization — which would have applied month before the intended date thereof. 21 Petitioner did not comply
to its piece-rate workers. Without those submissions, the labor arbiter with this requirement.
had the duty to use the daily minimum wage rate for non-agricultural Third Issue: Determination of Salary Differential
workers prevailing at the time of private respondent's dismissal, as In light of the foregoing discussion, we must also dismiss petitioner's
prescribed by the Regional Tripartite Wages and Productivity Boards. challenge to the computation of salary differential. As earlier observed,
Put differently, petitioner did not take the initiative of proposing an private respondent is entitled to the minimum wage prevailing at the
appropriate wage rate for its piece-rate workers. In the absence of such time of the termination of her employment. The same rate of minimum
wage rate, the labor arbiter cannot be faulted for applying the wage, P118.00, should be used in computing her salary differential
prescribed minimum wage rate in the computation of private resulting from petitioner's underpayment of her wages. Thus, the labor
respondent's separation pay. In fact, it acted and ruled correctly and arbiter correctly deducted private respondent's actually received wage
legally in the premises. of P60 a day from the prescribed daily minimum wage of P118.00, and
It is clear, therefore, that the applicable minimum wage for an eight- multiplied the difference by 26 working days, and subsequently by 16
hour working day is the basis for the computation of the separation pay years, equivalent to her length of service with petitioner. Thus, the
of piece-rate workers like private respondent. The computed daily wage amount of P31,149.56 as salary differential. 22
should not be reduced on the basis of unsubstantiated claims that her Petitioner argues that "the work of the private respondent is seasonal,
daily working hours were less than eight. Aside from its bare assertion, being dependent upon the availability of job-orders" and not "twenty-six
petitioner presented no clear proof that private respondent's regular (26) days a month." 23 Further, petitioner contends that private
working day was less than eight hours. Thus, the labor arbiter correctly respondent herself admitted she was "a piece worker whose work [was]
used the full amount of P118.00 per day in computing private seasonal." 24
respondent's separation pay. We agree with the following Contrary to the assertion of petitioner, neither the assailed Decision nor
computation: 15 the pleadings of private respondent show that private respondent's
Considering therefore that complainant had been work was seasonal. More important, petitioner utterly failed to
laid-off for more than six (6) months now, we substantiate its allegation that private respondent's work was seasonal.
strongly feel that it is already reasonable for the We observe that the labor arbiter based the computation of the salary
respondent to pay the complainant her separation differential on a 26-day month on the presumption that private
pay of one month for every year of service, a respondent's work was continuous. In view of the failure of petitioner to
fraction of six (6) months to be considered as one support its claim, we must sustain the correctness of this computation.
whole year. Separation pay should be computed WHEREFORE, premises considered, the petition is DISMISSED and
based on her minimum salary as will be determined the assailed Decision is AFFIRMED. Costs against petitioner.
hereunder. SO ORDERED
Separation pay 1 month = 16
years
P118.00 x 26 x 16 years =
P49,088.00
The amount "P118.00" represents the applicable daily minimum wage G.R. No. 132805 February 2, 1999
per Wage Order Nos. NCR-02 and NCR-02-A; "26", the number of PHILIPPINE AIRLINES, INC., petitioner,
working days in a month after excluding the four Sundays which are vs.
deemed rest days; "16", the total number of years spent by private NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
respondent in the employ of petitioner. ROMULUS PROTACIO and DR. HERMINIO A.
Second Issue: Computation of Separation Pay FABROS, respondents.
Petitioner questions not only the basis for computing private
respondent's monthly wage; it also contends that private respondent's PUNO, J.:
separation pay should not have been computed at one month's pay for Petitioner Philippine Airlines, Inc. assails the decision of the National
every year of service. Because private respondent should be Labor Relations Commission dismissing its appeal from the decision of
considered retrenched, the separation pay should be "one month's pay Labor Arbiter Romulus S. Protacio which declared the suspension of
or at least one/half (1/2) month pay for every year of service, whichever private respondent Dr. Herminio A. Fabros illegal and ordered petitioner
is higher, and not one (1) month's pay for every year of service as public to pay private respondent the amount equivalent to all the benefits he
respondent had ruled." 16 should have received during his period of suspension plus P500,000.00
Petitioner misapprehended the ground relied upon by public moral damages.
respondent for awarding separation pay. In this case, public respondent The facts are as follow:
held that private respondent was constructively dismissed, pursuant to Private respondent was employed as flight surgeon at petitioner
Article 286 of the Labor Code which reads: company. He was assigned at the PAL Medical Clinic at Nichols and
Art. 286. When employment not deemed terminated. was on duty from 4:00 in the afternoon until 12:00 midnight.
— The bonafide suspension of the operation of a On February 17, 1994, at around 7:00 in the evening, private
business or undertaking for a period not exceeding respondent left the clinic to have his dinner at his residence, which was
six (6) months, or the fulfillment by the employee of about five-minute drive away. A few minutes later, the clinic received
a military or civic duty shall not terminate an emergency call from the PAL Cargo Services. One of its employees,
employment. In all such cases, the employer shall Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr.
reinstate the employee to his former position Merlino Eusebio, called private respondent at home to inform him of the
without loss of seniority rights if he indicates his emergency. The patient arrived at the clinic at 7:50 in the evening and
desire to resume his work not later that one (1) Mr. Eusebio immediately rushed him to the hospital. When private
month from his resumption of operations of his respondent reached the clinic at around 7:51 in the evening, Mr.
employer or from his relief from the military or civic Eusebio had already left with the patient. Mr. Acosta died the following
duty. day.
Petitioner failed to discern that public respondent, in finding that the Upon learning about the incident, PAL Medical Director Dr. Godofredo
services of private respondent were terminated, merely adopted by B. Banzon ordered the Chief Flight Surgeon to conduct an investigation.
analogy the rule on constructive dismissal. Since private respondent The Chief Flight Surgeon, in turn, required private respondent to
was not reemployed within six (6) months from the "suspension" of her explain why no disciplinary sanction should be taken against him.
employment, she is deemed to have been constructively In his explanation, private respondent asserted that he was entitled to
dismissed. 17 Otherwise, private respondent will remain in a perpetual a thirty-minute meal break; that he immediately left his residence upon
"floating status." Because petitioner had not shown by competent being informed by Mr. Eusebio about the emergency and he arrived at
evidence any just cause for the dismissal of private respondent, she is the clinic a few minutes later; that Mr. Eusebio panicked and brought
entitled to reinstatement 18 or, if this is not feasible, to separation pay the patient to the hospital without waiting for him.
equivalent to one (1) month salary for every year of service. Private Finding private respondent's explanation unacceptable, the
respondent, however, neither asked for reinstatement 19 nor appealed management charged private respondent with abandonment of post
from the labor arbiter's finding that she was not illegally dismissed; she while on duty. He was given ten days to submit a written answer to the
merely prayed for the grant of her monetary claims. Thus, we sustain administrative charge.
 6

In his answer, private respondent reiterated the assertions in his psychologists, midwives, attendants and all other
previous explanation. He further denied that he abandoned his post on hospital or clinic personnel. (emphasis supplied)
February 17, 1994. He said that he only left the clinic to have his dinner Art. 85. Meal periods. — Subject to such regulations
at home. In fact, he returned to the clinic at 7:51 in the evening upon as the Secretary of Labor may prescribe, it shall be
being informed of the emergency. the duty of every employer to give his employees
After evaluating the charge as well as the answer of private respondent, not less than sixty (60) minutes time-off for their
petitioner company decided to suspend private respondent for three regular meals.
months effective December 16, 1994. Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor
Private respondent filed a complaint for illegal suspension against Code further states:
petitioner. Sec. 7. Meal and Rest Periods. — Every employer
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a shall give his employees, regardless of sex, not less
decision1 declaring the suspension of private respondent illegal. It also than one (1) hour time-off for regular meals, except
ordered petitioner to pay private respondent the amount equivalent to in the following cases when a meal period of not
all the benefits he should have received during his period of suspension less than twenty (20) minutes may be given by the
plus P500,000.00 moral damages. The dispositive portion of the employer provided that such shorter meal period is
decision reads: credited as compensable hours worked of the
WHEREFORE, in view of all the foregoing, employee;
judgment is hereby rendered declaring the (a) Where the work is non-manual work in nature or
suspension of complainant as illegal, and ordering does not involve strenuous physical exertion;
the respondents the restitution to the complainant of (b) Where the establishment regularly operates not
all employment benefits equivalent to his period of less than sixteen hours a day;
suspension, and the payment to the complainant of (c) In cases of actual or impending emergencies or
P500,000.00 by way of moral damages.2 there is urgent work to be performed on
Petitioner appealed to the NLRC. The NLRC, however, dismissed the machineries, equipment or installations to avoid
appeal after finding that the decision of the Labor Arbiter is supported serious loss which the employer would otherwise
by the facts on record and the law on the matter. 3 The NLRC likewise suffer; and
denied petitioner's motion for reconsideration. 4 (d) Where the work is necessary to prevent serious
Hence, this petition raising the following arguments: loss of perishable goods.
1. The public respondents acted without or in Rest periods or coffee breaks running from five (5)
excess of their jurisdiction and with grave abuse of to twenty (20) minutes shall be considered as
discretion in nullifying the 3-month suspension of compensable working time.
private respondent despite the fact that the private Thus, the eight-hour work period does not include the meal break.
respondent has committed an offense that Nowhere in the law may it be inferred that employees must take their
warranted the imposition of disciplinary action. meals within the company premises. Employees are not prohibited from
2. The public respondents acted without or in going out of the premises as long as they return to their posts on time.
excess of their jurisdiction and with grave abuse of Private respondent's act, therefore, of going home to take his dinner
discretion in holding the petitioner liable for moral does not constitute abandonment.
damages: We now go to the award of moral damages to private respondent.
(a) Despite the fact that no formal hearing Not every employee who is illegally dismissed or suspended is entitled
whatsoever was conducted for complainant to to damages. As a rule, moral damages are recoverable only where the
substantiate his claim; dismissal or suspension of the employee was attended by bad faith or
(b) Despite the absence of proof that the petitioner fraud, or constituted an act oppressive to labor, or was done in a
acted in bad faith in imposing the 3-month manner contrary to morals, good customs or public policy. 6 Bad faith
suspension; and does not simply mean negligence or bad judgment. It involves a state
(c) Despite the fact that the Labor Arbiter's award of of mind dominated by ill will or motive. It implies a conscious and
moral damages is highly irregular, considering that intentional design to do a wrongful act for a dishonest purpose or some
it was more than what the private respondent moral obliquity.7 The person claiming moral damages must prove the
prayed for. 5 existence of bad faith by clear and convincing evidence for the law
We find that public respondents did not err in nullifying the three-month always presumes good faith.8
suspension of private respondent. They, however, erred in awarding In the case at bar, there is no showing that the management of
moral damages to private respondent. petitioner company was moved by some evil motive in suspending
First, as regards the legality of private respondent's suspension. The private respondent. It suspended private respondent on an honest,
facts do not support petitioner's allegation that private respondent albeit erroneous, belief that private respondent's act of leaving the
abandoned his post on the evening of February 17, 1994. Private company premises to take his meal at home constituted abandonment
respondent left the clinic that night only to have his dinner at his house, of post which warrants the penalty of suspension. Also, it is evident
which was only a few minutes' drive away from the clinic. His from the facts that petitioner gave private respondent all the opportunity
whereabouts were known to the nurse on duty so that he could be to refute the charge against him and to defend himself. These negate
easily reached in case of emergency. Upon being informed of Mr. the existence of bad faith on the part of petitioner. Under the
Acosta's condition, private respondent immediately left his home and circumstances, we hold that private respondent is not entitled to moral
returned to the clinic. These facts belie petitioner's claim of damages.
abandonment. IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The
Petitioner argues that being a full-time employee, private respondent is portion of the assailed decision awarding moral damages to private
obliged to stay in the company premises for not less than eight (8) hours. respondent is DELETED. All other aspects of the decision are
Hence, he may not leave the company premises during such time, even AFFIRMED.
to take his meals. SO ORDERED.
We are not impressed.
Art. 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. — The normal hours
of work of any employee shall not exceed eight (8) G.R. No. 111042 October 26, 1999
hours a day. AVELINO LAMBO and VICENTE BELOCURA, petitioners,
Health personnel in cities and municipalities with a vs.
population of at least one million (1,000,000) or in NATIONAL LABOR RELATIONS COMMISSION and J.C. TAILOR
hospitals and clinics with a bed capacity of at least SHOP and/or JOHNNY CO, respondents.
one hundred (100) shall hold regular office hours for MENDOZA, J.:
eight (8) hours a day, for five (5) days a week, This is a petition for certiorari to set aside the decision 1 of the National
exclusive of time for meals, except where the Labor Relations Commission (NLRC) which reversed the awards made
exigencies of the service require that such by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to
personnel work for six (6) days or forty-eight (48) each, representing 13th month pay.
hours, in which case they shall be entitled to an The facts are as follows.
additional compensation of at least thirty per cent
Petitioners Avelino Lambo and Vicente Belocura were employed as
(30%) of their regular wage for work on the sixth day.
tailors by private respondents J.C. Tailor Shop and/or Johnny Co on
For purposes of this Article, "health personnel" shall
September 10, 1985 and March 3, 1985, respectively. They worked
include: resident physicians, nurses, nutritionists,
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As
dieticians, pharmacists, social workers, laboratory
in the case of the other 100 employees of private respondents,
technicians, paramedical technicians,
petitioners were paid on a piece-work basis, according to the style of
 7

suits they made. Regardless of the number of pieces they finished in a controls or has reserved the right to control the employee not only as
day, they were each given a daily pay of at least P64.00. to the result of the work but also as to the means and methods by which
On January 17, 1989, petitioners filed a complaint against private the result is to be accomplished. 6
respondents for illegal dismissal and sought recovery of overtime pay, In this case, private respondents exercised control over the work of
holiday pay, premium pay on holiday and rest day, service incentive petitioners. As tailors, petitioners worked in the company’s premises
leave pay, separation pay, 13th month pay, and attorney’s from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The
fees.1âwphi1.nêt mere fact that they were paid on a piece-rate basis does not negate
After hearing, Labor Arbiter Jose G. Gutierrez found private their status as regular employees of private respondents. The term
respondents guilty of illegal dismissal and accordingly ordered them to "wage" is broadly defined in Art. 97 of the Labor Code as remuneration
pay petitioners’ claims. The dispositive portion of the Labor Arbiter’s or earnings, capable of being expressed in terms of money whether
decision reads: fixed or ascertained on a time, task, piece or commission basis.
WHEREFORE, in the light of the Payment by the piece is just a method of compensation and does not
foregoing, judgment is hereby rendered define the essence of the relations. 7 Nor does the fact that petitioners
declaring the complainants to have been are not covered by the SSS affect the employer-employee relationship.
illegally dismissed and ordering the Indeed, the following factors show that petitioners, although piece-rate
respondents to pay the complainants the workers, were regular employees of private respondents: (1) within the
following monetary awards: contemplation of Art. 280 of the Labor Code, their work as tailors was
AVELINO LAMBO VICENTE BELOCURA necessary or desirable in the usual business of private respondents,
I. BACKWAGES P64,896.00 P64,896.00 which is engaged in the tailoring business; (2) petitioners worked for
II. OVERTIME PAY 13,447.90 13,447.90 private respondents throughout the year, their employment not being
dependent on a specific project or season; and, (3) petitioners worked
III. HOLIDAY PAY 1,399.30 1,399.30
for private respondents for more than one year. 8
IV. 13TH MONTH PAY 4,992.00 4,992.00
Second. Private respondents contend, however, that petitioners
V. SEPARATION PAY 9,984.00 11,648.00 refused to report for work after learning that the J.C. Tailoring and Dress
—————— —————— Shop Employees Union had demanded their (petitioners’) dismissal for
TOTAL P94,719.20 P96,383.20 = conduct unbecoming of employees. In support of their claim, private
P191,102.40 respondents presented the affidavits 9 of Emmanuel Y. Caballero,
Add: 10% Attorney's Fees 19,110.24 president of the union, and Amado Cabañero, member, that petitioners
—————— had not been dismissed by private respondents but that practically all
GRAND TOTAL P210,212.64 employees of the company, including the members of the union had
========= asked management to terminate the services of petitioners. The
or a total aggregate amount of TWO employees allegedly said they were against petitioners’ request for
HUNDRED TEN THOUSAND TWO change of the mode of payment of their wages, and that when a
HUNDRED TWELVE AND 64/100 meeting was called to discuss this issue, a petition for the dismissal of
(P210,212.64). petitioners was presented, prompting the latter to walk out of their jobs
All other claims are dismissed for lack of merit. and instead file a complaint for illegal dismissal against private
respondents on January 17, 1989, even before all employees could
SO ORDERED. 2
sign the petition and management could act upon the
On appeal by private respondents, the NLRC reversed the decision of same.1âwphi1.nêt
the Labor Arbiter. It found that petitioners had not been dismissed from
To justify a finding of abandonment of work, there must be proof of a
employment but merely threatened with a closure of the business if they
deliberate and unjustified refusal on the part of an employee to resume
insisted on their demand for a "straight payment of their minimum
his employment. The burden of proof is on the employer to show an
wage," after petitioners, on January 17, 1989, walked out of a meeting
unequivocal intent on the part of the employee to discontinue
with private respondents and other employees. According to the NLRC,
employment. 10 Mere absence is not sufficient. It must be accompanied
during that meeting, the employees voted to maintain the company
by manifest acts unerringly pointing to the fact that the employee simply
policy of paying them according to the volume of work finished at the
does not want to work anymore. 11
rate of P18.00 per dozen of tailored clothing materials. Only petitioners
allegedly insisted that they be paid the minimum wage and other Private respondents failed to discharge this burden. Other than the self-
benefits. The NLRC held petitioners guilty of abandonment of work and serving declarations in the affidavits of their two employees, private
respondents did not adduce proof of overt acts of petitioners showing
accordingly dismissed their claims except that for 13th month pay. The
dispositive portion of its decision reads: their intention to abandon their work. On the contrary, the evidence
shows that petitioners lost no time in filing the case for illegal dismissal
WHEREFORE, in view of the foregoing, the
against private respondent. This fact negates any intention on their part
appealed decision is hereby vacated and a new one
to sever their employment relationship. 12 Abandonment is a matter of
entered ordering respondents to pay each of the
intention; it cannot be inferred or presumed from equivocal acts. 13
complainants their 13th month pay in the amount of
Third. Private respondents invoke the compromise agreement, 14 dated
P4,992.00. All other monetary awards are hereby
deleted. March 2, 1993, between them and petitioner Avelino Lambo, whereby
in consideration of the sum of P10,000.00, petitioner absolved private
SO ORDERED. 3
respondents from liability for money claims or any other obligations.
Petitioners allege that they were dismissed by private respondents as
To be sure, not all quitclaims are per se invalid or against public policy.
they were about to file a petition with the Department of Labor and
But those (1) where there is clear proof that the waiver was wangled
Employment (DOLE) for the payment of benefits such as Social
from an unsuspecting or gullible person or (2) where the terms of
Security System (SSS) coverage, sick leave and vacation leave. They
settlement are unconscionable on their face are invalid. In these cases,
deny that they abandoned their work.
the law will step in to annul the questionable transaction. 15 However,
The petition is meritorious. considering that the Labor Arbiter had given petitioner Lambo a total
First. There is no dispute that petitioners were employees of private award of P94,719.20, the amount of P10,000.00 to cover any and all
respondents although they were paid not on the basis of time spent on monetary claims is clearly unconscionable. As we have held in another
the job but according to the quantity and the quality of work produced case, 16 the subordinate position of the individual employee vis-a-
by them. There are two categories of employees paid by results: (1) vis management renders him especially vulnerable to its
those whose time and performance are supervised by the employer. blandishments, importunings, and even intimidations, and results in his
(Here, there is an element of control and supervision over the manner improvidently waiving benefits to which he is clearly entitled. Thus,
as to how the work is to be performed. A piece-rate worker belongs to quitclaims, waivers or releases are looked upon with disfavor for being
this category especially if he performs his work in the company contrary to public policy and are ineffective to bar claims for the full
premises.); and (2) those whose time and performance are measure of the workers’ legal rights. 17 An employee who is merely
unsupervised. (Here, the employer’s control is over the result of the constrained to accept the wages paid to him is not precluded from
work. Workers on pakyao and takay basis belong to this group.) Both recovering the difference between the amount he actually received and
classes of workers are paid per unit accomplished. Piece-rate payment that amount which he should have received.
is generally practiced in garment factories where work is done in the Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday
company premises, while payment on pakyao and takay basis is pay, 13th month pay, separation pay and attorney’s fees,
commonly observed in the agricultural industry, such as in sugar corresponding to 10% of the total monetary awards, in favor of
plantations where the work is performed in bulk or in volumes difficult petitioners.
to quantify.4 Petitioners belong to the first category, i.e., supervised
As petitioners were illegally dismissed, they are entitled to
employees.
reinstatement with backwages. Considering that petitioners were
In determining the existence of an employer-employee relationship, the dismissed from the service on January 17, 1989, i.e., prior to March 21,
following elements must be considered: (1) the selection and 1989, 18 the Labor Arbiter correctly applied the rule in the Mercury Drug
engagement of the employee; (2) the payment of wages; (3) the power case, 19 according to which the recovery of backwages should be
of dismissal; and (4) the power to control the employee’s conduct. 5 Of
these elements, the most important criterion is whether the employer
 8

limited to three years without qualifications or deductions. Any award in IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.
excess of three years is null and void as to the excess. 20 P 64.00/day x 26 days =
The Labor Arbiter correctly ordered private respondents to give 1,664.00/yr. x 3 yrs. = 4,992.00
separation pay. Considerable time has lapsed since petitioners’ V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6
dismissal, so that reinstatement would now be impractical and hardly yrs.
in the best interest of the parties. In lieu of reinstatement, separation P1,664.00/mo. x 6 yrs. =
pay should be awarded to petitioners at the rate of one month salary 9,984.00
for every year of service, with a fraction of at least six (6) months of ————
service being considered as one (1) year. 21
TOTAL AWARD OF
The awards for overtime pay, holiday pay and 13th month pay are in AVELINO LAMBO
accordance with our finding that petitioners are regular employees, P94,719.20
although paid on a piece-rate basis. 22 These awards are based on the
========
following computation of the Labor Arbiter:
VICENTE BELOCURA
AVELINO LAMBO
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
I. BACKWAGES: Jan. 17/89 -
Jan. 17/92 = 36 mos. Same computation as A. Lambo
P64,896.00
P 64.00/day x 26 days =
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89
1,664.00/mo. x 36 mos. = P59,904.00
Same computation as A. Lambo
13th Mo. Pay:
13,447.90
P1,664.00/yr. x 3 yrs. = 4,992.00
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
P64,896.00
Same computation as A. Lambo
————
1,399.30
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89
Jan. 17/86 - April 30/87 = 15 mos. & 12 day =
Same computation as A. Lambo
(15 mos. x 26 days + 12 days) = 402 days 4,992.00
*2 hours = 25% V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7
402 days x 2 hrs./days = 804 hrs. yrs.
P 32.00/day ÷ 8 hrs. = P1,664.00/mo. x 7 yrs. =
4.00/hr. x 25% = 11,648.00
1.00/hr. + P4.00/hr. = —————
5.00/hr. x 804 hrs. = 4,020.00 TOTAL AWARD OF VICENTE
May 1/87 - Sept. 30/87 = 4 mos. & 26 days = BELOCURA P96,383.20
(4 mos. x 26 days + 26 days) = =========
130 days SUMMARY
130 days x 2 hrs./day = 260 hrs. AVELINO LAMBO VICENTE BELOCURA
P 41.00/day ÷ 8 hrs. = ———————— —————————
5.12/hr. x 25% = I. BACKWAGES P64,896.00 P64,896.00
1.28/hr. + P5.12/hr. = II. OVERTIME PAY 13,447.90 13,447.90
6.40/hr. x 260 hrs. = P1,664.00 III. HOLIDAY PAY 1,399.30 1,399.30
Oct. 1/87 - Dec. 13/87 = 2 mos. & 11 days = IV. 13TH MO. PAY 4,992.00 4,992.00
(2 mos. x 26 days + 11 days) = 63 days V. SEPARATION PAY 9,984.00 11,648.00
63 days x 2 hrs./day = 126 hrs. ————— —————
P 49.00/day ÷ 8 hrs. = TOTAL P94,719.20 P96,383.20
6.12/hr. x 25% = = P191,102.40
1.53/hr. + P6.12/hr. = ADD: 10% Attorney's Fees 19,110.24
7.65/hr. x 126 hrs. = P963.90 —————
Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days = GRAND TOTAL P210,212.64
(13 mos. x 26 days + 2 days) = 340 days =========
340 days x 2 hrs./day = 680 hrs. Except for the award of attorney’s fees in the amount of P19,110.24,
P 64.00/day ÷ 8 hrs. = the above computation is affirmed. The award of attorney’s fees should
8.00/hr. x 25% = be disallowed, it appearing that petitioners were represented by the
2.00/hr. + P8.00/hr = Public Attorney’s Office. With regard to petitioner Avelino Lambo, the
10.00/hr. x 680 hrs. = P6,800.00 P13,447.90 amount of P10,000.00 paid to him under the compromise agreement
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 should be deducted from the total award of P94,719.20. Consequently,
Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs the award to each petitioner should be as follows:
P 32.00/day x 200% = AVELINO LAMBO VICENTE BELOCURA
64.00/day x 12 days = 768.00 ———————— —————————
32.00/day x 12 days = (384.00) P384.00 I. BACKWAGES P64,896.00 P64,896.00
32.00/day x 30% = ———— II. OVERTIME PAY 13,447.90 13,447.90
9.60/day x 8 days = 76.80 460.80 III. HOLIDAY PAY 1,399.30 1,399.30
——— IV. 13TH MONTH PAY 4,992.00 4,992.00
May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs V. SEPARATION PAY 9,984.00 11,648.00
P 41.00/day x 200% = ————— —————
82.00/day 3 days = 246.00 P 94,719.20
41.00/day x 3 days = (123.00) P123.00 Less 10,000.00
41.00/day x 30% = ———— —————
12.30/day x 3 days = 36.90 159.90 TOTAL P84,719.20 P96,383.20
———— GRAND TOTAL P181,102.40
Oct. 1/87 - Dec. 13/87 = 1 RH =========
P 49.00/day x 200% = WHEREFORE, the decision of the National Labor Relations
Commission is SET ASIDE and another one is RENDERED ordering
98.00/day x 1 day = P98.00
private respondents to pay petitioners the total amount of One Hundred
49.00/day x 1 day = (49.00) 49.00 Eighty-One Thousand One Hundred Two Pesos and 40/100
———— (P181,102.40), as computed above.1âwphi1.nêt
Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs SO ORDERED.
P 64.00/day x 200% =
128.00/day x 9 days = P1,152.00
64.00/day x 9 days = (576.00)
P576.00 G.R. No. 142824 December 19, 2001
64.00/day x 30% = ———— INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO
19.20/day x 8 days = 153.60 729.60 1,399.30 GONZALES and MA. THERESA MONTEJO, petitioners,
——— ———
 9

vs. Arbiter Caday held in abeyance the proceedings before him. However,
INTERPHIL LABORATORIES, INC., AND HONORABLE on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after
LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND finding that the issues raised would require a formal hearing and the
EMPLOYMENT, respondents. presentation of evidentiary matters, directed Labor Arbiters Caday and
KAPUNAN, J.: M. Sol del Rosario to proceed with the hearing of the cases before them
Assailed in this petition for review on certiorari are the decision, and to thereafter submit their report and recommendation to his office.
promulgated on 29 December 1999, and the resolution, promulgated On 05 September 1995, Labor Arbiter Caday submitted his
on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978. recommendation to the then Secretary of Labor Leonardo A.
Culled from the questioned decision, the facts of the case are as follows: Quisumbing.8 Then Secretary Quisumbing approved and adopted the
Interphil Laboratories Employees Union-FFW is the sole and exclusive report in his Order, dated 13 August 1997, hence:
bargaining agent of the rank-and-file employees of Interphil WHEREFORE, finding the said Report of Labor Arbiter
Laboratories, Inc., a company engaged in the business of Manuel R. Caday to be supported by substantial evidence,
manufacturing and packaging pharmaceutical products. They had a this Office hereby RESOLVES to APPROVE and ADOPT the
Collective Bargaining Agreement (CBA) effective from 01 August 1990 same as the decision in this case, and judgment is hereby
to 31 July 1993. rendered:
Prior to the expiration of the CBA or sometime in February 1993, (1) Declaring the 'overtime boycott' and 'work slowdown' as
Allesandro G. Salazar,1 Vice-President-Human Resources Department illegal strike;
of respondent company, was approached by Nestor Ocampo, the union (2) Declaring the respondent union officers namely:
president, and Hernando Clemente, a union director. The two union Nestor Ocampo President
officers inquired about the stand of the company regarding the duration
of the CBA which was set to expire in a few months. Salazar told the Carmelo Santos Vice-President
union officers that the matter could be best discussed during the formal Marites Montejo Treasurer/Board
negotiations which would start soon. Member
In March 1993, Ocampo and Clemente again approached Salazar.
They inquired once more about the CBA status and received the same Rico Gonzales Auditor
reply from Salazar. In April 1993, Ocampo requested for a meeting to Rod Abuan Director
discuss the duration and effectivity of the CBA. Salazar acceded and a
meeting was held on 15 April 1993 where the union officers asked Segundino Flores Director
whether Salazar would be amenable to make the new CBA effective for
Hernando Director
two (2) years, starting 01 August 1993. Salazar, however, declared that
Clemente
it would still be premature to discuss the matter and that the company
could not make a decision at the moment. The very next day, or on 16 who spearheaded and led the overtime boycott and work
April 1993, all the rank-and-file employees of the company refused to slowdown, to have lost their employment status; and
follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 (3) Finding the respondents guilty of unfair labor practice for
p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., violating the then existing CBA which prohibits the union or
respectively, the employees stopped working and left their any employee during the existence of the CBA from staging
workplace without sealing the containers and securing the raw a strike or engaging in slowdown or interruption of work and
materials they were working on. When Salazar inquired about the ordering them to cease and desist from further committing the
reason for their refusal to follow their normal work schedule, the aforesaid illegal acts.
employees told him to "ask the union officers." To minimize the damage Petitioner union moved for the reconsideration of the order but its
the overtime boycott was causing the company, Salazar immediately motion was denied. The union went to the Court of Appeals via a
asked for a meeting with the union officers. In the meeting, Enrico petition for certiorari. In the now questioned decision promulgated on
Gonzales, a union director, told Salazar that the employees would only 29 December 1999, the appellate court dismissed the petition. The
return to their normal work schedule if the company would agree to their union's motion for reconsideration was likewise denied.
demands as to the effectivity and duration of the new CBA. Salazar Hence, the present recourse where petitioner alleged:
again told the union officers that the matter could be better discussed THE HONORABLE FIFTH DIVISION OF THE COURT OF
during the formal renegotiations of the CBA. Since the union was APPEALS, LIKE THE HONORABLE PUBLIC
apparently unsatisfied with the answer of the company, the overtime RESPONDENT IN THE PROCEEDINGS BELOW,
boycott continued. In addition, the employees started to engage in a COMMITTED GRAVE ABUSE OF DISCRETION,
work slowdown campaign during the time they were working, thus AMOUNTING TO LACK AND/OR EXCESS OF
substantially delaying the production of the company. 2 JURISDICTION WHEN IT COMPLETELY DISREGARDED
On 14 May 1993, petitioner union submitted with respondent company "PAROL EVIDENCE RULE" IN THE EVALUATION AND
its CBA proposal, and the latter filed its counter-proposal. APPRECIATION OF EVIDENCE PROFERRED BY THE
On 03 September 1993, respondent company filed with the National PARTIES.
Labor Relations Commission (NLRC) a petition to declare illegal THE HONORABLE FIFTH DIVISION OF THE COURT OF
petitioner union's "overtime boycott" and "work slowdown" which, APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,
according to respondent company, amounted to illegal strike. The case, AMOUNTING TO LACK AND/OR EXCESS OF
docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE
Labor Arbiter Manuel R. Caday. RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL
On 22 October 1993, respondent company filed with the National SEPARATION PACKAGE TO ALMOST ALL INVOLVED
Conciliation and Mediation Board (NCMB) an urgent request for OFFICERS OF PETITIONER UNION, DURING THE
preventive mediation aimed to help the parties in their CBA PENDENCY OF THE CASE, AS TANTAMOUNT TO
negotiations.3 The parties, however, failed to arrive at an agreement CONDONATION, IF INDEED, THERE WAS ANY MISDEED
and on 15 November 1993, respondent company filed with the Office COMMITTED.
of the Secretary of Labor and Employment a petition for assumption of THE HONORABLE FIFTH DIVISION OF THE COURT OF
jurisdiction. APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,
On 24 January 1994, petitioner union filed with the NCMB a Notice of AMOUNTING TO LACK AND/OR EXCESS OF
Strike citing unfair labor practice allegedly committed by respondent JURISDICTION WHEN IT HELD THAT THE SECRETARY
company. On 12 February 1994, the union staged a strike. OF LABOR AND EMPLOYMENT HAS JURISDICTION
On 14 February 1994, Secretary of Labor Nieves Confesor issued an OVER A CASE (A PETITION TO DECLARE STRIKE
assumption order4 over the labor dispute. On 02 March 1994, Secretary ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING
Confesor issued an order directing respondent company to BEFORE THE LABOR ARBITER.9
"immediately accept all striking workers, including the fifty-three (53) We sustain the questioned decision.
terminated union officers, shop stewards and union members back to On the matter of the authority and jurisdiction of the Secretary of Labor
work under the same terms and conditions prevailing prior to the strike, and Employment to rule on the illegal strike committed by petitioner
and to pay all the unpaid accrued year end benefits of its employees in union, it is undisputed that the petition to declare the strike illegal before
1993."5 On the other hand, petitioner union was directed to "strictly and Labor Arbiter Caday was filed long before the Secretary of Labor and
immediately comply with the return-to-work orders issued by (the) Employment issued the assumption order on 14 February 1994.
Office x x x6 The same order pronounced that "(a)ll pending cases However, it cannot be denied that the issues of "overtime boycott" and
which are direct offshoots of the instant labor dispute are hereby "work slowdown" amounting to illegal strike before Labor Arbiter Caday
subsumed herewith."7 are intertwined with the labor dispute before the Labor Secretary. In
In the i, the case before Labor Arbiter Caday continued. On 16 March fact, on 16 March 1994, petitioner union even asked Labor Arbiter
1994, petitioner union filed an "Urgent Manifestation and Motion to Caday to suspend the proceedings before him and consolidate the
Consolidate the Instant Case and to Suspend Proceedings" seeking same with the case before the Secretary of Labor. When Acting Labor
the consolidation of the case with the labor dispute pending before the Secretary Brillantes ordered Labor Arbiter Caday to continue with the
Secretary of Labor. Despite objection by respondent company, Labor hearing of the illegal strike case, the parties acceded and participated
 10

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

respondents' counsel waived his cross examination (t.s.n. p. concerted activities of "overtime boycott" and "work
15, hearing on August 9, 1994). slowdown" from April 16, 1993 up to March 7, 1994, to force
Aside from the foregoing undisputed testimonies of Salazar, the petitioner company to accede to their unreasonable
the testimonies of other Department Managers pointing to the demands, can be classified as a strike on an installment basis,
union officers as the instigators of the overtime boycott and as correctly called by petitioner company x x x19
work slowdown, the testimony of Epifanio Salumbides (Exh. It is thus undisputed that members of the union by their own volition
"Y") a union member at the time the concerted activities of the decided not to render overtime services in April 1993. 20 Petitioner union
respondents took place, is quoted hereunder: even admitted this in its Memorandum, dated 12 April 1999, filed with
"2. Noon Pebrero 1993, ipinatawag ng Presidente the Court of Appeals, as well as in the petition before this Court, which
ng Unyon na si Nestor Ocampo ang lahat ng taga- both stated that "(s)ometime in April 1993, members of herein petitioner,
maintenance ng bawat departamento upang on their own volition and in keeping with the regular working hours in
dumalo sa isang miting. Sa miting na iyon, sinabi ni the Company x x x decided not to render overtime". 21 Such admission
Rod Abuan, na isang Direktor ng Unyon, na confirmed the allegation of respondent company that petitioner
mayroon ilalabas na memo ang Unyon na nag- engaged in "overtime boycott" and "work slowdown" which, to use the
uutos sa mga empleyado ng Kompanya na mag- words of Labor Arbiter Caday, was taken as a means to coerce
imbento ng sari-saring dahilan para lang hindi sila respondent company to yield to its unreasonable demands.
makapagtrabaho ng "overtime". Sinabihan rin ako More importantly, the "overtime boycott" or "work slowdown" by the
ni Tessie Montejo na siya namang Treasurer ng employees constituted a violation of their CBA, which prohibits the
Unyon na 'Manny, huwag ka na lang pumasok sa union or employee, during the existence of the CBA, to stage a strike
Biyernes para hindi ka masabihan ng magtrabaho or engage in slowdown or interruption of work. 22 In Ilaw at Buklod ng
ng Sabado at Linggo' na siya namang araw ng Manggagawa vs. NLRC ,23 this Court ruled:
"overtime" ko x x x x x x (T)he concerted activity in question would still be illicit
"3. Nakalipas ang dalawang buwan at noong unang because contrary to the workers' explicit contractual
bahagi ng Abril 1993, miniting kami ng Shop commitment "that there shall be no strikes, walkouts,
Stewards namin na sina Ariel Abenoja, Dany stoppage or slowdown of work, boycotts, secondary boycotts,
Tansiongco at Vicky Baron. Sinabihan kami na refusal to handle any merchandise, picketing, sit-down strikes
huwag ng mag-overtime pag nagbigay ng senyas of any kind, sympathetic or general strikes, or any other
ang Unyon ng "showtime." interference with any of the operations of the COMPANY
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi during the term of x x x (their collective bargaining)
na si Danny Tansiongco ng "showtime". Dahil dito agreement."
wala ng empleyadong nag-overtime at sabay-sabay What has just been said makes unnecessary resolution of
silang umalis, maliban sa akin. Ako ay pumasok rin SMC's argument that the workers' concerted refusal to
noong Abril 17 at 18, 1993 na Sabado at Linggo. adhere to the work schedule in force for the last several years,
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag is a slowdown, an inherently illegal activity essentially illegal
ni Ariel Abenoja Shop Steward, sa opisina ng even in the absence of a no-strike clause in a collective
Unyon. Nadatnan ko doon ang halos lahat ng bargaining contract, or statute or rule. The Court is in
opisyales ng Unyon na sina: substantial agreement with the petitioner's concept of a
slowdown as a "strike on the installment plan;" as a willful
Nestor Ocampo Presidente
reduction in the rate of work by concerted action of workers
Carmelo Bise- for the purpose of restricting the output of the employer, in
Santos Presidente relation to a labor dispute; as an activity by which workers,
without a complete stoppage of work, retard production or
Nanding Director their performance of duties and functions to compel
Clemente
management to grant their demands. The Court also agrees
TessMontejo Chief Steward that such a slowdown is generally condemned as inherently
illicit and unjustifiable, because while the employees
Segundo Flores Director "continue to work and remain at their positions and accept the
Enrico Auditor wages paid to them," they at the same time "select what part
Gonzales of their allotted tasks they care to perform of their own volition
or refuse openly or secretly, to the employer's damage, to do
Boy Alcantara Shop Steward other work;" in other words, they "work on their own terms." x
Rod Abuan Director x x24
Finally, the Court cannot agree with the proposition that respondent
at marami pang iba na hindi ko na maala-ala. company, in extending substantial separation package to some officers
Pagpasok ko, ako'y pinaligiran ng mga opisyales ng of petitioner union during the pendency of this case, in effect, condoned
Unyon. Tinanong ako ni Rod Aguan kung bakit ako the illegal acts they committed.
"nag-overtime" gayong "Binigyan ka na namin ng
Respondent company correctly postured that at the time these union
instruction na huwag pumasok, pinilit mo pa ring
officers obtained their separation benefits, they were still considered
pumasok." "Management ka ba o Unyonista."
employees of the company. Hence, the company was merely
Sinagot ko na ako ay Unyonista. Tinanong niya muli
complying with its legal obligations.25 Respondent company could have
kung bakit ako pumasok. Sinabi ko na wala akong
withheld these benefits pending the final resolution of this case. Yet,
maibigay na dahilan para lang hindi pumasok at
considering perhaps the financial hardships experienced by its
"mag-overtime." Pagkatapos nito, ako ay
employees and the economic situation prevailing, respondent company
pinagmumura ng mga opisyales ng Unyon kaya't
chose to let its employees avail of their separation benefits. The Court
ako ay madaliang umalis.
views the gesture of respondent company as an act of generosity for
xxx xxx xxx which it should not be punished.
Likewise, the respondents' denial of having a hand in the work WHEREFORE, the petition is DENIED DUE COURSE and the 29
slowdown since there was no change in the performance and December 1999 decision of the Court of Appeals is AFFIRMED.
work efficiency for the year 1993 as compared to the previous
SO ORDERED.
year was even rebuffed by their witness Ma. Theresa Montejo,
a Quality Control Analyst. For on cross-examination, she
(Montejo) admitted that she could not answer how she was
able to prepare the productivity reports from May 1993 to
February 1994 because from April 1993 up to April 1994, she G.R. No. 153031 December 14, 2006
was on union leave. As such, the productivity reports she had PCL SHIPPING PHILIPPINES, INC. and U-MING MARINE
earlier shown was not prepared by her since she had no TRANSPORT CORPORATION, petitioners,
personal knowledge of the reports (t.s.n. pp. 32-35, hearing vs.
of February 27, 1995). Aside from this admission, the NATIONAL LABOR RELATIONS COMMISSION and STEVE
comparison made by the respondents was of no moment, RUSEL, respondents.
because the higher production for the years previous to 1993
was reached when the employees regularly rendered
overtime work. But undeniably, overtime boycott and work DECISION
slowdown from April 16, 1993 up to March 7, 1994 had
resulted not only in financial losses to the company but also
damaged its business reputation. AUSTRIA-MARTINEZ, J.:
Evidently, from all the foregoing, respondents' unjustified
unilateral alteration of the 24-hour work schedule thru their
 12

Before the Court is a petition for review on certiorari under Rule 45 of III. The private respondent is not entitled to other money
the Rules of Court assailing the Decision1 of the Court of Appeals (CA) claims, particularly as to the award of attorney's fees.9
dated December 18, 2001 in CA-G.R. SP No. 59976, which affirmed As to their first assigned error, petitioners contend that the CA erred in
the Decision of the National Labor Relations Commission (NLRC) affirming the findings of the NLRC that Rusel's act of jumping ship does
dated March 22, 2000 in NLRC NCR CA No. 018120-99; and the not establish any intent on his part to abandon his job and never return.
Resolution of the CA dated April 10, 2002, denying petitioners' motion Petitioners argue that Rusel's very act of jumping from the vessel and
for reconsideration.2 swimming to shore is evidence of highest degree that he has no
The facts of the case, as found by the CA, are as follows: intention of returning to his job. Petitioners further contend that if Rusel
In April 1996, Rusel was employed as GP/AB seaman by was indeed suffering from unbearable and unmitigated pain, it is
manning agency, PCL Shipping Philippines, Inc. (PCL unlikely that he is able to swim two (2) nautical miles, which is the
Shipping) for and in behalf of its foreign principal, U-Ming distance between their ship and the shore, considering that he needed
Marine Transport Corporation (U-Ming Marine). Rusel to use his limbs in swimming. Petitioners further assert that it is error
thereby joined the vessel MV Cemtex General (MV Cemtex) on the part of the CA to disregard the entries contained in the logbook
for the contract period of twelve (12) months with a basic and in the Marine Note Protest evidencing Rusels' offense of desertion
monthly salary of US$400.00, living allowance of US$140.00, because while these pieces of evidence were belatedly presented, the
fixed overtime rate of US$120.00 per month, vacation leave settled rule is that additional evidence may be admitted on appeal in
with pay of US$40.00 per month and special allowance of labor cases. Petitioners also contend that Rusel's act of desertion is a
US$175.00. grave and serious offense and considering the nature and situs of
On July 16, 1996, while Rusel was cleaning the vessel's employment as well as the nationality of the employer, the twin
kitchen, he slipped, and as a consequence thereof, he requirements of notice and hearing before an employee can be validly
suffered a broken and/or sprained ankle on his left foot. A terminated may be dispensed with.
request for medical examination was flatly denied by the As to their second assigned error, petitioners contend that assuming,
captain of the vessel. On August 13, 1996, feeling an for the sake of argument, that Rusel is not guilty of desertion, they
unbearable pain in his ankle, Rusel jumped off the vessel invoked the alternative defense that the termination of his employment
using a life jacket and swam to shore. He was brought to a was validly made pursuant to petitioners' right to exercise their
hospital where he was confined for eight (8) days. prerogative to pre-terminate such employment in accordance with
On August 22, 1996, a vessel's agent fetched Rusel from the Section 19(C) of the Standard Terms and Conditions Governing the
hospital and was required to board a plane bound for the Employment of Filipino Seafarers On-Board Ocean-Going Vessels,
Philippines. which provision was incorporated in Rusel's Contract of Employment
On September 26, 1996, Rusel filed a complaint for illegal with petitioners. Petitioners assert that despite the fact that this issue
dismissal, non-payment of wages, overtime pay, claim for was raised before the CA, the appellate court failed to resolve the same.
medical benefits, sick leave pay and damages against PCL Anent the last assigned error, petitioners argue that it is error on the
Shipping and U-Ming Marine before the arbitration branch of part of the CA to affirm the award of living allowance, overtime pay,
the NLRC. In their answer, the latter alleged that Rusel vacation pay and special allowance for two months because Rusel
deserted his employment by jumping off the vessel. failed to submit substantial evidence to prove that he is entitled to these
On July 21, 1998, the labor arbiter rendered his decision, the awards. Petitioners further argue that these money claims, particularly
dispositive portion of which reads as follows: the claim for living allowance, should not be granted because they
Wherefore, above premises duly considered we find partake of the nature of earned benefits for services rendered by a
the respondent liable for unjust repatriation of the seafarer. Petitioners also contend that the balance of Rusel's wages
complainant. from August 11-22, 1996 should be applied for the payment of the costs
of his repatriation, considering that under Section 19(E) of the Standard
Accordingly, the following award is hereby adjudged
Terms and Conditions Governing the Employment of Filipino Seafarers
against the respondent:
On-Board Ocean-Going Vessels, when a seafarer is discharged for any
1. The amount of $2,625.00 or its peso equivalent just cause, the employer shall have the right to recover the costs of his
at the time of payment representing three (3) replacement and repatriation from the seafarer's wages and other
months salary of the complainant due to his illegal earnings. Lastly, petitioners argue that the award of attorney's fees
dismissal. should be deleted because there is nothing in the decision of the Labor
2. The amount of $1,600.00 or its peso equivalent, Arbiter or the NLRC which states the reason why attorney's fees are
representing sick wage benefits. being awarded.
3. The amount of $550.00 or its peso equivalent, In his Comment, private respondent contends that petitioners are
representing living allowance, overtime pay and raising issues of fact which have already been resolved by the Labor
special allowance for two (2) months. Arbiter, NLRC and the CA. Private respondent argues that, aside from
4. The amount of $641.66 or its peso equivalent, the fact that the issues raised were already decided by three tribunals
representing unpaid wages from August 11 to 22, against petitioners' favor, it is a settled rule that only questions of law
1996. may be raised in a petition for review on certiorari under Rule 45 of the
5. Attorney's fees equivalent to 10% of the total Rules of Court. While there are exceptions to this rule, private
monetary award. respondent contends that the instant case does not fall under any of
The rest of the claims are dismissed for lack of merit. these exceptions. Private respondent asserts that petitioners failed to
SO ORDERED.3 substantiate their claim that the former is guilty of desertion. Private
Aggrieved by the Decision of the Labor Arbiter, herein petitioners respondent further contends that the right to due process is available
appealed to the NLRC. In its Decision dated March 22, 2000, the NLRC to local and overseas workers alike, pursuant to the provisions of the
affirmed the findings of the Labor Arbiter but modified the appealed Constitution on labor and equal protection as well as the declared policy
Decision, disposing as follows: contained in the Labor Code. Private respondent argues that
WHEREFORE, premises considered, the assailed decision is petitioners' act of invoking the provisions of Section 19(C) of the POEA
as it is hereby ordered MODIFIED in that the amount Contract as an alternative defense is misplaced and is inconsistent with
representing three months salary of the complainant due to their primary defense that private respondent was dismissed on the
his illegal dismissal is reduced to US$1,620.00. Further the ground of desertion. As to the award of attorney's fees, private
award of sick wage benefit is deleted. respondent contends that since petitioners' act compelled the former to
All other dispositions are AFFIRMED. incur expenses to protect his interest and enforce his lawful claims, and
because petitioners acted in gross and evident bad faith in refusing to
SO ORDERED.4
satisfy private respondent's lawful claims, it is only proper that
Petitioners filed a Motion for Reconsideration but the NLRC denied the attorney's fees be awarded in favor of the latter. Anent the other
same in its Decision of May 3, 2000.5 monetary awards, private respondent argues that these awards are all
Petitioners filed a petition for certiorari with the CA.6 In its Decision premised on the findings of the Labor Arbiter, NLRC and the CA that
dated December 18, 2001, the CA dismissed the petition and affirmed private respondent's dismissal was improper and illegal.
the NLRC Decision.7 The Court finds the petition without merit.
Petitioners filed a Motion for Reconsideration but it was denied by the Anent the first assigned error, it is a settled rule that under Rule 45 of
CA in its Resolution dated April 10, 2002. 8 the Rules of Court, only questions of law may be raised in this
Hence, the instant petition with the following assignment of errors: Court.10 Judicial review by this Court does not extend to a re-evaluation
I. The Court of Appeals erred in ruling that private respondent of the sufficiency of the evidence upon which the proper labor tribunal
was illegally dismissed from employment. has based its determination.11 Firm is the doctrine that this Court is not
xxxx a trier of facts, and this applies with greater force in labor
II. Likewise, the Court of Appeals erred in not upholding cases.12 Factual issues may be considered and resolved only when the
petitioners' right to pre-terminate private respondent's findings of facts and conclusions of law of the Labor Arbiter are
employment. inconsistent with those of the NLRC and the CA. 13 The reason for this
xxxx is that the quasi-judicial agencies, like the Arbitration Board and the
NLRC, have acquired a unique expertise because their jurisdiction are
 13

confined to specific matters.14 In the present case, the question of C. If the vessel arrives at a convenient port within a period of
whether private respondent is guilty of desertion is factual. The Labor three months before the expiration of his contract, the master/
Arbiter, NLRC and the CA are unanimous in their findings that private employer may repatriate the seafarer from such port provided
respondent is not guilty of desertion and that he has been illegally that the seafarer shall be paid all his earned wages. In
terminated from his employment. After a review of the records of the addition, the seafarer shall also be paid his leave pay for the
instant case, this Court finds no cogent reason to depart from the entire contract period plus a termination pay equivalent to one
findings of these tribunals. (1) month of his basic pay, provided, however, that this mode
Petitioners assert that the entries in the logbook of MV Cemtex of termination may only be exercised by the master/employer
General15 and in the Marine Note Protest16 which they submitted to the if the original contract period of the seafarer is at least ten (10)
NLRC confirm the fact that private respondent abandoned the vessel months; provided, further, that the conditions for this mode of
in which he was assigned. However, the genuineness of the Marine termination shall not apply to dismissal for cause.
Note Protest as well as the entries in the logbook are put in doubt The Court is not persuaded. POEA Memorandum Circular No. 055-96
because aside from the fact that they were presented only during took effect on January 1, 1997 while the contract of employment
petitioners' Motion for Reconsideration filed with the NLRC, both the entered into by and between private respondent and petitioners was
Marine Note Protest and the entry in the logbook which were prepared executed on April 10, 1996. Hence, it is wrong for petitioners to cite this
by the officers of the vessel were neither notarized nor authenticated particular Memorandum because at the time of petitioners' and private
by the proper authorities. Moreover, a reading of these entries simply respondent's execution of their contract of employment Memorandum
shows that private respondent was presumed to have deserted his post Circular No. 055-96 was not yet effective.
on the sole basis that he was found missing while the MV Cemtex What was in effect at the time private respondent's Contract of
General was anchored at the port of Takehara, Japan. Hence, without Employment was executed was POEA Memorandum Circular No. 41,
any corroborative evidence, these documents cannot be used as bases Series of 1989. It is clearly provided under the second paragraph of
for concluding that private respondent was guilty of desertion. private respondent's Contract of Employment that the terms and
Petitioners also question the findings and conclusion of the Labor conditions provided under Memorandum Circular No. 41, Series of
Arbiter and the NLRC that what caused private respondent in jumping 1989 shall be strictly and faithfully observed. Hence, it is Memorandum
overboard was the unmitigated pain he was suffering which was Circular No. 41, Series of 1989 which governs private respondent's
compounded by the inattention of the vessel's captain to provide him contract of employment.
with the necessary treatment inspite of the fact that the ship was Section H (6), Part I of Memorandum Circular No. 41, which has almost
moored for about two weeks at the anchorage of Takehara, Japan; and, identical provisions with Section 19 (C) of Memorandum Circular No.
that private respondent's act was a desperate move to protect himself 055-96, provides as follows:
and to seek relief for his physical suffering. Petitioners contend that the SECTION H. TERMINATION OF EMPLOYMENT
findings and conclusions of the Labor Arbiter and the NLRC which were xxxx
affirmed by the CA are based on conjecture because there is no 6. If the vessel arrives at a convenient port within a period of
evidence to prove that, at the time he jumped ship, private respondent three (3) months before the expiration of the Contract, the
was really suffering from an ankle injury. master/employer may repatriate the seaman from such port
It is true that no substantial evidence was presented to prove that the provided that the seaman shall be paid all his earned wages.
cause of private respondent's confinement in a hospital in Takehara, In addition, the seaman shall also be paid his leave pay for
Japan was his ankle injury. The Court may not rely on the letter marked the entire contract period plus a termination pay equivalent to
as Annex "B" and attached to private respondent's Position Paper one (1) month of his basic pay, provided, however, that this
because it was unsigned and it was not established who executed the mode of termination may only be exercised by the
same.17 However, the result of the x-ray examination conducted by the master/employer if the original contact period of the seaman
LLN Medical Services, Inc. on August 26, 1996, right after private is at least ten (10) months; provided, further, that the
respondent was repatriated to the Philippines, clearly showed that there conditions for this mode of termination shall not apply to
is a soft-tissue swelling around his ankle joint. 18 This evidence is dismissal for cause.
consistent with private respondent's claim that he was then suffering The Court agrees with private respondent's contention that petitioners'
from an ankle injury which caused him to jump off the ship. arguments are misplaced. Petitioners may not use the above-quoted
As to petitioners' contention that private respondent could not have provision as basis for terminating private respondent's employment
traversed the distance between the ship and the shore if he was indeed because it is incongruent with their primary defense that the latter's
suffering from unbearable pain by reason of his ankle injury, suffice it dismissal from employment was for cause. Petitioners may not claim
to say that private respondent is an able-bodied seaman and that with that they ended private respondent's services because he is guilty of
the full use of both his arms and the help of a life jacket, was able to desertion and at the same time argue that they exercised their option
reach the shore. to prematurely terminate his employment, even without cause, simply
As correctly defined by petitioners, desertion, in maritime law is: because they have the right to do so under their contract. These
The act by which a seaman deserts and abandons a ship or grounds for termination are inconsistent with each other such that the
vessel, in which he had engaged to perform a voyage, before use of one necessarily negates resort to the other. Besides, it appears
the expiration of his time, and without leave. By desertion, in from the records that petitioners' alternative defense was pleaded
maritime law, is meant, not a mere unauthorized absence merely as an afterthought because it was only in their appeal with the
from the ship, without leave, but an unauthorized absence NLRC that they raised this defense. The only defense raised by
from the ship with an intention not to return to her service; petitioners in their Answer with Counterclaim filed with the office of the
or as it is often expressed, animo non revertendi, that is, with Labor Arbiter is that private respondent was dismissed from
an intention to desert.19 (emphasis supplied) employment by reason of desertion.23 Under the Rules of
Hence, for a seaman to be considered as guilty of desertion, it is Court,24 which is applicable in a suppletory character in labor cases
essential that there be evidence to prove that if he leaves the ship or before the Labor Arbiter or the NLRC pursuant to Section 3, Rule I of
vessel in which he had engaged to perform a voyage, he has the clear the New Rules of Procedure of the NLRC25, defenses which are not
intention of abandoning his duty and of not returning to the ship or raised either in a motion to dismiss or in the answer are deemed
vessel. In the present case, however, petitioners failed to present clear waived.26
and convincing proof to show that when private respondent jumped Granting, for the sake of argument, that petitioners may use Section H
ship, he no longer had the intention of returning. The fact alone that he (6), Part I of Memorandum Circular No. 41 or Section 19(C) of
jumped off the ship where he was stationed, swam to shore and sought Memorandum Circular No. 055-96 as basis for terminating private
medical assistance for the injury he sustained is not a sufficient basis respondent's employment, it is clear that one of the conditions before
for petitioners to conclude that he had the intention of deserting his post. any of these provisions becomes applicable is when the vessel arrives
Settled is the rule that in termination cases, the burden of proof rests at a convenient port within a period of three (3) months before the
upon the employer to show that the dismissal is for a just and valid expiration of the contract of employment. In the present case, private
cause.20 The case of the employer must stand or fall on its own merits respondent's contract was executed on April 10, 1996 for a duration of
and not on the weakness of the employee's defense. 21 In the present twelve months. He was deployed aboard MV Cemtex General on June
case, since petitioners failed to discharge their burden of proving that 25, 1996 and repatriated to the Philippines on August 22, 1996. Hence,
private respondent is guilty of desertion, the Court finds no reason to it is clear that petitioners did not meet this condition because private
depart from the conclusion of the Labor Arbiter, NLRC and the CA that respondent's termination was not within a period of three months before
private respondent's dismissal is illegal. the expiration of his contract of employment.
In their second assigned error, petitioners cite Section 19(C) of POEA Moreover, the Court finds nothing in the records to show that petitioners
Memorandum Circular No. 055-9622 known as the Revised Standard complied with the other conditions enumerated therein, such as the
Employment Terms and Conditions Governing the Employment of payment of all of private respondent's earned wages together with his
Filipino Seafarers On Board Ocean-Going Vessels as their alternative leave pay for the entire contract period as well as termination pay
basis in terminating the employment of private respondent. Said equivalent to his one month salary.
Section provides as follows: Petitioners admit that they did not inform private respondent in writing
Section 19. REPATRIATION of the charges against him and that they failed to conduct a formal
xxxx investigation to give him opportunity to air his side. However, petitioners
 14

contend that the twin requirements of notice and hearing applies strictly With respect, however, to the award of overtime pay, the correct
only when the employment is within the Philippines and that these need criterion in determining whether or not sailors are entitled to overtime
not be strictly observed in cases of international maritime or overseas pay is not whether they were on board and can not leave ship beyond
employment. the regular eight working hours a day, but whether they actually
The Court does not agree. The provisions of the Constitution as well as rendered service in excess of said number of hours. 31 In the present
the Labor Code which afford protection to labor apply to Filipino case, the Court finds that private respondent is not entitled to overtime
employees whether working within the Philippines or abroad. Moreover, pay because he failed to present any evidence to prove that he
the principle of lex loci contractus (the law of the place where the rendered service in excess of the regular eight working hours a day.
contract is made) governs in this jurisdiction.27 In the present case, it is On the basis of the foregoing, the remaining benefits to which the
not disputed that the Contract of Employment entered into by and private respondent is entitled is the living allowance of
between petitioners and private respondent was executed here in the US$140.00/month, which was removed in the computation of private
Philippines with the approval of the Philippine Overseas Employment respondent's salary, special allowance of US$175.00/month and
Administration (POEA). Hence, the Labor Code together with its vacation leave with pay amounting to US$40.00/month. Since private
implementing rules and regulations and other laws affecting labor apply respondent rendered service for two months these benefits should be
in this case.28 Accordingly, as to the requirement of notice and hearing doubled, giving a total of US$710.00.
in the case of a seafarer, the Court has already ruled in a number of As to the award of attorney's fees, this Court ruled in Reyes v. Court of
cases that before a seaman can be dismissed and discharged from the Appeals,32 as follows:
vessel, it is required that he be given a written notice regarding the x x x [T]here are two commonly accepted concepts of
charges against him and that he be afforded a formal investigation attorney's fees, the so-called ordinary and extraordinary. In
where he could defend himself personally or through a its ordinary concept, an attorney's fee is the reasonable
representative.29 Hence, the employer should strictly comply with the compensation paid to a lawyer by his client for the legal
twin requirements of notice and hearing without regard to the nature services he has rendered to the latter. The basis of this
and situs of employment or the nationality of the employer. Petitioners compensation is the fact of his employment by and his
failed to comply with these twin requirements. agreement with the client. In its extraordinary concept,
Petitioners also contend that the wages of private respondent from attorney's fees are deemed indemnity for damages ordered
August 11-22, 1996 were applied to the costs of his repatriation. by the court to be paid by the losing party in a litigation. The
Petitioners argue that the off-setting of the costs of his repatriation instances where these may be awarded are those
against his wages for the aforementioned period is allowed under the enumerated in Article 2208 of the Civil Code, specifically par.
provisions of Section 19(E) of Memorandum Circular No. 055-96 which 7 thereof which pertains to actions for recovery of wages, and
provides that when the seafarer is discharged for any just cause, the is payable not to the lawyer but to the client, unless they have
employer shall have the right to recover the costs of his replacement agreed that the award shall pertain to the lawyer as additional
and repatriation from the seafarer's wages and other earnings. compensation or as part thereof. The extraordinary concept
The Court does not agree. Section 19(E) of Memorandum Circular No. of attorney's fees is the one contemplated in Article 111 of the
055-96 has its counterpart provision under Section H (2), Part II of Labor Code, which provides:
Memorandum Circular No. 41, to wit: Art. 111. Attorney's fees. – (a) In cases of unlawful
SECTION H. REPATRIATION withholding of wages, the culpable party may be
xxxx assessed attorney's fees equivalent to ten percent
2. When the seaman is discharged for disciplinary reasons, of the amount of wages recovered x x x
the employer shall have the right to recover the costs of The afore-quoted Article 111 is an exception to the
maintenance and repatriation from the seaman's balance of declared policy of strict construction in the awarding of
wages and other earnings. attorney's fees. Although an express finding of facts and
xxxx law is still necessary to prove the merit of the award,
It is clear under the above-quoted provision that the employer shall there need not be any showing that the employer acted
have the right to recover the cost of repatriation from the seaman's maliciously or in bad faith when it withheld the wages.
wages and other earnings only if the concerned seaman is validly There need only be a showing that the lawful wages were
discharged for disciplinary measures. In the present case, since not paid accordingly, as in this case.
petitioners failed to prove that private respondent was validly In carrying out and interpreting the Labor Code's provisions
terminated from employment on the ground of desertion, it only follows and its implementing regulations, the employee's welfare
that they do not have the right to deduct the costs of private should be the primordial and paramount consideration. This
respondent's repatriation from his wages and other earnings. kind of interpretation gives meaning and substance to the
Lastly, the Court is not persuaded by petitioners' contention that the liberal and compassionate spirit of the law as provided in
private respondent is not entitled to his money claims representing his Article 4 of the Labor Code which states that "[a]ll doubts in
living allowance, overtime pay, vacation pay and special allowance as the implementation and interpretation of the provisions of [the
well as attorney's fees because he failed to present any proof to show Labor] Code including its implementing rules and regulations,
that he is entitled to these awards. shall be resolved in favor of labor", and Article 1702 of the
However, the Court finds that the monetary award representing private Civil Code which provides that "[i]n case of doubt, all labor
respondent's three months salary as well as the award representing his legislation and all labor contracts shall be construed in favor
living allowance, overtime pay, vacation pay and special allowance of the safety and decent living for the laborer." 33 (Emphasis
should be modified. supplied)
The Court finds no basis in the NLRC's act of including private In the present case, it is true that the Labor Arbiter and the NLRC failed
respondent's living allowance as part of the three months salary to to state the reasons why attorney's fees are being awarded. However,
which he is entitled under Section 10 of Republic Act (RA) No. 8042, it is clear that private respondent was illegally terminated from his
otherwise known as the "Migrant Workers and Overseas Filipinos Act employment and that his wages and other benefits were withheld from
of 1995." The pertinent provisions of the said Act provides: him without any valid and legal basis. As a consequence, he is
compelled to file an action for the recovery of his lawful wages and other
Sec. 10. Money Claims –
benefits and, in the process, incurred expenses. On these bases, the
xxxx Court finds that he is entitled to attorney's fees.
In case of termination of overseas employment without just, WHEREFORE, the petition is PARTLY GRANTED. The Court of
valid or authorized cause as defined by law or contract, the Appeals' Decision dated December 18, 2001 and Resolution dated
worker shall be entitled to the full reimbursement of his April 10, 2002 are AFFIRMED with MODIFICATION to the effect that
placement fee with interest at twelve percent (12%) per the award of US$1620.00 representing private respondent's three
annum, plus his salaries for the unexpired portion of his months salary is reduced to US$1200.00. The award of US$550.00
employment contract or for three (3) months for every year of representing private respondent's living allowance, overtime pay,
the unexpired term, whichever is less. vacation pay and special allowance for two months is deleted and in
xxxx lieu thereof, an award of US$710.00 is granted representing private
It is clear from the above-quoted provision that what is included in the respondent's living allowance, special allowance and vacation leave
computation of the amount due to the overseas worker are only his with pay for the same period.
salaries. Allowances are excluded. In the present case, since private No costs.
respondent received a basic monthly salary of US$400.00, he is, SO ORDERED.
therefore, entitled to receive a sum of US$1200.00, representing three
months of said salary.
As to the awards of living allowance, overtime pay, vacation pay and
special allowance, it is clearly provided under private respondent's
Contract of Employment that he is entitled to these benefits as follows: G.R. No. 169434 March 28, 2008
living allowance of US$140.00/month; vacation leave with pay LAZARO V. DACUT, CESARIO G. CAJOTE, ROMERLO F.
equivalent to US$40.00/month; overtime rate of US$120.00/month; and, TUNGALA, LOWEL Z. ZUBISTA, and ORLANDO P.
special allowance of US$175.00/month.30 TABOY, Petitioners,
 15

vs.
Taboy P1,307.68 P1,076.91 P5,000.00
COURT OF APPEALS (Special Twelfth Division), STA. CLARA
INTERNATIONAL TRANSPORT AND EQUIPMENT CORPORATION,
and NICANDRO LINAO, Respondents.
[Total] P5,456.34 P4,331.48 P25,915.35
DECISION
QUISUMBING, J.:
Assailed in this petition for review are the Decision 1 dated June 21, 2. Zubista’s wage differential amounting to THIRTY-FOUR
2005 and the Resolution2 dated August 22, 2005 of the Court of THOUSAND SIX HUNDRED EIGHTY-SEVEN PESOS and
Appeals in CA-G.R. SP No. 76096, which affirmed the 70/100 (P34,687.70)[.]
Resolution3 dated May 20, 2002 of the National Labor Relations SO ORDERED.9
Commission (NLRC). The NLRC had affirmed the decision 4 of the Petitioners appealed to the NLRC alleging that the Labor Arbiter erred:
Labor Arbiter in NLRC Case No. NCR-00-09-09578-99, dismissing (1) in entertaining the company’s reply after the case had been
petitioners’ complaint for constructive dismissal but ordering the submitted for decision; (2) in not finding that Dacut, Cajote and Tungala
payment of their holiday pay, accrued sick and vacation leaves and were constructively dismissed; (3) in not finding that petitioners were
wage differential. entitled to their monetary claims; and (4) in not finding that petitioners
The antecedent facts culled from the submissions below are as follows: were entitled to actual, moral and exemplary damages as well as
Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala, litigation costs and attorney’s fees. At this point, Dacut and Tungala
Lowel Z. Zubista, and Orlando P. Taboy were crew members of the further contended that they resigned because they were being
LCT "BASILISA", an inter-island cargo vessel owned by private harassed by the company due to a complaint for violation of labor
respondent Sta. Clara International Transport and Equipment standards they had filed earlier against it.
Corporation. On May 20, 2002, the NLRC affirmed the Labor Arbiter’s
On November 29, 1998, Dacut discovered a hole in the vessel’s engine decision. 10 The NLRC clarified that although the Labor Arbiter has
room. The company had the hole patched up with a piece of iron and declared the case submitted for decision, the Labor Arbiter may still
cement. Despite the repair, Dacut and Tungala resigned in July 1999 entertain the company’s reply in order to ascertain the facts of the case.
due to the vessel’s alleged unseaworthiness. 5 The NLRC also declared that Dacut, Cajote and Tungala voluntarily
executed their resignation letters.1avvphi1
On the other hand, Cajote went on leave from April 12-28, 1999 to
undergo eye treatment. Since then, he has incurred several Petitioners elevated the case to the Court of Appeals which likewise
unauthorized absences. Fearing that he will be charged as Absent affirmed the findings of the NLRC. Petitioners now come before us
Without Leave (AWOL), Cajote resigned in June 1999. 6 alleging that the appellate court committed serious errors of law:
On September 22, 1999, petitioners filed a complaint7 for constructive I.
dismissal amounting to illegal dismissal (except for Zubista and Taboy); … in holding that there was nothing irregular in admitting
underpayment of wages, special and regular holidays; non-payment of respondents’ belatedly submitted reply and making the same
rest days, sick and vacation leaves, night shift differentials, subsistence the primary basis of the decision despite the fact that
allowance, and fixed overtime pay; actual, moral and exemplary petitioners had not been given the chance to refute its
damages; and litigation costs and attorney’s fees. contents.
Dacut and Tungala claimed that they resigned after Reynalyn G. Orlina, II.
the secretary of the Personnel Manager, told them that they will be paid … IN HOLDING THAT PETITIONERS LAZARO DACUT, [ET]
their separation pay if they voluntarily resigned. They also resigned AL. VOLUNTARILY RESIGNED FROM THEIR
because the vessel has become unseaworthy after the company EMPLOYMENT AND WERE NOT CONSTRUCTIVELY
refused to have it repaired properly.8 Meanwhile, Cajote alleged that he DISMISSED.
resigned because the company hired a replacement while he was still III.
on leave. When he returned, the Operations Manager told him that he … IN RULING THAT PETITIONERS [WERE] NOT
will be paid his separation pay if he voluntarily resigned; otherwise, he ENTITLED TO THEIR OTHER MONETARY CLAIMS.11
would be charged for being AWOL. On the other hand, Zubista claimed Essentially, we are asked to resolve: (1) whether the Labor Arbiter
that his wage was below the minimum set by the Regional Tripartite erred in admitting the company’s reply after the case had been
Wages and Productivity Board. Finally, petitioners alleged that they submitted for decision; (2) whether Dacut, Tungala and Cajote
were not paid their rest days, sick and vacation leaves, night shift voluntarily resigned from their employment; and (3) whether petitioners
differentials, subsistence allowance, and fixed overtime pay. were entitled to their monetary claims.1avvphi1
After the Labor Arbiter declared the case submitted for decision, the The first issue deals with technical rules and procedural matters. Well-
company filed its reply to petitioners’ position paper. It countered that settled is the rule that technical rules of procedure are not binding in
Dacut and Tungala voluntarily resigned due to the vessel’s alleged labor cases.12 In fact, it is the spirit and intention of the Labor Code that
unseaworthiness while Cajote resigned to avoid being charged as labor officials shall use all reasonable means to ascertain the facts in
AWOL. It also claimed that petitioners’ monetary claims had no basis. each case speedily and objectively, without regard to technicalities of
On August 2, 2000, the Labor Arbiter dismissed petitioners’ complaint. law or procedure.13
The Labor Arbiter ruled that there was sufficient evidence to prove that In our view, the fact that the Labor Arbiter admitted the company’s reply
the vessel was seaworthy. Thus, the fear of Dacut and Tungala was after the case had been submitted for decision did not make the
unfounded, and they must bear the consequence of their resignation. proceedings before him irregular. Petitioners were given adequate
The Labor Arbiter also observed that Cajote has incurred excessive opportunity in the NLRC and the Court of Appeals to rebut the
unauthorized absences which would warrant his dismissal under the company’s evidence against them.
Labor Code. Thus, the Labor Arbiter upheld the company’s position that The second and third issues require a review of factual matters. Under
Cajote resigned to avoid being charged as AWOL. Finally, the Labor Rule 45 of the Rules of Court, a petition for review on certiorari shall
Arbiter noted that except for the holiday pay, accrued sick and vacation only raise questions of law considering that the findings of fact of the
leaves, and wage differential, petitioners failed to substantiate their Court of Appeals are, as a general rule, conclusive upon and binding
monetary claims. The Labor Arbiter thus held: on this Court. This doctrine applies with greater force in labor cases
WHEREFORE, the foregoing premises considered, judgment is hereby where the factual findings of the labor tribunals are affirmed by the
rendered dismissing complainants’ charge for constructive dismissal Court of Appeals. The reason is that labor officials are deemed to have
and the concomitant prayer that goes therewith for lack of merit. acquired expertise in matters within their jurisdiction and therefore, their
However, respondent is ordered to pay the following: factual findings are generally accorded not only respect but also
1. [Complainants’] holiday pay and the cash equivalent of finality. 14
their accrued sick leave/vacation leave credits to: Here, the Labor Arbiter, the NLRC, and the Court of Appeals were
unanimous in finding that the primary reason why Dacut and Tungala
Holiday Pay Accrued
resigned was the vessel’s alleged unseaworthiness as borne by their
pleadings before the Labor Arbiter. Dacut and Tungala never
Regular Special S/L - V/L
mentioned that they resigned because they were being harassed by
Credits
the company due to a complaint for violation of labor standards they
had filed against it. This ground was alleged only before the NLRC and
Dacut P1,000.00 P1,099.98 P8,365.35
not a single act or incident was cited to prove this point. Even the
alleged assurance by Orlina, that they would be given separation pay,
Tungala P 933.32 P 756.66 P7,850.00 served merely as a secondary reason why they resigned. In fact, we
doubt that such assurance was even made considering that as
secretary of the Personnel Manager, it was not shown under what
Cajote P1,292.30 P 682.95 P2,100.00 authority Orlina acted when she told Dacut and Tungala to resign.
Likewise deserving scant consideration is Cajote’s claim that the
Operations Manager told him that he will be paid separation pay if he
Zubista P 923.04 P 714.98 P2,600.00 resigned voluntarily; otherwise, he would be charged as AWOL.
Although the company already hired a replacement, Cajote admitted
 16

that he was still employed at the time he resigned. In fact, the company union dues against the private respondent's salary in view of
tried to give him another assignment but he refused it. Thus, the only an alleged existing CBA between the Norwegian Seaman's
reason why Cajote resigned was his long unauthorized absences which Union (NSU, for brevity) and the petitioner's principal,
would have warranted his dismissal in any case. Blackfriars Shipping Co., Ltd. The petitioner further
We find no reason to disturb all these factual findings because they are asseverated that the private respondent has violated the
amply supported by substantial evidence. terms and conditions of his contract as manifested in the said
Apropos the monetary claims, there is insufficient evidence to prove official warning-termination form by always coming late when
petitioners’ entitlement thereto. As crew members, petitioners were reporting for duty even prior to the February 15, 1997
required to stay on board the vessel by the very nature of their duties, incident.3
and it is for this reason that, in addition to their regular compensation, The Labor Arbiter rendered a Decision dated March 5, 1998, holding
they are given free living quarters and subsistence allowances when petitioner liable to respondent for illegal dismissal and unauthorized
required to be on board. It could not have been the purpose of our law deductions, viz:
to require their employers to give them overtime pay or night shift WHEREFORE, premises considered, judgment is hereby rendered:
differential, even when they are not actually working. Thus, the correct 1. Declaring [petitioner] Bahia Shipping Services, Inc. (BSSI)
criterion in determining whether they are entitled to overtime pay or and its foreign principal Blackfriars Shipping Co., Ltd. (BSCL)
night shift differential is not whether they were on board and cannot guilty of illegal dismissal. Accordingly, the aforenamed
leave ship beyond the regular eight working hours a day, but whether [petitioner] BSSI and its foreign principal BSCL are hereby
they actually rendered service in excess of said number of hours. 15 In directed to pay jointly and severally, [private respondent]
this case, petitioners failed to submit sufficient proof that overtime and Reynaldo Chua the sum of US$1,230.00 as earlier computed,
night shift work were actually performed to entitle them to the representing his salary for the unexpired portion of the
corresponding pay. contract of employment limited to three (3) months under
WHEREFORE, the instant petition is DENIED. The Decision dated Republic Act 8042, and convertible to Philippine currency
June 21, 2005 and the Resolution dated August 22, 2005 of the Court upon actual payment.
of Appeals in CA-G.R. SP No. 76096 are AFFIRMED. 2. Directing the aforenamed [petitioner] BSSI and its foreign
SO ORDERED. principal BSCL to pay, jointly and severally, [private
respondent] Reynaldo Chua the following money claims as
earlier computed:
Reimbursement/Refund of Plane Fare ----
G.R. No. 162195 April 8, 2008
Illegal Deductions ("Union Dues") ----
BAHIA SHIPPING SERVICES, INC., petitioner,
vs. Differential Pay (Underpayment of Wages) ----
REYNALDO CHUA, respondent.
DECISION
AUSTRIA-MARTINEZ, J.: convertible to Philippine currency upon actual payment.
Before the Court is a Petition for Review on Certiorari under Rule 45 of 3. Directing the aforenamed [petitioner] BSSI and its foreign
the Rules of Court wherein Bahia Shipping Services, Inc. (petitioner) principal BSCL to pay, jointly and severally, the [private
assails the August 28, 2003 Decision1 of the Court of Appeals (CA), respondent] Reynaldo Chua ten (10%) percent attorney's
affirming the December 23, 1998 Decision and February 15, 1999 fees based on the total monetary award.
Resolution of the National Labor Relations Commission (NLRC); and 4. Dismissing the other money claims and/or charges of
the February 19, 2004 CA Resolution,2 denying its Motion for [private respondent] Reynaldo Chua for lack of factual and
Reconsideration. legal basis.
Petitioner adopted the following findings of fact of the CA: SO ORDERED.4
Private respondent Reynaldo Chua was hired by the Petitioner appealed to the NLRC which issued on December 23, 1998
petitioner shipping company, Bahia Shipping Services, Inc., a Decision, the dispositive portion of which reads:
as a restaurant waiter on board a luxury cruise ship liner M/S WHEREFORE, premises considered, the appealed Decision
Black Watch pursuant to a Philippine Overseas Employment is hereby MODIFIED in that the award on the unexpired
Administration (POEA) approved employment contract dated portion of the contract is deducted the amount equivalent to a
October 9, 1996 for a period of nine (9) months from October day's work of complainant. The other findings stand
18, 1996 to July 17, 1997. On October 18, 1996, the private AFFIRMED.
respondent left Manila for Heathrow, England to board the SO ORDERED.5
said sea vessel where he will be assigned to work. Petitioner filed a Motion for Reconsideration but the NLRC denied the
On February 15, 1997, the private respondent reported for his same in a Resolution dated February 15, 1999. 6
working station one and one-half (1½) hours late. On Respondent did not question the foregoing NLRC decision and
February 17, 1997, the master of the vessel served to the resolution.
private respondent an official warning-termination form
Upon a petition for certiorari filed by petitioner, the CA rendered the
pertaining to the said incident. On March 8, 1997, the vessel's
August 28, 2003 Decision assailed herein, modifying the NLRC
master, ship captain Thor Fleten conducted an inquisitorial
decision, thus:
hearing to investigate the said incident. Thereafter, on March
9, 1997, private respondent was dismissed from the service WHEREFORE, premises considered, the assailed decision
on the strength of an unsigned and undated notice of dated December 23, 1998, and the resolution dated February
dismissal. An alleged record or minutes of the said 15, 1999, of the public respondent NLRC are hereby
investigation was attached to the said dismissal notice. AFFIRMED, with the MODIFICATION that the monetary
award representing the salary of the petitioner for the
On March 24, 1997, the private respondent filed a complaint
unexpired portion of the contract which is limited to three (3)
for illegal dismissal and other monetary claims, which case
months under Republic Act No. 8042 is DELETED.
was assigned to Labor Arbiter Manuel M. Manansala.
SO ORDERED.7
The private respondent alleged that he was paid only
US$300.00 per month as monthly salary for five (5) months The CA denied petitioner's Motion for Reconsideration.
instead of US$410.00 as stipulated in his employment And so, the present petition raising the following issues:
contract. Thus, he claimed that he was underpaid in the a) Whether or not the Court of Appeals could grant additional
amount of US$110.00 per month for that same period of five affirmative relief by increasing the award despite the fact that
(5) months. He further asserted that his salaries were also respondent did not appeal the decision of both the Labor
deducted US$20.00 per month by the petitioner for alleged Arbiter and the NLRC.
union dues. Private respondent argued that it was his first b) Whether or not reporting for work one and one-half (1½)
offense committed on board the vessel. He adverted further hours late and abandoning his work are valid grounds for
that the petitioner has no proof of being a member of the dismissal.
AMOSUP or the ITF to justify its claim to deduct the said c) Whether or not respondent is entitled to overtime pay which
union dues [from] his monthly salary. was incorporated in his award for the unexpired portion of the
The petitioner disputed the said allegations of the private contract despite the fact that he did not render overtime work,
respondent by arguing that it received a copy of an addendum and whether or not, it is proper for the NLRC to award money
to the collective bargaining agreement (CBA) from the claims despite the fact that the NLRC decision, and affirmed
petitioner's principal, Blackfriars Shipping Company, Ltd. by the Court of Appeals, did not state clearly the facts and the
Consequently, the petitioner requested permission from the evidence upon which such conclusions are based. 8
POEA through a letter dated March 17, 1997 to amend the It is noted that petitioner does not question the monetary awards under
salary scale of the private respondent to US$300.00 per Item Nos. 2 and 3 of the dispositive portion of the LA Decision, which
month. The petitioner justified its monthly deduction made for were affirmed in toto by the NLRC and CA.
 17

The issues will be resolved jointly. Court of Appeals is imbued with sufficient authority and
The LA declared the dismissal of respondent illegal for the reason that discretion to review matters, not otherwise assigned as
the infraction he committed of being tardy by 1½ hour should not have errors on appeal, if it finds that their consideration is
been penalized by petitioner with the ultimate punishment of necessary in arriving at a complete and just resolution of
termination; rather, the commensurate penalty for such single tardiness the case or to serve the interests of justice or to avoid
would have been suspension for one or two weeks. The LA further dispensing piecemeal justice.
noted that petitioner meted out on respondent the penalty of dismissal Article 279 of the Labor Code, as amended, mandates that
hastily and summarily in that it merely went through the motions of an illegally dismissed employee is entitled to the twin reliefs
notifying respondent and hearing his side when, all along, it had already of (a) either reinstatement or separation pay, if reinstatement
decided to dismiss him.9 is no longer viable, and (b) backwages. Both are distinct
The NLRC sustained the foregoing findings of the LA, noting that the reliefs given to alleviate the economic damage suffered by an
claim of petitioner that respondent's tardiness was not infrequent but illegally dismissed employee and, thus, the award of one does
habitual is not supported by evidence.10 However, the NLRC held that, not bar the other. Both reliefs are rights granted by
although the penalty of dismissal on respondent was properly lifted, a substantive law which cannot be defeated by mere
penalty of deduction of one day's salary, the same to be subtracted procedural lapses. Substantive rights like the award of
from his monetary award, should be imposed on the latter for the backwages resulting from illegal dismissal must not be
tardiness he incurred.11 prejudiced by a rigid and technical application of the
The CA held that the NLRC and LA did not commit any grave abuse of rules. The order of the Court of Appeals to award
discretion in arriving at the factual assessments which are all supported backwages being a mere legal consequence of the
by substantial evidence.12 finding that respondents were illegally dismissed by
Petitioner assails the ruling of the CA for being based on the faulty petitioners, there was no error in awarding the
premise that respondent incurred tardiness only once when in fact he same.21 (Emphasis supplied)
had done so habitually.13 Whether respondent had been habitually The Court has consistently applied the foregoing exception to the
tardy prior to February 15, 1997 when he reported for work 1½ hours general rule. It does so yet again in the present case.
late is purely factual in nature. As such, the Court defers to the Section 10 of R.A. No. 8042,22 entitles an overseas worker who has
concurrent assessments of the LA and NLRC, as affirmed by the CA, been illegally dismissed to "his salaries for the unexpired portion of the
for the evaluation of evidence and the appreciation of the credibility of employment contract or for three (3) months for every year of the
witnesses fall within their expertise. 14 unexpired term, whichever is less."23
As the Court held in Acebedo Optical v . National Labor Relations The CA correctly applied the interpretation of the Court in Marsaman
Commission,15 Manning Agency, Inc. v. National Labor Relations Commission 24 that
Judicial Review of labor cases does not go beyond the the second option which imposes a three months – salary cap applies
evaluation of the sufficiency of the evidence upon which its only when the term of the overseas contract is fixed at one year or
labor officials' findings rest. As such, the findings of facts and longer; otherwise, the first option applies in that the overseas worker
conclusion of the NLRC are generally accorded not only great shall be entitled payment of all his salaries for the entire unexpired
weight and respect but even clothed with finality and deemed period of his contract.
binding on this Court as long as they are supported by In Skippers Pacific, Inc. v. Mira,25 wherein the overseas contract
substantial evidence.16 involved was only for six months, the Court held that it is the first option
In the present case, petitioner has failed to establish a compelling provided under Section 10 of R.A. No. 8042 which is applicable in that
reason for the Court to depart from this rule. In fact, as pointed out by the overseas worker who was illegally dismissed is entitled to payment
the CA, petitioner's claim that respondent's tardiness was habitual lacks of all his salaries covering the entire unexpired period of his contract.
evidentiary support as "no other documents on record were attached to The CA committed no error in adhering to the prevailing interpretation
substantiate that the private respondent was forewarned for the first of Section 10 of R.A. No. 8042.
and second time for any infraction or offense, work-related or not, vis- Finally, the Court comes to the last issue on whether in the computation
à-vis the performance of his regular duties and functions."17 of the foregoing award, respondent's "guaranteed overtime" pay
Such empty claim of petitioner, therefore, cannot persuade the Court to amounting to US$197.00 per month should be included as part of his
simply disregard three layers of thorough and in-depth assessments on salary. Petitioner contends that there is no factual or legal basis for the
the matter by the CA, NLRC and LA. inclusion of said amount because, after respondent's repatriation, he
It being settled that the dismissal of respondent was illegal, it follows could not have rendered any overtime work.26
that the latter is entitled to payment of his salary for the unexpired This time, petitioner's contention is well-taken.
portion of his contract, as provided under Republic Act (R.A.) No. 8042, The Court had occasion to rule on a similar issue in Stolt-Nielsen
considering that his employment was pre-terminated on March 9, 1997 Marine Services (Phils.), Inc. v. National Labor Relations
or four months prior to the expiration of his employment contract on July Commission,27 where the NLRC was questioned for awarding to an
17, 1997. illegally dismissed overseas worker fixed overtime pay equivalent to the
However, the LA limited the award to an amount equivalent to unexpired portion of the latter's contract. In resolving the question, the
respondent's salary for three months. The NLRC affirmed said award Court, citing Cagampan v. National Labor Relations
but deducted therefrom his salary for one day as penalty for the Commission,28 held that although an overseas employment contract
tardiness incurred. The CA affirmed the one-day salary deduction may guarantee the right to overtime pay, entitlement to such benefit
imposed by the NLRC but removed the three months - salary cap must first be established, otherwise the same cannot be allowed.
imposed by the LA. In effect, as this particular monetary award now Hence, it being improbable that respondent rendered overtime work
stands, it is to be computed based on the salary of respondent covering during the unexpired term of his contract, the inclusion of his
the period March 9, 1997 to July 17, 1997, less his salary for one day. "guaranteed overtime" pay into his monthly salary as basis in the
Petitioner questions the CA for lifting the three-month salary cap, computation of his salaries for the entire unexpired period of his
pointing out that the LA and NLRC decisions which imposed the cap contract has no factual or legal basis and the same should have been
can no longer be altered as said decisions where not questioned by disallowed.
respondent.18 Based on respondent's Position Paper filed with the Labor Arbiter, 29 his
Indeed, a party who has failed to appeal from a judgment is deemed to basic monthly salary is $213.00.
have acquiesced to it and can no longer obtain from the appellate court WHEREFORE, the petition is PARTLY GRANTED. The assailed
any affirmative relief other that what was already granted under said August 28, 2003 Decision and February 19, 2004 Resolution of the
judgment.19 However, when strict adherence to such technical rule will Court of Appeals are AFFIRMED with MODIFICATION that in the
impair a substantive right, such as that of an illegally dismissed computation of the payment to respondent Reynaldo Chua of his
employee to monetary compensation as provided by law, then equity salaries for the entire unexpired portion of his contract, his basic
dictates that the Court set aside the rule to pave the way for a full and monthly salary of US$213.00 shall be used as the sole basis.
just adjudication of the case. As the Court held in St. Michael's Institute No costs.
v. Santos:20
On the matter of the award of backwages, petitioners
advance the view that by awarding backwages, the appellate
court "unwittingly reversed a time-honored doctrine that a G.R. No. 151309 October 15, 2008
party who has not appealed cannot obtain from the appellate BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as
court any affirmative relief other than the ones granted in the Union President, JOSELITO LARIÑO, VIVENCIO B. BARTE,
appealed decision." We do not agree. SATURNINO EGERA and SIMPLICIO AYA-AY, petitioners,
The fact that the NLRC did not award backwages to the vs.
respondents or that the respondents themselves did not NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
appeal the NLRC decision does not bar the Court of Appeals CORPORATION, and/or WILFREDO C. RIVERA, respondents.
from awarding backwages. While as a general rule, a party DECISION
who has not appealed is not entitled to affirmative relief other
NACHURA, J.:
than the ones granted in the decision of the court below, the
 18

This petition seeks a review of the Decision1 of the Court of Appeals fact, they sent the Executive Vice-President and Legal Counsel as the
(CA) dated July 24, 2001 and Resolution dated December 20, 2001, company's representatives to the CBA negotiations. They claim that the
which affirmed the finding of the National Labor Relations Commission failure to arrive at an agreement was due to the stubbornness of the
(NLRC) that the petitioners' transfer to another workplace did not union panel.
amount to a constructive dismissal and an unfair labor practice. Respondents further averred that, long before the start of the
The pertinent factual antecedents are as follows: negotiations, the company had already been planning to decongest the
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary Caloocan office to comply with the government policy to shift the
medicines and its principal office is located in Caloocan City. Petitioners concentration of manufacturing activities from the metropolis to the
Joselito Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay countryside. The decision to transfer the company's production
are its regular employees, occupying the positions of helper, shipment activities to San Rafael, Bulacan was precipitated by the letter-reminder
helper and factory workers, respectively, assigned to the Production of the Bureau of Animal Industry.
Department. They are members of Bisig Manggagawa sa Tryco (BMT), On February 27, 1998, the Labor Arbiter dismissed the case for lack of
the exclusive bargaining representative of the rank-and-file employees. merit.10 The Labor Arbiter held that the transfer of the petitioners would
Tryco and the petitioners signed separate Memorand[a] of not paralyze or render the union ineffective for the following reasons:
Agreement2 (MOA), providing for a compressed workweek schedule to (1) complainants are not members of the negotiating panel; and (2) the
be implemented in the company effective May 20, 1996. The MOA was transfer was made pursuant to the directive of the Department of
entered into pursuant to Department of Labor and Employment Agriculture.
Department Order (D.O.) No. 21, Series of 1990, Guidelines on the The Labor Arbiter also denied the money claims, ratiocinating that the
Implementation of Compressed Workweek. As provided in the MOA, nonpayment of wages was justified because the petitioners did not
8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as render work from May 26 to 31, 1997; overtime pay is not due because
the regular working hours, and no overtime pay shall be due and of the compressed workweek agreement between the union and
payable to the employee for work rendered during those hours. The management; and service incentive leave pay cannot be claimed by
MOA specifically stated that the employee waives the right to claim the complainants because they are already enjoying vacation leave
overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from with pay for at least five days. As for the claim of noncompliance with
Monday to Friday considering that the compressed workweek schedule Wage Order No. 4, the Labor Arbiter held that the issue should be left
is adopted in lieu of the regular workweek schedule which also consists to the grievance machinery or voluntary arbitrator.
of 46 hours. However, should an employee be permitted or required to On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision,
work beyond 6:12 p.m., such employee shall be entitled to overtime dismissing the case, thus:
pay. PREMISES CONSIDERED, the Decision of February 27,
Tryco informed the Bureau of Working Conditions of the Department of 1998 is hereby AFFIRMED and complainants' appeal
Labor and Employment of the implementation of a compressed therefrom DISMISSED for lack of merit. Complainants
workweek in the company.3 Joselito Lariño, Vivencio Barte, Saturnino Egera and
In January 1997, BMT and Tryco negotiated for the renewal of their Simplicio Aya-ay are directed to report to work at
collective bargaining agreement (CBA) but failed to arrive at a new respondents' San Rafael Plant, Bulacan but without
agreement. backwages. Respondents are directed to accept the
Meantime, Tryco received the Letter dated March 26, 1997 from the complainants back to work.
Bureau of Animal Industry of the Department of Agriculture reminding SO ORDERED.11
it that its production should be conducted in San Rafael, Bulacan, not On December 22, 1999, the NLRC denied the petitioners' motion for
in Caloocan City: reconsideration for lack of merit.12
MR. WILFREDO C. RIVERA Left with no recourse, petitioners filed a petition for certiorari with the
President, Tryco Pharma Corporation CA.
San Rafael, Bulacan On July 24, 2001, the CA dismissed the petition for certiorari and ruled
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan that the transfer order was a management prerogative not amounting
Dear Mr. Rivera: to a constructive dismissal or an unfair labor practice. The CA further
This is to remind you that your License to Operate as sustained the enforceability of the MOA, particularly the waiver of
Veterinary Drug and Product Manufacturer is addressed at overtime pay in light of this Court's rulings upholding a waiver of
San Rafael, Bulacan, and so, therefore, your production benefits in exchange of other valuable privileges. The dispositive
should be done at the above mentioned address only. Further, portion of the said CA decision reads:
production of a drug includes propagation, processing, WHEREFORE, the instant petition is DISMISSED. The
compounding, finishing, filling, repacking, labeling, Decision of the Labor Arbiter dated February 27, 1998 and
advertising, storage, distribution or sale of the veterinary drug the Decision and Resolution of the NLRC promulgated on
product. In no instance, therefore, should any of the above be October 29, 1999 and December 22, 1999, respectively, in
done at your business office at 117 M. Ponce St., EDSA, NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-
Caloocan City. 05920-97, are AFFIRMED.
Please be guided accordingly. SO ORDERED.13
Thank you. The CA denied the petitioners' motion for reconsideration on December
Very truly yours, 20, 2001.14
(sgd.) Dissatisfied, petitioners filed this petition for review raising the following
EDNA ZENAIDA V. VILLACORTE, D.V.M. issues:
Chief, Animal Feeds Standard Division4 -A-
Accordingly, Tryco issued a Memorandum5 dated April 7, 1997 which THE HONORABLE COURT OF APPEALS ERRED IN
directed petitioner Aya-ay to report to the company's plant site in AFFIRMING THE PATENTLY ERRONEOUS RULING OF
Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the THE LABOR ARBITER AND THE COMMISSION THAT
order on April 18, 1997.6 Subsequently, through a Memorandum7 dated THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL
May 9, 1997, Tryco also directed petitioners Egera, Lariño and Barte to DISMISSAL, OF THE INDIVIDUAL PETITIONERS.
report to the company's plant site in Bulacan. -B-
BMT opposed the transfer of its members to San Rafael, Bulacan, THE COURT OF APPEALS GRAVELY ERRED IN NOT
contending that it constitutes unfair labor practice. In protest, BMT FINDING AND CONCLUDING THAT PRIVATE
declared a strike on May 26, 1997. RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR
In August 1997, petitioners filed their separate complaints 8 for illegal PRACTICE.
dismissal, underpayment of wages, nonpayment of overtime pay and -C-
service incentive leave, and refusal to bargain against Tryco and its THE COURT OF APPEALS ERRED IN NOT FINDING AND
President, Wilfredo C. Rivera. In their Position Paper, 9 petitioners CONCLUDING THAT PETITIONERS ARE ENTITLED TO
alleged that the company acted in bad faith during the CBA negotiations THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS
because it sent representatives without authority to bind the company, LITIGATION COSTS AND ATTORNEY'S FEES.15
and this was the reason why the negotiations failed. They added that The petition has no merit.
the management transferred petitioners Lariño, Barte, Egera and Aya- We have no reason to deviate from the well-entrenched rule that
ay from Caloocan to San Rafael, Bulacan to paralyze the union. They findings of fact of labor officials, who are deemed to have acquired
prayed for the company to pay them their salaries from May 26 to 31, expertise in matters within their respective jurisdiction, are generally
1997, service incentive leave, and overtime pay, and to implement accorded not only respect but even finality, and bind us when supported
Wage Order No. 4. by substantial evidence.16 This is particularly true when the findings of
In their defense, respondents averred that the petitioners were not the Labor Arbiter, the NLRC and the CA are in absolute agreement. 17 In
dismissed but they refused to comply with the management's directive this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed
for them to report to the company's plant in San Rafael, Bulacan. They that the petitioners were not constructively dismissed and that the
denied the allegation that they negotiated in bad faith, stating that, in transfer orders did not amount to an unfair labor practice. But if only to
 19

disabuse the minds of the petitioners who have persistently pursued Finally, we do not agree with the petitioners' assertion that the MOA is
this case on the mistaken belief that the labor tribunals and the not enforceable as it is contrary to law. The MOA is enforceable and
appellate court committed grievous errors, this Court will go over the binding against the petitioners. Where it is shown that the person
issues raised in this petition. making the waiver did so voluntarily, with full understanding of what he
Petitioners mainly contend that the transfer orders amount to a was doing, and the consideration for the quitclaim is credible and
constructive dismissal. They maintain that the letter of the Bureau of reasonable, the transaction must be recognized as a valid and binding
Animal Industry is not credible because it is not authenticated; it is only undertaking.27
a ploy, solicited by respondents to give them an excuse to effect a D.O. No. 21 sanctions the waiver of overtime pay in consideration of
massive transfer of employees. They point out that the Caloocan City the benefits that the employees will derive from the adoption of a
office is still engaged in production activities until now and respondents compressed workweek scheme, thus:
even hired new employees to replace them. The compressed workweek scheme was originally conceived
We do not agree. for establishments wishing to save on energy costs, promote
We refuse to accept the petitioners' wild and reckless imputation that greater work efficiency and lower the rate of employee
the Bureau of Animal Industry conspired with the respondents just to absenteeism, among others. Workers favor the scheme
effect the transfer of the petitioners. There is not an iota of proof to considering that it would mean savings on the increasing cost
support this outlandish claim. Absent any evidence, the allegation is not of transportation fares for at least one (1) day a week; savings
only highly irresponsible but is grossly unfair to the government agency on meal and snack expenses; longer weekends, or an
concerned. Even as this Court has given litigants and counsel a additional 52 off-days a year, that can be devoted to rest,
relatively wide latitude to present arguments in support of their cause, leisure, family responsibilities, studies and other personal
we will not tolerate outright misrepresentation or baseless accusation. matters, and that it will spare them for at least another day in
Let this be fair warning to counsel for the petitioners. a week from certain inconveniences that are the normal
Furthermore, Tryco's decision to transfer its production activities to San incidents of employment, such as commuting to and from the
Rafael, Bulacan, regardless of whether it was made pursuant to the workplace, travel time spent, exposure to dust and motor
letter of the Bureau of Animal Industry, was within the scope of its vehicle fumes, dressing up for work, etc. Thus, under this
inherent right to control and manage its enterprise effectively. While the scheme, the generally observed workweek of six (6) days is
law is solicitous of the welfare of employees, it must also protect the shortened to five (5) days but prolonging the working hours
right of an employer to exercise what are clearly management from Monday to Friday without the employer being obliged for
prerogatives. The free will of management to conduct its own business pay overtime premium compensation for work performed in
affairs to achieve its purpose cannot be denied.18 excess of eight (8) hours on weekdays, in exchange for the
This prerogative extends to the management's right to regulate, benefits abovecited that will accrue to the employees.
according to its own discretion and judgment, all aspects of Moreover, the adoption of a compressed workweek scheme in the
employment, including the freedom to transfer and reassign employees company will help temper any inconvenience that will be caused the
according to the requirements of its business. 19 Management's petitioners by their transfer to a farther workplace.
prerogative of transferring and reassigning employees from one area Notably, the MOA complied with the following conditions set by the
of operation to another in order to meet the requirements of the DOLE, under D.O. No. 21, to protect the interest of the employees in
business is, therefore, generally not constitutive of constructive the implementation of a compressed workweek scheme:
dismissal.20 Thus, the consequent transfer of Tryco's personnel, 1. The employees voluntarily agree to work more than eight
assigned to the Production Department was well within the scope of its (8) hours a day the total in a week of which shall not exceed
management prerogative. their normal weekly hours of work prior to adoption of the
When the transfer is not unreasonable, or inconvenient, or prejudicial compressed workweek arrangement;
to the employee, and it does not involve a demotion in rank or 2. There will not be any diminution whatsoever in the weekly
diminution of salaries, benefits, and other privileges, the employee may or monthly take-home pay and fringe benefits of the
not complain that it amounts to a constructive dismissal. 21 However, the employees;
employer has the burden of proving that the transfer of an employee is 3. If an employee is permitted or required to work in excess
for valid and legitimate grounds. The employer must show that the of his normal weekly hours of work prior to the adoption of the
transfer is not unreasonable, inconvenient, or prejudicial to the compressed workweek scheme, all such excess hours shall
employee; nor does it involve a demotion in rank or a diminution of his be considered overtime work and shall be compensated in
salaries, privileges and other benefits.22 accordance with the provisions of the Labor Code or
Indisputably, in the instant case, the transfer orders do not entail a applicable Collective Bargaining Agreement (CBA);
demotion in rank or diminution of salaries, benefits and other privileges 4. Appropriate waivers with respect to overtime premium pay
of the petitioners. Petitioners, therefore, anchor their objection solely on for work performed in excess of eight (8) hours a day may be
the ground that it would cause them great inconvenience since they are devised by the parties to the agreement.
all residents of Metro Manila and they would incur additional expenses 5. The effectivity and implementation of the new working time
to travel daily from Manila to Bulacan. arrangement shall be by agreement of the parties.
The Court has previously declared that mere incidental inconvenience PESALA v. NLRC,28 cited by the petitioners, is not applicable to the
is not sufficient to warrant a claim of constructive dismissal. 23 Objection present case. In that case, an employment contract provided that the
to a transfer that is grounded solely upon the personal inconvenience workday consists of 12 hours and the employee will be paid a fixed
or hardship that will be caused to the employee by reason of the monthly salary rate that was above the legal minimum wage. However,
transfer is not a valid reason to disobey an order of transfer. 24 unlike the present MOA which specifically states that the employee
Incidentally, petitioners cite Escobin v. NLRC25 where the Court held waives his right to claim overtime pay for work rendered beyond eight
that the transfer of the employees therein was unreasonable. However, hours, the employment contract in that case was silent on whether
the distance of the workplace to which the employees were being overtime pay was included in the payment of the fixed monthly salary.
transferred can hardly compare to that of the present case. In that case, This necessitated the interpretation by the Court as to whether the fixed
the employees were being transferred from Basilan to Manila; hence, monthly rate provided under the employment contract included
the Court noted that the transfer would have entailed the separation of overtime pay. The Court noted that if the employee is paid only the
the employees from their families who were residing in Basilan and minimum wage but with overtime pay, the amount is still greater than
accrual of additional expenses for living accommodations in Manila. In the fixed monthly rate as provided in the employment contract. It,
contrast, the distance from Caloocan to San Rafael, Bulacan is not therefore, held that overtime pay was not included in the agreed fixed
considerably great so as to compel petitioners to seek living monthly rate.
accommodations in the area and prevent them from commuting to Considering that the MOA clearly states that the employee waives the
Metro Manila daily to be with their families. payment of overtime pay in exchange of a five-day workweek, there is
Petitioners, however, went further and argued that the transfer orders no room for interpretation and its terms should be implemented as they
amounted to unfair labor practice because it would paralyze and render are written.
the union ineffective. WHEREFORE, the petition is DENIED. The Court of Appeals Decision
To begin with, we cannot see how the mere transfer of its members can dated July 24, 2001 and Resolution dated December 20, 2001
paralyze the union. The union was not deprived of the membership of are AFFIRMED.
the petitioners whose work assignments were only transferred to SO ORDERED.
another location.
More importantly, there was no showing or any indication that the
transfer orders were motivated by an intention to interfere with the
petitioners' right to organize. Unfair labor practice refers to acts that
G.R. No. 173648 January 16, 2012
violate the workers' right to organize. With the exception of Article 248(f)
of the Labor Code of the Philippines, the prohibited acts are related to ABDULJUAHID R. PIGCAULAN,* Petitioner,
the workers' right to self-organization and to the observance of a CBA. vs.
Without that element, the acts, no matter how unfair, are not unfair labor SECURITY and CREDIT NVESTIGATION, INC. and/or RENE AMBY
practices.26 REYES, Respondents.
 20

DECISION In respondents’ petition for certiorari with prayer for the issuance of a
DEL CASTILLO, J.: temporary restraining order and preliminary injunction16 before the CA,
It is not for an employee to prove non-payment of benefits to which he they attributed grave abuse of discretion on the part of the NLRC in
is entitled by law. Rather, it is on the employer that the burden of finding that Canoy and Pigcaulan are entitled to salary differentials,
proving payment of these claims rests. service incentive leave pay and proportionate 13th month pay and in
This Petition for Review on Certiorari1 assails the February 24, 2006 arriving at amounts without providing sufficient bases therefor.
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 85515, which The CA, in its Decision17 dated February 24, 2006, set aside the rulings
granted the petition for certiorari filed therewith, set aside the March 23, of
20043 and June 14, 20044 Resolutions of the National Labor Relations both the Labor Arbiter and the NLRC after noting that there were no
Commission (NLRC), and dismissed the complaint filed by Oliver R. factual and legal bases mentioned in the questioned rulings to support
Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) the conclusions made. Consequently, it dismissed all the monetary
against respondent Security and Credit Investigation, Inc. (SCII) and its claims of Canoy and Pigcaulan on the following rationale:
General Manager, respondent Rene Amby Reyes. Likewise assailed is First. The Labor Arbiter disregarded the NLRC rule that, in cases
the June 28, 2006 Resolution5 denying Canoy’s and Pigcaulan’s Motion involving money awards and at all events, as far as practicable, the
for Reconsideration.6 decision shall embody the detailed and full amount awarded.
Factual Antecedents Second. The Labor Arbiter found that the payrolls submitted by SCII
Canoy and Pigcaulan were both employed by SCII as security guards have no probative value for being unsigned by Canoy, when, in fact,
and were assigned to SCII’s different clients. Subsequently, however, said payrolls, particularly the payrolls from 1998 to 1999 indicate the
Canoy and Pigcaulan filed with the Labor Arbiter separate individual signatures of Canoy.
complaints7 for underpayment of salaries and non-payment of overtime, Third. The Labor Arbiter did not state in his decision the substance of
holiday, rest day, service incentive leave and 13th month pays. These the evidence adduced by Pigcaulan and Canoy as well as the laws or
complaints were later on consolidated as they involved the same jurisprudence that would show that the two are indeed entitled to the
causes of action. salary differential and incentive leave pays.
Canoy and Pigcaulan, in support of their claim, submitted their Fourth. The Labor Arbiter held Reyes liable together with SCII for the
respective daily time records reflecting the number of hours served and payment of the claimed salaries and benefits despite the absence of
their wages for the same. They likewise presented itemized lists of their proof that Reyes deliberately or maliciously designed to evade SCII’s
claims for the corresponding periods served. alleged financial obligation; hence the Labor Arbiter ignored that SCII
Respondents, however, maintained that Canoy and Pigcaulan were has a corporate personality separate and distinct from Reyes. To justify
paid their just salaries and other benefits under the law; that the salaries solidary liability, there must be an allegation and showing that the
they received were above the statutory minimum wage and the rates officers of the corporation deliberately or maliciously designed to evade
provided by the Philippine Association of Detective and Protective the financial obligation of the corporation. 18
Agency Operators (PADPAO) for security guards; that their holiday pay Canoy and Pigcaulan filed a Motion for Reconsideration, but same was
were already included in the computation of their monthly salaries; that denied by the CA in a Resolution19 dated June 28, 2006.
they were paid additional premium of 30% in addition to their basic Hence, the present Petition for Review on Certiorari.
salary whenever they were required to work on Sundays and 200% of Issues
their salary for work done on holidays; and, that Canoy and Pigcaulan The petition ascribes upon the CA the following errors:
were paid the corresponding 13th month pay for the years 1998 and I. The Honorable Court of Appeals erred when it dismissed
1999. In support thereof, copies of payroll listings8 and lists of the complaint on mere alleged failure of the Labor Arbiter and
employees who received their 13th month pay for the periods the NLRC to observe the prescribed form of decision, instead
December 1997 to November 1998 and December 1998 to November of remanding the case for reformation of the decision to
19999 were presented. In addition, respondents contended that include the desired detailed computation.
Canoy’s and Pigcaulan’s monetary claims should only be limited to the
II. The Honorable Court of Appeals erred when it [made]
past three years of employment pursuant to the rule on prescription of
complainants suffer the consequences of the alleged non-
claims.
observance by the Labor Arbiter and NLRC of the prescribed
Ruling of the Labor Arbiter forms of decisions considering that they have complied with
Giving credence to the itemized computations and representative daily all needful acts required to support their claims.
time records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel III. The Honorable Court of Appeals erred when it dismissed
P. Asuncion awarded them their monetary claims in his the complaint allegedly due to absence of legal and factual
Decision10 dated June 6, 2002. The Labor Arbiter held that the payroll [bases] despite attendance of substantial evidence in the
listings presented by the respondents did not prove that Canoy and records.20
Pigcaulan were duly paid as same were not signed by the latter or by
It is well to note that while the caption of the petition reflects both the
any SCII officer. The 13th month payroll was, however, acknowledged
names of Canoy and Pigcaulan as petitioners, it appears from its body
as sufficient proof of payment, for it bears Canoy’s and Pigcaulan’s
that it is being filed solely by Pigcaulan. In fact, the Verification and
signatures. Thus, without indicating any detailed computation of the
Certification of Non-Forum Shopping was executed by Pigcaulan alone.
judgment award, the Labor Arbiter ordered the payment of overtime pay,
holiday pay, service incentive leave pay and proportionate 13th month In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC
pay for the year 2000 in favor of Canoy and Pigcaulan, viz: 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
WHEREFORE, the respondents are hereby ordered to pay the
arrived at should be embodied in the decision. Instead, a statement of
complainants: 1) their salary differentials in the amount of ₱166,849.60
the nature or a description of the amount awarded and the specific
for Oliver Canoy and ₱121,765.44 for Abduljuahid Pigcaulan; 2) the
figure of the same will suffice. Besides, his and Canoy’s claims were
sum of ₱3,075.20 for Canoy and ₱2,449.71 for Pigcaulan for service
supported by substantial evidence in the form of the handwritten
incentive leave pay and; [3]) the sum of ₱1,481.85 for Canoy and
detailed computations which the Labor Arbiter termed as
₱1,065.35 for Pigcaulan as proportionate 13th month pay for the year
"representative daily time records," showing that they were not properly
2000. The rest of the claims are dismissed for lack of sufficient basis to
compensated for work rendered. Thus, the CA should have remanded
make an award.
the case instead of outrightly dismissing it.
SO ORDERED.11
In their Comment,21 respondents point out that since it was only
Ruling of the National Labor Relations Commission Pigcaulan who filed the petition, the CA Decision has already become
Respondents appealed to the NLRC. They alleged that there was no final and binding upon Canoy. As to Pigcaulan’s arguments,
basis respondents submit that they were able to present sufficient evidence
for the awards made because aside from the self-serving itemized to prove payment of just salaries and benefits, which bits of evidence
computations, no representative daily time record was presented by were unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly,
Canoy and Pigcaulan. On the contrary, respondents asserted that the the CA reconsidered these pieces of evidence and properly
payroll listings they submitted should have been given more probative appreciated them. Hence, it was correct in dismissing the claims for
value. To strengthen their cause, they attached to their Memorandum failure of Canoy and Pigcaulan to discharge their burden to disprove
on Appeal payrolls12 bearing the individual signatures of Canoy and payment.
Pigcaulan to show that the latter have received their salaries, as well Pigcaulan, this time joined by Canoy, asserts in his Reply 22 that his filing
as copies of transmittal letters13 to the bank to show that the salaries of the present petition redounds likewise to Canoy’s benefit since their
reflected in the payrolls were directly deposited to the ATM accounts of complaints were consolidated below. As such, they maintain that any
SCII’s employees. kind of disposition made in favor or against either of them would
The NLRC, however, in a Resolution14 dated March 23, 2004, inevitably apply to the other. Hence, the institution of the petition solely
dismissed the appeal and held that the evidence show underpayment by Pigcaulan does not render the assailed Decision final as to Canoy.
of salaries as well as non-payment of service incentive leave benefit. Nonetheless, in said reply they appended Canoy’s affidavit 23 where he
Accordingly, the Labor Arbiter’s Decision was sustained. The motion verified under oath the contents and allegations of the petition filed by
for reconsideration thereto was likewise dismissed by the NLRC in a Pigcaulan and also attested to the authenticity of its annexes. Canoy,
Resolution15 dated June 14, 2004. however, failed to certify that he had not filed any action or claim in
Ruling of the Court of Appeals another court or tribunal involving the same issues. He likewise
 21

explains in said affidavit that his absence during the preparation and and Pigcaulan, these representative daily time records, as termed by
filing of the petition was caused by severe financial distress and his the Labor Arbiter, can hardly be considered as competent evidence to
failure to inform anyone of his whereabouts. be used as basis to prove that the two were underpaid of their salaries.
Our Ruling We find nothing in the records which could substantially support
The assailed CA Decision is considered final as to Canoy. Pigcaulan’s contention that he had rendered service beyond eight
We have examined the petition and find that same was filed by hours to entitle him to overtime pay and during Sundays to entitle him
Pigcaulan solely on his own behalf. This is very clear from the petition’s to restday pay. Hence, in the absence of any concrete proof that
prefatory which is phrased as follows: additional service beyond the normal working hours and days had
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto indeed been rendered, we cannot affirm the grant of overtime pay to
this Honorable Court x x x. (Emphasis supplied.) Pigcaulan.
Also, under the heading "Parties", only Pigcaulan is mentioned as Pigcaulan is entitled to holiday pay, service incentive leave pay and
petitioner and consistent with this, the body of the petition refers only to proportionate 13th month pay for year 2000.
a "petitioner" and never in its plural form "petitioners". Aside from the However, with respect to the award for holiday pay, service incentive
fact that the Verification and Certification of Non-Forum Shopping leave
attached to the petition was executed by Pigcaulan alone, it was plainly pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to
and particularly indicated under the name of the lawyer who prepared these benefits.
the same, Atty. Josefel P. Grageda, that he is the "Counsel for Article 94 of the Labor Code provides that:
Petitioner Adbuljuahid Pigcaulan" only. In view of these, there is ART. 94. RIGHT TO HOLIDAY PAY. – (a) Every worker shall be paid
therefore, no doubt, that the petition was brought only on behalf of his regular daily wage during regular holidays, except in retail and
Pigcaulan. Since no appeal from the CA Decision was brought by service establishments regularly employing less than ten (10) workers;
Canoy, same has already become final and executory as to him. xxxx
Canoy cannot now simply incorporate in his affidavit a verification of While Article 95 of the Labor Code provides:
the contents and allegations of the petition as he is not one of the ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. – (a) Every
petitioners therein. Suffice it to state that it would have been different employee who has rendered at least one year of service shall be
had the said petition been filed in behalf of both Canoy and Pigcaulan. entitled to a yearly service incentive of five days with pay.
In such a case, subsequent submission of a verification may be allowed xxxx
as non-compliance therewith or a defect therein does not necessarily Under the Labor Code, Pigcaulan is entitled to his regular rate on
render the pleading, or the petition as in this case, fatally holidays even if he does not work.30 Likewise, express provision of the
defective.24 "The court may order its submission or correction, or act on law entitles him to service incentive leave benefit for he rendered
the pleading if the attending circumstances are such that strict service for more than a year already. Furthermore, under Presidential
compliance with the Rule may be dispensed with in order that the ends Decree No. 851,31 he should be paid his 13th month pay. As employer,
of justice may be served thereby. Further, a verification is deemed SCII has the burden of proving that it has paid these benefits to its
substantially complied with when one who has ample knowledge to employees.32
swear to the truth of the allegations in the complaint or petition signs
SCII presented payroll listings and transmittal letters to the bank to
the verification, and when matters alleged in the petition have been
show that Canoy and Pigcaulan received their salaries as well as
made in good faith or are true and correct."25 However, even if it were
benefits which it claimed are already integrated in the employees’
so, we note that Canoy still failed to submit or at least incorporate in his
monthly salaries. However, the documents presented do not prove
affidavit a certificate of non-forum shopping.
SCII’s allegation. SCII failed to show any other concrete proof by
The filing of a certificate of non-forum shopping is mandatory so much means of records, pertinent files or similar documents reflecting that
so that non-compliance could only be tolerated by special the specific claims have been paid. With respect to 13th month pay,
circumstances and compelling reasons.26 This Court has held that SCII presented proof that this benefit was paid but only for the years
when there are several petitioners, all of them must execute and sign 1998 and 1999. To repeat, the burden of proving payment of these
the certification against forum shopping; otherwise, those who did not monetary claims rests on SCII, being the employer. It is a rule that one
sign will be dropped as parties to the case. 27 True, we held that in some who pleads payment has the burden of proving it. "Even when the
cases, execution by only one of the petitioners on behalf of the other plaintiff alleges non-payment, still the general rule is that the burden
petitioners constitutes substantial compliance with the rule on the filing rests on the defendant to prove payment, rather than on the plaintiff to
of a certificate of non-forum shopping on the ground of common interest prove non-payment."33 Since SCII failed to provide convincing proof
or common cause of action or defense.28 We, however, find that that it has already settled the claims, Pigcaulan should be paid his
common interest is not present in the instant petition. To recall, Canoy’s holiday pay, service incentive leave benefits and proportionate 13th
and Pigcaulan’s complaints were consolidated because they both month pay for the year 2000.
sought the same reliefs against the same respondents. This does not,
The CA erred in dismissing the claims instead of remanding the case
however, mean that they share a common interest or defense. The
to the Labor Arbiter for a detailed computation of the judgment award.
evidence required to substantiate their claims may not be the same. A
particular evidence which could sustain Canoy’s action may not Indeed, the Labor Arbiter failed to provide sufficient basis for the
effectively serve as sufficient to support Pigcaulan’s claim. monetary awards granted.lawphi1 Such failure, however, should not
result in prejudice to the substantial rights of the party.1avvphi1 While
Besides, assuming that the petition is also filed on his behalf, Canoy
we disallow the grant of overtime pay and restday pay in favor of
failed to show any reasonable cause for his failure to join Pigcaulan to
Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday
personally sign the Certification of Non-Forum Shopping. It is his duty,
pay, service incentive leave pay and 13th month pay for year 2000.
as a litigant, to be prudent in pursuing his claims against SCII,
Hence, the CA is not correct in dismissing Pigcaulan’s claims in its
especially so, if he was indeed suffering from financial distress.
entirety.
However, Canoy failed to advance any justifiable reason why he did not
inform anyone of his whereabouts when he knows that he has a Consistent with the rule that all money claims arising from an employer-
pending case against his former employer. Sadly, his lack of prudence employee relationship shall be filed within three years from the time the
and diligence cannot merit the court’s consideration or sympathy. It cause of action accrued,34 Pigcaulan can only demand the amounts
must be emphasized at this point that procedural rules should not be due him for the period within three years preceding the filing of the
ignored simply because their non-observance may result in prejudice complaint in 2000. Furthermore, since the records are insufficient to
to a party’s substantial rights. The Rules of Court should be followed use as bases to properly compute Pigcaulan’s claims, the case should
except only for the most persuasive of reasons. 29 be remanded to the Labor Arbiter for a detailed computation of the
monetary benefits due to him.
Having declared the present petition as solely filed by Pigcaulan, this
Court shall consider the subsequent pleadings, although apparently WHEREFORE, the petition is GRANTED. The Decision dated
filed under his and Canoy’s name, as solely filed by the former. 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.
There was no substantial evidence to support the grant of overtime pay.
Petitioner Abduljuahid R. Pigcaulan is hereby declared entitled to
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, holiday pay and service incentive leave pay for the years 1997-2000
service incentive leave pay and 13th month pay for the year 2000 in and proportionate 13th month pay for the year 2000.
favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the
The case is REMANDED to the Labor Arbiter for further proceedings to
itemized computations they submitted which he considered as
determine the exact amount and to make a detailed computation of the
representative daily time records to substantiate the award of salary
monetary benefits due Abduljuahid R. Pigcaulan which Security and
differentials. The NLRC then sustained the award on the ground that
Credit Investigation Inc. should pay without delay.
there was substantial evidence of underpayment of salaries and
benefits. SO ORDERED.
We find that both the Labor Arbiter and the NLRC erred in this regard.
The handwritten itemized computations are self-serving, unreliable and
unsubstantial evidence to sustain the grant of salary differentials,
particularly overtime pay. Unsigned and unauthenticated as they are, G.R. No. 182848 October 5, 2011
there is no way of verifying the truth of the handwritten entries stated EMIRATE SECURITY AND MAINTENANCE SYSTEMS, INC. and
therein. Written only in pieces of paper and solely prepared by Canoy ROBERTO A. YAN, Petitioners,
 22

vs. of ₱83,443.75 (latest computation); ₱66,924.00 in monetary benefits;

GLENDA M. MENESE, Respondent. ₱50,000.00 and ₱20,000.00 in moral and exemplary damages,
DECISION respectively; and attorney’s fees of ₱15,036.74.
BRION, J.: The petitioners appealed to the National Labor Relations Commission
Before the Court is the petition for review on certiorari 1 which assails (NLRC). On September 30, 2003, the NLRC Second Division issued a
the decision2 and the resolution3 of the Court of Appeals (CA) rendered resolution8 granting the appeal and reversing the labor arbiter’s
on February 28, 2008 and May 14, 2008, respectively, in CA-G.R. SP. decision. It ruled that Menese was not constructively dismissed but was
No. 100073.4 merely transferred to another detachment. It opined that the transfer
The Antecedents was a valid exercise of the petitioners’ management prerogative.
The facts of the case are summarized below. However, it ruled that despite Menese’s refusal to accept the transfer,
she cannot be made liable for abandonment as her refusal was based
On June 5, 2001, respondent Glenda M. Menese (Menese) filed a
on her honest belief that she was being constructively dismissed. The
complaint for constructive dismissal; illegal reduction of salaries and
NLRC ordered Menese, at her option, to immediately report to the
allowances; separation pay; refund of contribution to cash bond;
agency’s head office and the agency to accept her back to work. It
overtime, holiday, rest day and premium pay; damages; and attorney’s
absolved Yan from liability, and deleted the award of backwages,
fees against the petitioners, Emirate Security and Maintenance
overtime pay and damages.
Systems, Inc. (agency) and its General Manager, Robert A. Yan (Yan).
On October 28, 2003, Menese filed a partial motion for
Menese alleged in the compulsory arbitration proceedings that on April
reconsideration9 of the NLRC resolution and later (on June 17, 2005),
1, 1999, the agency engaged her services as payroll and billing clerk.
a motion to recall the entry of judgment of October 31, 2003. On June
She was assigned to the agency’s security detachment at the Philippine
1, 2007, the NLRC rendered a resolution10 setting aside the entry of
General Hospital (PGH). She was given a monthly salary of ₱9,200.00
judgment and denying Menese’s partial motion for reconsideration.
and an allowance of ₱2,500.00, for a total of ₱11,700.00 in
compensation. Effective May 2001, her allowance was allegedly The Petition for Certiorari
reduced to ₱1,500.00 without notice, and ₱100.00 was deducted from Menese elevated her case to the CA through a petition for
her salary every month as her contribution to a cash bond which lasted certiorari11 under Rule 65 of the Rules of Court. In the main, she argued
throughout her employment. She was required to work seven (7) days that the agency was in bad faith when it issued the memoranda dated
a week, from 8:00 a.m. to 5:00 p.m. She was also required to report for May 16, 2001,12 May 22, 200113 and May 28, 2001,14 ordering her
work on holidays, except on New Year’s Day and Christmas. She transfer from the PGH detachment to the agency’s head office. She
claimed that she was never given overtime, holiday, rest day and posited that it was a ploy to create a vacancy in the detachment to
premium pay. accommodate the entry of Claro, Dapula’s protégée. She regarded the
Menese further alleged that on May 4, 2001, she started getting transfer as a removal from her position at PGH — a constructive
pressures from the agency for her to resign from her position because dismissal.
it had been committed to a certain Amy Claro, a protégée of Mrs. The agency, in rebuttal, posited that Menese was not illegally dismissed,
Violeta G. Dapula (Dapula) the new chief of the Security Division of the but was merely transferred to its head office in response to the request
University of the Philippines (UP) Manila and PGH. Menese raised the of the new head of the UP-PGH security division for the transfer. The
matter with Yan who told her that the agency was in the process of action, it maintained, was a valid exercise of its management
establishing goodwill with Dapula, so it had to sacrifice her position to prerogative. Thus, Menese was guilty of abandoning her employment
accommodate Dapula’s request to hire Claro. when she refused to report for work at her new posting.
Menese claimed that she was told not to worry because if she was still The CA Decision
interested in working with the agency, she could still be retained as a The CA granted the petition in its decision of February 28, 2008. 15 It set
lady guard with a salary equivalent to the minimum wage. She would aside the assailed resolutions of the NLRC and reinstated the March
then be detailed to another detachment because Dapula did not like to 14, 2002 decision of the labor arbiter.
see her around anymore. If the offer was acceptable to her, she should As the labor arbiter did, the CA found Menese to have been
report to the agency’s personnel officer for the issuance of the constructively, and therefore illegally, dismissed. It noted that the
necessary duty detail order. Menese thought about the offer and soon memoranda16 on Menese’s transfer were prompted by Dacula’s letter,
realized that she was actually being demoted in rank and salary. She dated May 8, 2001,17 to Yan, which contained allegations on Menese’s
eventually decided to decline the offer. She continued reporting to the supposed unprofessional conduct and involvement in nepotism. It
PGH detachment and performed her usual functions as if nothing further noted that when Yan asked Dapula in writing 18 to provide the
happened. agency with documents/evidence that would support her allegations,
Menese alleged that at this juncture, Claro reported at the agency’s she failed to do so. The CA thus concluded that the reasons for
PGH detachment and performed the functions she was doing. She Menese’s transfer did not exist or that no substantial evidence was
bewailed that thereafter she continuously received harassment calls presented in that regard.
and letters. She was also publicly humiliated and badly treated at the The CA brushed aside the petitioners’ argument that it was their
detachment. The agency, through Security Officer Alton Acab, prerogative to transfer Menese from the agency’s PGH detachment to
prohibited her from using the office computer. On May 18, 2001, Jose its head office at Ortigas Avenue, Mandaluyong City. Relying on
Dante Chan, the agency’s PGH detachment commander, arrogantly applicable jurisprudence, the appellate court pointed out that while it is
told her to leave PGH. Again on May 25, 2001, Chan shouted at her the management’s prerogative to transfer an employee from one office
and told her to pack her things and to leave immediately, and not to to another within the business establishment, it is not without limitation.
return to the detachment anymore; otherwise, she would be physically It must be exercised in such a way that there is no demotion in rank or
driven out of the office. diminution in pay, benefits and other privileges. Otherwise, the transfer
Still not satisfied with what they did, the petitioners allegedly withheld amounts to a constructive dismissal, as correctly pointed out by the
her salary for May 16-31, 2001. She claimed that the petitioners labor arbiter in his decision of March 14, 2002. 19 In this light, the CA
dismissed her from the service without just cause and due process. held that the petitioners failed to prove that Menese abandoned her
The petitioners, for their part, denied liability. They alleged that on May employment.
8, 2001, Dapula informed the agency in writing, 5 through Yan, that she The CA sustained all the other findings of the labor arbiter. On the
had been receiving numerous complaints from security guards and whole, it ruled that the NLRC misappreciated the evidence in the case.
other agency employees about Menese’s unprofessional conduct. She The petitioners moved for reconsideration, but the CA denied the
told the petitioners that she was not tolerating Menese’s negative work motion in its resolution of May 14, 2008. 20
attitude despite the fact that she is the wife of Special Police Major The Petitioners’ Case
Divino Menese who is a member of the UP Manila police force, and that Aside from the petition itself,21 the petitioners filed a reply to Menese’s
as a matter of policy and out of delicadeza, she does not condone comment22 and a memorandum23 where they asked for a reversal of
nepotism in her division. the assailed CA rulings on the ground that the CA gravely erred in:
On the basis of Dapula’s letter, Yan sent Menese a memorandum dated (1) Affirming the labor arbiter’s findings that Menese was
May 16, 2001,6 instructing her to report to the agency’s head office and, constructively dismissed;
there and then, discussed with her Dapula’s letter. Yan informed (2) Holding Yan solidarily liable with the agency for damages;
Menese that upon Dapula’s request, she would be transferred to and
another assignment which would not involve any demotion in rank or (3) Sustaining the award of backwages, damages and
diminution in her salary and other benefits. Although Menese said that attorney’s fees, as well as overtime pay.
she would think about the matter, the petitioners were surprised to The petitioners insist that Menese was not illegally dismissed. They
receive summons from the labor arbiter regarding the complaint. argue that it was Menese who deliberately and unjustifiably refused to
The Compulsory Arbitration Rulings work despite several notices24 to her after she was validly relieved from
In a decision dated March 14, 2002,7 Labor Arbiter Jovencio LL. Mayor, her current work assignment due to a client’s request. They maintain
Jr. declared Menese to have been constructively dismissed. He found that since Menese chose not to return to work, she must be considered
the petitioners wanting in good faith in transferring Menese to another either to have resigned from or to have abandoned her employment.
detachment as she would be suffering a demotion in rank and a They further maintain that nothing on record shows any positive or overt
diminution in pay. Accordingly, he ordered the petitioners to act of the agency in dismissing Menese.
immediately reinstate Menese and, solidarily, to pay her full backwages
 23

Moreover, the petitioners regard Menese’s continued refusal to report a memorandum dated May 16, 200132 issued by Yan; a second
to the agency’s head office as an act of gross insubordination memorandum dated May 22, 200133 issued by Personnel Officer Edwin
constituting a just cause for termination under Article 282(a) of the J. Yabes, reminding Menese of Yan’s instruction for her to report to the
Labor Code. They argue that under this law, an employer may main office; and a third memorandum dated May 28, 2001, 34 also
terminate an employment for serious misconduct or willful disobedience issued by Yabes informing Menese that it was her second notice to
by the employee of the lawful orders of his employer or his assume her work detail at the main office. Yabes instructed her to report
representative in connection with his work. for work on May 30, 2001.
The petitioners posit that she is not entitled to reinstatement and Citing Mendoza v. Rural Bank of Lucban,35 the petitioners argue that
backwages since she failed to comply with the reinstatement option the transfer was undertaken in the exercise of management prerogative
stated in the NLRC resolution. Neither is she entitled to overtime pay in the pursuit of their legitimate interests. They submit that Menese
because she did not work beyond the eight (8)-hour working period; her refused to comply with the valid transfer orders they issued, making her
one (1) hour time off from twelve noon to 1:00 p.m. is not compensable. liable for abandonment and insubordination. They argue that nothing
Neither is Menese entitled to moral and exemplary damages because on record shows that she was illegally dismissed as no dismissal had
the evidence on record does not show any malice or bad faith on their been imposed on her.
part to justify the award. On a superficial consideration, the petitioners’ position looks
The petitioners likewise take exception to the award of attorney’s fees unassailable as indeed an employer can regulate, generally without
as the labor arbiter’s decision and the NLRC’s resolution failed to state restraint and according to its own discretion and judgment, every
the justification for the award. They further contend that the CA gravely aspect of its business, including work assignments and transfer of
erred in upholding the labor arbiter’s ruling that Yan is solidarily liable employees, subject only to limitations imposed by law. 36 This
with the agency, as Yan was merely acting in his capacity as the submission, however, glossed over or suppressed a crucial factor in
agency’s general manager, and that there is no showing that Yan acted the present labor controversy. We refer to Dapula’s letter to Yan in early
maliciously or in bad faith when he ordered Menese’s transfer. They May 2001,37 asking for Menese’s transfer allegedly due to numerous
also point out that Menese did not challenge before the CA the NLRC complaints from security guards and co-workers regarding her
ruling absolving Yan from any liability. unprofessionalism and because of nepotism; Menese is the wife of a
The Case for Menese member of the UP Manila police force.
By way of her comment25 and memorandum,26 Menese asks that the Had Yan inquired into Dapula’s claim of Menese’s alleged
appeal be denied for lack of merit. unprofessionalism, ideally through an administrative investigation, he
She claims that at the arbitration stage, the petitioners readily admitted could have been provided with a genuine reason — assuming proof of
the fact of her removal, manifesting in open session their lack of interest Dapula’s accusation existed — for Menese’s transfer or even for her
to settle the case amicably as they have a strong evidence to support dismissal, if warranted. That the agency did not get into the bottom of
their defense of her dismissal for cause. She observed during the Dapula’s letter before it implemented Menese’s transfer is indicative of
hearing that the petitioners were very confident about their case, the sheer absence of an objective justification for the transfer. The most
because according to them, they had Dapula’s letter asking for her that the agency did was to write Dapula a letter, through Yan, asking
immediate removal.27 her to provide documents/evidence in support of her request for
Menese further claims that the petitioners realized that they did not Menese’s transfer.38 Significantly, Yan’s request came after the labor
have the necessary evidence, so Yan wrote Dapula a letter asking her arbiter’s summons to Yan regarding Menese’s complaint. Dapula never
for proof of the complaints or grievances of the security guards against responded to Yan’s letter and neither did she provide the evidence
Menese.28 Dapula did not produce or present the evidence they asked needed for the agency’s defense in the complaint.
for resulting in their failure to substantiate their defense of dismissal for As Menese noted, the petitioners did not submit as annex to the petition
cause. Menese contends that the petitioners then revised their theory Yan’s letter to Dapula, and the reason appears to be obvious — they
of the case and made it appear that she was not actually dismissed but were trying to avoid calling attention to the absence of proof of
was merely transferred, purportedly in the exercise of their Menese’s alleged unprofessionalism and her involvement in nepotism.
management prerogative. Evidently, the basis for Dapula’s request did not exist. We thus find
She posits that her transfer was motivated by ill will and bad faith, as it credible Menese’s contention that her transfer was a ploy to remove
was done to facilitate the entry of a favored applicant to the PGH her from the PGH detachment to accommodate the entry of Dapula’s
detachment. She intimates that the labor arbiter resolved the case protégée. In short, the agency wanted to create a vacancy for Claro,
correctly when he found her to have been constructively or illegally the protégée. Confronted with this clear intent of the petitioners, we
dismissed. She bewails the NLRC’s surprising reversal of the labor cannot see how Menese’s transfer could be considered a valid exercise
arbiter’s decision, but feels vindicated when the CA set aside the NLRC of management prerogative. As Menese rightly put it, her transfer was
ruling. arbitrarily done, motivated no less by ill will and bad faith.
Menese submits that the CA is correct in nullifying the NLRC’s reversal In Blue Dairy Corporation v. NLRC,39 the Court stressed as a matter of
of her illegal dismissal case because the labor tribunal closed its eyes principle that the managerial prerogative to transfer personnel must be
to the fact that bad faith attended her transfer. She points out that the exercised without abuse of discretion, bearing in mind the basic
petitioners’ twin directives, vis-à-vis her transfer upon which the NLRC elements of justice and fair play. Having the right should not be
based its ruling, "were both issued for a selfish and immoral confused with the manner in which that right is exercised. Thus, it
purpose;"29 the first, dated May 16, 2001,30 was issued for the purpose should not be used as a subterfuge by the employer to get rid of "an
of creating a vacancy, and the second, dated May 22, 2001, 31 was undesirable worker." Measured against this basic precept, the
intended to cover up the wrongdoing that was earlier committed. In petitioners undoubtedly abused their discretion or authority in
other words, the directives were tainted with malice and ill will. On the transferring Menese to the agency’s head office. She had become
matter of Yan’s liability, Menese maintains that the NLRC committed a "undesirable" because she stood in the way of Claro’s entry into the
serious error in allowing him to get away with his wrongdoing PGH detachment. Menese had to go, thus the need for a pretext to get
considering the injustice done to her as a result of her unceremonious rid of her. The request of a client for the transfer became the overriding
dismissal. command that prevailed over the lack of basis for the transfer.
In a different vein, Menese assails the NLRC’s exclusion of the one- We cannot blame Menese for refusing Yan’s offer to be
hour meal break as overtime work, for it erroneously assumed that her transferred.1avvphi1 Not only was the transfer arbitrary and done in
employer had been giving its employees a 60 minute time-off for regular bad faith, it would also result, as Menese feared, in a demotion in rank
meals and that she was not performing work during the period. She and a diminution in pay. Although Yan informed Menese that "based on
argues that this was not the actual practice in the workplace, the request of the client, she will be transferred to another assignment
contending that she continued working even during the one-hour meal which however will not involve any demotion in rank nor diminution in
break. her salaries and other benefits,"40 the offer was such as to invite
Finally, Menese maintains that the CA correctly reinstated the labor reluctance and suspicion as it was couched in a very general manner.
arbiter’s award of attorney’s fees and the imposition of solidary liability We find credible Menese’s submission on this point, i.e., that under the
on Yan and the agency. She posits that in her quest for justice because offered transfer: (1) she would hold the position of lady guard and (2)
of her unceremonious dismissal, she was constrained to engage the she would be paid in accordance with the statutory minimum wage, or
services of a counsel to handle her case. from ₱11,720.00 to ₱7,500.00.
The Court’s Ruling In these lights, Menese’s transfer constituted a constructive dismissal
as it had no justifiable basis and entailed a demotion in rank and a
We deny the petition for lack of merit. The evidence of Menese’s
diminution in pay for her. For a transfer not to be considered a
unwarranted, unjustified and, in her own language, "unceremonious"
constructive dismissal, the employer must be able to show that the
dismissal is so glaring that to ignore it is to commit, as the NLRC did,
transfer is for a valid reason, entails no diminution in the terms and
grave abuse of discretion.
conditions of employment, and must be unreasonably inconvenient or
We note as a starting point that at the time material to the case, Menese prejudicial to the employee. If the employer fails to meet these
ceased to be the agency’s payroll and billing clerk at its PGH standards, the employee’s transfer shall amount, at the very least, to
detachment. The position was taken away from her as she had been constructive dismissal.41 The petitioners, unfortunately for them, failed
transferred to the agency’s main office on Ortigas Avenue, to come up to these standards.
Mandaluyong City, upon the request of Dapula, the new chief of the
UP-PGH Security Division. The transfer was to be carried out through
 24

In declaring Menese’s transfer to be in the valid exercise of the (collectively, the respondents). The petitioners alleged in their
petitioners’ management prerogative, the NLRC grossly complaint that they were not paid minimum wages, overtime, holiday,
misappreciated the evidence and, therefore, gravely abused its premium, service incentive leave, and thirteenth month pays. They
discretion in closing its eyes to the patent injustice committed on further averred that the respondents made them sign blank payroll
Menese. It completely disregarded the obvious presence of bad faith in sheets. On June 11, 2001, the petitioners amended their complaint and
Menese’s transfer. Labor justice demands that Menese be awarded included illegal dismissal as their cause of action. They claimed that the
moral and exemplary damages42 and, for having been constrained to respondents relieved them from service in retaliation for the filing of
litigate in order to protect her rights, attorney’s fees.43 their original complaint.
Yan’s solidary liability Notably, the respondents did not participate in the proceedings before
Yan had been aware all the time of the utter lack of a valid reason for the Labor Arbiter except on April 19, 2001 and May 21, 2001 when
Menese’s transfer. He had been aware all the time that Dapula’s Mr. Romulo Pacia, Jr. appeared on the respondents’ behalf. 5 The
charges against Menese — the ostensible reason for the transfer — respondents’ counsel also appeared in a preliminary mandatory
were nonexistent as Dapula failed to substantiate the charges. He was conference on July 5, 2001.6 However, the respondents neither filed
very much a part of the flagrant and duplicitous move to get rid of any position paper nor proffered pieces of evidence in their defense
Menese to give way to Claro, Dapula’s protégée. despite their knowledge of the pendency of the case.
Based on the facts, Yan is as guilty as the agency in causing the The Labor Arbiter’s Ruling
transfer that was undertaken in bad faith and in a wanton and In a decision7 dated March 15, 2002, Labor Arbiter (LA) Elias H.
oppressive manner. Thus, he should be solidarily liable with the agency Salinas partially ruled in favor of the petitioners. The LA awarded the
for Menese’s monetary awards. petitioners salary differential, service incentive leave, and
The overtime pay award thirteenth month pays. In awarding these claims, the LA stated that
While the labor arbiter declared that Menese’s claim for overtime pay the burden of proving the payment of these money claims rests with the
is unrebutted44 and, indeed, nowhere in the petitioners’ position paper employer. The LA also awarded attorney’s fees in favor of the
did they controvert Menese’s claim, we hold that the claim must still be petitioners, pursuant to Article 111 of the Labor Code. 8
substantiated. In Global Incorporated v. Commissioner Atienza, 45 a However, the LA denied the petitioners’ claims for backwages,
claim for overtime pay will not be granted for want of factual and legal overtime, holiday, and premium pays. The LA observed that the
basis. In this respect, the records indicate that the labor arbiter granted petitioners failed to show that they rendered overtime work and worked
Menese’s claim for holiday pay, rest day and premium pay on the basis on holidays and rest days without compensation. The LA further
of payrolls.46 There is no such proof in support of Menese’s claim for concluded that the petitioners cannot be declared to have been
overtime pay other than her contention that she worked from 8:00 a.m. dismissed from employment because they did not show any notice of
up to 5:00 p.m. She presented no evidence to show that she was termination of employment. They were also not barred from entering
working during the entire one hour meal break. We thus find the NLRC’s the respondents’ premises.
deletion of the overtime pay award in order. The Proceedings before the NLRC
Also, the NLRC noted that the award of ₱2,600.00 for the refund of the Both parties appealed the LA’s ruling with the National Labor Relations
cash bond deposit is overstated and should be adjusted to ₱600.00 Commission. The petitioners disputed the LA’s denial of their claim for
only, as indicated by the payrolls. We likewise find the adjustment in backwages, overtime, holiday and premium pays. Meanwhile, the
order. respondents questioned the LA’s ruling on the ground that the LA did
All told, except for the above clarifications on the overtime pay award not acquire jurisdiction over their persons.
and the refund of the cash bond deposit, we reiterate and so declare The respondents insisted that they were not personally served with
the petition to be devoid of merit. summons and other processes. They also claimed that they paid the
WHEREFORE, premises considered, except for the overtime pay petitioners minimum wages, service incentive leave and thirteenth
award and the refund of deposit for the cash bond, the petition is month pays. As proofs, they attached photocopied and
DENIED for lack of merit. The assailed decision and resolution of the computerized copies of payroll sheets to their memorandum on
Court of Appeals are AFFIRMED, with the following modifications: appeal.9 They further maintained that the petitioners were validly
1) The deletion of the overtime pay award; and dismissed. They argued that the petitioners’ repeated defiance to their
2) Adjustment of the refund of the cash or surety bond deposit transfer to different workplaces and their violations of the company
award from ₱2,500.00 to ₱600.00. rules and regulations constituted serious misconduct and willful
Costs against the petitioners. disobedience.10
SO ORDERED. On January 3, 2003, the respondents filed an unverified supplemental
appeal. They attached photocopied and computerized copies of
list of employees with automated teller machine (ATM) cards to
the supplemental appeal. This list also showed the amounts allegedly
deposited in the employees’ ATM cards. 11 They also attached
G.R. No. 189404 December 11, 2013 documentary evidence showing that the petitioners were
WILGEN LOON, JERRY ARCILLA, ALBERTPEREYE, ARNOLD dismissed for cause and had been accorded due process.
PEREYE, EDGARDO OBOSE, ARNEL MALARAS, PATROCINO On January 22, 2003, the petitioners filed an Urgent Manifestation
TOETIN, EVELYN LEONARDO, ELMER GLOCENDA, RUFO and Motion12 where they asked for the deletion of the supplemental
CUNAMAY, ROLANDOSAJOL, ROLANDO ABUCAYON, JENNIFER appeal from the records because it allegedly suffered from
NATIVIDAD, MARITESS TORION, ARMANDO LONZAGA, RIZAL infirmities. First, the supplemental appeal was not verified. Second, it
GELLIDO, EVIRDE HAQUE,1 MYRNA VINAS, RODELITO AYALA, was belatedly filed six months from the filing of the respondents’ notice
WINELITO OJEL, RENATO RODREGO, NENA ABINA, EMALYN of appeal with memorandum on appeal. The petitioners pointed out that
OLIVEROS, LOUIE ILAGAN, JOEL ENTIG, ARNEL ARANETA, they only agreed to the respondents’ filing of a responsive pleading until
BENJAMIN COSE, WELITO LOON and WILLIAM December 18, 2002.13 Third¸ the attached documentary evidence on
ALIPAO, Petitioners, the supplemental appeal bore the petitioners’ forged signatures.
vs. They reiterated these allegations in an Urgent Motion to Resolve
POWER MASTER, INC., TRI-C GENERAL SERVICES, and Manifestation and Motion (To Expunge from the Records
SPOUSES HOMER and CARINA ALUMISIN, Respondents. Respondents’ Supplemental Appeal, Reply and/or
DECISION Rejoinder) dated January 31, 2003.14 Subsequently, the petitioners
BRION, J.: filed an Urgent Manifestation with Reiterating Motion to Strike-Off
We resolve the petition for review on certiorari,2 filed by petitioners the Record Supplemental Appeal/Reply, Quitclaims and Spurious
Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Documents Attached to Respondents’ Appeal dated August 7,
Obose, Arnel Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer 2003.15 The petitioners argued in this last motion that the payrolls
Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon, Jennifer should not be given probative value because they were the
Natividad, Maritess Torion, Armando Lonzaga, Rizal Gellido, Evirde respondents’ fabrications. They reiterated that the genuine payrolls
Haque, Myrna Vinas, Rodelito Ayala, Winelito Ojel, Renato Rodrego, bore their signatures, unlike the respondents’ photocopies of the
Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Arnel Araneta, payrolls. They also maintained that their signatures in the respondents’
Benjamin Cose, Welito Loon, William Alipao (collectively, documents (which showed their receipt of thirteenth month pay) had
the petitioners), to challenge the June 5, 2009 decision3 and the August been forged.
28, 2009 resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. The NLRC Ruling
95182. In a resolution dated November 27, 2003, the NLRC partially ruled in
The Factual Antecedents favor of the respondents.16 The NLRC affirmed the LA’s awards
Respondents Power Master, Inc. and Tri-C General Services employed of holiday pay and attorney’s fees. It also maintained that the LA
and assigned the petitioners as janitors and leadsmen in various acquired jurisdiction over the persons of the respondents through their
Philippine Long Distance Telephone Company (PLDT) offices in Metro voluntary appearance.
Manila area. Subsequently, the petitioners filed a complaint for money However, it allowed the respondents to submit pieces of evidence
claims against Power Master, Inc., Tri-C General Services and their for the first time on appeal on the ground that they had been
officers, the spouses Homer and Carina Alumisin deprived of due process. It found that the respondents did not
 25

actually receive the LA’s processes. It also admitted the respondents’ just and lawful claims. It is intended to assure the workers that they will
unverified supplemental appeal on the ground that technicalities may receive the money judgment in their favor upon the dismissal of the
be disregarded to serve the greater interest of substantial due process. employer’s appeal.23
Furthermore, the Rules of Court do not require the verification of a In the present case, the respondents filed a surety bond issued by
supplemental pleading. Security Pacific Assurance Corporation (Security Pacific) on June 28,
The NLRC also vacated the LA’s awards of salary differential, 2002. At that time, Security Pacific was still an accredited bonding
thirteenth month and service incentive leave pays. In so ruling, it company. However, the NLRC revoked its accreditation on February
gave weight to the pieces of evidence attached to the memorandum on 16, 2003.24 Nonetheless, this subsequent revocation should not
appeal and the supplemental appeal. It maintained that the absence of prejudice the respondents who relied on its then subsisting
the petitioners’ signatures in the payrolls was not an indispensable accreditation in good faith. In Del Rosario v. Philippine Journalists,
factor for their authenticity. It pointed out that the payment of money Inc.,25 we ruled that a bonding company’s revocation of authority is
claims was further evidenced by the list of employees with ATM cards. prospective in application.
It also found that the petitioners’ signatures were not forged. It took However, the respondents should post a new bond issued by an
judicial notice that many people use at least two or more different accredited bonding company in compliance with paragraph 4, Section
signatures. 6, Rule 6 of the NLRC Rules of Procedure. This provision states that
The NLRC further ruled that the petitioners were lawfully dismissed "[a] cash or surety bond shall be valid and effective from the date of
on grounds of serious misconduct and willful disobedience. It deposit or posting, until the case is finally decided, resolved or
found that the petitioners failed to comply with various memoranda terminated or the award satisfied."
directing them to transfer to other workplaces and to attend training The CA correctly ruled that the
seminars for the intended reorganization and reshuffling. NLRC properly gave due course to
The NLRC denied the petitioners’ motion for reconsideration in a the respondents’ supplemental
resolution dated April 28, 2006.17 Aggrieved, the petitioners filed a appeal
petition for certiorari under Rule 65 of the Rules of Court before the The CA also correctly ruled that the NLRC properly gave due course to
CA.18 the respondents’ supplemental appeal. Neither the laws nor the rules
The CA Ruling require the verification of the supplemental appeal. 26 Furthermore,
The CA affirmed the NLRC’s ruling. The CA held that the petitioners verification is a formal, not a jurisdictional, requirement. It is mainly
were afforded substantive and procedural due process. Accordingly, intended for the assurance that the matters alleged in the pleading are
the petitioners deliberately did not explain their side. Instead, they true and correct and not of mere speculation. 27 Also, a supplemental
continuously resisted their transfer to other PLDT offices and violated appeal is merely an addendum to the verified memorandum on appeal
company rules and regulations. It also upheld the NLRC’s findings on that was earlier filed in the present case; hence, the requirement for
the petitioners’ monetary claims. verification has substantially been complied with.
The CA denied the petitioners’ motion for reconsideration in a The respondents also timely filed their supplemental appeal on January
resolution dated August 28, 2009, prompting the petitioners to file the 3, 2003. The records of the case show that the petitioners themselves
present petition.19 agreed that the pleading shall be filed until December 18, 2002. The
The Petition NLRC further extended the filing of the supplemental pleading until
In the petition before this Court, the petitioners argue that the CA January 3, 2003 upon the respondents’ motion for extension.
committed a reversible error when it did not find that the NLRC A party may only adduce evidence
committed grave abuse of discretion. They reiterate their arguments for the first time on appeal if he
before the lower tribunals and the CA in support of this conclusion. They adequately explains his delay in the
also point out that the respondents posted a bond from a surety that submission of evidence and he
was not accredited by this Court and by the NLRC. In effect, the sufficiently proves the allegations
respondents failed to perfect their appeal before the NLRC. They sought to be proven
further insist that the NLRC should not have admitted the respondents’ In labor cases, strict adherence to the technical rules of procedure is
unverified supplemental appeal.20 not required. Time and again, we have allowed evidence to be
The Respondents’ Position submitted for the first time on appeal with the NLRC in the interest of
In their Comments, the respondents stress that the petitioners only substantial justice.28 Thus, we have consistently supported the rule that
raised the issue of the validity of the appeal bond for the first time on labor officials should use all reasonable means to ascertain the facts in
appeal. They also reiterate their arguments before the NLRC and the each case speedily and objectively, without regard to technicalities of
CA. They additionally submit that the petitioners’ arguments have been law or procedure, in the interest of due process. 29
fully passed upon and found unmeritorious by the NLRC and the CA. 21 However, this liberal policy should still be subject to rules of reason and
The Issues fairplay. The liberality of procedural rules is qualified by two
This case presents to us the following issues: requirements: (1) a party should adequately explain any delay in
the submission of evidence; and (2) a party should sufficiently
1) Whether the CA erred when it did not find that the NLRC
prove the allegations sought to be proven.30 The reason for these
committed grave abuse of discretion in giving due course to
requirements is that the liberal application of the rules before quasi-
the respondents’ appeal;
judicial agencies cannot be used to perpetuate injustice and hamper
a) Whether the respondents perfected their appeal the just resolution of the case. Neither is the rule on liberal construction
before the NLRC; and a license to disregard the rules of procedure. 31
b) Whether the NLRC properly allowed the Guided by these principles, the CA grossly erred in ruling that the NLRC
respondents’ supplemental appeal did not commit grave abuse of discretion in arbitrarily admitting and
2) Whether the respondents were estopped from submitting giving weight to the respondents’ pieces of evidence for the first time
pieces of evidence for the first time on appeal; on appeal.
3) Whether the petitioners were illegally dismissed and are A. The respondents failed to
thus entitled to backwages; adequately explain their delay
4) Whether the petitioners are entitled to salary differential, in the submission of evidence
overtime, holiday, premium, service incentive leave, and We cannot accept the respondents’ cavalier attitude in blatantly
thirteenth month pays; and disregarding the NLRC Rules of Procedure. The CA gravely erred when
5) Whether the petitioners are entitled to attorney’s fees. it overlooked that the NLRC blindly admitted and arbitrarily gave
The Court’s Ruling probative value to the respondents’ evidence despite their failure to
The respondents perfected their adequately explain their delay in the submission of evidence. Notably,
appeal with the NLRC because the the respondents’ delay was anchored on their assertion that they were
revocation of the bonding company's oblivious of the proceedings before the LA. However, the respondents
authority has a prospective did not dispute the LA’s finding that Mr. Romulo Pacia, Jr. appeared on
application their behalf on April 19, 2001 and May 21, 2001. 32 The respondents
Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of also failed to contest the petitioners’ assertion that the respondents’
a judgment involving a monetary award, an appeal by the employer counsel appeared in a preliminary mandatory conference on July 5,
may be perfected only upon the posting of a cash or surety bond issued 2001.33
by a reputable bonding company duly accredited by the Indeed, the NLRC capriciously and whimsically admitted and gave
Commission in the amount equivalent to the monetary award in the weight to the respondents’ evidence despite its finding that they
judgment appealed from." voluntarily appeared in the compulsory arbitration proceedings. The
Contrary to the respondents’ claim, the issue of the appeal bond’s NLRC blatantly disregarded the fact that the respondents voluntarily
validity may be raised for the first time on appeal since its proper filing opted not to participate, to adduce evidence in their defense and to file
is a jurisdictional requirement.22 The requirement that the appeal bond a position paper despite their knowledge of the pendency of the
should be issued by an accredited bonding company is mandatory and proceedings before the LA. The respondents were also grossly
jurisdictional. The rationale of requiring an appeal bond is to discourage negligent in not informing the LA of the specific building unit where the
the employers from using an appeal to delay or evade the employees'
 26

respondents were conducting their business and their counsel’s This case is REMANDED to the Labor Arbiter for the sole purpose of
address despite their knowledge of their non-receipt of the processes.34 computing petitioners' (Wilgen Loon, Jerry Arcilla, Albert Pereye,
B. The respondents failed to Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino Toetin,
sufficiently prove the Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay, Rolando Sajol,
allegations sought to be Rolando Abucayon, Jennifer Natividad, Maritess Torion, Ammndo
proven Lonzaga, Rizal Gellido, Evirdly Haque, Myrna Vinas, Nena Abina,
Furthermore, the respondents failed to sufficiently prove the allegations Emalyn Oliveros, Louie Ilagan, Joel Entig, Amel Araneta, Benjamin
sought to be proven. Why the respondents’ photocopied and Cose and William Alipao) full backwages (computed from the date of
computerized copies of documentary evidence were not presented at their respective dismissals up to the finality of this decision) and their
the earliest opportunity is a serious question that lends credence to the salary differential, service incentive leave, holiday, thirteenth month
petitioners’ claim that the respondents fabricated the evidence for pays, and attorney's fees equivalent to ten percent (10%) of the
purposes of appeal. While we generally admit in evidence and give withheld wages. The respondents are further directed to immediately
probative value to photocopied documents in administrative post a satisfactory bond conditioned on the satisfaction of the awards
proceedings, allegations of forgery and fabrication should prompt affirmed in this Decision.
the adverse party to present the original documents for SO ORDERED.
inspection.35 It was incumbent upon the respondents to present the
originals, especially in this case where the petitioners had submitted
their specimen signatures. Instead, the respondents effectively
deprived the petitioners of the opportunity to examine and controvert
the alleged spurious evidence by not adducing the originals. This Court
is thus left with no option but to rule that the respondents’ failure to
present the originals raises the presumption that evidence willfully
suppressed would be adverse if produced. 36
It was also gross error for the CA to affirm the NLRC’s proposition that
"[i]t is of common knowledge that there are many people who use at
least two or more different signatures."37 The NLRC cannot take judicial
notice that many people use at least two signatures, especially in this
case where the petitioners themselves disown the signatures in the
respondents’ assailed documentary evidence. 38 The NLRC’s position
is unwarranted and is patently unsupported by the law and
jurisprudence.
Viewed in these lights, the scales of justice must tilt in favor of the
employees. This conclusion is consistent with the rule that the
employer’s cause can only succeed on the strength of its own evidence
and not on the weakness of the employee’s evidence. 39
The petitioners are entitled to
backwages
Based on the above considerations, we reverse the NLRC and the CA’s
finding that the petitioners were terminated for just cause and were
afforded procedural due process. In termination cases, the burden of
proving just and valid cause for dismissing an employee from his
employment rests upon the employer. The employer’s failure to
discharge this burden results in the finding that the dismissal is
unjustified.40 This is exactly what happened in the present case.
The petitioners are entitled to salary
differential, service incentive,
holiday, and thirteenth month pays
We also reverse the NLRC and the CA’s finding that the petitioners are
not entitled to salary differential, service incentive, holiday, and
thirteenth month pays. As in illegal dismissal cases, the general rule is
that the burden rests on the defendant to prove payment rather than on
the plaintiff to prove non-payment of these money claims.41 The
rationale for this rule is that the pertinent personnel files, payrolls,
records, remittances and other similar documents – which will show
that differentials, service incentive leave and other claims of workers
have been paid – are not in the possession of the worker but are in the
custody and control of the employer.42
The petitioners are not entitled to
overtime and premium pays
However, the CA was correct in its finding that the petitioners failed to
provide sufficient factual basis for the award of overtime, and premium
pays for holidays and rest days. The burden of proving entitlement to
overtime pay and premium pay for holidays and rest days rests on the
employee because these are not incurred in the normal course of
business.43 In the present case, the petitioners failed to adduce any
evidence that would show that they actually rendered service in excess
of the regular eight working hours a day, and that they in fact worked
on holidays and rest days.
The petitioners are entitled to
attorney’s fees
The award of attorney’s fees is also warranted under the circumstances
of this case.1âwphi1 An employee is entitled to an award of attorney’s
fees equivalent to ten percent (10%) of the amount of the wages in
actions for unlawful withholding of wages. 44
As a final note, we observe that Rodelito Ayala, Winelito Ojel, Renato
Rodrego and Welito Loon are also named as petitioners in this case.
However, we deny their petition for the reason that they were not part
of the proceedings before the CA. Their failure to timely seek redress
before the CA precludes this Court from awarding them monetary
claims.
All told, we find that the NLRC committed grave abuse of discretion in
admitting and giving probative value to the respondents' evidence on
appeal, which errors the CA replicated when it upheld the NLRC rulings.
WHEREFORE, based on these premises, we REVERSE and SET
ASIDE the decision dated June 5, 2009, and the resolution dated
August 28, 2009 of the Court of Appeals in CA-G.R. SP No. 95182.
 27

B. WAGES In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held
G.R. No. L-44169 December 3, 1985 that all men who earn compensation by labor or work of any kind,
ROSARIO A. GAA, petitioner, whether of the head or hands, including judges, laywers, bankers,
vs. merchants, officers of corporations, and the like, are in some sense
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES "laboring men." But they are not "laboring men" in the popular sense of
CORPORATION, and CESAR R. ROXAS, Deputy Sheriff of the term, when used to refer to a must presume, the legislature used
Manila, respondents. the term. The Court further held in said case:
PATAJO, J.: There are many cases holding that contractors,
This is a petition for review on certiorari of the decision of the Court of consulting or assistant engineers, agents,
Appeals promulgated on March 30, 1976, affirming the decision of the superintendents, secretaries of corporations and
Court of First Instance of Manila. livery stable keepers, do not come within the
It appears that respondent Europhil Industries Corporation was meaning of the term. (Powell v. Eldred, 39 Mich,
formerly one of the tenants in Trinity Building at T.M. Kalaw Street, 554, Atkin v. Wasson, 25 N.Y. 482; Short v.
Manila, while petitioner Rosario A. Gaa was then the building Medberry, 29 Hun. 39; Dean v. De Wolf, 16 Hun.
administrator. On December 12, 1973, Europhil Industries commenced 186; Krausen v. Buckel, 17 Hun. 463; Ericson v.
an action (Civil Case No. 92744) in the Court of First Instance of Manila Brown, 39 Barb. 390; Coffin v. Reynolds, 37 N.Y.
for damages against petitioner "for having perpetrated certain acts that 640; Brusie v. Griffith, 34 Cal. 306; Dave v.
Europhil Industries considered a trespass upon its rights, namely, Nunan, 62 Cal. 400).
cutting of its electricity, and removing its name from the building Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held
directory and gate passes of its officials and employees" (p. 87 Rollo). that a traveling salesman, selling by sample, did not come within the
On June 28, 1974, said court rendered judgment in favor of respondent meaning of a constitutional provision making stockholders of a
Europhil Industries, ordering petitioner to pay the former the sum of corporation liable for "labor debts" of the corporation.
P10,000.00 as actual damages, P5,000.00 as moral damages, In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon
P5,000.00 as exemplary damages and to pay the costs. Hardware Co., supra, it was held that a laborer, within the statute
The said decision having become final and executory, a writ of exempting from garnishment the wages of a "laborer," is one whose
garnishment was issued pursuant to which Deputy Sheriff Cesar A. work depends on mere physical power to perform ordinary manual
Roxas on August 1, 1975 served a Notice of Garnishment upon El labor, and not one engaged in services consisting mainly of work
Grande Hotel, where petitioner was then employed, garnishing her requiring mental skill or business capacity, and involving the exercise
"salary, commission and/or remuneration." Petitioner then filed with the of intellectual faculties.
Court of First Instance of Manila a motion to lift said garnishment on the So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing
ground that her "salaries, commission and, or remuneration are an act making stockholders in a corporation liable for debts due
exempted from execution under Article 1708 of the New Civil Code. "laborers, servants and apprentices" for services performed for the
Said motion was denied by the lower Court in an order dated November corporation, held that a "laborer" is one who performs menial or manual
7, 1975. A motion for reconsideration of said order was likewise denied, services and usually looks to the reward of a day's labor or services for
and on January 26, 1976 petitioner filed with the Court of Appeals a immediate or present support. And in Weymouth vs. Sanborn, 43 N.H.
petition for certiorari against filed with the Court of Appeals a petition 173, 80 Am. Dec. 144, it was held that "laborer" is a term ordinarily
for certiorari against said order of November 7, 1975. employed to denote one who subsists by physical toil in
On March 30, 1976, the Court of Appeals dismissed the petition contradistinction to those who subsists by professional skill. And
for certiorari. In dismissing the petition, the Court of Appeals held that in Consolidated Tank Line Co. vs. Hunt, 83 Iowa, 6, 32 Am. St. Rep.
petitioner is not a mere laborer as contemplated under Article 1708 as 285, 43 N.W. 1057, 12 L.R.A. 476, it was stated that "laborers" are
the term laborer does not apply to one who holds a managerial or those persons who earn a livelihood by their own manual labor.
supervisory position like that of petitioner, but only to those "laborers Article 1708 used the word "wages" and not "salary" in relation to
occupying the lower strata." It also held that the term "wages" means "laborer" when it declared what are to be exempted from attachment
the pay given" as hire or reward to artisans, mechanics, domestics or and execution. The term "wages" as distinguished from "salary",
menial servants, and laborers employed in manufactories, agriculture, applies to the compensation for manual labor, skilled or unskilled, paid
mines, and other manual occupation and usually employed to at stated times, and measured by the day, week, month, or season,
distinguish the sums paid to persons hired to perform manual labor, while "salary" denotes a higher degree of employment, or a superior
skilled or unskilled, paid at stated times, and measured by the day, grade of services, and implies a position of office: by contrast, the term
week, month, or season," citing 67 C.J. 285, which is the ordinary wages " indicates considerable pay for a lower and less responsible
acceptation of the said term, and that "wages" in Spanish is "jornal" and character of employment, while "salary" is suggestive of a larger and
one who receives a wage is a "jornalero." more important service (35 Am. Jur. 496).
In the present petition for review on certiorari of the aforesaid decision The distinction between wages and salary was adverted to in Bell vs.
of the Court of Appeals, petitioner questions the correctness of the Indian Livestock Co. (Tex. Sup.), 11 S.W. 344, wherein it was said:
interpretation of the then Court of Appeals of Article 1708 of the New "'Wages' are the compensation given to a hired person for service, and
Civil Code which reads as follows: the same is true of 'salary'. The words seem to be synonymous,
ART. 1708. The laborer's wage shall not be subject convertible terms, though we believe that use and general acceptation
to execution or attachment, except for debts have given to the word 'salary' a significance somewhat different from
incurred for food, shelter, clothing and medical the word 'wages' in this: that the former is understood to relate to
attendance. position of office, to be the compensation given for official or other
It is beyond dispute that petitioner is not an ordinary or rank and file service, as distinguished from 'wages', the compensation for labor."
laborer but "a responsibly place employee," of El Grande Hotel, Annotation 102 Am. St. Rep. 81, 95.
"responsible for planning, directing, controlling, and coordinating the We do not think that the legislature intended the exemption in Article
activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure 1708 of the New Civil Code to operate in favor of any but those who
the cleanliness, maintenance and orderliness of all guest rooms, are laboring men or women in the sense that their work is manual.
function rooms, public areas, and the surroundings of the hotel. Persons belonging to this class usually look to the reward of a day's
Considering the importance of petitioner's function in El Grande Hotel, labor for immediate or present support, and such persons are more in
it is undeniable that petitioner is occupying a position equivalent to that need of the exemption than any others. Petitioner Rosario A. Gaa is
of a managerial or supervisory position. definitely not within that class.
In its broadest sense, the word "laborer" includes everyone who We find, therefore, and so hold that the Trial Court did not err in denying
performs any kind of mental or physical labor, but as commonly and in its order of November 7, 1975 the motion of petitioner to lift the notice
customarily used and understood, it only applies to one engaged in of garnishment against her salaries, commission and other
some form of manual or physical labor. That is the sense in which the remuneration from El Grande Hotel since said salaries, Commission
courts generally apply the term as applied in exemption acts, since and other remuneration due her from the El Grande Hotel do not
persons of that class usually look to the reward of a day's labor for constitute wages due a laborer which, under Article 1708 of the Civil
immediate or present support and so are more in need of the exemption Code, are not subject to execution or attachment.
than are other. (22 Am. Jur. 22 citing Briscoe vs. Montgomery, 93 Ga IN VIEW OF THE FOREGOING, We find the present petition to be
602, 20 SE 40; Miller vs. Dugas, 77 Ga 4 Am St Rep 192; State ex rel without merit and hereby AFFIRM the decision of the Court of Appeals,
I.X.L. Grocery vs. Land, 108 La 512, 32 So 433; Wildner vs. with costs against petitioner.
Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep. SO ORDERED.
84.
In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that
in determining whether a particular laborer or employee is really a
"laborer," the character of the word he does must be taken into G.R. No. 114698 July 3, 1995
consideration. He must be classified not according to the arbitrary WELLINGTON INVESTMENT AND MANUFACTURING
designation given to his calling, but with reference to the character of CORPORATION, petitioner,
the service required of him by his employer. vs.
 28

CRESENCIANO B. TRAJANO, Under-Secretary of Labor and words, no issue that to this extent, Wellington complied with the
Employment, ELMER ABADILLA, and 34 others, respondents. minimum norm laid down by law.
Apparently the monthly salary was fixed by Wellington to provide for
NARVASA, C.J.: compensation for every working day of the year including the holidays
The basic issue raised by petitioner in this case is, as its counsel puts specified by law — and excluding only Sundays. In fixing the salary,
it, "whether or not a monthly-paid employee, receiving a fixed monthly Wellington used what it calls the "314 factor;" that is to say, it simply
compensation, is entitled to an additional pay aside from his usual deducted 51 Sundays from the 365 days normally comprising a year
holiday pay, whenever a regular holiday falls on a Sunday." and used the difference, 314, as basis for determining the monthly
The case arose from a routine inspection conducted by a Labor salary. The monthly salary thus fixed actually covers payment for 314
Enforcement Officer on August 6, 1991 of the Wellington Flour Mills, an days of the year, including regular and special holidays, as well as days
establishment owned and operated by petitioner Wellington Investment when no work is done by reason of fortuitous cause, as above specified,
and Manufacturing Corporation (hereafter, simply Wellington). The or causes not attributable to the employees.
officer thereafter drew up a report, a copy of which was "explained to The Labor Officer who conducted the routine inspection of Wellington
and received by" Wellington's personnel manager, in which he set forth discovered that in certain years, two or three regular holidays had fallen
his finding of "(n)on-payment of regular holidays falling on a Sunday for on Sundays. He reasoned that this had precluded the enjoyment by the
monthly-paid employees."1 employees of a non-working day, and the employees had consequently
Wellington sought reconsideration of the Labor Inspector's report, by had to work an additional day for that month. This ratiocination received
letter dated August 10, 1991. It argued that "the monthly salary of the the approval of his Regional Director who opined 14 that "when a regular
company's monthly-salaried employees already includes holiday pay holiday falls on a Sunday, an extra or additional working day is created
for all regular holidays . . . (and hence) there is no legal basis for the and the employer has the obligation to pay its employees for the extra
finding of alleged non-payment of regular holidays falling on a day except the last Sunday of August since the payment for the said
Sunday."2 It expounded on this thesis in a position paper subsequently holiday is already included in the 314 factor." 15
submitted to the Regional Director, asserting that it pays its monthly- This ingenuous theory was adopted and further explained by
paid employees a fixed monthly compensation "using the 314 factor respondent Labor Undersecretary, to whom the matter was appealed,
which undeniably covers and already includes payment for all the as follows: 16
working days in a month as well as all the 10 unworked regular holidays . . . By using said (314) factor, the respondent
within a year."3 (Wellington) assumes that all the regular holidays
Wellington's arguments failed to persuade the Regional Director who, fell on ordinary days and never on a Sunday. Thus,
in an Order issued on July 28, 1992, ruled that "when a regular holiday the respondent failed to consider the circumstance
falls on a Sunday, an extra or additional working day is created and the that whenever a regular holiday coincides with a
employer has the obligation to pay the employees for the extra day Sunday, an additional working day is created and
except the last Sunday of August since the payment for the said holiday left unpaid. In other words, while the said divisor
is already included in the 314 factor," and accordingly directed may be utilized as proof evidencing payment of 302
Wellington to pay its employees compensation corresponding to four working days, 2 special days and the ten regular
(4) extra working days.4 holidays in a calendar year, the same does not
Wellington timely filed a motion for reconsideration of this Order of cover or include payment of additional working days
August 10, 1992, pointing out that it was in effect being compelled to created as a result of some regular holidays falling
"shell out an additional pay for an alleged extra working day" despite its on Sundays.
complete payment of all compensation lawfully due its workers, using He pointed out that in 1988 there was "an increase of three (3) working
the 314 factor.5 Its motion was treated as an appeal and was acted on days resulting from regular holidays falling on Sundays;" hence
by respondent Undersecretary. By Order dated September 22, the Wellington "should pay for 317 days, instead of 314 days." By the same
latter affirmed the challenged order of the Regional Director, holding process of ratiocination, respondent Undersecretary theorized that
that "the divisor being used by the respondent (Wellington) does not there should be additional payment by Wellington to its monthly-paid
reliably reflect the actual working days in a year, " and consequently employees for "an increment of three (3) working days" for 1989 and
commanded Wellington to pay its employees the "six additional working again, for 1990. What he is saying is that in those years, Wellington
days resulting from regular holidays falling on Sundays in 1988, 1989 should have used the "317 factor," not the "314 factor."
and 1990."6 Again, Wellington moved for reconsideration, 7 and again The theory loses sight of the fact that the monthly salary in Wellington
was rebuffed.8 — which is based on the so-called "314 factor" — accounts for all 365
Wellington then instituted the special civil action of certiorari at bar in days of a year; i.e., Wellington's "314 factor" leaves no day
an attempt to nullify the orders above mentioned. By Resolution dated unaccounted for; it is paying for all the days of a year with the exception
July 4, 1994, this Court authorized the issuance of a temporary only of 51 Sundays.
restraining order enjoining the respondents from enforcing the The respondents' theory would make each of the years in question
questioned orders.9 (1988, 1989, 1990), a year of 368 days. Pursuant to this theory, no
Every worker should, according to the Labor Code, 10 "be paid his employer opting to pay his employees by the month would have any
regular daily wage during regular holidays, except in retail and service definite basis to determine the number of days in a year for which
establishments regularly employing less than ten (10) workers;" this, of compensation should be given to his work force. He would have to
course, even if the worker does no work on these holidays. The regular ascertain the number of times legal holidays would fall on Sundays in
holidays include: "New Year's Day, Maundy Thursday, Good Friday, all the years of the expected or extrapolated lifetime of his business.
the ninth of April, the first of May, the twelfth of June, the fourth of July, Alternatively, he would be compelled to make adjustments in his
the thirtieth of November, the twenty-fifth of December, and the day employees' monthly salaries every year, depending on the number of
designated by law for holding a general election (or national times that a legal holiday fell on a Sunday.
referendum or plebiscite).11 There is no provision of law requiring any employer to make such
Particularly as regards employees "who are uniformly paid by the adjustments in the monthly salary rate set by him to take account of
month, "the monthly minimum wage shall not be less than the statutory legal holidays falling on Sundays in a given year, or, contrary to the
minimum wage multiplied by 365 days divided by twelve." 12 This legal provisions bearing on the point, otherwise to reckon a year at
monthly salary shall serve as compensation "for all days in the month more than 365 days. As earlier mentioned, what the law requires of
whether worked or not," and "irrespective of the number of working employers opting to pay by the month is to assure that "the monthly
days therein."13 In other words, whether the month is of thirty (30) or minimum wage shall not be less than the statutory minimum wage
thirty-one (31) days' duration, or twenty-eight (28) or twenty-nine (29) multiplied by 365 days divided by twelve," 17 and to pay that salary "for
(as in February), the employee is entitled to receive the entire monthly all days in the month whether worked or not," and "irrespective of the
salary. So, too, in the event of the declaration of any special holiday, or number of working days therein."18 That salary is due and payable
any fortuitous cause precluding work on any particular day or days regardless of the declaration of any special holiday in the entire country
(such as transportation strikes, riots, or typhoons or other natural or a particular place therein, or any fortuitous cause precluding work on
calamities), the employee is entitled to the salary for the entire month any particular day or days (such as transportation strikes, riots, or
and the employer has no right to deduct the proportionate amount typhoons or other natural calamities), or cause not imputable to the
corresponding to the days when no work was done. The monthly worker. And as also earlier pointed out, the legal provisions governing
compensation is evidently intended precisely to avoid computations monthly compensation are evidently intended precisely to avoid re-
and adjustments resulting from the contingencies just mentioned which computations and alterations in salary on account of the contingencies
are routinely made in the case of workers paid on daily basis. just mentioned, which, by the way, are routinely made between
In Wellington's case, there seems to be no question that at the time of employer and employees when the wages are paid on daily basis.
the inspection conducted by the Labor Enforcement Officer on August The public respondents argue that their challenged conclusions and
6, 1991, it was and had been paying its employees "a salary of not less dispositions may be justified by Section 2, Rule X, Book III of the
than the statutory or established minimum wage," and that the monthly Implementing Rules, giving the Regional Director power — 19
salary thus paid was "not . . . less than the statutory minimum wage . . . to order and administer (in cases where
multiplied by 365 days divided by twelve," supra. There is, in other employer-employee relations still exist), after due
notice and hearing, compliance with the labor
 29

standards provisions of the Code and the other SUBSCRIBED AND SWORN to before me this 7th day of May, 1991,
labor legislations based on the findings of their at Baguio City, Philippines.
Regulations Officers or Industrial Safety Engineers Asst. City Prosecutor
(Labor Standard and Welfare Officers) and made in Petitioner signed the affidavit but refused to go to the City Prosecutor's
the course of inspection, and to issue writs of Office to swear to the veracity and contents of the affidavit as instructed
execution to the appropriate authority for the by management. The affidavit was nevertheless submitted on the same
enforcement of his order, in line with the provisions day to the Regional Office of the Department of Labor and Employment
of Article 128 in relation to Articles 289 and 290 of in Baguio City.
the Labor Code, as amended. . . . As gleaned from the affidavit, the same was drawn by management for
The respondents beg the question. Their argument assumes that there the sole purpose of refuting findings of the Labor Inspector of DOLE (in
are some "labor standards provisions of the Code and the other labor an inspection of respondent's establishment on February 2, 1991)
legislations" imposing on employers the obligation to give additional apparently adverse to the private respondent. 3
compensation to their monthly-paid employees in the event that a legal After she refused to proceed to the City Prosecutor's Office — on the
holiday should fall on a Sunday in a particular month — with which same day the affidavit was submitted to the Cordillera Regional Office
compliance may be commanded by the Regional Director — when the of DOLE — petitioner avers that she was ordered by the hotel
existence of said provisions is precisely the matter to be established. management to turn over the keys to her living quarters and to remove
In promulgating the orders complained of the public respondents have her belongings from the hotel
attempted to legislate, or interpret legal provisions in such a manner as premises. 4 According to her, respondent strongly chided her for
to create obligations where none are intended. They have acted without refusing to proceed to the City Prosecutor's Office to attest to the
authority, or at the very least, with grave abuse of their discretion. Their affidavit. 5 She thereafter reluctantly filed a leave of absence from her
acts must be nullified and set aside. job which was denied by management. When she attempted to return
WHEREFORE, the orders complained of, namely: that of the to work on May 10, 1991, the hotel's cashier, Margarita Choy, informed
respondent Undersecretary dated September 22, 1993, and that of the her that she should not report to work and, instead, continue with her
Regional Director dated July 30, 1992, are NULLIFIED AND SET unofficial leave of absence. Consequently, on May 13, 1991, three days
ASIDE, and the proceeding against petitioner DISMISSED. after her attempt to return to work, petitioner filed a complaint for illegal
SO ORDERED. dismissal before the Arbitration Branch of the National Labor Relations
Commission — CAR Baguio City. In addition to her complaint for illegal
dismissal, she alleged underpayment of wages, non-payment of
holiday pay, service incentive leave pay, 13th month pay, night
G.R. No. 118506 April 18, 1997 differential and other benefits. The complaint was docketed as NLRC
Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe
NORMA MABEZA, petitioner,
P. Pati.
vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL Responding to the allegations made in support of petitioner's complaint
SUPREME, respondents. for illegal dismissal, private respondent Peter Ng alleged before Labor
Arbiter Pati that petitioner "surreptitiously left (her job) without notice to
the management" 6 and that she actually abandoned her work. He
KAPUNAN, J.: maintained that there was no basis for the money claims for
This petition seeking the nullification of a resolution of public underpayment and other benefits as these were paid in the form of
respondent National Labor Relations Commission dated April 28, 1994 facilities to petitioner and the hotel's other employee. 7 Pointing to the
vividly illustrates why courts should be ever vigilant in the preservation Affidavit of May 7, 1991, the private respondent asserted that his
of the constitutionally enshrined rights of the working class. Without the employees actually have no problems with management. In a
protection accorded by our laws and the tempering of courts, the supplemental answer submitted eleven (11) months after the original
natural and historical inclination of capital to ride roughshod over the complaint for illegal dismissal was filed, private respondent raised a
rights of labor would run unabated. new ground, loss of confidence, which was supported by a criminal
The facts of the case at bar, culled from the conflicting versions of complaint for Qualified Theft he filed before the prosecutor's office of
petitioner and private respondent, are illustrative. the City of Baguio against petitioner on July 4, 1991. 8
Petitioner Norma Mabeza contends that around the first week of May, On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing
1991, she and her co-employees at the Hotel Supreme in Baguio City petitioner's complaint on the ground of loss of confidence. His
were asked by the hotel's management to sign an instrument attesting disquisitions in support of his conclusion read as follows:
to the latter's compliance with minimum wage and other labor standard It appears from the evidence of respondent that
provisions of law. 1 The instrument provides: 2 complainant carted away or stole one (1) blanket, 1
JOINT AFFIDAVIT piece bedsheet, 1 piece thermos, 2 pieces towel
We, SYLVIA IGANA, HERMINIGILDO AQUINO, (Exhibits "9", "9-A," "9-B," "9-C" and "10" pages 12-
EVELYN OGOY, MACARIA JUGUETA, ADELAIDA 14 TSN, December 1, 1992).
NONOG, NORMA MABEZA, JONATHAN PICART In fact, this was the reason why respondent Peter
and JOSE DIZON, all of legal ages (sic), Filipinos Ng lodged a criminal complaint against complainant
and residents of Baguio City, under oath, depose for qualified theft and perjury. The fiscal's office
and say: finding a prima facie evidence that complainant
1. That we are employees of Mr. Peter L. Ng of his committed the crime of qualified theft issued a
Hotel Supreme situated at No. 416 Magsaysay Ave., resolution for its filing in court but dismissing the
Baguio City. charge of perjury (Exhibit "4" for respondent and
2. That the said Hotel is separately operated from Exhibit "B-7" for complainant). As a consequence,
the Ivy's Grill and Restaurant; complainant was charged in court for the said crime
3. That we are all (8) employees in the hotel and (Exhibit "5" for respondent and Exhibit "B-6" for the
assigned in each respective shifts; complainant).
4. That we have no complaints against the With these pieces of evidence, complainant
management of the Hotel Supreme as we are paid committed serious misconduct against her
accordingly and that we are treated well. employer which is one of the just and valid grounds
5. That we are executing this affidavit voluntarily for an employer to terminate an employee (Article
without any force or intimidation and for the purpose 282 of the Labor Code as amended). 9
of informing the authorities concerned and to On April 28, 1994, respondent NLRC promulgated its assailed
dispute the alleged report of the Labor Inspector of Resolution 10 — affirming the Labor Arbiter's decision. The resolution
the Department of Labor and Employment substantially incorporated the findings of the Labor
conducted on the said establishment on February 2, Arbiter. 11 Unsatisfied, petitioner instituted the instant special civil
1991. action for certiorari under Rule 65 of the Rules of Court on the following
IN WITNESS WHEREOF, we have hereunto set our grounds: 12
hands this 7th day of May, 1991 at Baguio City, 1. WITH ALL DUE RESPECT, THE HONORABLE
Philippines. NATIONAL LABOR RELATIONS COMMISSION
(Sgd.) (Sgd.) (Sgd.) COMMITTED A PATENT AND PALPABLE ERROR
SYLVIA IGAMA HERMINIGILDO AQUINO AMOUNTING TO GRAVE ABUSE OF
EVELYN OGOY DISCRETION IN ITS FAILURE TO CONSIDER
(Sgd.) (Sgd.) (Sgd.) THAT THE ALLEGED LOSS OF CONFIDENCE IS
MACARIA JUGUETA ADELAIDA NONOG NORMA A FALSE CAUSE AND AN AFTERTHOUGHT ON
MABEZA. THE PART OF THE RESPONDENT-EMPLOYER
(Sgd.) (Sgd.) TO JUSTIFY, ALBEIT ILLEGALLY, THE
JONATHAN PICART JOSE DIZON
 30

DISMISSAL OF THE COMPLAINANT FROM HER the powers or prerogatives to lay down management policies and/or to
EMPLOYMENT; hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
2. WITH ALL DUE RESPECT, THE HONORABLE employees or effectively recommend such managerial actions; and to
NATIONAL LABOR RELATIONS COMMISSION the second class belong cashiers, auditors, property custodians, etc.,
COMMITTED A PATENT AND PALPABLE ERROR or those who, in the normal and routine exercise of their functions,
AMOUNTING TO GRAVE ABUSE OF regularly handle significant amounts of money or property. Evidently,
DISCRETION IN ADOPTING THE RULING OF an ordinary chambermaid who has to sign out for linen and other hotel
THE LABOR ARBITER THAT THERE WAS NO property from the property custodian each day and who has to account
UNDERPAYMENT OF WAGES AND BENEFITS for each and every towel or bedsheet utilized by the hotel's guests at
ON THE BASIS OF EXHIBIT "8" (AN UNDATED the end of her shift would not fall under any of these two classes of
SUMMARY OF COMPUTATION PREPARED BY employees for which loss of confidence, if ably supported by evidence,
ALLEGEDLY BY RESPONDENT'S EXTERNAL would normally apply. Illustrating this distinction, this Court in Marina
ACCOUNTANT) WHICH IS TOTALLY Port Services, Inc. vs. NLRC, 20 has stated that:
INADMISSIBLE AS AN EVIDENCE TO PROVE To be sure, every employee must enjoy some
PAYMENT OF WAGES AND BENEFITS; degree of trust and confidence from the employer
3. WITH ALL DUE RESPECT, THE HONORABLE as that is one reason why he was employed in the
NATIONAL LABOR RELATIONS COMMISSION first place. One certainly does not employ a person
COMMITTED A PATENT AND PALPABLE ERROR he distrusts. Indeed, even the lowly janitor must
AMOUNTING TO GRAVE ABUSE OF enjoy that trust and confidence in some measure if
DISCRETION IN FAILING TO CONSIDER THE only because he is the one who opens the office in
EVIDENCE ADDUCED BEFORE THE LABOR the morning and closes it at night and in this sense
ARBITER AS CONSTITUTING UNFAIR LABOR is entrusted with the care or protection of the
PRACTICE COMMITTED BY THE RESPONDENT. employer's property. The keys he holds are the
The Solicitor General, in a Manifestation in lieu of Comment dated symbol of that trust and confidence.
August 8, 1995 rejects private respondent's principal claims and By the same token, the security guard must also be
defenses and urges this Court to set aside the public respondent's considered as enjoying the trust and confidence of
assailed resolution. 13 his employer, whose property he is safeguarding.
We agree. Like the janitor, he has access to this property. He
It is settled that in termination cases the employer bears the burden of too, is charged with its care and protection.
proof to show that the dismissal is for just cause, the failure of which Notably, however, and like the janitor again, he is
would mean that the dismissal is not justified and the employee is entrusted only with the physical task of protecting
entitled to reinstatement. 14 that property. The employer's trust and confidence
In the case at bar, the private respondent initially claimed that petitioner in him is limited to that ministerial function. He is not
abandoned her job when she failed to return to work on May 8, 1991. entrusted, in the Labor Arbiter's words, with the
Additionally, in order to strengthen his contention that there existed duties of safekeeping and safeguarding company
sufficient cause for the termination of petitioner, he belatedly included policies, management instructions, and company
a complaint for loss of confidence, supporting this with charges that secrets such as operation devices. He is not privy
petitioner had stolen a blanket, a bedsheet and two towels from the to these confidential matters, which are shared only
hotel. 15 Appended to his last complaint was a suit for qualified theft in the higher echelons of management. It is the
filed with the Baguio City prosecutor's office. persons on such levels who, because they
From the evidence on record, it is crystal clear that the circumstances discharge these sensitive duties, may be
upon which private respondent anchored his claim that petitioner considered holding positions of trust and confidence.
"abandoned" her job were not enough to constitute just cause to The security guard does not belong in such
sanction the termination of her services under Article 283 of the Labor category. 21
Code. For abandonment to arise, there must be concurrence of two More importantly, we have repeatedly held that loss of confidence
things: 1) lack of intention to work; 16 and 2) the presence of overt acts should not be simulated in order to justify what would otherwise be,
signifying the employee's intention not to work. 17 under the provisions of law, an illegal dismissal. "It should not be used
In the instant case, respondent does not dispute the fact that petitioner as a subterfuge for causes which are illegal, improper and unjustified.
tried to file a leave of absence when she learned that the hotel It must be genuine, not a mere afterthought to justify an earlier action
management was displeased with her refusal to attest to the affidavit. taken in bad faith." 22
The fact that she made this attempt clearly indicates not an intention to In the case at bar, the suspicious delay in private respondent's filing of
abandon but an intention to return to work after the period of her leave qualified theft charges against petitioner long after the latter exposed
of absence, had it been granted, shall have expired. the hotel's scheme (to avoid its obligations as employer under the Labor
Furthermore, while absence from work for a prolonged period may Code) by her act of filing illegal dismissal charges against the private
suggest abandonment in certain instances, mere absence of one or two respondent would hardly warrant serious consideration of loss of
days would not be enough to sustain such a claim. The overt act confidence as a valid ground for dismissal. Notably, the Solicitor
(absence) ought General has himself taken a position opposite the public respondent
to unerringly point to the fact that the employee has no intention to and has observed that:
return to work, 18 which is patently not the case here. In fact, several If petitioner had really committed the acts charged
days after she had been advised to take an informal leave, petitioner against her by private respondents (stealing
tried to resume working with the hotel, to no avail. It was only after she supplies of respondent hotel), private respondents
had been repeatedly rebuffed that she filed a case for illegal dismissal. should have confronted her before dismissing her
These acts militate against the private respondent's claim that on that ground. Private respondents did not do so.
petitioner abandoned her job. As the Solicitor General in his In fact, private respondent Ng did not raise the
manifestation observed: matter when petitioner went to see him on May 9,
Petitioner's absence on that day should not be 1991, and handed him her application for leave. It
construed as abandonment of her job. She did not took private respondents 52 days or up to July 4,
report because the cashier told her not to report 1991 before finally deciding to file a criminal
anymore, and that private respondent Ng did not complaint against petitioner, in an obvious attempt
want to see her in the hotel premises. But two days to build a case against her.
later or on the 10th of May, after realizing that she The manipulations of private respondents should
had to clarify her employment status, she again not be countenanced. 23
reported for work. However, she was prevented Clearly, the efforts to justify petitioner's dismissal — on top of the
from working by private respondents. 19 private respondent's scheme of inducing his employees to sign an
We now come to the second cause raised by private respondent to affidavit absolving him from possible violations of the Labor Code —
support his contention that petitioner was validly dismissed from her job. taints with evident bad faith and deliberate malice petitioner's summary
Loss of confidence as a just cause for dismissal was never intended to termination from employment.
provide employers with a blank check for terminating their employees. Having said this, we turn to the important question of whether or not the
Such a vague, all-encompassing pretext as loss of confidence, if dismissal by the private respondent of petitioner constitutes an unfair
unqualifiedly given the seal of approval by this Court, could readily labor practice.
reduce to barren form the words of the constitutional guarantee of The answer in this case must inevitably be in the affirmative.
security of tenure. Having this in mind, loss of confidence should ideally The pivotal question in any case where unfair labor practice on the part
apply only to cases involving employees occupying positions of trust of the employer is alleged is whether or not the employer has exerted
and confidence or to those situations where the employee is routinely pressure, in the form of restraint, interference or coercion, against his
charged with the care and custody of the employer's money or property. employee's right to institute concerted action for better terms and
To the first class belong managerial employees, i.e., those vested with conditions of employment. Without doubt, the act of compelling
 31

employees to sign an instrument indicating that the employer observed seniority rights and other privileges. Owing to the strained relations
labor standards provisions of law when he might have not, together with between petitioner and private respondent, allowing the former to return
the act of terminating or coercing those who refuse to cooperate with to her job would only subject her to possible harassment and future
the employer's scheme constitutes unfair labor practice. The first act embarrassment. In the instant case, separation pay equivalent to one
clearly preempts the right of the hotel's workers to seek better terms month's salary for every year of continuous service with the private
and conditions of employment through concerted action. respondent would be proper, starting with her job at the Belfront Hotel.
We agree with the Solicitor General's observation in his manifestation In addition to separation pay, backwages are in order. Pursuant to R.A.
that "[t]his actuation . . . is analogous to the situation envisaged in 6715 and our decision in Osmalik Bustamante, et al. vs. National Labor
paragraph (f) of Article 248 of the Labor Code" 24 which distinctly makes Relations Commission, 33 petitioner is entitled to full backwages from
it an unfair labor practice "to dismiss, discharge or otherwise prejudice the time of her illegal dismissal up to the date of promulgation of this
or discriminate against an employee for having given or being about to decision without qualification or deduction.
give testimony" 25 under the Labor Code. For in not giving positive Finally, in dismissal cases, the law requires that the employer must
testimony in favor of her employer, petitioner had reserved not only her furnish the employee sought to be terminated from employment with
right to dispute the claim and proffer evidence in support thereof but two written notices before the same may be legally effected. The first is
also to work for better terms and conditions of employment. a written notice containing a statement of the cause(s) for dismissal;
For refusing to cooperate with the private respondent's scheme, the second is a notice informing the employee of the employer's
petitioner was obviously held up as an example to all of the hotel's decision to terminate him stating the basis of the dismissal. During the
employees, that they could only cause trouble to management at great process leading to the second notice, the employer must give the
personal inconvenience. Implicit in the act of petitioner's termination employee ample opportunity to be heard and defend himself, with the
and the subsequent filing of charges against her was the warning that assistance of counsel if he so desires.
they would not only be deprived of their means of livelihood, but also Given the seriousness of the second cause (qualified theft) of the
possibly, their personal liberty. petitioner's dismissal, it is noteworthy that the private respondent never
This Court does not normally overturn findings and conclusions of even bothered to inform petitioner of the charges against her. Neither
quasi-judicial agencies when the same are ably supported by the was petitioner given the opportunity to explain the loss of the articles. It
evidence on record. However, where such conclusions are based on a was only almost two months after petitioner had filed a complaint for
misperception of facts or where they patently fly in the face of reason illegal dismissal, as an afterthought, that the loss was reported to the
and logic, we will not hesitate to set aside those conclusions. Going into police and added as a supplemental answer to petitioner's complaint.
the issue of petitioner's money claims, we find one more salient reason Clearly, the dismissal of petitioner without the benefit of notice and
in this case to set things right: the labor arbiter's evaluation of the hearing prior to her termination violated her constitutional right to due
money claims in this case incredibly ignores existing law and process. Under the circumstance an award of One Thousand Pesos
jurisprudence on the matter. Its blatant one-sidedness simply raises the (P1,000.00) on top of payment of the deficiency in wages and benefits
suspicion that something more than the facts, the law and for the period aforestated would be proper.
jurisprudence may have influenced the decision at the level of the WHEREFORE, premises considered, the RESOLUTION of the
Arbiter. National Labor Relations Commission dated April 24, 1994 is
Labor Arbiter Pati accepted hook, line and sinker the private REVERSED and SET ASIDE, with costs. For clarity, the economic
respondent's bare claim that the reason the monetary benefits received benefits due the petitioner are hereby summarized as follows:
by petitioner between 1981 to 1987 were less than minimum wage was 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up
because petitioner did not factor in the meals, lodging, electric to the date of petitioner's illegal dismissal;
consumption and water she received during the period in her 2) Service incentive leave pay; night differential pay and 13th month
computations. 26 Granting that meals and lodging were provided and pay for the same period;
indeed constituted facilities, such facilities could not be deducted 3) Separation pay equal to one month's salary for every year of
without the employer complying first with certain legal requirements. petitioner's continuous service with the private respondent starting with
Without satisfying these requirements, the employer simply cannot her job at the Belfront Hotel;
deduct the value from the employee's ages. First, proof must be shown 4) Full backwages, without qualification or deduction, from the date of
that such facilities are customarily furnished by the trade. Second, the petitioner's illegal dismissal up to the date of promulgation of this
provision of deductible facilities must be voluntarily accepted in writing decision pursuant to our ruling in Bustamante vs. NLRC. 34
by the employee. Finally, facilities must be charged at fair and
5) P1,000.00.
reasonable value. 27
ORDERED.
These requirements were not met in the instant case. Private
respondent "failed to present any company policy or guideline to show
that the meal and lodging . . . (are) part of the salary;" 28 he failed to
provide proof of the employee's written authorization; and, he failed to
show how he arrived at the valuations. 29 G.R. No. 152843 July 20, 2006
Curiously, in the case at bench, the only valuations relied upon by the INTERCONTINENTAL BROADCASTING CORPORATION, petitioner,
labor arbiter in his decision were figures furnished by the private vs.
respondent's own accountant, without corroborative evidence. On the REYNALDO BENEDICTO, deceased, substituted by his surviving
pretext that records prior to the July 16, 1990 earthquake were lost or spouse LOURDES V. BENEDICTO, and children, namely:
destroyed, respondent failed to produce payroll records, receipts and REYNALDO V. BENEDICTO, SHIRLEY V. BENEDICTO-TAN,
other relevant documents, where he could have, as has been pointed EDGAR V. BENEDICTO and LILIBETH V. BENEDICTO-DE LA
out in the Solicitor General's manifestation, "secured certified copies VICTORIA,*, respondents.
thereof from the nearest regional office of the Department of Labor, the DECISION
SSS or the BIR." 30 CORONA, J.:
More significantly, the food and lodging, or the electricity and water This is a petition for review on certiorari1 of the October 18, 2001
consumed by the petitioner were not facilities but supplements. A decision2 and March 18, 2002 resolution3 of the Court of Appeals (CA)
benefit or privilege granted to an employee for the convenience of the in CA-G.R. SP No. 53413 which in turn affirmed the March 5, 1999
employer is not a facility. The criterion in making a distinction between decision4 and June 10, 1999 resolution5 of the National Labor Relations
the two not so much lies in the kind (food, lodging) but the Commission (NLRC) in NLRC NCR CA Case No. 017886-99.
purpose. 31 Considering, therefore, that hotel workers are required to Petitioner alleged that Intercontinental Broadcasting Corporation is a
work different shifts and are expected to be available at various odd government-owned and controlled corporation.6 It is engaged in the
hours, their ready availability is a necessary matter in the operations of business of mass media communications including, among others, the
a small hotel, such as the private respondent's hotel. operation of television Channel 13 (IBC 13). 7
It is therefore evident that petitioner is entitled to the payment of the In 1993, Reynaldo Benedicto was appointed by Ceferino Basilio, the
deficiency in her wages equivalent to the full wage applicable from May general manager8 then of petitioner, as marketing manager with a
13, 1988 up to the date of her illegal dismissal. monthly compensation of P20,000 plus 1% commission from
Additionally, petitioner is entitled to payment of service incentive leave collections of all advertising contracts consummated. 9
pay, emergency cost of living allowance, night differential pay, and 13th In a letter dated October 11, 1994 signed by Tomas Gomez III, at that
month pay for the periods alleged by the petitioner as the private time the president of petitioner, Benedicto was terminated from his
respondent has never been able to adduce proof that petitioner was position.10
paid the aforestated benefits. On December 3, 1996, Benedicto filed a complaint with the NLRC for
However, the claims covering the period of October 1987 up to the time illegal dismissal and damages. He alleged that after his appointment,
of filing the case on May 13, 1988 are barred by prescription as P.D. he was able to increase the televiewing, listening and audience ratings
442 (as amended) and its implementing rules limit all money claims of petitioner which resulted in its improved competitive financial
arising out of employer-employee relationship to three (3) years from strength.11 Specifically, in 1994, he claimed that he successfully
the time the cause of action accrues. 32 initiated, pursued and consummated an advertising contract with VTV
We depart from the settled rule that an employee who is unjustly Corporation for a period of five years involving the amount of P600
dismissed from work normally should be reinstated without loss of
 32

million.12 However, on October 11, 1994, he was terminated from his monetary award will be given to them on dismissal of the employer’s
position without just or authorized cause. appeal.26 It is also meant to discourage employers from using the
Labor arbiter Jovencio LL. Mayor, Jr.,13 in a decision dated August 17, appeal to delay or evade payment of their obligations to the
1998, ruled in favor of Benedicto finding that he was indeed illegally employees.27
dismissed. Consequently, Mayor: (1) ordered his reinstatement with full Nevertheless, such amount of the bond may be reduced by the NLRC
backwages from the time of his dismissal up to his actual reinstatement in meritorious cases, on motion of the appellant. 28 Indeed, an
(amounting to P920,000 at the time of the promulgation of the decision); unreasonable and excessive amount of bond is oppressive and unjust,
(2) directed petitioner to pay his 1% commission on the contract with and has the effect of depriving a party of his right to appeal. 29
VTV Corporation (P645,000), attorney’s fees in the amount of 10% of The provision of Article 223 of the Labor Code requiring the posting of
the total award (P156,500) and (3) dismissed the claim for moral and a bond for the perfection of an appeal of a monetary award must be
exemplary damages.14 given liberal interpretation in line with the desired objective of resolving
Finding the award excessive, petitioner, on October 15, 1998, filed with controversies on the merits.30 If only to achieve substantial justice, strict
the NLRC its memorandum on appeal with motion to re-compute the observance of the reglementary periods may be relaxed if
award on which the appeal bond was to be based. 15 This motion was warranted.31 However, this liberal interpretation must be justified by
not acted upon,16 hence, on December 10, 1998, petitioner proceeded substantial compliance with the rule. As we declared in Buenaobra v.
to file the appeal bond based on the amounts 17 awarded in the Lim King Guan:32
judgment appealed from.18 It is true that the perfection of an appeal in the manner and
In a decision promulgated on March 5, 1999, the NLRC dismissed the within the period prescribed by law is not only mandatory but
appeal and ruled that petitioner failed to perfect its appeal since it did jurisdictional, and failure to perfect an appeal has the effect
not file the appeal bond within the reglementary period. The CA of making the judgment final and executory. However,
affirmed the NLRC’s decision. technicality should not be allowed to stand in the way of
Thus this petition with application for preliminary injunction and/or equitably and completely resolving the rights and obligations
temporary restraining order alleging the following assignment of errors: of the parties. We have allowed appeals from the decisions of
I. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING the labor arbiter to the NLRC, even if filed beyond the
THE ASSAILED DECISION/RESOLUTION OF THE [NLRC] reglementary period, in the interest of justice. 33
ON MERE TECHNICALITY, FAILING TO RECOGNIZE In this case, petitioner posted the bond when the NLRC did not act on
THAT PETITIONER HAS IN FACT PERFECTED ITS its motion for re-computation of the award. There was thus substantial
APPEAL UNDER EXISTING LAW AND JURISPRUDENCE[;] compliance that justified a liberal application of the requirement on the
II. WITH DUE RESPECT, THE [CA] ERRED IN timely filing of the appeal bond. Moreover, petitioner presented a
AFFIRMING IN TOTO THE ASSAILED meritorious ground in questioning the computation of the backwages,
RESOLUTION/DECISION DEPRIVING PETITIONER OF as we shall discuss below.
ITS RIGHT TO APPEAL, BY IGNORING THE MERITS OF We now proceed to the merits of the case.
THE MOTION TO RECOMPUTE AWARD TO REDUCE The labor arbiter found that Benedicto was an employee (the marketing
BOND AND ITS SIGNIFICANCE IN RELATION TO THE manager) of petitioner.34 He also determined that there was no just or
PERFECTION OF THE APPEAL[;] authorized cause for Benedicto’s termination. Neither did petitioner
III. WITH DUE RESPECT, THE [CA] ERRED IN NOT comply with the two-notice requirement for valid termination under the
PASSING UPON THE SUBSTANTIVE MERITS OF THE law. He therefore concluded that Benedicto was illegally dismissed. 35
CASE, SPECIALLY ON THE VALIDITY OF THE These factual findings of the NLRC, confirmed by the CA, are binding
REINSTATEMENT OF [BENEDICTO] AT AGE SEVENTY on us since they are supported by substantial evidence. Petitioner,
TWO (72), CONTRARY TO LAW AND JURISPRUDENCE, aside from merely stating that Benedicto’s appointment was
AND THE GRANT OF BACKWAGES BEYOND [THE] AGE unauthorized,36 did not extensively deal with the issue of whether
FOR COMPULSORY RETIREMENT AT 65[;] Benedicto was in fact its employee. Besides, it is estopped from
IV. WITH DUE RESPECT, THE [CA] ERRED IN denying such fact considering its admission that its former President,
AFFIRMING IN TOTO THE ASSAILED Tomas Gomez III, wrote him a letter of termination on October 11,
RESOLUTION/DECISION THAT GRANTS 5-YEAR 1994.37 Petitioner, furthermore, never contested the finding of illegal
AUTOMATIC INCREASE OF AWARD [SUCH] AS dismissal. Accordingly, there are no strong reasons for us to again
FROM P1.565M TO 2.711M WITHOUT SETTING delve into the facts.
[BENEDICTO]’S MOTION TO RECOMPUTE AWARD FOR Instead, the bulk of petitioner’s arguments focused on the labor arbiter’s
HEARING AND WITHOUT DUE NOTICE THEREOF order of reinstatement and award of backwages. The issue of
DEPRIVING THE PETITIONER OF ITS PROPERTY reinstatement was mooted by Benedicto’s death in 2002.
WITHOUT DUE PROCESS[;] As for the award of backwages, petitioner insists that the award should
V. THE [CA] ERRED IN IGNORING THE ISSUE OF be limited to what Benedicto was entitled to as of the compulsory
JURISDICTION RAISED BY PETITIONER.19 retirement age of 65 years. When the labor arbiter promulgated his
On June 26, 2002, this Court issued a temporary restraining order decision (wherein he awarded the amount of P920,000 as backwages),
enjoining Benedicto and the NLRC from implementing the decision of Benedicto was already 68 years old. In an order dated August 10, 1999,
labor arbiter Mayor.20 he further increased the backwages by P180,000.38
During the pendency of the case, on November 6, 2002, Benedicto We agree with petitioner that Benedicto was entitled to backwages only
passed away.21 He was substituted by his surviving spouse Lourdes V. up to the time he reached 65 years old, the compulsory retirement age
Benedicto and their four children.22 under the law.39 When Benedicto was illegally dismissed on October
After this petition was given due course, Atty. Rodolfo B. Barriga, who 11, 1994, he was already 64 years old. He turned 65 years old on
claimed to have been hired by Benedicto as collaborating counsel, filed December 1, 199440 at which age he was deemed to have retired.
a motion dated December 17, 2002 praying to be reinstated as counsel Since backwages are granted on grounds of equity for earnings lost by
of record of respondents.23 The Court, in a resolution dated March 26, an employee due to his illegal dismissal,41 Benedicto was entitled to
2003, denied the motion since any attorney-client relationship between backwages only for the period he could have worked had he not been
him and Benedicto, if it indeed existed, was terminated by the latter’s illegally dismissed, i.e. from October 11, 1994 to December 1, 1994.42
death. Thereafter, Atty. Barriga filed a motion to determine attorney’s Petitioner also questions the award by the labor arbiter of Benedicto’s
fees and notice and statement of charging lien for attorney’s fees dated 1% commission on the blocktime sale agreement with VTV Corporation
May 5, 2003 praying, among others, that we determine and approve in the amount of P645,000.43 The arbiter found that the agreement was
his attorney’s fees and approve the notice of his charging lien. 24 initiated by and consummated through Benedicto’s efforts and that he
Now the resolution of the issues. was entitled to the commission.44 This is another factual matter that is
Petitioner raises the issue of jurisdiction without, however, explaining binding on us. However, it is unclear how the labor arbiter arrived at the
properly the basis of its objections.25 Such half-hearted and belated amount adjudged. We therefore rule that in computing the amount of
attempt to argue the NLRC’s alleged lack of jurisdiction cannot possibly the commission Benedicto was entitled to, the following should be
be taken seriously at this late stage of the proceedings. considered:
The NLRC and the CA dismissed petitioner’s appeal. Both held that First, because Benedicto was entitled to backwages only from
petitioner failed to perfect its appeal. Petitioner had ten calendar days October 11 to December 1, 1994 when he turned 65 years
from its receipt of the labor arbiter’s decision on October 5, 1998 to old, petitioner should pay his commission only for this period.
appeal. While it filed its memorandum on appeal with motion to re- Second, by nature, commissions are given to employees only
compute award on October 15, 1998, the appeal bond was posted after if the employer receives income.45 Employees, as a reward,
the appeal period. receive a percentage of the earnings of the employer, which
Under the second paragraph of Article 223 of the Labor Code, when a they, through their efforts, helped produce. 46 Commissions
judgment involving monetary award is appealed by the employer, the are also given in the form of incentives or encouragement so
appeal is perfected only upon the posting of a cash or surety that employees will be inspired to put a little more industry
bond issued by a reputable bonding company duly accredited by the into their tasks. Commissions can also be considered as
NLRC in an amount equivalent to the monetary award in the judgment. direct remunerations for services rendered.47 All these
This assures the workers that if they finally prevail in the case, the different concepts of commissions are incongruent with the
 33

claim that an employee can continue to receive them In 1996, petitioner was designated Acting Manager. The corporation
indefinitely after reaching his mandatory retirement age. also hired Gerry Nino as accountant in lieu of petitioner. As Acting
Benedicto’s right to the commissions was coterminous with Manager, petitioner was assigned to handle recruitment of all
his employment with petitioner 48 and this ended when he employees and perform management administration functions;
reached the compulsory retirement age. represent the company in all dealings with government agencies,
Lastly, the stipulation49 providing for commissions (which did especially with the Bureau of Internal Revenue (BIR), Social Security
not specify the period of entitlement) would be too System (SSS) and in the city government of Makati; and to administer
burdensome if interpreted to mean that Benedicto had a right all other matters pertaining to the operation of Kasei Restaurant which
to it even after his employment with petitioner. Doubts in is owned and operated by Kasei Corporation. 7
contracts should be settled in favor of the greatest reciprocity For five years, petitioner performed the duties of Acting Manager. As of
of interests.50 A lopsided and open-minded construction could December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing
not have been the parties’ contemplation. Had that been their allowance and a 10% share in the profit of Kasei Corporation. 8
intent, then they should have spelled it out in no uncertain In January 2001, petitioner was replaced by Liza R. Fuentes as
terms. Manager. Petitioner alleged that she was required to sign a prepared
The labor arbiter should therefore re-compute the commission resolution for her replacement but she was assured that she would still
Benedicto was entitled to in accordance with these guidelines. be connected with Kasei Corporation. Timoteo Acedo, the designated
Petitioner is also liable for 10% of the total amount for attorney’s fees Treasurer, convened a meeting of all employees of Kasei Corporation
since Benedicto and the present respondents were compelled to litigate and announced that nothing had changed and that petitioner was still
and incur expenses to enforce and protect his rights.51 connected with Kasei Corporation as Technical Assistant to Seiji
With respect to Atty. Barriga’s motion, we note that this entails a factual Kamura and in charge of all BIR matters. 9
determination and examination of the evidence. Since Atty. Barriga still Thereafter, Kasei Corporation reduced her salary by P2,500.00 a
has to prove his entitlement to the attorney’s fees he is claiming and month beginning January up to September 2001 for a total reduction of
the amount thereof (if he is so entitled), this may be taken up in the P22,500.00 as of September 2001. Petitioner was not paid her mid-
NLRC which will execute the judgment.52 year bonus allegedly because the company was not earning well. On
In summary, this case shall be remanded to the labor arbiter for re- October 2001, petitioner did not receive her salary from the company.
computation of backwages and commissions to be paid by petitioner to She made repeated follow-ups with the company cashier but she was
respondent(s) for the period October 11, 1994 to December 1, 1994 advised that the company was not earning well. 10
and 10% of the total amount as attorney’s fees. The labor arbiter shall On October 15, 2001, petitioner asked for her salary from Acedo and
also set for further hearing Atty. Barriga’s motion to determine his the rest of the officers but she was informed that she is no longer
attorney’s fees and thereafter to fix the amount thereof if he is so connected with the company. 11
entitled. Since she was no longer paid her salary, petitioner did not report for
WHEREFORE, the assailed decision dated October 18, 2001 and work and filed an action for constructive dismissal before the labor
resolution dated March 18, 2002 of the Court of Appeals in CA-G.R. SP arbiter.
No. 53413 are hereby REVERSED and SET ASIDE. Private respondents averred that petitioner is not an employee of Kasei
Petitioner is ORDERED to pay the deceased respondent’s backwages Corporation. They alleged that petitioner was hired in 1995 as one of
and commissions to his heirs from the time he was illegally dismissed its technical consultants on accounting matters and act concurrently as
on October 11, 1994 up to the time he reached compulsory retirement Corporate Secretary. As technical consultant, petitioner performed her
age on December 1, 1994. Likewise, petitioner is ORDERED to pay work at her own discretion without control and supervision of Kasei
attorney’s fees equivalent to 10% of the total monetary award Corporation. Petitioner had no daily time record and she came to the
(backwages plus commissions). For this purpose, the case is hereby office any time she wanted. The company never interfered with her
ordered REMANDED to the labor arbiter for the re-computation of the work except that from time to time, the management would ask her
amounts due. opinion on matters relating to her profession. Petitioner did not go
The labor arbiter is also DIRECTED to set for further hearing Atty. through the usual procedure of selection of employees, but her services
Rodolfo B. Barriga’s motion to determine his attorney’s fees and were engaged through a Board Resolution designating her as technical
thereafter to fix the amount thereof if due to him. consultant. The money received by petitioner from the corporation was
Our temporary restraining order issued on June 26, 2002 is her professional fee subject to the 10% expanded withholding tax on
hereby LIFTED. professionals, and that she was not one of those reported to the BIR or
SSS as one of the company’s employees. 12
Costs against petitioner.
Petitioner’s designation as technical consultant depended solely upon
SO ORDERED.
the will of management. As such, her consultancy may be terminated
any time considering that her services were only temporary in nature
and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private
G.R. No. 170087 August 31, 2006 respondents submitted a list of employees for the years 1999 and 2000
ANGELINA FRANCISCO, Petitioner, duly received by the BIR showing that petitioner was not among the
vs. employees reported to the BIR, as well as a list of payees subject to
NATIONAL LABOR RELATIONS COMMISSION, KASEI expanded withholding tax which included petitioner. SSS records were
CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, also submitted showing that petitioner’s latest employer was Seiji
DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON Corporation. 13
ESCUETA, Respondents. The Labor Arbiter found that petitioner was illegally dismissed, thus:
DECISION WHEREFORE, premises considered, judgment is hereby rendered as
YNARES-SANTIAGO, J.: follows:
This petition for review on certiorari under Rule 45 of the Rules of Court 1. finding complainant an employee of respondent corporation;
seeks to annul and set aside the Decision and Resolution of the Court 2. declaring complainant’s dismissal as illegal;
of Appeals dated October 29, 2004 1 and October 7, 3. ordering respondents to reinstate complainant to her former position
2005, 2 respectively, in CA-G.R. SP No. 78515 dismissing the without loss of seniority rights and jointly and severally pay complainant
complaint for constructive dismissal filed by herein petitioner Angelina her money claims in accordance with the following computation:
Francisco. The appellate court reversed and set aside the Decision of a. Backwages 10/2001 – 07/2002 275,000.00
the National Labor Relations Commission (NLRC) dated April 15,
(27,500 x 10 mos.)
2003, 3 in NLRC NCR CA No. 032766-02 which affirmed with
modification the decision of the Labor Arbiter dated July 31, 2002, 4 in b. Salary Differentials (01/2001 – 09/2001) 22,500.00
NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents c. Housing Allowance (01/2001 – 07/2002) 57,000.00
were liable for constructive dismissal. d. Midyear Bonus 2001 27,500.00
In 1995, petitioner was hired by Kasei Corporation during its e. 13th Month Pay 27,500.00
incorporation stage. She was designated as Accountant and Corporate f. 10% share in the profits of Kasei
Secretary and was assigned to handle all the accounting needs of the Corp. from 1996-2001 361,175.00
company. She was also designated as Liaison Officer to the City of g. Moral and exemplary damages 100,000.00
Makati to secure business permits, construction permits and other h. 10% Attorney’s fees 87,076.50
licenses for the initial operation of the company. 5 P957,742.50
Although she was designated as Corporate Secretary, she was not If reinstatement is no longer feasible, respondents are ordered to pay
entrusted with the corporate documents; neither did she attend any complainant separation pay with additional backwages that would
board meeting nor required to do so. She never prepared any legal accrue up to actual payment of separation pay.
document and never represented the company as its Corporate SO ORDERED. 14
Secretary. However, on some occasions, she was prevailed upon to
On April 15, 2003, the NLRC affirmed with modification the Decision of
sign documentation for the company. 6
the Labor Arbiter, the dispositive portion of which reads:
 34

PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby of dependency of the worker upon the employer for his continued
MODIFIED as follows: employment in that line of business. 23
1) Respondents are directed to pay complainant separation pay The proper standard of economic dependence is whether the worker is
computed at one month per year of service in addition to full backwages dependent on the alleged employer for his continued employment in
from October 2001 to July 31, 2002; that line of business. 24 In the United States, the touchstone of
2) The awards representing moral and exemplary damages and 10% economic reality in analyzing possible employment relationships for
share in profit in the respective accounts of P100,000.00 and purposes of the Federal Labor Standards Act is dependency. 25 By
P361,175.00 are deleted; analogy, the benchmark of economic reality in analyzing possible
3) The award of 10% attorney’s fees shall be based on salary employment relationships for purposes of the Labor Code ought to be
differential award only; the economic dependence of the worker on his employer.
4) The awards representing salary differentials, housing allowance, mid By applying the control test, there is no doubt that petitioner is an
year bonus and 13th month pay are AFFIRMED. employee of Kasei Corporation because she was under the direct
SO ORDERED. 15 control and supervision of Seiji Kamura, the corporation’s Technical
On appeal, the Court of Appeals reversed the NLRC decision, thus: Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting
WHEREFORE, the instant petition is hereby GRANTED. The decision
Manager and Corporate Secretary, with substantially the same job
of the National Labor Relations Commissions dated April 15, 2003 is
functions, that is, rendering accounting and tax services to the company
hereby REVERSED and SET ASIDE and a new one is hereby rendered
and performing functions necessary and desirable for the proper
dismissing the complaint filed by private respondent against Kasei
operation of the corporation such as securing business permits and
Corporation, et al. for constructive dismissal.
other licenses over an indefinite period of engagement.
SO ORDERED. 16
Under the broader economic reality test, the petitioner can likewise be
The appellate court denied petitioner’s motion for reconsideration, said to be an employee of respondent corporation because she had
hence, the present recourse. served the company for six years before her dismissal, receiving check
The core issues to be resolved in this case are (1) whether there was vouchers indicating her salaries/wages, benefits, 13th month pay,
an employer-employee relationship between petitioner and private bonuses and allowances, as well as deductions and Social Security
respondent Kasei Corporation; and if in the affirmative, (2) whether contributions from August 1, 1999 to December 18, 2000. 26 When
petitioner was illegally dismissed. petitioner was designated General Manager, respondent corporation
Considering the conflicting findings by the Labor Arbiter and the made a report to the SSS signed by Irene Ballesteros. Petitioner’s
National Labor Relations Commission on one hand, and the Court of membership in the SSS as manifested by a copy of the SSS specimen
Appeals on the other, there is a need to reexamine the records to signature card which was signed by the President of Kasei Corporation
determine which of the propositions espoused by the contending and the inclusion of her name in the on-line inquiry system of the SSS
parties is supported by substantial evidence. 17 evinces the existence of an employer-employee relationship between
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there petitioner and respondent corporation. 27
has been no uniform test to determine the existence of an employer- It is therefore apparent that petitioner is economically dependent on
employee relation. Generally, courts have relied on the so-called right respondent corporation for her continued employment in the latter’s line
of control test where the person for whom the services are performed of business.
reserves a right to control not only the end to be achieved but also the In Domasig v. National Labor Relations Commission, 28 we held that in
means to be used in reaching such end. In addition to the standard of a business establishment, an identification card is provided not only as
right-of-control, the existing economic conditions prevailing between a security measure but mainly to identify the holder thereof as a bona
the parties, like the inclusion of the employee in the payrolls, can help fide employee of the firm that issues it. Together with the cash vouchers
in determining the existence of an employer-employee relationship. covering petitioner’s salaries for the months stated therein, these
However, in certain cases the control test is not sufficient to give a matters constitute substantial evidence adequate to support a
complete picture of the relationship between the parties, owing to the conclusion that petitioner was an employee of private respondent.
complexity of such a relationship where several positions have been We likewise ruled in Flores v. Nuestro 29 that a corporation who
held by the worker. There are instances when, aside from the registers its workers with the SSS is proof that the latter were the
employer’s power to control the employee with respect to the means former’s employees. The coverage of Social Security Law is predicated
and methods by which the work is to be accomplished, economic on the existence of an employer-employee relationship.
realities of the employment relations help provide a comprehensive Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has
analysis of the true classification of the individual, whether as employee, clearly established that petitioner never acted as Corporate Secretary
independent contractor, corporate officer or some other capacity. and that her designation as such was only for convenience. The actual
The better approach would therefore be to adopt a two-tiered test nature of petitioner’s job was as Kamura’s direct assistant with the duty
involving: (1) the putative employer’s power to control the employee of acting as Liaison Officer in representing the company to secure
with respect to the means and methods by which the work is to be construction permits, license to operate and other requirements
accomplished; and (2) the underlying economic realities of the activity imposed by government agencies. Petitioner was never entrusted with
or relationship. corporate documents of the company, nor required to attend the
This two-tiered test would provide us with a framework of analysis, meeting of the corporation. She was never privy to the preparation of
which would take into consideration the totality of circumstances any document for the corporation, although once in a while she was
surrounding the true nature of the relationship between the parties. This required to sign prepared documentation for the company. 30
is especially appropriate in this case where there is no written The second affidavit of Kamura dated March 7, 2002 which repudiated
agreement or terms of reference to base the relationship on; and due the December 5, 2001 affidavit has been allegedly withdrawn by
to the complexity of the relationship based on the various positions and Kamura himself from the records of the case. 31 Regardless of this fact,
responsibilities given to the worker over the period of the latter’s we are convinced that the allegations in the first affidavit are sufficient
employment. to establish that petitioner is an employee of Kasei Corporation.
The control test initially found application in the case of Viaña v. Al- Granting arguendo, that the second affidavit validly repudiated the first
Lagadan and Piga, 19 and lately in Leonardo v. Court of one, courts do not generally look with favor on any retraction or
Appeals, 20 where we held that there is an employer-employee recanted testimony, for it could have been secured by considerations
relationship when the person for whom the services are performed other than to tell the truth and would make solemn trials a mockery and
reserves the right to control not only the end achieved but also the place the investigation of the truth at the mercy of unscrupulous
manner and means used to achieve that end. witnesses. 32 A recantation does not necessarily cancel an earlier
In Sevilla v. Court of Appeals, 21 we observed the need to consider the declaration, but like any other testimony the same is subject to the test
existing economic conditions prevailing between the parties, in addition of credibility and should be received with caution. 33
to the standard of right-of-control like the inclusion of the employee in Based on the foregoing, there can be no other conclusion that petitioner
the payrolls, to give a clearer picture in determining the existence of an is an employee of respondent Kasei Corporation. She was selected and
employer-employee relationship based on an analysis of the totality of engaged by the company for compensation, and is economically
economic circumstances of the worker. dependent upon respondent for her continued employment in that line
Thus, the determination of the relationship between employer and of business. Her main job function involved accounting and tax services
employee depends upon the circumstances of the whole economic rendered to respondent corporation on a regular basis over an
activity, 22 such as: (1) the extent to which the services performed are indefinite period of engagement. Respondent corporation hired and
an integral part of the employer’s business; (2) the extent of the engaged petitioner for compensation, with the power to dismiss her for
worker’s investment in equipment and facilities; (3) the nature and cause. More importantly, respondent corporation had the power to
degree of control exercised by the employer; (4) the worker’s control petitioner with the means and methods by which the work is to
opportunity for profit and loss; (5) the amount of initiative, skill, be accomplished.
judgment or foresight required for the success of the claimed The corporation constructively dismissed petitioner when it reduced her
independent enterprise; (6) the permanency and duration of the salary by P2,500 a month from January to September 2001. This
relationship between the worker and the employer; and (7) the degree amounts to an illegal termination of employment, where the petitioner
is entitled to full backwages. Since the position of petitioner as
 35

accountant is one of trust and confidence, and under the principle of of her being a member thereof, and petitioner never questioned the
strained relations, petitioner is further entitled to separation pay, in lieu deduction of the tithe from her salary.
of reinstatement. 34 With regard to the charge for non-payment of overtime pay, holiday pay,
A diminution of pay is prejudicial to the employee and amounts to and allowances, Forest Hills noted that petitioner proffered no evidence
constructive dismissal. Constructive dismissal is an involuntary to support the same.
resignation resulting in cessation of work resorted to when continued The Labor Arbiter decided in favor of petitioner, disposing as follows:
employment becomes impossible, unreasonable or unlikely; when WHEREFORE, judgment is hereby rendered:
there is a demotion in rank or a diminution in pay; or when a clear 1. Finding respondents Forest Hills Academy and/or Naomi
discrimination, insensibility or disdain by an employer becomes Cabaluna guilty of illegally dismissing the complainant;
unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo- 2. Directing respondent to pay complainant Lilia P. Labadan
Flores, 36 we ruled that where an employee ceases to work due to a the total amount of P152,501.02 representing her monetary
demotion of rank or a diminution of pay, an unreasonable situation award x x x.
arises which creates an adverse working environment rendering it
Complainant’s other claim[s] are hereby dismissed for lack of
impossible for such employee to continue working for her employer.
merit and/or failure to substantiate.
Hence, her severance from the company was not of her own making
and therefore amounted to an illegal termination of employment. SO ORDERED.6
In affording full protection to labor, this Court must ensure equal work The National Labor Relations Commission (NLRC), finding the Labor
opportunities regardless of sex, race or creed. Even as we, in every Arbiter to have misappreciated the facts of the case, reversed and set
case, attempt to carefully balance the fragile relationship between aside his decision and dismissed petitioner’s complaint by Resolution
employees and employers, we are mindful of the fact that the policy of of June 30, 2005.7
the law is to apply the Labor Code to a greater number of employees. On petitioner’s Petition for Certiorari,8 the Court of Appeals, by
This would enable employees to avail of the benefits accorded to them Resolution9 of December 15, 2005, dismissed the petition for deficient
by law, in line with the constitutional mandate giving maximum aid and amount of appellate docket fee, non-attachment of Affidavit of Service,
protection to labor, promoting their welfare and reaffirming it as a absence of written explanation why the petition was filed through
primary social economic force in furtherance of social justice and registered mail instead of through personal service, and non-
national development. attachment of copies of the Complaint and the Answer filed before the
WHEREFORE, the petition is GRANTED. The Decision and Resolution Labor Arbiter. Petitioner’s Motion for Reconsideration having been
of the Court of Appeals dated October 29, 2004 and October 7, 2005, denied,10 she filed the present Petition for Review on
respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET Certiorari,11 faulting the Court of Appeals
ASIDE. The Decision of the National Labor Relations Commission x x x IN DISMISSING THE PETITION ON THE GROUND OF
dated April 15, 2003 in NLRC NCR CA No. 032766-02, TECHNICALITIES[;]
is REINSTATED. The case is REMANDED to the Labor Arbiter for the x x x IN NOT DECIDING ON THE MERITS WHETHER OR
recomputation of petitioner Angelina Francisco’s full backwages from NOT HONORABLE COMMISSIONERS OF THE
the time she was illegally terminated until the date of finality of this 5TH DIVISION HAVE COMMITTED AN ACT OF GRAVE
decision, and separation pay representing one-half month pay for every ABUSE OF DISCRETION AMOUNTING TO LACK OR
year of service, where a fraction of at least six months shall be EXCESS OF JURISDICTION:
considered as one whole year. A. IN REVERSING THE FINDINGS OF THE
SO ORDERED. EXECUTIVE LABOR ARBITER THAT HEREIN
PETITIONER-COMPLAINANT WAS NOT
DISMISSED FROM HER WORK AS A TEACHER
and AT THE SAME TIME THE REGISTRAR;
B. IN FINDING THAT BY A PROLONGED
G.R. No. 172295 December 23, 2008
ABSENCE OF ONE YEAR MORE OR LESS,
LILIA P. LABADAN, petitioner, PETITIONER WAIVED HER 13TH MONTH PAY
vs. AND SERVICE INCENTIVE LEAVES AS SHE
FOREST HILLS ACADEMY/NAOMI CABALUNA and PRESIDING FAILED TO STATE SUCH CLAIMS IN HER
COMISSIONER SALIC B. DUMARPA, COMMISSIONER PROCULO AFFIDAVIT THAT WAS ATTACHED [TO] HER
T. SARMEN, COMMISSIONER NOVITO C. CAGAYAN, respondents. POSITION PAPER, and;
DECISION C. THAT THE DECISION/RESOLUTION
CARPIO MORALES, J.: RENDERED BY THE HONORABLE
Lilian L. Labadan (petitioner) was hired by private respondent Forest COMMISSIONERS OF THE 5TH DIVISION WAS
Hills Mission Academy (Forest Hills) in July 1989 as an elementary TAINTED WITH GRAVE ABUSE OF DISCRETION
school teacher. From 1990 up to 2002, petitioner was registrar and AS IT WAS INCOMPLETE AND
secondary school teacher. UNLAWFUL[.]12 (Italics and emphasis in the
On August 18, 2003, petitioner filed a complaint 1 against respondent original)
Forest Hills and its administrator respondent Naomi Cabaluna for illegal Non-payment of docket fee at the time of the filing of a petition does not
dismissal, non-payment of overtime pay, holiday pay, allowances, automatically call for its dismissal as long as the fee is paid within the
13th month pay, service incentive leave, illegal deductions, and applicable prescriptive or reglementary period. 13 While petitioner paid
damages. the P30 deficient amount of the docket fee on February 7, 2006,14 it
In her Position Paper,2 petitioner alleged that she was allowed to go on was beyond the 60-day period for filing the petition for certiorari.
leave from Forest Hills, and albeit she had exceeded her approved Nevertheless, the Court, in the interest of substantial justice, brushes
leave period, its extension was impliedly approved by the school aside this and the other technicalities cited by the Court of Appeals in
principal because she received no warning or reprimand and was in its Resolution of December 15, 200515 and, instead of remanding the
fact retained in the payroll up to 2002.3 case to the appellate court, now hereby decides the case on the merits.
Petitioner further alleged that since 1990, tithes to the Seventh Day While in cases of illegal dismissal, the employer bears the burden of
Adventist church have been illegally deducted from her salary; and she proving that the dismissal is for a valid or authorized cause, the
was not paid overtime pay for overtime service, 13 th month pay, five employee must first establish by substantial evidence the fact of
days service incentive leave pay, and holiday pay; and that her SSS dismissal.16
contributions have not been remitted. The records do not show that petitioner was dismissed from the service.
Claiming that strained relations between her and Forest Hill have They in fact show that despite petitioner’s absence from July 2001 to
rendered reinstatement not feasible, petitioner prayed for separation March 2002 which, by her own admission, exceeded her approved
pay in lieu of reinstatement. leave,17 she was still considered a member of the Forest Hills
In its Position Paper,4 Forest Hills claimed as follows: In July 2001, faculty18 which retained her in its payroll.19
petitioner was permitted to go on leave for two weeks but did not return Petitioner argues, however, that she was constructively dismissed
for work after the expiration of the period. Despite petitioner’s when Forest Hills merged her class with another "so much that when
undertaking to report "soon," she never did even until the end of School she reported back to work, she has no more claims to hold and no more
Year 2001-2002. It thus hired a temporary employee to accomplish the work to do."20
needed reports. When she finally returned for work, classes for the Petitioner, however, failed to refute Forest Hills’ claim that when she
School Year 2002-2003 were already on-going. expressed her intention to resume teaching, classes were already
To belie petitioner’s claim that she was dismissed, Forest Hills ongoing for School Year 2002-2003. It bears noting that petitioner
submitted a list of faculty members and staff from School Year 1998- simultaneously held the positions of secondary school teacher and
1999 up to School Year 2001 to 2002 which included her name. 5 registrar and, as the NLRC noted, she could have resumed her work
With regard to the charge for illegal deduction, Forest Hills claimed that as registrar had she really wanted to continue working with Forest
the Seventh Day Adventist Church requires its members to pay tithes Hills.21
equivalent to 10% of their salaries, and petitioner was hired on account Petitioner’s affidavit and those of her former colleagues,22 which she
attached to her Position Paper, merely attested that she was dismissed
 36

from her job without valid cause, but gave no particulars on when and WHEREFORE, the Court of Appeals Resolution of December 15, 2005
how she was dismissed. is SET ASIDE. The petition is GRANTED insofar as petitioner’s claims
There being no substantial proof that petitioner was dismissed, she is for illegal deductions, holiday pay, service incentive leave pay,
not entitled to separation pay or backwages. 13th month pay, and non-remittance of SSS contributions are
Respecting petitioner’s claim for holiday pay, Forest Hills contends that concerned. Respondents are accordingly ORDERED to refund to
petitioner failed to prove that she actually worked during specific petitioner the amount of the illegal deductions from her salary; to pay
holidays. Article 94 of the Labor Code provides, however, that her holiday pay, service incentive leave pay, and 13 th month pay; to
(a) Every worker shall be paid his regular daily wage during remit her contributions to the SSS; and to pay her attorney’s fees
regular holidays, except in retail and service establishments equivalent to 10% of the final judgment award. The case is
regularly employing less than ten (10) workers; accordingly REMANDED to the Labor Arbiter for computation of the
(b) The employer may require an employee to work on any amount of such money claims.
holiday but such employee shall be paid a compensation SO ORDERED.
equivalent to twice his regular rate[.]
The provision that a worker is entitled to twice his regular rate if he is
required to work on a holiday implies that the provision entitling a
worker to his regular rate on holidays applies even if he does not work. G.R. No. 188949 July 26, 2010
The petitioner is likewise entitled to service incentive leave under Article CENTRAL AZUCARERA DE TARLAC, Petitioner,
95 of the Labor Code which provides that vs.
(a) Every employee who has rendered at least one year of CENTRAL AZUCARERA DE TARLAC LABOR UNION-
service shall be entitled to a yearly service incentive leave of NLU, Respondent.
five days with pay. DECISION
(b) This provision shall not apply to those who are already NACHURA, J.:
enjoying the benefit herein provided, those enjoying vacation Before the Court is a petition for review on certiorari under Rule 45 of
leave with pay of at least five days and those employed in the Rules of Court, assailing the Decision1 dated May 28, 2009, and the
establishments regularly employing less than ten employees Resolution2 dated July 28, 2009 of the Court of Appeals (CA) in CA-
or in establishment exempted from granting this benefit by the G.R. SP No. 106657.
Secretary of Labor after considering the viability or financial The factual antecedents of the case are as follows:
condition of such establishment. Petitioner is a domestic corporation engaged in the business of sugar
x x x x, manufacturing, while respondent is a legitimate labor organization
and to 13th month pay under Presidential Decree No. 851. 23 which serves as the exclusive bargaining representative of petitioner’s
As for petitioner’s claims for overtime pay, it must be denied, for other rank-and-file employees. The controversy stems from the interpretation
than the uncorroborated affidavits of her colleagues, there is no of the term "basic pay," essential in the computation of the 13th-month
concrete proof that she is entitled thereto. 24 And so must her claim for pay.
allowances, no proof to her entitlement thereto having been presented The facts of this case are not in dispute. In compliance with Presidential
On the deduction of 10% tithe, Article 113 of the Labor Code instructs: Decree (P.D.) No. 851, petitioner granted its employees the mandatory
ART. 113. No employer, in his own behalf or in behalf of any thirteenth (13th) - month pay since 1975. The formula used by petitioner
person, shall make any deduction from the wages of his in computing the 13th-month pay was: Total Basic Annual Salary
employees, except: divided by twelve (12). Included in petitioner’s computation of the Total
(a) In cases where the worker is insured with his Basic Annual Salary were the following: basic monthly salary; first eight
consent by the employer, and the deduction is to (8) hours overtime pay on Sunday and legal/special holiday; night
recompense the employer for the amount paid by premium pay; and vacation and sick leaves for each year. Throughout
him as premium on the insurance; the years, petitioner used this computation until 2006. 3
(b) For union dues, in cases where the right of the On November 6, 2004, respondent staged a strike. During the
worker or his union to check-off has been pendency of the strike, petitioner declared a temporary cessation of
recognized by the employer or authorized in writing operations. In December 2005, all the striking union members were
by the individual worker concerned; and allowed to return to work. Subsequently, petitioner declared another
(c) In cases where the employer is authorized by temporary cessation of operations for the months of April and May 2006.
law or regulations issued by the Secretary of Labor, The suspension of operation was lifted on June 2006, but the rank-and-
as does Rule VIII, Section 10 of the Rules Implementing Book III of the file employees were allowed to report for work on a fifteen (15) day-per-
Labor Code reading: month rotation basis that lasted until September 2006. In December
2006, petitioner gave the employees their 13th-month pay based on the
SEC. 10. Deductions from the wages of the employees may
employee’s total earnings during the year divided by 12. 4
be made by the employer in any of the following cases:
Respondent objected to this computation. It averred that petitioner did
(a) When the deductions are authorized by law,
not adhere to the usual computation of the 13th-month pay. It claimed
including deductions for the insurance premiums
that the divisor should have been eight (8) instead of 12, because the
advanced by the employer in behalf of the
employees worked for only 8 months in 2006. It likewise asserted that
employee as well as union dues where the right to
petitioner did not observe the company practice of giving its employees
check-off has been recognized by the employer or
the guaranteed amount equivalent to their one month pay, in instances
authorized in writing by the individual employee
where the computed 13th-month pay was less than their basic monthly
himself;
pay.5
(b) When the deductions are with the written
Petitioner and respondent tried to thresh out their differences in
authorization of the employees for payment to a
accordance with the grievance procedure as provided in their collective
third person and the employer agrees to do so,
bargaining agreement. During the grievance meeting, the
provided that the latter does not receive any
representative of petitioner explained that the change in the
pecuniary benefit, directly or indirectly, from the
computation of the 13th-month pay was intended to rectify an error in
transaction. (Emphasis and underscoring supplied)
the computation, particularly the concept of basic pay which should
In the absence then of petitioner’s written conformity to the deduction have included only the basic monthly pay of the employees. 6
of the 10% tithe from her salary, the deduction made by Forest Hills
For failure of the parties to arrive at a settlement, respondent applied
was illegal.
for preventive mediation before the National Conciliation and Mediation
Finally, on petitioner’s claim that Forest Hills did not remit her SSS Board. However, despite four (4) conciliatory meetings, the parties still
contributions, Villar v. National Labor Relations failed to settle the dispute. On March 29, 2007, respondent filed a
Commission25 enlightens: complaint against petitioner for money claims based on the alleged
x x x [T]he burden of proving payment of monetary claims diminution of benefits/erroneous computation of 13th-month pay before
rests on the employer. x x x the Regional Arbitration Branch of the National Labor Relations
xxxx Commission (NLRC).7
The reason for the rule is that the pertinent personnel files, On October 31, 2007, the Labor Arbiter rendered a
payrolls, records, remittances and other similar documents – Decision8 dismissing the complaint and declaring that the petitioner had
which will show that overtime, differentials, service incentive the right to rectify the error in the computation of the 13th-month pay of
leave and other claims of workers have been paid – are not its employees.9 The fallo of the Decision reads:
in the possession of the worker but in the custody and WHEREFORE, premises considered, the complaint filed by the
absolute control of the employer.26 (Underscoring supplied) complainants against the respondents should be DISMISSED with
Forest Hills having glossed over this claim, the same must be granted. prejudice for utter lack of merit.
Finally, insofar as petitioner was compelled to litigate her money claims, SO ORDERED.10
an award of attorney’s fees equivalent to 10% of the final judgment
award is in order.27
 37

Respondents filed an appeal. On August 14, 2008, the NLRC rendered by individual or collective agreement, company practice or policy, the
a Decision11 reversing the Labor Arbiter. The dispositive portion of the same are treated as part of the basic salary of the employees.
Decision reads: Based on the foregoing, it is clear that there could have no erroneous
WHEREFORE, the decision appealed is reversed and set aside and interpretation or application of what is included in the term "basic salary"
respondent-appellee Central Azucarera de Tarlac is hereby ordered to for purposes of computing the 13th-month pay of employees. From the
adhere to its established practice of granting 13th[-] month pay on the inception of P.D. No. 851 on December 16, 1975, clear-cut
basis of gross annual basic which includes basic pay, premium pay for administrative guidelines have been issued to insure uniformity in the
work in rest days and special holidays, night shift differential and paid interpretation, application, and enforcement of the provisions of P.D.
vacation and sick leaves for each year. No. 851 and its implementing regulations.
Additionally, respondent-appellee is ordered to observe the guaranteed As correctly ruled by the CA, the practice of petitioner in giving 13th-
one[-]month pay by way of 13th month pay. month pay based on the employees’ gross annual earnings which
SO ORDERED. 12 included the basic monthly salary, premium pay for work on rest days
Petitioner filed a motion for reconsideration. However, the same was and special holidays, night shift differential pay and holiday pay
denied in a Resolution dated November 27, 2008. Petitioner then filed continued for almost thirty (30) years and has ripened into a company
a petition for certiorari under Rule 65 of the Rules of Court before the policy or practice which cannot be unilaterally withdrawn.
CA.13 Article 100 of the Labor Code, otherwise known as the Non-Diminution
On May 28, 2009, the CA rendered a Decision14 dismissing the petition, Rule, mandates that benefits given to employees cannot be taken back
and affirming the decision and resolution of the NLRC, viz.: or reduced unilaterally by the employer because the benefit has
WHEREFORE, the foregoing considered, the petition is hereby become part of the employment contract, written or unwritten. 18 The
DISMISSED and the assailed August 14, 2008 Decision and November rule against diminution of benefits applies if it is shown that the grant of
27, 2008 Resolution of the NLRC, are hereby AFFIRMED. No costs. the benefit is based on an express policy or has ripened into a practice
SO ORDERED.15 over a long period of time and that the practice is consistent and
deliberate. Nevertheless, the rule will not apply if the practice is due to
Aggrieved, petitioner filed the instant petition, alleging that the CA
error in the construction or application of a doubtful or difficult question
committed a reversible error in affirming the Decision of the NLRC, and
of law. But even in cases of error, it should be shown that the correction
praying that the Decision of the Labor Arbiter be reinstated.
is done soon after discovery of the error. 19
The petition is denied for lack of merit.
The argument of petitioner that the grant of the benefit was not
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 voluntary and was due to error in the interpretation of what is included
represents an additional income based on wage but not part of the in the basic salary deserves scant consideration. No doubtful or difficult
wage. It is equivalent to one-twelfth (1/12) of the total basic salary question of law is involved in this case. The guidelines set by the law
earned by an employee within a calendar year. All rank-and-file are not difficult to decipher. The voluntariness of the grant of the benefit
employees, regardless of their designation or employment status and was manifested by the number of years the employer had paid the
irrespective of the method by which their wages are paid, are entitled benefit to its employees. Petitioner only changed the formula in the
to this benefit, provided that they have worked for at least one month computation of the 13th-month pay after almost 30 years and only after
during the calendar year. If the employee worked for only a portion of the dispute between the management and employees erupted. This act
the year, the 13th-month pay is computed pro rata.16 of petitioner in changing the formula at this time cannot be sanctioned,
Petitioner argues that there was an error in the computation of the 13th- as it indicates a badge of bad faith.
month pay of its employees as a result of its mistake in implementing Furthermore, petitioner cannot use the argument that it is suffering from
P.D. No. 851, an error that was discovered by the management only financial losses to claim exemption from the coverage of the law on
when respondent raised a question concerning the computation of the 13th-month pay, or to spare it from its erroneous unilateral computation
employees’ of the 13th-month pay of its employees. Under Section 7 of the Rules
13th-month pay for 2006. Admittedly, it was an error that was and Regulations Implementing P.D. No. 851, distressed employers
repeatedly committed for almost thirty (30) years. Petitioner insists that shall qualify for exemption from the requirement of the Decree only
the length of time during which an employer has performed a certain upon prior authorization by the Secretary of Labor. 20 In this case, no
act beneficial to the employees, does not prove that such an act was such prior authorization has been obtained by petitioner; thus, it is not
not done in error. It maintains that for the claim of mistake to be negated, entitled to claim such exemption.
there must be a clear showing that the employer had freely, voluntarily, WHEREFORE, the Decision dated May 28, 2009 and the Resolution
and continuously performed the act, knowing that he is under no dated July 28, 2009 of the Court of Appeals in CA-G.R. SP No. 106657
obligation to do so. Petitioner asserts that such voluntariness was are hereby AFFIRMED. Costs against petitioner.
absent in this case.17
SO ORDERED.
The Rules and Regulations Implementing P.D. No. 851, promulgated
on December 22, 1975, defines 13th-month pay and basic salary as
follows:
Sec. 2. Definition of certain terms. - As used in this issuance:
(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of G.R. No. 186070 April 11, 2011
the basic salary of an employee within a calendar year; CLIENTLOGIC PHILPPINES, INC. (now known as SITEL), JOSEPH
(b) "Basic salary" shall include all remunerations or earnings VELASQUEZ, IRENE ROA, and RODNEY SPIRES, Petitioners,
paid by an employer to an employee for services rendered vs.
but may not include cost-of-living allowances granted BENEDICT CASTRO, Respondent.
pursuant to Presidential Decree No. 525 or Letter of DECISION
Instructions No. 174, profit-sharing payments, and all NACHURA, J.:
allowances and monetary benefits which are not considered This is a Petition for Review on Certiorari under Rule 45 of the Rules of
or integrated as part of the regular or basic salary of the Court, assailing the September 1, 2008 Decision 1 and the January 7,
employee at the time of the promulgation of the Decree on 2009 Resolution2 of the Court of Appeals (CA), affirming with
December 16, 1975. modification the November 29, 2007 resolution3 of the National Labor
On January 16, 1976, the Supplementary Rules and Regulations Relations Commission (NLRC), which held that respondent Benedict
Implementing P.D. No. 851 was issued. The Supplementary Rules Castro was not illegally dismissed. The CA, however, awarded
clarifies that overtime pay, earnings, and other remuneration that are respondent’s money claims, viz.:
not part of the basic salary shall not be included in the computation of WHEREFORE, premises considered, the instant Petition is PARTLY
the 13th-month pay. GRANTED. The Resolutions dated 29 November 2007 and 23 January
On November 16, 1987, the Revised Guidelines on the Implementation 2008 of the National Labor Relations Commission (Third Division) in
of the 13th-Month Pay Law was issued. Significantly, under this NLRC CN. RAB-CAR-02-0091-07 LAC NO. 08-002207-07 are
Revised Guidelines, it was specifically stated that the minimum 13th- AFFIRMED with MODIFICATION in that the monetary awards of
month pay required by law shall not be less than one-twelfth (1/12) of Executive Labor Arbiter Vito C. Bose in his Decision dated 29 June
the total basic salary earned by an employee within a calendar 2007, as computed in Annex "A" thereof, ONLY for holiday premiums
year.1avvphi1 of Php 16,913.35; service incentive leave pay Php8,456.65; overtime
Furthermore, the term "basic salary" of an employee for the purpose of pay of Php 578,753.10; and rest day pay of Php 26,384.80 which
computing the 13th-month pay was interpreted to include all (petitioners) shall jointly and solidarily pay to petitioner, are hereby
remuneration or earnings paid by the employer for services rendered, REINSTATED. No pronouncement as to costs.
but does not include allowances and monetary benefits which are not SO ORDERED.4
integrated as part of the regular or basic salary, such as the cash The second assailed issuance of the CA denied petitioners’ motion for
equivalent of unused vacation and sick leave credits, overtime, reconsideration.
premium, night differential and holiday pay, and cost-of-living The facts:
allowances. However, these salary-related benefits should be included Respondent was employed by petitioner ClientLogic Philippines, Inc.
as part of the basic salary in the computation of the 13th-month pay if, (now known and shall hereafter be referred to as SITEL) on February
14, 2005 as a call center agent for its Bell South Account. After six (6)
 38

months, he was promoted to the "Mentor" position, and thereafter to We deny the petition.
the "Coach" position. A "Coach" is a team supervisor who is in charge The petition hinges on the question of whether the duties and
of dealing with customer complaints which cannot be resolved by call responsibilities performed by respondent qualify him as a member of
center agents. In June 2006, he was transferred to the Dot Green petitioners’ managerial staff. This is clearly a question of fact, the
Account. determination of which entails an evaluation of the evidence on record.
During respondent’s stint at the Dot Green Account, respondent noticed The alleged errors of the CA lengthily enumerated in the petition13 are
that some of the call center agents under him would often make essentially factual in nature and, therefore, outside the ambit of a
excuses to leave their work stations. Their most common excuse was petition for review on certiorari under Rule 45 of the Rules of Civil
that they would visit the company’s medical clinic. To verify that they Procedure. The Court does not try facts since such statutory duty is
were not using the clinic as an alibi to cut their work hours, respondent devolved upon the labor tribunals. It is not for this Court to weigh and
sent an e-mail to the clinic’s personnel requesting for the details of the calibrate pieces of evidence otherwise adequately passed upon by the
agents’ alleged medical consultation. His request was denied on the labor tribunals especially when affirmed by the appellate court. 14
ground that medical records of employees are highly confidential and Petitioners claim exception to the foregoing rule and assert that the
can only be disclosed in cases involving health issues, and not to be factual findings of the LA and the NLRC were conflicting. This is not
used to build any disciplinary case against them. correct. The labor tribunals’ decisions were at odds only with respect to
On October 11, 2006, respondent received a notice requiring him to the issue of illegal dismissal. Anent the money claims issue, it cannot
explain why he should not be penalized for: (1) violating Green Dot be said that their rulings were contradictory because the NLRC,
Company’s Policy and Procedure for Direct Deposit Bank Info Request disappointingly, did not make any finding thereon and it erroneously
when he accessed a customer’s online account and then gave the construed that the resolution of the money claims was intertwined with
latter’s routing and reference numbers for direct deposit; and (2) the determination of the legality of respondent’s dismissal. Nonetheless,
gravely abusing his discretion when he requested for the medical the CA has already rectified such lapse when it made a definitive review
records of his team members. Respondent did not deny the infractions of the LA’s factual findings on respondent’s money claims. Agreeing
imputed against him. He, however, justified his actuations by explaining with the LA, the CA held:
that the customer begged him to access the account because she did Article 82 of the Labor Code states that the provisions of the Labor
not have a computer or an internet access and that he merely Code on working conditions and rest periods shall not apply to
requested for a patient tracker, not medical records. managerial employees. Generally, managerial employees are not
In November 2006, a poster showing SITEL’s organizational chart was entitled to overtime pay for services rendered in excess of eight hours
posted on the company’s bulletin board, but respondent’s name and a day.
picture were conspicuously missing, and the name and photo of Article 212 (m) of the Labor Code defines a managerial employee as
another employee appeared in the position which respondent was "one who is vested with powers or prerogatives to lay down and
supposedly occupying. execute management policies and/or to hire, transfer, suspend, lay-off,
On January 22, 2007, SITEL posted a notice of vacancy for recall, discharge, assign or discipline employees, or to effectively
respondent’s position, and on February 12, 2007, he received a Notice recommend such managerial actions.
of Termination. These events prompted him to file a complaint for illegal In his Position Paper, (respondent) states that he worked from 8:00 p.m.
dismissal; non-payment of overtime pay, rest day pay, holiday pay, to 10:00 a.m. or 4 p.m. to 12:00 p.m. of the following day; he was also
service incentive leave pay; full backwages; damages; and attorney’s required to work during his restdays and during holidays but he was not
fees before the Labor Arbiter (LA) against herein petitioners SITEL and paid; he was also not paid overtime pay; night shift differentials, and
its officers, Joseph Velasquez (Velasquez), Irene Roa (Roa), and service incentive leave. He was employed as call center agent on 14
Rodney Spires (Spires).5 February 2005, then promoted as "Mentor" in August 2005, and again
In their position paper,6 petitioners averred that respondent was promoted to "Coach" position in September 2005, which was the
dismissed on account of valid and justifiable causes. He committed position he had when he was terminated. A "coach" is a team
serious misconduct which breached the trust and confidence reposed supervisor who is in charge of dealing with customer complaints which
in him by the company. He was duly furnished the twin notices required could not be dealt with by call center agents, and if a call center agent
by the Labor Code. Further, he is not entitled to overtime pay, rest day could not meet the needs of a customer, he passes the customer’s call
pay, night shift differential, holiday pay, and service incentive leave pay to the "coach." Clearly, (respondent) is not a managerial employee as
because he was a supervisor, hence, a member of the managerial staff. defined by law. Thus, he is entitled to his money claims.
In a decision dated June 29, 2007,7 the LA ruled in favor of respondent As correctly found by Executive Labor Arbiter Bose:
by declaring him illegally dismissed and ordering petitioners to pay his Employees are considered occupying managerial positions if they meet
full backwages and, in lieu of reinstatement, his separation pay. The LA all of the following conditions, namely:
further awarded respondent’s money claims upon finding that he was 1) Their primary duty consists of management of the
not occupying a managerial position. The decretal portion of the establishment in which they are employed or of a department
decision reads: or subdivision thereof;
WHEREFORE, all premises duly considered, the (petitioners) are 2) They customarily and regularly direct the work of two or
hereby found guilty of illegally dismissing (respondent). As such, more employees therein;
(petitioners) shall be jointly and solidarily liable to pay (respondent) his 3) They have the authority to hire or fire other employees of
full backwages from the date of his dismissal to the finality of this lower rank; or their suggestions and recommendations as to
decision, computed as of today at One Hundred Thirty Eight Thousand the hiring and firing and as to the promotion or any other
Seven Hundred Fifty Nine Pesos and 80/100 (₱138,759.80) plus, change of status of other employees are given particular
Seven Hundred Sixty Three Thousand Two Hundred Forty Eight Pesos weight.
and 67/100 (₱763,248.67) representing his separation pay at one
They are considered as officers or members of a managerial staff if
month pay for every year of service, holiday pay and service incentive
they perform the following duties and responsibilities:
leave pay for the three years prior to the filing of this case, overtime pay
for six (6) hours daily, rest day and ten percent (10%) as attorney’s fees. 1) The primary duty consists of the performance of work
directly related to management of policies of their employer;
All other claims are hereby dismissed for lack of evidence.
2) Customarily and regularly exercise discretion and
The computation of the foregoing monetary claims is hereto attached
independent judgment;
and made an integral part hereof as Annex "A."
3) (i) Regularly and directly assist a proprietor or a managerial
SO ORDERED.8
employee whose primary duty consists of management of the
Aggrieved, petitioners appealed to the NLRC, which, in its November establishment in which he is employed or subdivision thereof;
29, 2007 resolution,9 reversed and set aside the decision of the LA by or (ii) execute under general supervision work along
dismissing the complaint for lack of merit on the ground that specialized or technical lines requiring special training,
respondent’s employment was terminated for a just cause. The NLRC experience, or knowledge; or (iii) execute, under general
failed to discuss the money claims. supervision, special assignment and tasks xxx.
On September 1, 2008, the CA affirmed the NLRC’s finding that there (Respondent’s) duties do not fall under any of the categories
was no illegal dismissal. Anent the money claims, however, the CA enumerated above. His work is not directly related to management
concurred with the LA’s ruling.10 policies. Even the circumstances shown by the instant case reveal that
Petitioners and respondent respectively moved for partial (respondent) does not regularly exercise discretion and independent
reconsideration, but their motions were denied in the CA Resolution judgment. (Petitioners) submitted a list of the responsibilities of "HR
dated January 7, 2009.11 From the said denial, only petitioners sought Manager/Supervisor" and "Division Manager/Department
recourse with this Court through the petition at bar. Respondent’s Manager/Supervisors" but these do not pertain to (respondent) who
failure to partially appeal the CA’s Decision finding him not illegally does not have any of the said positions. He was just a team Supervisor
dismissed has now rendered the same final and executory; hence, the and not (an) HR or Department Supervisor. 15
instant petition shall traverse only the issue on money claims. We find no reversible error in the above ruling. The test of "supervisory"
Petitioners argue in the main12 that, as a team supervisor, respondent or "managerial status" depends on whether a person possesses
was a member of the managerial staff; hence, he is not entitled to authority to act in the interest of his employer and whether such
overtime pay, rest day pay, holiday pay, and service incentive leave authority is not merely routinary or clerical in nature, but requires the
pay.
 39

use of independent judgment.16 The position held by respondent and Length of Service, Actual, Moral and Exemplary Damages, and
its concomitant duties failed to hurdle this test. Attorney’s Fees."8
As a coach or team supervisor, respondent’s main duty was to deal with After a series of mandatory conference, both parties partially settled
customer complaints which could not be handled or solved by call with regard the issue of merit increase and length of
center agents. If the members of his team could not meet the needs of service.9 Subsequently, they filed their respective Position Paper and
a customer, they passed the customer’s call to respondent. Reply thereto dealing on the two remaining issues of SMI entitlement
This job description does not indicate that respondent can exercise the and illegal deduction.
powers and prerogatives equivalent to managerial actions which On September 30, 2003, the LA rendered a Decision10 in favor of
require the customary use of independent judgment. There is no petitioner, directing respondent to reimburse the amount illegally
showing that he was actually conferred or was actually exercising the deducted from petitioner’s retirement package and to integrate therein
following duties attributable to a "member of the managerial staff," viz.: his SMI privilege. Upon appeal of respondent, however, the NLRC
1) The primary duty consists of the performance of work modified the award and deleted the payment of SMI.
directly related to management of policies of their employer; Petitioner then moved to partially execute the reimbursement of illegal
2) Customarily and regularly exercise discretion and deduction, which the LA granted despite respondent’s
independent judgment; opposition.11 Later, without prejudice to the pendency of petitioner’s
3) (i) Regularly and directly assist a proprietor or a managerial petition for certiorari before the CA, the parties executed a Compromise
employee whose primary duty consists of management of the Agreement12 on October 4, 2006, whereby petitioner acknowledged full
establishment in which he is employed or subdivision thereof; payment by respondent of the amount of Ph₱496,016.67 covering the
or (ii) execute under general supervision work along amount illegally deducted.
specialized or technical lines requiring special training, The CA dismissed petitioner’s case on January 9, 2007 and denied his
experience, or knowledge; or (iii) execute, under general motion for reconsideration two months thereafter. Hence, this present
supervision, special assignment and tasks; and petition to resolve the singular issue of whether the SMI should be
4) Who do not devote more than 20 percent of their hours included in the computation of petitioner’s retirement benefits on the
worked in a workweek to activities which are not directly and ground of consistent company practice. Petitioner insistently avers that
closely related to the performance of the work described in many DSSs who retired without achieving the sales and collection
paragraphs (1), (2), and (3) above.17 targets were given the average SMI in their retirement package.
According to petitioners, respondent also performed the following We deny.
duties, as shown in the company’s Statement of Policy on Discipline: This case does not fall within any of the recognized exceptions to the
a. Know and understand in full the Policy on Discipline rule that only questions of law are proper in a petition for review on
including their underlying reasons. certiorari under Rule 45 of the Rules of Court. Settled is the rule that
b. Implement strictly and consistently the Policy on Discipline. factual findings of labor officials, who are deemed to have acquired
c. Ensure that the said Policy on Discipline is communicated expertise in matters within their respective jurisdiction, are generally
to and understood by all employees. accorded not only respect but even finality, and bind us when supported
by substantial evidence.13 Certainly, it is not Our function to assess and
d. Monitor compliance by employees with the said Policy.
evaluate the evidence all over again, particularly where the findings of
e. Advise HR Manager on the state of discipline in their both the CA and the NLRC coincide.
respective departments; problems, if any, and recommend
In any event, even if this Court would evaluate petitioner's arguments
solution(s) and corrective action(s).
on its supposed merits, We still find no reason to disturb the CA ruling
As correctly observed by the CA and the LA, these duties clearly that affirmed the NLRC. The findings and conclusions of the CA show
pertained to "Division Managers/Department Managers/ Supervisors," that the evidence and the arguments of the parties had all been
which respondent was not, as he was merely a team supervisor. carefully considered and passed upon. There are no relevant and
Petitioners themselves described respondent as "the superior of a call compelling facts to justify a different resolution which the CA failed to
center agent; he heads and guides a specific number of agents, who consider as well as no factual conflict between the CA and the NLRC
form a team."181âwphi1 decisions.
From the foregoing, respondent is thus entitled to his claims for holiday Generally, employees have a vested right over existing benefits
pay, service incentive leave pay, overtime pay and rest day pay, voluntarily granted to them by their employer. 14 Thus, any benefit and
pursuant to Book Three of the Labor Code, specifically Article 82, 19 in supplement being enjoyed by the employees cannot be reduced,
relation to Articles 87,20 93,21 and 9522 thereof. diminished, discontinued or eliminated by the employer. 15 The principle
WHEREFORE, premises considered, the Petition is hereby DENIED. of non-diminution of benefits is actually founded on the Constitutional
The September 1, 2008 Decision and the January 7, 2009 Resolution mandate to protect the rights of workers, to promote their welfare, and
of the Court of Appeals are AFFIRMED. to afford them full protection.16 In turn, said mandate is the basis of
SO ORDERED. Article 4 of the Labor Code which states that "all doubts in the
implementation and interpretation of this Code, including its
implementing rules and regulations, shall be rendered in favor of
labor."17
G.R. No. 176985 April 1, 2013 There is diminution of benefits when the following requisites are present:
RICARDO E. VERGARA, JR., Petitioner, (1) the grant or benefit is founded on a policy or has ripened into a
vs. practice over a long period of time; (2) the practice is consistent and
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent. deliberate; (3) the practice is not due to error in the construction or
DECISION application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.18
PERALTA, J.:
To be considered as a regular company practice, the employee must
Before Us is a petition for review on certiorari under Rule 45 of the
prove by substantial evidence that the giving of the benefit is done over
Rules of Civil Procedure assailing the January 9, 2007 Decision 1 and
a long period of time, and that it has been made consistently and
March 6, 2007 Resolution2 of the Court of Appeals (CA) in CA .. G.R.
deliberately.19 Jurisprudence has not laid down any hard-and-fast rule
SP No. 94622, which affirmed the January 31, 2006 Decision 3 and
as to the length of time that company practice should have been
March 8, 2006 Resolution4 of the National Labor Relations Commission
exercised in order to constitute voluntary employer practice. 20 The
(NLRC) modifying the September 30, 2003 Decision 5 of the Labor
common denominator in previously decided cases appears to be the
Arbiter (LA) by deleting the sales management incentives in the
regularity and deliberateness of the grant of benefits over a significant
computation of petitioner's retirement benefits.
period of time.21 It requires an indubitable showing that the employer
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent agreed to continue giving the benefit knowing fully well that the
Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on employees are not covered by any provision of the law or agreement
January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas requiring payment thereof.22 In sum, the benefit must be characterized
City, Metro Manila. As stipulated in respondent’s existing Retirement by regularity, voluntary and deliberate intent of the employer to grant
Plan Rules and Regulations at the time, the Annual Performance the benefit over a considerable period of time. 23
Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
Upon review of the entire case records, We find no substantial evidence
computation of retirement benefits, as follows: Basic Monthly Salary +
to prove that the grant of SMI to all retired DSSs regardless of whether
Monthly Average Performance Incentive (which is the total
or not they qualify to the same had ripened into company practice.
performance incentive earned during the year immediately preceding ÷
Despite more than sufficient opportunity given him while his case was
12 months) × No. of Years in Service.6
pending before the NLRC, the CA, and even to this Court, petitioner
Claiming his entitlement to an additional Ph₱474,600.00 as Sales utterly failed to adduce proof to establish his allegation that SMI has
Management Incentives (SMI)7 and to the amount of Ph₱496,016.67 been consistently, deliberately and voluntarily granted to all retired
which respondent allegedly deducted illegally, representing the unpaid DSSs without any qualification or conditions whatsoever. The only two
accounts of two dealers within his jurisdiction, petitioner filed a pieces of evidence that he stubbornly presented throughout the entirety
complaint before the NLRC on June 11, 2002 for the payment of his of this case are the sworn statements of Renato C. Hidalgo (Hidalgo)
"Full Retirement Benefits, Merit Increase, Commission/Incentives, and Ramon V. Velazquez (Velasquez), former DSSs of respondent
 40

who retired in 2000 and 1998, respectively. They claimed that the SMI
was included in their retirement package even if they did not meet the NARVASA, C.J.:
sales and collection qualifiers.24 However, juxtaposing these with the The petitioner in this special civil action of certiorari seeks nullification
evidence presented by respondent would reveal the frailty of their of the September 11, 1992 Decision of the Second Division of the
statements. National Labor Relations Commission reversing the judgment of the
The declarations of Hidalgo and Velazquez were sufficiently countered Labor Arbiter in NLRC NCR Case No. 10-4335-86 and dismissing the
by respondent through the affidavits executed by Norman R. Biola case for lack of merit, as well as of the Commission's November 24,
(Biola), Moises D. Escasura (Escasura), and Ma. Vanessa R. Balles 1992 Resolution denying reconsideration of said decision.
(Balles).25 Biola pointed out the various stop-gap measures undertaken On October 30, 1986, the Manila Mandarin Employees Union (hereafter
by respondent beginning 1999 in order to arrest the deterioration of its UNION), as exclusive bargaining agent of the rank-and-file employees
accounts receivables balance, two of which relate to the policies on the of the Manila Mandarin Hotel, Inc. (hereafter MANDARIN), filed with the
grant of SMI and to the change in the management structure of NLRC Arbitration Branch a complaint in its members' behalf to compel
respondent upon its re-acquisition by San Miguel Corporation. MANDARIN to pay the salary differentials of the individual employees
Escasura represented that he has personal knowledge of the concerned because of wage distortions in their salary structure
circumstances behind the retirement of Hidalgo and Velazquez. He allegedly created by the upward revisions of the minimum wage
attested that contrary to petitioner’s claim, Hidalgo was in fact qualified pursuant to various Presidential Decrees and Wage Orders, and the
for the SMI. As for Velazquez, Escasura asserted that even if he failure of MANDARIN to implement the corresponding increases in the
(Velazquez) did not qualify for the SMI, respondent’s General Manager basic salary rate of newly-hired employees.
in its Calamba plant still granted his (Velazquez) request, along with The relevant Presidential Decrees and Wage Orders were specified by
other numerous concessions, to achieve industrial peace in the plant the UNION as follows :
which was then experiencing labor relations problems. Lastly, Balles a. PD 1389, amending PD 928, mandating an
confirmed that petitioner failed to meet the trade receivable qualifiers of increase in the statutory minimum wage by P3.00
the SMI. She also cited the cases of Ed Valencia (Valencia) and spread out over a period of three years, as follows:
Emmanuel Gutierrez (Gutierrez), both DSSs of respondent who retired P1.00 starting July 1, 1978; P1.00 starting May 1,
on January 31, 2002 and December 30, 2002, respectively. She noted 1979; and P1.00 starting May 1, 1980.
that, unlike Valencia, Gutierrez also did not receive the SMI as part of
b. PD 1614, providing that workers covered by PD
his retirement pay, since he failed to qualify under the policy guidelines.
1389, whether agricultural or non-agricultural,
The verity of all these statements and representations stands and holds
should receive an increase of P2.00 in their
true to Us, considering that petitioner did not present any iota of proof
statutory minimum wage effective April 1, 1979, the
to debunk the same.1âwphi1
same representing an acceleration of the remaining
Therefore, respondent's isolated act of including the SMI in the increases under PD 1389; and that all non-
retirement package of Velazquez could hardly be classified as a agricultural workers in Metro Manila shall receive a
company practice that may be considered an enforceable obligation. minimum wage of P12.00;
To repeat, the principle against diminution of benefits is applicable only
c. PD 1713, issued on August 18, 1980, providing
if the grant or benefit is founded on an express policy or has ripened
an increase in the minimum daily wage rates and for
into a practice over a long period of time which is consistent and
additional allowance; increasing the minimum daily
deliberate; it presupposes that a company practice, policy and tradition
wage rates by P1.00, and providing that all private
favorable to the employees has been clearly established; and that the
employers shall pay their employees with wages or
payments made by the company pursuant to it have ripened into
salaries not exceeding P1,500.00 a month, an
benefits enjoyed by them.26 Certainly, a practice or custom is, as a
additional mandatory living allowance of P60.00 a
general rule, not a source of a legally demandable or enforceable
month for non-agricultural workers, P45.00 for
right.27 Company practice, just like any other fact, habits, customs,
plantation workers and P30.00 a month for
usage or patterns of conduct, must be proven by the offering party who
agricultural non-plantation workers;
must allege and establish specific, repetitive conduct that might
constitute evidence of habit or company practice. 28 d. PD 1751, issued on December 14, 1980,
increasing the statutory daily minimum wages by
To close, We rule that petitioner could have salvaged his case had he
integrating the P4.00 mandatory allowance under
step up to disprove respondent’s contention that he miserably failed to
PD 525 and PD 1123 into the basic pay of all
meet the collection qualifiers of the SMI. Respondent argues that −
covered workers;
An examination of the Company’s aged trial balance reveals that
e. Wage Order No. 1, issued on March 26, 1981,
petitioner did not meet the trade receivable qualifier. On the contrary,
increasing the mandatory emergency living
the said trial balance reveals that petitioner had a large amount of
allowance of all workers with salaries or wages of
uncollected overdue accounts. For the year 2001, his percentage
P1,500.00 a month by P2.00 a day for non-
collection efficiency for current issuance was at an average of 13.5% a
agricultural workers, P1.50 a day for agricultural
month as against the required 70%. For the same, petitioner’s
plantation workers, P1.00 a day for agricultural non-
collection efficiency was at an average of 60.25% per month for
plantation workers, effective March 22, 1981;
receivables aged 1-30 days, which is again, way below the required
90%. For receivables aged 31-60 days during said year, petitioner’s f. Wage Order No. 2 issued on July 6, 1983
collection efficiency was at an average of 56.17% per month, which is increasing the mandatory basic minimum wage and.
approximately half of the required 100%. Worse, for receivables over living allowance for non-agricultural and agricultural
60 days old, petitioner’s average collection efficiency per month was a workers in the following manner:
reprehensively low 14.10% as against the required 100%. 29 1) For non-agricultural
The above data was repeatedly raised by respondent in its Rejoinder employees, receiving not more
(To Complainant’s Reply) before the LA,30 Memorandum of than P1,800.00 monthly, P1.00
Appeal31 and Opposition (To Complainant-Appellee’s Motion for a day as minimum wage and
Reconsideration)32 before the NLRC, and Comment (On the P1.50 a day as cost of living
Petition),33 Memorandum (For the Private Respondent),34 and allowance;
Comment (On the Motion for Reconsideration) 35 before the CA. Instead 2) For plantation agricultural
of frontally rebutting the data, petitioner treated them with deafening employees, P1.00 a day as
silence; thus, reasonably and logically implying lack of evidence to minimum wage and P0.50 a day
support the contrary. as cost of living allowance
WHEREFORE, the petition is DENIED. The January 9, 2007 Decision subject to the same salary
and March 6, 2007 Resolution of the Court of Appeals in CA-G.R. SP ceiling provided in the
No. 94622, which affirmed the January 31, 2006 Decision and March 8, immediately preceding section;
2006 Resolution of the NLRC deleting the LA's inclusion of sales and
management incentives in the computation of petitioner's retirement 3) For non-plantation
benefits, is hereby AFFIRMED. agricultural employees, P1.00 a
SO ORDERED. day as minimum wage; and
also, providing that effective October 1, 1983, the
living allowance rates as adjusted in the preceding
section shall be further increased subject to the
same salary ceiling, for non-agricultural employees,
C. WAGE DISTORTION by P1.00.
G.R. No. 108556 November 19, 1996 g. Wage Order No. 3 issued November 7, 1983
MANILA MANDARIN EMPLOYEES UNION, petitioner, increasing the statutory minimum wage rates for
vs. workers in the private sector by P1.00 per day
NATIONAL LABOR RELATIONS COMMISSION, Second Division, effective November 1, 1983, and also increasing the
and the MANILA MANDARIN HOTEL, respondents.
 41

statutory wage rates by P1.00 per day, effective but also fatally flawed in that its supersedeas bond had been issued by
December 1, 1983; a surety company — Plaridel Surety & Insurance Company — which
h. Wage Order No. 4 issued on May 1, 1984 had pending obligations and liabilities at the time, the Insurance
increasing the statutory daily minimum wages, after Commissioner having in fact issued a Cease-and-Desist Order against
integrating the mandatory living allowance under said company for issuing bonds of no little magnitude without authority;
PDs 1614, 1634, 1678 and 1713 into the basic pay and that moreover, the replacement bond of the Commonwealth
of all covered employees, effective May 1, 1984; — Insurance Company — subsequently filed by order of the NLRC — was
after the integration, the minimum daily wage rate just as defective because the latter company had an authorized
was increased by P11.00 for non-agricultural maximum net retention level in the amount of only P686,582.80, way
workers. below the monetary award subject of MANDARIN'S appeal to the
i. Wage Order No. 5 issued on June 11, 1984 Commission.
increasing the statutory daily minimum wage rates The Court rules that respondent Commission acted correctly in
and living allowances of workers in the private accepting and acting on MANDARIN's appeal. The circumstances
sector by P3.00 effective June 16, 1984 — the attendant upon the filing of the appeal and supersedeas bond are
minimum daily wage rates became P35.00 for clearly set forth in the Certification of Deputy Executive Clerk Demaisip,
Metro Manila and P34.00 for outside Metro Manila; Jr. 5 above mentioned, viz.:
and This is to certify that when Atty. Godofredo Labay
j. Wage order No. 6, effective November 1, 1984, filed the appeal in NLRC NCR Case No. 10-4335-
increasing the statutory minimum wage rate by 86 entitled Manila Mandarin Employees Union
P2.00 per day. vs. Manila Mandarin on Friday, February 1, 1991,
On January 15, 1987, the UNION filed its Position Paper amplifying the the Cashier and the Docket Section, NCR, were not
allegations of its complaint and setting forth the legal bases of its around, that no one would receive the pleadings
demands against MANDARIN; and on March 25, 1987, it filed an and the appeal fee. He therefore approached
Amended Complaint presenting an additional claim for payment of Commissioner Domingo H. Zapanta for assistance
salary differentials to the union members affected, allegedly resulting and to have the appeal including the appeal bond in
from underpayment of wages. said case duly received on February 1, 1991 at 4:50
The Labor Arbiter eventually ruled in favor of the UNION, holding that p.m.
there were in fact wage distortions entitling its members to salary With respect to the appeal fee, since no one was
adjustments totalling P26,173,601.25 — for 541 employees — as well authorized to act as substitute for the Cashier of the
as underpayments amounting to P1,978,296.18 — for 182 employees. NCR for purposes of receiving the appeal fee and
The dispositive portion of his decision reads: 1 issuing a temporary receipt and/or official receipt
WHEREFORE, judgment is hereby rendered therefor, Commissioner Zapanta requested Atty.
ordering the respondent Hotel to pay the individual Gaudencio P. Demaisip, Jr. to receive said
complainants who are members of the respondent pleadings and allowed Atty. Labay to pay the appeal
Union whose names appear on the respective fee on Monday, February 4, 1991.
computations embodied in this Decision, the This certification is issued upon request of Atty.
aggregate amount of P26,173,601.25 representing Labay for whatever purpose it may serve him.
their salary adjustments by way of correcting the (SGD.) GAUDENCIO P.
wage distortions in their respective salary structure, DEMAISIP, JR.
for the period from October 30, 1983 up to October Deputy Executive Clerk
31, 1990, and continuously thereafter to pay the Second Division
corresponding amounts due them as such salary MANDARIN cannot be faulted for paying the appeal fee only on
adjustments until the same are properly and finally February 4, 1991. The fact is that on February 1, 1991, its lawyer was
restored in their basic monthly rates; to pay the in the NLRC premises, ready to pay said fee, but was unable to do so
aggregate amount of P1,978,296.18 representing because the NLRC Cashier or any other employee authorized to
their salary differentials resulting from receive payment in his stead, was no longer around. This is why
underpayment of wages in violation of the minimum Commissioner Zapanta allowed payment of the appeal fee to be made
wage laws, Presidential Decrees and Wage Orders on the next business day, as in fact the appeal fee was paid on,
for the period from March 25, 1984 up to October February 4, 1991. This Court has ruled that the failure to pay the appeal
31, 1990, and continuously thereafter to pay the docketing fee within the reglementary period confers a directory, not a
corresponding amounts due them as such salary mandatory, power to dismiss an appeal, to be exercised with
differentials until the same are properly and finally circumspection in light of all the relevant facts. 6 In view of these
restored into their basic monthly rates. considerations, and the meritoriousness of MANDARIN's appeal — as
Likewise, the respondent Hotel is ordered to pay an later pronounced by respondent NLRC — the interest of justice was
amount equivalent to ten percent (10%) of the total quite evidently served when MANDARIN's appeal was given due
awards granted to individual complainants, by way course despite delayed payment of the docketing fee.
of and as attorney's fees. The contention concerning MANDARIN's ostensibly defective appeal
On appeal, the Second Division of respondent Commission (composed bond, issued by Plaridel Surety and Insurance Company, deserves
of Commissioner Domingo H. Zapanta, ponente, and Presiding short shrift, too. The issuance of the bond antedated this court's
Commissioner Edna Bonto-Perez) rendered the dispositions already resolution of January 15, 1992 — to which the attention of respondent
referred to and now assailed — setting aside the Labor Arbiter's NLRC had been invited by the UNION — declaring said surety
judgment and dismissing the UNION's complaint, and later denying the company to be of doubtful solvency. More important, the issue was
UNION'S motion for reconsideration. 2 mooted when MANDARIN posted a new surety bond, through
The principal issues raised in this Court are: (1) Whether or not the Commonwealth Insurance Company, in compliance with the Order of
NLRC had jurisdiction to take cognizance of MANDARIN'S appeal from the respondent Commission dated December 10, 1991. The UNION's
the Labor Arbiter's decision; and (2) if so, whether or not it gravely contention that this new bond was equally defective because the
abused its discretion in setting aside the Labor Arbiter's judgment and bonding company had an authorized maximum net retention level lower
dismissing the UNION'S complaint. than the sum of P30,967,087.17 involved in this dispute, is
The issue of jurisdiction is grounded on the posited tardiness of private inconsequential, the new bonding company being duly accredited by
respondents' appeal from the Labor Arbiter's judgment to the NLRC, this Court and licensed by the Insurance Commission.
and fatal defect in their supersedeas bond. At any rate, this Court has invariably ruled that Article 223 of the Labor
The UNION contends 3 that the records indubitably show that Code, requiring a bond in appeals involving monetary awards, must be
MANDARIN received on January 22, 1991 its copy of the Labor liberally construed, in line with the desired objective of resolving
Arbiter's Decision (of January 15, 1991), but filed its appeal and paid controversies on their merits. 7 The circumstances under which the
the appeal fee only on February 4, 1991, three (3) days beyond the bond was filed in this case adequately justify such liberal application of
reglementary ten-day period for doing so. It also condemns as the provision.
"anomalous" the certification of Deputy Executive Clerk Gaudencio P. As to the alleged partiality of Commissioner Domingo Zapanta, the
Demaisip, Jr., NLRC, to the effect that MANDARIN's lawyer had Court finds that his intervention on February 1, 1991 in the matter of
approached Hon. Domingo H. Zapanta, a member of the Second payment of the appeal docketing fee did not, in the circumstances
Division, NLRC, "for assistance to have the appeal including the appeal already related, constitute impropriety or pre-judgment of the case and
fee in said case duly received and acknowledged on February 1, 1991, a ground for his disqualification as a member of the Second Division to
at 4:40 P.M.;" and claims that the anomaly was aggravated when it was which the case was thereafter raffled. Significantly, in its motion to
Commissioner Zapanta who wrote the Decision for the Second inhibit, the UNION mentioned that the case was "assigned particularly
Division4 — reversing the Labor Arbiter's judgment, as aforesaid — to the late Commissioner Rustico Diokno . . (but) that upon the latter's
despite the UNION'S motion for his disqualification and/or inhibition. demise, the case was reassigned to Commissioner Domingo Zapanta
The UNION finally argues that MANDARIN'S appeal was not only tardy as the new ponente." 8 As Commissioner Zapanta had always been a
 42

member of the Second Division, the UNION's motion for his inhibition, (d) The re-establishment of a significant difference
filed more than a year after the occurrence of the incident on which it in wage rates may be the result of resort to
was based, becomes suspect as a mere afterthought. In any case, grievance procedures or collective bargaining
Commissioner Zapanta did inhibit himself from taking part in the negotiations.
resolution of the UNION'S motion for reconsideration of the assailed It was only on June 9, 1989, upon the enactment of R.A. No. 6727
decision of September 11, 1992, thus dispelling what doubts might (Wage Rationalization Act, amending, among others, Article 124 of the
linger about his impartiality. Labor Code), 11 that the term "wage distortion" came to be explicitly
Coming now to the issue of wage distortion, prior to the effectivity on defined as:
June 9, 1989 of Republic Act No. 6727 which, among others, amended . . . a situation where an increase in prescribed
Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor wage rates results in the elimination or severe
Code, the concept of 'wage distortion' was relatively obscure. So it was contraction of Intentional quantitative differences in
observed by this Court in National Federation of Labor vs. NLRC, 9 a wage or salary rates between and among employee
case involving the same subject Wage Orders: groups in an establishment as to effectively
We note that neither the Wage Orders noted above, obliterate the distinctions embodied in such wage
nor the Implementing Rules promulgated by the structure based on skills, length of service, or other
Department of Labor and Employment, set forth a logical bases of differentiation.
clear and specific notion of "wage distortion." What The same provision lays down the procedure to be followed where
the Wage Orders and the Implementing Rules did wage distortion arises from the implementation of a wage increase
was simply to recognize that implementation of the prescribed by law or ordered by a Regional Wage Board, viz.:
Wage Orders could result in a 'distortion of the wage Where the application of any prescribed wage
structure' of an employer, and to direct the employer increase by virtue of a law or wage order issued by
and the union to negotiate with each other to correct any Regional Board results in distortions of the
the distortion. Thus, Section 6 of Wage Order No. 3, wage structure within an establishment, the
dated 7 November 1983, provided as follows: employer and the union shall negotiate to correct
Sec. 6. Where the application of the distortions. Any dispute arising from the wage
the minimum wage rate distortions shall be resolved through the grievance
prescribed herein results procedure under their collective bargaining
in distortions of the wage agreement and, if it remains unresolved, through
structure of an voluntary arbitration. Unless otherwise agreed by
establishment, the employer the parties in writing, such dispute shall be decided
and the union shall negotiate to by the voluntary arbitrator or panel of voluntary
correct the distortions. Any arbitrators within ten (10) calendar days from the
dispute arising from wage time said dispute was referred to voluntary
distortions shall be resolved arbitration.
through the grievance In cases where there are no collective agreements
procedure under their collective or recognized labor unions, the employers and
bargaining agreement or workers shall endeavor to correct such distortions.
through conciliation. Any dispute arising therefrom shall be settled
"In case where there is no through the National Conciliation and Mediation
collective bargaining agreement Board and, if it remains unresolved after ten (10)
or recognized labor organization, calendar days of conciliation, shall be referred to the
the employer shall endeavor to appropriate branch of the National Labor Relations
correct such distortions in Commission (NLRC). It shall be mandatory for the
consultation with their workers. NLRC to conduct continuous hearings and decide
Any dispute arising from wage the dispute within twenty (20) calendar days from
distortions shall be resolved the time said dispute is submitted for compulsory
through conciliation by the arbitration.
appropriate Regional Office of The pendency of a dispute arising from a wage
the Ministry of Labor and distortion shall not in any way delay the applicability
Employment or of any increase in prescribed wage rates pursuant
through arbitration by the NLRC to the provisions of law or Wage Order.
Arbitration Branch having The issue of whether or not a wage distortion exists as a consequence
jurisdiction over the work- of the grant of a wage increase to certain employees, is a question of
place." (Emphasis supplied) fact; 12 and as a rule, factual findings in labor cases, where grounded
It is therefore opportune to re-state the general principles enunciated in on substantial evidence, are not reviewed. 13 However, a disharmony
that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et such as exists here, between the factual findings of the Labor Arbiter
al., 10 as follows: and those of the NLRC, opens the door to a review thereof by this
(a) The concept of wage distortion assumes an Court. 14
existing grouping or classification of employees The Labor Arbiter ruled that a wage distortion existed, and that "the only
which establishes distinctions among such and logical way to correct . . . (it) in the salary structure of the
employees on some relevant or legitimate basis. employees of respondent Hotel is to apply the corresponding increase
This classification is reflected in a differing wage made by way of revising upward the minimum wage or integration of
rate for each of the existing classes of employees. the ECOLA into the basic wage as embodied in the various Presidential
(b) Wage distortions have often been the result of Decrees and Wage Orders, across-the-board, so that employees
government- decreed increases in minimum wages. whose salaries are above the minimum set by
There are, however, other causes of wage law but who have already been long in the service will not be
distortions, like the merger of two (2) companies discriminated against." 15
(with differing classification of employees and On the other hand, respondent Commission declared in its
different wage rates) where the surviving company decision 16 that there was no wage distortion arising from the
absorbs all the employees of the dissolved implementation of said Presidential Decrees and Wage Orders such as
corporation. (In the present Metro case, as already warranted across-the-board increases to all employees:
noted, the wage distortion arose because the On the issue of wage distortion, we have examined
effectivity dates of wage increases given to each of the various presidential decrees and wage orders
the two (2) classes of employees (rank-and-file and referred to by the complainant and in the Labor
supervisory) had not been synchronized in their Arbiter's decision and we found nothing therein that
respective CBAs.). would justify the award of across-the-board
(c) Should a wage distortion exist, there is no legal increases to all employees. The apparent intention
requirement that, in the rectification of that distortion of the law is only to upgrade the salaries or wages
by re-adjustment of the wage rates of the differing of the employees receiving lower than the minimum
classes of employees, the gap which had previously daily wage set therein. For example, Section 1 of
or historically existed be restored in precisely the Wage Order No. 6 provides that "effective
same amount. In other words, correction of a wage November 1, 1984, the statutory minimum daily
distortion may be done by re-establishing wage rates of workers in the private sector shall be
a substantial or significant gap (as distinguished increased by P2.00." Also, Section 1 of Presidential
from the historical gap) between the wage rates of Decree 1389 provides that "Presidential Decree
the differing classes of employees. 928 is hereby amended by increasing all existing
 43

statutory minimum wages in the country by Three 4. Renato Solomon Busboy 07/19/84 1,096.00
Pesos (P3.00) spread equally over a period of three 5. Buenconsejo Monico Busboy 04/15/85 968.00
years, as follows: l) One Peso (P1.00) starting July Housekeeping Dept.
1, 1978; 2) One Peso (P1.00) starting May 1, 1979; 1. Ruben A. Rillo Linen Uniform Att. 06/19/76
and One Peso (P1.00) starting May 1, 1980." Thus, 1,417.00
it is clear that the presidential decrees and wage 2. Hubert Malolot Linen Uniform Att. 01/16/80
orders merely provide for a floor wage to be 1,238.00
observed by the employers in the private sector. 3. Aurelia Kilat Linen Uniform Att. 05/02/79
It indeed appears that the clear mandate of those issuances was 1,272.00
merely to increase the prevailing minimum wages of particular 4. Rogelio Molaco Cloakroom Attn. 09/19/80
employee groups. There were no across-the-board increases to all 1,272.00
employees; increases were required only as regards those specified 5. David Pineda Cloakroom Attn. 09/14/81 1,213.00
therein. 17 It was therefore incorrect for the UNION to claim that all its 6. Nemesio Matro Houseman Attn. 06/10/77
members became automatically entitled to across-the-board increases 1,342.00
upon the effectivity of the Decrees and Wage Orders in question. And 7. Domingo Sabando Houseman Attn. 03/08/82
even if there were wage distortions, which is not the case here, the 1,194.00
appropriate remedy thereunder prescribed is for the employer and the 8. Renato Guina Houseman Attn. 08/24/81
union to "negotiate" to correct them; or, if the dispute be not thereby 1,194.00
resolved, to thresh out the controversy through the grievance * Vito was hired at a higher position with a higher
procedure in the collective bargaining agreement, or through hiring rate than that given to Trinidad, i.e. Vito was
conciliation or arbitration. hired at P366/mo. while Trinidad at P301/mo. Prior
A review of the records convinces this Court that respondent NLRC to hiring, Vito already worked as a waiter at the
committed no grave abuse of discretion in holding that no wage Metropolitan Club.
distortion was demonstrated by the UNION. It was, to be sure, The Court agrees that the claimed wage distortion was actually a result
incumbent on the UNION to prove by substantial evidence its assertion of the UNION'S failure to appreciate various circumstances relating to
of the existence of a wage distortion. This it failed to do. It presented the employment of the thirteen employees. For instance, while some of
no such evidence to establish, as required by the law, what, if any, were these employees mentioned by UNION Vice-President Arnulfo Castro
the designed quantitative differences in wage or salary rates between occupied the same or similar positions, they were hired by the Hotel on
employee groups, and if there were any severe contractions or different dates and at different salaries. As explained in part by
elimination of these quantitative differences. MANDARIN:
The UNION's effort to prove wage distortion consisted only of the With respect to the case of Pablo Trinidad and
presentation of an unverified list of thirteen (13) employees Eduardo Vito, while they were both occupying the
denominated a "Sample Comparison of Salary Rates Affected by Wage position of waiter in 1987, with monthly salaries of
Distortion," 18 viz.: P2,044.00 and P2,217.00, respectively, a
SAMPLE COMPARISON OF SALARY RATES OF comparative study of the records of these
COMPLAINANTS AFFECTED BY WAGE DISTORTION employees shows one of them was initially hired at
F&B DEFT. a higher position level which naturally carried a
Name Position Date Hired Basic Rate higher hiring rate. Trinidad was originally hired in
(12/30/85) 1978 as a mere Houseman at the Banquet
1. Pablo Trinidad — Waiter — 9/1/78 P1,300 Department with a basic starting rate of P301.00 a
2. Eduardo Vito — Waiter — 10/16/80 P1,375 month. On the other hand, Vito was originally hired
3. Camilo Sanchez — Busboy — 8/1/83 P954 in 1980 already a Busboy at the Food and Beverage
4. Renato Solomon — Busboy — 7/19/84 P1,096 Department with a starting salary of P366.00 a
5. Buenconsejo Monico — Busboy — 4/15/85 P968 month. Before he was hired at the Mandarin Hotel,
HOUSEKEEPING DEPT. Vito had already been working as Waiter at the
Metropolitan Club. Records also show that it was
1. Ruben A. Rillo — Linen Uniform Att. — 6/19/76
only after some time that Trinidad was promoted to
P984
Busboy but still with the smaller Banquet
2. Hubert Malolot — Linen Uniform Att. — 1/16/80
Department. The headway in rate was carried by
P1,238
Vito although at some point in their careers, these
3. Aurelia Kilat — Linen Uniform Att. — 5/2/79
two employees achieved the same position as
P1,272
Waiter. Not long after, Vito was promoted to Captain
4. Rogelio Molaco — Cloakroom Attn. — 9/1/80 Waiter while Trinidad remained Waiter. There is
P946 therefore no reason to compare the renumeration of
5. David Pineda — Cloakroom Attn. — 9/14/81 these two employees as the circumstances
P1,194 attendant to their employment are different. 21
6. Nemesio Matro — Houseman Attn. — 6/10/76
Respondent Commission correctly concluded that these did not
P1,142
represent cases of wage distortion contemplated by the law (Article 124,
7. Dom'go Sabano — Houseman Attn. — 3/8/82
Labor Code, as amended), i.e., a "situation where an increase in
P1,194
prescribed wage rates results in the elimination or severe contraction
8. Renato Guina — Houseman Attn. — 8/24/81
of intentional quantitative differences in wage or salary rates between
P1,194
and among employees groups in an establishment as to effectively
SUBMITTED: obliterate the distinctions embodied in such wage structure based on
(SGD.) ATTY. R.E. ESPINOSA skills, length of service, or other logical basis of differentiation."
9/17/87. Moreover, even assuming arguendo that there was really a wage
The UNION'S Internal Vice-President, Arnulfo Castro, deposed that the distortion, it was wrong for the Labor Arbiter, after first acknowledging
employees named in this list were the "more or less (13) persons found that some of the money claims had prescribed under Article 291 of the
to have suffered wage distortion," 19 and the UNION pointed out that Labor
while these thirteen employees occupied similar positions, they were Code, 22 to nevertheless order the computation of salary differentials
receiving different rates of salary. retroactive to the effective dates of PDs 1389, 1614, 1713, 1751 and
Respondent Commission however found that as explained by private Wage Orders Nos. 2, 3, 4, 5, and 6: in 1978, 1979, 1980, 1980, July
respondents, such disparity was due simply to the fact that the 1983, November 1983, May 1984, June 1981 and November 1984,
employees mentioned had been hired on different dates and were thus respectively. Clearly, five of these Decrees and Wage Orders took
receiving different salaries; or that an employee was hired initially at a effect after the lapse of the three-year prescriptive period for litigating
position level carrying a hiring rate higher than the others; or that an claims for wage distortion differentials, the original complaint for wage
employee failed to meet the cut-off date in the grant of yearly CBA distortion having been filed on October 30, 1986 and the amended
increase; or that the union did not get the correct data on salaries. The complaint for underpayment of wages, on March 25, 1987.
Commission accepted as more accurate the data presented by Consequently, the applicable cut-off dates, for purposes of prescription,
MANDARIN respecting the same employees, to wit: 20 were October 30, 1983 and March 25, 1984, respectively.
“ANNEX 2” Finally, the records show that the matter of wage distortion, actual or
F&B Dept. imputed under the various issuances up to Wage Order No. 6, had been
NAME Position Date Hired Basic Rate settled by the parties as early as July 30, 1985. On that day they
per Hotel Records as of 12/30/85 executed a Compromise Agreement with the assistance of the then
1. Pablo Trinidad Waiter 09/01/78 P1,302.00 * Regional Director of the National Capital Region, Severo M. Pucan in
2. Eduardo Vito Waiter 10/16/80 1,375.00 * which they affirmed that with the implementation by MANDARIN of
3. Camilo Sanchez Busboy 08/01/83 1,194.00 Wage Order Nos. 4 and 6 as well as P.D. 1634, the latter was "deemed
 44

for all legal and purposes to have fully satisfied all its legal and minimum monthly salary, the factor used is 313, composed of 303
contractual obligations to its employees under all presidential actual working days and the 10 unworked but paid regular holidays in
issuances on wages." 23 a year.
The Compromise Agreement pertinently states: In his explanatory Bulletin on the payment of Holiday Pay — Ref. No.
1. That the respondent shall implement Wage Order 85-08 dated 6 November 1985 — then Secretary Augusto Sanchez of
No. 6 effective July 1, 1985, without prejudice to the the Department of Labor and Employment, expatiating on the
outcome of the application for exemption as implications of the Chartered Bank case, 30 stated:
distressed employer filed by said respondent with 6. Monthly Paid Employees
the National Wage Council as regards benefits that Oftentime confusion arises from the different
might be due between November 1, 1985 and June interpretations as to who is a monthly-paid
30, inclusive; employee. A "monthly-paid employee" is one whose
2. The the respondent shall also implement monthly salary includes payments for everyday of
effective August 1, 1985 the integration of the the month although he does not regularly work on
P90.00 a month cost of living allowance under P.D. his rest days or Sundays and on regular and special
1634 into the basic wages of its employees as holidays. Group III in the above illustration covers
called for under Wage Order No. 4 in accordance monthly paid employees. Employees falling under
with the Guidelines contained in the Explanatory Group I, II and IV are in reality daily paid employees
Bulletin issued by the Bureau of Working Conditions but whose daily rate is translated into its monthly
on August 8, 1985; equivalent. The fact, therefore, that an employee is
3. That as soon as the respondent shall have regularly paid a fixed monthly rate does not
complied with the above terms of this Compromise necessarily mean that he is a monthly-paid
Agreement, said respondent shall be deemed for all employee as defined above. (Emphasis supplied)
legal intents and purposes to have fully satisfied all As applied to the UNION, the-monthly equivalent of the minimum wage
the legal and contractual obligations to its under the various Presidential Decrees and Wage Orders based on the
employees under all presidential issuances on above formula should be as follows:
wages, including Wage Orders No. 4 and 6, and PD/WO NO. Effectivity Minimum Daily Equivalent
Article XI of the collective bargaining agreement. Wage Rate Monthly Rate
The Labor Code recognizes the conclusiveness of compromises as a PD 1389 01 July 1978 P11.00 P286.96
means to settle and end labor disputes. Article 227 provides that "(a)ny PD 1614 1 March 1979 13.00 339.00
compromise settlement, including those involving labor standard laws, PD 1813 18 Aug. 1980 14.00 365.17
voluntarily agreed upon by the parties with the assistance of the Bureau WO # 2 06 July 1983 19.00 495.58
or the regional office of the Department of Labor, shall be final and WO # 3 01 Nov. 1983 20.00 521.67
binding upon the parties. The National Labor Relations Commission or WO # 4 01 May 1984 32.00 834.67
any court shall not assume jurisdiction over issues involved therein WO # 5 01 Nov. 1984 35.00 912.92
except in case of non-compliance thereof or if there is prima WO # 6 01 Nov. 1984 37.00 965.08
facie evidence that the settlement was obtained through fraud, On the other hand, the monthly pay of the Hotel employees and hiring
misrepresentation or coercion." In Olaybar vs. rate may be illustrated as follows:
NLRC, 24 this Court had occasion, in a labor dispute, to apply the rule PD/WO NO. Effectivity Equivalent Lowest Salary
that compromises and settlements have the effect and conclusiveness Monthly Rate in the Hotel
of res judicata upon the parties. PD 1389 01 July 1978 P286.92 P350.00
Thus, and again assuming arguendo the existence of a wage distortion, PD 1614 1 March 1979 339.08 411.00
this was corrected under the "fully implemented" Compromise PD 1813 18 Aug. 1980 365.17 562.00
Agreement; 25 and such correction having been explicitly WO # 2 06 July 1983 495.58 960.00
acknowledged by the UNION, it is now estopped from claiming that a WO # 3 01 Nov. 1983 521.67 960.00
distortion still subsists. In the same manner, when the UNION entered WO # 4 01 May 1984 834.67 960.00
into a new collective bargaining agreement with MANDARIN, providing WO # 5 01 Nov. 1984 912.92 960.00
for wage increases in 1987, it is deemed to have thereby settled any WO # 6 01 Nov. 1984 965.080 1,015.00
remaining question of wage distortion, since the subject of wages and A comparative analysis of the wages of the Hotel's employees from
wage distortions were plainly and unavoidably an economic issue and 1978 to 1984 vis a vis the minimum wages fixed by law for the period
the proper subject of collective bargaining. 26 reveals that at no time during the said period was there any
Neither did respondent Commission gravely abuse its discretion in underpayment of wages by the respondent Hotel. On the contrary, the
ruling against the UNION on the issue of underpayment of wages, prevailing monthly salaries of the subject hotel employees appear to be
The UNION's theory was that since the employees of MANDARIN are over and above the minimum amounts required under the applicable
paid on a monthly basis under the Group III category, the applicable Presidential Decrees and Wage Orders.
increase in daily wage must be multiplied by 365 and then divided by WHEREFORE, the assailed Decision of respondent Commission
12 to determine the equivalent monthly rate. MANDARIN's position, on promulgated on September 11, 1992 — reversing the judgment of the
the other hand, was that it had consistently been using the multiplier Labor Arbiter and dismissing the UNION'S complaint — being based
313, and not 365, for the purpose of deriving salary related benefits of on substantial evidence and in accord with applicable laws and
its employees who are paid by the month, excluding from 365, the 52 jurisprudence, as well as said Commission's Resolution dated 24, 1992
unpaid rest days in a year. This appears to have been the consistent — denying reconsideration — are hereby AFFIRMED in toto.
practice of MANDARIN, following the formula for daily paid employees SO ORDERED.
under Group II category as prepared by the Bureau of Labor
Standards: 27
AR x 313 days = EMR
——————
12 G.R. No. 102636 September 10, 1993
Where: 313 days = 303 actual working days a year METROPOLITAN BANK & TRUST COMPANY EMPLOYEES
plus the paid 10 unworked regular UNION-ALU-TUCP and ANTONIO V. BALINANG, petitioners,
holidays. vs.
Actual working days 303 NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and
10 legal holidays 10 METROPOLITAN BANK and TRUST COMPANY, respondents.
— VITUG, J.:
Total No. of Days 313. In this petition for certiorari, the Metropolitan Bank & Trust Company
MANDARIN presented evidence of its practice regarding the use of the Employees Union-ALU-TUCP (MBTCEU) and its president, Antonio V.
factor 313 in computing the monthly equivalent of the minimum daily Balinang, raise the issue of whether or not the implementation by the
wages and other related benefits of its employees; i.e., Annexes 3 and Metropolitan Bank and Trust Company of Republic Act No. 6727,
4 of its Supplemental Appeal dated November 12, 1991. This was mandating an increase in pay of P25 per day for certain employees in
corroborated by the UNION's Internal Vice President, Arnulfo Castro, the private sector, created a distortion that would require an adjustment
who admitted during cross-examination that in his research and study, under said law in the wages of the latter's other various groups of
he found that the divisor used in arriving at the daily rate of the hotel employees.
employees was 313 days, which meant that the days-off or rest days On 25 May 1989, the bank entered into a collective bargaining
are not paid. 28 The admission confirms that the hotel employees agreement with the MBTCEU, granting a monthly P900 wage increase
pertain Group II category under the Bureau of Labor Standards effective 01 January 1989, P600 wage increase 01 January 1990, and
Guidelines for computing the equivalent monthly minimum wage P200 wage increase effective 01 January 1991. The MBTCEU had also
rates. 29 Thus, instead of multiplying the applicable minimum daily bargained for the inclusion of probationary employees in the list of
wage by 365 and dividing the result by 12 to derive the applicable employees who would benefit from the first P900 increase but the bank
 45

had adamantly refused to accede thereto. Consequently, only regular a logical basis of differentiation (that) deserves protection from any
employees as of 01 January 1989 were given the increase to the distorting statutory wage increase." Otherwise, he added, "a minimum
exclusion of probationary employees. wage statute that seek to uplift the economic condition of labor would
Barely a month later, or on 01 January 1989, Republic Act 6727, "an itself destroy the mechanism of collective bargaining which, with
act to rationalize wage policy determination be establishing the perceived stability, has been labor's constitutional and regular source
mechanism and proper standards thereof, . . . fixing new wage rates, of wage increase for so long a time now." Thus, since the "subjective
providing wage incentives for industrial dispersal to the countryside, quantitative difference" between wage rates had been reduced from
and for other purposes," took effect. Its provisions, pertinent to this case, P900.00 to barely P150.00, correction of the wage distortion pursuant
state: to Section 4(c) of the Rules Implementing Republic Act 6727 should be
Sec. 4. (a) Upon the effectivity of this Act, the made.
statutory minimum wage rates of all workers and The labor arbiter disposed of the case, thus:
employees in the private sector, whether WHEREFORE, premises considered, the
agricultural or non-agricultural, shall be increased respondent is hereby directed to restore to
by twenty-five pesos (P25) per day, . . .: Provided, complainants and their members the Nine Hundred
That those already receiving above the minimum (P900.00) Pesos CBA wage gap they used to enjoy
wage rates up to one hundred pesos(P100.00) shall over non-regular employees as of January 1, 1989
also receive an increase of twenty-five pesos by granting them a Seven Hundred Fifty (P750.00)
(P25.00) per day, . . . Pesos monthly increase effective July 1, 1989.
xxx xxx xxx SO ORDERED.2
(d) If expressly provided for and agreed upon in the The bank appealed to the NLRC. On 31 May 1991, the NLRC Second
collective bargaining agreements, all increase in the Division, by a vote of 2 to 1, reversed the decision of the Labor Arbiter.
daily basic wage rates granted by the employers Speaking, through Commissioners Rustico L. Diokno and Domingo H.
three (3) months before the effectivity of this Act Zapanta, the NLRC said:
shall be credited as compliance with the increases . . . a wage distortion can arise only in a situation
in the wage rates prescribed herein, provided that, where the salary structure is characterized by
where such increases are less than the prescribed intentional quantitative differences among
increases in the wage rates under this Act, the employee groups determined or fixed on the basis
employer shall pay the difference. Such increase of skills, length of service, or other logical basis of
shall not include anniversary wage increases, merit differentiation and such differences or distinction
wage increase and those resulting from the are obliterated (In Re: Labor Dispute at the Bank of
regularization or promotion of employees. the Philippine Islands, NCMB-RB-7-11-096-89,
Where the application of the increases in the wage Secretary of Labor and Employment, February 18,
rates under this Section results in distortions as 1991).
defined under existing laws in the wage structure As applied in this case, We noted that in the new
within an establishment and gives rise to a dispute wage salary structure, the wage gaps between
therein, such dispute shall first be settled voluntarily Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic)
between the parties and in the event of a deadlock, were maintained. While there is a noticeable
the same shall be finally resolved through decrease in the wage gap between levels 2 and 3,
compulsory arbitration by the regional branches of Levels 3 and 4, and Levels 4 and 5, the reduction in
the National Labor Relations Commission (NLRC) the wage gaps between said levels is not significant
having jurisdiction over the workplace. as to obliterate or result in severe contraction of the
It shall be mandatory for the NLRC to conduct intentional quantitative differences in salary rates
continous hearings and decide any dispute arising between the employees groups. For this reason, the
under this Section within twenty (20) calendar days basis requirement for a wage in this case. Moreover,
from the time said dispute is formally submitted to it there is nothing in the law which would justify an
for arbitration. The pendency of a dispute arising across-the-board adjustment of P750.00 as ordered
from a wage distortion shall not in any way delay the by the labor Arbiter.
applicability of the increase in the wage rates WHEREFORE, premises considered, the appealed
prescribed under this Section. decision is hereby set aside and a new judgment is
Pursuant to the above provisions, the bank gave the P25 increase per hereby entered, dismissing the complaint for lack of
day, or P750 a month, to its probationary employees and to those who merit.
had been promoted to regular or permanent status before 01 July 1989 SO ORDERED.3
but whose daily rate was P100 and below. The bank refused to give the In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
same increase to its regular employees who were receiving more than There may not be an obliteration nor elimination of
P100 per day and recipients of the P900 CBA increase. said quantitative distinction/difference aforecited
Contending that the bank's implementation of Republic Act 6727 but clearly there is a contraction. Would such
resulted in the categorization of the employees into (a) the probationary contraction be severe as to warrant the necessary
employees as of 30 June 1989 and regular employees receiving P100 correction sanctioned by the law in point, RA 6727?
or less a day who had been promoted to permanent or regular status It is may considered view that the quantitative
before 01 July 1989, and (b) the regular employees as of 01 July 1989, intended distinction in pay between the two groups
whose pay was over P100 a day, and that, between the two groups, of workers in respondent company was contracted
there emerged a substantially reduced salary gap, the MBTCEU sought by more than fifty (50%) per cent or in particular by
from the bank the correction of the alleged distortion in pay. In order to more or less eighty-three (83%) per cent hence,
avert an impeding strike, the bank petitioned the Secretary of Labor to there is no doubt that there is an evident severe
assume jurisdiction over the case or to certify the same to the National contraction resulting in the complained of wage
Labor Relations Commission (NLRC) under Article 263 (g) of the Labor distortion.
Code.1 The parties ultimately agreed to refer the issue for compulsory Nonetheless, the award of P750.00 per month to all
arbitration to the NLRC. of herein individual complainants as ordered by the
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his Labor Arbiter below, to my mind is not the most
decision of 05 February 1991, the labor arbiter disregard with the bank's equitable remedy at bar, for the same would be an
contention that the increase in its implementation of Republic Act 6727 across the board increase which is not the intention
did not constitute a distortion because "only 143 employees or 6.8% of of RA 6727. For that matter, herein complainants
the bank's population of a total of 2,108 regular employees" benefited. cannot by right claim for the whole amount of
He stressed that "it is not necessary that a big number of wage earners P750.00 a month or P25.00 per day granted to the
within a company be benefited by the mandatory increase before a workers covered by the said law in the sense that
wage distortion may be considered to have taken place," it being they are not covered by the said increase mandated
enough, he said, that such increase "result(s) in the severe contraction by RA 6727. They are only entitled to the relief
of an intentional quantitative difference in wage between employee granted by said law by way of correction of the pay
groups." scale in case of distortion in wages by reason
The labor arbiter concluded that since the "intentional quantitative thereof.
difference" in wage or salary rates between and among groups of Hence, the formula offered and incorporated in
employees is not based purely on skills or length of service but also on Wage Order No. IV-02 issued on 21 May 1991 by
"other logical bases of differentiation, a P900.00 wage gap intentionally the Regional Tripartite Wages and Productivity
provided in a collective bargaining agreement as a quantitative Commission for correction of pay scale structures in
difference in wage between those who WERE regular employees as of case of wage distortion as in the case at bar which
January 1, 1989 and those who WERE NOT as of that date, is definitely is:
 46

Minimum Wage = % x allow a credit for voluntary compliance. As the Court, through Associate
Prescribed = Distortion Justice Florentino Feliciano, also pointed out in Apex Mining Company,
—————— Increased Inc. v. NLRC: 14
Adjustment . . . . (T)o compel employers simply to add on
Actual Salary legislated increases in salaries or allowances
would be the most equitable and fair under the without regard to what is already being paid, would
circumstances obtaining in this case. be to penalize employers who grant their workers
For this very reason, I register my dissent from the more than the statutorily prescribed minimum rates
majority opinion and opt for the modification of the of increases. Clearly, this would be counter-
Labor Arbiter's decision as afore-discussed.4 productive so far as securing the interests of labor
The MBTCEU filed a motion for reconsideration of the decision of the is concerned. . . .
NLRC; having been denied, the MBTCEU and its president filed the We find the formula suggested then by Commissioner Bonto-Perez,
instant petition for certiorari, charging the NLRC with gave abuse of which has also been the standard considered by the regional Tripartite
discretion by its refusal (a) "to acknowledge the existence of a wage Wages and Productivity Commission for the correction of pay scale
distortion in the wage or salary rates between and among the employee structures in cases of wage distortion, 15 to well be the appropriate
groups of the respondent bank as a result of the bank's partial measure to balance the respective contentions of the parties in this
implementation" of Republic Act 6727 and (b) to give due course to its instance. We also view it as being just and equitable.
claim for an across-the-board P25 increase under Republic Act No. WHEREFORE, finding merit in the instant petition for certiorari, the
6727.5 same is GRANTED DUE PROCESS, the questioned NLRC decision is
We agree with the Solicitor General that the petition is impressed with hereby SET ASIDE and the decision of the labor arbiter is
merit.6 REINSTATED subject to the MODIFICATION that the wage distortion
The term "wage distortion", under the Rules Implementing Republic Act in question be corrected in accordance with the formula expressed in
6727, is defined, thus: the dissenting opinion of Presiding Commissioner Edna Bonto-Perez.
(p) Wage Distortion means a situation where an This decision is immediately executory.
increase in prescribed wage rates results in the SO ORDERED.
elimination or severe contradiction of intentional
quantitative differences in wage or salary rates
between and among employee groups in an
establishment as to effectively obliterate the G.R. No. 140689 February 17, 2004
distinctions embodied in such wage structure based BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE
on skills, length of service, or other logical bases of UNIONS, petitioner,
differentiation. vs.
The issue of whether or not a wage distortion exists as a consequence NATIONAL LABOR RELATIONS COMMISSION and BANKARD,
of the grant of a wage increase to certain employees, we agree, is, by INC., respondents.
and large, a question of fact the determination of which is the statutory DECISION
function of the NLRC.7 Judicial review of labor cases, we may add, CARPIO MORALES, J.:
does not go beyond the evaluation of the sufficiency of the evidence The present Petition for Review on Certiorari under Rule 45 of the
upon which the labor official's findings rest.8 As such, factual findings Rules of Court raises the issue of whether the unilateral adoption by an
of the NLRC are generally accorded not only respect but also finality employer of an upgraded salary scale that increased the hiring rates of
provided that its decision are supported by substantial evidence and new employees without increasing the salary rates of old employees
devoid of any taint of unfairness of arbitrariness.9 When, however, the resulted in wage distortion within the contemplation of Article 124 of the
members of the same labor tribunal are not in accord on those aspects Labor Code.
of a case, as in this case, this Court is well cautioned not to be as so
Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level
conscious in passing upon the sufficiency of the evidence, let alone the
I, Level II, Level III, Level IV, and Level V. On May 28, 1993, its Board
conclusions derived therefrom.
of Directors approved a "New Salary Scale", made retroactive to April
In this case, the majority of the members of the NLRC, as well as its 1, 1993, for the purpose of making its hiring rate competitive in the
dissenting member, agree that there is a wage distortion arising from industry’s labor market. The "New Salary Scale" increased the hiring
the bank's implementation of the P25 wage increase; they do differ, rates of new employees, to wit: Levels I and V by one thousand pesos
however, on the extent of the distortion that can warrant the adoption (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00).
of corrective measures required by law. Accordingly, the salaries of employees who fell below the new minimum
The definition of "wage distortion," 10 aforequoted, shows that such rates were also adjusted to reach such rates under their levels.
distortion can so exist when, as a result of an increase in the prescribed Bankard’s move drew the Bankard Employees Union-WATU
wage rate, an "elimination or severe contraction of intentional (petitioner), the duly certified exclusive bargaining agent of the regular
quantitative differences in wage or salary rates" would occur "between rank and file employees of Bankard, to press for the increase in the
and among employee groups in an establishment as to effectively salary of its old, regular employees.
obliterate the distinctions embodied in such wage structure based on
Bankard took the position, however, that there was no obligation on the
skills, length of service, or other logical bases of differentiation." In
part of the management to grant to all its employees the same increase
mandating an adjustment, the law did not require that there be an
in an across-the-board manner.
elimination or total abrogation of quantitative wage or salary differences;
a severe contraction thereof is enough. As has been aptly observed by As the continued request of petitioner for increase in the wages and
Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, salaries of Bankard’s regular employees remained unheeded, it filed a
the contraction between personnel groupings comes close to eighty- Notice of Strike on August 26, 1993 on the ground of discrimination and
three (83%), which cannot, by any stretch of imagination, be considered other acts of Unfair Labor Practice (ULP).
less than severe. A director of the National Conciliation and Mediation Board treated the
The "intentional quantitative differences" in wage among employees of Notice of Strike as a "Preventive Mediation Case" based on a finding
the bank has been set by the CBA to about P900 per month as of 01 that the issues therein were "not strikeable".
January 1989. It is intentional as it has been arrived at through the Petitioner filed another Notice of Strike on October 8, 1993 on the
collective bargaining process to which the parties are thereby grounds of refusal to bargain, discrimination, and other acts of ULP -
concluded. 11 The Solicitor General, in recommending the grant of due union busting. The strike was averted, however, when the dispute was
course to the petition, has correctly emphasized that the intention of the certified by the Secretary of Labor and Employment for compulsory
parties, whether the benefits under a collective bargaining agreement arbitration.
should be equated with those granted by law or not, unless there are The Second Division of the NLRC, by Order of May 31, 1995, finding
compelling reasons otherwise, must prevail and be given effect. 12 no wage distortion, dismissed the case for lack of merit.
In keeping then with the intendment of the law and the agreement of Petitioner’s motion for reconsideration of the dismissal of the case was,
the parties themselves, along with the often repeated rule that all by Resolution of July 28, 1995, denied.
doubts in the interpretation and implementation of labor laws should be Petitioner thereupon filed a petition for certiorari before this Court,
resolved in favor of labor, 13 we must approximate an acceptable docketed as G.R. 121970. In accordance with its ruling in St. Martin
quantitative difference between and among the CBA agreed work Funeral Homes v. NLRC,1 the petition was referred to the Court of
levels. We, however, do not subscribe to the labor arbiter's exacting Appeals which, by October 28, 1999, denied the same for lack of merit.
prescription in correcting the wage distortion. Like the majority of the Hence, the present petition which faults the appellate court as follows:
members of the NLRC, we are also of the view that giving the (1) It misapprehended the basic issues when it concluded that
employees an across-the-board increase of P750 may not be under Bankard’s new wage structure, the old salary gaps
conducive to the policy of encouraging "employers to grant wage and between the different classification or level of employees
allowance increases to their employees higher than the minimum rates were "still reflected" by the adjusted salary rates 2; and
of increases prescribed by statute or administrative regulation,"
particularly in this case where both Republic Act 6727 and the CBA
 47

(2) It erred in concluding that "wage distortion does not Moreover, for purposes of determining the existence of wage distortion,
appear to exist", which conclusion is manifestly contrary to employees cannot create their own independent classification and use
law and jurisprudence.3 it as a basis to demand an across-the-board increase in salary.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION As National Federation of Labor v. NLRC, et al.10 teaches, the
ACT, amending, among others, Article 124 of the Labor Code) on June formulation of a wage structure through the classification of employees
9, 1989, the term "wage distortion" was explicitly defined as: is a matter of management judgment and discretion.
... a situation where an increase in prescribed wage rates results in the [W]hether or not a new additional scheme of classification of employees
elimination or severe contraction of intentional quantitative differences for compensation purposes should be established by the Company
in wage or salary rates between and among employee groups in an (and the legitimacy or viability of the bases of distinction there
establishment as to effectively obliterate the distinctions embodied in embodied) is properly a matter of management judgment and
such wage structure based on skills, length of service, or other logical discretion, and ultimately, perhaps, a subject matter for
bases of differentiation.4 bargaining negotiations between employer and employees. It is
Prubankers Association v. Prudential Bank and Trust Company 5 laid assuredly something that falls outside the concept of "wage
down the four elements of wage distortion, to wit: (1.) An existing distortion."11 (Emphasis and underscoring supplied)
hierarchy of positions with corresponding salary rates; (2) A significant As did the Court of Appeals, this Court finds that the third element
change in the salary rate of a lower pay class without a concomitant provided in Prubankers is also wanting. For, as the appellate court
increase in the salary rate of a higher one; (3) The elimination of the explained:
distinction between the two levels; and (4) The existence of the In trying to prove wage distortion, petitioner union presented a list of
distortion in the same region of the country. five (5) employees allegedly affected by the said increase:
Normally, a company has a wage structure or method of determining
the wages of its employees. In a problem dealing with "wage distortion,"
the basic assumption is that there exists a grouping or classification of Pay of Old/ Pay of Newly Difference
employees that establishes distinctions among them on some relevant
or legitimate bases.6 Regular Employees Hired Employees
Involved in the classification of employees are various factors such as
the degrees of responsibility, the skills and knowledge required, the A. Prior to April 1, 1993
complexity of the job, or other logical basis of differentiation. The
differing wage rate for each of the existing classes of employees Level I P4,518.75 P3,100 P1,418.75
reflects this classification. (Sammy
Petitioner maintains that for purposes of wage distortion, the Guce)
classification is not one based on "levels" or "ranks" but on two groups
of employees, the newly hired and the old, in each and every level, and Level II P6,242.00 P3,200 P3,042.00
not between and among the different levels or ranks in the salary (Nazario
structure. Abello)
Public respondent National Labor Relations Commission (NLRC)
Level III P4,850.00 P3,300 P1,550.00
refutes petitioner’s position, however. It, through the Office of the
(Arthur
Solicitor General, essays in its Comment of April 12, 2000 as follows:
Chavez)
To determine the existence of wage distortion, the "historical"
classification of the employees prior to the wage increase must be
Level IV P5,339.00 P3,500 P1,839.00
established. Likewise, it must be shown that as between the different
Melissa
classification of employees, there exists a "historical" gap or difference.
Cordero)
xxx
The classification preferred by petitioner is belied by the wage structure Level V P7,090.69 P3,700 P3,390.69
of private respondent as shown in the new salary scale it adopted on (Ma. Lourdes
May 28, 1993, retroactive to April 1, 1993, which provides, thus: Dee)

Hiring Minimum Maximum B. Effective April 1, 1993

Level From To From To From To Level I P4,518.75 P4,100 P418.75

Sammy
Guce)
I 3,100 4,100 3,200 4,200 7,200 9,250
Level II P6,242.00 P4,100 P2,142.00
II 3,200 4,100 3,300 4,200 7,500 9,500
(Nazario
Abello)
III 3,300 4,200 3,400 4,300 8,000 10,000
Level III P4,850.00 P4,200 P650.00
IV 3,500 4,400 3,600 4,500 8,500 10,500
(Arthur
Chavez)
V 3,700 4,700 3,800 4,800 9,000 11,000
Thus the employees of private respondent have been Level IV P5,330.00 P4,400 P939.00
"historically" classified into levels, i.e. I to V, and not on the basis (Melissa
of their length of service. Put differently, the entry of new Cordero)
employees to the company ipso facto place[s] them under any of the
levels mentioned in the new salary scale which private respondent Level V P7,090.69 P4,700 P2,390.69
adopted retroactive [to] April 1, 1993. Petitioner cannot make a contrary (Ma. Lourdes
classification of private respondent’s employees without encroaching Dee)
upon recognized management prerogative of formulating a wage
Even assuming that there is a decrease in the wage gap between the
structure, in this case, one based on level.7 (Emphasis and
pay of the old employees and the newly hired employees, to Our
underscoring supplied)
mind said gap is not significant as to obliterate or result in severe
The issue of whether wage distortion exists being a question of fact that contraction of the intentional quantitative differences in the salary rates
is within the jurisdiction of quasi-judicial tribunals,8 and it being a basic between the employee group. As already stated, the classification
rule that findings of facts of quasi-judicial agencies, like the NLRC, are under the wage structure is based on the rank of an employee, not on
generally accorded not only respect but at times even finality seniority. For this reason, ,wage distortion does not appear to
if they are supported by substantial evidence, as are the findings in the exist.12 (Emphasis and underscoring supplied)
case at bar, they must be respected. For these agencies have acquired
Apart from the findings of fact of the NLRC and the Court of Appeals
expertise, their jurisdiction being confined to specific matters. 9
that some of the elements of wage distortion are absent, petitioner
It is thus clear that there is no hierarchy of positions between the newly cannot legally obligate Bankard to correct the alleged "wage distortion"
hired and regular employees of Bankard, hence, the first element of as the increase in the wages and salaries of the newly-hired was not
wage distortion provided in Prubankers is wanting.lawphi1.nêt due to a prescribed law or wage order.
While seniority may be a factor in determining the wages of employees, The wordings of Article 124 are clear. If it was the intention of the
it cannot be made the sole basis in cases where the nature of their legislators to cover all kinds of wage adjustments, then the language of
work differs. the law should have been broad, not restrictive as it is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing.
xxx
 48

Where the application of any prescribed wage increase by virtue of SO ORDERED.

a law or Wage Order issued by any Regional Board results in
distortions of the wage structure within an establishment, the employer
and the union shall negotiate to correct the distortions. Any dispute
arising from the wage distortions shall be resolved through the
grievance procedure under their collective bargaining agreement and,
if it remains unresolved, through voluntary arbitration.
x x x (Italics and emphasis supplied)
Article 124 is entitled "Standards/Criteria for Minimum Wage
Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE
AGREEMENTS AND WAGE DETERMINATION" which principally
deals with the fixing of minimum wage. Article 124 should thus be
construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum
wage, the distinctions embodied in the wage structure based on skills,
length of service, or other logical bases of differentiation will be
preserved.
If the compulsory mandate under Article 124 to correct "wage
distortion" is applied to voluntary and unilateral increases by the
employer in fixing hiring rates which is inherently a business judgment
prerogative, then the hands of the employer would be completely tied
even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular
group, or as in the present case, the need to increase the
competitiveness of Bankard’s hiring rate. An employer would be
discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees
for a similar increase, especially if the financial conditions of the
business cannot address an across-the-board increase.
Petitioner cites Metro Transit Organization, Inc. v. NLRC13 to support
its claim that the obligation to rectify wage distortion is not confined to
wage distortion resulting from government decreed law or wage order.
Reliance on Metro Transit is however misplaced, as the obligation
therein to rectify the wage distortion was not by virtue of Article 124 of
the Labor Code, but on account of a then existing "company practice"
that whenever rank-and-file employees were paid a statutorily
mandated salary increase, supervisory employees were, as a matter
of practice, also paid the same amount plus an added premium. Thus
this Court held in said case:
We conclude that the supervisory employees, who then (i.e., on April
17, 1989) had, unlike the rank-and-file employees, no CBA governing
the terms and conditions of their employment, had the right to rely on
the company practice of unilaterally correcting the wage distortion
effects of a salary increase given to the rank-and-file employees, by
giving the supervisory employees a corresponding salary increase plus
a premium. . . .14 (Emphasis supplied)
Wage distortion is a factual and economic condition that may be
brought about by different causes. In Metro Transit, the reduction or
elimination of the normal differential between the wage rates of rank-
and-file and those of supervisory employees was due to the granting to
the former of wage increase which was, however, denied to the latter
group of employees.
The mere factual existence of wage distortion does not, however, ipso
facto result to an obligation to rectify it, absent a law or other source of
obligation which requires its rectification.
Unlike in Metro Transit then where there existed a "company practice,"
no such management practice is herein alleged to obligate Bankard to
provide an across-the-board increase to all its regular employees.
Bankard’s right to increase its hiring rate, to establish minimum salaries
for specific jobs, and to adjust the rates of employees affected thereby
is embodied under Section 2, Article V (Salary and Cost of Living
Allowance) of the parties’ Collective Bargaining Agreement (CBA), to
wit:
Section 2. Any salary increase granted under this Article shall
be without prejudice to the right of the Company to establish such
minimum salaries as it may hereafter find appropriate for specific jobs,
and to adjust the rates of the employees thereby affected to such
minimum salaries thus established.15 (Italics and underscoring supplied)
This CBA provision, which is based on legitimate business-judgment
prerogatives of the employer, is a valid and legally enforceable source
of rights between the parties.
In fine, absent any indication that the voluntary increase of salary rates
by an employer was done arbitrarily and illegally for the purpose of
circumventing the laws or was devoid of any legitimate purpose other
than to discriminate against the regular employees, this Court will not
step in to interfere with this management prerogative. Employees are
of course not precluded from negotiating with its employer and lobby
for wage increases through appropriate channels, such as through a
CBA.
This Court, time and again, has shown concern and compassion to the
plight of workers in adherence to the Constitutional provisions on social
justice and has always upheld the right of workers to press for better
terms and conditions of employment. It does not mean, however, that
every dispute should be decided in favor of labor, for employers
correspondingly have rights under the law which need to be respected.
WHEREFORE, the present petition is hereby DENIED.
 49

D. 13TH MONTH PAY The other findings are AFFIRMED.

G.R. No. 166208 June 29, 2007 SO ORDERED.7
KING OF KINGS TRANSPORT INC., CLAIRE DELA FUENTE and Respondent moved for reconsideration but it was denied through the
MELISSA LIM, petitioners, November 14, 2003 Resolution8 of the NLRC.
vs. Thereafter, respondent filed a Petition for Certiorari before the CA
SANTIAGO O. MAMAC, respondent. urging the nullification of the NLRC Decision and Resolution.
DECISION The Ruling of the Court of Appeals
VELASCO, JR., J.: Affirming the NLRC, the CA held that there was just cause for
Is a verbal appraisal of the charges against the employee a breach of respondent’s dismissal. It ruled that respondent’s act in "declaring sold
the procedural due process? This is the main issue to be resolved in tickets as returned tickets x x x constituted fraud or acts of dishonesty
this plea for review under Rule 45 of the September 16, 2004 justifying his dismissal."9
Decision1 of the Court of Appeals (CA) in CA-GR SP No. 81961. Said Also, the appellate court sustained the finding that petitioners failed to
judgment affirmed the dismissal of bus conductor Santiago O. Mamac comply with the required procedural due process prior to respondent’s
from petitioner King of Kings Transport, Inc. (KKTI), but ordered the bus termination. However, following the doctrine in Serrano v. NLRC, 10 it
company to pay full backwages for violation of the twin-notice modified the award of PhP 10,000 as indemnification by awarding full
requirement and 13th-month pay. Likewise assailed is the December 2, backwages from the time respondent’s employment was terminated
2004 CA Resolution2 rejecting KKTI’s Motion for Reconsideration. until finality of the decision.
The Facts Moreover, the CA held that respondent is entitled to the 13th-month pay
Petitioner KKTI is a corporation engaged in public transportation and benefit.
managed by Claire Dela Fuente and Melissa Lim. Hence, we have this petition.
Respondent Mamac was hired as bus conductor of Don Mariano The Issues
Transit Corporation (DMTC) on April 29, 1999. The DMTC employees Petitioner raises the following assignment of errors for our
including respondent formed the Damayan ng mga Manggagawa, consideration:
Tsuper at Conductor-Transport Workers Union and registered it with Whether the Honorable Court of Appeals erred in awarding in favor of
the Department of Labor and Employment. Pending the holding of a the complainant/private respondent, full back wages, despite the denial
certification election in DMTC, petitioner KKTI was incorporated with of his petition for certiorari.
the Securities and Exchange Commission which acquired new buses. Whether the Honorable Court of Appeals erred in ruling that KKTI did
Many DMTC employees were subsequently transferred to KKTI and not comply with the requirements of procedural due process before
excluded from the election. dismissing the services of the complainant/private respondent.
The KKTI employees later organized the Kaisahan ng mga Kawani sa Whether the Honorable Court of Appeals rendered an incorrect
King of Kings (KKKK) which was registered with DOLE. Respondent decision in that [sic] it awarded in favor of the complaint/private
was elected KKKK president. respondent, 13th month pay benefits contrary to PD 851. 11
Respondent was required to accomplish a "Conductor’s Trip Report" The Court’s Ruling
and submit it to the company after each trip. As a background, this
The petition is partly meritorious.
report indicates the ticket opening and closing for the particular day of
duty. After submission, the company audits the reports. Once an The disposition of the first assigned error depends on whether
irregularity is discovered, the company issues an "Irregularity Report" petitioner KKTI complied with the due process requirements in
against the employee, indicating the nature and details of the terminating respondent’s employment; thus, it shall be discussed
irregularity. Thereafter, the concerned employee is asked to explain the secondly.
incident by making a written statement or counter-affidavit at the back Non-compliance with the Due Process Requirements
of the same Irregularity Report. After considering the explanation of the Due process under the Labor Code involves two aspects: first,
employee, the company then makes a determination of whether to substantive––the valid and authorized causes of termination of
accept the explanation or impose upon the employee a penalty for employment under the Labor Code; and second, procedural––the
committing an infraction. That decision shall be stated on said manner of dismissal.12 In the present case, the CA affirmed the findings
Irregularity Report and will be furnished to the employee. of the labor arbiter and the NLRC that the termination of employment
Upon audit of the October 28, 2001 Conductor’s Report of respondent, of respondent was based on a "just cause." This ruling is not at issue
KKTI noted an irregularity. It discovered that respondent declared in this case. The question to be determined is whether the procedural
several sold tickets as returned tickets causing KKTI to lose an income requirements were complied with.
of eight hundred and ninety pesos. While no irregularity report was Art. 277 of the Labor Code provides the manner of termination of
prepared on the October 28, 2001 incident, KKTI nevertheless asked employment, thus:
respondent to explain the discrepancy. In his letter,3 respondent said Art. 277. Miscellaneous Provisions.––x x x
that the erroneous declaration in his October 28, 2001 Trip Report was (b) Subject to the constitutional right of workers to security of tenure
unintentional. He explained that during that day’s trip, the windshield of and their right to be protected against dismissal except for a just and
the bus assigned to them was smashed; and they had to cut short the authorized cause without prejudice to the requirement of notice under
trip in order to immediately report the matter to the police. As a result Article 283 of this Code, the employer shall furnish the worker whose
of the incident, he got confused in making the trip report. employment is sought to be terminated a written notice containing a
On November 26, 2001, respondent received a letter 4 terminating his statement of the causes for termination and shall afford the latter ample
employment effective November 29, 2001. The dismissal letter alleged opportunity to be heard and to defend himself with the assistance of his
that the October 28, 2001 irregularity was an act of fraud against the representative if he so desires in accordance with company rules and
company. KKTI also cited as basis for respondent’s dismissal the other regulations promulgated pursuant to guidelines set by the Department
offenses he allegedly committed since 1999. of Labor and Employment. Any decision taken by the employer shall be
On December 11, 2001, respondent filed a Complaint for illegal without prejudice to the right of the worker to contest the validity or
dismissal, illegal deductions, nonpayment of 13th-month pay, service legality of his dismissal by filing a complaint with the regional branch of
incentive leave, and separation pay. He denied committing any the National Labor Relations Commission. The burden of proving that
infraction and alleged that his dismissal was intended to bust union the termination was for a valid or authorized cause shall rest on the
activities. Moreover, he claimed that his dismissal was effected without employer.
due process. Accordingly, the implementing rule of the aforesaid provision states:
In its April 3, 2002 Position Paper,5 KKTI contended that respondent SEC. 2. Standards of due process; requirements of notice.––In all
was legally dismissed after his commission of a series of misconducts cases of termination of employment, the following standards of due
and misdeeds. It claimed that respondent had violated the trust and process shall be substantially observed:
confidence reposed upon him by KKTI. Also, it averred that it had I. For termination of employment based on just causes as defined in
observed due process in dismissing respondent and maintained that Article 282 of the Code:
respondent was not entitled to his money claims such as service (a) A written notice served on the employee specifying the ground or
incentive leave and 13th-month pay because he was paid on grounds for termination, and giving said employee reasonable
commission or percentage basis. opportunity within which to explain his side.
On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes (b) A hearing or conference during which the employee concerned, with
rendered judgment dismissing respondent’s Complaint for lack of the assistance of counsel if he so desires is given opportunity to
merit.6 respond to the charge, present his evidence, or rebut the evidence
Aggrieved, respondent appealed to the National Labor Relations presented against him.
Commission (NLRC). On August 29, 2003, the NLRC rendered a (c) A written notice of termination served on the employee, indicating
Decision, the dispositive portion of which reads: that upon due consideration of all the circumstances, grounds have
WHEREFORE, the decision dated 16 September 2002 is MODIFIED been established to justify his termination. 13
in that respondent King of Kings Transport Inc. is hereby ordered to In case of termination, the foregoing notices shall be served on the
indemnify complainant in the amount of ten thousand pesos (P10,000) employee’s last known address.14
for failure to comply with due process prior to termination.
 50

To clarify, the following should be considered in terminating the SEC. 3. Employers covered.––The Decree shall apply to all employers
services of employees: except to:
(1) The first written notice to be served on the employees should xxxx
contain the specific causes or grounds for termination against them, e) Employers of those who are paid on purely commission, boundary,
and a directive that the employees are given the opportunity to submit or task basis, and those who are paid a fixed amount for performing a
their written explanation within a reasonable period. "Reasonable specific work, irrespective of the time consumed in the performance
opportunity" under the Omnibus Rules means every kind of assistance thereof, except where the workers are paid on piece-rate basis in which
that management must accord to the employees to enable them to case the employer shall be covered by this issuance insofar as such
prepare adequately for their defense.15 This should be construed as a workers are concerned.
period of at least five (5) calendar days from receipt of the notice to give Petitioner KKTI maintains that respondent was paid on purely
the employees an opportunity to study the accusation against them, commission basis; thus, the latter is not entitled to receive the 13th-
consult a union official or lawyer, gather data and evidence, and decide month pay benefit. However, applying the ruling in Philippine
on the defenses they will raise against the complaint. Moreover, in Agricultural Commercial and Industrial Workers Union v. NLRC,23 the
order to enable the employees to intelligently prepare their explanation CA held that respondent is entitled to the said benefit.
and defenses, the notice should contain a detailed narration of the facts It was erroneous for the CA to apply the case of Philippine Agricultural
and circumstances that will serve as basis for the charge against the Commercial and Industrial Workers Union. Notably in the said case, it
employees. A general description of the charge will not suffice. Lastly, was established that the drivers and conductors praying for 13th- month
the notice should specifically mention which company rules, if any, are pay were not paid purely on commission. Instead, they were receiving
violated and/or which among the grounds under Art. 282 is being a commission in addition to a fixed or guaranteed wage or salary. Thus,
charged against the employees. the Court held that bus drivers and conductors who are paid a fixed or
(2) After serving the first notice, the employers should schedule and guaranteed minimum wage in case their commission be less than the
conduct a hearing or conference wherein the employees will be given statutory minimum, and commissions only in case where they are over
the opportunity to: (1) explain and clarify their defenses to the charge and above the statutory minimum, are entitled to a 13th-month pay
against them; (2) present evidence in support of their defenses; and (3) equivalent to one-twelfth of their total earnings during the calendar year.
rebut the evidence presented against them by the management. During On the other hand, in his Complaint,24 respondent admitted that he was
the hearing or conference, the employees are given the chance to paid on commission only. Moreover, this fact is supported by his pay
defend themselves personally, with the assistance of a representative slips25 which indicated the varying amount of commissions he was
or counsel of their choice. Moreover, this conference or hearing could receiving each trip. Thus, he was excluded from receiving the 13th-
be used by the parties as an opportunity to come to an amicable month pay benefit.
settlement. WHEREFORE, the petition is PARTLY GRANTED and the September
(3) After determining that termination of employment is justified, the 16, 2004 Decision of the CA is MODIFIED by deleting the award of
employers shall serve the employees a written notice of termination backwages and 13th-month pay. Instead, petitioner KKTI is ordered to
indicating that: (1) all circumstances involving the charge against the indemnify respondent the amount of thirty thousand pesos (PhP 30,000)
employees have been considered; and (2) grounds have been as nominal damages for failure to comply with the due process
established to justify the severance of their employment. requirements in terminating the employment of respondent.
In the instant case, KKTI admits that it had failed to provide respondent No costs.
with a "charge sheet."16 However, it maintains that it had substantially SO ORDERED.
complied with the rules, claiming that "respondent would not have
issued a written explanation had he not been informed of the charges
against him."17
We are not convinced.
First, respondent was not issued a written notice charging him of G.R. No. 160233 August 8, 2007
committing an infraction. The law is clear on the matter. A verbal ROGELIO REYES, Petitioner,
appraisal of the charges against an employee does not comply with the vs.
first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,18 the Court NATIONAL LABOR RELATIONS COMMISSION, Fifth Division, and
held that consultations or conferences are not a substitute for the actual UNIVERSAL ROBINA CORPORATION GROCERY
observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. DIVISION, Respondents.
v. Mesano,19 the Court, sanctioning the employer for disregarding the DECISION
due process requirements, held that the employee’s written explanation YNARES-SANTIAGO, J.:
did not excuse the fact that there was a complete absence of the first This petition for review on certiorari under Rule 45 of the Rules of Court
notice. seeks to reverse the November 14, 2002 Decision1 of the Court of
Second, even assuming that petitioner KKTI was able to furnish Appeals in CA-G.R. SP No. 64799, affirming the Decision of the
respondent an Irregularity Report notifying him of his offense, such National Labor Relations Commission (NLRC) which modified the
would not comply with the requirements of the law. We observe from Decision of the Labor Arbiter as regards the awards of retirement pay
the irregularity reports against respondent for his other offenses that and 13th month pay, and deleted the award of attorney’s fees; as well
such contained merely a general description of the charges against him. as the August 19, 2003 Resolution2 denying the motion for
The reports did not even state a company rule or policy that the reconsideration.
employee had allegedly violated. Likewise, there is no mention of any Petitioner was employed as a salesman at private respondent’s
of the grounds for termination of employment under Art. 282 of the Grocery Division in Davao City on August 12, 1977. He was eventually
Labor Code. Thus, KKTI’s "standard" charge sheet is not sufficient appointed as unit manager of Sales Department-South Mindanao
notice to the employee. District, a position he held until his retirement on November 30,
Third, no hearing was conducted. Regardless of respondent’s written 1997.3 Thereafter, he received a letter regarding the computation of his
explanation, a hearing was still necessary in order for him to clarify and separation pay, to wit:
present evidence in support of his defense. Moreover, respondent September 10, 1998
made the letter merely to explain the circumstances relating to the MR. ROGELIO J. REYES
irregularity in his October 28, 2001 Conductor’s Trip Report. He was #2 San Nicolas Street
unaware that a dismissal proceeding was already being effected. Thus, Skyline Village, Catalunan Grande
he was surprised to receive the November 26, 2001 termination letter Davao City 8000
indicating as grounds, not only his October 28, 2001 infraction, but also Dear Mr. Reyes,
his previous infractions. This is in reply to your letter dated August 10, 1998, a copy of which
Sanction for Non-compliance with Due Process Requirements was received by the undersigned only on September 2, 1998.
As stated earlier, after a finding that petitioners failed to comply with the We wish to advise you that per our computation, your separation pay
due process requirements, the CA awarded full backwages in favor of amounts to:
respondent in accordance with the doctrine in Serrano v.
NLRC.20 However, the doctrine in Serrano had already been Retirement benefit (computed at 50% pay for
abandoned in Agabon v. NLRC by ruling that if the dismissal is done every year of service, a fraction of at least 6 Php 109,192.20
without due process, the employer should indemnify the employee with months considered as 1 year)
nominal damages.21
VL Cash Conversion (144 hours) 7,511.31
Thus, for non-compliance with the due process requirements in the
termination of respondent’s employment, petitioner KKTI is sanctioned SL Cash Conversion (120 hours) 3,129.72
to pay respondent the amount of thirty thousand pesos (PhP 30,000)
as damages. Financial Assistance (as approved by LY
Thirteenth (13th)-Month Pay Gokongwei in Memo dated November 4, 1997) 30,000.00
Section 3 of the Rules Implementing Presidential Decree No.
85122 provides the exceptions in the coverage of the payment of the
13th-month benefit. The provision states:
 51

Final Accountability/Accounting market transactions attributable to the claimant. Thus, as a unit

Tax Refund 16,699.35 manager who supervised the salesmen under his control and did not
13th Month Pay 10,919.22 enter into actual sale transactions, petitioner’s overriding commissions
Withheld Commission must not be considered in the computation of the retirement benefits
November 1997 30,000.00 and 13th month pay.15
Salary Overpaid ( 834.59) The petition lacks merit. Any seeming inconsistencies between
Lost Pager ( 6,295.00) 50,488.98 Philippine Duplicators and Boie-Takeda had been clarified by the Court
in the Resolution dated February 15, 1995 in the Philippine Duplicators
TOTAL Php 200,322.21 case.16
The Court thus clarified that in Philippine Duplicators, the salesmen’s
This computation is pursuant to Company policy and practice. We are
commissions, comprising a pre-determined percentage of the selling
unable to agree with your suggested basis of computation as they are
price of the goods sold by each salesman, were properly included in
without legal basis. Also, we regret that we cannot pay you the Sales
the term basic salary for purposes of computing the 13th month pay.
Commission and Tax Refund ahead of the other payments.
The salesmen’s commission are not overtime payments, nor profit-
Kindly get in touch with us at 671-7098 if you have any questions. sharing payments nor any other fringe benefit, 17 but a portion of the
Very truly yours, salary structure which represents an automatic increment to the
(SGD) ATTY. MANUEL R. DEL ROSARIO monetary value initially assigned to each unit of work rendered by a
Group Human Resources Director salesman.18
cc: Mr. Lance Gokongwei Contrarily, in Boie-Takeda, the so-called commissions paid to or
Atty. Danny Bolos received by medical representatives of Boie-Takeda Chemicals or by
Mr. Al Bacleon4 the rank and file employees of Philippine Fuji Xerox Co., were excluded
Insisting that his retirement benefits and 13th month pay must be based from the term basic salary because these were paid to the medical
on the average monthly salary of ₱42,766.19, which consists of representatives and rank-and-file employees as productivity bonuses,
₱10,919.22 basic salary and ₱31,846.97 average monthly commission, which are generally tied to the productivity, or capacity for revenue
petitioner refused to accept the check5 issued by private respondent in production, of a corporation and such bonuses closely resemble profit-
the amount of ₱200,322.21.6 Instead, he filed a complaint before the sharing payments and have no clear direct or necessary relation to the
arbitration branch of the NLRC for retirement benefits, 13th month pay, amount of work actually done by each individual employee. 19 Further,
tax refund, earned sick and vacation leaves, financial assistance, commissions paid by the Boie-Takeda Company to its medical
service incentive leave pay, damages and attorney’s fees. 7 representatives could not have been sales commissions in the same
On March 15, 1999, Labor Arbiter Miriam A. Libron-Barroso rendered sense that Philippine Duplicators paid the salesmen their sales
a decision holding that sales commission is part of the basic salary of commissions. Medical representatives are not salesmen; they do not
a unit manager, thus: effect any sale of any article at all.20
WHEREFORE, JUDGMENT IS HEREBY RENDERED ordering In fine, whether or not a commission forms part of the basic salary
respondent Universal Robina Corporation-Grocery Division to pay depends upon the circumstances or conditions for its payment, which
complainant the net amount of PESOS: NINE HUNDRED ELEVEN indubitably are factual in nature for they will require a re-examination
THOUSAND SIX HUNDRED NINETY NINE AND 92/100 (₱911,699.92) and calibration of the evidence on record. Thus, our review thereof in
representing his retirement benefits, 13th month pay for 1997, 13th the case at bar would violate the settled rule that findings of facts of
month pay differential for 1996 and 1995, VL and SL Cash conversion, quasi-judicial bodies like the NLRC, and affirmed by the Court of
withheld commission for 1997, financial assistance and tax refund plus Appeals in due course, are conclusive on this Court, which is not a trier
attorney’s fees equivalent to 5% of the total award. of facts.21 Nevertheless, should petitioner’s commissions be
All other claims are dismissed for lack of basis. considered in the computation of his retirement benefits and 13th
SO ORDERED.8 month pay?
On appeal, the NLRC modified the decision of the Labor Arbiter by We rule in the negative.
excluding the overriding commission in the computation of the Article 287 of the Labor Code, as amended by Republic Act No. 7641,
retirement benefits and 13th month pay and deleted the award of otherwise known as The New Retirement Law, 22 provides:
attorney’s fees, thus: Art. 287. Retirement. — Any employee may be retired upon reaching
WHEREFORE, judgment is rendered: the retirement age established in the collective bargaining agreement
1. Affirming with modification the decision appealed from or other applicable employment contract.
insofar as the award of retirement pay and 13th month pay to xxxx
the effect that same be computed based on the ₱10,919.22 In the absence of a retirement plan or agreement providing for
basic salary to the exclusion of the overriding commissions of retirement benefits of employees in the establishment, an employee
complainant. upon reaching the age of sixty (60) years or more, but not beyond sixty
2. Affirming in toto the award of VL cash conversion, SL cash five (65) years which is hereby declared the compulsory retirement age,
conversion, tax refund, withheld commission and financial who has served at least five (5) years in the said establishment, may
assistance. retire and shall be entitled to retirement pay equivalent to at least one
3. Deleting the award of attorney’s fees for lack of merit. half (1/2) month salary for every year of service, a fraction of at least
SO ORDERED.9 six (6) months being considered as one whole year.
Both parties moved for reconsideration of the NLRC decision but were Unless the parties provide for broader inclusions, the term one half (1/2)
denied by the NLRC for lack of merit. Only petitioner filed a petition for month salary shall mean fifteen (15) days plus one twelfth (1/12) of the
certiorari before the Court of Appeals but was dismissed for lack of 13th month pay and the cash equivalent of not more than five (5) days
merit. of service incentive leaves.
Petitioner’s motion for reconsideration was denied; hence this petition And, Section 5 of Rule II of the Rules Implementing the New Retirement
raising the sole issue: Law, provides:
WHETHER OR NOT THE AVERAGE MONTHLY SALES RULE II
COMMISSION OF THIRTY ONE THOUSAND EIGHT HUNDRED Retirement Benefits
FORTY SIX AND 97/100 (Php 31,846.97) SHOULD BE INCLUDED IN xxxx
THE COMPUTATION OF HIS RETIREMENT BENEFITS AND 13th Section 5. Retirement Benefits.
MONTH PAY.10 5.1 In the absence of an applicable agreement or retirement plan, an
Petitioner contends that the commissions form part of the basic salary, employee who retires pursuant to the Act shall be entitled to retirement
citing the case of Philippine Duplicators, Inc. v. National Labor pay equivalent to at least one-half (1/2) month salary for every year of
Relations Commission,11 wherein the Court held that commissions service, a fraction of at least six (6) months being considered as one
earned by salesmen form part of their basic salary.12 whole year.
Private respondent counters that petitioner knew that the overriding 5.2 Components of One-half (1/2) Month Salary. – For the purpose of
commission is not included in the basic salary because it had not been determining the minimum retirement pay due an employee under this
considered as such for a long time in the computation of the 13th month Rule, the term "one-half-month salary" shall include all the following:
pay, leave commissions, absences and tardiness. Petitioner himself (a) Fifteen (15) days salary of the employee based on his
stated in the complaint that his basic salary is ₱10,919.22, thus, he is latest salary rate. As used herein, the term "salary" includes
estopped from claiming otherwise. Moreover, in Boie-Takeda all remunerations paid by an employer to his employees for
Chemicals, Inc. v. De la Serna,13 the Supreme Court held that the fixed services rendered during normal working days and hours,
or guaranteed wage is patently "the basic salary" for this is what the whether such payments are fixed or ascertained on a time,
employee receives for a standard work period, and that commissions task, piece or commission basis, or other method of
are given for extra efforts exerted in consummating sales or other calculating the same, and includes the fair and reasonable
transactions. Also, in Soriano v. National Labor Relations value, as determined by the Secretary of Labor and
Commission,14 the Court clarified that overriding commission is not Employment, of food, lodging, or other facilities customarily
properly includible in the basic salary as it must be earned by actual furnished by the employer to his employees. The term does
not include cost of living allowance, profit-sharing payments
 52

and other monetary benefits which are not considered as part Under the Rules and Regulations Implementing Presidential Decree
of or integrated into the regular salary of the employees. 851, the following compensations are deemed not part of the basic
(b) The cash equivalent of not more than five (5) days of salary:
service incentive leave. a) Cost-of-living allowances granted pursuant to Presidential
(c) One-twelfth of the 13 month pay due the employee. Decree 525 and Letter of Instruction No. 174;
(d) All other benefits that the employer and employee may b) Profit sharing payments;
agree upon that should be included in the computation of the c) All allowances and monetary benefits which are not
employee’s retirement pay. (Emphasis supplied) considered or integrated as part of the regular basic salary of
The article provides for two types of retirement: (a) compulsory and (b) the employee at the time of the promulgation of the Decree
optional. The first takes place at age 65, while the second is primarily on December 16, 1975. (Emphasis supplied)
determined by the collective bargaining agreement or other Finally, considering that the computations, as well as the propriety of
employment contract or employer’s retirement plan. In the absence of the awards, are unquestionably factual issues that have been
any provision on optional retirement in a collective bargaining discussed and ruled upon by NLRC and affirmed by the Court of
agreement, other employment contract, or employer’s retirement plan, Appeals, we cannot depart from such findings. Findings of fact of
an employee may optionally retire upon reaching the age of 60 years administrative agencies and quasi-judicial bodies, which have acquired
or more, but not beyond 65 years, provided he has served at least five expertise because their jurisdiction is confined to specific matters, are
years in the establishment concerned. generally accorded not only respect, but finality when affirmed by the
For the purpose of computing retirement pay, "one-half month salary" Court of Appeals. Such findings deserve full respect and, without
shall include all of the following: justifiable reason, ought not to be altered, modified or reversed.26
1) 15 days salary based on the latest salary rate; WHEREFORE, the petition is DENIED. The November 14, 2002
2) cash equivalent of 5 days of service incentive leave (or Decision of the Court of Appeals in CA-G.R. SP No. 64799, affirming
vacation leave); the Decision of the National Labor Relations Commission, which
3) 1/12 of the 13th month pay; modified the Decision of the Labor Arbiter with respect to the awards of
4) other benefits as may be agreed upon by employer and retirement pay and 13th month pay, and deleted the award of attorney’s
employee for inclusion. fees is AFFIRMED in toto.
But, it shall not include the following: SO ORDERED.
1) cost of living allowance;
2) profit-sharing payments; and
3) other monetary benefits which are not considered as part
of or integrated into the regular salary of the employees (CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA
Petitioner filed for optional retirement upon reaching the age of 60. DE TARLAC LABOR UNION-NLU)
However, the basis in computing his retirement benefits is his latest
salary rate of ₱10,919.22 as the commissions he received are in the
form of profit-sharing payments specifically excluded by the foregoing
rules. E. SEPARATION PAY
As aptly observed by the Court of Appeals: G.R. No. 141464 September 21, 2005
In fine, Boie-Takeda and Philippine Duplicator particularize the types of GRANDSPAN DEVELOPMENT CORPORATION, Petitioner,
earnings and remuneration that should or should not properly be vs.
included or integrated in the basic salary and which questions are to be RICARDO BERNARDO, ANTONINO CEÑIDOZA and EDGARDO
resolved or determined on a case-to-case basis, in the light of the DEL PRADO, surviving parent of EDGAR DEL
specific and detailed facts of each case. In other words, when these PRADO, Respondent.
earnings and remuneration are closely akin to fringe benefits, overtime DECISION
pay or profit-sharing statements, they are properly excluded in SANDOVAL-GUTIERREZ, J.:
computing retirement pay. However, sales commissions which are Before us is a petition for review on certiorari under Rule 45 of the 1997
effectively an integral portion of the basic salary structure of an Rules of Civil Procedure, as amended, assailing the Decision 1 dated
employee, shall be included in determining the retirement pay. September 17, 1999 and Resolution2 dated January 6, 2000 rendered
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of by the Court of Appeals in CA-G.R. SP No. 50610, entitled "Ricardo
₱10,919.22 as salary corresponding to his position as Unit Manager. Bernardo, Antonino Ceñidoza and Edgardo Del Prado, as surviving
Thus, as correctly ruled by public respondent NLRC, the "overriding parent of Edgar Del Prado vs. National Labor Relations Commission,
commissions" paid to him by Universal Robina Corp. could not have Grandspan Development Corporation and Joaquin Narag doing
been ‘sales commissions’ in the same sense that Philippine Duplicators business under the name & style of J. Narag Construction."
paid its salesmen sales commissions. Unit Managers are not salesmen; The instant controversy stemmed from a complaint for illegal dismissal
they do not effect any sale of article at all. Therefore, any commission and non-payment of benefits filed with the Labor Arbiter by Ricardo
which they receive is certainly not the basic salary which measures the Bernardo, Antonino Ceñidoza and Edgar Del
standard or amount of work of complainant as Unit Manager. Prado, respondents, against Grandspan Development
Accordingly, the additional payments made to petitioner were not in fact Corporation, petitioner, and/or its warehouse manager, Manuel G. Lee,
sales commissions but rather partook of the nature of profit-sharing docketed as NLRC Case No. RAB-IV-11-4605-92-RI.
business. Certainly, from the foregoing, the doctrine in Boie-Takeda Respondents, in their complaint, alleged that sometime in 1990, they
Chemicals and Philippine Fuji Xerox Corporation, which pronounced were employed as truck scale monitors by petitioner with a daily salary
that commissions are additional pay that does not form part of the basic of ₱104.00 each. Eventually, they were assigned at its Truck Scale
salary, applies to the present case.23 Section of the Warehouse/Materials Department. They were issued
Aside from the fact that as unit manager petitioner did not enter into identification cards signed by Bonifacio Selmo, petitioner’s personnel
actual sale transactions, but merely supervised the salesmen under his manager. On October 28, 1992, petitioner sent them a notice
control, the disputed commissions were not regularly received by him. terminating their services effective October 29, 1992 for using profane
Only when the salesmen were able to collect from the sale transactions or offensive language, in violation of Article VI (2) (a) of the company’s
can petitioner receive the commissions. Conversely, if no collections Rules and Regulations.
were made by the salesmen, then petitioner would receive no Petitioner denied the allegations of respondents in their complaint,
commissions at all.24 In fine, the commissions which petitioner received claiming that they are employees of J. Narag Construction. Sometime
were not part of his salary structure but were profit-sharing payments in the third quarter of 1992, Canad Japan Co., Ltd. engaged petitioner’s
and had no clear, direct or necessary relation to the amount of work he services for fabrication works of several round and rectangular steel
actually performed. The collection made by the salesmen from the sale tanks needed for the HCMG or Sogo project due for completion in
transactions was the profit of private respondent from which petitioner September, 1992. As a consequence, petitioner subcontracted the
had a share in the form of a commission. services of J. Narag Construction which, in turn, assigned its 3 helpers
It may be argued that petitioner may have exerted efforts in pushing the (herein respondents) to work for petitioner’s project. Sometime in
salesmen to close more sale transactions; however, it is not the October, 1992, Manuel G. Lee, manager of petitioner’s Warehouse
criterion which would entitle him to a commission, but the actual sale Department received a report from supervisor Robert Ong that
transactions brought about by the individual efforts of the salesmen. respondents vandalized the company’s log book and chairs. This
Insofar as what constitutes "basic salary," the foregoing discussions prompted petitioner to send J. Narag Construction a memorandum
equally apply to the computation of petitioner’s 13th month pay. As held terminating the services of respondents for violation of the company’s
in San Miguel Corporation v. Inciong:25 Rules and Regulations.
Under Presidential Decree 851 and its implementing rules, the basic After the submission of the parties’ pleadings and position papers, the
salary of an employee is used as the basis in the determination of his Labor Arbiter rendered a Decision dated June 30, 1994 dismissing
13th-month pay. Any compensations or remunerations which are respondents’ complaint. In concluding that respondents were validly
deemed not part of the basic pay is excluded as basis in the dismissed from employment, the Labor Arbiter held that they were
computation of the mandatory bonus.
 53

project employees whose services were terminated upon completion of backwages and other benefits and privileges enjoyed by respondent
the project for which they were hired. Grandspan employees.
Upon appeal, the National Labor Relations Commission (NLRC) issued Private respondents Grandspan and J. Narag Construction are likewise
a Resolution dated March 7, 1995 remanding the case to the Labor ordered to pay petitioner Edgardo del Prado, surviving parent of Edgar
Arbiter for appropriate proceedings to determine whether there is an del Prado, the latter’s separation pay at the rate of one (1) month salary
employer-employee relationship between the parties. for every year of service rendered by the deceased.
Both parties filed their respective motions for reconsideration but were SO ORDERED."
denied by the NLRC in separate Resolutions dated April 28, 1995 and On October 8, 1999, petitioner filed a motion for reconsideration.
May 31, 1995. Respondents also filed a motion for reconsideration and/or clarification
Respondents then filed with this Court a petition for certiorari. Pursuant praying that the Appellate Court’s Decision be modified by awarding
to our ruling in St. Martin’s Funeral Home vs. NLRC,3 we referred the respondent Del Prado his backwages.
petition to the Court of Appeals for its appropriate action and disposition. On January 6, 2000, the Court of Appeals promulgated its Resolution
Meantime, respondent Del Prado died and was substituted by his denying petitioner’s motion for reconsideration but modifying its
surviving parent, Edgardo Del Prado. Decision in the sense that petitioner and J. Narag Construction are
On September 17, 1999, the Appellate Court rendered a Decision ordered to pay respondent Del Prado his separation pay and
setting aside the NLRC’s Resolutions and ordering petitioner (1) to backwages.
reinstate respondents Bernardo and Ceñidoza to their former positions Hence, this petition for review on certiorari.
and pay, jointly and severally with J. Narag Construction, their The issue for our resolution is whether the Court of Appeals erred in
backwages and other benefits, and (2) to pay respondent Del Prado his holding that respondents are employees of petitioner.
separation pay. Petitioner argues that it has no employer-employee relationship with
The Court of Appeals found that respondents are employees of respondents since they are employees of J. Narag Construction, an
petitioner; that they were non-project workers; and that they were independent contractor.
denied due process, thus: In Miguel vs. JCT Group, Inc.,4 we held:
"In the instant case, petitioners were assigned to the Truck Scaling "The test for determining an employer-employee relationship hinges on
Materials Department of Grandspan. They worked in Grandspan’s resolving who has the power to select employees, who pays for their
premises using the materials, supplies and equipment of Grandspan. wages, who has the power to dismiss them, and who exercises control
They were under the supervision of Grandspan as to the manner and in the methods and the results by which the work is accomplished."
results of their work, and performed services directly connected to the The Court of Appeals found that J. Narag Construction assigned
usual business of respondent Grandspan for the fabrication of heavy respondents to perform activities directly related to the main business
structural components. The memorandum dated 28 October 1992 (p. of petitioner. They worked in petitioner’s premises, using its equipment,
75 Rollo) dismissing the petitioners in fact emanated from Grandspan materials and supplies. J. Narag Construction’s payroll worksheets
Materials Manager Manuel G. Lee and is addressed to the Personnel covering the period from December 21, 1990 to July 31, 1991 show that
Department of Grandspan, albeit containing the self-serving claim that the payment of their salaries was approved by petitioner. The manager
the employees-petitioners were ‘J. Narag Construction personnel’. and supervisor of petitioner’s Warehouse Department supervised the
Under the circumstances, We rule that J. Narag was a labor-only manner and results of their work. It was petitioner who terminated their
contractor. While petitioners were in J. Narag Construction’s payroll, services after finding them guilty of using profane or offensive language
such fact does not per se establish J. Narag Construction as an in violation of Article VI (2) (a) of the company’s Rules and Regulations.
independent contractor, i.e., the employer of the petitioners. x x x. The Appellate Court then concluded that these circumstances confirm
xxxxxx the existence of an employer-employee relationship between petitioner
The Office of the Solicitor General opines that petitioners were non- and respondents.
project employees as they were assigned at Grandspan’s Materials We agree.
Department. We agree. Moreover, if petitioners were truly project Unswayed, petitioner insists that J. Narag Construction, being a
employees, private respondents should have presented proof that they legitimate independent contractor, is the employer of respondents. On
submitted to the nearest public employment office a report of this point, the Court of Appeals held that J. Narag Construction is a
termination of service of their project employees upon completion of the labor-only contractor.
construction project, as required by Policy Instruction No. 20. x x x. Article 106 of the Labor Code, as amended, provides in part:
Going now to the issue of whether or not petitioners were illegally "ART. 106. Contractor or subcontracting. – x x x.
dismissed, We rule in the affirmative. In the letter/memo dated 28
xxxxxx
October 1992 (Rollo, p. 75), by which Grandspan ostensibly requested
J. Narag to terminate petitioners’ contract immediately, the reason cited There is ‘labor-only’ contracting where the person supplying workers to
for the dismissal was violation of Article VI 2.a. of company Rules and an employer does not have substantial capital or investment in the form
Regulations (the use of profane or offensive languages addressed to of tools, equipment, machineries, work premises, among others, and
company officers) committed, according to the petitioners, through the the workers recruited and placed by such person are performing
vandalism of logbooks and office furniture at the Truck Scale Section activities which are directly related to the principal business of such
of the Warehouse/Materials Department with obscene drawings. x x x. employer. x x x."
However, this is not supported by substantial evidence which is On the basis of the records, we have no reason to deviate from the
necessary in order that petitioners may be dismissed for just cause. Appellate Court’s finding that J. Narag Construction is indeed a labor-
Considering that private respondent failed to discharge the burden of only contractor. These are the reasons: (1) it is not registered as a
proof reposed on it to show that the dismissal was justified, the building contractor with the SEC; (2) it has no contract with petitioner;
inevitable result is a finding that the dismissal was unjustified (Uy vs. and (3) there is no proof of its financial capability and has no list of
NLRC, 261 SCRA 505; Caurdanetaan Piece Workers Union vs. equipment, tools, machineries and implements used in the business.
Laguesma, 296 SCRA 401). Clearly, J. Narag Construction could not be respondents’ employer.
Moreover, petitioners were not given ample opportunity to prepare But petitioner maintains that respondents are project employees and
adequately for their defense, including legal representation (Abiera vs. as such, their services ended in September, 1992 upon completion of
NLRC, supra; Pangasinan III Electric Cooperative, Inc. vs. NLRC, 215 its HCMG or Sogo project.
SCRA 669), nor were they served notice of investigation, nor given an In Kiamco vs. NLRC,5 we held:
opportunity to be heard. This violates the requirement of notice and "The principal test for determining whether particular employees are
hearing in case of employee dismissal, thus petitioners’ dismissal was properly characterized as ‘project employees,’ as distinguished from
void (Abiera vs. NLRC, 202 SCRA 7; Falguera vs. Lansangan, 251 ‘regular employees,’ is whether or not the ‘project employees’ were
SCRA 364). assigned to carry out a ‘specific project or undertaking,’ the duration
As illegally dismissed employees, petitioners are protected by Article and scope of which were specified at the time the employees were
279 of the Labor Code, x x x. engaged for that project. As defined, project employees are those
In the case of petitioner Edgar del Prado, now deceased and workers hired (1) for a specific project or undertaking, and (2) the
represented in this petition by his surviving parent Edgardo del Prado, completion or termination of such project or undertaking has been
reinstatement is no longer possible, thus he should be paid separation determined at the time of engagement of the employee."
pay equivalent to one month salary for every year of service in addition Here, petitioner could not present employment contracts signed by
to backwages (International Phamaceuticals, Inc. vs. NLRC, 287 SCRA respondents showing that their employment was for the duration of the
228). HCMG or Sogo project.
WHEREFORE, finding merit in the petition, the same is GRANTED. Likewise, as correctly observed by the Court of Appeals, petitioner
The assailed NLRC resolutions dated 7 March 1995 and 28 April 1995 failed to present any report terminating the services of respondents
are ANNULLED and SET ASIDE. when its projects were actually finished.
Private respondent Grandspan is ordered to reinstate petitioners Section 2.2 (e) of the Labor Department Order No. 19 expressly
Ricardo Bernardo and Antonino Ceñidoza to their former positions provides that the report of termination is one of the indications of project
without loss of seniority rights. Grandspan and J. Narag Construction employment.6
are declared jointly and severally liable to pay said petitioners full
 54

Time and again, we held that failure of the employer to file termination supervisor Fiderlie Recide, they were not pacified, prompting Recide to
reports after every project completion with the nearest public call for security assistance. The two were then brought to the SM Food
employment office is an indication that respondents were Court Administration Office where they continued to cast tirades at
not project employees.7 each other notwithstanding the request of the SM Food Court Manager
We, therefore, uphold the finding of the Court of Appeals that to stop. Because they refused to be mollified, they were brought to the
respondents are petitioner’s regular employees. As such, they are Customer Relations Office for further investigation. As a result of the
entitled to security of tenure and can only be dismissed for a just or incident, the SM Food Court Manager banned the two from working
authorized cause, as provided by Article 279 of the Labor Code, as within the SM Food Court’s premises.
amended, thus: Respondent then filed with the Labor Arbiter a complaint for illegal
"ARTICLE 279. Security of Tenure. — In cases of regular employment, dismissal, salary differentials, service incentive leave, separation pay
the employer shall not terminate the services of an employee except and damages. It was dismissed by the Labor Arbiter for lack of merit in
for a just cause or when authorized by this Title. An employee who is a Decision dated December 4, 1998.1
unjustly dismissed from work shall be entitled to reinstatement without On appeal to the National Labor Relations Commission (NLRC), the
loss of seniority rights and other privileges and to his full backwages, Labor Arbiter’s decision was affirmed with the modification that
inclusive of allowances, and to his other benefits or their monetary respondent was awarded separation pay. The dispositive portion of
equivalent computed from the time his compensation was withheld from NLRC Decision dated September 30, 1999, reads:
him up to the time of his actual reinstatement." WHEREFORE, the foregoing premises considered, the Decision of the
In Bolinao Security and Investigation Service, Inc. vs. Toston 8, we Labor Arbiter is hereby AFFIRMED with the modification that the
emphasized that "it is incumbent upon the employer to prove by the respondents are hereby ordered to pay complainant her separation pay
quantum of evidence required by law that the dismissal of an employee equivalent to one (1) month salary per year of service, based on her
is not illegal, otherwise, the dismissal would be unjustified." last salary of P196.00/day and counted from 10 December 1984 until
Here, petitioner failed to discharge its burden. In terminating the finality of this Decision.
respondents’ services, it merely relied on the alleged completion of the SO ORDERED.2lavvphil.ne+
HCMG or Sogo project and on the report that respondents uttered This prompted petitioner to file a special civil action for certiorari with
profane or offensive language in violation of the company’s Rules and the Court of Appeals (CA), and in its Decision dated March 30, 2001, it
Regulations. As earlier mentioned, they are not project employees. And affirmed the NLRC’s decision and dismissed the petition for lack of
as found by the Court of Appeals, there is no evidence to substantiate merit.
the charge of uttering profane or offensive language. Hence, herein petition for review on certiorari under Rule 45 of the
It also appears that petitioner violated respondents’ right to due process. Rules of Court on the following grounds:
In Loadstar Shipping Co., Inc. vs. Mesano, 9 we held: THE PUBLIC RESPONDENT COURT OF APPEALS DEPARTED
"The law requires that an employee sought to be dismissed must be FROM ESTABLISHED JURISPRUDENCE AND ERRED AND
served two written notices before termination of his employment. The GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE NLRC
first notice is to apprise the employee of the particular acts or omissions AWARD TO PRIVATE RESPONDENT JOVY SORIA SEPARATION
by reason of which his dismissal has been decided upon; and the PAY EVEN AS HER DISMISSAL ON GROUNDS OF SERIOUS
second notice is to inform the employee of the employer’s decision to MISCONDUCT WAS SUSTAINED
dismiss him. Failure to comply with the requirement of two notices CORROLARY (sic) TO THIS GROUND THE LEGAL ISSUE RAISED
makes the dismissal illegal. The procedure is mandatory. Non- IS WHETHER AN AWARD OF SEPARATION PAY IS PROPER TO AN
observance thereof renders the dismissal of an employee illegal and EMPLOYEE WHO IS FOUND TO HAVE BEEN VALIDLY DISMISSED
void." ON THE GROUND OF SERIOUS MISCONDUCT 3
Records show that respondents were not served by petitioner with The sole issue in this case --- whether a validly dismissed employee
notices, verbal or written, informing them of the particular acts for which like respondent is entitled to an award of separation pay --- has already
their dismissal is sought. Neither were they required to give their side been squarely settled as early as 1988 in the leading case of Philippine
regarding the alleged serious misconduct imputed against them. Long Distance Telephone Co. vs. NLRC, 4 wherein it was stated, viz.:
We thus sustain the Court of Appeals ruling that respondents were We hold that henceforth separation pay shall be allowed as a measure
deprived of both their substantive and procedural rights to due of social justice only in those instances where the employee is validly
process and, therefore, the termination of their employment is illegal. dismissed for causes other than serious misconduct or those
Since respondents were illegally dismissed from work, they are entitled reflecting on his moral character. Where the reason for the valid
to reinstatement without loss of seniority rights, full backwages, dismissal is, for example, habitual intoxication or an offense involving
inclusive of allowances, and other benefits or their monetary moral turpitude, like theft or illicit sexual relations with a fellow worker,
equivalent computed from the time their compensation was withheld the employer may not be required to give the dismissed employee
from them up to the time of their actual reinstatement. 10 separation pay, or financial assistance, or whatever other name it is
However, the circumstances obtaining in this case do not warrant the called, on the ground of social justice. (Emphasis supplied)
reinstatement of respondents. Antagonism caused a severe strain in Separation pay therefore, depends on the cause of dismissal, and may
the parties’ employer-employee relationship. Thus, a more equitable be accordingly awarded provided that the dismissal does not fall under
disposition would be an award of separation pay equivalent to at least either of two circumstances: (1) there was serious misconduct, or (2)
one month pay, or one month pay for every year of service, whichever the dismissal reflected on the employee’s moral character. 5
is higher, (with a fraction of at least six (6) months being considered as The question that now arises in this case is whether the cause of
one (1) whole year),11 in addition to their full backwages, allowances respondent’s dismissal falls under the two circumstances, i.e., serious
and other benefits.12 misconduct or the dismissal reflected on the employee’s moral
Records show that respondents were employed by petitioner from 1990 character.lavvphil.ne+
to October 29, 1992, or for two (2) years, with a daily salary of ₱104.00 The Court holds that respondent’s cause of dismissal in this case
each, hence, entitled to a separation pay of ₱4,992.00. 13 amounts as a serious misconduct and as such, separation pay should
WHEREFORE, the assailed Decision dated September 17, 1999 and not have been awarded to her. Thus, the petition should be granted.
Resolution dated January 6, 2000 of the Court of Appeals in CA-G.R. Misconduct is improper or wrongful conduct. It is the transgression of
SP No. 50610 are hereby AFFIRMED with MODIFICATION in the some established and definite rule of action, a forbidden act, a
sense that petitioner is ordered to pay each respondent separation pay dereliction of duty, willful in character, and implies wrongful intent and
equivalent to ₱4,992.00, plus their respective full backwages, and other not mere error of judgment. To be a valid cause for termination, the
privileges and benefits, or their monetary equivalent, during the period misconduct must be serious.6
of their dismissal up to their supposed actual reinstatement. While it is true, as respondent contends, that the Labor Arbiter did not
Costs against petitioner. tag her cause of dismissal as serious misconduct, nevertheless, it is its
SO ORDERED. nature, not its label that characterizes the cause as serious misconduct.
There is no question as regards the incident that caused respondent’s
dismissal. While respondent’s co-worker Sumalague was eating at the
back of the store, respondent rushed toward Sumalague and hit the
latter on the face causing injuries. A scuffle ensued and despite their
G.R. No. 147719 January 27, 2006
supervisor Recide’s pleas, the two continued to fight, prompting Recide
HA YUAN RESTAURANT, Petitioner, to call the mall security. When the two were brought to the
vs. administration office, they continued bickering and did not heed the
NATIONAL LABOR RELATIONS COMMISSION and JUVY request of the manager to stop, and thus they were brought to the
SORIA, Respondents. Customer Relations Office. Because of the incident, the two were
DECISION banned from working within the premises. The fact that Sumalague
AUSTRIA-MARTINEZ, J.: sustained injuries is a matter that cannot be taken lightly. Moreover, the
Respondent Juvy Soria worked as a cashier in petitioner’s incident disturbed the peace in the work place, not to mention that
establishment located inside the SM Food Court Makati. On January respondent and Sumalague committed a breach of its
11, 1998, respondent assaulted her co-worker Ma. Teresa Sumalague discipline.7 Clearly, respondent committed serious misconduct within
resulting in a scuffle between the two. Despite the intervention of their
 55

the meaning of Art. 282 of the Labor Code, providing for the dismissal respondent was illegally dismissed from employment and ordering
of employees. petitioners (1) to reinstate her to her former position as executive
Her cause of dismissal amounting to a serious misconduct, respondent director without loss of seniority rights and other privileges; and (2) to
is not entitled to an award of separation pay. As further stated in pay her, jointly and severally, full backwages and other benefits,
Philippine Long Distance Telephone Co. vs. NLRC: damages and attorney's fee equivalent to 10% of the monetary awards,
The policy of social justice is not intended to countenance wrongdoing thus:
simply because it is committed by the underprivileged. At best it may WHEREFORE, premises considered, judgment is hereby
mitigate the penalty but it certainly will not condone the offense. rendered declaring the termination of complainant NORY A.
Compassion for the poor is an imperative of every humane society but JUANGCO illegal.
only when the recipient is not a rascal claiming an undeserved privilege. Accordingly, respondents AMKOR TECHNOLOGY PHILS.,
Social justice cannot be permitted to be refuge of scoundrels any more INC., MIKE PETRUCCI, DANNY D. FRANKLIN and
than can equity be an impediment to the punishment of the guilty. ROSEMARIE S. KATALBAS are ordered to jointly and
Those who invoke social justice may do so only if their hands are clean solidarily reinstate complainant NORY A. JUANGCO to her
and their motives blameless and not simply because they happen to be former executive position (Executive Director) without loss of
poor. This great policy of our Constitution is not meant for the protection earned seniority rights and other benefits and privileges with
of those who have proved they are not worthy of it, like the workers who full backwages from date of dismissal up to actual date of
have tainted the cause of labor with the blemishes of their own reinstatement in the total amount as of this
character.8 date P2,025,833.33 computed as follows:
WHEREFORE, the petition is GRANTED. The Court of Appeals Basic Salary:
Decision dated March 30, 2001 in CA-G.R. SP No. 58219 is MODIFIED 11/15/01 – 7/31/02
to the effect that the NLRC Decision dated September 30, 1999 is P220,000.00/mo. x 8.50 mos. = P1,870,000.00
AFFIRMED with MODIFICATION in that the award of separation pay in
favor of respondent Juvy Soria is DELETED. 13th month pay:
SO ORDERED. P1,870,000.00/12 = P 155,833.33
Total = P2,025,833.33
Respondents are further ordered to jointly and solidarily pay
complainant her performance bonuses and other benefits she
G.R. No. 166507 September 27, 2006 used to receive similarly granted to her co-executive officers.
AMKOR TECHNOLOGY PHILIPPINES, INC., ANTHONY MICHAEL Respondents are furthermore ordered to pay complainant
PETRUCCI and ROSEMARIE S. KATALBAS, petitioners, moral damages in the amount of Five Million Pesos
vs. (P5,000,000.00) and exemplary damages in the amount
NORY A. JUANGCO, respondent. of Three Million Pesos (P3,000,000.00), as well as attorney's
DECISION fees equivalent to ten percent (10%) of the entire award. The
SANDOVAL-GUTIERREZ, J.: amount already received by complainant shall be considered
Before us is a petition for review on certiorari under Rule 45 of the 1997 as partial/advance payment of the judgment award in the final
Rules of Civil Procedure, as amended, assailing the Decision 1 dated enforcement of the decision.
October 20, 2004 and Resolution2 dated December 20, 2004 rendered SO ORDERED.
by the Court of Appeals in CA-G.R. SP No. 76121, entitled "Nory A. On appeal, the National Labor Relations Commission (NLRC)
Juangco, petitioner, v. National Labor Relations Commission, Amkor promulgated its Decision dated October 1, 2002 reversing the Labor
Technology Philippines, Inc., Mike Petrucci, Danny D. Franklin And Arbiter's Decision and dismissing respondent's complaint.
Rosemarie S. Katalbas, respondents." Respondent then filed a motion for reconsideration, but was denied by
The instant controversy stemmed from a complaint for illegal dismissal, the NLRC in a Resolution dated December 26, 2002. Hence, she filed
damages and attorney's fees filed with the Labor Arbiter by Nory A. with the Court of Appeals a petition for certiorari with prayer for
Juangco, respondent, against Amkor Technology Philippines, Inc., issuance of a temporary restraining order and a writ of preliminary
Anthony Michael Petrucci, Danny D. Franklin and Rosemarie S. injunction.
Katalbas, petitioners, docketed as NLRC NCR Case No. 30-04-02141- On October 20, 2004, the appellate court rendered a Decision setting
02. aside the NLRC Decision and reinstating that of the Labor Arbiter, but
Respondent, in her complaint, alleged that sometime in September with modification in the sense that in lieu of reinstatement, respondent
1990, she was employed as production control senior supervisor by was awarded separation pay and a reduced moral and exemplary
Amkor Technology Philippines, Inc., petitioner company. Eventually, damages of P500,000.00 and P250,000.00, respectively.
she became a production control executive director with a monthly In disposing of the case, the Court of Appeals held:
salary of P220,000.00. During her employment, she received several The petition is impressed with merit.
merit increases and bonuses from petitioner company in recognition of xxxxxx
her exemplary performance. Sometime in October 2001, Tony Ng,
Notably, the notice of voluntary retirement and the 'Receipt,
respondent's immediate superior, resigned and was replaced by
Release, Waiver and Quitclaim' partake the nature of a
Anthony Michael Petrucci, petitioner, as president. The new
contract of adhesion, such that the petitioner had no hand in
management implemented several drastic changes in the existing
the preparation of these documents. Since a contract of
corporate policies and the composition of the corporate management
adhesion is unilaterally prepared by only one party, and the
team. During an emergency meeting on November 15, 2001,
only thing left to be done by the other party is to affix his/her
petitioners informed her of a staff reorganization and she realized her
signature, any ambiguity in its provisions or any question as
services were being terminated effective immediately. Petitioners
to the voluntariness of its execution should be generally
directed her to sign a document setting forth the conditions of her
resolved against the party who drafted the document
alleged voluntary retirement, such as: (1) payment, on a staggered
(Magellan Capital Management Corporation vs. Zosa, 355
basis, of separation benefits at the rate of 11/4 months basic salary per
SCRA 157 [2001]).
year of service and additional two months basic salary in lieu of the
one-month notice requirement; and (2) forfeiture of such separation Since petitioner claims that she was merely coerced into
benefits in case of violation of company rules and regulations on signing the subject documents, the voluntariness of the
confidentiality and disruption of operations. Thereafter, she was execution thereof is squarely at issue and petitioner's claim
ordered to leave the company. On November 21, 2001, after having was correctly given due course by the labor arbiter (JMM
been paid her separation benefits, she was forced to sign a "Release Promotions and Management, Inc. vs. Court of Appeals, 390
and Quitclaim." SCRA 223 [2002]). Notably, the labor arbiter did not only find
that private respondents failed to prove the voluntariness of
Petitioners denied respondent's allegations in her complaint. They
the execution of said documents, but it also found that private
claimed that as a result of the economic slowdown then experienced in
respondents' copy of the 'Receipt and Release, Waiver and
this country, they contemplated to implement cost-cutting measures.
Quitclaim' contained insertions which were not found in
Several meetings were conducted by petitioners to discuss the
petitioner's copy.
company retrenchment program. Respondent voluntarily submitted
herself for retrenchment and then tendered her resignation letter. xxxxxx
Respondent, having rendered eleven (11) years of service, was paid Despite the foregoing considerations, public respondent
by petitioners P3,704,517.98 representing her separation benefits at NLRC reversed the labor arbiter's finding of illegal dismissal
the rate of 11/4 months basic salary per year of service. Additionally, she and relied heavily on the affidavits of 'ATP Staff members'
received her two months salary, leave credits, 13th month pay, and stating that petitioner volunteered herself to be included in the
coop receivable. And after having been paid her separation benefits, retirement program and therefore was not coerced to sign the
she executed and signed, on November 22, 2001, a Release and notice of voluntary retirement and the quitclaim. Pitted against
Quitclaim. the foregoing circumstances showing the coercion employed
After the submission of the parties' pleadings and position papers, the upon petitioner, the affidavits deserve no weight and
Labor Arbiter rendered a Decision dated July 31, 2002 holding that credence for they were executed by the executives employed
 56

with private respondent AMKOR and are therefore self- But still, petitioners insist that since respondent already received her
serving. separation benefits, she can no longer claim that they coerced her to
That petitioner had already accepted her separation pay, is of retire. On this point, the Court of Appeals ruled that employees who
no moment and did not estop her from questioning the legality receive their separation pay are not barred from contesting the legality
of her dismissal. x x x. That petitioner executed the waiver of their dismissal from the service and their acceptance of those
only on November 21, 2001, or after six (6) days from the benefits would not amount to estoppel. We agree. Otherwise,
signing of the notice of voluntary retirement, does not detract employees who have been forced to resign and accept their separation
from the fact that petitioner was merely forced to resign and pay can no longer resort to legal remedies.
the waiver was an afterthought of private respondents to Thus, we sustain the ruling of the Court of Appeals that respondent did
camouflage their misdeeds, as correctly noted by the labor not voluntarily retire; she was forced to retire, tantamount to illegal
arbiter. dismissal. And as correctly pointed out by the same court, it is
There was therefore, no basis at all for public respondent "impracticable" to reinstate respondent to her former position. In lieu
NLRC's reversal of the labor arbiter's finding of illegal thereof, respondent is entitled to an award of separation pay, plus her
dismissal. As a consequence of petitioner's illegal dismissal, full backwages and other privileges and benefits, or their monetary
she is entitled to reinstatement and all other privileges equivalent, during the period of her dismissal up to her supposed actual
withheld from her from the time of her dismissal up to the time reinstatement. Since she had been paid P3,704,517.98 as separation
of reinstatement. This is in consonance with Article 279 of the benefits, this amount should be deducted from the total monetary
Labor Code, which provides that an employee who is unjustly award due her.
dismissed is entitled to reinstatement (Rodriguez , Jr. vs. We observe that respondent failed to prove she is entitled to moral and
National Labor Relations Commission, 393 SCRA 511 exemplary damages. Thus, these awards should be deleted.
[2002]). WHEREFORE, we DENY the petition. The assailed Decision dated
However, it is undeniable that the strained relations between October 20, 2004 and Resolution dated December 20, 2004 of the
the parties render it impracticable to reinstate petitioner who Court of Appeals in CA-G.R. SP No. 76121 are AFFIRMED with
holds a key position as she has a hand in the operations of MODIFICATION in the sense that the awards for moral and exemplary
private respondent AMKOR. The award of separation pay in damages are DELETED. Costs against petitioners.
lieu of reinstatement is more appropriate. Thus, separation SO ORDERED.
pay equivalent to one (1) month salary for every year of
service should be awarded in lieu of reinstatement (Hantex
Trading Co., Inc. vs. Court of Appeals, 390 SCRA 181 [2002]).
Moreover, the labor arbiter's award of moral damages G.R. No. 154532 October 27, 2006
of P5,000,000.00 and exemplary damages of P3,000,000.00
PETRON CORPORATION AND PETER C. MALIGRO, petitioners,
is excessive under the attendant circumstances. It is
vs.
doctrinally settled that the power of the courts to grant
NATIONAL LABOR RELATIONS COMMISSION AND CHITO S.
damages and attorney's fees demands factual, legal and
MANTOS, respondents.
equitable justification (Ranola vs. Court of Appeals, 322
SCRA 1 [2000]). The Court therefore resolves to reasonably DECISION
reduce the same, and taking into account the circumstances GARCIA, J.:
of the case (Asia Pacific Chartering Phils., Inc. vs. Farolan, Assailed and sought to be set aside in this petition for review under
393 SCRA 454 [2002]), including the social and financial Rule 45 of the Rules of Court is the Resolution dated November 26,
position of petitioner, private respondents are ordered to pay 20011 of the Court of Appeals (CA) in CA-G.R. SP No. 67702,
petitioner moral damages in the amount of Five Hundred dismissing the petition for certiorari thereat filed by the herein
Thousand Pesos (P500,000.00) and exemplary damages in petitioners on the ground that the Verification and Certification on Non-
the amount of Two Hundred Fifty Thousand Pesos Forum Shopping was defective because co-petitioner Peter C. Maligro
(P250,000.00). was not a signatory thereto, as reiterated in its subsequent Resolution
WHEREFORE, the present petition is GRANTED. The of July 16, 2002,2 denying the petitioners' motion for reconsideration.
assailed Decision dated October 1, 2002 and Resolution The facts:
dated December 26, 2002 of public respondent NLRC are Petitioner Petron Corporation (Petron), a corporation duly organized
SET ASIDE and the Decision dated July 31, 2002 of the Labor and existing under the laws of the Philippines, is engaged in the refining,
Arbiter is REINSTATED, with MODIFICATION that in lieu of sale and distribution of petroleum and other related products, while its
reinstatement, petitioner Nory A. Juangco is awarded co-petitioner Peter C. Maligro was the former Visayas Operations
separation pay equivalent to one (1) month salary for every Assistant Manager of Petron's Visayas-Mindanao District Office at
year of service, and the amount of moral damages and Lahug, Cebu City.
exemplary damages awarded to petitioner is hereby reduced On May 15, 1990, Petron, through its Cebu District Office, hired the
to Five Hundred Thousand Pesos (P500,000.00) and Two herein private respondent Chito S. Mantos, an Industrial Engineer, as
Hundred Fifty Thousand Pesos (P250,000.00), respectively. a managerial, professional and technical employee with initial
SO ORDERED. designation as a Bulk Plant Engineering Trainee. He attained regular
On November 4, 2004, petitioners filed a motion for reconsideration, employment status on November 15, 1990 and was later on designated
but was denied by the appellate court in a Resolution dated December as a Bulk Plant Relief Supervisor, remaining as such for the next five
20, 2004. years while being assigned to the different plants and offices of Petron
Hence, this petition for review on certiorari. within the Visayas area.
Petitioners contend that the Court of Appeals seriously erred (1) in It was while assigned at Petron's Cebu District Office with petitioner
holding that respondent was illegally dismissed; and (2) in finding that Peter Maligro as his immediate superior, when Mantos, thru a Notice of
respondent is entitled to an award of separation pay, backwages, Disciplinary Action dated October 29, 1996, 3 a copy of which was
damages and attorney's fee. received by him on November 18, 1996,4 was suspended for 30 days
The basic issue for our resolution is whether respondent was illegally from November 1 to 30, 1996 for violating company rules and
dismissed from employment. regulations regarding Absence Without Leave (AWOL), not having
reported for work during the period August 5 to 27, 1996.
The Court of Appeals found that respondent's "notice of voluntary
retirement" and the "Receipt, Release, Waiver, and Quitclaim" were Subsequently, in a notice Termination of Services bearing date
already prepared when respondent signed the same. Hence, any November 20, 19965 and received by him on November 25,
question as to the validity of their execution should be generally 1996,6 Mantos' services were altogether terminated effective
resolved against petitioners who obviously drafted those documents. December 1, 1996, by reason of his continued absences from August
28, 1996 onwards, as well as for Insubordination/Discourtesy for
Petitioners merely offered in evidence the affidavits of their executives
making false accusations against his superior.
stating that respondent volunteered to be included in petitioner
company's retirement program. Considering that these executives are Meanwhile, on November 8, 1996, contending that he has been
petitioners' personnel, the Court of Appeals is correct in concluding that constructively dismissed as of August 5, 1996, Mantos filed with the
their affidavits are self-serving and, therefore, not credible. National Labor Relations Commission, Regional Arbitration Branch
(NLRC-RAB), Cebu City, a complaint for illegal dismissal and other
Moreover, the fact that respondent filed a complaint for illegal dismissal
monetary claims against Petron and/or Peter C. Maligro. The case was
from employment against petitioners completely negates their claim
docketed as NLRC RAB-VII Case No. 11-1439-96.
that she voluntarily retired.
In his complaint, Mantos made the following allegations:
In Molave Tours Corporation v. National Labor Relations
Commission,3 we held: xxx He had an unblemished record in his service with [Petron].
Intrigues and professional jealousies, however, have
By vigorously pursuing the litigation of his action against
prevailed over the work atmosphere in [Petron]. This became
petitioner, private respondent clearly manifested that he has
more particularly true in regard to his close relationship with
no intention of relinquishing his employment, which act is
Jaime "Boy" Tamayo, then the VISMIN Operations Manager
wholly incompatible to petitioner's assertion that he voluntarily
who later left the company to migrate to Canada. His
resigned.
 57

closeness to Tamayo has caused problems with his It is an established fact that for his absences from August 5
relationship with Peter Maligro, Visayas Operations Assistant to August 27, 1996, complainant was imposed the penalty of
Manager, who has been after his neck for sometime. suspension for thirty (30) days from November 1 to 30, 1996
Maligro's hatred on him became evident when he was per the letter of respondent Maligro to complainant dated
assigned to Nasipit Bulk Plant at Nasipit, Agusan del Norte October 29, 1996 (Annex "D"). From respondents' Annex "6"
for two (2) months or so. He was deprived of his which is a memorandum of November 19, 1996 containing
usual P1,000.00 a day per diem. He was also deprived of the the report of the Investigation Committee it is shown therein
usual facilities such as the service vehicle and the use and that the summons in this case was received by respondents
access to lighterage services. on November 14, 1996. The following day, November 15,
Because of the tremendous work pressure, he availed and 1996, the Committee met to determine the factual basis of the
was granted a vacation leave in March 1996. Before he charges of absence without leave and insubordination
reported back to work he was summoned to the office of Peter against complainant. The Committee was convened seven (7)
Paul Shotwell. There, he was advised by [Petron's] officers to days after the filing of the complaint herein on November 8,
resign from [Petron] as they were instructed by superiors that 1996.
he should quit as they no longer liked him. Failing to convince We find that the foregoing factual milieu militates badly
him he was later offered to avail of [Petron's] early retirement against the cause for the respondents. It appears that the
program dubbed as "Manpower Reduction Program" or MRP. Investigation Committee was belatedly constituted as an
Thereafter he was advised to avail of his remaining vacation afterthought after the respondents received the summons in
leave while they process his MRP papers. After his vacation, this case. For his AWOL, complainant was already sufficiently
he was no longer allowed to report back at his assignment at penalized by suspension for thirty (30) days, the maximum
Mactan Aviation Facilities but directly to Maligro at the Cebu penalty authorized by law. In fact, complainant was still
District Office. While being designated as Operations serving his suspension when the Committee was convened
Engineer, he was assigned only menial tasks such as and issued the memorandum of November 19, 1996
recopying errands, digging up files, drafting and redrafting recommending his dismissal for AWOL and insubordination.
memoranda and other mere clerical works. On August 5, The insubordination aspect stemmed from complainant's
1996, Maligro bad-mouthed him in the presence of his co- accusation in his complaint for constructive dismissal and
employees for alleged dissatisfaction of his work as a mere withholding of his stock certificates. The imposition of the
clerk. What [Petron and Maligro] have done to him amounts penalty of dismissal smacks of a desire to get even for
to constructive dismissal. Hence, his complaint. 7 (Words in complainant's filing of a complaint against the respondents.
brackets supplied.) Anyway, the penalty of dismissal was too harshly and
For their part, Petron and Maligro averred that Mantos was dismissed [d]isproportionately imposed on the complainant considering
for just and valid causes effective December 1, 1996, asserting that: his length of service.
xxx complainant [Mantos] incurred absences without leave Furthermore, there is in an (sic) unrebutted evidence for the
(AWOL) on August 5 to 27, 1996 inclusive. He failed to complainant that earlier while being assigned directly under
comply with the instruction of a superior for him to report for respondent Maligro at the Cebu District Office, with the
work at the Cebu City District office and to submit a formal designation as Operations Engineer, he was assigned only
explanation of his AWOL. From August 28, 1996, up to the menial tasks like recopying errands, digging up files, drafting
filing of respondents' position paper, complainant has not and redrafting memoranda and other clerical works.
reported for work but continued to receive the salary for the We find that respondents' act was tantamount to constructive
months of August, September and October 2, 1996. An dismissal xxx Under such circumstances, the continuance of
investigation was conducted on September 2, 1996 but complainant's employment with respondent corporation has
complainant failed to appear. Instead he sent two (2) letters been rendered impossible, unreasonable and unlikely. There
thru his counsel accusing respondent Maligro of certain acts exists also a demotion in rank.
humiliating and prejudicing him. After a series of hearings, xxx xxx xxx
[Petron's] Investigation Committee in a report and We find therefore that complainant was illegally dismissed
recommendation of November 19, 1996, recommended that from the service. He should have been reinstated to his
after a 30-day suspension, complainant should be subjected former position without loss of seniority rights. We find
to a more severe penalty. Hence, they deny complainant's however, that the filing of this complaint has spawned
claims. 8 strained relationship between the parties. Hence,
In a decision dated June 30, 1998, Labor Arbiter Dominador A. reinstatement is no longer practical and feasible. Instead
Almirante declared Mantos to have been constructively dismissed but complainant should be awarded his separation pay
ruled that only Petron could be held liable to him for separation pay in equivalent to one (1) month pay per year of service. He is not
lieu of reinstatement and the cash equivalent of his certificate of stocks, however entitled to backwages. He is not completely free
less his personal accountabilities. More specifically, the decision from blame in his separation from the service. He committed
dispositively states: absences without leave. xxx
WHEREFORE, foregoing premises considered, judgment is xxx xxx xxx
hereby rendered ordering the respondent Petron Corporation Complainant is also entitled to the cash equivalent of his
VISMIN District Office to pay complainant the amount of One certificate of stocks admitted in respondent's Exhibit "7" to
Hundred Two thousand Nine Hundred Twenty-Eight Pesos be P66,600.00. From the total award shall be deducted the
and 41/100 (P102,928.41) representing the separation pay amount of P56,191.59 complainant's outstanding account to
for his six (6) years of service at P15,420.00 a month, the respondent.
cash equivalent of his certificate of stocks minus his The rest of the claims are hereby ordered dismissed for lack
outstanding account, computed as follows: of merit not having been substantiated by clear and
a. Separation convincing evidence. Respondent Peter C. Maligro is hereby
Pay: absolved from any liability hereof there being no showing that
P15,420.00 he acted in bad faith and in excess of his authority in dealing
x 6 years - P 92, 520.00 with the complainant. 10
Both dissatisfied, the parties questioned the aforementioned Labor
Arbiter's decision: Petron and Maligro, by way of an appeal to the NLRC
b. Cash
at Cebu City, accompanied by a P102, 928.41 surety bond in favor of
equivalent of
Mantos; and the latter, by a motion for reconsideration which the NLRC
certificate of
eventually treated as an appeal.
stocks - P 66,600.00
On July 31, 2000, the NLRC reversed the findings of the Labor Arbiter
regarding Mantos' constructive dismissal as of November 1, 1996 and
considered him to have been illegally dismissed only on December 1,
Total P159,120.00 1996. In the same decision, the NLRC adjudged Maligro solidarily liable
with Petron, and accordingly modified the Labor Arbiter's decision as
follows:
Minus - P 56, 191.59 WHEREFORE, the questioned Decision is MODIFIED in that
complainant was illegally suspended from November 1-30,
P102, 1996 and was ILLEGALLY DISMISSED on December 1,
Net Award 928.41 1996, accordingly and as discussed, he should be paid
separation pay based on his one month salary (P15,420.00)
SO ORDERED. 9 per year of service computed until the month of promulgation
Explains the Labor Arbiter in his decision: (July, 2000) of this Decision. In addition, complainant is
 58

entitled to full backwages from November 1, 1996 until July, MERELY BECAUSE ITS CHAIRMAN WAS
2000. MANTOS' SUPERIOR, DESPITE CONTRARY
The finding below of cash equivalent of certificate of stocks in EVIDENCE ON RECORD.
the amount of P66,600.00 is deleted. The accountability of 5. THAT PETITIONER PETER C. MALIGRO IS
complainant in the amount of P56,191.59 shall be deleted SOLIDARILY LIABLE WITH PETITIONER
from his total awards. PETRON CORPORATION FOR THE LATTER'S
Complainant is likewise entitled to ten percent (10%) of the ALLEGED LIABILITY TO MANTOS
total awards by way of attorney's fees. NOTWITHSTANDING THE ABSENCE OF
The foregoing liabilities are solidary against respondents EVIDENCE INDICATING THAT MALIGRO ACTED
Petron Corporation and Peter C. Maligro. WITH BAD FAITH AGAINST MANTOS.
SO ORDERED.11 6. THAT PRIVATE RESPONDENT IS ENTITLED
Justifying its decision, the NLRC explained that Mantos failed to prove TO AWARD OF FULL BACKWAGES FROM 1
that he had to quit his job on August 5, 1996 because his continued NOVEMBER 1996 UNTIL JULY 2000 AND TO THE
employment was rendered impossible, unbearable and unlikely. On the OTHER MONETARY AWARDS MADE BY THE
other hand, Petron and Maligro did not observe the requisite procedural NLRC.
due process considering that (1) the alleged Notice of Violation of In his Comment,14 the private respondent avers, among others, that the
Company Rules and Regulations dated August 27, 1996 which petitioners' petition for certiorari in CA-G.R. SP No. 67702 cannot alter
preceded the suspension of Mantos was not received by the latter; and the factual findings of the Labor Arbiter as affirmed by the NLRC. He
(2) no separate notice for the two new charges of Absence Without argues that the sole office of a writ of certiorari is to correct jurisdictional
Leave (AWOL) starting August 28, 1996 and errors including grave abuse of discretion amounting to lack or excess
Insubordination/Discourtesy for making false accusations against his of jurisdiction, and does not include correction of the NLRC's evaluation
superior, were sent to Mantos prior to the Notice of Termination dated of the evidence, whose factual findings are generally accorded not only
November 20, 1996 based on the report/recommendation dated great respect but even finality.
November 19, 1996 of the Investigation Committee. Furthermore, the The petition is partly meritorious.
Commission noted that on the day after Petron and Maligro received Concededly, the fact that only Petron, minus its co-petitioner Peter C.
the summons with respect to Mantos' complaint with the NLRC-RAB, Maligro, executed and signed the Verification and Certification on Non-
the Investigation Committee was immediately convened regarding Forum Shopping,15 attached to the petition for certiorari in CA-G.R. SP
Mantos' continued absences beginning August 28, 1996 with Maligro No. 67702, is a cause for the dismissal of that petition, conformably with
himself being a member of said committee. Section 5, Rule 7 of the Rules of Court which expressly requires that
With their motion for reconsideration having been denied by the NLRC the certification against forum shopping must have to be certified under
in its Resolution of August 31, 2001,12 the petitioners elevated the case oath by "the plaintiff or principal party," and failure to comply therewith
via certiorari to the CA in CA-G.R. SP No. 67702. shall cause the dismissal of the action. 16
As stated at the threshold hereof, the CA, in its assailed Resolution of Be that as it may, we hold that the CA erred in outrightly dismissing CA-
November 26, 2001, outrightly dismissed the petition for being G.R. SP No. 67702 solely on the ground that therein co-petitioner Peter
defective in form because only petitioner Petron signed the verification Maligro failed to equally sign the verification and certification on non-
and certification on non-forum shopping without its co-petitioner Peter forum shopping.
Maligro likewise signing the same. It must be remembered that the petitioners in CA-G.R. SP No.
Their motion for reconsideration having been denied by the CA in its 67702 are Petron and its operations assistant manager, Peter Maligro.
second impugned Resolution of July 16, 2002, the petitioners are now Evidently, Maligro was included in the complaint filed by Mantos in
with us via the present recourse on the following grounds: 13 NLRC RAB-VII Case No. 11-1439-96 in Maligro's capacity as Petron's
A. THE COURT OF APPEALS ERRED IN DISMISSING corporate officer. Maligro has no separate and distinct personality from
PETITIONERS' PETITION FOR CERTIORARI ON THE that of Petron, undoubtedly the direct employer of Mantos against
GROUND THAT THE SAME FAILED TO COMPLY WITH which any award in the latter's favor is enforceable. With Petron being
THE RULE ON CERTIFICATION ON NON-FORUM the real party-in interest in that case and not Maligro, the latter's failure
SHOPPING CONSIDERING THAT: to equally sign the verification and certification on non-forum shopping
1. THERE WAS SUBSTANTIAL COMPLIANCE BY should not have merited the CA's outright dismissal of
PETITIONERS WITH THE REQUIREMENTS ON the certiorari petition in CA-G.R. SP No. 67702.
CERTIFICATION OF NON-FORUM SHOPPING. In outrightly dismissing the petition, the CA relied on Loquias v. Office
2. THERE WAS A REASONABLE CAUSE FOR of the Ombudsman.17 The appellate court's reliance on that case is
PETITIONER MALIGRO'S FAILURE TO ATTACH misplaced. For, in the subsequent case of Micro Sales Operation
A VERIFICATION/CERTIFICATION OF NON- Network and Willy Bendol v. NLRC, et. al., 18 wherein the CA based its
FORUM SHOPPING. dismissal of the therein similarly defective petition for certiorari on the
B. THE OUTRIGHT DISMISSAL OF THE PETITION BY THE strength of Loquias, this Court ruled:
COURT OF APPEALS WOULD DEFEAT SUBSTANTIAL The Court of Appeals relied on Loquias v. Office of the
JUSTICE CONSIDERING THAT THE NLRC COMMITTED Ombudsman, which held that a certification on non-forum
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK shopping signed by only one of two or more petitioners is
OR EXCESS OF JURISDICTION IN FINDING THAT: defective, unless he was duly authorized by his co-petitioner.
1. PRIVATE RESPONDENT'S COMPLAINT FOR However, the said ruling applies when the co-parties are
ILLEGAL DISMISSAL WAS NOT FILED AS A being sued in their individual capacities. Note that the
MALICIOUS SCHEME AGAINST PETITIONERS, petitioners in Loquias are the mayor, vice-mayor, and three
DESPITE OVERWHELMING EVIDENCE ON members of the municipal board of San Miguel, Zamboanga
RECORD. del Sur. The said co-parties were charged with violation of
Republic Act No. 3019 15 in their various capacities.
2. PETITIONERS DISMISSED PRIVATE
RESPONDENT MANTOS WITHOUT OBSERVING In the instant case, the petitioners are the company and
THE REQUISITE PROCEDURAL DUE PROCESS its operations manager, Willy Bendol. The latter was
BECAUSE PETITIONERS ALLEGEDLY DID NOT impleaded simply because he was a co-respondent in the
PROVE THAT MANTOS RECEIVED THE NOTICE illegal dismissal complaint. He has no interest in this
OF VIOLATION OF COMPANY RULES DATED 27 case separate and distinct from the company, which was
AUGUST 1996 AS WELL AS THE TWO the direct employer of private respondents. Any award of
TELEGRAMS REQUIRING MANTOS TO REPORT reinstatement, backwages, and attorney's fees in favor of
FOR WORK, CONTRARY TO SUBSTANTIAL private respondents will be enforced against the
EVIDENCE ON RECORD. company as the real party in interest in an illegal
dismissal case. Petitioner Bendol is clearly a mere
3. THAT PETITIONERS DISMISSED MANTOS
nominal party in the case. His failure to sign the
WITHOUT OBSERVING THE REQUISITE
verification and certification on non-forum shopping is
PROCEDURAL DUE PROCESS BECAUSE
not a ground for the dismissal of the petition. The
PETITIONERS ALLEGEDLY DID NOT SEND A
appellate court erred in dismissing outright petitioners'
NOTICE OF VIOLATION OF COMPANY RULES
special civil action for certiorari solely on that ground.
TO PRIVATE RESPONDENT FOR THE
(Emphasis supplied.)
OFFENSES THAT HE COMMITTED FOR THE
SECOND TIME, DESPITE CONTRARY In any event, considering that Maligro derives his standing or
EVIDENCE ON RECORD. personality in the case from Petron, the certification on non-forum
shopping executed and signed only by the corporation benefited
4. THAT PETITIONERS DID NOT SHOW HOW
Maligro such that the attachment of said certification to the petition
THE INVESTIGATION COMMITTEE THAT
in CA-G.R. SP No. 67702 should be deemed substantial compliance
INVESTIGATED MANTOS' VIOLATIONS OF
with the rule on certification on non-forum shopping.
COMPANY RULES WAS CREATED AND THAT
THE SAME WAS BIASED AGAINST MANTOS
 59

We have, therefore, opted to give due course to the present petition. investigation on September 2, 1996; and (2) the Notice dated
And realizing that a remand of this case to the CA would only entail November 12, 1996 on the second set of charges of AWOL starting
further delay in the proceedings, we deemed it prudent to resolve the August 28, 1996 and Insubordination/Discourtesy for allegedly making
controversy to finally put it to a rest. false accusations against his superior with notice of the investigation
In the review of NLRC decisions through the special civil action on November 15, 1996.
of certiorari, resolution is confined only to issues of jurisdiction and As borne by the records, it was only in their motion for reconsideration
grave abuse of discretion on the part of the labor tribunal. The Court of the NLRC decision that the petitioners proffered the delivery records
refrains from reviewing factual assessments of lower courts and of a private courier to show that the aforementioned notices, as well as
agencies exercising adjudicative functions, such as the NLRC. 19 two alleged telegrams requiring the private respondent to report for
Here, however, we are constrained to make a review of the records and work,28 were in fact sent to the latter. But, a perusal of said delivery
a re-examination of the questioned NLRC findings to arrive at a records does not bear the petitioners' claim. For, apart from the private
complete, just and proper determination of the case. respondent's full name, Chito S. Mantos, being written in block letters
Essentially, the issue posed is the validity of private respondent's on the said delivery records, there is no other way of knowing whether
dismissal. it was really him who received the notices or that another person could
The validity of an employee's dismissal hinges on the satisfaction of have received the same in his behalf.29 Verily, said delivery records do
two substantive requirements, to wit: (1) the employee was accorded not substantially show respondent's receipt of the notices in question.
due process, basic of which are the opportunity to be heard and to Given the above, we cannot give credence to petitioners' claim that as
defend himself; and (2) the dismissal must be for any of the causes early as August 27, 1996, the date of the notice allegedly sent to the
provided for in Article 282 of the Labor Code. 20 respondent informing him of the first set of offenses, the latter already
The illegality of the act of dismissal constitutes discharge without just knew that a committee was going to investigate him for infractions of
cause, while the illegality in the manner of dismissal is dismissal without company rules and regulations in connection with the second set and
due process.21 that he was invited to attend the investigating committee's scheduled
Here, private respondent was successively charged with two (2) sets of hearing.
offenses and separately penalized for each set. We, therefore, lend concurrence to the common findings of both the
The first set of infractions consisted of private respondent's being NLRC and the Labor Arbiter that the committee which investigated the
AWOL from August 5 to 27, 1996 and Insubordination/Discourtesy as alleged second set of offenses and which eventually led to the
set forth in the Notice of Violation of Company Rules and Regulations committee's recommendation for his dismissal was created only on
dated August 27, 1996,22 for which he was penalized with suspension November 15, 1996 or a day at the heels of the petitioners' receipt on
for 30 days effective November 1 to 30, 1996 but only for the charge of November 14, 1996 of the summons issued in NLRC RAB-VII Case No.
being AWOL. The second set, as contained in the Notice of Violation of 11-1439-96.
Company Rules and Regulations (EM 300) dated November 12, With the reality that no notice of any investigation was timely served on
199623 consisted also of being AWOL, this time beginning August 28, the private respondent, the latter's filing of his complaint for illegal
1996, and Insubordination/Discourtesy for making false accusations dismissal in NLRC RAB-VII Case No. 11-1439-96 on November 8,
against his superior, for which he was dismissed effective December 1996 could not be said to have been made to preempt the investigation
1, 1996. regarding his alleged offenses as he was yet unaware of any such
Private respondent did not report for work starting August 5, 1996 due investigation. Moreover, as the NLRC rightly observed:
to his belief that he has already been dismissed as of said date. But We note from the records that although complainant quit
since he failed to prove his allegation of clear acts of harassment and working starting August 5, 1996 because he felt he was
humiliation, which had allegedly become so unbearable as to leave him "constructively dismissed" he did not file outright the present
with no choice but to forego his continued employment, we uphold the complaint. Instead, he wrote respondent Maligro on October
legality of his suspension due to his unauthorized absences from 18, 1996, thru counsel asking an explanation why no case for
August 5 to 27, 1996. illegal dismissal with damages would be filed against
With respect to respondent's dismissal, however, we find the same respondents. When he therefore finally filed the present case
unjustified. on Novemeber 8, 1996, that showed his lingering belief that
he was constructively dismissed although from the viewpoint
Under paragraph (a), Article 282 of the Labor Code, 24 an employer may
of respondents, he was already penalized with "grave
terminate the services of an employee for his willful disobedience of the
suspension" for his AWOL from August 5-27, 1996. In short,
employer's lawful orders in connection with his work.
the filing of the complaint was not a "malicious scheme" on
Verily, the employer's rules, instructions or commands, in order to be a the part of the complainant contrary to the contention of
ground for discharge on the score of disobedience, must be reasonable respondents. 30
and lawful, must be known to the employee, and must pertain to the
Petitioners' failure to comply with the two-notice requirement as shown
duties for which his services were engaged. 25
above, let alone the lack of just cause for terminating the services of
From the foregoing, it is clear that the factual basis for the petitioners' private respondent, rendered the latter's dismissal illegal.
charge of insubordination against the private respondent, i.e., making
In fine, we rule and so hold that the NLRC did not gravely abuse its
false accusations against his superior cannot constitute a just cause for
discretion in declaring the illegality of private respondent's dismissal.
dismissal. The so-called accusations are embodied in the complaint
filed by the private respondent in NLRC RAB-VII Case No. 11-1439-96, We are, however, with the petitioners in their submission that the NLRC
in which complaint he believed himself to have been constructively erred in holding petitioner Peter Maligro jointly and severally liable with
dismissed as of August 5, 1996. By no stretch of imagination can the petitioner Petron for the money claims of the private respondent.
filing of such complaint constitute insubordination. If, as asserted by the Settled is the rule in this jurisdiction that a corporation is invested by
private respondent, he had been constructively dismissed as of August law with a legal personality separate and distinct from those acting for
5, 1996, such assertion could not have risen to the level of false and in its behalf and, in general, from the people comprising it. 31 Thus,
accusation against his superior. obligations incurred by corporate officers acting as corporate agents
On the other hand, while respondent has indeed been absent from are not theirs but the direct accountabilities of the corporation they
August 28, 1996, the penalty of dismissal therefor is too harsh represent.32 True, solidary liabilities may at times be incurred by
considering that all the while, he deemed himself to have been already corporate officers, but only when exceptional circumstances so
dismissed as early as August 5, 1996. Besides, private respondent has warrant.33 For instance, in labor cases, corporate directors and officers
already been penalized with suspension for his unauthorized absences, may be held solidarily liable with the corporation for the termination of
which notice of suspension he only received on November 18, 1996. employment if done with malice or in bad faith. 34
Likewise, the petitioners failed to prove that they complied with the In the present case, the apparent basis for the NLRC in holding
requisites of procedural due process in dismissing private respondent. petitioner Maligro solidarily liable with Petron were its findings that (1)
the Investigation Committee was created a day after the summons in
It is horn-book law that an employee sought to be dismissed must be
NLRC RAB-VII Case No. 11-1439-96 was received, with Maligro no
served two (2) written notices before termination of employment: a
less being the chairman thereof; and (2) the basis for the charge of
notice to apprise the employee of the particular acts or omissions for
insubordination was the private respondent's alleged making of false
which his dismissal is sought; and the subsequent notice to inform him
accusations against Maligro.
of the employer's decision to discharge him from the service. 26 The
procedure is mandatory and non-observance thereof renders the Those findings, however, cannot justify a finding of personal liability on
dismissal illegal and void.27 the part of Maligro inasmuch as said findings do not point to Maligro's
extreme personal hatred and animosity with the respondent. It cannot,
Here, while the private respondent received the Notice of Disciplinary
therefore, be said that Maligro was motivated by malice and bad faith
Action dated October 29, 1996 informing him of his suspension, and
in connection with private respondent's dismissal from the service.
the Memorandum dated November 20, 1996 terminating his services,
he did not receive any prior notice[s] apprising him of the particular acts If at all, what said findings show are the illegality itself of private
for which his suspension and/or termination were being sought. respondent's dismissal, the lack of just cause therefor and the non-
observance of procedural due process. Verily, the creation of the
As rightly found by the NLRC, the private respondent was not given the
investigation committee and said committee's consideration of the
following notices, to wit: (1) the Notice of Violation of Company Rules
insubordination charge against the private respondent, were merely
and Regulations dated August 27, 1996 on his AWOL from August 5 to
27, 1996 and Insubordination/Discourtesy with notice of an
 60

aimed to cover up the illegal dismissal or to give it a semblance of the charge of illegal dismissal because his services were
legality. terminated on 31 October 1990.
Besides, the fact that Maligro himself was the committee chairman is The complainant’s employment record indicates that he
not itself sufficient to impute bad faith on his part or attribute bias rendered service with Lipercon Services from 1 April 1981 to
against him. It is undisputed that Maligro was private respondent's February 1982 as budget head assigned to SMC-Beer
superior, being Petron's Operations Assistant Manager for Visayas and Division, then from July 1983 to April 1985 with Skillpower,
Mindanao. It is thus logical for him to be part of the committee that will Inc., as accounting clerk assigned to SMC-Magnolia Division,
investigate private respondent's alleged infractions of company rules then from October 1988 to 1989 also with Skillpower, Inc. as
and regulations. As well, the committee was composed of three other acting clerk assigned to SMC-Magnolia Finance, and from
Petron officers as members, and nowhere is there any showing that October 1989 to 31 October 1990 with PHILSSEC assigned
Maligro, as committee chairman, influenced the other committee to Magnolia Finance as accounting clerk. The complainant
members to side against the private respondent. considered himself as an employee of SMC-Magnolia.
In any event, it must be stressed that private respondent's allegation of Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-
bad faith on the part of Maligro was not established in this case. We only contractors and any one of which had never been his
quote the NLRC's finding in this regard: employer. His dismissal, according to him, was in retaliation
Whether he really caught the ire of his immediate supervisor for his filing of the complaint for regularization in service. His
(respondent Maligro) in view of his alleged closeness to the dismissal was illegal there being no just cause for the action.
previous one who migrated to Canada, and whether or not he He was not accorded due process neither was his dismissal
was assigned to menial clerical jobs when his designation reported to the Department of Labor and Employment.
was that of Operations Engineer, were not clearly established PHILSSEC disclaimed liability. As an entity catering (sic)
by complainant.35 computer systems and program for business enterprises, it
Lastly, as to the award of backwages, we refer to Article 279 of the has contracted with SMC-Magnolia to computerize the latter’s
Labor Code (as amended by Section 34 of R.A. 6715) which provides manual accounting reporting systems of its provincial sales.
that an employee who is unjustly dismissed from work is entitled to PHILSSEC then conducted a three phase analysis of SMC–
reinstatement without loss of seniority rights and other privileges, and Magnolia set up: first the computer needs of the firm was (sic)
to the payment of his full backwages, inclusive of allowances, and other determined; then, the development of computer systems or
benefits or their monetary equivalent computed from the time his program suitable; and, finally, set up the systems and train
compensation was withheld from him (which, as a rule, is from the time the employees to operate the same. In all these phases,
of his illegal dismissal) up to the time of his actual reinstatement. PHILSSEC uses its computer system and technology and
Similarly, under R.A. 6715,36 employees who are illegally dismissed are provided the necessary manpower to compliment the transfer
entitled to full backwages, inclusive of allowances and other benefits or of the technology to SMC-Magnolia. Complainant Maliksi was
their monetary equivalent, computed from the time their actual one of those employed by PHILSSEC whose principal
compensation was withheld from them up to the time of their actual function was the manual control of data needed during the
reinstatement but if reinstatement is no longer possible, the backwages computerization. Like all assigned to the project, the
shall be computed from the time of their illegal termination up to the complainant’s work was controlled by PHILSSEC supervisors,
finality of the decision.37 his salary paid by the agency and he reported directly to
Since the circumstances obtaining in this case do not warrant private PHILSSEC. The computerization project was completed on
respondent's reinstatement in the light of the antagonism generated by 31 October 1990, and so, the complainant was terminated on
this litigation which must have caused a severe strain in the parties' the said date.
employer-employee relationship, an award of separation pay in lieu of SMC, on the other hand, submitted its position. In the contract
reinstatement, equivalent to one month pay for every year of service, SMC entered with PHILSSEC, the latter undertook to set up
in addition to full backwages, allowances, and other benefits or the the computerization of the provincial sales reporting system
monetary equivalent thereof, is in order. The award of attorney's fees of Magnolia Division. To carry out the task, PHILSSEC
is sanctioned by law and must be upheld. utilized 3 computer programmers and the rest were data
WHEREFORE, the assailed Resolution of the Court of Appeals is SET encoders. The complainant being one of the compliments (sic)
ASIDE, and the NLRC decision dated July 31, 2000 is AFFIRMED with performed the following functions:
the MODIFICATION that (1) private respondent Chito S. Mantos is xxx xxx xxx
awarded separation pay equivalent to one month pay for every year of SMC likewise contends that PHILSSEC exercised exclusive
service and full backwages, other privileges and benefits or to the managerial prerogative over the complainant as to hiring,
monetary equivalent thereof, computed from the date of his illegal payment of salary, dismissal and most importantly, the control
dismissal on December 1, 1996 until the finality of this decision; and (2) over his work. SMC was interested only in the result of the
petitioner Peter C. Maligro is ABSOLVED from any liability adjudged work specified in the contract but not as to the means and
against co-petitioner Petron Corporation. methods of accomplishing the same. Moreover, PHILSSEC
Costs against the petitioners. has substantial capital of its own. It has an IBM system, 3
SO ORDERED. computers, 17 IBM or IBM-compatible computers; it has a
building where the computer training center and main office
are located. What it markets to clients are computer programs
and training systems on computer technology and not the
usual labor or manpower supply to establishment concerns.
G.R. No. 147566 December 6, 2006 Moreover, what PHILSSEC set up employing the complainant,
SAN MIGUEL CORPORATION, petitioner, among others, has no relation to the principal business of
vs. SMC, which is food and beverage. It was a single relationship
NATIONAL LABOR RELATIONS COMMISSION and RAFAEL between the people utilized by PHILSSEC and SMC…’ 3
MALIKSI, respondents The Labor Arbiter declared Maliksi a regular employee of PHILSSEC
DECISION and absolved SMC from liability. Dispositively, the Labor Arbiter’s
GARCIA, J.: decision reads:
In this petition for review under Rule 45 of the Rules of Court, petitioner WHEREFORE, the complainant, Rafael Maliksi, is
San Miguel Corporation (SMC) seeks the reversal and setting aside of recognized as a regular employee of Philippine Software
the Decision1 dated September 30, 1999 of the Court of Appeals (CA) Services and Education Center which respondent is ordered
in CA-G.R. SP No. 50321, as reiterated in its Resolution2 of March 20, to reinstate him to a job of the same level as his previous
2001, affirming in toto an earlier decision of the National Labor position in any of the projects where there is a vacancy and
Relations Commission (NLRC) in NLRC NCR CA No. 005478-93, without loss of seniority rights. A five months backwages is
entitled "Rafael C. Maliksi v. San Miguel Corporation and/or Philippine awarded because the prolonged suspension from his work
Software Services & Education Center." The affirmed NLRC decision was brought about by his refusal to take any job offered by
overturned that of the Labor Arbiter and declared the herein private PHILSSEC earlier in the proceedings of this case. The
respondent Rafael Maliksi (Maliksi) a regular employee of the petitioner respondent, SMC-Magnolia Division, is exempted from any
and ordered the latter to reinstate him with benefits. liability as the complaint against the said corporation is
As found by the NLRC and subsequently adopted by the CA, the facts dismissed for lack of merit.
are as follows: SO ORDERED.4
On 16 October 1990, Rafael M. Maliksi filed a complaint Maliksi appealed to the NLRC. In turn, in a decision dated January 26,
against the San Miguel Corporation-Magnolia Division, herein 1998, the NLRC reversed that of the Labor Arbiter by declaring Maliksi
referred to as SMC and Philippine Software Services and a regular employee of the petitioner and ordering the latter to reinstate
Education Center herein referred to as PHILSSEC to compel him without loss of seniority rights and with full benefits, to wit:
the said respondents to recognize him as a regular employee. WHEREFORE, as recommended, the decision below is
He amended the complaint on 12 November 1990 to include hereby SET ASIDE. Accordingly, judgment is hereby
rendered directing respondent SMC-Magnolia Division to
 61

reinstate complainant as a regular employee without loss of administrative and clerical work that was necessary to SMC’s business
seniority rights and other privileges and to pay complainant on a daily basis. In Bustamante v. National Labor Relations
full backwages, inclusive of allowances and other benefits or Commission, 12 we ruled:
their monetary equivalent, computed from the time his In the case at bar, petitioners were employed at various
compensation was withheld from him up to time of his actual periods from 1985 to 1989 for the same kind of work they
reinstatement, plus 10% of the total money award for and were hired to perform in September 1989. Both the labor
attorney’s fees. arbiter and the respondent NLRC agree that petitioners
SO ORDERED.5 were employees engaged to perform activities necessary
From the aforementioned decision of the NLRC, SMC went in the usual business of the employer. As laborers,
on certiorari to the CA in CA-G.R. SP No. 50321. harvesters or sprayers in an agricultural establishment which
As stated at the outset, the CA, in the herein assailed Decision 6 dated produces high grade bananas, petitioners’ tasks are
September 30, 1999, affirmed in toto that of the NLRC. In so doing, the indispensable to the year-round operations of respondent
CA found SMC to have utilized PHILSSEC, Lipercon Services, Inc. company. This belies the theory of respondent company that
(Lipercon) and Skillpower, Inc. (Skillpower) as conduits to circumvent the employment of petitioners was terminated due to the
Article 280 of the Labor Code, employing Maliksi as contractual or expiration of their probationary period in June 1990. If at all
project employee through these entities, thereby undermining his right significant, the contract for probationary employment was
to gain regular employment status under the law. The appellate court utilized by respondent company as a chicanery to deny
echoed the NLRC’s assessment that Maliksi’s work was necessary or petitioners their status as regular employees and to evade
desirable in the business of SMC in its Magnolia Division, for more than paying them the benefits attached to such status. Some of the
the required one-year period. It affirmed the NLRC’s finding that the petitioners were hired as far back as 1985, although the hiring
three (3) conduit entities adverted to, Lipercon and Skillpower, are was not continuous. They were hired and re-hired in a span
labor-only contractors such that Maliksi’s previous employment of from two to four years to do the same type of work
contracts with SMC, through these two entities, are deemed to have which conclusively shows the necessity of petitioners’
been entered into in violation of labor laws. Consequently, Maliksi’s service to the respondent company’s business.
employment with SMC became permanent and regular after the Petitioners have, therefore, become regular employees after
statutory period of one year of service through these entities. The CA performing activities which are necessary in the usual
concluded that on account of his past employment contracts with SMC business of their employer. But, even assuming that the
under Lipercon and Skillpower, Maliksi was already a regular employee activities of petitioners in respondent company’s plantation
of SMC when he entered into SMC’s computerization project as part of were not necessary or desirable to its business, we affirm the
the PHILSSEC project complement. public respondent’s finding that all of the complainants
With its motion for reconsideration having been denied by the CA in its (petitioners) have rendered non-continuous or broken service
Resolution of March 20, 2001, SMC is now with this Court via the for more than one (1) year and are consequently considered
present recourse on the following assigned errors: regular employees.
I We do not sustain public respondent’s theory that private
The Court of Appeals gravely erred in declaring private respondent should not be made to compensate petitioners for
respondent a regular employee of petitioner SMC despite its backwages because its termination of their employment was
findings that PHILSSEC, the contractor that employed private not made in bad faith. The act of hiring and re-hiring the
respondent, is an independent job contractor. petitioners over a period of time without considering
them as regular employees evidences bad faith on the
Corollarily, the declaration of the Honorable Court of Appeals
part of private respondent. The public respondent made a
that private respondent is a regular employee of petitioner
finding to this effect when it stated that the subsequent re-
SMC proceeds from the erroneous premise that private
hiring of petitioners on a probationary status "clearly appears
respondent was already a regular employee of SMC when he
to be a convenient subterfuge on the part of management to
was hired by the independent contractor PHILSSEC. Having
prevent complainants (petitioners) from becoming regular
been placed in petitioner SMC by a supposed labor-only
employees." (Emphasis supplied)
contractor, for just five months and for a different job, three
years after his last assignment therein, private respondent It is worth noting that, except for the computerization project of
had not thereby become a regular employee of petitioner PHILSSEC, petitioner did not make any insinuation at all that the
SMC. services of Maliksi with SMC was project-related such that an
employment contract with Lipercon and Skillpower was necessary.
II
In Madriaga v. Court of Appeals,13 the Court, confronted with the same
The Court of Appeals gravely erred in ultimately resolving the
issue now being addressed, declared that regularization of employment
case upon the principle that "all doubts must be resolved in
favor of labor"; certainly, protection to labor does not imply in SMC should extend to those whose situation is similar to the
sanctioning a plain injustice to the employer, particularly complainants in said case. We wrote:
where private respondent was shown to have stated This is the third time that the parties have invoked the power
falsehoods and committed malicious intercalations and of this Court to decide the labor dispute involved in this case.
misrepresentations. The generative facts of the case are as follows:
III On 04 March 1988, the NOWM and a number of
The Court of Appeals gravely erred in declaring that private workers-complainants filed with the Arbitration
respondent was not part of the of the personnel group in the Branch of the NCR, NLRC, Manila, against San
computerization program of petitioner SMC under PHILSSEC. Miguel Corporation, Philippine Dairy Products
Corporation, Magnolia Dairy Products, Skillpower
We DENY.
Corporation and Lipercon Services, Inc. for
SMC concedes that Maliksi, before his employment with PHILSSEC, illegal dismissal.
worked in SMC from November 1988 to April 1990, but as employee
xxx xxx xxx
of Skillpower7 and that he was previously assigned to SMC between
1981 up to February 1985, "for periods spread apart."8 The Labor The Voluntary Arbitrator rendered a decision on 29
Arbiter found, as earlier stated, that Maliksi rendered service with July 1988, the dispositive of which states:
Lipercon from 1 April 1981 to February 1982 as budget WHEREFORE, it is hereby declared that
head assigned to SMC-Beer Division; from July 1983 to April complainants are regular employees of SMC and
1985 with Skillpower as accounting clerk assigned to SMC-Magnolia PDPC. Accordingly, SMC and PDPC are hereby
Division, then from October 1988 to 19899 also with Skillpower as ordered to reinstate the dismissed 85 complainants
acting clerk assigned to SMC-Magnolia Finance, and from October to their former positions as their regular employees
1989 to 31 October 1990 with PHILSSEC assigned to Magnolia effective from the date of the filing of their
Finance as accounting clerk. In all, it appears that, while under the complaints with full backwages less the daily
employ of either Lipercon or Skillpower, Maliksi has undisputedly financial assistance of P30.00 per day each,
rendered service with SMC for at least three years and seven extended to them by Lipercon and Skillpower.
months.10 Aggrieved by the said decision of the Voluntary Arbitrator,
The Court takes judicial notice of the fact that Lipercon and Skillpower SMC and PDPC filed a petition for certiorari before the
were declared to be labor-only contractors,11 providing as they do Supreme Court.
manpower services to the public for a fee. The existence of an It was upon the filing of the said petition for certiorari that the
employer-employee relationship is factual and we give due deference Court had the first opportunity to pass upon the controversies
to the factual findings of both the NLRC and the CA that an employer- involved in this case. In a Resolution dated 30 August 1989,
employee relationship existed between SMC (or its subsidiaries) and the Court dismissed G.R. No. 85577 entitled, "Philippine
Maliksi. Indeed, having served SMC for an aggregate period of more Dairy Products Corporation and San Miguel Corporation –
than three (3) years through employment contracts with these two labor Magnolia Dairy Products Division v. Voluntary Arbitrator Tito
contractors, Maliksi should be considered as SMC’s regular employee. F. Genilo of the Department of Labor and Employment (DOLE)
The hard fact is that he was hired and re-hired by SMC to perform
 62

and the National Organization of Workingmen (NOWM)" for computer expert, Maliksi’s inclusion in the project was uncalled for. To
lack of merit. The Court held in full: our mind, his placement in the project was for the purpose of
Individual private respondents are xxx [SMC, et al.] circumventing labor laws. The evidence shows that immediately before
laborers supplied to petitioners by Skillpower he entered the PHILSSEC project in October 1989, Maliksi was fresh
Corporation and Lipercon Services, Inc., on the out of his employment with SMC (through Skillpower) as acting clerk
basis of contracts of services. Upon expiration of assigned to SMC-Magnolia Finance (from October 1988 to 1989).
the said contracts, individual private respondents Maliksi’s work under the PHILSSEC project was mainly administrative
were denied entry to petitioners' premises. in nature and necessary to the development of SMC’s business. These
Individual private respondents and respondent were:
union thus filed separate complaints for illegal a. posting manually the daily account balances in the workset;
dismissal against petitioners San Miguel Corp., b. fitting the daily totals into the monthly totals;
Skillpower Corporation and Lipercon Services, Inc., c. comparing the manual totals with the computer generated
in the [NLRC, NCR] After consolidation and totals;
voluntary arbitration, respondent Labor Arbiter Tito d. locating the differences between the totals; and,
F. Genilo rendered a decision xxx declaring
e. adjusting and correcting errors.
individual private respondents regular employees of
petitioners and ordering the latter to reinstate the Simply put, the data gathered by SMC on a daily basis through Maliksi’s
former and to pay them backwages. On motion for work would be submitted for analysis and evaluation, thereby allowing
execution filed by private respondents, Labor SMC to make the necessary business decisions that would enable it to
Arbiter Genilo issued on October 20, 1988 an order market its products better, or monitor its sales and collection with
directing, among others, the regularization of "all the efficiency. Without the data gatherer or encoder, no analysis could
complainants which include those still working and occur. SMC would then, for the most part, be kept in the dark.
those already terminated." Hence, this petition for As to the petitioner’s second assigned error, we hold that there is no
certiorari with injunction. need to resolve the present case under the principle that all doubts
Petitioners contend that prior to reinstatement, should be resolved in favor of the workingman. The perceived doubt
individual private respondents should first comply does not obtain in the first place.
with certain requirements, like submission of NBI We understand Maliksi’s desperation in making his point clear to SMC,
and police clearances and submission to physical which unduly refuses to acknowledge his status as a regular employee.
and medical examinations, since petitioners are Instead, he was juggled from one employment contract to another in a
deemed to be direct employers and have the right continuous bid to circumvent labor laws. The act of hiring and re-hiring
to ascertain the physical fitness and moral workers over a period of time without considering them as regular
uprightness of its employees by requiring the latter employees evidences bad faith on the part of the employer. 17 Where,
to undergo periodic examinations, and that from the circumstances, it is apparent that periods have been imposed
petitioners may not be ordered to employ on to preclude the acquisition of tenurial security by the employee, the
regular basis the other workers rendering policy, agreement or practice should be struck down as contrary to
services to petitioners by virtue of a similar public policy, morals, good customs or public order. 18 In point of law,
contract of services between petitioners and any person who willfully causes loss or injury to another in a manner
Skillpower Corporation and Lipercon Services, that is contrary to morals, good customs or public policy shall be liable
Inc. because such other workers were not for the damage.19
parties to or were not impleaded in the voluntary Ways and means contrived by employers to countermand labor laws
arbitration case. granting regular employment status to their workers are numerous and
Considering that the clearances and examinations long. For instance, they toss the poor workers from one job contractor
sought by petitioners from private respondents are to another, make them go through endless applications, lining up,
not 'periodic' in nature but are made preconditions paperwork, documentation, and physical examinations; make them
for reinstatement, as in fact the petition filed alleged sign five- or ten-month-only job contracts, yet re-hire them after brief
that reinstatement shall be effective upon "rest periods," but not after requiring them to go through the whole
compliance with such requirements, (pp. 5-6 thereof) application and selection process once again; prepare and have them
which should not be the case because this is not a sign waivers, quitclaims, and the like; refuse to issue them identification
case of initial hiring, the workers concerned cards, receipts or any other concrete proof of employment or
having rendered years of service to petitioners documentary proof of payment of their salaries; fail to enroll them for
who are considered direct employers, and that entitlement to social security and other benefits; give them positions,
regularization is a labor benefit that should titles or designations that connote short-term employment.
apply to all qualified employees similarly Others are more creative: they set up "distributors" or "dealers" which
situated and may not be denied merely because are, in reality, shell or dummy companies. In this manner, the mother
some employees were allegedly not parties to or company avoids the employer-employee relations, and is thus shielded
were not impleaded in the voluntary arbitration from liability from employee claims in case of illegal dismissal, closure,
case, even as the finding of Labor Arbiter Genilo unfair labor practices and the like. In those instances, the poor
is to the contrary, this Court finds no grave employees, finding the shell or dummy company to be without assets,
abuse of discretion committed by Labor Arbiter often end up confused and without recourse as to whom to run after.
Genilo in issuing the questioned order of They sue the mother company which conveniently sets up the defense
October 20, 1988. of absence of employer-employee relations. In San Miguel Corporation
ACCORDINGLY, the Court Resolved to Dismiss the v. MAERC Integrated Services, Inc.,20 we took note of the practice of
petition for lack of merit. hiring employees through labor contractors that catered exclusively to
In fine, the Court affirmed the ruling of the Voluntary Arbitrator the employment needs of SMC or its divisions or other specific
and declared that therein complainants are regular business interests, such that after the specific SMC business or division
employees of San Miguel Corporation (SMC) and PDPC. It ceases to do business, the labor contractor likewise ceases its
must be noted that in the abovequoted Resolution, the operations.
Court extended the benefit of regularization not only to The contrivances may be many and the schemes ingenious and
the original complainants but also to those workers who imaginative. But this Court will not hesitate to put pen to a line and
are "similarly situated" to therein complainants. Herein defend the worker’s right to be secure in his (or her) proprietary right to
petitioners are among those who are "similarly regular employment and his right to a secure employment, viz, one that
situated."14 (Emphasis supplied) is free from fear and doubt, that anytime he could be removed,
We find respondent Maliksi to be similarly situated with those of the retrenched, his contract not renewed or he might not be re-hired. The
complainants in Madriaga. Indeed, Lipercon and Skillpower have ramifications may seem trivial, but we cannot allow the ordinary Filipino
figured in not just a few of our decisions, 15 so much so that we are worker’s right to tenurial security to be put in jeopardy by recurrent but
inclined to believe that these two were involved in labor-only contracting abhorrent practices that threaten the very lives of those that depend on
with respect to Maliksi. We hold that the finding of the NLRC and the him.
CA as to SMC’s resorting to labor-only contracting is entitled to Considering, however, the supervening event that SMC’s Magnolia
consideration in its full weight. Division has been acquired by another entity, it appears that private
With respect to PHILSSEC, there was no need for Maliksi to be respondent’s reinstatement is no longer feasible. Instead, he should be
employed under the former’s computerization program to be awarded separation pay as an alternative. 21 Likewise, owing to
considered a regular employee of SMC at the time. Moreover, SMC petitioner’s bad faith, it should be held liable to pay damages for
itself admits that Maliksi’s work under the computerization program did causing undue injury and inconvenience to the private respondent in its
"not require the operation of a computer system, such as the software contractual hiring-firing-rehiring scheme.
program being developed by PHILSSEC."16 Given this admission, we WHEREFORE, the instant petition is DENIED and the assailed CA
are simply at a loss to understand why Maliksi should be included in decision dated September 30, 1999 is AFFIRMED, with
the computerization project as a project employee. Not being a the MODIFICATION that if the reinstatement of private respondent is
 63

no longer practicable or feasible, then petitioner SMC is ordered to pay The petitioner in this case may, however, argue that the Pantranco
him, in addition to the other monetary awards, separation pay for the case is not applicable in the case at bar as the controversy in the said
period from October 31, 1990 when he was dismissed until he shall case involves a compulsory retirement on the basis of the length of
have been actually paid at the rate of one (1) month salary for every service rendered by the employee as agreed in an existing CBA,
year of his employment, with a fraction of at least six (6) months being whereas in the present case, the private respondent compulsorily
considered as one (1) year, or the rate of separation pay awarded by retired the petitioner not based on a CBA but on the retirement scheme
petitioner to its other regular employees as provided by written provided for in the private respondent’s retirement plan. Nonetheless,
agreement, policy or practice, whichever is higher or most beneficial to this argument must fail. The contract fixing for retirement age as
private respondent. allowed under Article 287 of the Labor Code does not exclusively refer
In addition, petitioner is hereby suffered to indemnify private to CBA which provides for an agreed retirement age. The said provision
respondent the amount of P50,000.00 as nominal damages for its bad explicitly allows, as well, other applicable employment contract to fix
faith in juggling the latter from one labor contractor to another and retirement age.
causing him unnecessary injury and inconvenience, and for denying The records disclose that the private respondent’s Retirement Plan has
him his proprietary right to regular employment. been in effect for more than 30 years. The said plan is deemed
Let this case be REMANDED to the Labor Arbiter for the computation integrated into the employment contract between private respondent
of private respondent’s backwages, proportionate 13th month pay, and its employees as evidenced by the latter’s voluntary
separation pay, attorneys’ fees and other monetary awards; and for contribution through monthly salary deductions. Previous retirees
immediate execution. have already enjoyed the benefits of the retirement plan, and ever since
Costs against the petitioner. the said plan was effected, no questions or disagreement have been
SO ORDERED. raised, until the same was made to apply to the petitioner.
xxx14 (emphasis ours)
The problem with this line of reasoning is that a perusal of the rules and
regulations of the plan shows that participation therein was not
voluntary at all.
G.R. No. 156934 March 16, 2007
Rule III of the plan, on membership, stated:
ALPHA C. JACULBE, Petitioner,
SECTION 1 – MEMBERSHIP
vs.
SILLIMAN UNIVERSITY,Respondent. All full-time Filipino employees of the University will automatically
become members of the Plan, provided, however, that those who
DECISION
have retired from the University, even if rehired, are no longer eligible
CORONA, J.: for membership in the Plan. A member who continues to serve the
Petitioner comes to us via this petition for review on certiorari1 to University cannot withdraw from the Plan.
challenge a decision2 of the Court of Appeals (CA) and the xxx xxx xxx
resolution3 affirming it.
SECTION 2 – EFFECTIVITY OF MEMBERSHIP
Sometime in 1958, petitioner began working for respondent’s university
Membership in the Plan starts on the day a person is hired on a full-
medical center as a nurse.4
time basis by the University.
In a letter dated December 3, 1992,5 respondent, through its Human
SECTION 3 – TERMINATION OF MEMBERSHIP
Resources Development Office, informed petitioner that she was
approaching her 35th year of service with the university and was due Termination of membership in the Plan shall be upon the death of
for automatic retirement on November 18, 1993, at which time she the member, resignation or termination of employee’s contract by
would be 57 years old. This was pursuant to respondent’s retirement the University, or retirement from the University.15 (emphasis ours).
plan for its employees which provided that its members could be Rule IV, on contributions, stated:
automatically retired "upon reaching the age of 65 or after 35 years of The Plan is contributory. The University shall set aside an amount
uninterrupted service to the university."6 Respondent required certain equivalent to 3½% of the basic salaries of the faculty and staff. To this
documents in connection with petitioner’s impending retirement. shall be added a 5% deduction from the basic salaries of the faculty
A brief exchange of letters7 between petitioner and respondent followed. and staff.
Petitioner emphatically insisted that the compulsory retirement under A member on leave with the University approval shall continue paying,
the plan was tantamount to a dismissal and pleaded with respondent to based on his pay while on leave, his leave without pay should pay his
be allowed to work until the age of 60 because this was the minimum contributions to the Plan. However, a member, who has been on leave
age at which she could qualify for SSS8 pension. But respondent stood without pay should pay his contributions based on his salary plus the
pat on its decision to retire her, citing "company policy." University’s contributions while on leave or the full amount within one
On November 15, 1993, petitioner filed a complaint in the National month immediately after the date of his reinstatement. Provided[,]
Labor Relations Commission (NLRC) for "termination of service with further that if a member has no sufficient source of income while on
preliminary injunction and/or restraining order." 9 On November 18, leave may pay within six months after his reinstatement. 16
1993, respondent compulsorily retired petitioner. From the language of the foregoing retirement plan rules, the
After the parties submitted their position papers, the labor arbiter compulsory nature of both membership in and contribution to the plan
rendered a decision finding respondent guilty of illegal dismissal and debunked the CA’s theory that petitioner’s "voluntary contributions"
ordered that petitioner be reinstated and paid full backwages. 10 On were evidence of her willing participation therein. It was through no
appeal, however, the NLRC reversed the labor arbiter’s decision and voluntary act of her own that petitioner became a member of the plan.
dismissed the complaint for lack of merit. 11 The NLRC likewise denied In fact, the only way she could have ceased to be a member thereof
petitioner’s motion for reconsideration. 12 In the assailed decision and was if she stopped working for respondent altogether. Furthermore, in
resolution, the CA affirmed the NLRC. the rule on contributions, the repeated use of the word "shall"
Hence, this petition. ineluctably pointed to the conclusion that employees had no choice but
to contribute to the plan (even when they were on leave).
The issues for our consideration are:
According to the assailed decision, respondent’s retirement plan "ha(d)
1) did respondent’s retirement plan imposing automatic
been in effect for more than 30 years."17 What was not pointed out,
retirement after 35 years of service contravene the security of
however, was that the retirement plan came into being in 1970 18 or 12
tenure clause in the 1987 Constitution and the Labor Code?
years after petitioner started working for respondent. In short, it was not
2) did respondent commit illegal dismissal by retiring part of the terms of employment to which petitioner agreed when she
petitioner solely by reason of such provision in its retirement started working for respondent. Neither did it become part of those
plan? terms shortly thereafter, as the CA would have us believe.
Retirement plans allowing employers to retire employees who are less Retirement is the result of a bilateral act of the parties, a voluntary
than the compulsory retirement age of 65 are not per se repugnant to agreement between the employer and the employee whereby the latter,
the constitutional guaranty of security of tenure. Article 287 of the Labor after reaching a certain age agrees to sever his or her employment with
Code provides: the former.19 In Pantranco North Express, Inc. v. NLRC,20 to which both
ART. 287. Retirement - Any employee may be retired upon reaching the CA and respondent refer, the imposition of a retirement age below
the retirement age established in the collective bargaining agreement the compulsory age of 65 was deemed acceptable because this was
or other applicable employment contract. xxx part of the CBA between the employer and the employees. The consent
By its express language, the Labor Code permits employers and of the employees, as represented by their bargaining unit, to be retired
employees to fix the applicable retirement age at below 60 years. 13 even before the statutory retirement age of 65 was laid out clearly in
However, after reviewing the assailed decision together with the rules black and white and was therefore in accord with Article 287.
and regulations of respondent’s retirement plan, we find that the plan In this case, neither the CA nor the respondent cited any agreement,
runs afoul of the constitutional guaranty of security of tenure contained collective or otherwise, to justify the latter’s imposition of the early
in Article XIII, also known as the provision on Social Justice and Human retirement age in its retirement plan, opting instead to harp on
Rights. petitioner’s alleged "voluntary" contributions to the plan, which was
The CA, in ruling against petitioner, premised its decision to uphold the simply untrue. The truth was that petitioner had no choice but to
retirement plan on her voluntary participation therein: participate in the plan, given that the only way she could refrain from
doing so was to resign or lose her job. It is axiomatic that employer and
 64

employee do not stand on equal footing, 21 a situation which often reconsideration of the award of separation pay but was also denied.
causes an employee to act out of need instead of any genuine Hence, petitioner filed a petition for certiorari with the Court of Appeals
acquiescence to the employer. This was clearly just such an instance. on the ground that the NLRC committed grave abuse of discretion
Not only was petitioner still a good eight years away from the amounting to lack or in excess of jurisdiction by affirming the award of
compulsory retirement age but she was also still fully capable of separation pay to private respondent. The appellate court dismissed
discharging her duties as shown by the fact that respondent’s board of the petition for lack of merit. Petitioner moved for reconsideration but
trustees seriously considered rehiring her after the effectivity of her was denied.
"compulsory retirement."22 Hence, this petition where petitioner raises the lone issue of –
As already stated, an employer is free to impose a retirement age less Whether the Honorable Court of Appeals’ decision upholding the award
than 65 for as long as it has the employees’ consent. Stated conversely, of separation pay to private respondent Cagampan who was legally
employees are free to accept the employer’s offer to lower the dismissed for gross misconduct and acts of dishonesty is contrary to
retirement age if they feel they can get a better deal with the retirement the existing jurisprudence.9
plan presented by the employer. Thus, having terminated petitioner Simply stated, at issue in this case is the propriety of the award of
solely on the basis of a provision of a retirement plan which was not separation pay to private respondent.
freely assented to by her, respondent was guilty of illegal dismissal. Petitioner maintains that private respondent is not entitled to separation
At this point, reinstatement is out of the question.1awphi1.nét Petitioner pay since he was dismissed for gross misconduct and acts of
is now 71 years old and therefore well over the statutory compulsory dishonesty. It contends that separation pay or financial assistance is
retirement age. For this reason, we grant her separation pay in lieu of not awarded to employees lawfully dismissed for serious misconduct or
reinstatement. It is also for this reason that we modify the award of for cause reflecting on his moral character.10
backwages in her favor, to be computed from the time of her illegal Private respondent for his part claims that payment of separation pay
dismissal on November 18, 1993 up to her compulsory retirement age. for humanitarian reasons is proper considering that he had served
WHEREFORE, the petition is hereby GRANTED. The decision of the petitioner for almost twenty-one years prior to his termination.11
Court of Appeals in CA-G.R. SP No. 50445 is REVERSED and SET The Court of Appeals in affirming the NLRC decision held that the
ASIDE. The October 25, 1994 decision of the labor arbiter finding NLRC did not gravely abuse its discretion in awarding the benefits of
respondent guilty of illegal dismissal is REINSTATED, with compassionate justice. It ratiocinated that considering his long years of
the MODIFICATION that, in lieu of reinstatement, petitioner is awarded service, it did not necessarily follow that no award of separation pay
separation pay, the award of backwages to be computed from the time could be made if there was no illegal dismissal.12
of her illegal dismissal up to her compulsory retirement age. We find for petitioner. Separation pay should not be awarded.
SO ORDERED. Section 7, Rule I, Book VI of the Omnibus Rules Implementing the
Labor Code provides that when the employee is dismissed for any of
the just causes under Article 28213 of the Labor Code, he shall not be
entitled to termination pay without prejudice to applicable collective
G.R. No. 163561 July 24, 2007 bargaining agreement or voluntary employer policy or
CENTRAL PANGASINAN ELECTRIC COOPERATIVE, practice.14 Separation pay shall be allowed only in those instances
INC., Petitioner, where the employee is validly dismissed for causes other than serious
vs. misconduct or those reflecting on his moral character.15 Separation pay
NATIONAL LABOR RELATIONS COMMISSION and LITO in such case is granted to stand as a "measure of social justice." 16 If
CAGAMPAN, Respondents. the cause for the termination of employment cannot be considered as
DECISION one of mere inefficiency or incompetence but an act that constitutes an
QUISUMBING, J.: utter disregard for the interest of the employer or a palpable breach of
trust in him, the grant by the Court of separation benefits is hardly
This is a petition for review on certiorari assailing the Decision 1 dated
justifiable.171avvphi1
December 11, 2003 of the Court of Appeals in CA-G.R. SP No. 62285
and its Resolution2 dated April 19, 2004, denying the motion for In this case, private respondent was found by the Labor Arbiter and the
reconsideration. The appellate court had affirmed the Decision3 dated NLRC to have been validly dismissed for violations of company rules,
July 31, 2000 of the National Labor Relations Commission (NLRC), and certain acts tantamount to serious misconduct. Such findings, if
which sustained the decision4 dated January 14, 2000 of the Labor supported by substantial evidence, are accorded respect and even
Arbiter. finality by this Court.18
The facts are undisputed. Although long years of service might generally be considered for the
award of separation benefits or some form of financial assistance to
Private respondent Lito Cagampan was the Acting Power Use
mitigate the effects of termination, this case is not the appropriate
Coordinator of petitioner Central Pangasinan Electric Cooperative, Inc.
instance for generosity under the Labor Code nor under our prior
(CENPELCO). On November 7, 1998, Cagampan received a check
decisions. The fact that private respondent served petitioner for more
amounting to ₱100,831 from Aurora B. Bonifacio as partial payment for
than twenty years with no negative record prior to his dismissal, in our
the installation of a transformer in her building and expansion of a three-
view of this case, does not call for such award of benefits, since his
phase line.
violation reflects a regrettable lack of loyalty and worse, betrayal of the
In a letter5 dated November 14, 1998, Bonifacio informed company. If an employee’s length of service is to be regarded as a
CENPELCO’s General Manager Salvador de Guzman of the said justification for moderating the penalty of dismissal, such gesture will
transaction and that Cagampan did not issue a receipt for the partial actually become a prize for disloyalty, distorting the meaning of social
payment made. She also requested the immediate installation of the justice and undermining the efforts of labor to cleanse its ranks of
transformer. Thereafter, Cagampan was directed to explain in writing undesirables.19
why he should not be disciplined or dismissed for the unauthorized
WHEREFORE, the petition is GRANTED. The Decision dated
acceptance of payments for new electrical connections.
December 11, 2003 of the Court of Appeals in CA-G.R. SP No. 62285
Upon investigation, it appeared that Cagampan knowingly entered into and its Resolution dated April 19, 2004, denying the motion for
an unauthorized contract for the installation of a transformer, and that reconsideration, are hereby REVERSED and SET ASIDE.
he was not authorized to accept payment. Hence, Cagampan was
SO ORDERED.
found guilty of violating CENPELCO’s Code of Ethics and Discipline,
namely: (1) unauthorized acceptance of payments for new connection;
(2) dishonest or unauthorized activity whether for personal gain or not;
and (3) defrauding others by using the name of the company. He was
dismissed from service.6 G.R. Nos. 158786 & 158789 October 19, 2007
Cagampan filed a complaint for illegal dismissal, praying for payment TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION
of backwages and damages, and reinstatement. In a decision dated (TMPCWA), ED CUBELO, EDWIN ALARANA, ALEX ALEJO, ERWIN
January 14, 2000, the Labor Arbiter found that Cagampan used his ALFONSO, MELVIN APOSTOL, DANIEL AROLLADO, DOMINADOR
position as a CENPELCO employee to enter into a contract with ARRIOLA, LESTER ATUN, ROLANDO BALUYOT, RODERICK
Bonifacio for the purchase of materials and hiring of labor force BAYANI, ABEL BERCES, BENNY BERING, MELCHOR BLANCO,
necessary for the installation of a transformer, in violation of company JERRY BOLOCON, ELMER BULAN, NELSON CABAHUG, JESSIE
rules.7 The Labor Arbiter dismissed the complaint for lack of merit but CABATAY, MARCELO CABEZAS, ROQUE CANDELARIO, JR.,
ordered CENPELCO to pay Cagampan separation pay, thus, LORENZO CARAQUEO, DENNIS CARINGAL, GIENELL CASABA,
WHEREFORE, PREMISES CONSIDERED, the instant complaint is CHRISTOPHER CATAPUSAN, RICO CATRAL, JULIUS COMETA,
hereby DISMISSED for lack of merit. The respondent corporation is, JAY ANTONIO CORAL, REYNALDO CUEVAS, BENIGNO DAVID,
however, ordered to pay the complainant P99,345.00 (P9,934.50 ÷ 2 = JR., JOEY DE GUZMAN, LEONARDO DE LEON, ROGELIO DELOS
P4,967.25 x 20) by way of separation pay. SANTOS, JOSELITO DE OCAMPO, FRANK MANUEL DIA,
SO ORDERED.8 ANTONIO DIMAYUGA, ARMANDO ERCILLO, DELMAR
Both parties appealed to the NLRC. In a decision dated July 31, 2000, ESPADILLA, DENNIS ESPELOA, JASON FAJILAGUTAN, JOHN
the NLRC affirmed the Labor Arbiter’s decision. Private respondent’s FAJURA, MELENCIO FRANCO, DEXTER FULGAR, EDUARDO
motion for reconsideration was denied. CENPELCO sought GADO, ERWIN GALANG, ROBIN GARCES, ARIEL GARCIA,
RONALD GASPI, ANGELO GAVARRA, REYNALDO GOJAR,
 65

EDGAR HILANGA, EUGENE JAY HONDRADA, ALEJANDRO Toyota rank and file employees. Toyota challenged said Order via an
IMPERIAL, FERDINAND JAEN, JOEY JAVILLONAR, BASILIO appeal to the DOLE Secretary.8
LAQUI, ALBERTO LOMBOY, JUDE JONOBELL LOZADA, JOHNNY In the meantime, the Union submitted its Collective Bargaining
LUCIDO, ROMMEL MACALINDONG, NIXON MADRAZO, ROGELIO Agreement (CBA) proposals to Toyota, but the latter refused to
MAGISTRADO, JR., PHILIP JOHN MAGNAYE, ALLAN JOHN negotiate in view of its pending appeal. Consequently, the Union filed
MALABANAN, ROLANDO MALALUAN, JR., PAULINO MALEON, a notice of strike on January 16, 2001 with the NCMB, docketed as
MANUEL MANALO, JR., JONAMAR MANAOG, JOVITO NCMB-NCR-NS-01-011-01, based on Toyota’s refusal to bargain. On
MANECLANG, BAYANI MANGUIL, JR., CARLITO MARASIGAN, February 5, 2001, the NCMB-NCR converted the notice of strike into a
ROMMEL MARIANO, BOBIT MENDOZA, ERICSON MONTERO, preventive mediation case on the ground that the issue of whether or
MARLAW MONTERO, EDWIN NICANOR, RODERICK NIERVES, not the Union is the exclusive bargaining agent of all Toyota rank and
LOLITO NUNEZ, FELIMON ORTIZ, EDWIN PECAYO, ERWIN PENA, file employees was still unresolved by the DOLE Secretary.
JOWALD PENAMANTE, JORGE POLUTAN, EDDIE RAMOS, In connection with Toyota’s appeal, Toyota and the Union were
ROLANDO REYES, PHILIP ROXAS, DAVID SALLAN, JR., required to attend a hearing on February 21, 2001 before the Bureau
BERNARDO SALVADOR, BALDWIN SAN PABLO, JEFFREY of Labor Relations (BLR) in relation to the exclusion of the votes of
SANGALANG, BERNABE SAQUILABON, ALEX SIERRA, alleged supervisory employees from the votes cast during the
ROMUALDO SIMBORIO, EDWIN TABLIZO, PETRONIO TACLAN, certification election. The February 21, 2001 hearing was cancelled and
JR., RODEL TOLENTINO, ROMMEL TOLENTINO, GRANT ROBERT reset to February 22, 2001. On February 21, 2001, 135 Union officers
TORAL, FEDERICO TORRES, JR., EMANNUEL TULIO, NESTOR and members failed to render the required overtime work, and instead
UMITEN, JR., APOLLO VIOLETA, SR., DOMINADOR ZAMORA, JR., marched to and staged a picket in front of the BLR office in Intramuros,
ROMMEL ARCETA, ANTONIO BORSIGUE, EMILIO COMPLETO, Manila.9 The Union, in a letter of the same date, also requested that its
RANDY CONSIGNADO, BASILIO DELA CRUZ, ALEXANDER members be allowed to be absent on February 22, 2001 to attend the
ESTEVA, NIKKO FRANCO, RODEL GAMIT, ROBERTO GONZALES, hearing and instead work on their next scheduled rest day. This request
PHILIP JALEA, JOEY LLANERA, GERONIMO LOPEZ, RUEL however was denied by Toyota.
MANEGO, EDWIN MANZANILLA, KENNETH NATIVIDAD, LARRY Despite denial of the Union’s request, more than 200 employees staged
ORMILLA, CORNELIO PLATON, PAUL ARTHUR SALES, mass actions on February 22 and 23, 2001 in front of the BLR and the
ALEJANDRO SAMPANG, LAURO SULIT, ROLANDO TOMAS, DOLE offices, to protest the partisan and anti-union stance of Toyota.
JOSE ROMMEL TRAZONA, MICHAEL TEDDY YANGYON, Due to the deliberate absence of a considerable number of employees
MAXIMINO CRUZ, VIRGILIO COLANDOG, ROMMEL DIGMA, on February 22 to 23, 2001, Toyota experienced acute lack of
JOSELITO HUGO, and RICKY CHAVEZ, Petitioners, manpower in its manufacturing and production lines, and was unable
vs. to meet its production goals resulting in huge losses of PhP 53,849,991.
NATIONAL LABOR RELATIONS COMMISSION, (NLRC- Soon thereafter, on February 27, 2001, Toyota sent individual letters to
2ND DIVISION), HON. COMMISSIONERS: VICTORINO CALAYCAY, some 360 employees requiring them to explain within 24 hours why
ANGELITA GACUTAN, and RAUL AQUINO, TOYOTA MOTOR they should not be dismissed for their obstinate defiance of the
PHILIPPINES CORPORATION, TAKESHI FUKUDA, and DAVID company’s directive to render overtime work on February 21, 2001, for
GO, Respondents, their failure to report for work on February 22 and 23, 2001, and for their
x - - - - - - - - - - - - - - - - - - - - - - -x participation in the concerted actions which severely disrupted and
G.R. Nos. 158798-99 paralyzed the plant’s operations.10 These letters specifically cited
TOYOTA MOTOR PHILIPPINES CORPORATION, Petitioner, Section D, paragraph 6 of the Company’s Code of Conduct, to wit:
vs. Inciting or participating in riots, disorders, alleged strikes, or concerted
TOYOTA MOTOR PHILIPPINES CORP. WORKERS ASSOCIATION actions detrimental to [Toyota’s] interest.
(TMPCWA), Respondent. 1st offense – dismissal.11
DECISION Meanwhile, a February 27, 2001 Manifesto was circulated by the Union
VELASCO, JR., J.: which urged its members to participate in a strike/picket and to abandon
The Case their posts, the pertinent portion of which reads, as follows:
In the instant petition under Rule 45 subject of G.R. Nos. 158786 and YANIG sa kanyang komportableng upuan ang management ng
158789, Toyota Motor Philippines Corporation Workers Association TOYOTA. And dating takot, kimi, at mahiyaing manggagawa ay walang
(Union) and its dismissed officers and members seek to set aside the takot na nagmartsa at nagprotesta laban sa desperadong
February 27, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. pagtatangkang baguhin ang desisyon ng DOLE na pabor sa UNYON.
SP Nos. 67100 and 67561, which affirmed the August 9, 2001 Sa tatlong araw na protesta, mahigit sa tatlong daang manggagawa
Decision2 and September 14, 2001 Resolution3 of the National Labor ang lumahok.
Relations Commission (NLRC), declaring illegal the strikes staged by xxxx
the Union and upholding the dismissal of the 227 Union officers and HANDA na tayong lumabas anumang oras kung patuloy na
members. ipagkakait ng management ang CBA. Oo maari tayong masaktan
On the other hand, in the related cases docketed as G.R. Nos. 158798- sa welga. Oo, maari tayong magutom sa piketlayn. Subalit may
99, Toyota Motor Philippines Corporation (Toyota) prays for the recall pagkakaiba ba ito sa unti-unting pagpatay sa atin sa loob ng 12 taong
of the award of severance compensation to the 227 dismissed makabaling likod ng pagtatrabaho? Ilang taon na lang ay
employees, which was granted under the June 20, 2003 CA magkakabutas na ang ating mga baga sa mga alipato at usok ng
Resolution4 in CA-G.R. SP Nos. 67100 and 67561. welding. Ilang taon na lang ay marupok na ang ating mga buto sa
In view of the fact that the parties are petitioner/s and respondent/s and kabubuhat. Kung dumating na ang panahong ito at wala pa tayong CBA,
vice-versa in the four (4) interrelated cases, they will be referred to as paano na? Hahayaan ba nating ang kumpanya lang ang makinabang
simply the Union and Toyota hereafter. sa yamang likha ng higit sa isang dekadang pagpapagal natin?
The Facts HUWAG BIBITIW SA NASIMULANG TAGUMPAY!
The Union is a legitimate labor organization duly registered with the PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG
Department of Labor and Employment (DOLE) and is the sole and MAKATARUNGANG CBA!
exclusive bargaining agent of all Toyota rank and file employees. 5 HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA
Toyota, on the other hand, is a domestic corporation engaged in the MANGGAGAWA SA TOYOTA! 12 (Emphasis supplied.)
assembly and sale of vehicles and parts. 6 It is a Board of Investments On the next day, the Union filed with the NCMB another notice of strike
(BOI) participant in the Car Development Program and the Commercial docketed as NCMB-NCR-NS-02-061-01 for union busting amounting to
Vehicle Development Program. It is likewise a BOI-preferred non- unfair labor practice.
pioneer export trader of automotive parts and is under the "Special On March 1, 2001, the Union nonetheless submitted an explanation in
Economic Zone Act of 1995." It is one of the largest motor vehicle compliance with the February 27, 2001 notices sent by Toyota to the
manufacturers in the country employing around 1,400 workers for its erring employees. The Union members explained that their refusal to
plants in Bicutan and Sta. Rosa, Laguna. It is claimed that its assets work on their scheduled work time for two consecutive days was simply
amount to PhP 5.525 billion, with net sales of PhP 14.646 billion and an exercise of their constitutional right to peaceably assemble and to
provisions for income tax of PhP 120.9 million. petition the government for redress of grievances. It further argued that
On February 14, 1999, the Union filed a petition for certification election the demonstrations staged by the employees on February 22 and 23,
among the Toyota rank and file employees with the National 2001 could not be classified as an illegal strike or picket, and that
Conciliation and Mediation Board (NCMB), which was docketed as Toyota had already condoned the alleged acts when it accepted back
Case No. NCR-OD-M-9902-001. Med-Arbiter Ma. Zosima C. Lameyra the subject employees.13
denied the petition, but, on appeal, the DOLE Secretary granted the Consequently, on March 2 and 5, 2001, Toyota issued two (2)
Union’s prayer, and, through the June 25, 1999 Order, directed the memoranda to the concerned employees to clarify whether or not they
immediate holding of the certification election. 7 are adopting the March 1, 2001 Union’s explanation as their own. The
After Toyota’s plea for reconsideration was denied, the certification employees were also required to attend an investigative interview, 14 but
election was conducted. Med-Arbiter Lameyra’s May 12, 2000 Order they refused to do so.
certified the Union as the sole and exclusive bargaining agent of all the On March 16, 2001, Toyota terminated the employment of 227
employees15 for participation in concerted actions in violation of its
 66

Code of Conduct and for misconduct under Article 282 of the Labor Normandy Castalone, Joey Llanera, Greg Castro, Felicisimo
Code. The notice of termination reads: Escrimadora, Rodolfo Bay, Ramon Clemente, Dante Baclino,
After a careful evaluation of the evidence on hand, and a thorough Allan Palomares, Arturo Murillo and Robert Gonzales.
assessment of your explanation, TMP has concluded that there are Attached hereto as Annexes "1" to "18" are the pictures taken
overwhelming reasons to terminate your services based on Article 282 on March 28, 2001 at the Bicutan and Sta. Rosa plants.
of the Labor Code and TMP’s Code of Conduct. 7. From March 29 to 31, 2001, the strikers continued to
Your repeated absences without permission on February 22 to 23, barricade the entrances to TMPC’s two (2) plants. Once again,
2001 to participate in a concerted action against TMP constitute the strikers hurled nasty remarks and prevented employees
abandonment of work and/or very serious misconduct under Article 282 aboard shuttle buses from entering the plants. Among the
of the Labor Code. strikers were Christopher Saldivar, Basilio Laqui, Sabas
The degree of your offense is aggravated by the following Bernabise, Federico Torres, Freddie Olit, Josel Agosto,
circumstances: Arthur Parilla, Richard Calalang, Ariel Garcia, Edgar Hilaga,
1. You expressed to management that you will adopt the Charlie Oliveria, Ferdinand Jaen, Wilfredo Tagle, Alejandro
union’s letter dated March 1, 2001, as your own explanation Imperial, Manjolito Puno, Delmar Espadilla, Domingo Javier,
to the charges contained in the Due Process Form dated Apollo Violeta and Elvis Tabinao.17
February 27, 2001. It is evident from such explanation that On March 29, 2001, Toyota filed a petition for injunction with a prayer
you did not come to work because you deliberately for the issuance of a temporary restraining order (TRO) with the NLRC,
participated together with other Team Members in a plan to which was docketed as NLRC NCR Case No. INJ-0001054-01. It
engage in concerted actions detrimental to TMP’s interest. As sought free ingress to and egress from its Bicutan and Sta. Rosa
a result of your participation in the widespread abandonment manufacturing plants. Acting on said petition, the NLRC, on April 5,
of work by Team Members from February 22 to 23, 2001, 2001, issued a TRO against the Union, ordering its leaders and
TMP suffered substantial damage. members as well as its sympathizers to remove their barricades and all
It is significant that the absences you incurred in order to forms of obstruction to ensure free ingress to and egress from the
attend the clarificatory hearing conducted by the Bureau of company’s premises. In addition, the NLRC rejected the Union’s motion
Labor Relations were unnecessary because the union was to dismiss based on lack of jurisdiction.18
amply represented in the said hearings by its counsel and Meanwhile, Toyota filed a petition to declare the strike illegal with the
certain members who sought and were granted leave for the NLRC arbitration branch, which was docketed as NLRC NCR (South)
purpose. Your reason for being absent is, therefore, not Case No. 30-04-01775-01, and prayed that the erring Union officers,
acceptable; and directors, and members be dismissed.19
2. Your participation in the organized work boycott by Team On April 10, 2001, the DOLE Secretary assumed jurisdiction over the
Members on February 22 and 23 led to work disruptions that labor dispute and issued an Order20 certifying the labor dispute to the
prevented the Company from meeting its production targets, NLRC. In said Order, the DOLE Secretary directed all striking workers
resulting [in] foregone sales of more than eighty (80) vehicles, to return to work at their regular shifts by April 16, 2001. On the other
mostly new-model Revos, valued at more than Fifty Million hand, it ordered Toyota to accept the returning employees under the
Pesos (50,000,000.00). same terms and conditions obtaining prior to the strike or at its option,
The foregoing is also a violation of TMP’s Code of Conduct put them under payroll reinstatement. The parties were also enjoined
(Section D, Paragraph 6) to wit: from committing acts that may worsen the situation.1âwphi1
"Inciting or participating in riots, disorders, illegal The Union ended the strike on April 12, 2001. The union members and
strikes or concerted actions detrimental to TMP’s officers tried to return to work on April 16, 2001 but were told that
interest." Toyota opted for payroll-reinstatement authorized by the Order of the
Based on the above, TMP Management is left with DOLE Secretary.
no other recourse but to terminate your employment In the meantime, the Union filed a motion for reconsideration of the
effective upon your receipt thereof. DOLE Secretary’s April 10, 2001 certification Order, which, however,
[Sgd.] was denied by the DOLE Secretary in her May 25, 2001 Resolution.
JOSE MARIA ALIGADA Consequently, a petition for certiorari was filed before the CA, which
was docketed as CA-G.R. SP No. 64998.
Deputy Division Manager16
In the intervening time, the NLRC, in compliance with the April 10, 2001
In reaction to the dismissal of its union members and officers,
Order of the DOLE Secretary, docketed the case as Certified Case No.
the Union went on strike on March 17, 2001. Subsequently,
000203-01.
from March 28, 2001 to April 12, 2001, the Union intensified
its strike by barricading the gates of Toyota’s Bicutan and Sta. Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance
Rosa plants. The strikers prevented workers who reported for of the DOLE Secretary’s certification Order, several payroll-reinstated
work from entering the plants. In his Affidavit, Mr. Eduardo members of the Union staged a protest rally in front of Toyota’s Bicutan
Nicolas III, Security Department Head, stated that: Plant bearing placards and streamers in defiance of the April 10, 2001
Order.
3. On March 17, 2001, members of the Toyota Motor
Philippines Corporation Workers Association (TMPCWA), in Then, on May 28, 2001, around forty-four (44) Union members staged
response to the dismissal of some two hundred twenty seven another protest action in front of the Bicutan Plant. At the same time,
(227) leaders and members of TMPCWA and without some twenty-nine (29) payroll-reinstated employees picketed in front of
observing the requirements mandated by the Labor Code, the Santa Rosa Plant’s main entrance, and were later joined by other
refused to report for work and picketed TMPC premises from Union members.
8:00 a.m. to 5:00 p.m. The strikers badmouthed people On June 5, 2001, notwithstanding the certification Order, the Union filed
coming in and hurled invectives such as "bakeru" at Japanese another notice of strike, which was docketed as NCMB-NCR-NS-06-
officers of the company. The strikers likewise pounded the 150-01. On June 18, 2001, the DOLE Secretary directed the second
officers’ vehicle as they tried to enter the premises of the notice of strike to be subsumed in the April 10, 2001 certification Order.
company. In the meantime, the NLRC, in Certified Case No. 000203-01, ordered
4. On March 28, 2001, the strikers intensified their picketing both parties to submit their respective position papers on June 8, 2001.
and barricaded the gates of TMPC’s Bicutan and Sta. Rosa The union, however, requested for abeyance of the proceedings
plants, thus, blocking the free ingress/egress to and from the considering that there is a pending petition for certiorari with the CA
premises. Shuttle buses and cars containing TMPC assailing the validity of the DOLE Secretary’s Assumption of
employees, suppliers, dealers, customers and other people Jurisdiction Order.
having business with the company, were prevented by the Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its
strikers from entering the plants. previous order for both parties to submit their respective position
5. As a standard operating procedure, I instructed my men to papers on or before June 2, 2001. The same Order also denied the
take photographs and video footages of those who Union’s verbal motion to defer hearing on the certified cases.
participated in the strike. Seen on video footages taken on On June 27, 2001, the Union filed a Motion for Reconsideration of the
various dates actively participating in the strike were union NLRC’s June 19, 2001 Order, praying for the deferment of the
officers Emilio C. Completo, Alexander Esteva, Joey submission of position papers until its petition for certiorari is resolved
Javellonar and Lorenzo Caraqueo. by the CA.
6. Based on the pictures, among those identified to have On June 29, 2001, only Toyota submitted its position paper. On July 11,
participated in the March 28, 2001 strike were Grant Robert 2001, the NLRC again ordered the Union to submit its position paper
Toral, John Posadas, Alex Sierra, Allan John Malabanan, by July 19, 2001, with a warning that upon failure for it to do so, the
Abel Bersos, Ernesto Bonavente, Ariel Garcia, Pablito Adaya, case shall be considered submitted for decision.
Feliciano Mercado, Charlie Oliveria, Philip Roxas, June Meanwhile, on July 17, 2001, the CA dismissed the Union’s petition for
Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit, certiorari in CA-G.R. SP No. 64998, assailing the DOLE Secretary’s
Federico Torres, Larry Gerola, Roderick Bayani, Allan April 10, 2001 Order.
Oclarino, Reynaldo Cuevas, Jorge Polutan, Arman Ercillo, Notwithstanding repeated orders to file its position paper, the Union still
Jimmy Hembra, Albert Mariquit, Ramil Gecale, Jimmy Palisoc, failed to submit its position paper on July 19, 2001. Consequently, the
 67

NLRC issued an Order directing the Union to submit its position paper IV. Whether the CA erred in affirming the Decision of the
on the scheduled August 3, 2001 hearing; otherwise, the case shall be NLRC which excluded the Union’s Position Paper which the
deemed submitted for resolution based on the evidence on record. Union filed by mail. In the same vein, whether the Union’s
During the August 3, 2001 hearing, the Union, despite several right to due process was violated when the NLRC excluded
accommodations, still failed to submit its position paper. Later that day, their Position Paper.
the Union claimed it filed its position paper by registered mail. V. Whether the CA erred in dismissing the Union’s Petition for
Subsequently, the NLRC, in its August 9, 2001 Decision, declared the Certiorari.
strikes staged by the Union on February 21 to 23, 2001 and May 23 Toyota, on the other hand, presents this sole issue for our
and 28, 2001 as illegal. The decretal portion reads: determination:
WHEREFORE, premises considered, it is hereby ordered: I. Whether the Court of Appeals erred in issuing its Resolution dated
(1) Declaring the strikes staged by the Union to be illegal. June 20, 2003, partially modifying its Decision dated February 27, 2003,
(2) Declared [sic] that the dismissal of the 227 who and awarding severance compensation to the dismissed Union
participated in the illegal strike on February 21-23, 2001 is members.
legal. In sum, two main issues are brought to the fore:
(3) However, the Company is ordered to pay the 227 Union (1) Whether the mass actions committed by the Union on
members, who participated in the illegal strike severance different occasions are illegal strikes; and
compensation in an amount equivalent to one month salary (2) Whether separation pay should be awarded to the Union
for every year of service, as an alternative relief to continued members who participated in the illegal strikes.
employment. The Court’s Ruling
(4) Declared [sic] that the following Union officers and The Union contends that the NLRC violated its right to due process
directors to have forfeited their employment status for having when it disregarded its position paper in deciding Toyota’s petition to
led the illegal strikes on February 21-23, 2001 and May 23 declare the strike illegal.
and 28, 2001: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, We rule otherwise.
Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico It is entirely the Union’s fault that its position paper was not considered
Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, by the NLRC. Records readily reveal that the NLRC was even too
Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, generous in affording due process to the Union. It issued no less than
Bayani Manguil, Jr., and Mayo Mata.21 three (3) orders for the parties to submit its position papers, which the
SO ORDERED.22 Union ignored until the last minute. No sufficient justification was
The NLRC considered the mass actions staged on February 21 to 23, offered why the Union belatedly filed its position paper. In Datu
2001 illegal as the Union failed to comply with the procedural Eduardo Ampo v. The Hon. Court of Appeals, it was explained that a
requirements of a valid strike under Art. 263 of the Labor Code. party cannot complain of deprivation of due process if he was afforded
After the DOLE Secretary assumed jurisdiction over the Toyota dispute an opportunity to participate in the proceedings but failed to do so. If he
on April 10, 2001, the Union again staged strikes on May 23 and 28, does not avail himself of the chance to be heard, then it is deemed
2001. The NLRC found the strikes illegal as they violated Art. 264 of waived or forfeited without violating the constitutional
the Labor Code which proscribes any strike or lockout after jurisdiction guarantee.29 Thus, there was no violation of the Union’s right to due
is assumed over the dispute by the President or the DOLE Secretary. process on the part of the NLRC.
The NLRC held that both parties must have maintained the status quo On a procedural aspect, the Union faults the CA for treating its petition
after the DOLE Secretary issued the assumption/certification Order, as an unsigned pleading and posits that the verification signed by 159
and ruled that the Union did not respect the DOLE Secretary’s directive. out of the 227 petitioners has already substantially complied with and
Accordingly, both Toyota and the Union filed Motions for satisfied the requirements under Secs. 4 and 5 of Rule 7 of the Rules
Reconsideration, which the NLRC denied in its September 14, 2001 of Court.
Resolution.23 Consequently, both parties questioned the August 9, The Union’s proposition is partly correct.
2001 Decision24 and September 14, 2001 Resolution of the NLRC in Sec. 4 of Rule 7 of the Rules of Court states:
separate petitions for certiorari filed with the CA, which were docketed Sec. 4. Verification.—Except when otherwise specifically required by
as CA-G.R. SP Nos. 67100 and 67561, respectively. The CA then law or rule, pleadings need not be under oath, verified or accompanied
consolidated the petitions. by affidavit.
In its February 27, 2003 Decision,25 the CA ruled that the Union’s A pleading is verified by an affidavit that the affiant has read the
petition is defective in form for its failure to append a proper verification pleading and that the allegations therein are true and correct of his
and certificate of non-forum shopping, given that, out of the 227 personal knowledge or based on authentic records.
petitioners, only 159 signed the verification and certificate of non-forum A pleading required to be verified which contains a verification based
shopping. Despite the flaw, the CA proceeded to resolve the petitions on "information and belief" or upon "knowledge, information and belief,"
on the merits and affirmed the assailed NLRC Decision and Resolution or lacks a proper verification, shall be treated as an unsigned pleading.
with a modification, however, of deleting the award of severance The verification requirement is significant, as it is intended to secure an
compensation to the dismissed Union members. assurance that the allegations in the pleading are true and correct and
In justifying the recall of the severance compensation, the CA not the product of the imagination or a matter of speculation. 30 This
considered the participation in illegal strikes as serious misconduct. It requirement is simply a condition affecting the form of pleadings, and
defined serious misconduct as a transgression of some established and noncompliance with the requirement does not necessarily render it
definite rule of action, a forbidden act, a dereliction of duty, willful in fatally defective. Indeed, verification is only a formal and not a
character, and implies wrongful intent and not mere error in judgment. jurisdictional requirement.31
It cited Panay Electric Company, Inc. v. NLRC,26 where we revoked the In this case, the problem is not the absence but the adequacy of the
grant of separation benefits to employees who lawfully participated in Union’s verification, since only 159 out of the 227 petitioners executed
an illegal strike based on Art. 264 of the Labor Code, which states that the verification. Undeniably, the petition meets the requirement on the
"any union officer who knowingly participates in an illegal strike and any verification with respect to the 159 petitioners who executed the
worker or union officer who knowingly participates in the commission of verification, attesting that they have sufficient knowledge of the truth
illegal acts during a strike may be declared to have lost his employment and correctness of the allegations of the petition. However, their
status."27 signatures cannot be considered as verification of the petition by the
However, in its June 20, 2003 Resolution, 28 the CA modified its other 68 named petitioners unless the latter gave written authorization
February 27, 2003 Decision by reinstating severance compensation to to the 159 petitioners to sign the verification on their behalf. Thus,
the dismissed employees based on social justice. in Loquias v. Office of the Ombudsman, we ruled that the petition
The Issues satisfies the formal requirements only with regard to the petitioner who
Petitioner Union now comes to this Court and raises the following signed the petition but not his co-petitioner who did not sign nor
issues for our consideration: authorize the other petitioner to sign it on his behalf. 32 The proper ruling
I. Whether the mere participation of ordinary employees in an in this situation is to consider the petition as compliant with the formal
illegal strike is enough reason to warrant their dismissal. requirements with respect to the parties who signed it and, therefore,
II. Whether the Union officers and members’ act of holding can be given due course only with regard to them. The other petitioners
the protest rallies in front of the BLR office and the Office of who did not sign the verification and certificate against forum shopping
the Secretary of Labor and Employment on February 22 and cannot be recognized as petitioners have no legal standing before the
23, 2001 should be held as illegal strikes. In relation hereto, Court. The petition should be dismissed outright with respect to the
whether the protests committed on May 23 and 28, 2001, non-conforming petitioners.
should be held as illegal strikes. Lastly, whether the Union In the case at bench, however, the CA, in the exercise of sound
violated the Assumption of Jurisdiction Order issued by the discretion, did not strictly apply the ruling in Loquias and instead
Secretary of Labor and Employment. proceeded to decide the case on the merits.
III. Whether the dismissal of 227 Union officers and members The alleged protest rallies in front of the offices of BLR and DOLE
constitutes unfair labor practice. Secretary and at the Toyota plants constituted illegal strikes
When is a strike illegal?
 68

Noted authority on labor law, Ludwig Teller, lists six (6) categories of We sustain the CA’s affirmance of the NLRC’s finding that the protest
an illegal strike, viz: rallies staged on February 21 to 23, 2001 were actually illegal strikes.
(1) [when it] is contrary to a specific prohibition of law, such The illegality of the Union’s mass actions was succinctly elaborated by
as strike by employees performing governmental functions; the labor tribunal, thus:
or We have stated in our questioned decision that such mass actions
(2) [when it] violates a specific requirement of law[, such as staged before the Bureau of Labor Relations on February 21-23, 2001
Article 263 of the Labor Code on the requisites of a valid by the union officers and members fall squarely within the definition of
strike]; or a strike (Article 212 (o), Labor Code). These concerted actions resulted
(3) [when it] is declared for an unlawful purpose, such as in the temporary stoppage of work causing the latter substantial losses.
inducing the employer to commit an unfair labor practice Thus, without the requirements for a valid strike having been complied
against non-union employees; or with, we were constrained to consider the strike staged on such dates
(4) [when it] employs unlawful means in the pursuit of its as illegal and all employees who participated in the concerted actions
objective, such as a widespread terrorism of non-strikers [for to have consequently lost their employment status.
example, prohibited acts under Art. 264(e) of the Labor Code]; If we are going to stamp a color of legality on the two (2) [day-] walk
or out/strike of respondents without filing a notice of strike, in effect we are
(5) [when it] is declared in violation of an existing injunction[, giving license to all the unions in the country to paralyze the operations
such as injunction, prohibition, or order issued by the DOLE of their companies/employers every time they wish to hold a
Secretary and the NLRC under Art. 263 of the Labor Code]; demonstration in front of any government agency. While we recognize
or the right of every person or a group to peaceably assemble and petition
(6) [when it] is contrary to an existing agreement, such as a the government for redress of grievances, the exercise of such right is
no-strike clause or conclusive arbitration clause. 33 governed by existing laws, rules and regulations.
Petitioner Union contends that the protests or rallies conducted on Although the respondent union admittedly made earnest
February 21 and 23, 2001 are not within the ambit of strikes as defined representations with the company to hold a mass protest before the
in the Labor Code, since they were legitimate exercises of their right to BLR, together with their officers and members, the denial of the request
peaceably assemble and petition the government for redress of by the management should have been heeded and ended their
grievances. Mainly relying on the doctrine laid down in the case insistence to hold the planned mass demonstration. Verily, the violation
of Philippine Blooming Mills Employees Organization v. Philippine of the company rule cannot be dismissed as mere absences of two
Blooming Mills Co., Inc.,34 it argues that the protest was not directed at days as being suggested by the union [are but] concerted actions
Toyota but towards the Government (DOLE and BLR). It explains that detrimental to Petitioner Toyota’s interest. 38 (Emphasis supplied.)
the protest is not a strike as contemplated in the Labor Code. The Union It is obvious that the February 21 to 23, 2001 concerted actions were
points out that in Philippine Blooming Mills Employees Organization, undertaken without satisfying the prerequisites for a valid strike under
the mass action staged in Malacañang to petition the Chief Executive Art. 263 of the Labor Code. The Union failed to comply with the
against the abusive behavior of some police officers was a proper following requirements: (1) a notice of strike filed with the DOLE 30
exercise of the employees’ right to speak out and to peaceably gather days before the intended date of strike, or 15 days in case of unfair
and ask government for redress of their grievances. labor practice;39 (2) strike vote approved by a majority of the total union
The Union’s position fails to convince us. membership in the bargaining unit concerned obtained by secret ballot
in a meeting called for that purpose; and (3) notice given to the DOLE
While the facts in Philippine Blooming Mills Employees
of the results of the voting at least seven days before the intended strike.
Organization are similar in some respects to that of the present case,
These requirements are mandatory and the failure of a union to comply
the Union fails to realize one major difference: there was no labor
with them renders the strike illegal.40 The evident intention of the law in
dispute in Philippine Blooming Mills Employees Organization. In the
requiring the strike notice and the strike-vote report is to reasonably
present case, there was an on-going labor dispute arising from Toyota’s
regulate the right to strike, which is essential to the attainment of
refusal to recognize and negotiate with the Union, which was the
legitimate policy objectives embodied in the law. 41 As they failed to
subject of the notice of strike filed by the Union on January 16, 2001.
conform to the law, the strikes on February 21, 22, and 23, 2001 were
Thus, the Union’s reliance on Phililippine Blooming Mills Employees
illegal.
Organization is misplaced, as it cannot be considered a precedent to
the case at bar. Moreover, the aforementioned February 2001 strikes are in blatant
violation of Sec. D, par. 6 of Toyota’s Code of Conduct which prohibits
A strike means any temporary stoppage of work by the concerted action
"inciting or participating in riots, disorders, alleged strikes or concerted
of employees as a result of an industrial or labor dispute. A labor
actions detrimental to [Toyota’s] interest." The penalty for the offense
dispute, in turn, includes any controversy or matter concerning terms
is dismissal. The Union and its members are bound by the company
or conditions of employment or the association or representation of
rules, and the February 2001 mass actions and deliberate refusal to
persons in negotiating, fixing, maintaining, changing, or arranging the
render regular and overtime work on said days violated these rules. In
terms and conditions of employment, regardless of whether the
sum, the February 2001 strikes and walk-outs were illegal as these
disputants stand in the proximate relation of the employer and the
were in violation of specific requirements of the Labor Code and a
employee.35
company rule against illegal strikes or concerted actions.
In Bangalisan v. Court of Appeals, it was explained that "[t]he fact that
With respect to the strikes committed from March 17 to April 12, 2001,
the conventional term ‘strike’ was not used by the striking employees
those were initially legal as the legal requirements were met. However,
to describe their common course of action is inconsequential, since the
on March 28 to April 12, 2001, the Union barricaded the gates of the
substance of the situation and not its appearance, will be deemed
Bicutan and Sta. Rosa plants and blocked the free ingress to and
controlling."36 The term "strike" has been elucidated to encompass not
egress from the company premises. Toyota employees, customers,
only concerted work stoppages, but also slowdowns, mass leaves, sit-
and other people having business with the company were intimidated
downs, attempts to damage, destroy, or sabotage plant equipment and
and were refused entry to the plants. As earlier explained, these strikes
facilities, and similar activities.37
were illegal because unlawful means were employed. The acts of the
Applying pertinent legal provisions and jurisprudence, we rule that the Union officers and members are in palpable violation of Art. 264(e),
protest actions undertaken by the Union officials and members on which proscribes acts of violence, coercion, or intimidation, or which
February 21 to 23, 2001 are not valid and proper exercises of their right obstruct the free ingress to and egress from the company premises.
to assemble and ask government for redress of their complaints, but Undeniably, the strikes from March 28 to April 12, 2001 were illegal.
are illegal strikes in breach of the Labor Code. The Union’s position is
Petitioner Union also posits that strikes were not committed on May 23
weakened by the lack of permit from the City of Manila to hold "rallies."
and 28, 2001. The Union asserts that the rallies held on May 23 and 28,
Shrouded as demonstrations, they were in reality temporary stoppages
2001 could not be considered strikes, as the participants were the
of work perpetrated through the concerted action of the employees who
dismissed employees who were on payroll reinstatement. It concludes
deliberately failed to report for work on the convenient excuse that they
that there was no work stoppage.
will hold a rally at the BLR and DOLE offices in Intramuros, Manila, on
February 21 to 23, 2001. The purported reason for these protest actions This contention has no basis.
was to safeguard their rights against any abuse which the med-arbiter It is clear that once the DOLE Secretary assumes jurisdiction over the
may commit against their cause. However, the Union failed to advance labor dispute and certifies the case for compulsory arbitration with the
convincing proof that the med-arbiter was biased against them. The NLRC, the parties have to revert to the status quo ante (the state of
acts of the med-arbiter in the performance of his duties are presumed things as it was before). The intended normalcy of operations is
regular. Sans ample evidence to the contrary, the Union was unable to apparent from the fallo of the April 10, 2001 Order of then DOLE
justify the February 2001 mass actions. What comes to the fore is that Secretary Patricia A. Sto. Tomas, which reads:
the decision not to work for two days was designed and calculated to WHEREFORE, PREMISES CONSIDERED, this Office hereby
cripple the manufacturing arm of Toyota. It becomes obvious that the CERTIFIES the labor dispute at Toyota Motors Philippines Corporation
real and ultimate goal of the Union is to coerce Toyota to finally to the [NLRC] pursuant to Article 263 (g) of the Labor Code, as
acknowledge the Union as the sole bargaining agent of the company. amended. This Certification covers the current labor cases filed in
This is not a legal and valid exercise of the right of assembly and to relation with the Toyota strike, particularly, the Petition for Injunction
demand redress of grievance. filed with the National Labor Relations Commission entitled Toyota
Motor Philippines Corporation vs. Toyota Motor Philippines Corporation
 69

Workers Association (TMPCWA), Ed Cubelo, et al., NLRC Injunction officers are hereby terminated for cause pursuant to Article 264(a) of
Case No. 3401054-01; Toyota Motor Philippines Corporation vs. the Labor Code: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito
Toyota Motor Philippines Corporation Workers Association, et al., Hugo, Virgilio Colandog, Rommel Digma, Federico Torres, Emilio
NLRC NCR Case No. 3004-01775-01, and such other labor cases that Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo,
the parties may file relating to the strike and its effects while this Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo
Certification is in effect. Mata.43
As provided under Article 2634(g) of the Labor Code, all striking The rule is well entrenched in this jurisdiction that factual findings of the
workers are directed to return to work at their regular shifts by April 16, labor tribunal, when affirmed by the appellate court, are generally
2001; the Company is in turn directed to accept them back to work accorded great respect, even finality.44
under the same terms and conditions obtaining prior to the work Likewise, we are not duty-bound to delve into the accuracy of the
stoppage, subject to the option of the company to merely reinstate a factual findings of the NLRC in the absence of clear showing that these
worker or workers in the payroll in light of the negative emotions that were arbitrary and bereft of any rational basis.45 In the case at bench,
the strike has generated and the need to prevent the further the Union failed to convince us that the NLRC findings that the Union
deterioration of the relationship between the company and its workers. officials instigated, led, and knowingly participated in the series of illegal
Further, the parties are hereby ordered to cease and desist from strikes are not reinforced by substantial evidence. Verily, said findings
committing any act that might lead to the worsening of an already have to be maintained and upheld. We reiterate, as a reminder to labor
deteriorated situation.42 (Emphasis supplied.) leaders, the rule that "[u]nion officers are duty bound to guide their
It is explicit from this directive that the Union and its members shall members to respect the law."46 Contrarily, if the "officers urge the
refrain from engaging in any activity that might exacerbate the tense members to violate the law and defy the duly constituted authorities,
labor situation in Toyota, which certainly includes concerted actions. their dismissal from the service is a just penalty or sanction for their
This was not heeded by the Union and the individual respondents who unlawful acts."47
staged illegal concerted actions on May 23 and 28, 2001 in Member’s liability depends on participation in illegal acts
contravention of the Order of the DOLE Secretary that no acts should Art. 264(a) of the Labor Code provides that a member is liable when he
be undertaken by them to aggravate the "already deteriorated knowingly participates in an illegal act "during a strike." While the
situation." provision is silent on whether the strike is legal or illegal, we find that
While it may be conceded that there was no work disruption in the two the same is irrelevant. As long as the members commit illegal acts, in
Toyota plants, the fact still remains that the Union and its members a legal or illegal strike, then they can be terminated. 48 However, when
picketed and performed concerted actions in front of the Company union members merely participate in an illegal strike without committing
premises. This is a patent violation of the assumption of jurisdiction and any illegal act, are they liable?
certification Order of the DOLE Secretary, which ordered the parties "to This was squarely answered in Gold City Integrated Port Service, Inc.
cease and desist from committing any act that might lead to the v. NLRC,49 where it was held that an ordinary striking worker cannot be
worsening of an already deteriorated situation." While there are no work terminated for mere participation in an illegal strike. This was an
stoppages, the pickets and concerted actions outside the plants have affirmation of the rulings in Bacus v. Ople50 and Progressive Workers
a demoralizing and even chilling effect on the workers inside the plants Union v. Aguas,51 where it was held that though the strike is illegal, the
and can be considered as veiled threats of possible trouble to the ordinary member who merely participates in the strike should not be
workers when they go out of the company premises after work and of meted loss of employment on the considerations of compassion and
impending disruption of operations to company officials and even to good faith and in view of the security of tenure provisions under the
customers in the days to come. The pictures presented by Toyota Constitution. In Esso Philippines, Inc. v. Malayang Manggagawa sa
undoubtedly show that the company officials and employees are being Esso (MME), it was explained that a member is not responsible for the
intimidated and threatened by the strikers. In short, the Union, by its union’s illegal strike even if he voted for the holding of a strike which
mass actions, has inflamed an already volatile situation, which was became illegal.52
explicitly proscribed by the DOLE Secretary’s Order. We do not find any Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the
compelling reason to reverse the NLRC findings that the pickets on May history relating to the liability of a union member in an illegal strike,
23 and 28, 2001 were unlawful strikes. starting with the "rule of vicarious liability," thus:
From the foregoing discussion, we rule that the February 21 to 23, 2001 Under [the rule of vicarious liability], mere membership in a labor union
concerted actions, the March 17 to April 12, 2001 strikes, and the May serves as basis of liability for acts of individuals, or for a labor activity,
23 and 28, 2001 mass actions were illegal strikes. done on behalf of the union. The union member is made liable on the
Union officers are liable for unlawful strikes or illegal acts during a strike theory that all the members are engaged in a general conspiracy, and
Art. 264 (a) of the Labor Code provides: the unlawful acts of the particular members are viewed as necessary
ART. 264. PROHIBITED ACTIVITIES incidents of the conspiracy. It has been said that in the absence of
(a) x x x statute providing otherwise, the rule of vicarious liability applies.
Any worker whose employment has been terminated as a consequence Even the Industrial Peace Act, however, which was in effect from 1953
of an unlawful lockout shall be entitled to reinstatement with full to 1974, did not adopt the vicarious liability concept. It expressly
backwages. Any union officer who knowingly participates in an illegal provided that:
strike and any worker or union officer who knowingly participates in the No officer or member of any association or organization, and no
commission of illegal acts during a strike may be declared to have lost association or organization participating or interested in a labor dispute
his employment status: Provided, That mere participation of a worker shall be held responsible or liable for the unlawful acts of individual
in a lawful strike shall not constitute sufficient ground for termination of officers, members, or agents, except upon proof of actual participation
his employment, even if a replacement had been hired by the employer in, or actual authorization of, such acts or of ratifying of such acts after
during such lawful strike. actual knowledge thereof.
Art. 264(a) sanctions the dismissal of a union officer who knowingly Replacing the Industrial Peace Act, the Labor Code has not adopted
participates in an illegal strike or who knowingly participates in the the vicarious liability rule.53
commission of illegal acts during a lawful strike. Thus, the rule on vicarious liability of a union member was abandoned
It is clear that the responsibility of union officials is greater than that of and it is only when a striking worker "knowingly participates in the
the members. They are tasked with the duty to lead and guide the commission of illegal acts during a strike" that he will be penalized with
membership in decision making on union activities in accordance with dismissal.
the law, government rules and regulations, and established labor Now, what are considered "illegal acts" under Art. 264(a)?
practices. The leaders are expected to recommend actions that are No precise meaning was given to the phrase "illegal acts." It may
arrived at with circumspection and contemplation, and always keep encompass a number of acts that violate existing labor or criminal laws,
paramount the best interests of the members and union within the such as the following:
bounds of law. If the implementation of an illegal strike is recommended, (1) Violation of Art. 264(e) of the Labor Code which provides
then they would mislead and deceive the membership and the supreme that "[n]o person engaged in picketing shall commit any act of
penalty of dismissal is appropriate. On the other hand, if the strike is violence, coercion or intimidation or obstruct the free ingress
legal at the beginning and the officials commit illegal acts during the to or egress from the employer’s premises for lawful purposes,
duration of the strike, then they cannot evade personal and individual or obstruct public thoroughfares";
liability for said acts. (2) Commission of crimes and other unlawful acts in carrying
The Union officials were in clear breach of Art. 264(a) when they out the strike;54 and
knowingly participated in the illegal strikes held from February 21 to 23, (3) Violation of any order, prohibition, or injunction issued by
2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001. the DOLE Secretary or NLRC in connection with the
We uphold the findings of fact of the NLRC on the involvement of said assumption of jurisdiction/certification Order under Art. 263(g)
union officials in the unlawful concerted actions as affirmed by the CA, of the Labor Code.
thus: As earlier explained, this enumeration is not exclusive and it may cover
As regards to the Union officers and directors, there is overwhelming other breaches of existing laws.
justification to declare their termination from service. Having instigated In the cases at bench, the individual respondents participated in several
the Union members to stage and carry out all illegal strikes from mass actions, viz:
February 21-23, 2001, and May 23 and 28, 2001, the following Union
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(1) The rallies held at the DOLE and BLR offices on February Joey; 117. Lomboy, Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude
21, 22, and 23, 2001; Jonobell; 120. Lucido, Johny; 121. Macalindong, Rommel; 122.
(2) The strikes held on March 17 to April 12, 2001; and Madrazo, Nixon; 123. Magbalita, Valentin; 124. Magistrado, Rogelio Jr.;
(3) The rallies and picketing on May 23 and 28, 2001 in front 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127.
of the Toyota Bicutan and Sta. Rosa plants. Malabrigo, Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio
Did they commit illegal acts during the illegal strikes on February 21 to Jr.; 130. Maleon, Paulino; 131. Manaig, Roger; 132. Manalang, Joseph
23, 2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001? Patrick; 133. Manalo, Manuel Jr.; 134. Manaog, Jonamar; 135. Manaog,
The answer is in the affirmative. Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito; 138.
Manego, Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; 141.
As we have ruled that the strikes by the Union on the three different
Manjares, Alfred; 142. Manzanilla, Edwin; 143. Marasigan, Carlito; 144.
occasions were illegal, we now proceed to determine the individual
Marcial, Nilo; 145. Mariano, Rommel; 146. Mata, Mayo; 147. Mendoza,
liabilities of the affected union members for acts committed during
Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150. Miranda,
these forbidden concerted actions.
Eduardo; 151. Miranda, Luis; 152. Montero, Ericson; 153. Montero,
Our ruling in Association of Independent Unions in the Philippines v. Marlaw; 154. Montes, Ruel; 155. Morales, Dennis; 156. Natividad,
NLRC lays down the rule on the liability of the union members: Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor,
Decisive on the matter is the pertinent provisions of Article 264 (a) of Edwin; 160. Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito;
the Labor Code that: "[x x x] any worker [x x x] who knowingly 163. Obe, Victor; 164. Oclarino, Alfonso; 165. Ojenal, Leo; 166. Olit,
participates in the commission of illegal acts during a strike may be Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169. Operana, Danny;
declared to have lost his employment status. [x x x]" It can be gleaned 170. Oriana, Allan; 171. Ormilla, Larry; 172. Ortiz, Felimon; 173.
unerringly from the aforecited provision of law in point, however, that Paniterce, Alvin; 174. Parallag, Gerald; 175. Pecayo, Edwin; 176. Pena,
an ordinary striking employee can not be terminated for mere Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179. Piamonte,
participation in an illegal strike. There must be proof that he Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John;
committed illegal acts during the strike and the striker who 183. Puno, Manjolito; 184. Ramos, Eddie; 185. Reyes, Rolando; 186.
participated in the commission of illegal act[s] must be identified. Roxas, Philip; 187. Sales, Paul Arthur; 188. Sallan, David Jr.; 189.
But proof beyond reasonable doubt is not required. Substantial Salvador, Bernardo; 190. Sampang, Alejandro; 191. San Pablo,
evidence available under the circumstances, which may justify the Baldwin; 192. Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos,
imposition of the penalty of dismissal, may suffice. Raymond; 195. Sapin, Al Jose; 196. Saquilabon, Bernabe; 197.
In the landmark case of Ang Tibay vs. CIR, the court ruled "Not only Serrano, Ariel; 198. Sierra, Alex; 199. Simborio, Romualdo; 200. Sulit,
must there be some evidence to support a finding or conclusion, but Lauro; 201. Tabirao, Elvisanto; 202. Tablizo, Edwin; 203. Taclan,
the evidence must be ‘substantial.’ Substantial evidence is more Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson
than a mere scintilla. It means such relevant evidence that a Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick; 209.
reasonable mind might accept as sufficient to support a Tolentino, Rodel; 210. Tolentino, Rommel; 211. Tolentino, Romulo Jr.;
conclusion."55 (Emphasis supplied.) 212. Tomas, Rolando; 213. Topaz, Arturo Sr.; 214. Toral, Grant Robert;
Thus, it is necessary for the company to adduce proof on the 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona, Jose
participation of the striking employee in the commission of illegal acts Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas,
during the strikes. Joseph; 221. Vergara, Allan; 222. Vergara, Esdwin; 223. Violeta, Apollo
After a scrutiny of the records, we find that the 227 employees indeed Sr.; 224. Vistal, Alex; 225. Yangyon, Michael Teddy; 226. Zaldevar,
joined the February 21, 22, and 23, 2001 rallies and refused to render Christopher; and 227. Zamora, Dominador Jr.
overtime work or report for work. These rallies, as we earlier ruled, are Toyota’s Position Paper containing the list of striking workers was
in reality illegal strikes, as the procedural requirements for strikes under attested to as true and correct under oath by Mr. Jose Ma. Aligada, First
Art. 263 were not complied with. Worse, said strikes were in violation Vice President of the Group Administration Division of Toyota. Mr.
of the company rule prohibiting acts "in citing or participating in riots, Emerito Dumaraos, Assistant Department Manager of the Production
disorders, alleged strikes or concerted action detrimental to Toyota’s Department of Toyota, likewise submitted a June 29, 2001
interest." Affidavit56 confirming the low attendance of employees on February 21,
With respect to the February 21, 22, and 23, 2001 concerted actions, 22, and 23, 2001, which resulted from the intentional absences of the
Toyota submitted the list of employees who did not render overtime aforelisted striking workers. The Union, on the other hand, did not refute
work on February 21, 2001 and who did not report for work on February Toyota’s categorical assertions on the participation of said workers in
22 and 23, 2001 as shown by Annex "I" of Toyota’s Position Paper in the mass actions and their deliberate refusal to perform their assigned
NLRC Certified Case No. 000203-01 entitled In Re: Labor Dispute at work on February 21, 22, and 23, 2001. More importantly, it did not
Toyota Motor Philippines Corp. The employees who participated in the deny the fact of absence of the employees on those days from the
illegal concerted actions were as follows: Toyota manufacturing plants and their deliberate refusal to render work.
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; Their admission that they participated in the February 21 to 23, 2001
5. Alejo, Alex; 6. Alfonso, Erwin; 7. Apolinario, Dennis; 8. Apostol, mass actions necessarily means they were absent from their work on
Melvin; 9. Arceta, Romel; 10. Arellano, Ruel; 11. Ariate, Abraham; 12. those days.
Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester; 15. Bala, Anent the March 28 to April 12, 2001 strikes, evidence is ample to show
Rizalino; 16. Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, commission of illegal acts like acts of coercion or intimidation and
Roderick; 19. Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; obstructing free ingress to or egress from the company premises. Mr.
22. Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter; 25. Eduardo Nicolas III, Toyota’s Security Chief, attested in his affidavit that
Bolocon, Jerry; 26. Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue, the strikers "badmouthed people coming in and shouted invectives
Antonio; 29. Bulan, Elmer; 30. Busano, Freddie; 31. Bustillo, Ernesto such as bakeru at Japanese officers of the company." The strikers even
Jr.; 32. Caalim, Alexander; 33. Cabahug, Nelson; 34. Cabatay, Jessie; pounded the vehicles of Toyota officials. More importantly, they
35. Cabezas, Marcelo; 36. Calalang, Richard; 37. Candelario, Roque prevented the ingress of Toyota employees, customers, suppliers, and
Jr.; 38. Capate, Leo Nelson; 39. Carandang, Resty; 40. Caraqueo, other persons who wanted to transact business with the company.
Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan, These were patent violations of Art. 264(e) of the Labor Code, and may
Christopher; 44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. even constitute crimes under the Revised Penal Code such as threats
Cometa, Julius; 48. Completo, Emilio; 49. Consignado, Randy; 50. or coercion among others.
Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52. Cuevas, Reynaldo; 53. On March 28, 2001, the following have committed illegal acts––
Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, blocking the ingress to or egress from the two (2) Toyota plants and
Rene; 57. David, Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz, preventing the ingress of Toyota employees on board the company
Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62. De Leon, shuttle–– at the Bicutan and Sta. Rosa Plants, viz:
Leonardo; 63. Delos Santos, Rogelio; 64. De Ocampo, Joselito; 65. De 1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John
Silva, Leodegario; 66. Del Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla, Malabanan; 5. Abel Berces; 6. Ariel Garcia; 7. Charlie Oliveria; 8.
Alex; 69. Dia, Frank Manuel; 70. Dimayuga, Antonio; 71. Dingcong, Manjolito Puno; 9. Baldwin San Pablo; 10. Federico Torres; 11. Larry
Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14. Reynaldo Cuevas;
75. Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. 15. George Polutan; 16. Arman Ercillo; 17. Joey Llanera; and 18.
Esteva, Alexander; 79. Estole, Francisco; 80. Fajardo, George; 81. Roberto Gonzales
Fajilagutan, Jason; 82. Fajura, John; 83. Franco, Melencio; 84. Franco, Photographs were submitted by Toyota marked as Annexes "1"
Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87. Gado, Eduardo; 88. through "18" of its Position Paper, vividly showing the participation of
Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin; 91. Garcia, Ariel; the aforelisted employees in illegal acts.57
92. Gaspi, Ronald; 93. Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. To further aggravate the situation, a number of union members
Gerola, Larry; 96. Gohilde, Michael; 97. Gojar, Regino; 98. Gojar, committed illegal acts (blocking the ingress to and egress from the plant)
Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga, during the strike staged on March 29, 2001 at the Toyota plant in
Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay; 104. Bicutan, to wit:
Imperial, Alejandro; 105. Jaen, Ferdinand; 106. Jalea, Philip; 107.
1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit;
Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan, Victorio; 110.
and 5. Joel Agosto
Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro,
Orlando; 114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera,
 71

Pictures marked as Annexes "21" to "22" of Toyota’s Position Paper under the applicable individual or collective bargaining agreement with
reveal the illegal acts committed by the aforelisted workers.58 the employer or voluntary employer policy or practice" 65 or under the
On the next day, March 30, 2001, several employees again committed Labor Code and other existing laws. This means that the employee,
illegal acts (blocking ingress to and egress from the plant) during the despite the dismissal for a valid cause, retains the right to receive from
strike at the Bicutan plant, to wit: the employer benefits provided by law, like accrued service incentive
1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; leaves. With respect to benefits granted by the CBA provisions and
5. Wilfredo Tagle; 6. Alejandro Imperial; 7. Manjolito Puno; 8. Delmar voluntary management policy or practice, the entitlement of the
Espadilla; 9. Apollo Violeta; and 10. Elvis Tabirao dismissed employees to the benefits depends on the stipulations of the
Pictures marked as Annexes "25" to "26" and "28" of Toyota’s Position CBA or the company rules and policies.
Paper show the participation of these workers in unlawful acts. 59 As in any rule, there are exceptions. One exception where separation
On April 5, 2001, seven (7) Toyota employees were identified to have pay is given even though an employee is validly dismissed is when the
committed illegal acts (blocking ingress to and egress from the plant) court finds justification in applying the principle of social justice well
during the strike held at the Bicutan plant, to wit: entrenched in the 1987 Constitution. In Phil. Long Distance Telephone
1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Co. (PLDT) v. NLRC, the Court elucidated why social justice can
Salvador; 5. Antonio Dimayuga; 6. Rurel Borebor; and 7. Alberto validate the grant of separation pay, thus:
Lomboy The reason is that our Constitution is replete with positive commands
The participations of the strikers in illegal acts are manifest in the for the promotion of social justice, and particularly the protection of the
pictures marked as Annexes "32" and "33" of Toyota’s Position Paper. 60 rights of the workers. The enhancement of their welfare is one of the
primary concerns of the present charter. In fact, instead of confining
On April 6, 2001, only Rogelio Piamonte was identified to have
itself to the general commitment to the cause of labor in Article II on the
committed illegal acts (blocking ingress to and egress from the Toyota
Declaration of Principles of State Policies, the new Constitution
plant) during the strike at the Toyota Santa Rosa plant.61 Then, on April
contains a separate article devoted to the promotion of social justice
9, 2001, Alvin Paniterce, Dennis Apolinario, and Eduardo
and human rights with a separate sub-topic for labor. Article XIII
Miranda62 were identified to have committed illegal acts (blocking
expressly recognizes the vital role of labor, hand in hand with
ingress to and egress from the Toyota plant) during the strike at the
management, in the advancement of the national economy and the
Toyota Santa Rosa plant and were validly dismissed by Toyota.
welfare of the people in general. The categorical mandates in the
Lastly, the strikers, though on payroll reinstatement, staged protest Constitution for the improvement of the lot of the workers are more than
rallies on May 23, 2001 and May 28, 2001 in front of the Bicutan and sufficient basis to justify the award of separation pay in proper cases
Sta. Rosa plants. These workers’ acts in joining and participating in the even if the dismissal be for cause.66
May 23 and 28, 2001 rallies or pickets were patent violations of the April
In the same case, the Court laid down the rule that severance
10, 2001 assumption of jurisdiction/certification Order issued by the
compensation shall be allowed only when the cause of the dismissal is
DOLE Secretary, which proscribed the commission of acts that might
other than serious misconduct or that which reflects adversely on the
lead to the "worsening of an already deteriorated situation." Art. 263(g)
employee’s moral character. The Court succinctly discussed the
is clear that strikers who violate the assumption/certification Order may
propriety of the grant of separation pay in this wise:
suffer dismissal from work. This was the situation in the May 23 and 28,
2001 pickets and concerted actions, with the following employees who We hold that henceforth separation pay shall be allowed as a measure
committed illegal acts: of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting
a. Strikers who joined the illegal pickets on May 23, 2001 were (1)
on his moral character. Where the reason for the valid dismissal is, for
Dennis Apolinario; (2) Abel Berces; (3) Benny Bering; (4) Dexter
example, habitual intoxication or an offense involving moral turpitude,
Bolaños; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7) Randy
like theft or illicit sexual relations with a fellow worker, the employer may
Consignado; (8) Herbert Dalanon; (9) Leodegario De Silva; (10)
not be required to give the dismissed employee separation pay, or
Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko Franco; (13)
financial assistance, or whatever other name it is called, on the ground
Genaro Gerola, Jr.; (14) Michael Gohilde; (15) Rogelio Magistrado; (16)
of social justice.
Rolando Malaluan, Jr.; (17) Leoncio Malate, Jr.; (18) Edwin Manzanilla;
(19) Nila Marcial; (20) Roderick Nierves; (21) Larry Ormilla; (22) A contrary rule would, as the petitioner correctly argues, have the effect,
Filemon Ortiz; (23) Cornelio Platon; (24) Alejandro Sampang; (25) Eric of rewarding rather than punishing the erring employee for his offense.
Santiago; (26) Romualdo Simborio; (27) Lauro Sulit; and (28) Rommel And we do not agree that the punishment is his dismissal only and that
Tagala. the separation pay has nothing to do with the wrong he has committed.
Of course it has. Indeed, if the employee who steals from the company
Pictures show the illegal acts (participation in pickets/strikes despite the
is granted separation pay even as he is validly dismissed, it is not
issuance of a return-to-work order) committed by the aforelisted
unlikely that he will commit a similar offense in his next employment
strikers.63
because he thinks he can expect a like leniency if he is again found out.
b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; This kind of misplaced compassion is not going to do labor in general
(2) Alex Alejo; (3) Erwin Alfonso; (4) Dennis Apolinario; (5) Melvin any good as it will encourage the infiltration of its ranks by those who
Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel Berces; (9) Benny do not deserve the protection and concern of the Constitution.
Bering; (10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo
The policy of social justice is not intended to countenance wrongdoing
Capate; (13) Lorenzo Caraqueo; (14) Christopher Catapusan; (15)
simply because it is committed by the underprivileged. At best it may
Ricky Chavez; (16) Virgilio Colandog; (17) Claudio Correa; (18) Ed
mitigate the penalty but it certainly will not condone the offense.
Cubelo; (19) Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno David,
Compassion for the poor is an imperative of every humane society but
Jr.; (22) Alex Del Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25)
only when the recipient is not a rascal claiming an undeserved privilege.
Aldrin Duyag; (26) Armando Ercillo; (27) Delmar Espadilla; (28)
Social justice cannot be permitted to be refuge of scoundrels any more
Alexander Esteva; (29) Nikko Franco; (30) Dexter Fulgar; (31) Dante
than can equity be an impediment to the punishment of the guilty.
Fulo; (32) Eduardo Gado; (33) Michael Gohilde; (34) Eugene Jay
Those who invoke social justice may do so only if their hands are clean
Hondrada II; (35) Joey Javillonar; (36) Basilio Laqui; (37) Alberto
and their motives blameless and not simply because they happen to be
Lomboy; (38) Geronimo Lopez; (39) Rommel Macalindog; (40) Nixon
poor. This great policy of our Constitution is not meant for the protection
Madrazo; (41) Valentin Magbalita; (42) Allan Jon Malabanan; (43)
of those who have proved they are not worthy of it, like the workers who
Jonamar Manaog; (44) Bayani Manguil; (45) June Manigbas; (46)
have tainted the cause of labor with the blemishes of their own
Alfred Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo
character.67
Ojenal; (50) Allan Oriana; (51) Rogelio Piamonte; (52) George Polutan;
(53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56) Explicit in PLDT are two exceptions when the NLRC or the courts
Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) should not grant separation pay based on social justice¾serious
Edwin Tablizo; (60) Emmanuel Tulio; (61) Nestor Umiten; (62) Joseph misconduct (which is the first ground for dismissal under Art. 282) or
Vargas; (63) Edwin Vergara; and (64) Michael Teddy Yangyon. acts that reflect on the moral character of the employee. What is unclear
is whether the ruling likewise precludes the grant of separation pay
Toyota presented photographs which show said employees conducting
when the employee is validly terminated from work on grounds laid
mass pickets and concerted actions.64
down in Art. 282 of the Labor Code other than serious misconduct.
Anent the grant of severance compensation to legally dismissed union
A recall of recent cases decided bearing on the issue reveals that when
members, Toyota assails the turn-around by the CA in granting
the termination is legally justified on any of the grounds under Art. 282,
separation pay in its June 20, 2003 Resolution after initially denying it
separation pay was not allowed. In Ha Yuan Restaurant v. NLRC,68 we
in its February 27, 2003 Decision. The company asseverates that
deleted the award of separation pay to an employee who, while
based on the CA finding that the illegal acts of said union members
unprovoked, hit her co-worker’s face, causing injuries, which then
constitute gross misconduct, not to mention the huge losses it suffered,
resulted in a series of fights and scuffles between them. We viewed her
then the grant of separation pay was not proper.
act as serious misconduct which did not warrant the award of
The general rule is that when just causes for terminating the services separation pay. In House of Sara Lee v. Rey,69 this Court deleted the
of an employee under Art. 282 of the Labor Code exist, the employee award of separation pay to a branch supervisor who regularly, without
is not entitled to separation pay. The apparent reason behind the authorization, extended the payment deadlines of the company’s sales
forfeiture of the right to termination pay is that lawbreakers should not agents. Since the cause for the supervisor’s dismissal involved her
benefit from their illegal acts. The dismissed employee, however, is integrity (which can be considered as breach of trust), she was not
entitled to "whatever rights, benefits and privileges [s/he] may have
 72

worthy of compassion as to deserve separation pay based on her A painstaking review of case law renders obtuse the Union’s claim for
length of service. In Gustilo v. Wyeth Phils., Inc.,70 this Court found no separation pay. In a slew of cases, this Court refrained from awarding
exceptional circumstance to warrant the grant of financial assistance to separation pay or financial assistance to union officers and members
an employee who repeatedly violated the company’s disciplinary rules who were separated from service due to their participation in or
and regulations and whose employment was thus terminated for gross commission of illegal acts during strikes. In the recent case of Pilipino
and habitual neglect of his duties. In the doctrinal case of San Miguel v. Telephone Corporation v. Pilipino Telephone Employees Association
Lao,71 this Court reversed and set aside the ruling of the CA granting (PILTEA),74 this Court upheld the dismissal of union officers who
retirement benefits or separation pay to an employee who was participated and openly defied the return-to-work order issued by the
dismissed for willful breach of trust and confidence by causing the DOLE Secretary. No separation pay or financial assistance was
delivery of raw materials, which are needed for its glass production granted. In Sukhothai Cuisine and Restaurant v. Court of
plant, to its competitor. While a review of the case reports does not Appeals,75 this Court declared that the union officers who participated
reveal a case involving a termination by reason of the commission of a in and the union members who committed illegal acts during the illegal
crime against the employer or his/her family which dealt with the issue strike have lost their employment status. In this case, the strike was
of separation pay, it would be adding insult to injury if the employer held illegal because it violated agreements providing for arbitration.
would still be compelled to shell out money to the offender after the Again, there was no award of separation pay nor financial assistance.
harm done. In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel
In all of the foregoing situations, the Court declined to grant termination Employees Union,76 the strike was declared illegal because the means
pay because the causes for dismissal recognized under Art. 282 of the employed was illegal. We upheld the validity of dismissing union
Labor Code were serious or grave in nature and attended by willful or members who committed illegal acts during the strike, but again,
wrongful intent or they reflected adversely on the moral character of the without awarding separation pay or financial assistance to the erring
employees. We therefore find that in addition to serious misconduct, in employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v.
dismissals based on other grounds under Art. 282 like willful Sulpicio Lines,77 this Court upheld the dismissal of union officers who
disobedience, gross and habitual neglect of duty, fraud or willful breach participated in an illegal strike sans any award of separation pay. Earlier,
of trust, and commission of a crime against the employer or his family, in Grand Boulevard Hotel v. Genuine Labor Organization of Workers in
separation pay should not be conceded to the dismissed employee. Hotel, Restaurant and Allied Industries,78 we affirmed the dismissal of
In analogous causes for termination like inefficiency, drug use, and the Union’s officers who participated in an illegal strike without
others, the NLRC or the courts may opt to grant separation pay awarding separation pay, despite the NLRC’s declaration urging the
anchored on social justice in consideration of the length of service of company to give financial assistance to the dismissed
the employee, the amount involved, whether the act is the first offense, employees.79 In Interphil Laboratories Union-FFW, et al. v. Interphil
the performance of the employee and the like, using the guideposts Laboratories, Inc.,80 this Court affirmed the dismissal of the union
enunciated in PLDT on the propriety of the award of separation pay. officers who led the concerted action in refusing to render overtime
In the case at bench, are the 227 striking employees entitled to work and causing "work slowdowns." However, no separation pay or
separation pay? financial assistance was allowed. In CCBPI Postmix Workers Union v.
In the instant case, the CA concluded that the illegal strikes committed NLRC,81 this Court affirmed the dismissal of union officers who
by the Union members constituted serious misconduct. 72 participated in the strike and the union members who committed illegal
acts while on strike, without awarding them separation pay or financial
The CA ratiocinated in this manner:
assistance. In 1996, in Allied Banking Corporation v. NLRC,82 this
Neither can social justice justify the award to them of severance Court affirmed the dismissal of Union officers and members, who
compensation or any other form of financial assistance. x x x staged a strike despite the DOLE Secretary’s issuance of a return to
xxxx work order but did not award separation pay. In the earlier but more
Considering that the dismissal of the employees was due to their relevant case of Chua v. NLRC,83 this Court deleted the NLRC’s award
participation in the illegal strikes as well as violation of the Code of of separation benefits to an employee who participated in an unlawful
Conduct of the company, the same constitutes serious misconduct. A and violent strike, which strike resulted in multiple deaths and extensive
serious misconduct is a transgression of some established and definite property damage. In Chua, we viewed the infractions committed by the
rule of action, a forbidden act, a dereliction of duty, willful in character, union officers and members as a serious misconduct which resulted in
and implies wrongful intent and not mere error in judgment. In fact, in the deletion of the award of separation pay in conformance to the ruling
Panay Electric Company, Inc. v. NLRC, the Supreme Court nullified the in PLDT. Based on existing jurisprudence, the award of separation pay
grant of separation benefits to employees who unlawfully participated to the Union officials and members in the instant petitions cannot be
in an illegal strike in light of Article 264, Title VIII, Book V of the Labor sustained.
Code, that, "any union officer who knowingly participates in an illegal One last point to consider—it is high time that employer and employee
strike and any worker or union officer who knowingly participates in the cease to view each other as adversaries and instead recognize that
commission of illegal acts during a strike may be declared to have lost theirs is a symbiotic relationship, wherein they must rely on each other
his employment status." to ensure the success of the business. When they consider only their
The constitutional guarantee on social justice is not intended only for own self-interests, and when they act only with their own benefit in mind,
the poor but for the rich as well. It is a policy of fairness to both labor both parties suffer from short-sightedness, failing to realize that they
and management.73 (Emphasis supplied.) both have a stake in the business. The employer wants the business to
In disposing of the Union’s plea for reconsideration of its February 27, succeed, considering the investment that has been made. The
2003 Decision, the CA however performed a volte-face by reinstating employee in turn, also wants the business to succeed, as continued
the award of separation pay. employment means a living, and the chance to better one’s lot in life. It
The CA’s grant of separation pay is an erroneous departure from our is clear then that they both have the same goal, even if the benefit that
ruling in Phil. Long Distance Telephone Co. v. NLRC that serious results may be greater for one party than the other. If this becomes a
misconduct forecloses the award of separation pay. Secondly, the source of conflict, there are various, more amicable means of settling
advertence to the alleged honest belief on the part of the 227 disputes and of balancing interests that do not add fuel to the fire, and
employees that Toyota committed a breach of the duty to bargain instead open avenues for understanding and cooperation between the
collectively and an abuse of valid exercise of management prerogative employer and the employee. Even though strikes and lockouts have
has not been substantiated by the evidence extant on record. There been recognized as effective bargaining tools, it is an antiquated notion
can be no good faith in intentionally incurring absences in a collective that they are truly beneficial, as they only provide short-term solutions
fashion from work on February 22 and 23, 2001 just to attend the DOLE by forcing concessions from one party; but staging such strikes would
hearings. The Union’s strategy was plainly to cripple the operations and damage the working relationship between employers and employees,
bring Toyota to its knees by inflicting substantial financial damage to thus endangering the business that they both want to succeed. The
the latter to compel union recognition. The Union officials and members more progressive and truly effective means of dispute resolution lies in
are supposed to know through common sense that huge losses would mediation, conciliation, and arbitration, which do not increase tension
befall the company by the abandonment of their regular work. It was but instead provide relief from them. In the end, an atmosphere of trust
not disputed that Toyota lost more than PhP 50 million because of the and understanding has much more to offer a business relationship than
willful desertion of company operations in February 2001 by the the traditional enmity that has long divided the employer and the
dismissed union members. In addition, further damage was employee.
experienced by Toyota when the Union again resorted to illegal strikes WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are
from March 28 to April 12, 2001, when the gates of Toyota were blocked DENIED while those in G.R. Nos. 158798-99 are GRANTED.
and barricaded, and the company officials, employees, and customers The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and
were intimidated and harassed. Moreover, they were fully aware of the 67561 restoring the grant of severance compensation is ANNULLED
company rule on prohibition against concerted action inimical to the and SET ASIDE.
interests of the company and hence, their resort to mass actions on The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and
several occasions in clear violation of the company regulation cannot 67561, which affirmed the August 9, 2001 Decision of the NLRC but
be excused nor justified. Lastly, they blatantly violated the deleted the grant of severance compensation, is REINSTATED and
assumption/certification Order of the DOLE Secretary, exhibiting their AFFIRMED.
lack of obeisance to the rule of law. These acts indeed constituted No costs.
serious misconduct.
SO ORDERED.
 73

the same; and consequently annulled and set aside the NLRC decision.
The CA disposed, as follows:
WHEREFORE, premises considered, the instant petition
G.R. No. 160905 July 4, 2008 is GRANTED. The assailed decision of the NLRC dated
BIENVENIDO D. GOMA, petitioner, October 24, 2000, as well as the Resolution dated September
vs. 9, 2002 in NLRC Case No. V-000882-99, RAB VII-0088-98-D
PAMPLONA PLANTATION INCORPORATED, respondent. are hereby ANNULLED and SET ASIDE. The complaint is
DECISION ordered DISMISSED.
NACHURA, J.: SO ORDERED.16
For review is the Decision1 of the Court of Appeals (CA) dated August Contrary to the NLRC’s finding, the CA concluded that there was no
27, 2003 granting respondent Pamplona Plantation, Inc.’s petition employer-employee relationship. The CA stressed that petitioner
for certiorari and its Resolution2 dated November 11, 2003 denying having raised a positive averment, had the burden of proving the
petitioner Bienvenido Goma’s motion for reconsideration, in CA-G.R. existence of an employer-employee relationship. Respondent,
SP No. 74892. therefore, had no obligation to prove its negative averment. 17 The
appellate court further held that while the respondent’s business
Petitioner commenced3 the instant suit by filing a complaint for illegal
required the performance of occasional repairs and carpentry work, the
dismissal, underpayment of wages, non-payment of premium pay for
retention of a carpenter in its payroll was not necessary or desirable in
holiday and rest day, five (5) days incentive leave pay, damages and
the conduct of its usual business.18 Lastly, although the petitioner was
attorney’s fees, against the respondent. The case was filed with the
an employee of the former owner of the hacienda, the respondent was
Sub-Regional Arbitration Branch No. VII of Dumaguete City. Petitioner
not required to absorb such employees because employment contracts
claimed that he worked as a carpenter at the Hacienda Pamplona since
are in personam and binding only between the parties.19
1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m.
to 5:00 p.m. daily with a salary rate of P90.00 a day paid weekly; and Petitioner now comes before this Court raising the sole issue:
that he worked continuously until 1997 when he was not given any work WHETHER OR NOT THE DECISION OF [THE] COURT OF
assignment.4 On a claim that he was a regular employee, petitioner APPEALS DATED AUGUST 27, 2003, REVERSING AND
alleged to have been illegally dismissed when the respondent refused SETTING ASIDE THE NLRC (Fourth Division, Cebu City)
without just cause to give him work assignment. Thus, he prayed for RULING THAT THE "PETITIONER WAS NOT ILLEGALLY
backwages, salary differential, service incentive leave pay, damages DISMISSED AS HE WAS NOT AN EMPLOYEE OF
and attorney’s fees.5 RESPONDENT", IS CONTRARY TO LAW AND
On the other hand, respondent denied having hired the petitioner as its JURISPRUDENCE ON WHICH IT WAS BASED, AND NOT
regular employee. It instead argued that petitioner was hired by a IN CONSONANCE WITH THE EVIDENCE ON RECORD.20
certain Antoy Cañaveral, the manager of the hacienda at the time it was The disposition of this petition rests on the resolution of the following
owned by Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari questions: 1) Is the petitioner a regular employee of the respondent? 2)
known as "Ybarra."6 Respondent added that it was not obliged to If so, was he illegally dismissed from employment? and 3) Is he entitled
absorb the employees of the former owner. to his monetary claims?
In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created Petitioner insists that he was a regular employee of the respondent
for the operation of tourist resorts, hotels and bars. Petitioner, thus, corporation. The respondent, on the other hand, counters that it did not
rendered service in the construction of the facilities of PPLC. If at all, hire the petitioner, hence, he was never an employee, much less a
petitioner was a project but not a regular employee. 7 regular one.
On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed Both the Labor Arbiter and the CA concluded that there was no
the case for lack of merit.8 The Labor Arbiter concluded that petitioner employer-employee relationship between the petitioner and
was hired by the former owner, hence, was not an employee of the respondent. They based their conclusion on the alleged admission of
respondent. Consequently, his money claims were denied. 9 the petitioner that he was previously hired by the former owner of the
On appeal to the National Labor Relations Commission (NLRC), the hacienda. Thus, they rationalized that since the respondent was not
petitioner obtained favorable judgment when the tribunal reversed and obliged to absorb all the employees of the former owner, petitioner’s
set aside the Labor Arbiter’s decision. The dispositive portion of the claim of employment could not be sustained. The NLRC, on the other
NLRC decision reads: hand, upheld petitioner’s claim of regular employment because of the
respondent’s failure to present its employment records.
WHEREFORE, the Decision of the Labor Arbiter is hereby
SET ASIDE and a new one is hereby issued ORDERING the The existence of an employer-employee relationship involves a
respondent, Pamplona Plantation Incorporated, the following: question of fact which is well within the province of the CA to determine.
Nonetheless, given the reality that the CA’s findings are at odds with
1) to reinstate the complainant, BIENVENIDO D. GOMA to
those of the NLRC, the Court is constrained to probe into the attendant
his former position immediately without loss of seniority rights
circumstances as appearing on record. 21
and other privileges;
A thorough examination of the records compels this Court to reach a
2) to pay the same complainant TWELVE THOUSAND
conclusion different from that of the CA. It is true that petitioner admitted
THREE HUNDRED FIFTY-NINE PESOS (P12,359.00) in
having been employed by the former owner prior to 1993 or before the
salary differentials;
respondent took over the ownership and management of the plantation,
3) to pay to the same complainant ONE HUNDRED ONE however, he likewise alleged having been hired by the respondent as
THOUSAND SIX HUNDRED SIXTY PESOS (P101,660.00) a carpenter in 1995 and having worked as such for two years until 1997.
in backwages to be updated until actual reinstatement; and Notably, at the outset, respondent categorically denied that it hired the
4) to pay attorney’s fee in the amount of ELEVEN petitioner. Yet, in its petition filed before the CA, respondent made this
THOUSAND FOUR HUNDRED TWO PESOS (P11,402.00) admission:
which is equivalent to ten percent (10%) of the total judgment Private respondent [petitioner herein] cannot be considered a
award.1avvphi1 regular employee since the nature of his work is merely
The respondent is further ordered to pay the aggregate project in character in relation to the construction of the
amount of ONE HUNDRED FOURTEEN THOUSAND AND facilities of the Pamplona Plantation Leisure Corporation.
NINETEEN PESOS (P114,019.00) to the complainant He is a project employee as he was hired – 1) for a specific
through the cashier of this Commission within ten (10) days project or undertaking, and 2) the completion or termination
from receipt hereof. of such project or undertaking has been determined at the
SO ORDERED.10 time of engagement of the employee. x x x.
Respondent’s motion for reconsideration was denied by the NLRC on xxxx
September 9, 2002.11 In other words, as regards those workers who worked in
The NLRC upheld the existence of an employer-employee relationship, 1995 specifically in connection with the construction of the
ratiocinating that it was difficult to believe that a simple carpenter from facilities of Pamplona Plantation Leisure Corporation, their
far away Pamplona would go to Dumaguete City to hire a competent employment was definitely "temporary" in character and not
lawyer to help him secure justice if he did not believe that his right as a regular employment. Their employment was deemed
laborer had been violated.12 It added that the creation of the PPLC terminated by operation of law the moment they had finished
required the tremendous task of constructing hotels, inns, restaurants, the job or activity under which they were employed.22
bars, boutiques and service shops, thus involving extensive carpentry Thus, departing from its initial stand that it never hired petitioner, the
work. As an old carpentry hand in the old corporation, the possibility of respondent eventually admitted the existence of employer-employee
petitioner’s employment was great.13 The NLRC likewise held that the relationship before the CA. It, however, qualified such admission by
respondent should have presented its employment records if only to claiming that it was PPLC that hired the petitioner and that the nature
show that petitioner was not included in its list of employees; its failure of his employment therein was that of a "project" and not "regular"
to do so was fatal.14 Considering that petitioner worked for the employee.
respondent for a period of two years, he was a regular employee. 15
Parenthetically, this Court in Pamplona Plantation Company, Inc. v.
Aggrieved, respondent instituted a special civil action Tinghil23 and Pamplona Plantation Company v. Acosta24 had pierced
for certiorari under Rule 65 before the Court of Appeals which granted
 74

the veil of corporate fiction and declared that the two We stress herein that the law overrides such conditions which are
corporations,25 PPLC and the herein respondent, are one and the same. prejudicial to the interest of the worker whose weak bargaining position
By setting forth these defenses, respondent, in effect, admitted that necessitates the succor of the State. What determines whether a
petitioner worked for it, albeit in a different capacity. Such an allegation certain employment is regular or otherwise is not the will or word of the
is in the nature of a negative pregnant, a denial pregnant with the employer, to which the worker oftentimes acquiesces. Neither is it the
admission of the substantial facts in the pleadings responded to which procedure of hiring the employee nor the manner of paying the salary
are not squarely denied, and amounts to an acknowledgment that or the actual time spent at work. It is the character of the activities
petitioner was indeed employed by respondent. 26 performed by the employer in relation to the particular trade or business
The employment relationship having been established, the next of the employer, taking into account all the circumstances, including the
question we must answer is: Is the petitioner a regular or project length of time of its performance and its continued existence. Given the
employee? attendant circumstances in the case at bar, it is obvious that one year
We find the petitioner to be a regular employee. after he was employed by the respondent, petitioner became a regular
Article 280 of the Labor Code, as amended, provides: employee by operation of law.33
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The As to the question of whether petitioner was illegally dismissed, we
provisions of written agreement to the contrary answer in the affirmative.
notwithstanding and regardless of the oral agreement of the Well-established is the rule that regular employees enjoy security of
parties, an employment shall be deemed to be regular where tenure and they can only be dismissed for just cause and with due
the employee has been engaged to perform activities which process, i.e., after notice and hearing. In cases involving an employee’s
are usually necessary or desirable in the usual business or dismissal, the burden is on the employer to prove that the dismissal
trade of the employer, except where the employment has was legal. This burden was not amply discharged by the respondent in
been fixed for a specific project or undertaking, the this case.
completion or termination of which has been determined at Obviously, petitioner’s dismissal was not based on any of the just or
the time of the engagement of the employee or where the authorized causes enumerated under Articles 282,34 28335 and 28436 of
work or service to be performed is seasonal in nature and the the Labor Code, as amended. After working for the respondent for a
employment is for the duration of the season. period of two years, petitioner was shocked to find out that he was not
An employment shall be deemed to be casual if it is not given any work assignment anymore. Hence, the requirement of
covered by the preceding paragraph: Provided, That, any substantive due process was not complied with.
employee who has rendered at least one year of service, Apart from the requirement that the dismissal of an employee be based
whether such service is continuous or broken, shall be on any of the just or authorized causes, the procedure laid down in
considered a regular employee with respect to the activity in Book VI, Rule I, Section 2 (d) of the Omnibus Rules Implementing the
which he is employed and his employment shall continue Labor Code, must be followed.37 Failure to observe the rules is a
while such activity exists. violation of the employee’s right to procedural due process.
As can be gleaned from this provision, there are two kinds of regular In view of the non-observance of both substantive and procedural due
employees, namely: (1) those who are engaged to perform activities process, in accordance with the guidelines outlined by this Court
which are usually necessary or desirable in the usual business or trade in Agabon v. National Labor Relations Commission,38 we declare that
of the employer; and (2) those who have rendered at least one year of petitioner’s dismissal from employment is illegal. 39
service, whether continuous or broken, with respect to the activity in Having shown that petitioner is a regular employee and that his
which they are employed.27 Simply stated, regular employees are dismissal was illegal, we now discuss the propriety of the monetary
classified into: regular employees by nature of work; and regular claims of the petitioner. An illegally dismissed employee is entitled to:
employees by years of service. The former refers to those employees (1) either reinstatement, if viable, or separation pay if reinstatement is
who perform a particular activity which is necessary or desirable in the no longer viable, and (2) backwages.40
usual business or trade of the employer, regardless of their length of In the instant case, we are prepared to concede the impossibility of the
service; while the latter refers to those employees who have been reinstatement of petitioner considering that his position or any
performing the job, regardless of the nature thereof, for at least a equivalent position may no longer be available in view of the length of
year.28 If the employee has been performing the job for at least one time that this case has been pending. Moreover, the protracted litigation
year, even if the performance is not continuous or merely intermittent, may have seriously abraded the relationship of the parties so as to
the law deems the repeated and continuing need for its performance render reinstatement impractical. Accordingly, petitioner may be
as sufficient evidence of the necessity, if not indispensability, of that awarded separation pay in lieu of reinstatement. 41
activity to the business.29 Petitioner’s separation pay is pegged at the amount equivalent to
Respondent is engaged in the management of the Pamplona Plantation petitioner’s one (1) month pay, or one-half (1/2) month pay for every
as well as in the operation of tourist resorts, hotels, inns, restaurants, year of service, whichever is higher, reckoned from his first day of
etc. Petitioner, on the other hand, was engaged to perform carpentry employment up to finality of this decision. Full backwages, on the other
work. His services were needed for a period of two years until such time hand, should be computed from the date of his illegal dismissal until the
that the respondent decided not to give him work assignment anymore. finality of this decision.
Owing to his length of service, petitioner became a regular employee, On petitioner’s entitlement to attorney’s fees, we must take into account
by operation of law. the fact that petitioner was illegally dismissed from his employment and
Respondent argues that, even assuming that petitioner can be that his wages and other benefits were withheld from him without any
considered an employee, he cannot be classified as a regular valid and legal basis. As a consequence, he was compelled to file an
employee, but merely as a project employee whose services were hired action for the recovery of his lawful wages and other benefits and, in
only with respect to a specific job and only while that specific job existed. the process, incurred expenses. On these bases, the Court finds that
A project employee is assigned to carry out a specific project or he is entitled to attorney’s fees equivalent to ten percent (10%) of the
undertaking the duration and scope of which are specified at the time monetary award.42
the employee is engaged in the project. A project is a job or undertaking Lastly, we affirm the NLRC’s award of salary differential. In light of our
which is distinct, separate and identifiable from the usual or regular foregoing disquisition on the illegality of petitioner’s dismissal, and our
undertakings of the company. A project employee is assigned to a adoption of the NLRC’s findings, suffice it to state that such issue is a
project which begins and ends at determined or determinable times. 30 question of fact, and we find no cogent reason to disturb the findings of
The principal test used to determine whether employees are project the labor tribunal.
employees as distinguished from regular employees, is whether or not WHEREFORE, premises considered, the petition is GRANTED. The
the employees were assigned to carry out a specific project or Decision of the Court of Appeals dated August 27, 2003 and its
undertaking, the duration or scope of which was specified at the time Resolution dated November 11, 2003 in CA-G.R. SP No. 74892
the employees were engaged for that project.31 In this case, apart from are REVERSED and SET ASIDE. Petitioner is found to have been
respondent’s bare allegation that petitioner was a project employee, it illegally dismissed from employment and thus, is ENTITLED to: 1)
had not shown that petitioner was informed that he would be assigned Salary Differential embodied in the NLRC decision dated October 24,
to a specific project or undertaking. Neither was it established that he 2000 in NLRC Case No. V-000882-99; 2) Separation Pay; 3)
was informed of the duration and scope of such project or undertaking Backwages; and 4) Attorney’s fees equivalent to ten percent (10%) of
at the time of his engagement. the monetary awards. Upon finality of this judgment, let the records of
Most important of all, based on the records, respondent did not report the case be remanded to the NLRC for the computation of the exact
the termination of petitioner’s supposed project employment to the amounts due the petitioner.
Department of Labor and Employment (DOLE). Department Order No. SO ORDERED.
19 (as well as the old Policy Instructions No. 20) requires employers to
submit a report of an employee’s termination to the nearest public
employment office every time the employment is terminated due to a
completion of a project. Respondent’s failure to file termination reports, G.R. No. 163607 July 14, 2008
particularly on the cessation of petitioner’s employment, was an
CENTRAL PHILIPPINES BANDAG RETREADERS, INC., Petitioner,
indication that the petitioner was not a project but a regular employee. 32
vs.
PRUDENCIO J. DIASNES, Respondent.
 75

DECISION Therefore, your employment is terminated effective November 11, 1996.

VELASCO, JR., J.: You are requested to return all company assets in your [possession] to
Respondent Prudencio J. Diasnes was initially hired by petitioner the company representative who will be authorized to retrieve them.
Central Philippines Bandag Retreaders, Inc. (Bandag) as technical (Sgd.) Loreto C. Rico
service representative for the Visayas and Bicol areas. In the course of General Manager3
his employment with Bandag, Diasnes was able to show his strengths To contest his dismissal from the service, Diasnes filed a complaint with
and received numerous awards and citations. In 1995, Diasnes the Regional Arbitration Branch of the National Labor Relations
received a promotional appointment as sales manager/officer-in- Commission (NLRC) for illegal dismissal, non-payment of salaries and
charge and was assigned to manage Eastern Visayas Retreaders, Inc. allowances, 13th month pay, and other benefits against Bandag,
based in Tacloban City, with a service area covering the whole of Sarmiento Management Group, and Rico, docketed as NLRC RAB VII-
Region VIII. 1492-96.
It was at this latest posting that Diasnes’ work performance started to On October 15, 1997, Labor Arbiter Ernesto F. Carreon rendered a
deteriorate. From July to September in 1995, six (6) company-issued decision which, while holding Diasnes to have been legally dismissed
checks were dishonored for causes attributable to Diasnes and for from the service, directed payment of separation pay in the amount of
which he was suspended for six (6) days. It was also during this two- PhP 278,965.50 and 13th month pay in the amount of PhP 14,652.74.
month stretch that his absences and tardiness became more frequent. Dispositively, the labor arbiter’s decision reads as follows:
On January 2, 1996, Diasnes received a memorandum from his WHEREFORE, premises considered, judgment is hereby rendered
supervisor, Loreto C. Rico, relieving him from his duties as sales ordering the respondent Central Philippines Bandag Retreaders, Inc. to
manager of Region VIII. Two days after, Diasnes received a notice to pay the complainant Prudencio J. Diasnes Separation Pay in the
appear before the Employee Adjudication Committee on January 9, amount of P278,965.50 and proportionate 13th month pay in the
1996 to resolve the matter of his relief. After the meeting, the committee amount of P14,652.74.
issued the following report and recommendations: The case against respondents Sarmiento Management Corporation
Therefore, the committee unanimously agreed that SM-OIC Prudencio and Loreto Rico and the other claims are dismissed for lack of merit.
Diasnes be: Relieved for three (3) months. This will give him enough SO ORDERED.
time to help his wife’s problem; After the period lapsed he may return Therefrom, both parties appealed to the NLRC, Diasnes assailing the
to work, but with another position or function; if he desire[s] to retire labor arbiter’s finding on the validity of his dismissal, while Bandag
from the company separation/retirement pay may be granted to him. 1 impugning the labor arbiter’s decision insofar as the award of
Diasnes, however, did not avail himself of any of the options set forth separation pay was concerned.
in the committee’s report and recommendations, but requested a Cebu Thereafter, on January 12, 1999, the NLRC rendered a
City assignment which his employer granted. In Cebu City, Diasnes’ Decision,4 dismissing the separate appeals of both parties and thus
performance as sales supervisor was far from encouraging. His effectively affirming the decision of the labor arbiter.
attendance and punctuality were likewise very poor. To top it all, Aggrieved, Bandag filed a motion to reconsider the decision of the
Diasnes did not at all report for work from October 12, 1996 to NLRC.
November 11, 1996. By Resolution dated October 29, 1999, the NLRC partially granted
Thereafter, on October 31, 1996, Bandag, through supervisor Rico, reconsideration and deleted the award for separation pay, Diasnes
addressed a show-cause letter-memorandum to Diasnes, which reads having failed to establish that Bandag has an established policy of
as follows: granting separation pay of one and a half (1 ½) month for every year of
SUBJECT: Habitual tardiness and Absenteeism service to separated employees. The fallo of the NLRC’s resolution
Your attendance records from Sept. 1 to Oct. 31, 1996, show that of reads:
the 50 working days, you report[ed for work] only for 25 days. Of the 25 WHEREFORE, premises considered, the Motion for Reconsideration
days that you report[ed] for work, you never had any instance that filed by respondent Central Philippines Bandag Retreaders, Inc., is
you’re on time – official reporting time is at 8:00 O’clock A.M. PARTIALLY GRANTED. The Decision promulgated on 12 January
During this period, you have not reported to work for 25 working days 1999 is ABANDONED and a new one is entered ordering respondent
and these are all absences without official leave. This shows that your Central Philippines Bandag Retreaders, Inc. to pay complainant
absences [amounted to] 50% [of the official work days] and [you were Prudencio J. [Diasnes] the amount of P14,652.74 representing [his]
tardy] 100% [of the] period referred [to]. proportionate 13th month pay.
You have committed an act unbecoming of an officer and a breach of SO ORDERED.
our policy on attendance.1avvphi1 Habitual absenteeism and tardiness Unsatisfied with the turn of events, Diasnes filed with the Court of
are cause for suspension and/or termination from employment. Appeals (CA) a petition for certiorari and prohibition with prayer for
You are therefore required to submit your written explanation within 48 injunctive relief. Docketed as CA-G.R. SP No. 58916, the petition
hrs. from receipt of this memo and present yourself to the employees sought the reinstatement of the NLRC’s Decision dated January 12,
adjudication committee. 1999.
The Adjudication committee will convene immediately upon receipt of On June 18, 2003, the CA issued a Decision5 that granted the petition
your reply. This consultation is of a substance to assure you that the and effectively reinstated the NLRC’s Decision of January 12, 1999,
management prerogative to discipline employees is not exercised in an thus restoring the award of separation pay. The CA ratiocinated that
arbitrary manner. separation pay is proper in view of the following main considerations:
For your information and strict compliance. the Employee Adjudication Committee’s recommendation, the
L.C. RICO2 imperatives of social justice, and Diasnes’ exemplary performance for
Apparently finding Diasnes’ explanation to be insufficient, Bandag more than ten (10) years.
dismissed Diasnes from the service effective November 11, 1996 on In time, Bandag filed a motion for reconsideration, but the CA, by
the grounds stated in the termination letter which reads as follows: Resolution6 dated April 1, 2004, denied the motion.
TO : P.J. DIASNES Bandag now comes before this Court with the present petition under
DATE : NOVEMBER 11, 1996 Rule 45 raising the sole issue for resolution, rephrased as follows:
SUBJECT: TERMINATION OF EMPLOYMENT WHETHER OR NOT A VALIDLY AND LEGALLY SEPARATED
You had been notified for gross and habitual neglect of your duty and EMPLOYEE MAY BE ENTITLED TO SEPARATION PAY.
had been given enough time to be heard by an employees adjudication The Court’s Ruling
committee[.] Again, you [had been apprised] that the consultation is of The labor arbiter resolved the issue in the affirmative, basing his award
a substance to assure you that the management prerogative to of separation pay mainly on the recommendation of the Employee
discipline employees is not exercise[d] in [an] arbitrary manner. Adjudication Committee and on the finding that Diasnes’ dismissal was
A number of company representatives had been sent to your residence for a cause not constituting serious misconduct or reflective of his moral
but all failed to see you in person. A verification with the company character. This ruling, as earlier recited, was eventually reversed by the
Doctor, yield[ed] negative report of any health related consultation. All NLRC, but was subsequently reinstated by the CA.
those that has been done is indicative of the management’s concern of Bandag excepts, claiming that separation pay could not and should not
employees. be granted based solely on the recommendation made by its
The termination of your employment is base[d] on the following: adjudication committee. As Bandag explains, the recommendation was
1. HABITUAL TARDINESS FROM SEPT. 1, 1996 merely an offer which Diasnes did not accept, much less avail himself
TO OCT. 11, 1996. of. Alternatively, Bandag argues that the formula used by the labor
2. ABSENCES WITHOUT OFFICIAL LEAVE arbiter to compute the separation pay, i.e., 1 ½ month’s pay per year of
DURING THE SAME PERIOD. service instead of only one month’s pay per year of service, is wrong.
3. FAILURE TO REPORT FOR WORK FROM Diasnes, arguing for the propriety of the grant of separation pay, states
OCTOBER 12, 1996 TO NOVEMBER 11, 1996. that, given his exemplary service with the company for ten (10) years,
the ends of social and compassionate justice would best be served if
This is a willful breach of trust given to you as officer of the company
he is awarded separation pay or financial assistance. Diasnes further
and serious misconduct of an employee. And it is our belief, that you
states that other legally separated employees were also granted
have put an end to the employer-employee relationship without serving
separation pay at the rate of 1 ½ month’s salary per year of service.
any written notice to the company.
 76

The petition has merit. inefficiency but immorality and the grant of separation pay would be
We agree with Bandag that the report of its Employee Adjudication entirely unjustified.
Committee recommending the grant to Diasnes of separation pay in We hold that henceforth separation pay shall be allowed as a measure
case he opts to retire or voluntarily leave the company was merely in of social justice only in those instances where the employee is validly
the nature of an offer. Contrary to the perception of the labor arbiter and dismissed for causes other than serious misconduct or those reflecting
the CA, the offer was not an open-ended arrangement which Diasnes on his moral character. Where the reason for the valid dismissal is, for
was free to accept or reject when convenient. example, habitual intoxication or an offense involving moral turpitude,
As may be recalled, sometime in January 1996, Diasnes was asked by like theft or illicit sexual relations with a fellow worker, the employer may
his superior to appear before the Employee Adjudication Committee to not be required to give the dismissed employee separation pay, or
assess his performance during his tenure as the sales manager of financial assistance, or whatever other name it is called, on the ground
Region VIII. It was at this time that the committee came up with the of social justice.12
following recommendations: first, that Diasnes be relieved from his post As may noted, PLDT declared that separation pay or financial
as sales manager for three months, after which he may return to work assistance should be denied a legally separated employee when the
with another position or function; and second, that if Diasnes would cause for dismissal is for an act constituting serious misconduct or that
want to retire instead of availing himself of the first option, he would be reflects on the employee’s moral character. PLDT, however, did not go
granted retirement or separation pay. None of these recommendations, further to state that the grant or award of separation pay or financial
however, was availed of by Diasnes, as he instead asked to be assistance is automatically awarded when the dismissal is for a cause
transferred to Cebu City and was accommodated. It was some 11 other than that contemplated in said case. This PLDT doctrine was later
months after the committee made its recommendation and Bandag expanded in Toyota Motors Phils. Corp. Workers Association v.
acceded to the request for transfer that Diasnes was dismissed from National Labor Relations Commission (Toyota), where we held that:
the service. It is fairly obvious that the committee’s recommendations In all of the foregoing situations, the Court declined to grant termination
were superseded by Bandag’s approval of Diasnes’ request for transfer. pay because the causes for dismissal recognized under Art. 282 of the
Just as it is fairly obvious that the tender of separation was conditional Labor Code were serious or grave in nature and attended by willful or
on Diasnes severing his official relationship with the company on wrongful intent or they reflected adversely on the moral character of the
voluntary basis. In fine, what amounted to Bandag’s offer for Diasnes employees. We, therefore, find that in addition to serious misconduct,
to resign with separation pay was no longer open and effective at the in dismissals based on other grounds under Art. 282, like willful
time of his dismissal from service. Thus, the labor arbiter erred in disobedience, gross and habitual neglect of duty, fraud or willful breach
invoking the committee’s recommendation as basis for an award of of trust, and commission of a crime against the employer or his family,
separation pay. separation pay should not be conceded to the dismissed employee.
We also agree with the NLRC’s October 29, 1999 Decision where it In analogous causes for termination, like inefficiency, drug use, and
held that Diasnes failed to prove that Bandag regularly grants others, the NLRC or the courts may opt to grant separation pay
separation pay to dismissed employees, as a policy, and without regard anchored on social justice in consideration of length of service of the
as to the cause of dismissal. Absent substantial proof to the contrary, employee, the amount involved, whether the act is the first offense, the
we refuse to disturb the factual findings of the NLRC. performance of the employee and the like, using guideposts enunciated
The labor arbiter also erred in awarding separation pay based on social in PLDT on the propriety of the award of separation pay. 13 (Emphasis
justice. added.)
Gabuay v. Oversea Paper Supply7 defines separation pay as the To reiterate our ruling in Toyota, labor adjudicatory officials and the CA
amount that an employee receives at the time of his severance and is must demur the award of separation pay based on social justice when
designed to provide the employee with the wherewithal during the an employee’s dismissal is based on serious misconduct or willful
period he is looking for another employment. In San Miguel Corporation disobedience; gross and habitual neglect of duty; fraud or willful breach
v. Lao,8 the Court held that the award of separation pay is authorized of trust; or commission of a crime against the person of the employer
in the situations dealt with in Article 283 and Art. 284 of the Labor Code, or his immediate family—grounds under Art. 28214 of the Labor Code
but not in terminations of employment based on instances enumerated that sanction dismissals of employees. They must be most judicious
in Art. 282.9 In Eastern Paper Mills, Inc. v. NLRC, this Court held that: and circumspect in awarding separation pay or financial assistance as
The only cases when separation pay shall be paid, although the the constitutional policy to provide full protection to labor is not meant
employee was lawfully dismissed, are when the cause of termination to be an instrument to oppress the employers. The commitment of the
was not attributable to the employee’s fault but due to: (1) the Court to the cause of labor should not embarrass us from sustaining
installation of labor saving devices, (2) redundancy, (3) retrenchment, the employers when they are right, as here. In fine, we should be more
(4) cessation of employer’s business, or (5) when the employee is cautious in awarding financial assistance to the undeserving and those
suffering from a disease and his continued employment is prohibited by who are unworthy of the liberality of the law.
law or is prejudicial to his health and to the health of his co-employees The attendant circumstances in the present case considered, we are
(Articles 283 and 284, Labor Code.) Other than these cases, an constrained to deny Diasnes separation pay since the cause for the
employee who is dismissed for a just and lawful cause is not entitled to termination of his employment amounts to gross and habitual neglect
separation pay even if the award were to be called by another name. 10 of his duties. His repeated and continuous absences without prior leave
Separation pay is likewise awarded in lieu of reinstatement if and his frequent tardiness within the last two months prior to his
reinstatement is no longer feasible, as when the relationship between dismissal exemplify his utter disregard for his employment and his
the employer and employee has become strained. 11 Still, in some employer’s interest. Diasnes’ character is also put into question if we
cases, separation pay or financial assistance may be extended as a take into consideration that he should have been dismissed as early as
measure of social justice. PLDT v. NLRC settled the matter on the January 1996, if not for Bandag’s benevolence and goodwill. It is
award and amount of financial assistance or separation pay that may unthinkable to award separation pay or financial assistance to an
be awarded a legally separated employee based on social or unworthy employee who exploited and took advantage of his
compassionate justice. This Court held: employer’s past generosity and accommodation.
There should be no question that where it comes to such valid but not WHEREFORE, the assailed Decision dated June 18, 2003 of the CA in
iniquitous causes as failure to comply with work standards, the grant of CA-G.R. SP No. 58916 is hereby REVERSED and SET ASIDE and the
separation pay to the dismissed employee may be both just and Resolution dated October 29, 1999 of the NLRC is hereby
compassionate, particularly if he has worked for some time with the REINSTATED.
company. For example, a subordinate who has irreconcilable policy or No costs.
personal differences with his employer may be validly dismissed for SO ORDERED.
demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she also has
to take care of her child may also be removed because of her poor
attendance, this being another authorized ground. x x x Under these
G.R. No. 172199 February 27, 2009
and similar circumstances, however, the award to the employee of
separation pay would be sustainable under the social justice policy ELIZABETH D. PALTENG, Petitioner,
even if the separation is for cause. vs.
UNITED COCONUT PLANTERS BANK, Respondent.
But where the cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more discerning. There DECISION
is no doubt it is compassionate to give separation pay to a salesman if QUISUMBING, J.:
he is dismissed for his inability to fill his quota but surely he does not Assailed in this petition for review on certiorari are the Decision1 dated
deserve such generosity if his offense is misappropriation of the December 23, 2005 and Resolution2 dated April 4, 2006 of the Court of
receipts of his sales. This is no longer mere incompetence but clear Appeals in CA-G.R. SP No. 72660 denying reconsideration. The
dishonesty. A security guard found sleeping on the job is doubtless appellate court had modified the Decision3 dated March 6, 2002 of the
subject to dismissal but may be allowed separation pay since his National Labor Relations Commission (NLRC) and limited the award of
conduct, while inept, is not depraved. But if he was in fact not really backwages in favor of petitioner Elizabeth D. Palteng from the time she
sleeping but sleeping with a prostitute during his tour of duty and in the was illegally dismissed on October 25, 1996, until the promulgation of
company premises, the situation is changed completely. This is not only the Labor Arbiter’s Decision4 on December 6, 1999.
 77

The antecedent facts are as follows: favor of respondent Elizabeth D. Palteng shall correspond to the period
Petitioner Elizabeth D. Palteng was the Senior Assistant from the date of her dismissal (on October 25, 1996) up to the
Manager/Branch Operations Officer of respondent United Coconut promulgation of the labor arbiter’s decision (on December 6, 1999).
Planters Bank in its Banaue Branch in Quezon City. SO ORDERED.11
On April 15, 1996, Area Head and Vice-President Eulallo S. Rodriguez The appellate court noted Palteng’s admission that she granted BP
reported to the bank’s Internal Audit and Credit Review Division that accommodation to Mercado against her personal checks beyond and
bank client Clariza L. Mercado-The Red Shop has incurred Past Due outside her authority and that said infraction is a major offense that may
Domestic Bills Purchased (BP) of ₱34,260,000. After conducting a cause her dismissal. Hence, it limited the award of backwages from the
diligence audit, the division reported to the Audit and Examination time Palteng was illegally dismissed on October 25, 1996, until the
Committee that Palteng committed several offenses under the promulgation of the Labor Arbiter’s Decision on December 6, 1999, as
Employee Discipline Code in connection with Mercado’s Past Due penalty for her offense.
Domestic BP. It also recommended that the matter be referred to the Petitioner now submits the following issue for our consideration:
Committee on Employee Discipline for proper disposition. THE COURT OF APPEALS ERRED IN LIMITING THE AWARD OF
On August 14, 1996, Palteng was required to explain why no BACKWAGES IN FAVOR OF PETITIONER, WHOSE DISMISSAL
disciplinary action should be taken against her in connection with the FROM EMPLOYMENT WAS DECLARED ILLEGAL BY THE COURT
following alleged offenses: AND THE LABOR TRIBUNALS, TO ONLY UP TO THE DATE OF THE
"1. Gross negligence and dereliction of duties in the PROMULGATION OF THE LABOR ARBITER’S DECISION[.]12
implementation of company policies or valid orders from The crux of the present controversy is whether the award of backwages,
Management authorities, when: if any, should be counted from the time petitioner was illegally
a. You granted BP against personal checks. Per dismissed until the promulgation of the Labor Arbiter’s Decision on
bank policy, checks eligible for BP accommodation December 6, 1999, or until the finality of the decision.
are trade checks and granting of BP against Petitioner contends that the Labor Arbiter, the NLRC and the Court of
personal checks is strictly prohibited. Appeals unanimously found her dismissal illegal. Thus, she is entitled
b. You granted accommodations based on client’s to the twin reliefs of reinstatement (or payment of separation pay if
statement that a loan will be released. You failed to reinstatement is no longer possible) and payment of backwages. She
confirm this with AO Pearl Urbano before effecting adds that the backwages should be computed from the time she was
the accommodations. You likewise failed to report illegally dismissed on October 25, 1996, until the finality of the decision.
to AO Urbano the excess availments on the OL of Respondent counters that petitioner is not entitled to the payment of
the client. Per bank policy on CSBD/CCD clients backwages since she is not entirely faultless or fully innocent of the
with established lines, the servicing unit/branches offenses imputed against her.
shall coordinate all BP/DAUD availments with the Settled is the rule that an employee who is illegally dismissed from work
account officer for proper monitoring and control. is entitled to reinstatement without loss of seniority rights, and other
2. Abuse of discretion when: privileges as well as to full backwages, inclusive of allowances, and to
a. You granted BP accommodations to the client in other benefits or their monetary equivalent computed from the time his
excess of the ₱5 million sublimit under her Omnibus compensation was withheld from him up to the time of his actual
Line. In spite of the fact that you did not have the reinstatement.13 However, in the event that reinstatement is no longer
approving authority, you did not elevate the client’s possible, the employee may be given separation pay
availment to the proper authority for approval. instead.141avvphi1
b. You approved the MCs issued to the client Notably, reinstatement and payment of backwages are distinct and
beyond your approving limit of ₱5 million being a separate reliefs given to alleviate the economic setback brought about
Class C signatory. Issuance[s] were not confirmed by the employee’s dismissal. The award of one does not bar the other.
by proper approving body."5 Backwages may be awarded without reinstatement, and reinstatement
In response, Palteng explained that at the time the BP accommodation may be ordered without awarding backwages. 15
was extended, Mercado has, as far as she knew, an Omnibus Line of In a number of cases,16 the Court, despite ordering reinstatement or
₱100 Million secured by a pledge on jewelries. She was not aware that payment of separation pay in lieu of reinstatement, has not awarded
the Omnibus Line has been reduced to ₱50 Million and that it contained backwages as penalty for the misconduct or infraction committed by
a ₱5 Million sublimit on BP. Nevertheless, she accepted full the employee.
responsibility for granting the BP accommodation against Mercado’s In the case at bar, petitioner admitted that she granted the BP
personal checks beyond and outside her authority. While she admitted accommodation against Mercado’s personal checks beyond and
committing a major offense that may cause her dismissal, she claimed outside her authority. The Labor Arbiter, the NLRC and the Court of
that it was an honest mistake.6 Appeals all found her to have committed an "error of
After hearing and investigation, the committee recommended Palteng’s judgment,"17 "honest mistake,"18 "honest mistake" vis-à-vis a "major
dismissal. On October 25, 1996, Palteng was dismissed with forfeiture offense."19
of all benefits.7 Since petitioner was not faultless in regard to the offenses imputed
Palteng filed a complaint8 for illegal dismissal seeking reinstatement to against her, we hold that the award of separation pay only, without
her former position without loss of seniority rights with full backwages, backwages, is proper.
or in the alternative, payment of separation pay with full backwages, WHEREFORE, the Decision dated December 23, 2005 of the Court of
and recovery of her monetary claims with damages. Appeals in CA-G.R. SP No. 72660 is AFFIRMED with the
On December 6, 1999, the Labor Arbiter rendered a decision disposing, MODIFICATION that the award of backwages is DELETED. Petitioner
thus: Elizabeth D. Palteng is hereby DECLARED entitled to be paid by
WHEREFORE, premises considered, judgment is hereby rendered respondent Bank only separation pay in lieu of reinstatement computed
declaring as illegal the termination of herein complainant and ordering at the rate of one (1) month pay for every year of service from the time
respondent to pay complainant the following: of her employment up to the time of her dismissal. No pronouncement
1.) Separation pay in lieu of reinstatement computed at the as to costs.
rate of one (1) month pay for every year of service from the SO ORDERED.
time of her employment up to the time of termination.
2.) Full backwages plus increments or adjustment if any from
the time of her dismissal until finality of judgment.
3.) ₱500,000.00 as moral damages. G.R. No. 169173 June 5, 2009
4.) [₱300,000.00] as exemplary damages. M+W ZANDER PHILIPPINES, INC. and ROLF
5.) 10% of the total monetary award as attorney’s fees. WILTSCHEK, Petitioners,
SO ORDERED.9 vs.
The bank appealed to the NLRC which rendered a decision on March TRINIDAD M. ENRIQUEZ, Respondent.
6, 2002, to wit: DECISION
WHEREFORE, premises considered[,] the assailed decision is hereby PUNO, C.J.:
affirmed except that the awards of moral and exemplary damages are At bar is a petition for review on certiorari under Rule 45 of the Rules of
ordered deleted therefrom. Court, seeking the reversal of the decision,1 dated May 31, 2005, of the
SO ORDERED.10 Court of Appeals in CA G.R. SP No. 87597, entitled "Trinidad M.
Dissatisfied, the bank elevated the matter to the Court of Appeals. On Enriquez v. National Labor Relations Commission, M+W Zander
December 23, 2005, the appellate court modified the decision of the Philippines, Inc. and Rolf Wiltschek." The decision of the Court of
NLRC, in this wise: Appeals set aside the decision of the National Labor Relations
WHEREFORE, premises considered, the petition is Commission (NLRC) and ruled the dismissal of respondent Trinidad M.
partially GRANTED. The decision of the labor arbiter dated December Enriquez (Enriquez) as illegal. The Court of Appeals also ordered
6, 1999, as affirmed with modification by the National Labor Relations petitioners M+W Zander Philippines, Inc. and Rolf Wiltschek to
Commission, is further MODIFIED in that the award of backwages in reinstate respondent to her former position without loss of seniority
 78

rights and privileges and awarded her moral damages and attorney’s 20. RANDY TECSON (sgd.)
fees. 21. JOY P. ESGUERRA (sgd.)
The facts are as follows. 22. LARRY N. MARASIGAN (sgd.)
On June 4, 2001, respondent Enriquez was hired on probationary basis 23. ELMER M. ARANA (sgd.)
as the Administration Manager and Executive Assistant to the General 24. ALDRIN EVANGELISTA (sgd.)
Manager of petitioner M+W Zander Philippines, Inc. (M+W Zander), a 25. EDWARD A. BORJA (sgd.)
multi-national corporation engaged in construction and facilities 26. ERNESTO M. ANTIQUIA (sgd.)
management. She was confirmed as a permanent employee on
27. JESS DELA CRUZ (sgd.)
December 4, 2001. As Administration Manager, respondent’s
responsibilities include taking charge of the management of 28. P.R. SIMPLICIANO (sgd.)
administrative personnel assigned to the head office, as well as the 29. R.L. CRUZ (sgd.)
security of the company staff and premises and the implementation of The same appeal from the employees at the site to follow.3
company rules. As Executive Assistant to the General Manager, A day after the Letter of Appeal was released, a number of employees
respondent was in charge of scheduling, monitoring and tracking all the did not report to work.
General Manager’s appointments and personal finances and serving Petitioners allege that after the announcement of Wiltschek as the new
as the liaison among the General Manager, the Division Heads, the General Manager, respondent actively solicited signatures for a letter
Administrative Staff and external contacts. opposing the appointment of Wiltschek (Letter of Appeal). The
In January 2002, M+W Zander relieved its General Manager, Mr. Eric petitioners claim that Enriquez used her influence and moral
Van Stiegeren, and in his place appointed Mr. Rolf Wiltschek ascendancy to coerce several employees into signing the letter of
(Wiltschek). The appointment of Wiltschek as the Acting General appeal.4 They referred to Affidavits of Mark Joseph M. Amador
Manager was announced in a meeting held on January 31, 2002. On (Amador),5 Randy R. Tecson (Tecson)6 and Patrocinio R.
the same day, a Letter of Appeal2 was signed by 29 employees of M+W Simpliciano,7 M+W Zander’s Accounting Assistant, Network
Zander, opposing the appointment of Wiltschek. Administrator and Contract Administrator, respectively, which state that
The letter states: respondent sought their signature for the Letter of Appeal. Amador
TO: MR. KLAUS GAERTNER stated in his affidavit8 that on February 1, 2002 one Abelardo Tayag
Managing Director asked him not to go to work and Enriquez only called him to confirm
CC: MR. HELMUT KURZBOECK that he did not report for work. In Tecson’s affidavit, 9 it was stated that
on February 1, 2002, he received a call from Enriquez in his mobile
CC: MISS KITY LEE
phone telling him not to report to work since other employees will not
DATE: January 31, 2002 report to work and that he should just file for a sick leave since they
LETTER OF APPEAL were doing the same. Tecson said he was already on his way to the
We are writing you this Letter of Appeal in the hope of expressing our office and refused to follow Enriquez.
concern and sentiments on the appointment of Rolf Wiltschek as the Upon discovering respondent Enriquez’s participation in drafting and in
new General Manager. circulating the Letter of Appeal, as well as in the alleged work stoppage
We are appealing for your kind attention and consideration on this that occurred a day after the release of the Letter, M+W Zander sent a
matter as part of the m+w Zander family worldwide. We know that Notice10 to respondent Enriquez, requiring her to explain within 48
above anything else, the well-being of the company is the first priority hours from receipt of the notice why no disciplinary action should be
of every employee from whom he derives his livelihood and that of his taken against her for willful breach of trust and using her authority
family. However, we believe that Rolf Wiltschek as the General and/or influence as Administration Manager of M+W Zander over her
Manager here in the Philippines will not in any way contribute to our subordinates to stage a "no work day" on February 1, 2002. It was
goal of making m+w Zander better equipped to fight all the financial indicated that willful breach of trust has a corresponding penalty of
deficiencies that the company is facing today. dismissal. Meanwhile, respondent Enriquez was placed under
For how can we have a person represent the company when we cannot preventive suspension for 15 working days.
even respect him as a person. His human behavior and relationship, Respondent Enriquez signed a statement, 11 dated February 5, 2002,
his manners and etiquette appear less than the accepted norms in a denying that she used her authority and/or influence as Administration
civilized society. His sarcasm and arrogance and seeming feeling of Manager and Executive Assistant to the General Manager to compel
superiority as expressed by his verbal abuses on his contemporaries her co-employees to stage the illegal work stoppage. She also denied
and subordinates is unacceptable even in a poor country like the that she performed any act to disrupt the vital operations of the
Philippines. Most of us in m+w Zander have worked with all sorts of company. She said that when she arrived at work on February 2, 2002,
people with different nationalities, people with even higher positions in she was given a notice of suspension for 15 days and was instructed
life but we have never seen such an obnoxious and demeaning attitude to leave the premises without being given an explanation. Her personal
towards the Filipino workers. It has perhaps escaped Rolf Wiltschek, belongings were inspected and she was escorted out of the premises
that we Filipinos take pride in our professions and in our Country like a criminal. Respondent stated in her affidavit that her colleagues
humble as it is. were given an order that if she is seen in the premises of the company,
We wish to relay to you our extreme disappointment on the the administration should be informed immediately and that in no case
replacement of Mr. Eric Van Stijgeren with the sudden appointment of should respondent be allowed to enter the premises of the company
Rolf Wiltschek as the new General Manager. We wish to convey to you except if she is with an authorized escort of the petitioner company. 12
our apprehension on the fate that awaits m+w Zander here in the On February 14, 2002, an administrative investigation and an
Philippines with Rolf Wiltschek as the General Manager. Lastly, we administrative hearing were conducted by the petitioner. During the
assure you of our commitment to give our best performance in any task administrative hearing, the respondent submitted several signed
given us for the welfare of our Company. statements from her subordinates, such as Cecilia Benito, 13 the
Please help us save m+w Zander (Phils.) Inc. receptionist; Michelle De Mesa,14 the Engineering Administrative
Respectfully yours, Assistant; Joy Esguerra,15 an Administrative Assistant, and Christine
M+W Zander- Manila Head Office STAFF Roma San Agustin;16 all saying that they were never advised or
All of the Undersigned: prevailed upon by the respondent not to report to work.
1. ABEC TAYAG (sgd.) Sales Engineer Allan Ordinario Rivera (Rivera) admitted before the
2. CARLITO GARCIA (sgd.) investigating panel that he was the one who instigated the no work day
3. MARK JOSEPH AMADOR (sgd.) on February 1, 2002, but he was not charged by the petitioners. We
quote Rivera’s statement:
4. CHRISTINE SAN AGUSTIN (sgd.)
14 FEBRUARY 2002
5. EMMANUEL PIELAGO, JR. (sgd.)
TO WHOM IT MAY CONCERN:
6. STANLEY MOSENDE (sgd.)
IN RELATION TO THE ALLEGATIONS MADE AGAINST MS.
7. JOANNE A. MEDIARITO (sgd.)
TRINIDAD ENRIQUEZ, I ALLAN O. RIVERA REQUEST TO BE
8. MICHAEL M. ILAGAN (sgd.) ACKNOWLEDGED & RECOGNIZED THROUGH MY OWN
9. DIANE F. COMINTAN (sgd.) INITIATIVE & NOT FORCED TO PRESENT THIS WRITTEN
10. ERIC V. NAPOLITAN (sgd.) STATEMENT TO CLARIFY WHAT REALLY TRANSPIRED ON
11. RAYMOND C. JOSE (sgd.) JANUARY 31, 2002.
12. CHE BONBON (sgd.) IT WAS ME [sic] WHO GAVE INSTRUCTION TO THOSE PRESENT
13. POCHOLO G. RATON (sgd.) THAT EVENING OF JANUARY 31, 2002 NOT TO REPORT FOR
14. JON-JON IBARRA (sgd.) WORK THE FOLLOWING DAY[,] FEBRUARY 01, 2002 (FRIDAY).
15. MICHELLE DE MESA (sgd.) IT WAS ALSO I, WHO INVITED MS. TRINIDAD ENRIQUEZ TO JOIN
16. TRINIDAD M. ENRIQUEZ (sgd.) US, WHO WAS THEN LATER ACCUSED OF INSTIGATING THE
17. VIRGILIO G. NATIVIDAD (sgd.) SAID "NO WORK DAY SHOW," WHEREAS, IT WAS I WHO
18. CELSA L. BAG-AO (sgd.) INSTIGATED THE INCIDENT.
19. ALLAN RIVERA (sgd.) FURTHER MS. TRINIDAD ENRIQUEZ, ASIDE FROM COMING LATE
EVENING, SHE ONLY STAYED FOR LESS THAN AN HOUR, THAT
 79

THE ACCUSATION BY SOME OF THE INDIVIDUALS IS NOT TRUE, effectively recommend such managerial actions. 31 They refer to those
SINCE SOME HAD ALREADY LEFT & MOST OF THE whose primary duty consists of the management of the establishment
PARTICIPANTS DID NOT ARRIVED [sic] YET. in which they are employed or of a department or a subdivision thereof,
THIS IS TO ATTEST TO THE TRUTH OF THE ABOVE. and to other officers or members of the managerial staff. 32 Officers and
(Sgd.) members of the managerial staff perform work directly related to
ALLAN ORDINARIO RIVERA management policies of their employer and customarily and regularly
SALES ENGINEER17 exercise discretion and independent judgment. 33
Out of the eight subordinates who gave their statements during the The second class or fiduciary rank-and-file employees consist of
administrative investigation, it was only Stanley Mosende (Mosende) cashiers, auditors, property custodians, etc., or those who, in the
who stated that he was influenced by respondent Enriquez not to report normal exercise of their functions, regularly handle significant amounts
for work.18 It appears, however, that Mosende was not absent from of money or property.34 These employees, though rank-and-file, are
work based on the signed attendance sheet, which showed that he routinely charged with the care and custody of the employer’s money
reported to the office at 5:00 p.m. and signed out at 7:00 p.m. 19 The or property, and are thus classified as occupying positions of trust and
accounts of Mosende are incongruous with the statement of Tecson, confidence.
the Network Administrator. Tecson submitted a written statement In the case at bar, respondent was employed as the Administration
declaring that around 8:00 a.m. of February 1, 2002, he received a text Manager and the Executive Assistant to the General Manager. The
message from Mosende and from Wally Borja asking him not to go to responsibilities of the Administration Manager include:
the office.20 He did not mention the respondent. Later on, he - To take charge of the management of Administrative
contradicted his earlier statement when he submitted another affidavit personnel assigned to the head office in so far as
that was attached to the Petition for Review of petitioner M+W Zander, administrative functions are concerned (Administrative
this time stating that it was respondent Enriquez who called him up in Assistants assigned to the Division heads and other
his mobile phone to tell him not to report to work. managerial positions except HRD);
On March 1, 2002, a Notice of Termination21 was received by - To take charge of the over-all security for the company staff,
respondent informing her that her services as Administration Manager premises, and sensitive areas; to guard against unauthorized
and Executive Assistant to the General Manager of M+W Zander are entry in sensitive areas (as determined by the management
terminated effective the same day. The respondent was found liable for committee);
"willful breach of trust and confidence in using [her] authority and/or - To take charge of the implementation of company rules on
influence as Administrative Manager of M+W Zander Philippines over housekeeping, cleanliness and security for all occupants of
[her] subordinate to stage a ‘no work day’ last February 1, 2002, which the Head Office in coordination with the company Division
in turn disrupted vital operations in the Company." 22 Heads and HRD;
On the same day of her receipt of the Notice of Termination, respondent - To monitor attendance of all administrative personnel and
filed a Complaint for illegal dismissal with the Arbitration Office of the enforce applicable company rules pertaining thereto;
NLRC. Respondent Enriquez alleges that petitioners based her - To take charge of the maintenance, upkeep and inventory
termination on mere speculation since there were a number of of all company property within the head office;
employees who reported to work despite signing the letter of appeal, - To take charge of the timely provision of supplies and
and despite the absence of some of the employees, the company still equipment covered by the proper requisition documents
continued its operations that day. within the head office;
Labor Arbiter Edgar B. Bisana held that respondent Enriquez was - To take charge of traffic, tracking, and distribution of all
illegally dismissed.23 Both petitioners, M+W Zander and Wiltschek, incoming and outgoing correspondence, packages and
were ordered to reinstate respondent without loss of seniority rights and facsimile messages;
privileges, and to pay respondent full backwages and benefits from the - To take care of all official travel arrangements and
time compensation was withheld from her up to her actual documentation by company personnel;
reinstatement. The petitioners were further ordered to pay ₱100,000.00 - To ensure the proper allocation of company cars assigned
as moral damages, ₱100,000.00 as exemplary damages, as well as to the Head Office; and
attorney’s fees.
- To coordinate schedule and documentation of regular staff
The NLRC reversed the decision of the Labor Arbiter and found that meetings and one-on-one meetings as required by EVS and
respondent was not illegally dismissed because she committed serious the Division Heads.35 (Emphasis supplied.)
misconduct which destroyed the trust and confidence of the
The duties of the Executive Assistant to the General Manager are as
management in her.24
follows:
The Court of Appeals reversed and set aside the decision of the NLRC
- To take care of the scheduling, monitoring, and tracking of
and reinstated the decision of the Labor Arbiter, declaring that the
all the GM’s appointments;
dismissal of respondent was illegal. 25 The petitioners were ordered to
reinstate respondent to her former position without loss of seniority - To serve as liaison between the GM, the Division Heads, the
rights and privileges. The Court of Appeals deleted the award of Administrative Staff and external contacts;
exemplary damages and reduced the award of moral damages to - To take care of immigration concerns and corresponding
₱25,000.00. The award of attorney’s fees was also affirmed.1avvphi1 documents for the GM and the company expatriates;
At issue in this petition26 is whether respondent was illegally dismissed - To effectively handle, monitor, and document calls for the
by petitioners. Consequently, it must also be determined whether moral GM;
damages and attorney’s fees should be awarded, if respondent was - To handle personal financials (Banking/Bills) for the GM and
illegally dismissed, and whether Wiltschek should be personally liable - To perform any other tasks relative to the above functions
together with M+W Zander. which may be assigned from time to time by the GM.36
After a thorough review of the records, we affirm the decision of the Though respondent’s position is designated as the Administration
Court of Appeals and find that respondent was illegally dismissed by Manager of M+W Zander, it does not automatically mean that she
petitioner M+W Zander. occupies a position of trust and confidence. It is not the job title but the
The sole ground for respondent’s termination by petitioners is "willful actual work that the employee performs that determines whether he or
breach of trust and confidence in using [her] authority and/or influence she occupies a position of trust and confidence. 37 Respondent’s duties
as Administrative Manager of ZANDER over [her] subordinate to stage as the Administration Manager include management of the
a ‘no work day’ last February 1, 2002."27 administrative assistants who are assigned to the division heads, in so
Article 282 (c) of the Labor Code allows an employer to terminate the far as their administrative functions are concerned. She also takes
services of an employee for loss of trust and confidence. 28 Certain charge of the implementation of company rules on housekeeping and
guidelines must be observed for the employer to terminate an cleanliness, oversees the security of the premises and the sensitive
employee for loss of trust and confidence. We held in General Bank areas of the company, monitors the inventory of company property, and
and Trust Company v. Court of Appeals,29 viz.: ensures the timely provision of supplies and equipment. The position of
[L]oss of confidence should not be simulated. It should not be used as an Administration Manager may thus be properly considered as a
a subterfuge for causes which are improper, illegal, or unjustified. Loss managerial position, being a head of administrative assistants of other
of confidence may not be arbitrarily asserted in the face of divisions, and because of the performance of work directly related to
overwhelming evidence to the contrary. It must be genuine, not a mere management policies and company rules.
afterthought to justify earlier action taken in bad faith. 30 The second requisite of terminating an employee for loss of trust and
The first requisite for dismissal on the ground of loss of trust and confidence is that there must be an act that would justify the loss of
confidence is that the employee concerned must be one holding a trust and confidence.38 To be a valid cause for dismissal, the loss of
position of trust and confidence. confidence must be based on a willful breach of trust and founded on
clearly established facts.39
There are two classes of positions of trust: managerial employees and
fiduciary rank-and-file employees. We find that it was not established that respondent used her authority
to influence her subordinates to stage a "no work day"; and assuming
Managerial employees are defined as those vested with the powers or
that she performed this act as alleged by petitioners, it does not satisfy
prerogatives to lay down management policies and to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees or
 80

the jurisprudential requirements for valid termination due to loss of trust also in the case of Chiang Kai Shek School v. Court of Appeals, 46 this
and confidence. Court awarded moral damages to a teacher who was flatly, and without
Loss of trust and confidence stems from a breach of trust founded on a warning or a formal notice, told that she was dismissed.
dishonest, deceitful or fraudulent act. In the case at bar, respondent did In the case at bar, we see it fit to award moral damages to respondent
not commit any act which was dishonest or deceitful. She did not use because the manner in which respondent was treated upon petitioners’
her authority as the Administration Manager to misappropriate suspicion of her involvement in drafting and in circulating the letter of
company property nor did she abuse the trust reposed in her by appeal and the alleged staging of the "no work day" is contrary to good
petitioners with respect to her responsibility to implement company morals because it caused unnecessary humiliation to respondent.
rules. The most that can be attributed to respondent is that she When respondent reported to work a day after the alleged "no work
influenced a single subordinate, without exerting any force or making day," she was given a notice of preventive suspension, her personal
any threats, not to report to work. This does not constitute dishonest or belongings were inspected, and she was escorted outside of the
deceitful conduct which would justify the conclusion of loss of trust and premises, without any explanation. Furthermore, an order was given by
confidence.1awphil the administration to her subordinates that in no case shall she be
We are convinced that respondent's dismissal cannot justifiably be allowed inside the company premises without an authorized escort.
sustained since the findings in this case and whatever investigations Such measures were unwarranted because the charges against
may have been made by petitioners miserably fail to establish respondent have no connection to the breach of trust involving loss of
culpability on respondent’s part. While dishonesty or disloyalty of an money or company property, which could have called for securing
employee is not to be condoned, neither should a condemnation on that company property from respondent. The crux is precisely that the
ground be tolerated on the basis of suspicions spawned by speculative charges against respondent are divorced from the essence of loss of
inferences.40 trust and confidence—which is the commission of an act that is
Petitioners anchored the termination of respondent on the statement dishonest, deceitful or fraudulent. And despite this, based merely on
made by a single subordinate, Mosende, which was made during the mere suspicion, respondent was treated unfairly when she was not
administrative investigation conducted by petitioners. Mosende stated given an explanation why her personal belongings were inspected, why
that respondent, as his superior, told him not to report to work on she was asked to leave the company building, why she had to be
February 1, 2002.41 It was only Mosende who said that respondent escorted by guards, why she was banned from the premises, and, most
forced him not to report to work on February 1, 2002. During the importantly, why it was necessary at all to issue an order to her
administrative investigation, the rest of respondent’s subordinates did subordinates that she is not allowed in the company premises unless
not identify respondent as the one who influenced them not to go to she is escorted by authorized personnel. These measures are uncalled
work on February 1, 2002. for, unfair and oppressive.
The act of influencing a single subordinate not to report to work is On the matter of attorney's fees, we have ruled that attorney's fees may
insufficient to merit the harsh and grave penalty of dismissal. The be awarded only when the employee is illegally dismissed in bad faith
records are bereft of any evidence to prove that respondent in fact and is compelled to litigate or incur expenses to protect his rights by
coerced a considerable number of employees to stage the "no work reason of the unjustified acts of his employer. 47 In the case at bar,
day." Petitioners may not arbitrarily assert loss of trust and confidence respondent’s unjustified and unwarranted dismissal prompted her to
in respondent based on the lone affidavit of Mosende, in the face of engage the professional services of a counsel and she is thus entitled
overwhelming evidence to the contrary, including affidavits from several to an award of attorney’s fees.
subordinates of respondent and the categorical statement of Rivera Lastly, we come to the issue of whether Wiltschek, as the General
that he was the one who influenced other employees to stage the "no Manager, should be personally liable together with M+W Zander. We
work day." agree with petitioners that he should not be made personally liable. The
We note that while 29 other employees signed the Letter of Appeal, and general manager of a corporation should not be made personally
several employees joined the alleged work stoppage, it was only answerable for the payment of an illegally dismissed employee's
respondent who was singled out and dismissed. These protest monetary claims arising from the dismissal unless he had acted
activities bear out the general sentiment of discontent within the maliciously or in bad faith in terminating the services of the
company and petitioners cannot pin the blame on respondent alone. employee.48 The employer corporation has a separate and distinct
Petitioners may not terminate respondent’s employment on mere personality from its officers who merely act as its agents.
speculation and base her dismissal on unclear and nebulous reasons, It is well settled that:
especially where a less punitive penalty would suffice. The penalty [A] corporation is invested by law with a personality separate and
must be commensurate with the act, conduct or omission imputed to distinct from those of the persons composing it as well as from that of
the employee and must be imposed in connection with the disciplinary any other entity to which it may be related. Mere ownership by a single
authority of the employer.42 stockholder or by another corporation of all or nearly all of the capital
We thus find the dismissal to be illegal. Consequently, respondent is stock of a corporation is not of itself sufficient ground for disregarding
entitled to reinstatement without loss of seniority rights and other the separate corporate personality. 49
privileges, and to full backwages, inclusive of allowances, and other The exception noted is where the official "had acted maliciously or in
benefits or their monetary equivalent, computed from the time of the bad faith," in which event he may be made personally liable for his own
withholding of the employee's compensation up to the time of actual act. That exception is not applicable in the case at bar, because it has
reinstatement. If reinstatement is not possible due to the strained not been proven that Wiltschek was impleaded in his capacity as
relations between the employer and the employee, separation pay General Manager of petitioner corporation and there appears to be no
should instead be paid the employee equivalent to one month salary evidence on record that he acted maliciously or in bad faith in
for every year of service, computed from the time of engagement up to terminating the services of respondent. His act, therefore, was within
the finality of this decision. the scope of his authority and was a corporate act for which he should
Petitioners also raised as an issue the propriety of the award of moral not be held personally liable for.
damages and attorney’s fees, arguing that there is no factual or legal IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The
basis to award such. Petitioners also pointed out that there was also no portion of the assailed decision ordering Rolf Wiltschek liable with M+W
discussion in the body of the decision of the Court of Appeals which Zander is DELETED. All other aspects of the decision of the Court of
states the reasons for the award of damages. Appeals are AFFIRMED.
We find that based on the facts of the case, there is sufficient basis to SO ORDERED.
award moral damages and attorney’s fees to respondent. We have
consistently ruled that in illegal dismissal cases, moral damages are
recoverable only where the dismissal of the employee was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was done
G.R. No. 182499 October 2, 2009
in a manner contrary to morals, good customs or public policy. 43 Such
an award cannot be justified solely upon the premise that the employer CONCEPCION FAELDONIA, Petitioner,
fired his employee without just cause or due process. Additional facts vs.
must be pleaded and proven to warrant the grant of moral damages TONG YAK GROCERIES, JAYME GO and MERLITA
under the Civil Code, i.e., that the act of dismissal was attended by bad GO, Respondents.
faith or fraud, or constituted an act oppressive to labor, or was done in DECISION
a manner contrary to morals, good customs or public policy; and, of YNARES-SANTIAGO, J.:
course, that social humiliation, wounded feelings, grave anxiety, and This Petition for Review on Certiorari assails the Decision 1 and
similar injury resulted therefrom.44 Resolution2 of the Court of Appeals (CA) dated February 14, 2007 and
In previous cases where moral damages and attorney’s fees were March 18, 2008, respectively, in CA-G.R. SP No. 76651 which set aside
awarded, the manner of termination was done in a humiliating and the Decision3 of the National Labor Relations Commission (NLRC)
insulting manner, such as in the case of Balayan Colleges v. National dated September 19, 2002 and its Resolution4 dated January 27, 2003
Labor Relations Commission45 where the employer posted copies of its finding that petitioner Concepcion Faeldonia was illegally dismissed.
letters of termination to the teachers inside the school campus and it Petitioner alleged that she worked at Tong Yak Groceries as
also furnished copies to the town mayor and Parish Priest of their sales/stock clerk from March 1978 until her dismissal on April 20, 2000;
community for the purpose of maligning the teachers’ reputation. So that on January 26, 2000, while on an errand for her employer, she
 81

stepped on a rusted half-inch nail which injured her foot and caused SO ORDERED.15
her to be absent from work; that respondent Jayme Go advised her to The NLRC found that respondents failed to prove that petitioner
visit Dr. William Ty, who gave her antibiotics and pain killers as abandoned her job. It found that the submission of a certification that
medications;5 that after two weeks of medication, the wounds did not petitioner is fit to work is contrary to the claim that she is demanding for
heal and even worsened; that she was brought to the Metropolitan separation pay for health reasons. The NLRC thus stated:
Hospital in Sta. Cruz, Manila where she was also diagnosed to be Not only were the respondents unable to prove that the complainant
diabetic; that her foot was operated on and she was confined at the abandoned her job. Evidence on hand corroborates the fact that there
hospital for 24 days; that the respondents paid the hospital bill was no abandonment at all. Firstly, had there been truth to
amounting to ₱22,266.40;6 that she was released from the hospital on respondent’s claim that the complainant opted to be separated from
March 1, 2000, but was advised to report daily for wound dressing for employment due to health reasons, and that she was not able to prove
three weeks; and that respondents paid for all the expenses. 7 entitlement to separation benefits on account of her failure to produce
Petitioner also alleged that on March 10, 2000, she was summoned by a medical certification concerning her no longer fit to work as issued by
respondent Merlita Go who told her that, "ayaw na namin sa iyo dahil a public health authority, she should not have, in the first place,
may sakit ka, paengkang-engkang kung lumakad at pagtatawanan ka requested the company physician to accomplish the SSS Sickness
lamang ng mga kasamahan mo dito;" however, petitioner did not give Notification form where the latter certified, in clear terms, that
much attention to said statement;8 that she was able to secure from the complainant was already fit to work on April 20, 2000. Secondly,
SSS a Sickness Notification9 signed by Dr. William Ty certifying that respondents in fact admitted that the said Certification was submitted
she is fit to resume work by April 20, 2000; that petitioner reported back to them by the complainant. This again would not be the logical
to work on April 20, 2000 but was told to resign and that she would be recourse of an employee seeking separation benefits on the
given a sum of money to start a business; that when petitioner asked representation that she is no longer physically fit to work, since the
how much financial assistance would be given her, respondent Merlita certification of respondents’ physician actually pertains to
Go angrily stated, "Marami na akong nagastos sa pagpapa-ospital sa complainant’s being fit to resume her employment. In effect, the facts
iyo."10 obtaining bolster complainant’s assertion that she endeavored to
Thereafter, respondents no longer allowed petitioner to go back to work. present herself for resumption of her work, but was refused. This
Hence, she filed a complaint for illegal dismissal with money claims conclusion is far from being conjectural, as it is based on law, evidence
before the NLRC,11 claiming that her dismissal was not for cause and on record, and the existing jurisprudential norm on the issue of
without due process. abandonment. Hence, the finding that complainant was dismissed from
Respondents denied that they dismissed petitioner. They alleged that employment, and that such dismissal is illegal. 16
after petitioner’s accident, they had extended the necessary medical Respondents filed a motion for reconsideration but it was denied; hence,
and hospital assistance to her amounting to almost ₱70,000.00; that they filed a petition for certiorari before the Court of Appeals which
they had been lenient in her attendance at work; that petitioner issued on February 14, 2007 the herein assailed Decision, 17 the
demanded for separation pay citing her health condition; that they dispositive portion of which states—
required petitioner to submit a certification issued by a government WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.
physician stating her fitness to work,12 but petitioner no longer reported The decision promulgated on September 19, 2002 and the resolution
back for work; that although petitioner submitted a certification that she dated January 27, 2003 of the National Labor Relations Commission
is fit to resume work, the same was not issued by a government are NULLIFIED AND SET ASIDE.
physician; and that they were surprised to receive the Notice of Hearing The decision dated October 29, 2001 of the Labor Arbiter is
by the labor tribunal.13 REINSTATED.
On October 29, 2001, the Labor Arbiter rendered a decision finding that SO ORDERED.18
petitioner was not dismissed from employment, the dispositive portion Hence, this petition.
of which states:
Petitioner argues that the Court of Appeals erred in reversing the NLRC
WHEREFORE, premises considered, judgment is hereby rendered and in affirming the Labor Arbiter’s ruling. She claims that the appellate
finding that complainant was not dismissed from work, legally or court failed to consider the medical certificate she submitted which was
otherwise. Respondents are hereby ordered to pay as follows, to wit: issued by the company physician attesting her fitness to resume work.
1. Separation pay According to petitioner, this only supports her claim that she presented
herself for work but was refused. She maintains that the findings of the
P223.50 x 15 days x 22 years = NLRC were based on substantial evidence while those of the labor
arbiter were groundless.
P73,755.00 – 52,266.45 = P21,488.55 On the other hand, respondents assert that only questions of law may
be raised in a petition for review on certiorari under Rule 45.
2. Wage differential Respondents also argue that the findings of the labor arbiter as affirmed
by the Court of Appeals should be accorded not only respect but even
P3.50 x 26 x 5.5 months = P 500.50 finality because it was supported by substantial evidence.
The petition is meritorious.
3. Service incentive leave The issue in the instant case is factual: whether petitioner abandoned
her work or was illegally dismissed.
P223.50 x 15 = P 3,352.50 The factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally
4. 13th Month Pay accorded not only respect but even finality.19 However, when there is a
showing that they were arrived at arbitrarily or in disregard of the
P223.50 x 26 x 2 = P11,622.00 evidence on record, they may be examined by the courts. 20
We find that the NLRC acted well within its appellate jurisdiction over
All other claims are hereby dismissed for lack of merit.
the labor arbiter in reversing the latter’s factual conclusions. The
SO ORDERED.14 powers and jurisdiction of the NLRC as the country’s labor court is well-
The Labor Arbiter found that the assistance given by respondents to defined in the Labor Code. Article 223 states that decisions, awards or
petitioner by way of medical and hospital expenses amounting to about orders of the Labor Arbiter may be appealed if there is prima facie
₱73,755.00, belies the allegation that respondents asked petitioner to evidence of abuse of discretion on the part of the Labor Arbiter, or
resign without benefits. The arbiter also held that petitioner filed the serious errors in the finding of facts are raised which would cause grave
complaint when her demand for separation pay was not granted for her or irreparable damage or injury to the appellant 21 while Article 217
failure to produce a certification from a public health physician. specifically provides that the Commission has exclusive appellate
However, despite the finding that there was no dismissal, the labor jurisdiction over all cases decided by the labor arbiters. Moreover,
arbiter awarded separation pay to petitioner considering her length of Article 218 (c) vests the Commission the power to "correct, amend, or
service and in accordance with Art. 284 of the Labor Code. waive any error, defect or irregularity whether in substance or form" in
On appeal, the NLRC reversed the decision of the Labor Arbiter, the the exercise of its appellate jurisdiction. 221avvphi1
dispositive portion of which reads: In termination cases, the burden of proof rests upon the employer to
WHEREFORE, premises considered, the decision under review is show that the dismissal is for a just and valid cause and failure to do so
REVERSED and SET ASIDE. Judgment is hereby entered, declaring would necessarily mean that the dismissal was illegal. 23 In Philippine
complainant Concepcion Faeldonia as illegally dismissed from her Long Distance Telephone Company, Inc. v. Tiamson, the Court ruled:
employment. Accordingly, respondents are ordered to REINSTATE the The employer’s case succeeds or fails on the strength of its evidence
complainant to her former position without loss of seniority rights, and and not on the weakness of the employee’s defense. If doubt exists
to pay the said complainant, jointly and severally, FULL BACKWAGES between the evidence presented by the employer and the employee,
computed from April 20, 2000 until actually reinstated. the scales of justice must be tilted in favor of the latter. Moreover, the
Respondents are likewise ordered to pay complainant, her salary quantum of proof required in determining the legality of an employee’s
differentials in the amount of P500.50, Service Incentive Leave Pay of dismissal is only substantial evidence. Substantial evidence is more
P3,352.50 and 13th month pay of P11,622.00. than a mere scintilla of evidence or relevant evidence as a reasonable
All other claims of the complainant are dismissed for lack of merit.
 82

mind might accept as adequate to support a conclusion, even if other

₱15.00 1 February 2002
minds, equally reasonable, might conceivably opine otherwise. 24
Following this principle, it is incumbent upon the respondents to prove On 20 March 2002, respondent National Union of Workers in Hotel,
by substantial evidence that petitioner abandoned her job. For Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union),
abandonment to exist, it must be shown that (1) the employee has failed through its President, Reynaldo C. Rasing (Rasing), sent a letter4 to
to report for work or must have been absent without valid or justifiable Director Alex Maraan (Dir. Maraan) of the Department of Labor and
reason; and (2) that there must have been a clear intention to sever the Employment-National Capital Region (DOLE-NCR), reporting the non-
employer-employee relationship as manifested by some overt acts.25 compliance of Dusit Hotel with WO No. 9, while there was an on-going
Respondents failed to discharge this burden. Mere absence of compulsory arbitration before the National Labor Relations
petitioner is not sufficient to establish the allegation of abandonment. Commission (NLRC) due to a bargaining deadlock between the Union
The prolonged absence of petitioner was not without justifiable reason and Dusit Hotel; and requesting immediate assistance on this matter.
because it was established that her failure to report for work was due On 24 May 2002, Rasing sent Dir. Maraan another letter following-up
to the injury she suffered in the course of her employment and with his previous request for assistance.
sufficient notice to respondents. Petitioner also presented herself for Acting on Rasing’s letters, the DOLE-NCR sent Labor Standards
work on the date stated in the medical certificate which stated that she Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of
is fit to resume work. Dusit Hotel premises on 24 April 2002. LSO Natividad’s Inspection
Above all, the intention to sever the employer-employee relationship Results Report5 dated 2 May 2002 stated:
was not duly established by respondents. The prior submission of a Based on interviews/affidavits of employees, they are receiving more
medical certificate that petitioner is fit to resume work negates the claim than P290.00 average daily rate which is exempted in the compliance
of respondents that the former demanded for separation pay on of Wage Order NCR-09;
account of her failing health. Certainly, petitioner cannot demand for Remarks: There is an ongoing negotiation under Case # NCMB-NCR-
separation benefits on the ground of illness while at the same time NS-12-369-01 & NCMB-NCR-NS-01-019-02 now forwarded to the
presenting a certification that she is fit to work. Respondents could have NLRC office for the compulsory arbitration.
denied petitioner’s demand at that instance and ordered her to return NOTE: Payrolls to follow later upon request including position paper of
to work had it not been their intention to sever petitioner from their [Dusit Hotel].
employ. Hence, we find the allegation that petitioner presented herself By virtue of Rasing’s request6 for another inspection, LSO Natividad
for work but was refused by respondents more credible. conducted a second inspection of Dusit Hotel premises on 29 May 2002.
It should be noted that respondents also failed to observe the In her Inspection Results Report7 dated 29 May 2002, LSO Natividad
requirements of procedural due process in effecting petitioner’s noted:
dismissal. In dismissing an employee, the employer has the burden of *Non-presentation of records/payrolls
proving that the dismissed worker has been served two notices: (1) the *Based on submitted payrolls & list of union members by NUWHRAIN-
first to inform the employee of the particular acts or omissions for which DUSIT HOTEL NIKKO Chapter, there are one hundred forty-four (144)
the employer seeks his dismissal, and (2) the second to inform the affected in the implementation of Wage Order No. NCR-09-> ECOLA
employee of his employer’s decision to terminate him. 26 covering the periods from Nov.5/01 to present.
In cases of abandonment of work, the ground alleged by respondents, Accordingly, the DOLE-NCR issued a Notice of Inspection Result
notice shall be served at the worker’s last known address. 27 Here, no directing Dusit Hotel to effect restitution and/or correction of the noted
such notice was served to petitioner. Hence, for breach of the due violations within five days from receipt of the Notice, and to submit any
process requirements, respondents shall also be liable in the amount question on the findings of the labor inspector within the same period,
of ₱30,000 as indemnity in the form of nominal damages.28 otherwise, an order of compliance would be issued. The Notice of
WHEREFORE, the petition is GRANTED. The Decision and Resolution Inspection Result was duly received by Dusit Hotel Assistant Personnel
of the Court of Appeals dated February 14, 2007 and March 18, 2008, Manager Rogelio Santos.8
respectively, in CA-G.R. SP No. 76651 are hereby REVERSED and In the meantime, the NLRC rendered a Decision9 dated 9 October 2002
SET ASIDE. The Decision of the National Labor Relations Commission in NLRC-NCR-CC No. 000215-02 – the compulsory arbitration
dated September 19, 2002 declaring Concepcion Faeldonia as illegally involving the Collective Bargaining Agreement (CBA) deadlock
dismissed is hereby REINSTATED and AFFIRMED with between Dusit Hotel and the Union – granting the hotel employees the
MODIFICATION that respondents are further ordered to pay nominal following wage increases, in accord with the CBA:
damages in the amount of ₱30,000.00.
Effective January 1, 2001- ₱500.00/month
SO ORDERED.
Effective January 1, 2002- ₱550.00/month
Effective January 1, 2003- ₱600.00/month
On 22 October 2002, based on the results of the second inspection of
Dusit Hotel premises, DOLE-NCR, through Dir. Maraan, issued the
G.R. No. 181972 August 25, 2009 Order10 directing Dusit Hotel to pay 144 of its employees the total
PHILIPPINE HOTELIERS, INC., DUSIT HOTEL NIKKO- amount of ₱1,218,240.00, corresponding to their unpaid ECOLA under
MANILA, Petitioner, WO No. 9; plus, the penalty of double indemnity, pursuant to Section
vs. 12 of Republic Act No. 6727,11 as amended by Republic Act No.
NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT, AND 8188,12 which provides:
ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)- DUSIT HOTEL Sec. 12. Any person, corporation, trust, firm, partnership, association
NIKKO CHAPTER, Respondents. or entity which refuses or fails to pay any of the prescribed increases
DECISION or adjustments in wage rates made in accordance with this Act shall be
CHICO-NAZARIO, J.: punished by a fine not less than Twenty-five thousand pesos (₱25,000)
Before this Court is a Petition for Review on Certiorari, under Rule 45 nor more than One hundred thousand pesos (₱100,000) or
of the Rules of Court, assailing the Decision1 dated 10 September 2007 imprisonment of not less than two (2) years nor more than four (4) years
of the Court of Appeals in CA-G.R. SP No. 92798 granting the ₱30.00- or both such find and imprisonment at the discretion of the court:
per-day Emergency Cost of Living Allowance (ECOLA), under Wage Provided, That any person convicted under this Act shall not be entitled
Order (WO) No. NCR-09 (WO No. 9), to 144 employees of petitioner to the benefits provided for under the Probation Law.
Dusit Hotel Nikko (Dusit Hotel)2 and imposing upon the latter the The employer concerned shall be ordered to pay an amount equivalent
penalty of double indemnity under Republic Act No. 6727, as amended to double the unpaid benefits owing to the employees: Provided, That
by Republic Act No. 8188. Likewise assailed herein is the payment of indemnity shall not absolve the employer from the criminal
Resolution3 dated 4 March 2008 of the appellate court in the same case liability under this Act.
denying the Motion for Reconsideration of Dusit Hotel. If the violation is committed by a corporation, trust or firm, partnership,
The antecedent facts of the case are as follows: association or any other entity, the penalty of imprisonment shall be
WO No. 9, approved by the Regional Tripartite Wages and Productivity imposed upon the entity’s responsible officers including but not limited
Board (RTWPB) of the National Capital Region (NCR), took effect on 5 to the president, vice president, chief executive officer, general
November 2001. It grants ₱30.00 ECOLA to particular employees and manager, managing director or partner. (Emphasis ours.)
workers of all private sectors, identified as follows in Section 1 thereof: Dusit Hotel filed a Motion for Reconsideration13 of the DOLE-NCR
Section 1. Upon the effectivity of this Wage Order, all private sector Order dated 22 October 2002, arguing that the NLRC Decision dated 9
workers and employees in the National Capital Region receiving daily October 2002, resolving the bargaining deadlock between Dusit Hotel
wage rates of TWO HUNDRED FIFTY PESOS (₱250.00) up to TWO and the Union, and awarding salary increases under the CBA to hotel
HUNDRED NINETY PESOS (₱290.00) shall receive an emergency employees retroactive to 1 January 2001, already rendered the DOLE-
cost of living allowance in the amount of THIRTY PESOS (₱30.00) per NCR Order moot and academic. With the increase in the salaries of the
day payable in two tranches as follows: hotel employees ordered by the NLRC Decision of 9 October 2002,
along with the hotel employees’ share in the service charges, the 144
Amount of ECOLA Effectivity hotel employees, covered by the DOLE-NCR Order of 22 October 2002,
would already be receiving salaries beyond the coverage of WO No. 9.
₱15.00 5 November 2001
 83

Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR Hence, Dusit Hotel sought recourse from this Court by filing the instant
issued a Resolution14 on 27 December 2002, setting aside its earlier Petition,28 at the crux of which is the sole issue of whether the 144 hotel
Order dated 22 October 2002 for being moot and academic, in employees were still entitled to ECOLA granted by WO No. 9 despite
consideration of the NLRC Decision dated 9 October 2002; and the increases in their salaries, retroactive to 1 January 2001, ordered
dismissing the complaint of the Union against Dusit Hotel, for non- by NLRC in the latter’s Decision dated 9 October 2002.
compliance with WO No. 9, for lack of merit. 1avvphi1 Section 1 of WO No. 9 very plainly stated that only private sector
The Union appealed15 the 27 December 2002 Resolution before the workers and employees in the NCR receiving daily wage rates of
DOLE Secretary maintaining that the wage increases granted by the ₱250.00 to ₱290.00 shall be entitled to ECOLA. Necessarily, private
NLRC Decision of 9 October 2002 should not be deemed as sector workers and employees receiving daily wages of more than
compliance by Dusit Hotel with WO No. 9. ₱290.00 were no longer entitled to ECOLA. The ECOLA was to be
The DOLE, through Acting Secretary Manuel G. Imson, issued an implemented in two tranches: ₱15.00/day beginning 5 November 2001;
Order16 dated 22 July 2004 granting the appeal of the Union. The DOLE and the full amount of ₱30.00/day beginning 1 February 2002.
Secretary reasoned that the NLRC Decision dated 9 October 2002 WO No. 9 took effect on 5 November 2001. The Decision rendered by
categorically declared that the wage increase under the CBA finalized the NLRC on 9 October 2002 ordered Dusit Hotel to grant its employees
between Dusit Hotel and the Union shall not be credited as compliance salary increases retroactive to 1 January 2001 and 1 January 2002. In
with WOs No. 8 and No. 9. Furthermore, Section 1 of Rule IV of the determining which of its employees were entitled to ECOLA, Dusit Hotel
Rules Implementing WO No. 9, which provides that wage increases used as bases the daily salaries of its employees, inclusive of the
granted by an employer in an organized establishment within three retroactive salary increases. The Union protested and insisted that the
months prior to the effectivity of said Wage Order shall be credited as bases for the determination of entitlement to ECOLA should be the
compliance with the ECOLA prescribed therein, applies only when an hotel employees’ daily salaries, exclusive of the retroactive salary
agreement to this effect has been forged between the parties or a increases. According to the Union, Dusit Hotel cannot credit the salary
provision in the CBA allowing such crediting exists. Hence, the DOLE increases as compliance with WO No. 9.
Secretary held: Much of the confusion in this case arises from the insistence of the
WHEREFORE, premises considered, the appeal is hereby GRANTED. Union to apply Section 13 of WO No. 9, which states:
The Resolution dated December 27, 2002 issued by the Regional Section 13. Wage increases/allowances granted by an employer in an
Director is SET ASIDE and his Order dated October 22, 2002 is hereby organized establishment with three (3) months prior to the effectivity of
REINSTATED. Dusit Hotel Nikko Manila is hereby ordered to pay its this Order shall be credited as compliance with the prescribed increase
One Hundred Forty Four (144) employees the aggregate amount of set forth herein, provided the corresponding bargaining agreement
One Million Two Hundred Eighteen Thousand Two Hundred Forty provision allowing creditability exists. In the absence of such an
Pesos (Php1,218,240.00) representing their Emergency Cost Of Living agreement or provision in the CBA, any increase granted by the
Allowance (ECOLA) under Wage Order No. NCR-09 and the penalty of employer shall not be credited as compliance with the increase
double indemnity under Republic Act. No. 8188, as amended. 17 prescribed in this Order.
Expectedly, Dusit Hotel sought reconsideration18 of the 22 July 2004 In unorganized establishments, wage increases/allowances granted by
Order of the DOLE Secretary. In an Order19 dated 16 December 2004, the employer within three (3) months prior to the effectivity of this Order
the DOLE Secretary granted the Motion for Reconsideration of Dusit shall be credited as compliance therewith.
Hotel and reversed his Order dated 22 July 2004. The DOLE Secretary, In case the increases given are less than the prescribed adjustment,
in reversing his earlier Order, admitted that he had disregarded therein the employer shall pay the difference. Such increases shall not include
that the wage increase granted by the NLRC in the latter’s Decision anniversary increases, merit wage increases and those resulting from
dated 9 October 2002 retroacted to 1 January 2001. The said wage the regularization or promotion of employees. (Emphasis ours.)
increase, taken together with the hotel employees’ share in the service The Union harps on the fact that its CBA with Dusit Hotel does not
charges of Dusit Hotel, already constituted compliance with the WO No. contain any provision on creditability, thus, Dusit Hotel cannot credit the
9. According to the DOLE Secretary: salary increases as compliance with the ECOLA required to be paid
To stress, the overriding consideration of Wage Order NCR-09 is quite under WO No. 9.1avvphi1
simple, to provide workers with immediate relief through the grant of The reliance of the Union on Section 13 of WO No. 9 in this case is
Emergency Cost of Living Allowance to enable them to cope with the misplaced. Dusit Hotel is not contending creditability of the hotel
increases in the cost of living. Conformably with the evident intent of employees’ salary increases as compliance with the ECOLA mandated
the subject Wage Order as expressed in its preamble, this Office finds by WO No. 9. Creditability means that Dusit Hotel would have been
that the substantial share in the service charge being received by the allowed to pay its employees the salary increases in place of the
employees of appellee (Dusit Hotel) more than compensates for the ECOLA required by WO No. 9. This, however, is not what Dusit Hotel
Emergency Cost of Living Allowance of ₱30.00 given under Wage is after. The position of Dusit Hotel is merely that the salary increases
Order NCR-09.20 should be taken into account in determining the employees’ entitlement
It was then the turn of the Union to file a Motion for to ECOLA. The retroactive increases could raise the hotel employees’
Reconsideration,21 but it was denied by the DOLE Secretary in an daily salary rates above ₱290.00, consequently, placing said
Order22 dated 13 October 2005. The DOLE Secretary found that it employees beyond the coverage of WO No. 9. Evidently, Section 13 of
would be unjust on the part of Dusit Hotel if the hotel employees were WO No. 9 on creditability is irrelevant and inapplicable herein.
to enjoy salary increases retroactive to 1 January 2001, pursuant to the The Court agrees with Dusit Hotel that the increased salaries of the
NLRC Decision dated 9 October 2002, and yet said salary increases employees should be used as bases for determining whether they were
would be disregarded in determining compliance by the hotel with WO entitled to ECOLA under WO No. 9. The very fact that the NLRC
No. 9. decreed that the salary increases of the Dusit Hotel employees shall be
The Union appealed the Orders dated 16 December 2004 and 13 retroactive to 1 January 2001 and 1 January 2002, means that said
October 2005 of the DOLE Secretary with the Court of Appeals via a employees were already supposed to receive the said salary increases
Petition for Review23 under Rule 43 of the Rules of Court. On 10 beginning on these dates. The increased salaries were the rightful
September 2007, the Court of Appeals promulgated its salaries of the hotel employees by 1 January 2001, then again by 1
Decision24 ruling in favor of the Union. Referring to Section 13 of WO January 2002. Although belatedly paid, the hotel employees still
No. 9, the Court of Appeals declared that wage increases/allowances received their salary increases.
granted by the employer shall not be credited as compliance with the It is only fair and just, therefore, that in determining entitlement of the
prescribed increase in the same Wage Order, unless so provided in the hotel employees to ECOLA, their increased salaries by 1 January 2001
law or the CBA itself; and there was no such provision in the case at and 1 January 2002 shall be made the bases. There is no logic in
bar. The appellate court also found that Dusit Hotel failed to recognizing the salary increases for one purpose (i.e., to recover the
substantiate its position that receipt by its employees of shares in the unpaid amounts thereof) but not for the other (i.e., to determine
service charges collected by the hotel was to be deemed substantial entitlement to ECOLA). For the Court to rule otherwise would be to
compliance by said hotel with the payment of ECOLA required by WO sanction unjust enrichment on the part of the hotel employees, who
No. 9. The Court of Appeals adjudged that Dusit Hotel should be liable would be receiving increases in their salaries, which would place them
for double indemnity for its failure to comply with WO No. 9 within five beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA
days from receipt of notice. The appellate court stressed that ECOLA under the very same provision.
is among the laborers’ financial gratifications under the law, and is The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel
distinct and separate from benefits derived from negotiation or to increase the salaries of its employees by ₱500.00 per month,
agreement with their employer. In the end, the Court of Appeals retroactive to 1 January 2001. After applying the said salary increase,
disposed: only 82 hotel employees29 would have had daily salary rates falling
WHEREFORE, finding the existence of grave abuse of discretion in the within the range of ₱250.00 to ₱290.00. Thus, upon the effectivity of
issuance of the assailed Orders dated December 16, 2004 and October WO No. 9 on 5 November 2001, only the said 82 employees were
13, 2005, the same are hereby REVERSED AND SET ASIDE and the entitled to receive the first tranch of ECOLA, equivalent to ₱15.00 per
Order dated July 22, 2004 of the respondent DOLE Acting Secretary in day.
OS-LS-0630-2003-0105 is REINSTATED.25 The NLRC Decision dated 9 October 2002 also ordered Dusit Hotel to
The Motion for Reconsideration26 of Dusit Hotel was denied for lack of effect a second round of increase in its employees’ salaries, equivalent
merit by the Court of Appeals in its Resolution27 dated 4 March 2008. to ₱550.00 per month, retroactive to 1 January 2002. As a result of this
 84

increase, the daily salary rates of all hotel employees were already AGRICULTURAL AND INDUSTRIAL SUPPLIES CORPORATION,
above ₱290.00. Consequently, by 1 January 2002, no more hotel DAILY HARVEST MERCANTILE, INC., JOSEPH C. SIA HETIONG
employee was qualified to receive ECOLA. and REYNALDO M. RODRIGUEZ, Petitioners,
Given that 82 hotel employees were entitled to receive the first tranch vs.
of ECOLA from 5 November 2001 to 31 December 2001, the Court JUEBER P. SIAZAR and THE HONORABLE NATIONAL LABOR
must address the assertion of Dusit Hotel that the receipt by said hotel RELATIONS COMMISSION, Respondents.
employees of their shares in the service charges already constituted DECISION
substantial compliance with the prescribed payment of ECOLA under ABAD, J.:
WO No. 9. This case dwells on circumstances that spell dismissal from work
The Court rules in the negative. although the company insists that such circumstances indicate
It must be noted that the hotel employees have a right to their share in abandonment of work.
the service charges collected by Dusit Hotel, pursuant to Article 96 of The Facts and the Case
the Labor Code of 1991, to wit: On July 3, 1997 respondent Jueber P. Siazar (Siazar) filed a complaint
Article 96. Service charges. – All service charges collected by hotels, for illegal dismissal and unfair labor practice against petitioner
restaurants and similar establishments shall be distributed at the rate Agricultural and Industrial Supplies Corporation (AISC) and others
of eighty-five percent (85%) for all covered employees and fifteen before the National Labor Relations Commission (NLRC) in NLRC-
percent (15%) for management. The share of employees shall be NCR Case 00-07-04689-97.
equally distributed among them. In case the service charge is abolished, Siazar claimed that he first worked for the Daily Harvest Mercantile, Inc.
the share of the covered employees shall be considered integrated in (DHMI) on April 12, 1993 but was transferred after three years in June
their wages. 1996 to AISC1 as product designer, mold maker, and CNC programmer
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory with a monthly salary of ₱25,000.00.2
provision to pay its employees and management their respective In early 1997, Siazar discovered that his company was not remitting
shares in the service charges collected, the hotel cannot claim that much of his SSS premiums although the computations appeared on his
payment thereof to its 82 employees constitute substantial compliance pay slips. When he told his co-employees about it, they made their own
with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel inquiries, too.3 On Siazar’s arrival at work on June 17, 1997, the
employees’ right to their shares in the service charges collected by company guard refused him entry and handed him two notes from the
Dusit Hotel is distinct and separate from their right to ECOLA; management: one said that he was not to report for work;4 the other
gratification by the hotel of one does not result in the satisfaction of the said that he was to report after two days on June 19, 1997 to Atty.
other. Rodriguez at his office in Binondo.5
The Court, however, finds no basis to hold Dusit Hotel liable for double Too anxious over the matter, Siazar did not wait for June 19 and went
indemnity. Under Section 2(m) of DOLE Department Order No. 10, straightaway to see Atty. Rodriguez. The latter told Siazar that the
Series of 1998,30 the Notice of Inspection Result "shall specify the company had decided to abolish his department because of
violations discovered, if any, together with the officer’s recommendation redundancy and he could no longer work. Atty. Rodriguez asked Siazar
and computation of the unpaid benefits due each worker with an advice to make a computation of what amount he expected from the company
that the employer shall be liable for double indemnity in case of refusal and return to the lawyer with such computation on the following day and
or failure to correct the violation within five calendar days from receipt the company would immediately pay him.6
of notice." A careful review of the Notice of Inspection Result dated 29 When Siazar told his co-employees about this development, they
May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that thought that the company removed him from work because of fear that
the said Notice did not contain such an advice. Although the Notice he would agitate them into forming a union, given the non-remittance
directed Dusit Hotel to correct its noted violations within five days from of the correct amounts of their SSS contributions. 7
receipt thereof, it was not sufficiently apprised that failure to do so within When Siazar and his wife saw Atty. Rodriguez again at his office on
the given period would already result in its liability for double indemnity. June 19, 1997, the latter insisted on getting Siazar to do the
The lack of advice deprived Dusit Hotel of the opportunity to decide and computation he asked. Because of the lawyer’s insistence, Siazar
act accordingly within the five-day period, as to avoid the penalty of finally gave him a computation of his claims against the company on
double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. June 23, 1997. As Siazar was unsure of his situation, however, he
Maraan, already issued its Order directing Dusit Hotel to pay 144 of its consulted a lawyer on that same day. This lawyer went with him back
employees the total amount of ₱1,218,240.00, corresponding to their to Atty. Rodriguez who confirmed that Siazar had indeed been
unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, dismissed because his department was no longer earning money. This
pursuant to Section 12 of Republic Act No. 6727, as amended by surprised Siazar because his department did not generate income on
Republic Act No. 8188.31 its own, being a mere support unit of the company. 8 Since all attempts
Although the Court is mindful of the fact that labor embraces individuals at negotiation proved futile, Siazar filed his complaint.
with a weaker and unlettered position as against capital, it is equally AISC had a different version. It claimed the company thought of closing
mindful of the protection that the law accords to capital. While the down Siazar’s department where he worked solo since it was no longer
Constitution is committed to the policy of social justice and the making money. Thus, they wrote him the two notes on June 17,
protection of the working class, it should not be supposed that every 1997.9 Atty. Rodriguez did not say, however that the company was
labor dispute will be automatically decided in favor of labor. already dismissing Siazar.10 The latter simply decided on his own to
Management also has its own rights which, as such, are entitled to drop out of work after learning of the company’s plan regarding his
respect and enforcement in the interest of simple fair play.32 department.11 What Atty. Rodriguez and Siazar discussed was how the
In sum, the Court holds that the retroactive salary increases should be latter might be compensated if the company’s plan went through. In
taken into account in the determination of which hotel employees were response, Siazar even submitted a proposal that the company found
entitled to ECOLA under WO No. 9. After applying the salary increases excessive.12
retroactive to 1 January 2001, 82 hotel employees still had daily salary On December 14, 1998 the Labor Arbiter found that the company did
rates between ₱250.00 and ₱290.00, thus, entitling them to receive the not yet dismiss Siazar from work13 since they were still negotiating for
first tranch of ECOLA, equivalent to ₱15.00 per day, beginning 5 a financial package for him. He rather stopped reporting for work of his
November 2001, the date of effectivity of WO No. 9, until 31 December own accord after learning of the plan to retrench him. Indeed, the
2001. Following the second round of salary increases retroactive to 1 company gave Siazar no letter of dismissal or
January 2002, all the hotel employees were already receiving daily retrenchment.14 Consequently, the Labor Arbiter dismissed the
salary rates above ₱290.00, hence, leaving no one qualified to receive complaint but ordered the company to give Siazar separation pay, his
ECOLA. Receipt by the 82 hotel employees of their shares from the unpaid salary, and a proportionate 13th month pay for 1997. 15
service charges collected by Dusit Hotel shall not be deemed payment
Siazar appealed to the NLRC, which ruled16 on June 3, 1999 to uphold
of their ECOLA from 5 November 2001 to 31 December 2001.
the Labor Arbiter’s finding that the company did not dismiss him from
WHEREFORE, premises considered, the Decision dated 10 work and that, misunderstanding its action, he ceased to report for work.
September 2007 and the Resolution dated 4 March 2008 of the Court It was all a misunderstanding, said the NLRC, and each party must bear
of Appeals in CA-G.R. SP No. 92798 are hereby AFFIRMED WITH his own loss to place them on equal footing.17 The NLRC sustained the
THE FOLLOWING MODIFICATIONS: (1) Dusit Hotel Nikko is award of separation pay, to be reckoned from June 1996 to June 1997,
ORDERED to pay its 82 employees – who, after applying the salary the time Siazar worked for AISC. The NLRC also affirmed the grant to
increases for 1 January 2001, had daily salaries of ₱250.00 to ₱290.00 him of his unpaid salary and proportionate 13th month pay. 18 Siazar
– the first tranch of Emergency Cost of Living Allowance, equivalent to asked for reconsideration but the NLRC denied it. 19
₱15.00 per day, from 5 November 2001 to 31 December 2001, within
Not dissuaded, Siazar went up to the Court of Appeals (CA)20 but on
ten (10) days from finality of this Decision; and (2) the penalty for double
December 21, 200521 the latter court affirmed the NLRC decision. On
indemnity is DELETED. No costs.
motion for reconsideration, however, the CA rendered an Amended
SO ORDERED. Decision22 on December 13, 2006, finding sufficient evidence that the
company indeed illegally dismissed Siazar from work. The CA based
its finding on the following: (a) Rodriguez told Siazar that he had been
terminated; (b) the company did not allow Siazar to enter its premises;
G.R. No. 177970 August 25, 2010 (c) it wanted to close his department and retrench him from work; (d)
 85

Rodriguez asked Siazar to compute what he expected was to be his year of service computed from June 1996 up to the finality of this
separation pay; (e) the company neither gave Siazar notice nor decision; and (b) full backwages computed from the date of his illegal
informed him of the reason for his dismissal; and (f) it showed no valid dismissal on June 17, 1997 up to the finality of the decision.
or just cause for the dismissal. Let the records of this case be REMANDED to the Labor Arbiter for the
The CA thus ordered the company to reinstate Siazar and pay him full proper computation of the awards.
backwages, inclusive of allowances and other benefits or their SO ORDERED.
monetary equivalent computed from the time of his dismissal up to the
time of his actual reinstatement.23 The company filed a motion for
reconsideration, but the CA denied the same on May 22, 2007, 24 hence
the present petition for review on certiorari.
G.R. No. 181913 March 5, 2010
Issues Presented
DANIEL P. JAVELLANA, JR., Petitioner,
Two issues are presented: vs.
1. Whether or not the company dismissed Siazar from work; ALBINO BELEN, Respondent.
and x - - - - - - - - - - - - - - - - - - - - - - -x
2. In the affirmative, whether or not his dismissal was valid. G.R. No. 182158
Court’s Ruling ALBINO BELEN, Petitioner,
The company insists that the Court should reinstate the original CA vs.
decision, given the findings of the Labor Arbiter and the NLRC that it DANIEL P. JAVELLANA, JR. and JAVELLANA FARMS,
had not dismissed Siazar.25 Ordinarily, the Court will not, on petition for INC., Respondents.
review on certiorari, reexamine the facts of the case. Here, however, DECISION
since the CA overturned its earlier ruling and its factual findings now
ABAD, J.:
differ from those of the Labor Arbiter and the NLRC, the Court is making
an exception.26 This case is about the proper computation of the monetary awards of
an illegally dismissed employee.
From an examination of the record, the Court has ascertained that the
evidence supports the CA’s finding that the company dismissed Siazar The Facts and the Case
from work. This is evident from the following: On May 9, 2000 petitioner Albino Belen (Belen) filed a
One. On company’s orders, the guard prevented Siazar from entering complaint1 against respondents Javellana Farms, Inc. and Daniel
its premises to work. The company even gave him notice not to report Javellana, Jr. (Javellana) for illegal dismissal and underpayment or
for work and instead told him to see the company’s external counsel non-payment of salaries, overtime pay, holiday pay, service incentive
after two days. If the company had not yet decided to close down leave pay (SILP), 13th month pay, premium pay for holiday, and rest
Siazar’s department and wanted merely to explore that possibility with day as well as for moral and exemplary damages and attorney's fees.2
him,27 it had no reason to require him to stay away from work in the Petitioner Belen alleged that respondent Javellana hired him as
meantime. Barring him from work simply meant that the company had company driver on January 31, 19943 and assigned him the tasks of
taken away his right to continue working for it. picking up and delivering live hogs, feeds, and lime stones used for
Two. It is simply preposterous for Siazar or any employee like him to cleaning the pigpens.4 On August 19, 1999 Javellana gave him
just give up a job that paid ₱25,000.00 a month when, according to the instructions to (a) pick up lime stones in Tayabas, Quezon; (b) deliver
company, it had not yet decided to carry out its plan and fire him. live hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery
truck repaired; and (d) pick up a boar at Joliza Farms in Norzagaray,
Three. That Siazar lost no time in filing a complaint for illegal dismissal
Bulacan.5
negates the notion that he voluntarily left or abandoned his job. 28 An
employee who files a suit to claim his job back raises serious doubts Petitioner Belen further alleged that his long and arduous day finally
that he even entertained the idea of leaving it in the first place. ended at 4:30 a.m. of the following day, August 20, 1999. But after just
three hours of sleep, respondent Javellana summoned him to the office.
Four. Despite Siazar’s failure to show up for work, the company did not
When he arrived at 8:20 a.m., Javellana had left. After being told that
summon him back or ask him to explain his long absence. Normally, an
the latter would not be back until 4:00 p.m., Belen decided to go home
employer would not stand by when an employee just stops coming to
and get some more sleep.6
work as this would affect its business. That the company just sat by
when Siazar did not come to work strengthens his contention that it had Petitioner Belen was promptly at the office at 4:00 p.m. but respondent
dismissed him. Further, the company failed to substantiate its claim that Javellana suddenly blurted out that he was firing Belen from work.
it reported Siazar’s irregular behavior to the Department of Labor and Deeply worried that he might not soon get another job, Belen asked for
Employment.29 The Court cannot consider allegations that have not a separation pay. When Javellana offered him only ₱5,000.00, he did
been proved.30 not accept it.7
All these show that the company indeed terminated the services of Respondent Javellana claimed, on the other hand, that he hired
Siazar. The question now is this: was his termination valid? petitioner Belen in 1995, not as a company driver, but as family
driver.8 Belen did not do work for his farm on a regular basis, but picked
Here, the company did not adduce any evidence to prove that Siazar’s
up feeds or delivered livestock only on rare occasions when the farm
dismissal had been for a just or authorized cause as in fact it had been
driver and vehicle were unavailable.9
its consistent stand that it did not terminate him and that he quit on his
own. But given that the company dismissed Siazar and that such Regarding petitioner Belen's dismissal from work, respondent
dismissal had remained unexplained, there can be no other conclusion Javellana insisted that he did it for a reason. Belen intentionally failed
but that his dismissal was illegal.31 to report for work on August 20, 1999 and this warranted his
dismissal.10
The Court has held that, under Article 279 of the Labor Code,
separation pay may be awarded to an illegally dismissed employee in In a decision11 dated November 25, 2002, the Labor Arbiter found
lieu of reinstatement when continued employment is no longer possible petitioner Belen to be a company driver as evidenced by the pay
where, as in this case, the continued relationship between the employer slips12 that the farm issued to him. Since his abrupt dismissal from work
and the employee is no longer viable due to strained relations between violated his right to due process, it was illegal. 13 The Labor Arbiter
them32 and reinstatement appears no longer practical due to the length awarded him backwages, separation pay, 13th month pay, SILP,
of time that had since passed.33 holiday pay, salary differential, and attorney's fees. 14
In awarding separation pay to an illegally dismissed employee, in lieu On appeal, the National Labor Relations Commission (NLRC) issued a
of reinstatement, the amount to be awarded shall be equivalent to one resolution15 dated October 23, 2003, modifying the decision of the
month salary for every year of service34 reckoned from the first day of Labor Arbiter. The NLRC was convinced that respondent Javellana
employment until the finality of the decision. 35 Payment of separation hired petitioner Belen as a family driver but required him to make certain
pay is in addition to payment of backwages.36 And if separation pay is errands that were related to the farm business. Like the Labor Arbiter,
awarded instead of reinstatement, backwages shall be computed from the NLRC also found Belen to have been illegally dismissed. But since
the time of illegal termination up to the finality of the decision.37 he was but a family driver, the NLRC deleted the award of backwages
and separation pay and instead ordered Javellana to pay him 15 days
The separation pay in this case shall be reckoned from the time Siazar
salary by way of indemnity pursuant to Article 149 of the Labor Code.
worked for AISC, from June 1996 until the finality of this decision. The
Belen moved for reconsideration, but the NLRC denied his motion. 16
Court could not hold AISC liable for his work with DHMI for lack of
evidence that the latter was simply an alter ego of AISC and had been Aggrieved, petitioner Belen elevated the matter to the Court of Appeals
established to evade an existing obligation, justify a wrong, or protect a (CA),17 which in its Decision18 dated September 12, 2007, reverted
fraud.38 back to the decision of the Labor Arbiter. The CA held that Belen was
a company driver since, aside from driving respondent Javellana and
WHEREFORE, the Court AFFIRMS the Court of Appeals’ Amended
his family, he also did jobs that were needed in Javellana's business
Decision dated December 13, 2006 and Resolution dated May 22, 2007
operations, such as hauling and delivering live hogs, feeds, and lime
in CA-G.R. SP 56228 subject to the MODIFICATION that the liability
stones for the pig pens.19 The CA also said that Javellana's abrupt
for respondent Jueber P. Siazar’s illegal dismissal shall be the sole
dismissal of Belen for an isolated case of neglect of duty was
liability of petitioner Agricultural and Industrial Supplies Corporation and
unjustified.20 The appellate court, however, modified the award of
that, in lieu of reinstatement with backwages, the latter shall pay Siazar
backwages and separation pay, as it found the computation to be
(a) separation pay in the amount equivalent to one month pay for every
erroneous.21
 86

Both respondent Javellana and petitioner Belen moved for petitioner Belen began his service. Technically the computation of his
reconsideration of the decision but the CA denied them both on March separation pay would end on the day he was dismissed on August 20,
3, 2008. 22 Undaunted, they both took recourse to this Court in G.R. 1999 when he supposedly ceased to render service and his wages
181913 and G.R. 182158, respectively. ended. But, since Belen was entitled to collect backwages until the
The Court consolidated the two cases in its Resolution of July 2, judgment for illegal dismissal in his favor became final, 37 here on
2008.23 But on July 16, 2008, having initially examined the petition in September 22, 2008, the computation of his separation pay should also
G.R. 181913, the Court denied due course to it for respondent end on that date.
Javellana's failure to sufficiently show reversible error in the assailed Further, since the monetary awards remained unpaid even after it
decision.24 Javellana moved for reconsideration but the Court denied it became final on September 22, 2008 because of issues raised
with finality on September 22, 2008.25 respecting the correct computation of such awards, it is but fair that
Questions Presented respondent Javellana be required to pay 12% interest per annum on
The questions presented in this case are: those awards from September 22, 2008 until they are paid. The 12%
1. Whether or not the Labor Arbiter correctly computed interest is proper because the Court treats monetary claims in labor
petitioner Belen's backwages and separation pay; and cases the equivalent of a forbearance of credit.38 It matters not that the
2. Whether or not the monetary award in his favor should run amounts of the claims were still in question on September 22, 2008.
until the finality of the decision in his case. What is decisive is that the issue of illegal dismissal from which the
order to pay monetary awards to petitioner Belen stemmed had been
The Court's Rulings
long terminated.39
One. Petitioner Belen points out that the Labor Arbiter correctly
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the
computed his monetary award although he appeared to have been
decision of the Court of Appeals dated September 12, 2007 and its
awarded more than what was right because of a typographical error in
resolution dated March 3, 2008 in CA-G.R. SP 83354, REINSTATES
the statement of the period that his backwages covered. The Labor
the decision of the Labor Arbiter dated November 25, 2002 in NLRC-
Arbiter's approved computation gave the period as from August 20,
NCR Case 30-09-04294-01 with the modification that the awards of
1999 to November 19, 2000 when the proper period was from August
backwages be computed from August 20, 1999 to September 22, 2008
20, 1999, the date he was dismissed from work, to November 25, 2002,
and the separation pay, from January 31, 1994 to September 22, 2008;
the date the Labor Arbiter rendered his decision in the case. 26
the 10% attorney's fees be based on the awards so computed; and that
For the same reason, petitioner Belen claims that his separation pay the amounts due be made to bear interest of 12% per annum from
should be computed from January 31, 1994, when he was hired, up to September 22, 2008 until fully paid.
November 25, 2002, when the Labor Arbiter rendered his decision.
Let the records of the case be remanded to the National Labor
Belen also insists that the 10% attorney's fees awarded to him be based
Relations Commission upon the finality of this judgment for
on the total amount arrived at, not by the appellate court, but by the
computation of the exact amounts due petitioner Albino Belen from
Labor Arbiter.27
respondents Javellana Farms, Inc. and Daniel Javellana, Jr.
After taking such position initially, petitioner Belen claims that the
SO ORDERED.
amount awarded to him by the Labor Arbiter merely represents a
portion of what he was entitled to. The award of backwages to which
he was entitled should continue to run until the decision in his favor has
become final.281avvphi1
Respondent Javellana points out, however, that the Labor Arbiter's G.R. No. 187200 May 5, 2010
decision clearly shows that he intended to award backwages and GOLDEN ACE BUILDERS and ARNOLD U. AZUL, Petitioners,
separation pay only until November 19, 2000. 29 Javellana also vs.
disagreed that the monetary award should be reckoned until the finality JOSE A. TALDE, Respondent.
of the decision in petitioner Belen's favor. The Labor Arbiter expressly DECISION
limited the amount of that award since he granted Belen's request to be CARPIO MORALES, J.:
given separation pay instead of being reinstated. 30 Jose A. Talde (respondent) was hired in 1990 as a carpenter by
It is obvious from a reading of the Labor Arbiter's decision that the date petitioner Golden Ace Builders of which its co-petitioner Arnold Azul
November 19, 2000 stated in the computation was mere typographical (Azul) is the owner-manager. In February 1999, Azul, alleging the
error. Somewhere in the body of the decision is the categorical unavailability of construction projects, stopped giving work
statement that petitioner Belen "is entitled to backwages from August assignments to respondent, prompting the latter to file a complaint 1 for
20, 1999 up to the date of this decision."31 Since the Labor Arbiter illegal dismissal.
actually rendered his decision on November 25, 2002, 32 it would be By Decision2 of January 10, 2001, the Labor Arbiter ruled in favor of
safe to assume that he caused the computation of the amount of respondent and ordered his immediate reinstatement without loss of
backwages close to that date or on November 19, 2002. The same seniority rights and other privileges, and with payment of full
could be said of the computation of petitioner Belen's separation pay. backwages, which at that time was computed at ₱144,382.23, and the
Two. This leads us to the question, does the amount that the Labor amount of ₱3,236.37 representing premium pay for rest days, service
Arbiter awarded petitioner Belen represent all that he will get when the incentive leave pay and 13th month pay.
decision in his case becomes final or does it represent only the amount Pending their appeal to the National Labor Relations Commission
that he was entitled to at the time the Labor Arbiter rendered his (NLRC) and in compliance with the Labor Arbiter’s Decision, petitioners,
decision, leaving room for increase up to the date the decision in the through counsel, advised respondent to report for work in the
case becomes final? construction site within 10 days from receipt thereof. Respondent
Article 279 of the Labor Code, as amended by Section 34 of Republic submitted, however, on May 16, 2001 a manifestation3 to the Labor
Act 6715 instructs: Arbiter that actual animosities existed between him and petitioners and
Art. 279. Security of Tenure. - In cases of regular employment, the there had been threats to his life and his family’s safety, hence, he
employer shall not terminate the services of an employee except for a opted for the payment of separation pay. Petitioners denied the
just cause or when authorized by this Title. An employee who is unjustly existence of any such animosity.
dismissed from work shall be entitled to reinstatement without loss of Meanwhile, the NLRC dismissed petitioners’ appeal by Resolution4 of
seniority rights and other privileges and to his full backwages, inclusive April 22, 2002, holding that respondent was a regular employee and
of allowances, and to his other benefits or their monetary equivalent not a project employee, and that there was no valid ground for the
computed from the time his compensation was withheld from him up to termination of his services. Petitioners’ motion for reconsideration was
the time of his actual reinstatement. denied by Resolution5 of August 6, 2002.
Clearly, the law intends the award of backwages and similar benefits to Petitioners’ appeal to the Court of Appeals was dismissed by
accumulate past the date of the Labor Arbiter's decision until the Decision6 of August 12, 2004 which attained finality on September 15,
dismissed employee is actually reinstated. 33 But if, as in this case, 2004.
reinstatement is no longer possible, this Court has consistently ruled As an agreement could not be forged by the parties on the satisfaction
that backwages shall be computed from the time of illegal dismissal of the judgment, the matter was referred to the Fiscal Examiner of the
until the date the decision becomes final. 34 NLRC who recomputed at ₱562,804.69 the amount due respondent,
As it happens, the parties filed separate petitions before this Court. The which was approved by the Labor Arbiter by Order 7 of July 5, 2005. A
petition in G.R. 181913, filed by respondent Javellana, questioned the writ of execution8 dated July 8, 2005 was thereupon issued.
CA's finding of illegality of dismissal while the petition in G.R. 182158, Finding the amount exorbitant, petitioners filed a motion for
filed by petitioner Belen, challenged the amounts of money claims reconsideration with the NLRC, contending that since respondent
awarded to him. The Court denied the first with finality in its resolution refused to report back to work, he should be considered to have
of September 22, 2008;35 the second is the subject of the present case. abandoned the same, hence, the recomputation of the wages and
Consequently, Belen should be entitled to backwages from August 20, benefits due him should not be beyond May 15, 2001, the date when
1999, when he was dismissed, to September 22, 2008, when the he manifested his refusal to be reinstated.
judgment for unjust dismissal in G.R. 181913 became final. By Resolution9 of March 9, 2006, the NLRC granted petitioners’ motion
Separation pay, on the other hand, is equivalent to one month pay for and accordingly vacated the computation. It held that since respondent
every year of service, a fraction of six months to be considered as one did not appeal the Decision of the Labor Arbiter granting him only
whole year.36 Here that would begin from January 31, 1994 when
 87

reinstatement and backwages, not separation pay in lieu thereof, he environment. On the other hand, it releases the employer from the
may not be afforded affirmative relief; and since he refused to go back grossly unpalatable obligation of maintaining in its employ a worker it
to work, he may recover backwages only up to May 20, 2001, the day could no longer trust.15
he was supposed to return to the job site. Respondent’s motion for Strained relations must be demonstrated as a fact, however, to be
reconsideration was denied by the NLRC by Resolution 10 of June 30, adequately supported by evidence16 — substantial evidence to show
2006, hence, he filed a petition for certiorari with the Court of Appeals. that the relationship between the employer and the employee is
By Decision11 of September 10, 2008, the appellate court set aside the indeed strained as a necessary consequence of the judicial
NLRC Resolutions, holding that respondent is entitled to both controversy.17
backwages and separation pay, even if separation pay was not granted In the present case, the Labor Arbiter found that actual animosity
by the Labor Arbiter, the latter in view of the strained relations between existed between petitioner Azul and respondent as a result of the filing
the parties. The appellate court disposed: of the illegal dismissal case. Such finding, especially when affirmed by
WHEREFORE, in view of all the foregoing premises, judgment is the appellate court as in the case at bar, is binding upon the Court,
hereby rendered by us GRANTING the petition filed in this case. The consistent with the prevailing rules that this Court will not try facts anew
assailed RESOLUTIONS dated 30, 2006 and March 9, 2006 of the and that findings of facts of quasi-judicial bodies are accorded great
NLRC are hereby SET ASIDE. respect, even finality.
Thus, the full backwages and separation pay to be awarded to the Clearly then, respondent is entitled to backwages and separation pay
petitioner shall be computed as follows: as his reinstatement has been rendered impossible due to strained
relations. As correctly held by the appellate court, the backwages due
Full Backwages as of June 30, 2005 = ₱562,804.69 respondent must be computed from the time he was unjustly dismissed
until his actual reinstatement, or from February 1999 until June 30,
Separation Pay: 2005 when his reinstatement was rendered impossible without fault on
₱220.00 x 26 days = ₱5,720,00 his part.
The Court, however, does not find the appellate court’s computation of
₱5,720/month x 8 years = 45,760.00 separation pay in order. The appellate court considered respondent to
have served petitioner company for only eight years. Petitioner was
hired in 1990, however, and he must be considered to have been in the
₱608,564.69 service not only until 1999, when he was unjustly dismissed, but until
We also award an additional 10% of the total monetary award by way June 30, 2005, the day he is deemed to have been actually separated
of attorney’s fees for the expenses incurred by the petitioner to protect (his reinstatement having been rendered impossible) from petitioner
his rights and interests. Furthermore, when the decision of this Court company or for a total of 15 years.
as to the monetary award becomes final and executory, the rate of legal WHEREFORE, the Court of Appeals Decision dated September 10,
interest shall be imposed at 12% per annum from such finality until its 2008 and its Resolution dated March 12, 2009 in C.A. G.R. SP No.
satisfaction, this interim period being deemed to be by then an 961082 are AFFIRMED with the MODIFICATION that the amount of
equivalent to a forbearance of credit. separation pay due respondent is, in light of the discussion in the
SO ORDERED. (emphasis in the original) immediately foregoing paragraph, computed at ₱85,800.00.
Petitioners’ motion for reconsideration was denied by Resolution12 of SO ORDERED.
March 12, 2009, hence, the present petition for review on certiorari.
Petitioners assail the appellate court’s award of separation pay. They
assailed too as contrary to prevailing jurisprudence the computation of
backwages from the time of dismissal up to actual reinstatement. They F. RETIREMENT PAY
contend that, in effect, the appellate court modified an already final and
executory decision. (REYES vs. NLRC)
The petition fails.
The basis for the payment of backwages is different from that for the
award of separation pay. Separation pay is granted where G.R. No. 159701 August 17, 2007
reinstatement is no longer advisable because of strained relations PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner,
between the employee and the employer. Backwages represent vs.
compensation that should have been earned but were not collected THE LATE ROMEO F. BOLSO, represented by his
because of the unjust dismissal. The basis for computing backwages is heirs, Respondent.
usually the length of the employee’s service while that for separation
DECISION
pay is the actual period when the employee was unlawfully prevented
from working.13 CARPIO, J.:
As to how both awards should be computed, Macasero v. Southern The Case
Industrial Gases Philippines14 instructs: Before the Court is a petition for review1 of the 27 November 2002
[T]he award of separation pay is inconsistent with a finding that there Decision2 and the 19 August 2003 Resolution3 of the Court of Appeals
was no illegal dismissal, for under Article 279 of the Labor Code and as in CA-G.R. SP No. 53911. The Court of Appeals dismissed the petition
held in a catena of cases, an employee who is dismissed without just of Philippine Long Distance Telephone Company (PLDT) and affirmed
cause and without due process is entitled the 26 March 1999 Decision of the National Labor Relations
to backwages and reinstatement or payment of separation pay in lieu Commission (NLRC)
thereof: finding the dismissal of Romeo F. Bolso (Bolso) illegal. 4
Thus, an illegally dismissed employee is entitled to two reliefs: The Facts
backwages and reinstatement. The two reliefs provided are separate Bolso was an Installer/Repairman II of PLDT since February 1982 until
and distinct. In instances where reinstatement is no longer feasible PLDT dismissed him on 20 July 1997.
because of strained relations between the employee and the employer, On 5 February 1996, Samuel Mabunga (Mabunga), a PLDT subscriber,
separation pay is granted. In effect, an illegally dismissed employee is sold the rights to his telephone line to Ismael Salazar (Salazar) for
entitled to either reinstatement, if viable, or separation pay if ₱20,000. Mabunga received ₱15,000 for the transfer. Then, for the
reinstatement is no longer viable, and backwages. installation of this telephone line, Salazar paid ₱2,500 to a PLDT
The normal consequences of respondents’ illegal dismissal, then, installer who introduced himself as Boy Negro and the remaining
are reinstatement without loss of seniority rights, and payment of ₱2,500 to Boy Negro’s two companions.
backwages computed from the time compensation was withheld On 20 May 1996, Salazar wrote PLDT complaining about Mabunga’s
up to the date of actual reinstatement. Where reinstatement is no continued usage of the telephone line through an extension, despite
longer viable as an option, separation pay equivalent to one (1) the transfer. Salazar requested PLDT to check out the problem and
month salary for every year of service should be awarded as an immediately cut-off the extension line.5
alternative. The payment of separation pay is in addition to On 28 June 1996, Salazar went to PLDT’s Quality Control and
payment of backwages. (emphasis, italics and underscoring supplied) Inspection Division (QCID) office where he affirmed having paid ₱2,500
Velasco v. National Labor Relations Commission emphasizes: to Boy Negro and another ₱2,500 to Boy Negro’s two companions for
The accepted doctrine is that separation pay may avail in lieu of installing the telephone line at his residence. During the investigation,
reinstatement if reinstatement is no longer practical or in the best Salazar positively identified a photograph of Bolso as that of Boy Negro.
interest of the parties. Separation pay in lieu of reinstatement may Salazar voluntarily executed a Sinumpaang Salaysay6 narrating the
likewise be awarded if the employee decides not to be reinstated. circumstances surrounding the installation of the illegal extension line
(emphasis in the original; italics supplied) and a Certification7 that the man he had identified in the photograph
Under the doctrine of strained relations, the payment of separation pay was the one who actually went to his residence and installed the
is considered an acceptable alternative to reinstatement when the latter telephone line.
option is no longer desirable or viable. On one hand, such payment On 29 June 1996, the QCID personnel inspected the telephone
liberates the employee from what could be a highly oppressive work installation at Salazar’s residence and confirmed that Mabunga was
 88

using the telephone line through an outside extension installed at SO ORDERED.13

Salazar’s house. PLDT informed Salazar and Mabunga that it was an On 26 April 1999, PLDT filed a motion for reconsideration, which the
unofficial installation, and invited them to its QCID office to enlighten it NLRC denied in its 30 April 1999 Resolution.
on the matter. On 23 July 1999, PLDT filed with the Court of Appeals a petition for
On 23 July 1996, PLDT issued an Inter-Office Memo requesting the certiorari to nullify the NLRC decision and resolution.
appearance of Bolso, together with his immediate supervisor or union On 27 November 2002, the Court of Appeals issued a Decision
council representative, at PLDT’s Sampaloc Office for the investigation dismissing the petition for certiorari.
of his alleged participation in the illegal installation. PLDT filed a motion for reconsideration on 22 January 2003, which the
On 26 July 1996, both Salazar and Bolso appeared at the QCID Court of Appeals denied in its Resolution of 19 August 2003.
investigation. Salazar reaffirmed his earlier Sinumpaang Salaysay and Hence, this petition.
Certification, and at the same time, positively picked out and identified The Ruling of the Court of Appeals
Bolso from among those present as the installer of the unofficial
Sustaining the NLRC, the Court of Appeals ruled that "special
telephone line. Bolso denied the allegations against him.
circumstances exist which raise serious doubt as to the accountability
Subsequently, Bolso submitted to PLDT what appears to be a of Bolso." Salazar’s recantation letter rendered "some truth" to Bolso’s
recantation of Salazar’s previous statements, alleging that he did not innocence. Salazar reasoned out that confusion coupled with
personally know Bolso and that Bolso was not Boy Negro. The letter indignation drove him to implicate an innocent person, which bothered
dated 5 August 1996 reads: his conscience. The Court of Appeals held that Salazar’s retraction was
QUALITY CONTROL a declaration against his own interest under Section 38, Rule 130 of the
INSPECTION DIVISION PLDT Rules of Court.14 The Court of Appeals also found no evidence that
SA KINAUUKULAN, Bolso committed the breach attributed to him. "Other than Salazar’s
SA NAGANAP PONG IMBISTIGASYON NI G. FERNANDO R. inadvertence, the alleged incident involving Bolso was unsupported by
ARAMBULO, IMBISTIGADOR NG (Q.C.I.D.) QUALITY CONTROL relevant and convincing evidence."15
AND INSPECTION DIVISION PLDT NOONG IKA-26 NG HULYO, The Court of Appeals went on to say that assuming the recantation was
1996 GANAP NA ALA UNA ’Y MEDYA NG HAPON, ARAW NG invalid and that Bolso did commit serious misconduct, "dismissal is too
BIYERNES. harsh a penalty considering the length of his service in PLDT and the
NA ANG BUONG KATOTOHANAN AY HINDI KO KILALA SI ROMEO infraction was his first offense."
BOLSO AT SIYA AY NAITURO KO LAMANG NOONG MAGHARAP- The Court of Appeals likewise ruled that there was no hearing where
HARAP KAMI NOONG IKA-26 NG HULYO, 1996 DAHIL NGA SA Bolso had a reasonable opportunity to air his side and confront his
KABIGLAAN KO AT INIT NG ULO AT SA TOTOO IYON "BOY accuser. "If there was any, it was surely not the kind of investigation
NEGRO" NA SINASABI AY HINDI SIYA. that would suffice to comply with the procedural requirement." Hence,
AKO PO AY BINABAGABAG NG AKING KONSENSIYA AT Bolso was denied of his right to due process, rendering his dismissal
DAMDAMIN SA PAGTUTURO NG ISANG TAONG WALA NA MANG illegal.
KINALAMAN AY MALAKI PO ANG NAGAWANG KASALANAN. The Issue
ANG SA INYO AY LUBOS NA GUMAGALANG NA SANA AKO AY The issue in this case boils down to whether Bolso’s dismissal for
INYONG MAUNAWAAN. serious misconduct was lawful.
Sgd. The Ruling of this Court
ISMAEL G. SALAZAR8 The petition is meritorious.
On 20 January 1997, the Manggagawang Komunikasyon ng Pilipinas, On the issue of just cause
Bolso’s union, requested the withdrawal of the complaint against Bolso The Labor Code provides that an employer may terminate the services
since the "complainant [sic] failed to satisfy the standard basis for it to of an employee for a just cause.16 Among the just causes in the Labor
merit further investigation x x x." 9 Code is serious misconduct. Misconduct is improper or wrong conduct.
On 10 July 1997, Bolso’s counsel demanded the immediate dismissal It is the transgression of some established and definite rule of action, a
of the administrative case against Bolso based on Salazar’s retraction forbidden act, a dereliction of duty, willful in character, and implies
and the release of Bolso’s benefits under PLDT’s early wrongful intent and not mere error in judgment. The misconduct to be
retirement/redundancy program. 10 serious within the meaning of the Labor Code must be of such a grave
Giving no credence to the recantation letter and finding that Salazar’s and aggravated character and not merely trivial or unimportant. Such
previous statements established Bolso’s culpability, PLDT, through an misconduct, however serious, must nevertheless be in connection with
Inter-Office Memo, terminated Bolso effective 20 June 1997 for serious the employee’s work to constitute just cause for his separation. 17
misconduct. An employee’s dismissal due to serious misconduct must be supported
On 15 August 1997, Bolso filed with the Labor Arbiter a complaint by substantial evidence.18 Substantial evidence is that amount of
against PLDT for illegal dismissal, backwages, and damages, docketed relevant evidence as a reasonable mind might accept as adequate to
as NLRC NCR Case No. 00-08-05842-97. support a conclusion, even if other minds, equally reasonable, might
On 6 August 1998, the Labor Arbiter 11 issued his decision dismissing conceivably opine otherwise.19
the case for lack of merit.12 The Labor Arbiter found Bolso’s evidence In this case, there is no question that PLDT installers, such as Bolso,
"too speculative and conjectural." Bolso’s denial of the charges of repairmen, and linemen provide services but cannot collect or receive
serious misconduct, fraud, and breach of trust was not supported by any personal fees for such services. Violating this company rule
convincing evidence except the retraction made by Salazar of his constitutes serious misconduct.20 Did Bolso accept payment for the
previous statement pointing to Bolso as the one who installed the illegal installation of an unauthorized PLDT telephone line, which would
extension line. The Labor Arbiter further held that "while there is no constitute serious misconduct warranting his dismissal?
direct evidence that Bolso exacted money from Salazar in Based on the records, Salazar’s initial statements given to PLDT QCID
consideration of the installation of the unofficial extension line," there is narrated how he gave Bolso ₱2,500 for the installation of the telephone
substantial evidence against him for serious misconduct. line which he purchased from Mabunga. The telephone line turned out
On 28 September 1998, Bolso appealed to the NLRC. to be an illegal extension line. Salazar gave separate but similar
Ruling in favor of Bolso, the NLRC held that PLDT failed to prove that statements in the course of the investigation, the first was on 28 June
Bolso committed the infraction imputed against him. The recantation of 1996 and another was on 26 July 1996. During the first instance he
Salazar of his previous statement regarding Bolso’s installation of the went to PLDT QCID’s office, Salazar easily, immediately, and
illegal extension line "totally established Bolso’s innocence." The NLRC unhesitatingly identified Bolso’s photograph as the man who went to his
also stated that this was the first time PLDT charged Bolso with an house to install the extension line. During the 26 July 1996 investigation,
offense and that "it would have been foolhardy on the part of Bolso to while Salazar was facing Bolso, Salazar pointed to him as the installer
risk and lose his only source of livelihood at the cost of a measly amount of the illegal extension line.
of ₱2,500." The NLRC further noted that Salazar voluntarily gave his There was also evidence that Bolso received money in exchange for
recantation letter, and he did it in his own handwriting and in a language the installation of the extension line. Salazar added during the 26 July
very well known to him. The NLRC also found that Bolso was denied of 1996 investigation the following statements:
his right to due process. T25 : Ano ang gusto ninyong idagdag, ibawas o baguhin?
The NLRC disposed of the case as follows: S : Hindi ko talaga siya kilala dahil iyong dalawang taong nauna sa
WHEREFORE, in the light of the foregoing, the appeal is hereby kanya ang talagang may kilala sa kanya. Kilala ko lang siya sa alyas
GRANTED. The assailed Decision dated August 6, 1998 is hereby niyang "BOY NEGRO". At nung nagbayad ako ng pera, ay siya
VACATED and SET ASIDE and a new one is hereby entered ordering talaga ang pinagbigyan ko, doon sa loob ng bahay ko, kasama
respondent Philippine Long Distance Telephone Co. to reinstate iyong dalawa.21 (Emphasis supplied)
complainant Romeo F. Bolso to his former position as The standard of substantial evidence is met where the employer, as in
Installer/Repairman II without loss of seniority rights and other this case, has reasonable ground to believe that the employee is
employee benefits with full backwages counted from the time of his responsible for the misconduct and his participation in such misconduct
dismissal on June 20, 1997 up to the time of actual reinstatement. makes him unworthy of the trust and confidence demanded by his
All other reliefs herein sought and prayed for are hereby DENIED for position.221avvphi1
lack of merit.
 89

However, Salazar retracted his statement pointing to Bolso as Boy investigation to be conducted on 26 July 1996 with his immediate
Negro who installed the illegal extension line. Salazar’s recantation, supervisor or union council representative.
Bolso now claims, clearly established his innocence of the offense At the investigation conducted on 26 July 1996, Bolso did appear during
charged. Hence, Bolso’s fate as a PLDT employee lies solely on which he was apprised of the charges against him, as well as his rights:
Salazar’s statements. Does Salazar’s subsequent retraction of his Tanong 16: Ginoong Bolso, narinig mo ba ang mga sinabi ni G. Salazar
previous statement convincingly prove Bolso’s non-participation in the laban sa iyo. Ngunit bago ka sumagot, nais ko munang ipaalam sa iyo
offense charged? ang mga karapatan mo sa ilalim ng Bagong Saligang Batas. Una, ikaw
We rule in the negative. ay may karapatan hindi sumagot o magsawalang kibo sa mga
In a similar case involving PLDT and one of its installers,23 the Court katanungan ko. May karapatan ka ring sumangguni muna sa isang
held that it was more "reasonable to believe that the affidavits of abogado o Union Council rep na siyang pili mo upang makatulong sa
retraction were, as claimed by petitioner, a mere afterthought, executed pagsisiyasat na ito. Dahil lahat ng sasabihin mo ay maaari naming
out of compassion to enable private respondent to extricate himself gamitin ebidensya laban o pabor sa iyo sa lahat ng hukuman dito sa
from the consequence of his malfeasance." As such, the affidavits had Philipinas. Naiintindihan mo ba ang iyong mga nabanggit na karapatan?
no probative value. S: Oo.32
Moreover, a retraction does not necessarily negate an earlier During this investigation, Bolso was allowed to confront his accuser
declaration. For this reason, courts look with disfavor upon retractions. Salazar face-to-face, and was given adequate opportunity to
Hence, when confronted with a recanting witness, in this case the immediately respond to the charges against him. Thereafter, Bolso’s
complainant, courts must not automatically exclude the original union, Manggagawang Komunikasyon ng Pilipinas, interceded on his
statement based solely on the recantation. Courts should determine behalf. Bolso’s counsel also moved for "the immediate dismissal of the
which statement should be given credence through a comparison of the pending administrative case against Bolso." Clearly, Bolso was
original and the new statements, applying the general rules of afforded ample opportunity to air his side and defend himself. Hence,
evidence.24 there was no denial of his right to due process.
In this case, Salazar did not expressly repudiate his earlier statement WHEREFORE, we GRANT the petition. We REINSTATE the Decision
that he paid Bolso ₱2,500 for the installation of the illegal telephone of the Labor Arbiter dated 6 August 1998.
line. What Salazar stated in his recantation letter was that Bolso was SO ORDERED.
not Boy Negro. Therefore, only Bolso’s identity as Boy Negro was
retracted. Salazar’s original statement that Bolso received ₱2,500 for
the installation of the outside extension line remains undisputed.
Even assuming that Salazar retracted fully his original statements given
G.R. No. 152991 July 21, 2008
during the PLDT investigation, Salazar did not swear or subscribe to
ALBERTO P. OXALES, Petitioner,
his recantation letter. Salazar never identified it himself or affirmed its
vs.
veracity. Bolso also submitted the letter to PLDT.
UNITED LABORATORIES, INC., Respondent.
Further, Bolso did not offer any reason for Salazar’s initial imputation DECISION
against him. In fact, Bolso stated during the 26 July 1996 investigation REYES, R.T., J.:
that he did not know of any motive on the part of Salazar for accusing HOW should a private company retirement plan for employees be
and pointing him as the installer of the illegal extension line. implemented vis-à-vis The Retirement Pay Law (Republic Act No.
T22 : Sa iyong pagkakaalam, ano ang maaaring motibo ni G. Salazar 7641)?
para paratangan ka niya ng ganito? Papaano ipapatupad ang isang plano ng pribadong kompanya
S : Wala akong alam na dahilan dahil, unang-una hindi ko siya kilala at para sa pagreretiro ng mga empleyado sa harap ng Batas ng
nakikita. Pangalawa, ay hindi ko area iyong lugar na iyan, at hindi ako Pagbabayad sa Pagreretiro (Batas Republika Blg. 7641)?
nagagawi roon. We address the concern in this appeal by certiorari of the Decision1 of
T23 : Kung gayon, ano sa palagay mo ang malaking dahilan kung bakit the Court of Appeals (CA) affirming the Resolution 2 and Decision3 of
sa dinami-dami ng empleyado sa PLDT Sampaloc ay ikaw pa ang the Labor Arbiter and the National Labor Relations Commission
naituro ni G. Salazar na isa sa mga nagkabit sa kanyang tirahan ng (NLRC), respectively, dismissing petitioner Alberto P. Oxales’
telepono bilang 742-5015? complaint for additional retirement benefits, recovery of the cash
S : Hindi ko alam talaga.25 equivalent of his unused sick leaves, damages, and attorney’s fees,
The Court is mindful that Bolso’s employment with PLDT was his main against respondent United Laboratories, Inc. (UNILAB).
source of income and that the infraction imputed on him was his first The Facts
offense in his 15 years of service to PLDT. However, the Court cannot Sometime in 1959, UNILAB established the United Retirement Plan
close its eyes to the fact that Salazar positively identified Bolso as the (URP).4 The plan is a comprehensive retirement program aimed at
installer of the illegal extension line for which he was paid ₱2,500. The providing for retirement, resignation, disability, and death benefits of its
Court has held that the longer an employee stays in the service of the members. An employee of UNILAB becomes a member of the URP
company, the greater is his responsibility for knowledge and upon his regularization in the company. The URP mandates the
compliance with the norms of conduct and the code of discipline in the compulsory retirement of any member-employee who reaches the age
company.26 An employee’s length of service with the company even of 60.
aggravates his offense.27 Bolso should have been more loyal to PLDT Both UNILAB and the employee contribute to the URP. On one hand,
from which he had derived his income for 15 years. UNILAB provides for the account of the employee an actuarially-
Upholding the employee’s interest in disregard of the employer’s right determined amount to Trust Fund A. On the other hand, the employee
to dismiss and discipline does not serve the cause of social justice. chips in 2½% of his monthly salary to Trust Fund B. Upon retirement,
Social justice ceases to be an effective instrument for the "equalization the employee gets both amounts standing in his name in Trust Fund A
of the social and economic forces" by the State when it is used to shield and Trust Fund B.
wrongdoing.28 As retirement benefits, the employee receives (1) from Trust Fund A a
Moreover, it is worthy to note that Bolso applied for benefits under lump sum of 1½ month’s pay per year of service "based on the
PLDT’s early retirement/redundancy program. Bolso’s counsel even member’s last or terminal basic monthly salary," 5 and (2) whatever the
wrote PLDT for the withdrawal of the administrative complaint against employee has contributed to Trust Fund B, together with the income
Bolso and for the release of the benefits under this program. Therefore, minus any losses incurred. The URP excludes commissions, overtime,
Bolso’s plea for reinstatement in this case conflicts with his application bonuses, or extra compensations in the computation of the basic salary
for early retirement, which PLDT denied due to the then pending for purposes of retirement.
complaint against him. Reinstatement is plainly irreconcilable with Oxales joined UNILAB on September 1, 1968. He was compulsorily
retirement. retired by UNILAB when he reached his 60th birthday on September 7,
At any rate, since Bolso was dismissed for a just cause, neither he nor 1994, after having rendered service of twenty-five (25) years, eleven
his heirs can avail of the retirement benefits. (11) months, and six (6) days. He was then Director of Manufacturing
Services Group.
On the issue of due process
In computing the retirement benefits of Oxales based on the 1½ months
Bolso’s claim that he was denied of his right to due process when PLDT for every year of service under the URP, UNILAB took into account only
dismissed him is untenable. his basic monthly salary. It did not include as part of the salary base the
The essence of due process is simply an opportunity to be heard, or as permanent and regular bonuses, reasonable value of food allowances,
applied to administrative proceedings, an opportunity to explain one’s 1/12 of the 13th month pay, and the cash equivalent of service incentive
side or an opportunity to seek a reconsideration of the action or ruling leave.
complained of.29 A formal or trial-type hearing is not at all times and in Thus, Oxales received from Trust Fund A ₱1,599,179.00, instead of
all circumstances essential.30 ₱4,260,255.70. He also received ₱176,313.06, instead of ₱456,039.20
In the present case, Bolso was notified by way of an Inter-Office as cash equivalent of his unused sick leaves. Lastly, he received
Memo31 dated 23 July 1996 of an investigation, specifically, on his ₱397,738.33 from his contributions to Trust Fund B. In sum, Oxales
alleged participation in the installation of an illegal outside extension received the total amount of ₱2,173,230.39 as his retirement benefits.
found on telephone number 742-5015. He was advised to appear at the On August 21, 1997, Oxales wrote UNILAB, claiming that he should
have been paid ₱1,775,907.23 more in retirement pay and unused
 90

leave credits. He insisted that his bonuses, allowances and 13th month INCORRECTLY INTERPRETING THE URP TO EXCLUDE
pay should have been factored in the computation of his retirement SEVERAL REMUNERATIONS FROM THE SAID SALARY
benefits.6 BASE;
On September 9, 1997, UNILAB wrote7 back and reminded Oxales 3. WHETHER OR NOT THE COURT OF APPEALS
about the provision of the URP excluding any commissions, overtime, SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE
bonuses or extra compensations in the computation of the basic salary OF DISCRETION IN TOTALLY IGNORING THE ISSUE AND
of the retiring employee. IN NOT FINDING THAT THE NLRC COMMITTED GRAVE
Disgruntled, Oxales filed a complaint with the Labor Arbiter for (1) the ABUSE OF DISCRETION IN INCORRECTLY
correct computation of his retirement benefits, (2) recovery of the cash INTERPRETING THE URP TO EXCLUDE PERMANENT
equivalent of his unused sick leaves, (3) damages, and (4) attorney’s AND REGULAR ALLOWANCES FROM THE SALARY BASE
fees. He argued that in the computation of his retirement benefits, FOR COMPUTING RETIREMENT BENEFITS OF
UNILAB should have included in his basic pay the following, to wit: (a) PETITIONER;
cash equivalent of not more than five (5) days service incentive leave; 4. WHETHER OR NOT THE COURT OF APPEALS
(b) 1/12th of 13th month pay; and (c) all other benefits he has been SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC
receiving. COMMITTED GRAVE ABUSE OF DISCRETION IN
Efforts were exerted for a possible amicable settlement. As this proved INCORRECTLY INTERPRETING THE URP TO EXCLUDE
futile, the parties were required to submit their respective pleadings and PERMANENT AND REGULAR REMUNERATIONS
position papers. MISLABELED AS BONUSES FROM THE SALARY BASE
Labor Arbiter, NLRC and CA Dispositions FOR COMPUTING THE RETIREMENT BENEFITS OF THE
On June 30, 1998, Labor Arbiter Romulus A. Protasio rendered a PETITIONER;
decision dismissing the complaint, thus: 5. WHETHER OR NOT THE COURT OF APPEALS
WHEREFORE, premises considered, judgment is hereby rendered ERRED IN NOT FINDING THAT THE NLRC COMMITTED
dismissing the instant complaint for lack of merit. GRAVE ABUSE OF DISCRETION IN INCORRECTLY
SO ORDERED.8 INTERPRETING THE URP TO EXCLUDE ONE TWELFTH
The Labor Arbiter held that the URP clearly excludes commission, (1/12th) OF THE STATUTORY THIRTEENTH MONTH PAY
overtime, bonuses, or other extra compensation. Hence, the benefits FROM THE SALARY BASE FOR COMPUTING
asked by Oxales to be included in the computation of his retirement RETIREMENT BENEFITS;
benefits should be excluded.9 6. WHETHER OR NOT THE COURT OF APPEALS
The Arbiter also held that the inclusion of the fringe benefits claimed by SERIOUSLY ERRED IN THE INTERPRETATION OF R.A.
Oxales would put UNILAB in violation of the terms and conditions set NO. 7641 WHEN IT CONCLUDED THAT THE SAID LAW IS
forth by the Bureau of Internal Revenue (BIR) when it approved the APPLICABLE ONLY IN THE ABSENCE OF RETIREMENT
URP as a tax-qualified plan. More, any overpayment of benefits would PLAN OR AGREEMENT PROVIDING FOR THE
adversely affect the actuarial soundness of the plan. It would also RETIREMENT BENEFITS OF EMPLOYEES IN AN
expose the trustees of the URP to liabilities and prejudice the other ESTABLISHMENT;
employees. Worse, the BIR might even withdraw the tax exemption 7. WHETHER OR NOT THE COURT OF APPEALS
granted to the URP.10 Lastly, the Labor Arbiter opined that the URP SERIOUSLY ERRED IN NOT FINDING THAT THE
precludes the application of the provisions of R.A. No. 7641. 11 DEFINITION OF "SALARY" UNDER THE IMPLEMENTING
Oxales appealed to the NLRC. On February 8, 1999, the NLRC RULES OF R.A. NO. 7641 SHOULD BE INTERPRETED TO
affirmed the decision of the Labor Arbiter, disposing as follows: INCLUDE THE PERMANENT AND REGULAR
WHEREFORE, in view thereof, the instant appeal is hereby dismissed REMUNERATIONS OF PETITIONER IN THE SALARY
for lack of merit and the appealed decision is ordered affirmed. BASE FOR COMPUTING RETIREMENT BENEFITS;
SO ORDERED.12 8. WHETHER OR NOT THE LABOR ARBITER, THE NLRC,
The NLRC ruled that the interpretation by Oxales of R.A. No. 7641 is AND COURT OF APPEALS COMMITTED GRAVE ABUSE
selective. He only culled the provisions that are beneficial to him, OF DISCRETION IN IGNORING AND NOT RESOLVING
putting in grave doubt the sincerity of his motives. For instance, he THE ISSUES REGARDING PETITIONER’S UNPAID CASH
claims that the value of the food benefits and other allowances should EQUIVALENT OF THE UNUSED SICK LEAVE CREDITS;
be included in his monthly salary as multiplicand to the number of his 9. WHETHER OR NOT THE COURT OF APPEALS
years of service with UNILAB. At the same time, however, he does not SERIOUSLY ERRED IN NOT RULING THAT THE NLRC
intend to reduce the 1½ month salary as multiplier under the URP to ½ GRAVELY ABUSED ITS DISCRETION IN ITS FAILURE TO
under R.A. No. 7641.13 PROPERLY INTERPRET THE URP IN DETERMINING THE
The NLRC agreed with the Labor Arbiter that the provisions of R.A. No. EMPLOYMENT PERIOD OF PETITIONER FOR THE
7641 do not apply in view of the URP. The NLRC also took into account PURPOSE OF COMPUTING RETIREMENT BENEFITS;
the fact that the benefits granted to Oxales by virtue of the URP was 10. WHETHER OR NOT THE COURT OF APPEALS
even higher than what R.A. No. 7641 requires. 14 SERIOUSLY ERRED IN NOT RULING THAT THE NLRC
His motion for reconsideration having been denied, Oxales filed with COMMITTED GRAVE ABUSE OF DISCRETION IN NOT
the CA a petition for certiorari under Rule 65. REINSTATING THE MEDICAL RETIREMENT BENEFITS
In a decision promulgated on April 12, 2002, the CA dismissed the OF PETITIONER;
petition. The CA ruled that the petition of Oxales calls for a review of 11. WHETHER OR NOT THE COURT OF APPEALS
the factual findings of the Labor Arbiter as affirmed by the NLRC. It is SERIOUSLY ERRED AND GRAVELY ABUSED ITS
not the normal function of the CA in a special civil action for certiorari to DISCRETION IN TOTALLY AND ARBITRARILY IGNORING
inquire into the correctness of the evaluation of the evidence by the THE ISSUE AND IN NOT FINDING THAT THE NLRC
Labor Arbiter. Its authority is confined only to issues of jurisdiction or COMMITTED GRAVE ABUSE OF DISCRETION IN
grave abuse of discretion.15 RENDERING A DECISION IN VIOLATION OF THE
Just like the Labor Arbiter and the NLRC, the CA also held that R.A. CONSTITUTIONAL REQUIREMENTS WHICH IN EFFECT
No. 7641 is applicable only in the absence of a retirement plan or DENIED PETITIONER’S RIGHT TO DUE PROCESS;
agreement providing for the retirement benefits of employees in an 12. WHETHER OR NOT THE COURT OF APPEALS
establishment.16 SERIOUSLY ERRED AND GRAVELY ABUSED ITS
Finally, the CA denied the claim of Oxales to moral and exemplary DISCRETION IN LIKEWISE RENDERING A DECISION IN
damages. According to the appellate court, he failed to prove the VIOLATION OF THE CONSTITUTIONAL REQUIREMENT
presence of bad faith or fraud on the part of UNILAB. His mere THAT DECISIONS SHOULD EXPRESS CLEARLY AND
allegations of having suffered sleepless nights, serious anxiety, and DISTINCTLY THE FACTS OF THE CASE AND THE LAW
mental anguish are not enough. No premium should be placed on the ON WHICH IT IS BASED;
right to litigate.17 13. WHETHER OR NOT THE COURT OF APPEALS
Left with no other option, Oxales filed the present recourse under Rule SERIOUSLY ERRED IN NOT GRANTING MORAL AND
45 of the 1997 Rules of Civil Procedure.18 EXEMPLARY DAMAGES AND ATTORNEY’S FEES TO
Issues PETITIONER;
In his Memorandum,19 Oxales raises the following issues for Our 14. WHETHER OR NOT THE SUPREME COURT SHOULD
disposition, to wit: GRANT PETITIONER UNPAID RETIREMENT PAY,
1. WHETHER OR NOT THE COURT OF APPEALS UNPAID CASH EQUIVALENT OF UNUSED LEAVE
SERIOUSLY ERRED IN NOT FINDING THAT ACCORDING CREDITS, REINSTATEMENT OF MEDICAL BENEFITS,
TO PREVAILING JURISPRUDENCE, SUCH ERRORS IN MORAL AND EXEMPLARY DAMAGES, AND ATTORNEY’S
THE COMPUTATION OF RETIREMENT BENEFITS OF FEES.20 (Underscoring supplied)
PETITIONER SHOULD BE CORRECTED IN A SPECIAL The issues posed by Oxales may be compressed as follows: first,
ACTION FOR CERTIORARI; whether in the computation of his retirement and sick leave benefits,
2. WHETHER OR NOT THE COURT OF APPEALS UNILAB should have factored such benefits like bonuses, cash and
SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC meal allowances, rice rations, service incentive leaves, and 1/12 of the
COMMITTED GRAVE ABUSE OF DISCRETION IN 13th month pay; second, whether R.A. No. 7641 is applicable for
 91

purposes of computing his retirement benefits; and third, whether pacta privata juri publico derogare non possunt. Private contracts
UNILAB is liable for moral damages, exemplary damages, and cannot derogate from the public law. Ang kasunduang pribado ay hindi
attorney’s fees. makasisira sa batas publiko. Five (5) reasons support this conclusion.
Our Ruling First, a plain reading of the Retirement Pay Law. R.A. No. 7641
The clear language of the URP should be respected. originated from the House of Representatives as House Bill 317 which
A retirement plan in a company partakes the nature of a contract, with was later consolidated with Senate Bill 132. It was approved on
the employer and the employee as the contracting parties. It creates a December 9, 1992 and took effect on January 7, 1993.38 Amending
contractual obligation in which the promise to pay retirement benefits is Article 287 of the Labor Code, it provides as follows:
made in consideration of the continued faithful service of the employee Art. 287. Retirement. – Any employee may be retired upon reaching the
for the requisite period.21 retirement age established in the collective bargaining agreement or
The employer and the employee may establish such stipulations, other applicable employment contract.
clauses, terms, and conditions as they may deem convenient. 22 In In case of retirement, the employee shall be entitled to receive such
Allgeyer v. Louisiana,23 New York Life Ins. Co. v. Dodge,24 Coppage v. retirement benefits as he may have earned under existing laws and any
Kansas,25 Adair v. United States,26 Lochner v. New York,27 and Muller collective bargaining agreement and other agreements: Provided,
v. Oregon,28 the United States Supreme Court held that the right to however, that an employee’s retirement benefits under any collective
contract about one’s affair is part and parcel of the liberty of the bargaining and other agreements shall not be less than those provided
individual which is protected by the "due process of law" clause of the herein.
Constitution. In the absence of a retirement plan or agreement providing for
The obligations arising from the agreement between the employer and retirement benefits of employees in the establishment, an employee
the employee have the force of law between them and should be upon reaching the age of sixty (60) years or more, but not beyond sixty-
complied with in good faith.29 However, though the employer and the five (65) years which is hereby declared the compulsory retirement age,
employee are given the widest latitude possible in the crafting of their who has served at least five (5) years in the said establishment, may
contract, such right is not absolute. There is no such thing as absolute retire and shall be entitled to retirement pay equivalent to at least one-
freedom of contract. A limitation is provided for by the law itself. Their half (1/2) month salary for every year of service, a fraction of at least
stipulations, clauses, terms, and conditions should not be contrary to six (6) months being considered as one whole year.
law, morals, good customs, public order, or public policy. 30 Indeed, the Unless the parties provide for broader inclusions, the term ‘one-half (1/2)
law respects the freedom to contract but, at the same time, is very month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the
zealous in protecting the contracting parties and the public in general. 13th month pay and the cash equivalent of not more than five (5) days
So much so that the contracting parties need not incorporate the of service incentive leaves. (Underscoring supplied)
existing laws in their contract, as the law is deemed written in every Second, the legislative history of the Retirement Pay Law. It may be
contract. Quando abest, proviso parties, adest proviso legis. When the recalled that R.A. No. 7641 traces back its history in the case of Llora
provision of the party is lacking, the provision of the law supplies Motors, Inc. v. Drilon.39 In this case, the Court held that the then Article
it. Kung may kulang na kondisyon sa isang kasunduan, ang batas 287 of the Labor Code40 and its Implementing Rules41 may not be the
ang magdaragdag dito. source of an employee’s entitlement to retirement pay absent the
Viewed from the foregoing, We rule that Oxales is not entitled to the presence of a collective bargaining agreement or voluntary company
additional retirement benefits he is asking. The URP is very clear: policy that provides for retirement benefits for the employee. 42
"basic monthly salary" for purposes of computing the retirement pay is Third, the legislative intent of the Retirement Pay Law. A reading of the
"the basic monthly salary, or if daily[,] means the basic rate of pay explanatory note of Representative Alberto S. Veloso would show why
converted to basic monthly salary of the employee excluding any Congress sought to pass the Retirement Pay Law: many employers
commissions, overtime, bonuses, or extra compensations." 31 Inclusio refuse or neglect to adopt a retirement plan for their employees
unius est exclusio alterius. The inclusion of one is the exclusion of because of the absence of any legal compulsion for them to do so, thus:
others. Ang pagsama ng isa, pagpwera naman sa iba. When the Labor Code came into effect in 1974, retirement pay had, as
The URP is not contrary to law, morals, good customs, public order, or a matter of course, been granted to employees in the private sector
public policy to merit its nullification. We, thus, sustain it. At first blush, when they reach the age of sixty (60) years. This had practically been
the URP seems to be disadvantageous to the retiring employee the rule observed by employers in the country pursuant to the rules and
because of the exclusion of commissions, overtime, bonuses, or extra regulations issued by the then Minister of Labor and Employment to
compensations in the computation of the basic monthly salary. implement the provisions of the Labor Code, more particularly, where
However, a close reading of its provisions would reveal otherwise. We there is no provision for the same in the collective bargaining
quote with approval the explanation of the NLRC in this regard, viz.: agreement or retirement plan of the establishment.1avvphil
x x x the United Retirement Plan of the respondent [Unilab] has a one At present, however, such benefit of retirement pay is no longer
and one-half months salary for every year of service as the basis of available where there is no collective agreement thereon or any
entitlement. Under the new law, only one-half month of the retiree’s retirement plan at all. This is so because, in a decision of the Supreme
salary inclusive however, of not more than five (5) days of service Court (Llora Motors vs. Drilon and NLRC, et al., G.R. No. 82895,
incentive leave and one-twelfth (1/12) of the 13th month pay are used November 7, 1989), it was held that the grant of such benefit under the
as the bases in the retirement benefits computation. rules implementing the Labor Code is not supported by any express
Mathematically speaking therefore, complainant’s [Oxales] benefits provision of the Labor Code itself. In short, there is no specific statutory
received amounting to ₱1,599,179.00 under Trust Fund A together with basis for the grant of retirement benefits for employees in the private
the cash equivalent of his unused leaves which has an amount of sector reaching the age of 60 years.
₱176,313.06 and his contribution in the Trust Fund B amounting to Since the time of such nullification by the Supreme Court of said
₱397,738.33 are way above the entitlement he could have received implementing rules on retirement pay for private sector employees,
under Republic Act 7641, otherwise known as the New Retirement many employers simply refuse or neglect to adopt any retirement plan
Law.32 (Underscoring supplied) for their workers, obviously emboldened by the thought that, after said
Both law33 and jurisprudence34 mandate that if the terms of a contract ruling, there is no longer any legal compulsion to grant such retirement
are clear and leave no doubt upon the intention of the contracting benefits. In our continuous quest to promote social justice, unfair
parties, the literal meaning of its stipulations shall control. Thus, if the situations like this, productive of grievance or irritants in the labor-
terms of a writing are plain and unambiguous, there is no room for management relations, must immediately be corrected or remedied by
construction, since the only purpose of judicial construction is to legislation. (Underscoring supplied)
remove doubt and uncertainty.35 Only where the language of a contract Fourth, the title of the Retirement Pay Law. The complete title of R.A.
is ambiguous and uncertain that a court may, under well-established No. 7641 is "An Act Amending Article 287 of Presidential Decree No.
rules of construction, interfere to reach a proper construction and make 442, As Amended, Otherwise Known as the Labor Code of the
certain that which in itself is uncertain. 36 Where the language of a Philippines, By Providing for Retirement Pay to Qualified Private Sector
contract is plain and unambiguous, its meaning should be determined in the Absence of Any Retirement Plan in the Establishment." Res ipsa
without reference to extrinsic facts or aids. 37 loquitur. The thing speaks for itself. Isang bagay na nangungusap na
R.A. No. 7641 does not apply in view of the URP which gives to the sa kanyang sarili.
retiring employee more than what the law requires; the supporting Fifth, jurisprudence. In Oro Enterprises, Inc. v. National Labor Relations
cases cited by Oxales are off-tangent. Commission,43 the Court held that R.A. No. 7641 "is undoubtedly a
R.A. No. 7641, otherwise known as "The Retirement Pay Law," only social legislation. The law has been enacted as a labor protection
applies in a situation where (1) there is no collective bargaining measure and as a curative statute that – absent a retirement plan
agreement or other applicable employment contract providing for devised by, an agreement with, or a voluntary grant from, an employer
retirement benefits for an employee; or (2) there is a collective – can respond, in part at least, to the financial well-being of workers
bargaining agreement or other applicable employment contract during their twilight years soon following their life of labor." 44
providing for retirement benefits for an employee, but it is below the In Pantranco North Express, Inc. v. National Labor Relations
requirements set for by law. The reason for the first situation is to Commission,45 the Court held that Article 287 of the Labor Code
prevent the absurd situation where an employee, who is otherwise "makes clear the intention and spirit of the law to give employers and
deserving, is denied retirement benefits by the nefarious scheme of employees a free hand to determine and agree upon the terms and
employers in not providing for retirement benefits for their employees. conditions of retirement,"46 and that the law "presumes that employees
The reason for the second situation is expressed in the latin maxim know what they want and what is good for them absent any showing
 92

that fraud or intimidation was employed to secure their consent the supreme act of dismissing a disloyal employee for having joined or
thereto."47 sympathized with a rival company, with more reason may it do the
Lastly, in Brion v. South Philippine Union Mission of the Seventh Day lesser act of merely discontinuing a benefit unilaterally given to an
Adventist Church,48 the Court ruled that a reading of Article 287 of the already-retired employee."59 As a retired employee, Oxales may not
Labor Code would reveal that the "employer and employee are free to claim a vested right on these medical benefits. A careful examination
stipulate on retirement benefits, as long as these do not fall below floor of the URP would show that medical benefits are not included in the
limits provided by law."49 URP.
We are aware of the several cases cited by Oxales to support his claim Indeed, while there is nothing wrong in the act of Oxales in joining a
that the computation of his retirement benefits should not have been rival company after his retirement, justice and fair play would dictate
limited to the basic monthly salary as defined by the URP. However, that by doing so, he cannot now legally demand the continuance of his
these cases negate, rather than support, his claim. medical benefits from UNILAB. To rule otherwise would result in an
In Villena v. National Labor Relations Commission,50 the "compulsory absurd situation where Oxales would continue to receive medical
retirement" of Villena was, in fact, an illegal dismissal in disguise. Thus, benefits from UNILAB while working in a rival company. We note that
the Court ordered the Batangas, Laguna, Tayabas Bus Co. to pay these medical benefits are merely unilaterally given by UNILAB to its
Villena "his full backwages, allowances, and other benefits for a period retired employees.
of three (3) years after his illegal dismissal on April 24, 1987, until he We are not unaware of this Court’s pronouncement in Brion v. South
reached the compulsory retirement age plus his retirement benefits Philippine Union Mission of the Seventh Day Adventist
equivalent to his gross monthly pay, allowances and other benefits for Church.60 However, Oxales’ plight differs from Brion because the URP
every year of service up to age sixty (60), which is the normal retirement does not expressly cover medical benefits to retirees. In contrast, the
age for him."51 retired employee in Brion had acquired a vested right to the withheld
The distinction between Villena with the instant case is readily apparent. benefits.
The Court used the regular compensation of Villena in computing his The claim of Oxales to moral damages, exemplary damages, and
retirement benefits because the provision of the CBA for rank-and-file attorney’s fees must also be denied for want of basis in law or
employees is inapplicable to him, being a managerial employee. jurisprudence. On this score, We echo the pronouncement of the Court
The Villena case was also decided before the passage of R.A. No. in Audion v. Electric Co., Inc. v. National Labor Relations
7641. Commission,61 to wit:
In Planters Products, Inc. v. National Labor Relations Moral and exemplary damages are recoverable only where the
Commission,52 the petitioning employees were given termination dismissal of an employee was attended by bad faith or fraud, or
benefits based on their basic salary. However, Planters Products, Inc. constituted an act oppressive to labor, or was done in a manner
had integrated the allowances of its remaining employees into their contrary to morals, good customs or public policy. The person claiming
basic salary. Thus, it was the basic salary that increased. Also, it was moral damages must prove the existence of bad faith by clear and
the basic salary as increased (not the basic salary and allowances) convincing evidence for the law always presumes good faith. It is not
which still formed the basis for the computation of the termination enough that one merely suffered sleepless nights, mental anguish,
benefits of the remaining employees of the company. The Court held serious anxiety as the result of the actuations of the other party.
that fairness demanded that the terminated employees receive the Invariably, such action must be shown to have been willfully done in
same treatment.53 Clearly, such situation is absent here. bad faith or with ill motive, and bad faith or ill motive under the law
In Manuel L. Quezon University v. National Labor Relations cannot be presumed but must be established with clear and convincing
Commission,54 the issue raised was whether respondents are entitled evidence. Private respondent predicated his claim for such damages
to the retirement benefits provided for under R.A. No. 7641, even if on his own allegations of sleepless
petitioner has an existing valid retirement plan. The Court held that the nights and mental anguish, without establishing bad faith, fraud or ill
coverage of the law "applies to establishments with existing collective motive as legal basis therefor.
bargaining or other agreements or voluntary retirement plans whose Private respondent not being entitled to award of moral damages, an
benefits are less than those prescribed under the proviso in question." 55 award of exemplary damages is likewise baseless. Where the award of
Admittedly, this Court held in the case of Songco v. National Labor moral and exemplary damages is eliminated, so must the award for
Relations Commission56 that not only the basic salary but also the attorney’s fees be deleted. Private respondent has not shown that he
"allowances" (like transportation and emergency living allowances) and is entitled thereto pursuant to Art. 2208 of the Civil Code. 62 (Citations
"earned sales commissions" should be taken into consideration in omitted)
computing the backwages and separation pay of the employee. Here, there was no dismissal, as Oxales was retired by UNILAB by
However, a closer examination of the case would show that the virtue of the URP. He was also paid his complete retirement benefits.
CBA57 between Zuellig and F.E. Zuellig Employees Association, in Epilogue
which Songco was a member, did not contain an explicit definition of It is not disputed that Oxales has worked tirelessly for UNILAB. For one
what salary is. Neither was there any inclusions or exclusions in the thing, he has spent a considerable amount of years with the company.
determination of the salary of the employee. Here, the URP has an For another, he has contributed much to its growth and expansion.
explicit provision excluding any commissions, overtime, bonuses, or However, even as We empathize with him in his time of great need, it
extra compensations for purposes of computing the basic salary of a behooves Us to interpret the law according to what it mandates.
retiring employee. Too, the Songco case was decided before the We reiterate the time-honored principle that the law, in protecting the
passage of R.A. No. 7641. rights of the laborer, authorizes neither oppression nor self-destruction
Clearly then, R.A. No. 7641 does not apply because the URP grants to of the employer. While the Constitution is committed to the policy of
the retiring employee more than what the law gives. Under the URP, social justice and the protection of the working class, management also
the employee receives a lump sum of 1½ pay per year of service, has its own rights, which are entitled to respect and enforcement in the
compared to the minimum ½ month salary for every year of service set interest of fair play. Out of its concern for those with less privilege in life,
forth by R.A. No. 7641. this Court has inclined more often than not toward the employee and
Oxales is trying to have the best of both worlds. He wants to have his upheld his cause with his conflicts with the employer. Such favorable
cake and eat it too: the 1½ months formula under the URP, and the treatment, however, has not blinded the Court to rule that justice is in
inclusion of the value of food benefits and other allowances he was every case for the deserving. Justice should be dispensed in the light
entitled to as employee of UNILAB with his monthly salary as the of the established facts and applicable law and doctrine. 63
multiplicand of his number of years in the service. This he should not WHEREFORE, the appealed Decision is AFFIRMED. No costs.
be permitted to do, lest a grave injustice is caused to UNILAB, and its SO ORDERED.
past and future retirees.
We agree with the NLRC observation on this score:
As an illustration, Complainant claims that his monthly salary as the
multiplicand of his number of years in the service should include the G.R. No. 181995 July 16, 2012
value of the food benefits and other allowances he was entitled while BIBIANO C. ELEGIR, Petitioner,
in the employ of respondent. However, he did not even, by implication, vs.
intend to reduce the 1½ month salary as multiplier under the URP to ½ PHILIPPINE AIRLINES, INC., Respondent.
under the law he invoked. This is a sign of covetousness, unfair both to
DECISION
the employer and those employees who have earlier retired under said
plan.58 REYES, J.:
Oxales is not entitled to the reinstatement of his medical benefits, This is a petition for review on certiorari under Rule 45 of the Rules of
which are not part of the URP. Corollarily, he is not also entitled to Court seeking to annul and set aside the Decision1 dated August 6,
moral damages, exemplary damages, and attorney’s fees. 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79111, which
Oxales claims that UNILAB unilaterally revoked his medical benefits, reversed and set aside the Decision2 dated March 18, 2002 and
causing him humiliation and anxiety. This, he argues, entitles him to Order3 dated June 30, 2003 of the National Labor Relations
moral damages, exemplary damages, plus attorney’s fees. Commission (NLRC) in NLRC NCR Case No. 00-08-06135-97 and
We cannot agree. The records bear out that after Oxales retired from NLRC NCR CA No. 015030-98.
UNILAB, he chose to join a rival company, Lloyds Laboratories, Inc. As Factual Antecedents
UNILAB correctly puts it, "[i]f any employer can legally and validly do
 93

As culled from the records, the instant case stemmed from the following
₱ 4,150,106.20
factual antecedents:
Petitioner Bibiano C. Elegir (petitioner) was hired by Philippine Airlines, plus legal interest of 12% per annum from November 06, 1996.
Inc. (PAL) as a commercial pilot, specifically designated as HS748 Finally, ten percent (10%) of all sums owing to petitioner is hereby
Limited First Officer, on March 16, 1971.4 adjudged as attorney’s fees.
In 1995, PAL embarked on a refleeting program and acquired new and SO ORDERED.10
highly sophisticated aircrafts. Subsequently, it sent an invitation to bid The LA ratiocinated that PAL had no right to withhold the payment of
to all its flight deck crew, announcing the opening of eight (8) B747-400 the petitioner’s retirement benefits simply because he retired from
Captain positions that were created by the refleeting program. The service before the lapse of three (3) years. To begin with, there was no
petitioner, who was then holding the position of A-300 Captain, document evidencing the fact that the petitioner was required to stay
submitted his bid and was fortunately awarded the same. 5 The with PAL for three (3) years from the completion of his training or that
petitioner, together with seven (7) other pilots, was sent for training at he was bound to reimburse the company of the costs of his training
Boeing in Seattle, Washington, United States of America on May 8, should he retire from service before the completion of the period. The
1995, to acquire the necessary skills and knowledge in handling the LA likewise dismissed the theory espoused by PAL that the petitioner’s
new aircraft. He completed his training on September 19, 1995. 6 submission of his bid for the new position which necessarily requires
On November 5, 1996, after rendering twenty-five (25) years, eight (8) training created an innominate contract of du ut facias between him and
months and twenty (20) days of continuous service, the petitioner the company since their relationship is governed by the CBA between
applied for optional retirement authorized under the Collective the management and the ALPAP.11
Bargaining Agreement (CBA) between PAL and the Airline Pilots On appeal, the NLRC took a different stance and modified the decision
Association of the of the LA in its Decision dated March 18, 2002, which pertinently states:
Philippines (ALPAP), in which he was a member of good standing. In Considering that [petitioner] was only fifty-two (52) years when he opted
response, PAL asked him to reconsider his decision, asseverating that to retire on November 6, 1996, he was, strictly, not yet qualified to
the company has yet to recover the full value of the costs of his training. receive the benefits provided under said Article 287 of the Labor Code,
It warned him that if he leaves PAL before he has rendered service for as amended by R.A. 7641. However, petitioner is eligible for retirement
at least three (3) years, it shall be constrained to deduct the costs of his under the CBA between respondent PAL and ALPAP, as he had
training from his retirement pay.7 already served for more than 25 years with said respondent. This is
On November 6, 1996, the petitioner went on terminal leave for thirty covered by the provision in the first paragraph of Article 287 of the
(30) days and thereafter made effective his retirement from service. Labor Code which states that an employee may be retired upon
Upon securing his clearance, however, he was informed that the costs reaching the retirement age established in the collective bargaining
of his training will be deducted from his retirement pay, which will be agreement or other applicable employment contract, inasmuch as the
computed at the rate of ₱ 5,000.00 per year of service. The petitioner, CBA in question does not provide for any retirement age, but limited
through his counsel, sent PAL a correspondence, asserting that his itself to the number of years of service or flying hours of the employee
retirement benefits should be based on the computation stated in concerned. Consequently, anytime that an employee of respondent
Article 287 of the Labor Code, as amended by Republic Act (R.A.) No. PAL reaches twenty (20) years of service or 20,000 (flying) hours as a
7641, and that the costs of his training should not be deducted pilot of PAL, then his age at that precise time would be considered as
therefrom. In its Reply dated August 4, 1997, PAL refused to yield to the retirement age, as far as he is concerned.
the petitioner’s demand and maintained that his retirement pay should The retirement benefits of petitioner should, therefore, be computed in
be based on PAL-ALPAP Retirement Plan of 1967 (PAL-ALPAP accordance with both Article 287 of the Labor Code and the Retirement
Retirement Plan) and that he should reimburse the company with the Plan in the CBA of PAL and ALPAP.
proportionate costs of his training. Thus, on August 27, 1997, the On the second issue, we rule that petitioner is under obligation to
petitioner filed a complaint for non-payment of retirement pay, moral reimburse a portion of the expenses incurred for his training as B747-
damages, exemplary damages and attorney’s fees against PAL. 8 400 Captain.
On February 6, 1998, the Labor Arbiter (LA) rendered a Decision, 9 the It would be grossly unfair and unjust to PAL if the petitioner would be
pertinent portions of which read: allowed to reap the fruits of this training, which upgraded his knowledge
From the foregoing, it is manifestly clear that an employee’s retirement and skills that would enable him to demand higher pay, if he would not
benefits under any collective bargaining agreement shall not be less be made to return said benefits in the form of service for a reasonable
than those provided under the New Retirement Pay Law and if such period of time, say three (3) years as PAL’s company policy demands.
benefits are less, the employee shall pay the difference between the xxx
amount due the employee and that provided under the CBA or xxxx
individual agreement or retirement plan (Par. 3.2, Sec. 3, rules Thus, with the adjudged reimbursement for training expenses of
Implementing the New Retirement Pay Law). P921,281.71 (sic), the awards due to petitioner shall be, as follows:
Thus, applying the pertinent CBA provision in correlation with the New
Retirement Pay Law, complainant should receive the following amount, Retirement Pay (P138,477.00 divided by 2 times 26)
to wit:
22.5 x 26 yrs. x P138,447.00= P2,700,301.50 Service Incentive Leave (P138,477.00 divided by 30 x 5)
If we were to follow the PAL’s computation of petitioner’s retirement pay,
the latter’s retirement benefits in the amount of P125,000.00 based on Accrued Trip Leave
Section 2, Article VII of the Retirement Plan of the CBA at P5,000.00
per every year of service would be much less than his monthly salary 13th Month Pay
of P138,477.00 at the time of his retirement. This was never envisioned
by the law. Instead, it is the clear intention of our law makers to provide 1996 Unutilized days off
a bigger and better retirement pay or benefits under existing laws
and/or existing CBA or other agreements. Nov. 1996 Productive Allowance (net)
xxxx
WHEREFORE, in view of the foregoing, we find PAL liable to the Unpaid salary 12/1-5/96
petitioner for the payment of his retirement benefits as follows:
1996 w/ tax refund
Retirement Benefits ₱ 2,700,301.50
(22.5 x 26 years x P138,477.00) TOTAL

Accrued Trip Leave 760,299.37 LESS:

Accrued Vacation Leave 386,546.44 Reimbursement of training expenses 981,281.71

1996 Unutilized days off 105,089.46 1996 13thmonth pay overpayment 19,837.16

Nov. ‘96 Prod. Allow. (net) 1,726.92 1996 Christmas bonus overpayment 11,539.75

Unpaid Salary 12/1/-5/96 22,416.65 PESALA 567.93

1996 w/tax refund 2,464.42 TOTAL

13th month backpay for the year RETIREMENT PAY STILL PAYABLE
1988-1991 171,262.50
IN VIEW OF THE FOREGOING, the decision of the Labor Arbiter
TOTAL should be MODIFIED by increasing the awards to the petitioner to ONE
MILLION FOUR HUNDRED SIXTY SIX THOUSAND SEVEN
 94

HUNDRED SIXTY-NINE and 84/100 (P1,466,769.84) PESOS as The petitioner filed a motion for reconsideration but the same was
computed above. denied in a Resolution18 dated February 21, 2008. Aggrieved, the
SO ORDERED.12 petitioner appealed to this Court.
Both PAL and petitioner filed their respective motions for partial Essentially, we are called upon to rule on the following issues:
reconsideration from the decision of the NLRC. In its Motion for Partial 1. Whether the petitioner’s retirement benefits should be
Reconsideration,13 PAL asseverated that the decision of the NLRC, computed based on Article 287 of the Labor Code or on PAL’s
directing the computation of the petitioner’s retirement benefits based retirement plans;
on Article 287 of the Labor Code, instead of the CBA, was inconsistent 2. Whether the petitioner should reimburse PAL with the
with the disposition of this Court in Philippine Airlines, Inc. v. Airline proportionate costs of his training; and
Pilots Association of the Philippines. 14 It emphasized that in said case, 3. Whether interest should be imposed on the monetary
this Court sustained PAL’s position and directed the payment of award in favor of the petitioner.
retirement benefits of the complainant pilot in accordance with the PAL- The Ruling of this Court
ALPAP Retirement Plan. However, in an Order 15 dated June 30, 2003, The petitioner’s retirement pay should be computed based on PAL’s
the NLRC denied PAL’s motion for reconsideration. retirement plans.
Unyielding, PAL filed a petition for certiorari with the CA. In said petition, The petitioner maintains that it is Article 287 of the Labor Code which
PAL emphasized that the petitioner’s case should be decided in light of should be applied in the computation of his retirement pay since the
the ruling in Philippine Airlines, Inc., where this Court held that the same provides for higher benefits. He contends that the CA erroneously
computation of the retirement pay of a PAL pilot who retired before resorted to the ruling in Philippine Airlines, Inc. since the circumstances
reaching the retirement age of sixty (60) should be based on the PAL- in the said case, which led this Court to rule in favor of the applicability
ALPAP Retirement Plan or at the rate of P5,000.00 for every year of of PAL’s retirement plans in computing retirement benefits, are
service.16 unavailing in the present case. Specifically, he pointed out that the pilot
In its Decision dated August 6, 2007, the CA ruled that the petitioner’s in Philippine Airlines, Inc. retired at the age of forty-five (45), while he
retirement pay should be computed in accordance with PAL-ALPAP opted to retire at fifty-two (52). He further emphasized that the ruling
Retirement Plan and the PAL Pilots’ Retirement Benefit Plan as was was anchored on a finding that the retirement benefits that the pilot
held in Philippine Airlines, Inc. It held, thus: would get under Article 287 of the Labor Code are less than those he
The present case squarely falls within the state of facts upon which the would get under PAL’s retirement plans.19
ruling in Philippine Airlines, Inc., vs. Airline Pilots Association of the Apparently, the petitioner failed to appreciate the heart behind the ruling
Philippines was enunciated. Petitioner herein applies for retirement at in Philippine Airlines, Inc. To recapitulate, the case stemmed from
an age below 60. A distinction was made between a pilot who retires at PAL’s unilateral act of retiring airline pilot Captain Albino Collantes
the age of sixty and another who retires earlier. The Supreme Court (Collantes) under the authority of Section 2, Article VII of the PAL-
was explicit when it declared: ALPAP Retirement Plan. Thereafter, ALPAP filed a Notice of Strike with
"A pilot who retires after twenty years of service or after flying 20,000 the Department of Labor and Employment (DOLE), asseverating that
hours would still be in the prime of his life and at the peak of his career, the retirement of Collantes constituted illegal dismissal and union
compared to one who retires at the age of 60 years old." busting. The Secretary of Labor assumed jurisdiction and eventually
Furthermore, petitioner would not be getting less if his retirement pay upheld PAL’s action of retiring Collantes as a valid exercise of its option
is computed on the PAL-ALPAP retirement plan rather than the formula under Section 2, Article VII of the PAL-ALPAP Retirement Plan. It
provided by the Labor Code. Petitioner did not refute that he already further directed for the computation of Collantes’ retirement benefits on
got retirement benefits from another retirement plan – the PAL the basis of Article 287 of the Labor Code. 20 Acting on Collantes’
Pilots Retirement Plan. It appearing that the retirement benefits petition for certiorari, the CA held that the pilot’s retirement benefits
amounting to P1,800,201.00 being the main bone of contention herein, should be based on Article 287 of the Labor Code and not on the PAL-
this Court proceeds to compute the balance of Capt. Elegir’s retirement ALPAP Retirement Plan. On appeal to this Court, we reversed the CA
benefits as follows: and ruled that Collantes’ retirement benefits should be computed based
on the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement
Retirement Pay (P5,000 x 25 years) ₱125,000.00 Benefit Plan and not on Article 287 of the Labor Code since the benefits
under the two (2) plans are substantially higher than the latter. The
Trip Leave Pay 757,564.04 dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, the petition is GRANTED.
Vacation Leave Pay 385,155.76 The March 2, 2000 Decision and the June 19, 2000 Resolution of the
Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET
1996 Unutilized Day-Off 104,711.38 ASIDE. The Order of the Secretary of Labor in NCMB-NCR-N.S. 12-
514-97 dated June 13, 1998, is MODIFIED as follows: The retirement
Productivity Allowance for 1996 1,726.92 benefits to be awarded to Captain Albino Collantes shall be based on
the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement
Unpaid Salary for December 1-5, Benefit Plan. The directive contained in subparagraph (2) of the
22,335.00
1996 dispositive portion thereof, which required petitioner to consult the pilot
involved before exercising its option to retire him, is DELETED. The
1996 Withholding Tax Refund 2,464.42 said Order is AFFIRMED in all other respects.
SO ORDERED.21 (Emphasis supplied)
It bears reiterating that there are only two retirement schemes at point
P1,398,957.52 in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP
Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The two
Less Accountabilities: retirement schemes are alternative in nature such that the retired pilot
can only be entitled to that which provides for superior benefits.
Training Cost ₱981,281.71
Article 287 of the Labor Code states:
Art. 287. Retirement. - Any employee may be retired upon reaching the
1996 13th Month Pay
19,837.16 retirement age established in the collective bargaining agreement or
Overpayment
other applicable employment contract.
1996 Christmas In case of retirement, the employee shall be entitled to receive such
11,539.75 retirement benefits as he may have earned under existing laws and any
Bonus
collective bargaining agreement and other agreements: provided,
PESALA 567.93 1,013,226.55 however, that an employee’s retirement benefits under any collective
bargaining and other agreements shall not be less than those provided
herein.
BALANCE ₱ 385,730.97 In the absence of a retirement plan or agreement plan providing for
retirement benefits of employees in the establishment, an employee
pursuant to the ruling in G.R. No. 143686. upon reaching the age of sixty (60) years or more, but not beyond sixty-
xxxx five (65) years which is hereby declared as the compulsory retirement
WHEREFORE, the petition is GRANTED. The Decision of public age, who has served at least five (5) years in the said establishment,
respondent dated March 18, 2002 and its Order of June 30, 2003 are may retire and shall be entitled to retirement pay equivalent to at least
REVERSED and SET ASIDE. The retirement benefits of petitioner Capt. one-half (1/2) month salary for every year of service, a fraction of at
Bibiano Elegir shall be based on the 1967 PAL-ALPAP Retirement Plan least six (6) months being considered as one whole year.
andthe PAL Pilots Retirement Benefit Plan and the balance still due Unless the parties provide for broader inclusions, the term ‘one-half (1/2)
him, pegged at P385,730.97. month salary’ shallmean fifteen (15) days plus one-twelfth (1/12) of the
SO ORDERED.17 (Citation omitted and emphasis supplied) 13th month pay and the cash equivalent of not more than five (5) days
of service incentive leaves. x x x (Emphasis supplied)
 95

It can be clearly inferred from the language of the foregoing provision 240% of salary or almost two and a half worth of monthly salary per
that it is applicable only to a situation where (1) there is no CBA or other year of service provided under the PAL Pilots’ Retirement Benefit Plan,
applicable employment contract providing for retirement benefits for an which will be further added to the P125,000.00 to which the petitioner
employee, or (2) there is a CBA or other applicable employment is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to
contract providing for retirement benefits for an employee, but it is the petitioner’s advantage that PAL’s retirement plans were applied in
below the requirement set by law. The rationale for the first situation is the computation of his retirement benefits.
to prevent the absurd situation where an employee, deserving to The petitioner should reimburse PAL with the costs of his training.
receive retirement benefits, is denied them through the nefarious As regards the issue of whether the petitioner should be obliged to
scheme of employers to deprive employees of the benefits due them reimburse PAL with the costs of his training, the ruling in Almario v.
under existing labor laws. On the other hand, the second situation aims Philippine Airlines, Inc.28 is controlling. Essentially, in the mentioned
to prevent private contracts from derogating from the public law. 22 case, this Court recognized the right of PAL to recoup the costs of a
The primary application of existing CBA in computing retirement pilot’s training in the form of service for a period of at least three (3)
benefits is implied in the title of R.A. No. 7641 which amended Article years. This right emanated from the CBA between PAL and ALPAP,
287 of the Labor Code. The complete title of R.A. No. 7641 reads: "An which must be complied with good faith by the parties. Thus:
Act Amending Article 287 of Presidential Decree No. 442, As Amended, "The CBA is the law between the contracting parties – the collective
otherwise known as the Labor Code of the Philippines, By Providing for bargaining representative and the employer-company. Compliance
Retirement Pay to Qualified Private Sector in the Absence of Any with a CBA is mandated by the expressed policy to give protection to
Retirement Plan in the Establishment."23 labor. In the same vein, CBA provisions should be "construed liberally
Emphasis must be placed on the fact that the purpose of the rather than narrowly and technically, and the courts must place a
amendment is not merely to establish precedence in application or practical and realistic construction upon it, giving due consideration to
accord blanket priority to existing CBAs in computing retirement the context in which it is negotiated and purpose which it is intended to
benefits. The determining factor in choosing which retirement scheme serve." This is founded on the dictum that a CBA is not an ordinary
to apply is still superiority in terms of benefits provided. Thus, even if contract but one impressed with public interest. It goes without saying,
there is an existing CBA but the same does not provide for retirement however, that only provisions embodied in the CBA should be so
benefits equal or superior to that which is provided under Article 287 of interpreted and complied with. Where a proposal raised by a
the Labor Code, the latter will apply. In this manner, the employee can contracting party does not find print in the CBA, it is not a part thereof
be assured of a reasonable amount of retirement pay for his and the proponent has no claim whatsoever to its implementation."
sustenance. In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine
Consistent with the purpose of the law, the CA correctly ruled for the Airlines, Inc.," the Secretary of the Department of Labor and
computation of the petitioner’s retirement benefits based on the two (2) Employment (DOLE), passing on the failure of PAL and ALPAP to
PAL retirement plans because it is under the same that he will reap the agree on the terms and conditions for the renewal of their CBA which
most benefits. Under the PAL-ALPAP Retirement Plan, the petitioner, expired on December 31, 1987 and construing Section 1 of Article XXIII
who qualified for late retirement after rendering more than twenty (20) of the 1985-1987 CBA, held:
years of service as a pilot, is entitled to a lump sum payment of xxxx
P125,000.00 for his twenty-five (25) years of service to PAL. Section 2, Section 1, Article XXIII of the 1985-1987 CBA provides:
Article VII of the PAL-ALPAP Retirement Plan provides: Pilots fifty-five (55) years of age or over who have not previously
Section 2. Late Retirement. Any member who remains in the service of qualified in any Company turbo-jet aircraft shall not be permitted to bid
the company after his normal retirement date may retire either at his into the Company’s turbo-jet operations. Pilots fifty-five (55) years of
option or at the option of the Company, and when so retired he shall be age or over who have previously qualified in the company’s turbo-jet
entitled either: (a) to a lump sum payment of P5,000.00 for each operations may be by-passed at Company option, however, any such
completed year of service rendered as a pilot, or (b) to such termination pilot shall be paid the by-pass pay effective upon the date a junior pilot
pay benefits to which he may be entitled under existing laws, whichever starts to occupy the bidded position.
is the greater amount.24 x x x PAL x x x proposed to amend the provision in this wise:
Apart from the abovementioned benefit, the petitioner is also entitled to The compulsory retirement age for all pilots is sixty (60) years. Pilots
the equity of the retirement fund under PAL Pilots’ Retirement Benefit who reach the age of fifty-five (55) years and over without having
Plan, which pertains to the retirement fund raised from contributions previously qualified in any Company turbo-jet aircraft shall not be
exclusively from PAL of amounts equivalent to 20% of each pilot’s permitted to occupy any position in the Company’s turbo-jet fleet. Pilots
gross monthly pay. Each pilot stands to receive the full amount of the fifty-four (54) years of age and over are ineligible for promotion to any
contribution upon his retirement which is equivalent to 240% of his position in Group I. Pilots reaching the age of fifty-five (55) shall be
gross monthly income for every year of service he rendered to PAL. frozen in the position they currently occupy at that time and shall be
This is in addition to the amount of not less than P100,000.00 that he ineligible for any further movement to any other positions.
shall receive under the PAL-ALPAP Retirement Plan.25
PAL’s contention is basically premised on prohibitive training costs. The
In sum, therefore, the petitioner will receive the following retirement return on this investment in the form of the pilot promoted is allegedly
benefits: five (5) years. Considering the pilot’s age, the chances of full recovery
(1) P125,000.00 (25 years x P5,000.00) for his 25 years of are asserted to be quite slim.
service to PAL under the PAL-ALPAP Retirement Plan, and; ALPAP opposed the proposal and argued that the training cost is offset
(2) 240% of his gross monthly salary for every year of his by the pilot’s maturity, expertise and experience.
employment or, more specifically, the summation of PAL’s By way of compromise, we rule that a pilot should remain in the position
monthly contribution of an amount equivalent to 20% of his where he is upon reaching age fifty-seven (57), irrespective of whether
actual monthly salary, under the PAL Pilots’ Retirement or not he has previously qualified in the Company’s turbo-jet operations.
Benefit Plan. The rationale behind this is that a pilot who will be compulsorily retired
As stated in the records, the petitioner already received the amount due at age sixty (60) should no longer be burdened with training for a new
to him under the PAL Pilots’ Retirement Benefit Plan. 26 As much as we position. But if a pilot is only at age fifty-five (55), and promotional
would like to demonstrate with specificity the amount of the petitioner’s positions are available, he should still be considered and promoted if
entitlement under said plan, we are precluded from doing so because qualified, provided he has previously qualified in any company turbo-jet
there is no record of the petitioner’s salary, including increments thereto, aircraft. In the latter case, the prohibitive training costs are more than
attached to the records of this case. To reiterate, the benefit under the offset by the maturity, expertise, and experience of the pilot.
PAL Pilots’ Retirement Benefit Plan pertains to the totality of PAL’s Thus, the provision on age limit should now read:
monthly contribution for every pilot, which amounts to 20% of the actual
Pilots fifty-seven (57) years of age shall be frozen in their
monthly salary. Necessarily, the computation of this benefit requires a
positions.1âwphi1 Pilots fifty-five (55) [sic] years of age provided they
record of the petitioner’s salary, which was unfortunately not submitted
have previously qualified in any company turbo-jet aircraft shall be
by either of the parties. At any rate, the petitioner did not dispute the
permitted to occupy any position in the company’s turbo-jet
fact that he already received his entitlement under the PAL Pilots’
fleet.29 (Citations omitted and emphasis supplied)
Retirement Benefit Plan nor did he question the propriety of the amount
tendered. Thus, we can reasonably assume that he received the rightful Further, we considered PAL’s act of sending its crew for training as an
amount of his entitlement under the plan. investment which expects an equitable return in the form of service
within a reasonable period of time such that a pilot who decides to leave
On the other hand, under Article 287 of the Labor Code, the petitioner
the company before it is able to regain the full value of the investment
would only be receiving a retirement pay equivalent to at least one-half
must proportionately reimburse the latter for the costs of his training.
(1/2) of his monthly salary for every year of service, a fraction of at least
We ratiocinated:
six (6) months being considered as one whole year. To stress, one-half
(1/2) month salary means 22.5 days: 15 days plus 2.5 days It bears noting that when Almario took the training course, he was about
representing one-twelfth (1/12) of the 13th month pay and the 39 years old, 21 years away from the retirement age of 60. Hence, with
remaining 5 days for service incentive leave. 27 the maturity, expertise, and experience he gained from the training
course, he was expected to serve PAL for at least three years to offset
Comparing the benefits under the two (2) retirement schemes, it can
"the prohibitive costs" thereof.
readily be perceived that the 22.5 days worth of salary for every year of
service provided under Article 287 of the Labor Code cannot match the The pertinent provision of the CBA and its rationale aside, contrary to
Almario’s claim, Article 22 of the Civil Code which reads:
 96

"Art. 22. Every person who through an act of performance by another, on the part of the plaintiff, or the failure to acquire something what the
or any other means, acquires or comes into possession of something latter would have obtained.36
at the expense of the latter without just or legal ground, shall return the As can be gathered from the facts, PAL invested a considerable
same to him," applies. amount of money in sending the petitioner abroad to undergo training
This provision on unjust enrichment recognizes the principle that one to prepare him for his new appointment as B747-400 Captain. In the
may not enrich himself at the expense of another. An authority on Civil process, the petitioner acquired new knowledge and skills which
Law writes on the subject, viz: effectively enriched his technical know-how. As all other investors, PAL
"Enrichment of the defendant consists in every patrimonial, physical, or expects a return on investment in the form of service by the petitioner
moral advantage, so long as it is appreciable in money. It may consist for a period of 3 years, which is the estimated length of time within
of some positive pecuniary value incorporated into the patrimony of the which the costs of the latter’s training can be fully recovered. The
defendant, such as: (1) the enjoyment of a thing belonging to the petitioner is, thus, expected to work for PAL and utilize whatever
plaintiff; (2) the benefits from service rendered by the plaintiff to the knowledge he had learned from the training for the benefit of the
defendant; (3) the acquisition of a right, whether real or personal; (4) company. However, after only one (1) year of service, the petitioner
the increase of value of property of the defendant; (5) the improvement opted to retire from service, leaving PAL stripped of a necessary
of a right of the defendant, such as the acquisition of a right of manpower.
preference; (6) the recognition of the existence of a right in the Undeniably, the petitioner was enriched at the expense of PAL. After
defendant; and (7) the improvement of the conditions of life of the undergoing the training fully shouldered by PAL, he acquired a higher
defendant. level of technical competence which, in the professional realm,
x x x x" translates to a higher compensation. To prove this point, his monthly
Admittedly, PAL invested for the training of Almario to enable him to salary of P125,692.00 was increased to P131,703.00 while he was still
acquire a higher level of skill, proficiency, or technical competence so undergoing training. After his training, his salary was further increased
that he could efficiently discharge the position of A-300 First Officer. to P137,977.00.37 Further, his training broadened his opportunities for
Given that, PAL expected to recover the training costs by availing of a better employment as in fact he was able to transfer to another airline
Almario’s services for at least three years. The expectation of PAL was company immediately after he left PAL. 38 To allow the petitioner to
not fully realized, however, due to Almario’s resignation after only eight simply leave the company without reimbursing it for the proportionate
months of service following the completion of his training course. He amount of the expenses it incurred for his training will only magnify the
cannot, therefore, refuse to reimburse the costs of training without financial disadvantage sustained by PAL. Reason and fairness dictate
violating the principle of unjust enrichment. 30 (Citation omitted and that he must return to the company a proportionate amount of the costs
emphasis supplied) of his training.
After perusing the records of this case, we fail to find any significant fact Award of interest not warranted under the circumstances.
or circumstance that could warrant a departure from the established The petitioner claims that the CA should have imposed interest on the
jurisprudence. The petitioner admitted that as in Almario, the prevailing monetary award in his favor. To support his claim, he cited the case of
CBA between PAL and ALPAP at the time of his retirement Eastern Shipping Lines, Inc. v. Court of Appeals,39 where this Court
incorporated the same stipulation in Section 1, Article XXIII of the 1985- summarized the rules in the imposition of the proper interest rates:
1987 CBA31 which provides: I. When an obligation, regardless of its source, i.e., law,
Pilots fifty-seven (57) years of age shall be frozen in their positions. contracts, quasi-contracts, delicts or quasi-delicts is breached,
Pilots fifty-five (55) [sic] years of age provided they have previously the contravenor can be held liable for damages. The
qualified in any company turbo-jet aircraft shall be permitted to occupy provisions under Title XVIII on "Damages" of the Civil Code
any position in the company’s turbo-jet fleet.32 govern in determining the measure of recoverable damages.
As discussed in Almario, the above provision initially set the age of fifty- II. With regard particularly to an award of interest in the
five (55) years as the reckoning point when a pilot becomes disqualified concept of actual and compensatory damages, the rate of
to bid for a higher position. The age of disqualification was set at 55 interest, as well as the accrual thereof, is imposed, as follows:
years old to enable PAL to fully recover the costs of the pilot’s training 1. When the obligation is breached, and it consists
within a period of five (5) years before the pilot reaches the compulsory in the payment of a sum of money, i.e., a loan or
retirement age of sixty (60). The DOLE Secretary however lowered the forbearance of money, the interest due should be
age to fifty-seven (57), thereby cutting the supposed period of recovery that which may have been stipulated in writing.
of investment to three (3) years. The DOLE Secretary justified the Furthermore, the interest due shall itself earn legal
amendment in that the "prohibitive training costs are more than offset interest from the time it is judicially demanded. In
by the maturity, expertise and the experience of the pilot."33 the absence of stipulation, the rate of interest shall
By carrying over the same stipulation in the present CBA, both PAL and be 12% per annum to be computed from default, i.e.,
ALPAP recognized that the company’s effort in sending pilots for from judicial or extrajudicial demand under and
training abroad is an investment which necessarily expects a subject to the provisions of Article 1169 of the Civil
reasonable return in the form of service for a period of at least three (3) Code.
years. This stipulation had been repeatedly adopted by the parties in 2. When an obligation, not constituting a loan or
the succeeding renewals of their CBA, thus validating the impression forbearance of money, is breached, an interest on
that it is a reasonable and acceptable term to both PAL and ALPAP. the amount of damages awarded may be imposed
Consequently, the petitioner cannot conveniently disregard this at the discretion of the court at the rate of 6% per
stipulation by simply raising the absence of a contract expressly annum. No interest, however, shall be adjudged on
requiring the pilot to remain within PAL’s employ within a period of 3 unliquidated claims or damages except when or
years after he has been sent on training. The supposed absence of until the demand can be established with
contract being raised by the petitioner cannot stand as the CBA clearly reasonable certainty. Accordingly, where the
covered the petitioner’s obligation to render service to PAL within 3 demand is established with reasonable certainty,
years to enable it to recoup the costs of its investment. the interest shall begin to run from the time the claim
Further, to allow the petitioner to leave the company before it has is made judicially or extrajudicially (Art. 1169, Civil
fulfilled the reasonable expectation of service on his part will amount to Code) but when such certainty cannot be so
unjust enrichment. Pertinently, Article 22 of the New Civil Code states: reasonably established at the time the demand is
Art. 22. Every person who through an act of performance by another, made, the interest shall begin to run only from the
or any other means, acquires or comes into possession of something date the judgment of the court is made (at which
at the expense of the latter without just or legal ground, shall return the time the quantification of damages may be deemed
same to him. to have been reasonably ascertained). The actual
There is unjust enrichment when a person unjustly retains a benefit at base for the computation of legal interest shall, in
the loss of another, or when a person retains the money or property of any case, be on the amount finally adjudged.
another against the fundamental principles of justice, equity and good 3. When the judgment of the court awarding a sum
conscience. Two conditions must concur: (1) a person is unjustly of money becomes final and executory, the rate of
benefited; and (2) such benefit is derived at the expense of or with legal interest, whether the case falls under
damages to another. The main objective of the principle of unjust paragraph 1 or paragraph 2, above, shall be 12%
enrichment is to prevent one from enriching oneself at the expense of per annum from such finality until its satisfaction,
another. It is commonly accepted that this doctrine simply means that this interim period being deemed to be by then an
a person shall not be allowed to profit or enrich himself inequitably at equivalent to a forbearance of credit. 40 (Citations
another’s expense.34 The enrichment may consist of a patrimonial, omitted and emphasis supplied)
physical, or moral advantage, so long as it is appreciable in money. 35 It The petitioner, however, took the foregoing guidelines out of context
must have a correlative prejudice, disadvantage or injury to the plaintiff and entertained a misplaced supposition that all judgments which
which may consist, not only of the loss of the property or the deprivation include a monetary award must be imposed with interest. The
of its enjoyment, but also of the non-payment of compensation for a jurisprudential guideline clearly referred to breach of an obligation
prestation or service rendered to the defendant without intent to donate consisting of a forbearance of money, goods or credit before the
imposition of a legal interest of 12% can be warranted. Such essential
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element is nowhere to be found in the facts of this case. Even granting service based on the final salary of the member. Credit will be given for
that an interest of 6% may be imposed in cases of breached obligations incomplete years pro-rated at one-twelfth (1/12) of the full years credit
not constituting loan or forbearance of money, loan or credit, such for each month of service.
depends upon the discretion of the court. If at all, the monetary award As regards the attorney’s fees, the bank argued that Lazaro was not
in favor of the petitioner will earn legal interest from the time the entitled thereto, because he had merely performed his functions as a
judgment becomes final and executory until the same is fully satisfied, legal counsel of the bank, for which he was already compensated.
regardless of the nature of the breached obligation. The imposition is Lastly, Banco Filipino refused to give profit shares without the Monetary
justified considering that the interim period from the finality of judgment, Board’s approval as required by law.
awarding a monetary claim and until payment thereof, is deemed to be Ultimately, the LA gave credence to the bank’s defenses and, hence,
equivalent to a forbearance of credit.41 denied all of Lazaro’s demands.5 On appeal, the National Labor
WHEREFORE, in view of the foregoing disquisitions, the petition is Relations Commission (NLRC) affirmed the LA’s Decision. 6
DENIED. The Decision dated August 6, 2007 of the Court of Appeals After receiving the adverse judgment, Lazaro pursued the action before
in CA-G.R. SP No. 79111 is AFFIRMED. The Labor Arbiter is hereby the CA. The appellate court modified the LA’s Decision and held that
DIRECTED to compute Bibiano C. Elegir's retirement pay based on the Lazaro was entitled to retirement pay differential. 7 It reasoned that, as
1967 PAL-ALPAP Retirement Plan and the PAL Pilots' Retirement a consequence of the bank’s continued operations notwithstanding the
Benefit Plan, crediting Philippine Airlines, Inc. for the amount it had receivership proceedings, Banco Filipino could not disclaim the work
already paid the petitioner under the mentioned plans. performed by Lazaro during the said period. 8 Thus, the whole duration
SO ORDERED. of seven years must be included in computing his retirement pay
differential.
As for the claims consisting of attorney’s fees and additional retirement
pay on the basis of increased salaries, the CA concurred in the LA’s
G.R. No. 185346 June 27, 2012 denial of those claims.9 With respect to the profit shares demanded by
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Petitioner, Lazaro, it dismissed his demands, considering that the bank had
vs. already paid him in full, as evidenced by the attached vouchers and
MIGUELITO M. LAZARO, Respondent. checks.10
x-----------------------x Banco Filipino and Lazaro separately moved for reconsideration, both
G.R. No. 185442 of which the appellate court denied.11
MIGUELITO M. LAZARO, Petitioner, In the instant Petitions, the parties question the CA’s dispositions of
vs. Lazaro’s monetary claims.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK and Banco Filipino assails the grant of a retirement pay differential. It
TEODORO O. ARCENAS, JR., BF RETIREMENT FUND AND emphasizes that the liquidation period should not be included in
PERFECTO YASAY JR. (IN SUBSTITUTION OF DECEASED computing retirement benefits.
CONRADO BANZON), Respondents. Additionally, Banco Filipino cites Banco Filipino Staff Association v.
DECISION Banco Filipino Savings and Mortgage Bank and claims that this Court
SERENO, J.: had already ruled to exclude the seven-year period of closure from the
length of service of the bank’s employees. 12
Before this Court are two consolidated Petitions for Review under Rule
45 filed by Banco Filipino Savings and Mortgage Bank (Banco Filipino) On the other hand, Lazaro reiterates his demand for a higher salary
(G.R. No. 185346) and Miguelito M. Lazaro (Lazaro) (G.R. No. 185442). base for computing his retirement pay. He also asks that his retirement
Both Petitions assail the Court of Appeals (CA) 23 January 2008 pay differential be reckoned from work rendered for 27 years and 10
Decision and 12 November 2008 Resolution in CA-G.R. SP No. 93145. months. Further, he asks that the 10 months be further rounded off to
one year, given that the Labor Code considers a fraction of at least six
Ruling against Lazaro, the CA sustained the judgments of the courts a
(6) months as a whole year.13
quo denying his monetary claims for salary differential, attorney’s fees
and profit sharing. Nevertheless, the appellate court granted him seven Lazaro also reiterates his claim for attorney’s fees. He additionally
years of retirement differential pay covering the period within which the denies having received his profit share in full. Instead, he claims that
bank was under liquidation. the amounts he received were only for the years 1984, 1994 and
1995.14 Banco Filipino therefore still owes him profit shares covering
The pertinent facts are as follows:1
the period 1985 to 1993.
On 1 February 1968, Lazaro started working for Banco Filipino as a
Lazaro also brings up a matter that he raised for the first time in his
probationary employee. Rising from the ranks, he was promoted to the
Motion for Reconsideration before the CA.15 He claims a one-day salary
position of assistant manager, which he held until the bank was closed
differential for the work he rendered on the day of his retirement on 1
by the Central Bank of the Philippines on 25 January 1985.
December 1995.16 Hence, he supposedly should be paid the difference
Notwithstanding the cessation of the regular operations of the bank,
between his previous salary of ₱ 38,000 and the new salary of ₱ 50,000
Lazaro was reemployed on 16 April 1992 as a member of a task
given to senior officers.
force2 assigned to collect its delinquent accounts.
Additionally, he prays for moral damages, exemplary damages,
After this Court adjudged that the bank’s closure was illegal, 3 Banco
attorney’s fees and expenses of the suit. 17
Filipino eventually reopened in June 1992. Lazaro continued to work
for the bank until he retired from his last post as assistant vice-president Accordingly, the combined issues presented for our resolution are as
on 1 December 1995. Thereafter, he was paid retirement benefits for follows:
20 years and 7 months of service pegged at his latest gross salary rate I. Whether the CA gravely erred in granting retirement pay
of ₱ 38,000 per month. differentials to Lazaro;
Lazaro, however, demanded a higher amount. Specifically, he asserted II. Whether the CA committed grievous error in dismissing
that since his employment lasted from 1 February 1968 until 1 Lazaro’s claims for attorney’s fees and profit shares; and
December 1995, he should be credited with 27 years and 10 months of III. Whether the CA committed grievous error in not
service. Additionally, he claimed that the base amount of his retirement addressing Lazaro’s claims for a one-day salary differential
pay should be increased from ₱ 38,000 to ₱ 50,000 to reflect the salary and damages consisting of moral and exemplary damages,
increase given by the bank to its senior officers in December 1995. attorney’s fees and expenses of suit.
Aside from demanding his retirement pay differential, Lazaro also Ruling of the Court
required Banco Filipino to pay the 10% attorney’s fees it received while Retirement Pay Differentials
foreclosing delinquent accounts. Furthermore, he sought the payment In essence, Banco Filipino maintains that the seven-year period when
of his 10% profit share from 1984 to 1995. it was under liquidation should not be credited in computing Lazaro’s
Banco Filipino refused the additional demands of Lazaro. As a result, retirement pay because, during that period, the bank was considered
he filed a Complaint for underpayment of retirement benefits, as well closed. It cites, as further basis, G.R. No. 165367 pertaining to Banco
as nonpayment of attorney’s fees and profit shares before the Labor Filipino Staff Association v. Banco Filipino Savings and Mortgage
Arbiter (LA). Bank18 to support the exclusion of the liquidation period.
In its defense, Banco Filipino emphasized that Lazaro was entitled only This contention is without merit, for it inaccurately portrays the status of
to 20 years and 7months of service, for he could not include in his a bank under liquidation. In Philippine Veterans Bank v. NLRC, 19 this
employment the period of 7 years within which the bank was ordered Court explained that banks under liquidation retain their legal
closed. personality. In fact, even if they are prohibited from conducting regular
Banco Filipino also denied the contention of Lazaro that the basis of his banking business, it is necessary that debts owed to them be
retirement pay should be increased from ₱ 38,000 to ₱ 50,000. collected.20 Lazaro performed the duty of foreclosing debts in favor of
According to the bank, Lazaro was not covered by the salary increase Banco Filipino. It cannot rightfully disclaim Lazaro’s work that benefitted
granted in December 1995, since he had resigned as early as 1 it. Consequently, we find no grievous error committed by the CA in
December 1995. In this regard, the bank cited the Rules of the Banco crediting the years covered by the liquidation period as part of Lazaro’s
Filipino Retirement Fund as follows:4 retirement pay.
The normal retirement date of a member shall be a lump sum amount With respect to Banco Filipino Staff Association v. Banco Filipino
or gratuity equal to one and one-half month’s salary for every year of Savings and Mortgage Bank, which Banco Filipino cites in order to
 98

prove that this Court had earlier excluded the seven-year period of to be less favorable than that provided for by the law. Ultimately, the
closure from the length of service of the bank’s employees, the CA read more important threshold33 to be considered in construing whether the
the case correctly; i.e. that this Court did not categorically exclude the retirement agreement provides less benefits, compared to those
seven-year period of closure from the length of service of Banco Filipino provided by the Retirement Pay Law, is that the retirement benefits in
employees.21 Thus, the bank cannot use our pronouncement in the said the said agreement should at least amount to one-half of the
case to defeat Lazaro’s claim for retirement pay differential. employee’s monthly salary.
Notably, Lazaro remains unsatisfied with the award of retirement pay Therefore, considering that Lazaro is bound by the terms of the Rules
differential. He seeks these further adjustments: (1) the basis for the of the Banco Filipino Retirement Fund, it follows that he cannot claim
computation of his retirement pay should be increased from ₱ 38,000 his 27 years and 10 months of work to be rounded off to 28 years in
to ₱ 50,000; and (2) the retirement pay differential should include 8 order to obtain a higher retirement pay.
years, and not just 7 years and 7 months of his service. Attorney’s Fees and Profit Shares
With respect to the claim that the base for computing the retirement pay Lazaro must establish a legal basis – either by law, contract or other
should be ₱ 50,000 and not ₱ 38,000, the courts a quo found that since sources of obligations34 – to merit the receipt of the additional 10%
the applicable Rules of the Banco Filipino Retirement Fund state that attorney’s fees collected in the various foreclosure procedures he
the computation shall be for "each completed month of settled as the bank’s legal officer.
service,"22 Lazaro – who did not complete his services for December After a perusal of the instant Petition, we note that Lazaro has not
1995 – cannot claim the salary increase granted, when he has already produced any contract or provision of law that would warrant the
left Banco Filipino, and credit it to his retirement pay. Conversely, payment of the additional attorney’s fees. Without any basis, therefore,
Lazaro argues that the Rules of the Banco Filipino Retirement Fund do this Court sustains the rulings of the courts below that he is only entitled
not explicitly state that the computation shall be for each completed to his salaries as the bank’s legal officer, because the services he
month of service.23 rendered in the foreclosure proceedings was part of his official tasks.35
Referring to the Rules of the Banco Filipino Retirement Fund, this Court Anent the claim for profit shares, the CA has already made a finding
observes that they refer to the "final salary" of the employee as basis that Lazaro received full payment thereof based on the
for computing the latter’s retirement pay.24 check,36 voucher,37 Withholding Tax Certificate38 and
As established by the LA, the NLRC and the CA, the final salary of Quitclaim39 attached by Banco Filipino. However, he points out that the
Lazaro was ₱ 38,000, and not ₱ 50,000.25 This consistent factual payment covered only his profit shares in 1984, 1994 and 1995; and,
determination can no longer be retried. It is aphoristic that a hence, the bank reneged on it duty to give his shares from 1985 to 1993.
reexamination of factual findings cannot be done through a petition for On this point, this Court cannot try the case anew to determine fully
review on certiorari under Rule 45 of the Rules of Court, because this whether the CA seriously erred in making a factual conclusion that
Court reviews only questions of law.26 Lazaro received full payment of his profit shares. This Court is not a
With regard to the second adjustment Lazaro prays for, we note that he trier of facts, and this doctrine applies with greater force to labor
assiduously went through the whole process of appeal to seek a cases.40 We generally do not weigh anew the evidence already passed
rounding off of his 27 years and 10 months of work to 28 years and upon by the CA.41 In any event, Lazaro has not demonstrated that
consequently obtain a higher retirement pay. Considering the bank’s Banco Filipino earned profits from 1985 to 1993, the very period during
grant of 20 years and 7 months of retirement pay,27 plus the CA’s award which the bank was closed.
of a 7-year retirement pay differential,28 in effect, only 5 months worth The records show that Banco Filipino’s allegation pertaining to its profit
of prorated retirement pay remains unsettled. At this juncture, this Court shares for 1985 to 1993 remains unrefuted. 42 Considering that Lazaro
reminds everyone that while access to the courts is guaranteed, there does not dispute its submission, we rule that he has failed to
must be limits thereto.29 substantiate the affirmative relief prayed for.
We rule that the CA committed no reversible error when it did not round One-day salary differential and Lazaro’s claims for moral and
off Lazaro’s length of service. To begin with, his plea for rounding off exemplary damages, attorney’s fees and expenses of suit
his length of service is mistakenly based on Article 287 of the Labor Prefatorily, Lazaro’s claims for one-day salary differential, which was
Code, which provides: raised only before the CA, merits instant dismissal.1avvphi1 This ruling
Art. 287. Retirement. – Any employee may be retired upon reaching the is supported by basic considerations of due process, which prohibits
retirement age established in the collective bargaining agreement or the raising of issues for the first time on appeal.43 Points of law, theories,
other applicable employment contract. issues, and arguments not brought to the attention of the lower court
In case of retirement, the employee shall be entitled to receive such will not be considered by the reviewing court.44 To consider them would
retirement benefits as he may have earned under existing laws and any be unfair to the adverse party, who would have no opportunity to
collective bargaining agreement and other agreements: Provided, present contrary evidence as it could have done had it been aware of
however, that an employee's retirement benefits under any collective the new theory at the time of the hearing before the trial court. 45
bargaining and other agreements shall not be less than those provided As for damages, attorney’s fees and expenses of the suit, the courts a
herein. quo consistently did not grant, or even address, the claims of Lazaro.
In the absence of a retirement plan or agreement providing But to finally write finis to this case, we hold that he is not entitled to
for retirement benefits of employees in the establishment, an those reliefs.
employee upon reaching the age of sixty (60) years or more, To obtain moral damages, the claimant must prove the existence of bad
but not beyond sixty-five (65) years which is hereby declared faith by clear and convincing evidence, for the law always presumes
the compulsory retirement age, who has served at least five good faith. It is not even enough that one merely suffered sleepless
(5) years in the said establishment, may retire and shall be nights, mental anguish and serious anxiety as the result of the
entitled to retirement pay equivalent to at least one-half (1/2) actuations of the other party.46
month salary for every year of service, a fraction of at least In this case, Lazaro did not state any moral anguish that he suffered.
six (6) months being considered as one whole year. Neither did he substantiate his imputations of malice to Banco Filipino.
Unless the parties provide for broader inclusions, the term one-half (1/2) He only made a sweeping declaration, without concrete proof, that the
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the bank in refusing his claim maliciously damaged his property rights and
13th month pay and the cash equivalent of not more than five (5) days interest.47 Accordingly, neither moral damages nor exemplary
of service incentive leaves. x x x. (Emphasis supplied.) damages48 can be awarded to him.
Lazaro cannot anchor his claim on the said provision, because With respect to attorney’s fees, an award is proper only if the one was
governing in this case is the Rules of the Banco Filipino Retirement forced to litigate and incur expenses to protect one’s rights and interest
Fund. Indeed, as found in the Implementing Rules of the Retirement by reason of an unjustified act or omission of the party for whom it is
Pay Law30 and in jurisprudence,31 only in the absence of an applicable sought.49 The award of attorney’s fees is more of an exception than the
retirement agreement shall Article 287 of the Labor Code apply. There general rule, since it is not sound policy to place a penalty on the right
is a proviso however, that an employee's retirement benefits under any to litigate.50
agreement shall not be less than those provided in the said article. Here, Banco Filipino had a prima facie legitimate defense that, because
It cannot be gainsaid that the Rules of the Banco Filipino Retirement it underwent liquidation proceedings, it cannot be compelled to credit
Fund provide for benefits lower than those in the Labor Code. In fact, that period to the retirement pay and profit shares of its employees. It
the bank offers a retirement pay equivalent to one and one-half month also rationalized that Lazaro cannot be additionally paid attorney’s fees
salary for every year of service, a rate over and above the one-half without showing any basis for the compensation. Considering that
month salary threshold provided by the law. Banco Filipino’s refusal cannot be accurately characterized as
Moreover, although the Rules of the Banco Filipino Retirement Fund unjustified, Lazaro cannot claim an award of attorney’s fees.
do not grant a rounding off scheme, they nonetheless provide that IN VIEW THEREOF, the assailed 23 January 2008 Decision and 12
prorated credit shall be given for incomplete years, regardless of the November 2008 Resolution of the Court of Appeals in CA-G.R. SP No.
fraction of months in the retiree’s length of service.32 Hence, even if the 93145 are hereby AFFIRMED.
retiree rendered only a fraction of five months, the retiree shall still be SO ORDERED.
credited with retirement benefits based on the fraction of five months of
service actually rendered.
Notwithstanding the lack of a rounding-up provision, still, the higher
retirement pay, together with the prorated crediting, cannot be deemed