G.R. No. 91298 June 22, 1990 ART. 224. Execution of decision, orders, awards.
ART. 224. Execution of decision, orders, awards. (a) The Secretary of Labor and
CORAZON PERIQUET, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL
CONSTRUCTION CORPORATION (Formerly Construction Development Corp. of the
Phils.), respondents.
Tabaquero, Albano & Associates for petitioner.
The Government Corporate Counsel for private respondent.
CRUZ, J.:
It is said that a woman has the privilege of changing her mind but this is usually allowed
only in affairs of the heart where the rules are permissibly inconstant. In the case before
us, Corazon Periquet, the herein petitioner, exercised this privilege in connection with her
work, where the rules are not as fickle.
The petitioner was dismissed as toll collector by the Construction Development
Corporation of the Philippines, private respondent herein, for willful breach of trust and
unauthorized possession of accountable toll tickets allegedly found in her purse during a
surprise inspection. Claiming she had been "framed," she filed a complaint for illegal
dismissal and was sustained by the labor arbiter, who ordered her reinstatement within ten
days "without loss of seniority rights and other privileges and with fun back wages to be
computed from the date of her actual dismissal up to date of her actual reinstatement." 1
On appeal, this order was affirmed in toto by public respondent NLRC on August 29, 1980.
2 limitation has not been devised against those who wish to act but cannot do so, for causes
On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of
a writ of execution of the decision. The motion was granted by the executive labor arbiter
in an order dated June 26, 1989, which required payment to the petitioner of the sum of
P205,207.42 "by way of implementing the balance of the judgment amount" due from the
private respondent.3 Pursuant thereto, the said amount was garnished by the NLRC sheriff
on July 12, 1989. 4 On September 11, 1989, however, the NLRC sustained the appeal of
the CDCP and set aside the order dated June 20, 1989, the corresponding writ of
execution of June 26, 1989, and the notice of garnishment. 5
In its decision, the public respondent held that the motion for execution was time-barred,
having been filed beyond the five-year period prescribed by both the Rules of Court and
the Labor Code. It also rejected the petitioner's claim that she had not been reinstated on
time and ruled as valid the two quitclaims she had signed waiving her right to
reinstatement and acknowledging settlement in full of her back wages and other benefits.
The petitioner contends that this decision is tainted with grave abuse of discretion and
asks for its reversal. We shall affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court, provides:
SEC. 6. Execution by motion or by independent action. A judgment may be executed on
motion within five (5) years from the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred by the statute of limitations,
a judgment may be enforced by action.
A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.
Employment or any Regional Director, the Commission or any Labor Arbiter or Med-
Arbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it becomes final
and executory, requiring a sheriff or a duly deputized officer to execute or enforce a final
decision, order or award. ...
The petitioner argues that the above rules are not absolute and cites the exception snowed
in Lancita v. Magbanua, 6 where the Court held:
Where judgments are for money only and wholly unpaid, and execution has been
previously withheld in the interest of the judgment debtor, which is in financial difficulties,
the court has no discretion to deny motions for leave to issue execution more than five
years after the judgments are entered. (Application of Molnar, Belinsky, et al. v. Long Is.
Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an execution, although there is authority to
the contrary, the general rule is that there should not be included the time when execution
is stayed, either by agreement of the parties for a definite time, by injunction, by the taking
of an appeal or writ of error so as to operate as a supersedeas, by the death of a party, or
otherwise. Any interruption or delay occasioned by the debtor will extend the time within
which the writ may be issued without scire facias.
xxx xxx xxx
There has been no indication that respondents herein had ever slept on their rights to have
the judgment executed by mere motions, within the reglementary period. The statute of
beyond their central.
Periquet insists it was the private respondent that delayed and prevented the execution of
the judgment in her favor, but that is not the way we see it. The record shows it was she
who dilly-dallied.
The original decision called for her reinstatement within ten days from receipt thereof
following its affirmance by the NLRC on August 29, 1980, but there is no evidence that she
demanded her reinstatement or that she complained when her demand was rejected.
What appears is that she entered into a compromise agreement with CDCP where she
waived her right to reinstatement and received from the CDCP the sum of P14,000.00
representing her back wages from the date of her dismissal to the date of the agreement. 7
Dismissing the compromise agreement, the petitioner now claims she was actually
reinstated only on March 16, 1987, and so should be granted back pay for the period
beginning November 28, 1978, date of her dismissal, until the date of her reinstatement.
She conveniently omits to mention several significant developments that transpired during
and after this period that seriously cast doubt on her candor and bona fides.
After accepting the sum of P14,000.00 from the private respondent and waiving her right to
reinstatement in the compromise agreement, the petitioner secured employment as
kitchen dispatcher at the Tito Rey Restaurant, where she worked from October 1982 to
March 1987. According to the certification issued by that business, 8 she received a
monthly compensation of P1,904.00, which was higher than her salary in the CDCP.
For reasons not disclosed by the record, she applied for re-employment with the CDCP
and was on March 16,1987, given the position of xerox machine operator with a basic
salary of P1,030.00 plus P461.33 in allowances, for a total of P1,491.33 monthly. 9
On June 27, 1988; she wrote the new management of the CDCP and asked that the rights
granted her by the decision dated August 29, 1980, be recognized because the waiver she
had signed was invalid. 10
On September 19, 1988, the Corporate Legal Counsel of the private respondent (now
Philippine National Construction Corporation) recommended the payment to the petitioner
of the sum of P9,544.00, representing the balance of her back pay for three years at P654.
00 per month (minus the P14,000.00 earlier paid). 11
On November 10, 1988, the petitioner accepted this additional amount and signed another
Quitclaim and Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis
St., Quezon City, hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND
FIVE HUNDRED FORTY FOUR PESOS ONLY (P9,544.00) Philippine currency,
representing the unpaid balance of the back wages due me under the judgment award in
NLRC Case No. AB-2-864-79 entitled "Corazon Periquet vs. PNCC- TOLLWAYS" and I
further manifest that this payment is in full satisfaction of all my claims/demands in the
aforesaid case. Likewise, I hereby manifest that I had voluntarily waived reinstatement to
my former position as TOLL TELLER and in lieu thereof, I sought and am satisfied with my
present position as XEROX MACHINE OPERATOR in the Central Office.
Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated
10 May 1979 was due to my own fault and that PNCC is not liable thereto.
I hereby RELEASE AND DISCHARGE the said corporation and its officers from money
and all claims by way of unpaid wages, separation pay, differential pay, company, statutory
and other benefits or otherwise as may be due me in connection with the above-entitled
case. I hereby state further that I have no more claims or right of action of whatever nature,
whether past, present, future or contingent against said corporation and its officers, relative
to NLRC Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at
Mandaluyong, Metro Manila. (Emphasis supplied.) 12
The petitioner was apparently satisfied with the settlement, for in the memorandum she
sent the PNCC Corporate Legal Counsel on November 24, 1988, 13 she said in part:
Sir, this is indeed my chance to express my gratitude to you and all others who have
helped me and my family enjoy the fruits of my years of stay with PNCC by way of granting
an additional amount of P9,544.00 among others ...
As per your recommendation contained therein in said memo, I am now occupying the
position of xerox machine operator and is (sic) presently receiving a monthly salary of
P2,014.00.
Reacting to her inquiry about her entitlement to longevity pay, yearly company increases
and other statutory benefits, the private respondent adjusted her monthly salary from
P2,014.00 to P3,588.00 monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for execution that is now the subject of this
petition.
It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if
she does not know her own mind. First she signed a waiver and then she rejected it; then
she signed another waiver which she also rejected, again on the ground that she had been
deceived. In her first waiver, she acknowledged full settlement of the judgment in her favor,
and then in the second waiver, after accepting additional payment, she again
acknowledged fun settlement of the same judgment. But now she is singing a different
tune.
In her petition she is now disowning both acknowledgments and claiming that the earlier
payments both of which she had accepted as sufficient, are insufficient. They were valid
before but they are not valid now. She also claimed she was harassed and cheated by the
past management of the CDCP and sought the help of the new management of the PNCC
under its "dynamic leadership." But now she is denouncing the new management-for also
tricking her into signing the second quitclaim.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there
is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking. As in this case.
The question may be asked: Why did the petitioner sign the compromise agreement of
September 16, 1980, and waive all her rights under the judgment in consideration of the
cash settlement she received? It must be remembered that on that date the decision could
still have been elevated on certiorari before this Court and there was still the possibility of
its reversal. The petitioner obviously decided that a bird in hand was worth two on the wing
and so opted for the compromise agreement. The amount she was then waiving, it is worth
noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to
demand after the lapse of eight years.
The back pay due the petitioner need not detain us. We have held in countless cases that
this should be limited to three years from the date of the illegal dismissal, during which
period (but not beyond) the dismissed employee is deemed unemployed without the
necessity of proof. 14 Hence, the petitioner's contention that she should be paid from 1978
to 1987 must be rejected, and even without regard to the fact (that would otherwise have
been counted against her) that she was actually employed during most of that period.
Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of
the private respondent to file a supersedeas bond is not well-taken. As the Solicitor
General correctly points out, the bond is required only when there is an appeal from the
decision with a monetary award, not an order enforcing the decision, as in the case at bar.
As officers of the court, counsel are under obligation to advise their clients against making
untenable and inconsistent claims like the ones raised in this petition that have only
needlessly taken up the valuable time of this Court, the Solicitor General, the Government
Corporate Counsel, and the respondents. Lawyers are not merely hired employees who
must unquestioningly do the bidding of the client, however unreasonable this may be when
tested by their own expert appreciation of the pertinent facts and the applicable law and
jurisprudence. Counsel must counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur.
SECOND DIVISION
[G.R. No. 126625. September 23, 1997]
KANLAON CONSTRUCTION ENTERPRISES CO., INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, 5TH DIVISION, and BENJAMIN RELUYA, JR.,
EDGARDO GENAYAS, ERNESTO CANETE, PROTACIO ROSALES, NESTOR BENOYA,
RODOLFO GONGOB, DARIO BINOYA, BENJAMIN BASMAYOR, ABELARDO SACURA,
FLORENCIO SACURA, ISABELO MIRA, NEMESIO LACAR, JOSEPH CABIGKIS,
RODRIGO CILLON, VIRGILIO QUIZON, GUARINO EVANGELISTA, ALEJANDRO GATA,
BENEDICTO CALAGO, NILO GATA, DIONISIO PERMACIO, JUANITO SALUD, ADOR
RIMPO, FELIPE ORAEZ, JULIETO TEJADA, TEOTIMO LACIO, ONOFRE QUIZON,
RUDY ALVAREZ, CRESENCIO FLORES, ALFREDO PERMACIO, CRESENCIO ALVIAR,
HERNANI SURILA, DIOSDADO SOLON, CENON ALBURO, ZACARIAS ORTIZ,
EUSEBIO BUSTILLO, GREGORIO BAGO, JERRY VARGAS, EDUARDO BUENO,
PASCUAL HUDAYA, ROGELIO NIETES, and REYNALDO NIETES, respondents.
DECISION
PUNO, J.:
In this petition for certiorari, petitioner Kanlaon Construction Enterprises Co., Inc. seeks to
annul the decision of respondent National Labor Relations Commission, Fifth Division and
remand the cases to the Arbitration Branch for a retrial on the merits.
Petitioner is a domestic corporation engaged in the construction business nationwide with
principal office at No. 11 Yakan St., La Vista Subdivision, Quezon City. In 1988, petitioner
was contracted by the National Steel Corporation to construct residential houses for its
plant employees in Steeltown, Sta. Elena, Iligan City. Private respondents were hired by
petitioner as laborers in the project and worked under the supervision of Engineers Paulino
Estacio and Mario Dulatre. In 1989, the project neared its completion and petitioner started
terminating the services of private respondents and its other employees.
In 1990, private respondents filed separate complaints against petitioner before Sub-
Regional Arbitration Branch XII, Iligan City. Numbering forty-one (41) in all, they claimed
that petitioner paid them wages below the minimum and sought payment of their salary
differentials and thirteenth-month pay. Engineers Estacio and Dulatre were named co-
respondents.
Some of the cases were assigned to Labor Arbiter Guardson A. Siao while the others were
assigned to Labor Arbiter Nicodemus G. Palangan. Summonses and notices of preliminary
conference were issued and served on the two engineers and petitioner through Engineer
Estacio. The preliminary conferences before the labor arbiters were attended by Engineers
Estacio and Dulatre and private respondents. At the conference of June 11, 1990 before
Arbiter Siao, Engineer Estacio admitted petitioner's liability to private respondents and
agreed to pay their wage differentials and thirteenth-month pay on June 19, 1990. As a
result of this agreement, Engineer Estacio allegedly waived petitioner's right to file its
position paper. [1] Private respondents declared that they, too, were dispensing with their
position papers and were adopting their complaints as their position paper. [2]
On June 19, 1990, Engineer Estacio appeared but requested for another week to settle the
claims. Labor Arbiter Siao denied this request. On June 21, 1990, Arbiter Siao issued an
order granting the complaint and directing petitioner to pay private respondents' claims.
Arbiter Siao held:
"x x x.
"Considering the length of time that has elapsed since these cases were filed, and what
the complainants might think as to how this branch operates and/or conducts its
proceedings as they are now restless, this Arbiter has no other alternative or recourse but
to order the respondent to pay the claims of the complainants, subject of course to the
computation of the Fiscal Examiner II of this Branch pursuant to the oral manifestation of
respondent. The Supreme Court ruled: 'Contracts though orally made are binding on the
parties.' (Lao Sok v. Sabaysabay, 138 SCRA 134).
"Similarly, this Branch would present in passing that 'a court cannot decide a case without
facts either admitted or agreed upon by the parties or proved by evidence.' (Yu Chin Piao
v. Lim Tuaco, 33 Phil. 92; Benedicto v. Yulo, 26 Phil. 160),
"WHEREFORE, premises considered, the respondent is hereby ordered to pay the
individual claims of the above-named complainants representing their wage differentials
within ten (10) days from receipt of this Order.
"The Fiscal Examiner II of this Branch is likewise hereby ordered to compute the individual
claims of the herein complainants.
"SO ORDERED." [3]
On June 29, 1990, Arbiter Palangan issued a similar order, thus:
"When the above-entitled cases were called for hearing on June 19, 1990 at 10:00 a.m.
respondent thru their representative manifested that they were willing to pay the claims of
the complainants and promised to pay the same on June 28, 1990 at 10:30 a.m.
"However, when these cases were called purposely to materialize the promise of the
respondent, the latter failed to appear without any valid reason.
"Considering therefore that the respondent has already admitted the claims of the
complainants, we believe that the issues raised herein have become moot and academic.
"WHEREFORE, premises considered, the above-entitled cases are hereby ordered Closed
and Terminated, however, the respondent is hereby ordered to pay the complainants their
differential pay and 13th-month pay within a period of ten (10) days from receipt hereof
based on the employment record on file with the respondent.
"SO ORDERED." [4]
Petitioner appealed to respondent National Labor Relations Commission. It alleged that it
was denied due process and that Engineers Estacio and Dulatre had no authority to
represent and bind petitioner. Petitioner's appeal was filed by one Atty. Arthur Abundiente.
In a decision dated April 27, 1992, respondent Commission affirmed the orders of the
Arbiters.
Petitioner interposed this petition alleging that the decision of respondent Commission was
rendered without jurisdiction and in grave abuse of discretion. Petitioner claims that:
"I
"THE QUESTIONED DECISION RENDERED BY THE HONORABLE COMMISSION IS A
NULLITY, IT HAVING BEEN ISSUED WITHOUT JURISDICTION;
II
"PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY
ABUSED ITS DISCRETION IN ARBITRARILY, CAPRICIOUSLY AND WHIMSICALLY
MAKING THE FOLLOWING CONCLUSIONS BASED NOT ON FACTS AND EVIDENCE
BUT ON SPECULATION, SURMISE AND CONJECTURE:
A. Petitioner was deprived of the constitutional right to due process of law when it was
adjudged by the NLRC liable without trial on the merits and without its knowledge;
B. The NLRC erroneously, patently and unreasonably interpreted the principle that the
NLRC and its Arbitration Branch are not strictly bound by the rules of evidence;
C. There is no legal nor actual basis in the NLRC's ruling that petitioner is already in
estoppel to disclaim the authority of its alleged representatives.
D. The NLRC committed manifest error in relying merely on private respondents
unsubstantiated complaints to hold petitioner liable for damages." [5]
In brief, petitioner alleges that the decisions of the labor arbiters and respondent
Commission are void for the following reasons: (1) there was no valid service of summons;
(2) Engineers Estacio and Dulatre and Atty. Abundiente had no authority to appear and
represent petitioner at the hearings before the arbiters and on appeal to respondent
Commission; (3) the decisions of the arbiters and respondent Commission are based on
unsubstantiated and self-serving evidence and were rendered in violation of petitioner's
right to due process.
Service of summons in cases filed before the labor arbiters is governed by Sections 4 and
5 of Rule IV of the New Rules of Procedure of the NLRC. They provide:
"Section 4. Service of Notices and Resolutions.-- (a) Notices or summons and copies of
orders, resolutions or decisions shall be served on the parties to the case personally by the
bailiff or duly authorized public officer within three (3) days from receipt thereof or by
registered mail; Provided that where a party is represented by counsel or authorized
representative, service shall be made on such counsel or authorized representative;
provided further that in cases of decision and final awards, copies thereof shall be served
on both the parties and their counsel; provided finally, that in case where the parties are so
numerous, service shall be made on counsel and upon such number of complainants as
may be practicable, which shall be considered substantial compliance with Article 224 (a)
of the Labor Code, as amended.
"x x x.
"Section 5. Proof and completeness of service.-- The return is prima facie proof of the facts
indicated therein. Service by registered mail is complete upon receipt by the addressee or
his agent. x x x."
Under the NLRC Rules of Procedure, summons on the respondent shall be served
personally or by registered mail on the party himself. If the party is represented by counsel
or any other authorized representative or agent, summons shall be served on such person.
It has been established that petitioner is a private domestic corporation with principal
address in Quezon City. The complaints against petitioner were filed in Iligan City and
summonses therefore served on Engineer Estacio in Iligan City. The question now is
whether Engineer Estacio was an agent and authorized representative of petitioner.
To determine the scope or meaning of the term "authorized representative" or "agent" of
parties on whom summons may be served, the provisions of the Revised Rules of Court
may be resorted to. [6]
Under the Revised Rules of Court, [7] service upon a private domestic corporation or
partnership must be made upon its officers, such as the president, manager, secretary,
cashier, agent, or any of its directors. These persons are deemed so integrated with the
corporation that they know their responsibilities and immediately discern what to do with
any legal papers served on them. [8]
In the case at bar, Engineer Estacio, assisted by Engineer Dulatre, managed and
supervised the construction project. [9] According to the Solicitor General and private
respondents, Engineer Estacio attended to the project in Iligan City and supervised the
work of the employees thereat. As manager, he had sufficient responsibility and discretion
to realize the importance of the legal papers served on him and to relay the same to the
president or other responsible officer of petitioner. Summons for petitioner was therefore
validly served on him.
Engineer Estacio's appearance before the labor arbiters and his promise to settle the
claims of private respondents is another matter.
The general rule is that only lawyers are allowed to appear before the labor arbiter and
respondent Commission in cases before them. The Labor Code and the New Rules of
Procedure of the NLRC, nonetheless, lists three (3) exceptions to the rule, viz:
"Section 6. Appearances.-- x x x.
"A non-lawyer may appear before the Commission or any Labor Arbiter only if:
"(a) he represents himself as party to the case;
"(b) he represents the organization or its members, provided that he shall be made to
present written proof that he is properly authorized; or
"(c) he is a duly-accredited member of any legal aid office duly recognized by the
Department of Justice or the Integrated Bar of the Philippines in cases referred thereto by
the latter. x x x." [10]
A non-lawyer may appear before the labor arbiters and the NLRC only if: (a) he represents
himself as a party to the case; (b) he represents an organization or its members, with
written authorization from them; or (c) he is a duly accredited member of any legal aid
office duly recognized by the Department of Justice or the Integrated Bar of the Philippines
in cases referred to by the latter. [11]
Engineers Estacio and Dulatre were not lawyers. Neither were they duly-accredited
members of a legal aid office. Their appearance before the labor arbiters in their capacity
as parties to the cases was authorized under the first exception to the rule. However, their
appearance on behalf of petitioner required written proof of authorization. It was incumbent
upon the arbiters to ascertain this authority especially since both engineers were named
co-respondents in the cases before the arbiters. Absent this authority, whatever
statements and declarations Engineer Estacio made before the arbiters could not bind
petitioner.
The appearance of Atty. Arthur Abundiente in the cases appealed to respondent
Commission did not cure Engineer Estacio's representation. Atty. Abundiente, in the first
place, had no authority to appear before the respondent Commission. The appellants' brief
he filed was verified by him, not by petitioner. [12] Moreover, respondent Commission did
not delve into the merits of Atty. Abundiente's appeal and determine whether Engineer
Estacio was duly authorized to make such promise. It dismissed the appeal on the ground
that notices were served on petitioner and that the latter was estopped from denying its
promise to pay.
Nevertheless, even assuming that Engineer Estacio and Atty. Abundiente were authorized
to appear as representatives of petitioner, they could bind the latter only in procedural
matters before the arbiters and respondent Commission. Petitioner's liability arose from
Engineer Estacio's alleged promise to pay. A promise to pay amounts to an offer to
compromise and requires a special power of attorney or the express consent of petitioner.
The authority to compromise cannot be lightly presumed and should be duly established
by evidence. [13] This is explicit from Section 7 of Rule III of the NLRC Rules of
Procedure, viz:
"Section 7. Authority to bind party.-- Attorneys and other representatives of parties shall
have authority to bind their clients in all matters of procedure; but they cannot, without a
special power of attorney or express consent, enter into a compromise agreement with the
opposing party in full or partial discharge of a client's claim."
The promise to pay allegedly made by Engineer Estacio was made at the preliminary
conference and constituted an offer to settle the case amicably. The promise to pay could
not be presumed to be a single unilateral act, contrary to the claim of the Solicitor General.
[14] A defendant's promise to pay and settle the plaintiff's claims ordinarily requires a
reciprocal obligation from the plaintiff to withdraw the complaint and discharge the
defendant from liability. [15] In effect, the offer to pay was an offer to compromise the
cases.
In civil cases, an offer to compromise is not an admission of any liability, and is not
admissible in evidence against the offeror. [16] If this rule were otherwise, no attempt to
settle litigation could safely be made. [17] Settlement of disputes by way of compromise is
an accepted and desirable practice in courts of law and administrative tribunals. [18] In
fact, the Labor Code mandates the labor arbiter to exert all efforts to enable the parties to
arrive at an amicable settlement of the dispute within his jurisdiction on or before the first
hearing. [19]
Clearly, respondent Commission gravely abused its discretion in affirming the decisions of
the labor arbiters which were not only based on unauthorized representations, but were
also made in violation of petitioner's right to due process.
Section 3 of Rule V of the NLRC Rules of Procedure provides:
"Section 3. Submission of Position Papers/Memorandum.-- Should the parties fail to agree
upon an amicable settlement, in whole or in part, during the conferences, the Labor Arbiter
shall issue an order stating therein the matters taken up and agreed upon during the
conferences and directing the parties to simultaneously file their respective verified
position papers.
"x x x."
After petitioner's alleged representative failed to pay the workers' claims as promised,
Labor Arbiters Siao and Palangan did not order the parties to file their respective position
papers. The arbiters forthwith rendered a decision on the merits without at least requiring
private respondents to substantiate their complaints. The parties may have earlier waived
their right to file position papers but petitioner's waiver was made by Engineer Estacio on
the premise that petitioner shall have paid and settled the claims of private respondents at
the scheduled conference. Since petitioner reneged on its "promise," there was a failure to
settle the case amicably. This should have prompted the arbiters to order the parties to file
their position papers.
Article 221 of the Labor Code mandates that in cases before labor arbiters and respondent
Commission, they "shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of law or procedure, all in
the interest of due process." The rule that respondent Commission and the Labor Arbiters
are not bound by technical rules of evidence and procedure should not be interpreted so
as to dispense with the fundamental and essential right of due process. [20] And this right
is satisfied, at the very least, ' when the parties are given the opportunity to submit position
papers. [21] Labor Arbiters Siao and Palangan erred in dispensing with this requirement.
Indeed, the labor arbiters and the NLRC must not, at the expense of due process, be the
first to arbitrarily disregard specific provisions of the Rules which are precisely intended to
assist the parties in obtaining the just, expeditious and inexpensive settlement of labor
disputes. [22]
IN VIEW WHEREOF, the petition for certiorari is granted. The decision of the National
Labor Relations Commission, Fifth Division, is annulled and set aside and the case is
remanded to the Regional Arbitration Branch, Iligan City for further proceedings.
SO ORDERED.
Regalado, (Chairman), and Torres, Jr., JJ., concur.
Mendoza, J., on official leave.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 118746 September 7, 1995
ATTY. WILFREDO TAGANAS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET AL.,
respondents.
RESOLUTION

FRANCISCO, J.:
Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit
for illegal dismissal, underpayment and non-payment of wages, thirteenth-month pay,
attorney's fees and damages conditioned upon a contingent fee arrangement granting the
equivalent of fifty percent of the judgment award plus three hundred pesos appearance fee
per hearing.1 The Labor Arbiter ruled in favor of private respondents and ordered Ultra
Clean Services (Ultra) and the Philippine Tuberculosis Society, Inc., (PTSI) respondents
therein, jointly and severally to reinstate herein private respondents with full backwages, to
pay wage differentials, emergency cost of living allowance, thirteenth-month pay and
attorney's fee, but disallowed the claim for damages for lack of basis.2 This decision was
appealed by Ultra and PTSI to the National Labor Relations Commission (NLRC), and
subsequently by PTSI to the Court but to no avail. During the execution stage of the
decision, petitioner moved to enforce his attorney's charging lien.3 Private respondents,
aggrieved for receiving a reduced award due to the attorney's charging lien, contested the
validity of the contingent fee arrangement they have with petitioner, albeit four of the
fourteen private respondents have expressed their conformity thereto.4
Finding the arrangement excessive, the Labor Arbiter ordered the reduction of petitioner's
contingent fee from fifty percent of the judgment award to ten percent, except for the four
private respondents who earlier expressed their conformity.5 Petitioner appealed to NLRC
which affirmed with modification the Labor Arbiter's order by ruling that the ten percent
contingent fee should apply also to the four respondents even if they earlier agreed to pay
a higher percentage.6 Petitioner's motion for reconsideration was denied, hence this
petition for certiorari.
The sole issue in this petition is whether or not the reduction of petitioner's contingent fee
is warranted. Petitioner argues that respondent NLRC failed to apply the pertinent laws
and jurisprudence on the factors to be considered in determining whether or not the
stipulated amount of petitioner's contingent fee is fair and reasonable. Moreover, he
contends that the invalidation of the contingent fee agreement between petitioner and his
clients was without any legal justification especially with respect to the four clients who
manifested their conformity thereto. We are not persuaded.
A contingent fee arrangement is an agreement laid down in an express contract between a
lawyer and a client in which the lawyer's professional fee, usually a fixed percentage of
what may be recovered in the action is made to depend upon the success of the litigation.7
This arrangement is valid in this jurisdiction.8 It is, however, under the supervision and
scrutiny of the court to protect clients from unjust charges.9 Section 13 of the Canons of
Professional Ethics states that "[a] contract for a contingent fee, where sanctioned by law,
should be reasonable under all the circumstances of the case including the risk and
uncertainty of the compensation, but should always be subject to the supervision of a
court, as to its reasonableness". Likewise, Rule 138, Section 24 of the Rules of Court
provides:
Sec. 24. Compensation of attorneys; agreement as to fees. An attorney shall be
entitled to have and recover from his client no more than a reasonable compensation for
his services, with a view to the importance of the subject-matter of the controversy, the
extent of the services rendered, and the professional standing of the attorney. No court
shall be bound by the opinion of attorneys as expert witnesses as to the proper
compensation but may disregard such testimony and base its conclusion on its own
professional knowledge. A written contract for services shall control the amount to be paid
therefor unless found by the court to be unconscionable or unreasonable.
When it comes, therefore, to the validity of contingent fees, in large measure it depends on
the reasonableness of the stipulated fees under the circumstances of each case. The
reduction of unreasonable attorney's fees is within the regulatory powers of the courts.10
We agree with the NLRC's assessment that fifty percent of the judgment award as
attorney's fees is excessive and unreasonable. The financial capacity and economic status
of the client have to be taken into account in fixing the reasonableness of the fee.11 Noting
that petitioner's clients were lowly janitors who receive miniscule salaries and that they
were precisely represented by petitioner in the labor dispute for reinstatement and claim
for backwages, wage differentials, emergency cost of living allowance, thirteenth-month
pay and attorney's fees to acquire what they have not been receiving under the law and to
alleviate their living condition, the reduction of petitioner's contingent fee is proper. Labor
cases, it should be stressed, call for compassionate justice.
Furthermore, petitioner's contingent fee falls within the purview of Article 111 of the Labor
Code. This article fixes the limit on the amount of attorney's fees which a lawyer, like
petitioner, may recover in any judicial or administrative proceedings since the labor suit
where he represented private respondents asked for the claim and recovery of wages. In
fact, We are not even precluded from fixing a lower amount than the ten percent ceiling
prescribed by the article when circumstances warrant it.12 Nonetheless, considering the
circumstances and the able handling of the case, petitioner's fee need not be further
reduced.
The manifestation of petitioner's four clients indicating their conformity with the contingent
fee contract did not make the agreement valid. The contingent fee contract being
unreasonable and unconscionable the same was correctly disallowed by public respondent
NLRC even with respect to the four private respondents who agreed to pay higher
percentage. Petitioner is reminded that as a lawyer he is primarily an officer of the court
charged with the duty of assisting the court in administering impartial justice between the
parties. When he takes his oath, he submits himself to the authority of the court and
subjects his professional fees to judicial control.13
WHEREFORE, finding no grave abuse of discretion the assailed NLRC decision is hereby
affirmed in toto.
Narvasa, C.J., Regalado, Puno and Mendoza, JJ., concur.
THIRD DIVISION
[G.R. No. 142049. January 30, 2001]
GERMAN MARINE AGENCIES, INC. and LUBECA MARINE MANAGEMENT HK LTD.,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and FROILAN S. DE
LARA, respondents.
DECISION
GONZAGA-REYES, J.:
On 17 October 1994, private respondent was hired by petitioners to work as a radio officer
on board its vessel, the M/V T.A. VOYAGER. Sometime in June, 1995, while the vessel
was docked at the port of New Zealand, private respondent was taken ill. His worsening
health condition was brought by his crewmates to the attention of the master of the vessel.
However, instead of disembarking private respondent so that he may receive immediate
medical attention at a hospital in New Zealand, the master of the vessel proceeded to
Manila, a voyage of ten days, during which time the health of private respondent rapidly
deteriorated. Upon arrival in Manila, private respondent was not immediately disembarked
but was made to wait for several hours until a vacant slot in the Manila pier was available
for the vessel to dock. Private respondent was confined in the Manila Doctors Hospital,
wherein he was treated by a team of medical specialists from 24 June 1995 to 26 July
1995.
After private respondent was discharged from the hospital, he demanded from petitioners
the payment of his disability benefits and the unpaid balance of his sickness wages,
pursuant to the Standard Employment Contract of the parties. Having been assured by
petitioners that all his benefits would be paid in time, private respondent waited for almost
a year, to no avail. Eventually, petitioners told private respondent that, aside from the
sickness wages that he had already received, no other compensation or benefit was
forthcoming.[1] Private respondent filed a complaint with the National Labor Relations
Commission (NLRC) for payment of disability benefits and the balance of his sickness
wages. On 31 July 1997, the labor arbiter rendered a decision,[2] the pertinent parts of
which are quoted hereunder
In the case at bar, there is no issue on the propriety or illegality of complainants discharge
or release from employment as Radio Operator. What complainant is pursuing is limited to
compensation benefits due a seaman pursuant to POEA Standard Employment Contract,
Part II, Section C, paragraph 4(c) and paragraph 5, which reads:
SECTION C. COMPENSATION BENEFIT
xxx
4. The liabilities of the employer when the seaman suffers injury or illness during the term
of his contract are as follows:
xxx
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel
for medical treatment. After discharge from the vessel, the seaman is entitled to one
hundred percent (100%) of his basic wages until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician, but is [sic]
no case shall this period exceed one hundred twenty (120) days. For this purpose, the
seaman shall submit himself to a post-employment medical examination by the company-
designated physician within three working days upon his return, except when he is
physically incapacitated to do so, in which case the written notice to the agency within the
same period is deemed as compliance x x x.
5. In case of permanent total or partial disability of the seamen [sic] [during] the term of
employment caused by either injury or illness, the seamen [sic] shall be compensated in
accordance with the schedule of benefits enumerated in Appendix 1 of this Contract.
Computation of his benefits arising from an illness or disease shall be governed by the
rates and the rules of compensation applicable at the time of [sic] the illness or disease
was contracted.
The aforecited provisions of the POEA Standards [sic] Employment Contract is clear and
unmistakable that its literal meaning should be preserved.
Thus, the only question at which the liability of respondents is anchored is whether
complainant was really fit to work in his position as radio operator. If this is so, it could
mean that he is not entitled to disability compensation which respondents vigorously
disputed, citing in support the certification made by Dra. Victoria Forendo [sic] Cayabyab,
allegedly the officially accredited and designated physician of respondents, which is
likewise, accredited with the Philippine Overseas Employment Administration where it is
stated that Nothing [sic] his job description as a radio operator, Mr. de Lara may be
allowed to go back to work. (Annex D & E). Complainant on the other hand disputes
respondents above posture contending that the more persuasive and authentic evidence
for purposes of deciding his fitness or lack of fitness to work is the certificate issued by Ms.
Naneth [sic] Domingo-Reyes, MD, FPMA where it appears that after submitting himself to
another medical examination by his attending physicians at the Manila Doctors Hospital on
December 4, 1996, to verify possible mistake in his post treatment examination on March
25, 1996, firmly was classified under partial permanent disability and is not fit to go back to
his previous work due to mental state. (Annex C, complainants reply to respondents
position paper).
We have gone into a judicious study and analysis of the arguments and exhibits
particularly the ones relied upon by the parties and find that of the complainant worthy of
consideration. Looking closely at Annexes D and E of respondents position paper, there is
hardly any clear affirmation that complainant was fully fit to resume his work as radio
operator. Although the document alluded to, declares that complainant may be allowed to
go back to work, the tenor of the same seems uncertain that complainant is fit to resume
his work, and that assuming that such was the message, the words may be can not be
taken as overriding that coming from the Manila Doctor Hospital which in the beginning
handled the medical case of complainant and to which respondents unconditionally
referred him and by reason of which six or seven medical especialists [sic] of the hospital
took turn[s] studying and reviewing his uncertain ailment after release by respondents.
Otherwise stated, unlike the message of annexes D to E of respondents, annex C of
complainant is clear and unmistakable and confirm complainants partial permanent
disability and his definite unfitness to go back to his previous work due to his mental
health. Some pronouncements in this exhibit mentions also that when complainant was
admitted an emerging basis for drowsiness, behavioral change and off and on fever and
different procedures were resorted along his case, like emergency CT scan on the brain
and his admission in June 24, 1995 was catastropic, whereas, more could be said in three
document[s] issued by Dra. Victoria Florendo Cayabyab.
Finally, respondents contend that the annexes issued by Dr. Domingo-Reyes of the Manila
Doctors Hospital should not be given weight because it is not issued by the hospital or
doctor duly accredited by the POEA. Neither would a close look on the applicable provision
for seamen show that a duly accredited hospital or doctor is needed for purposes of the
grant of compensation benefits to a such [sic] or ailing seamen. We are more persuaded
based on the arguments of the complainant among others, that it is absurd to require an
ailing seaman in high seas or in a foreign land to still wait until the ship where he is
working land in the country to secure treatment in a duly accredited hospital or doctor.
On the basis of the above therefore, and convinced that complainants partial permanent
disability which was contracted in the course or on account of his employment as radio
operator in foreign principals vessel, he is entitled to disability benefit in accordance with
the schedule of benefits enumerated in Appendix 1 of the Contract, the maximum of which
is US $50,000. But since the amount prayed for is US$25,000.00 which we presume has a
more realistic basis, the same is hereby granted.
Concerning the sickness wage, respondents averred that the same had already been paid.
However, there is no evidence that the same has been paid except the payment to the
complainant of P49,546.00. Since complainants salary as US$870 and a seamans sick
wage entitlement is fixed to a maximum of 120 days, his sickness wages would rest to a
total sum of US$3,480 or its peso equivalent. On this, complainant has been paid only
[P]49,546.00 (US$1,943), thereby leaving for complainant a balance of US$1,537. Finally,
it is also argued that as regards the balance, the same has been paid citing as proof the
Sickness Release and Quitclaim signed by complainant (Annexes C & C-1). Complainant,
on the other hand denied this, and contended that the quitclaim and release is invalid.
Considering that there is no proof on record that this balance of US$1,537 was paid, unlike
the P49,546.00, the same is granted.
WHEREFORE, premises above-considered, a decision is hereby issued ordering
respondent German Marine Agencies Inc. to pay complainant the following sums:
(a) Disability benefit - - - - - - - - - - - - - - US$25,000.00
(b) Sickness wage balance - - - - - - - - - - US$1,137.00
all in the aggregate of Twenty Six Thousand One Hundred Thirty Seven Dollars
(US$26,137.00) or its peso equivalent, the claim for damages being hereby dismissed for
lack of merit, plus ten (10%) percent attorneys fees.
SO ORDERED.
On 29 July 1998, the NLRC[3] affirmed the labor arbiters decision in toto and declared that
the latters findings and conclusions were supported by substantial evidence.[4] After its
motion for reconsideration was denied by the NLRC on 20 May 1999, petitioners repaired
to the Court of Appeals.[5] The appellate courts assailed decision was promulgated on 1
December 1999, upholding the decision of the NLRC, with the modification that petitioners
were ordered to pay private respondent exemplary damages in the amount of P50,000.00.
The appellate court reasoned out its decision,[6] thus -
The basic issue here is: Whether or not petitioner is liable to pay private respondents claim
as awarded by the NLRC, and whether or not there was abuse of discretion on the part of
the NLRC in affirming such decision on appeal? To resolve this issue, this Court took time
in looking closely at the pertinent provision of the Standard Employment Contract
Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels,
particularly PART II, SECTION C, par. no. 4 (c), and par. no. 5, which states as follows:
SECTION C. COMPENSATION AND BENEFITS
4. The liabilities of the employer when the seaman suffers injury or illness during the term
of his contract are as follows:
xxxx
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel
for medical treatment. After discharge from the vessel the seaman is entitled to hundred
percent (100%) of his basic wages until he is declared fit to work or his degree of
permanent disability has been assessed by the company-designated physician, but in no
case shall this period exceed one hundred twenty (120) days. x x x x
5. In case of permanent total or partial disability of the seaman during the term of his
employment caused by either injury or illness the seaman shall be compensated in
accordance with the schedule of benefits enumerated in Appendix 1 of his Contract.
Computation of his benefits arising from an illness or disease shall be governed by the
rates and the rules of compensation applicable at the time the illness or disease was
contracted.
xxx...
A cursory reading of these applicable contractual provisions and a thorough evaluation of
the supporting evidence presented by both parties, lends strong credence to the
contentions and arguments presented by private respondent.
The award of disability compensation has a clear and valid basis in the Standard
Employment Contract and the facts as supported by the medical certificate issued by Dr.
Nannette Domingo-Reyes of the Manila Doctors Hospital. Petitioners contention, that Dr.
Domingo-Reyes is not company designated is far from the truth. The designation of the
Manila Doctors Hospital by petitioners as the company doctor for private respondent
cannot be denied. Their very act of committing private respondent for treatment at the
Manila Doctors Hospital under the care of its physician is tantamount to company
designation. The very act of paying the hospital bills by the petitioners constitutes their
confirmation of such designation. Hence, petitioners cannot resort to the convenience of
denying this fact just to evade their obligation to pay private respondent of his claims for
disability benefit.
This Court also finds no basis on (sic) the petitioners contention that the company-
designated [physician] must also be accredited with the POEA before he can engage in
the medical treatment of a sick seaman. There is nothing in the Standard Employment
Contract that provides this accreditation requirement, and even if there is, this would be
absurd and contrary to public policy as its effect will deny and deprive the ailing seaman of
his basic right to seek immediate medical attention from any competent physician. The
lack of POEA accreditation of a physician who actually treated the ailing seaman does not
render the findings of such physician (declaring the seaman permanently disabled) less
authoritative or credible. To our mind, it is the competence of the attending physician, not
the POEA accreditation, that determines the true health status of the patient-seaman,
which in this instant case, is [sic] the attending physicians from the Manila Doctors
Hospital.
As to the award of the balance of wages, this Court is inclined not to disturb the factual
findings of the NLRC. The failure of the petitioners to present a strong and credible
evidence supporting the fact of alleged payment of the balance of sickness justifies the
award of such claim. The long standing doctrine in labor cases that in case of doubt, the
doubt is resolved in favor of labor applies. For there are indications that the evidence
presented by petitioners appears to be of dubious origin as private respondent challenged
the petitioners to present the original copy of the quitclaim and the vouchers in a motion
demanding from petitioners to produce the original copy of those documents purporting to
show that he had received the alleged sum of P39,803.30, which allegedly shows the
payment of the balance of his sickness wages. This motion was vehemently opposed by
petitioners. To our mind, such opposition only created more doubts and eroded the
veracity and credence of petitioners documentary evidence.
As to the award of attorneys fees, the same is justified by the fact that private respondent
actually hired the services of a lawyer to vindicate his right to claim for his disability benefit
which is being arbitrarily denied to him by petitioners. Had it not been for the arbitrary
denial of petitioners, private respondent could not have been compelled to hire the
services of a lawyer to pursue his claims in court, for which he is presumed to have
incurred costs.
With respect to private respondents claim for damages, this Court finds that the NLRC
overlooked the attendance of negligence on the part of petitioners in their failure to provide
immediate medical attention to private respondent. It further appears that negligence not
only exists but was deliberately perpetrated by petitioners by its arbitrary refusal to commit
the ailing private respondent to a hospital in New Zealand or at any nearest port deprived
of his right to immediate medical attention by petitioners, which resulted to the serious
deterioration of his health that caused his permanent partial disability. Such deprivation of
immediate medical attention appears deliberate by the clear manifestation from petitioners
own words which states that, the proposition of the complainant that respondents should
have taken the complainant to the nearest port of New Zealand is easier said than done. It
is worthy to note that deviation from the route of the vessel will definitely result to loss of a
fortune in dollars not only to the respondents but likewise to the owners of the cargoes
being shipped by the said vessel.
By petitioners own statement, they reveal their utter lack of concern for their Filipino crew.
This kind of attitude cannot be taken to pass by this Court without appropriate sanction by
way of payment of exemplary damages, if only to show that the life of a Filipino crew must
be accorded due attention and respect by the petitioners. For after all, had it not been for
the toils of this crew, among others, petitioners would not be doing as good in their
business and making fortunes in dollars.
In affirming the decision of the Labor Arbiter, this Court finds that the NLRC never abused
its discretion nor exceeded its jurisdiction.
Hence, this Court finds no valid basis to disturb the findings of the NLRC.
WHEREFORE, the decision of the NLRC dated 29 July 1998, and the Order dated 20 May
1999, are hereby AFFIRMED, and in addition thereto, petitioners are ordered to pay
exemplary damages to private respondent in the sum of Fifty Thousand Pesos
(P50,000.00).
SO ORDERED.
Petitioners motion for reconsideration was denied by the Court of Appeals in its Resolution
of 11 February 2000. Hence, the present appeal.
Disability Benefits
Petitioners contend that the existence and degree of a seamans disability must be
declared by a company-designated physician who must be accredited with the POEA.
Following this line of reasoning, petitioners claim that private respondent is not entitled to
disability benefits because he was found fit to return to work by Dr. Victoria Florendo
Cayabyab, the designated physician of petitioners, who is also accredited with the
POEA.[7]
Disagreeing with petitioners stand, the labor arbiter ruled that, for purposes of determining
compensation benefits under the Standard Employment Contract, an ailing seaman need
not have his condition assessed by a doctor or hospital accredited with the POEA.
Consequently, the labor arbiter gave more weight to the opinion of the specialists from the
Manila Doctors Hospital who treated private respondent and declared him as having
sustained a partial permanent disability and unfit to go back to his previous work.[8]
Meanwhile, the Court of Appeals held that petitioners act of committing private respondent
for treatment at the Manila Doctors Hospital and of paying his hospital bills therein is
tantamount to company-designation, and therefore, the certificate issued by Dr. Nanette
Domingo-Reyes of the Manila Doctors Hospital describing private respondent as suffering
from a partial permanent disability should be construed as decisive in the matter of private
respondents entitlement to disability benefits. The appellate court also declared that
nothing in the Standard Employment Contract requires the company-designated physician
or hospital to also be accredited with the POEA.[9]
In the case at bar, the parties are at odds as to the proper interpretation of the POEA
Standard Employment Contract Governing the Employment of All Filipino Seamen On
Board Ocean-Going Vessels (Standard Employment Contract), particularly Part II, Section
C thereof, which provides that
xxx xxx xxx
4. The liabilities of the employer when the seaman suffers injury or illness during the term
of his contract are as follows:
a. The employer shall continue to pay the seaman his basic wages during the time he is on
board the vessel;
b. If the injury or illness requires medical and/or dental treatment in a foreign port, the
employer shall be liable for the full cost of such medical, dental, surgical and hospital
treatment as well as board and lodging until the seaman is declared fit to work or to be
repatriated.
However, if after repatriation the seaman still requires medical attention arising from said
injury or illness, he shall be so provided at cost to the employer until such time he is
declared fit or the degree of his disability has been established by the company-designated
physician.
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel
for medical treatment. After discharge from the vessel the seaman is entitled to one
hundred percent (100%) of his basic wages until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician, but in no
case shall this period exceed one hundred twenty (120) days. For this purpose, the
seaman shall submit himself to a post-employment medical examination by the company-
designated physician within three working days upon his return except when he is
physically incapacitated to do so, in which case a written notice to the agency within the
same period is deemed as compliance. Failure of the seaman to comply with the
mandatory reporting requirement shall result in his forfeiture of the right to claim the above
benefits.
xxx xxx xxx
5. In case of permanent total or partial disability of the seaman during the term of
employment caused by either injury or illness the seaman shall be compensated in
accordance with the schedule of benefits enumerated in Appendix 1 of his Contract.
Computation of his benefits arising from an illness or disease shall be governed by the
rates and the rules of compensation applicable at the time the illness or disease was
contracted.
xxx xxx xxx
Petitioners contention that the existence and grade of a seamans disability must be
pronounced by a physician accredited by the POEA does not find any support in the
abovecited provision, nor in any other portion of the Standard Employment Contract. In
order to claim disability benefits under the Standard Employment Contract, it is the
company-designated physician who must proclaim that the seaman suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of the
latters employment. There is no provision requiring accreditation by the POEA of such
physician. In fact, aside from their own gratuitous allegations, petitioners are unable to cite
a single provision in the said contract in support of their assertions or to offer any credible
evidence to substantiate their claim. If accreditation of the company-designated physician Appendix 1
was contemplated by the POEA, it would have expressly provided for such a qualification,
by specifically using the term accreditation in the Standard Employment Contract, to SCHEDULE OF DISABILITY OR IMPEDIMENT
denote its intention. For instance, under the Labor Code it is expressly provided that
physicians and hospitals providing medical care to an injured or sick employee covered by FOR INJURIES SUFFERED AND OR ILLNESS CONTRACTED
the Social Security System or Government Service Insurance System must be accredited
by the Employees Compensation Commission.[10] It is a cardinal rule in the interpretation HEAD
of contracts that if the terms of a contract are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of its stipulation shall control.[11] There is no Traumatic head injuries that result to:
ambiguity in the wording of the Standard Employment Contract the only qualification
prescribed for the physician entrusted with the task of assessing the seamans disability is 1. Apperture unfilled with bone not over
that he be company-designated. When the language of the contract is explicit, as in the
case at bar, leaving no doubt as to the intention of the drafters thereof, the courts may not three (3) inches without brain injury . . . . . . . . . . . . . . . . Gr. 9
read into it any other intention that would contradict its plain import.[12]
2. Apperture unfilled with bone over
The word designate means to specify, to mark out and make known, to identify by name,
to indicate, to show, to distinguish by mark or description, or to set apart for a purpose or three (3) inches without brain injury . . . . . . . . . . . . . . . . Gr. 3
duty.[13] The Court agrees with the appellate courts ruling that petitioners act of
committing private respondent for treatment at the Manila Doctors Hospital and paying the 3. Severe paralysis of both upper or
hospital bills therein is tantamount to company-designation. By such unequivocal acts,
petitioners clearly set apart and distinguished the Manila Doctors Hospital, together with its lower extremities or one upper and one
team of specialists, as the ones qualified to assess the existence and degree of private
respondents disability and thereby resolve the question of the latters entitlement to lower extremity . . . . . . . . . . . . . . . . . . . . . . . Gr. 1
disability benefits under the Standard Employment Contract.
4. Moderate paralysis of two (2) extremities
In addition to their having been effectively designated by petitioners, it was the physicians
from the Manila Doctors Hospital who examined and treated private respondent for a little producing moderate difficulty in
more than one month, subjecting the latter to a series of medical procedures, such as
medical therapy, neurological surgical drainage for brain abscess, bilateral thalamic area movements with self care activities . . . . . . . . . . . . . . . . Gr. 6
S/P craniotomy (Burr Hole), and opthalmological (orbit) surgery for socket revision and
reconstruction of his left eye. The extensive medical attention given to private respondent 5. Slight paralysis affecting one extremity
enabled the Manila Doctors Hospital specialists to acquire a detailed knowledge and
familiarity with private respondents medical condition.[14] No doubt such specialized producing slight difficulty with self-care
knowledge enabled these physicians to arrive at a much more accurate appraisal of
private respondents condition, including the degree of any disability which he might have activities . . . . . . . . . . . . . . . . . Gr. 10
sustained, as compared to another physician not privy to private respondents case from
the very beginning. Thus, the appellate court was not mistaken in giving more weight to the 6. Severe mental disorder or Severe Complex
certificate issued by Dr. Nanette Domingo-Reyes of the Manila Doctors Hospital dated
December 4, 1996, than to the one issued by Dr. Victoria Florendo Cayabyab. Cerebral function disturbance or post

On the strength of Dr. Domingo-Reyess medical certificate which stated that private traumatic psychoneurosis which require
respondent can be classified under partial permanent disability and is not fit to go back to
his previous work due to his mental state, the labor arbiter awarded $25,000.00 as regular aid and attendance as to render worker
disability benefits, which award was upheld by the NLRC and the appellate court.
Petitioners insist that there is no factual basis for the award of $25,000.00 since there is no permanently unable to perform any work . . . . . . . . . . Gr. 1
finding as to the grade of permanent partial disability sustained by private respondent, in
accordance with Appendix 1 of the Standard Employment Contract (Schedule of Disability 7. Moderate mental disorder or moderate brain
or Impediment For Injuries Suffered and Diseases or Illness Contracted), and therefore, no
means of determining the exact amount of compensation to which private respondent may functional disturbance which limits worker
be entitled.[15]
to the activities of daily living with some
The Court does not agree with petitioners position. Under the Standard Employment
Contract the grade of disability suffered by the seaman must be ascertained in accordance directed care or attendance . . . . . . . . . . . . . . . Gr. 6
with Appendix 1 of such contract, which is partially reproduced herein -
8. Slight mental disorder or disturbance that
 listed in Appendix 1, specifically number seven (7), is described as a moderate mental
requires little attendance or aid and which disorder or moderate brain functional disturbance which limits worker to the activities of
daily living with some directed care or attendance. This coincides with Dr. Domingo-Reyes
interferes to a slight degree with the working diagnosis of private respondents condition, as follows -

capacity of the claimant . . . . . . . . . . . . . . . Gr. 10 xxx xxx xxx

9. Incurable imbecility . . . . . . . . . . . . . . . . . . . . . Gr. 1 Work-ups and Management:

Each grade under Appendix 1 has an equivalent disability allowance or benefit expressed
in terms of a percentage of the maximum amount of $50,000.00. This is specified in
Appendix 1-A of the Standard Employment Contract -
APPENDIX 1-A
SCHEDULE OF DISABILITY ALLOWANCES
Patient was admitted on an emergency bases for drowsiness, behavioral change and on
and off fever. This started with headaches since the first week of June 1995 while on duty
(on voyage). Patient progressively deteriorated and arrived here already dehydrated with
high grade fever. (emphasis supplied)
Emergency CT Scan of the brain revealed rounded masses in both thalamus on the brain;
the larger mass was situated at the right.

Impediment Grace Impediment Burr hole at the right parietal and drainage of the right thalamic abscess was done on June
26, 1995. Repair of shallow fornix of left eye and biopsy was done for culture studies
1 Maximum Rate x 120.00% thereafter.

2 x 88.81% Mr. De Lara stayed in the hospital for 33 days and was still in bedridden state when
discharge. He became ambulant on mid-August 1996 but his cerebral functions (cognitive
3 x 78.36% and behavioral) remain impaired.

4 x 68.66% This is his 18th month of illness. His admission last June 24, 1995 is considered
catastrophic. He now can be classified under partial permanent disability and is not fit to go
5 x 58.96% back to his previous work due to his mental state.[16] (emphasis supplied)

6 x 50.00% xxx xxx xxx

7 x 41.80% Thus, the medical certificate of Dr. Domingo-Reyes is more than sufficient basis for the
award of disability benefits in the amount of $25,000.00 in favor of private respondent.
8 x 33.59%
Sickness wages
9 x 26.12%
Petitioners assert that the award of $1,137.00, representing the balance of the sickness
10 x 20.15% wages owed to private respondent, is erroneous and in absolute disregard of their
documentary evidence - particularly the three check vouchers in the total amount of
11 x 14.93% P89,354.80, all issued in 1995 in favor of either private respondent or his wife, and the
Sickwages Release & Quitclaim - which, according to petitioners, taken together would
12 x 10.45% prove that they had paid private respondent the total amount of P89,354.80, or $3,480.00,
corresponding to the 120 days sickness wages as required under the Standard
13 x 6.72% Employment Contract.

14 x 3.74%
Maximum Rate: US$50,000.
To be paid in Philippine Currency equivalent at the exchange rate prevailing during the
time of payment.
Private respondent asked petitioner for disability benefits in the amount of $25,000.00, or
fifty percent (50%) of the maximum rate of $50,000.00, which, under Appendix 1-A, is
awarded when the seaman sustains a grade 6 disability. One of the grade 6 head injuries
Contrary to petitioners assertions, the labor arbiter held that only P49,546.00 ($1,943.00)
was paid by petitioners and that private respondent is still entitled to the balance of the
sickness wages in the amount of $1,537.00. According to the labor arbiter, petitioners
failed to prove that they had paid this amount to private respondent, notwithstanding the
document entitled Sickness Release & Quitclaim introduced by petitioners in evidence,
which was not given credence.[17] The NLRC and the Court of Appeals concurred with the
labor arbiter on this issue. The appellate court held that the documentary evidence of
petitioners was insufficient to support their contentions.[18]
The Supreme Court has always accorded respect and finality to the findings of fact of the
NLRC, particularly if they coincide with those of the Labor Arbiter, when supported by
substantial evidence. The reason for this is that a quasi-judicial agency like the NLRC has
acquired a unique expertise because its jurisdiction is confined to specific matters.[19]
Whether or not petitioners actually paid the balance of the sickness wages to private
respondent is a factual question. In the absence of proof that the labor arbiter or the NLRC
had gravely abused their discretion, the Court shall deem conclusive and cannot be
compelled to overturn this particular factual finding.[20]
Damages
We affirm the appellate courts finding that petitioners are guilty of negligence in failing to
provide immediate medical attention to private respondent. It has been sufficiently
established that, while the M/V T.A. VOYAGER was docked at the port of New Zealand,
private respondent was taken ill, causing him to lose his memory and rendering him
incapable of performing his work as radio officer of the vessel. The crew immediately
notified the master of the vessel of private respondents worsening condition. However,
instead of disembarking private respondent so that he may receive immediate medical
attention at a hospital in New Zealand or at a nearby port, the master of the vessel
proceeded with the voyage, in total disregard of the urgency of private respondents
condition. Private respondent was kept on board without any medical attention whatsoever
for the entire duration of the trip from New Zealand to the Philippines, a voyage of ten
days. To make matters worse, when the vessel finally arrived in Manila, petitioners failed
to directly disembark private respondent for immediate hospitalization. Private respondent
was made to suffer a wait of several more hours until a vacant slot was available at the
pier for the vessel to dock. It was only upon the insistence of private respondents relatives
that petitioners were compelled to disembark private respondent and finally commit him to
a hospital.[21] There is no doubt that the failure of petitioners to provide private respondent
with the necessary medical care caused the rapid deterioration and inevitable worsening of
the latters condition, which eventually resulted in his sustaining a permanent disability.
In light of the foregoing, petitioners are liable for moral damages for the physical suffering
and mental anguish caused to private respondent.[22] There is no hard and fast rule in the
determination of what would be a fair amount of moral damages, since each case must be
governed by its own peculiar circumstances.[23] In the present case, the Court considers
the amount of P50,000.00 in moral damages as proper.[24]
Meanwhile, exemplary damages are imposed by way of example or correction for the
public good, pursuant to Article 2229 of the Civil Code. They are imposed not to enrich one
party or impoverish another but to serve as a deterrent against or as a negative incentive
to curb socially deleterious actions. While exemplary damages cannot be recovered as a
matter of right, they need not be proved, although plaintiff must show that he is entitled to
moral, temperate, or compensatory damages before the court may consider the question
of whether or not exemplary damages should be awarded.[25] In quasi-delicts, exemplary
damages may be granted if the defendant acted with gross negligence.[26] Coming now to
the case at bar, the appellate court found that
negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary
refusal to commit the ailing private respondent to a hospital in New Zealand or at any
nearest port which resulted to the serious deterioration of his health that caused his
permanent partial disability. Such deprivation of immediate medical attention appears
deliberate by the clear manifestation from petitioners own words which states that, the
proposition of the complainant that respondents should have taken the complainant to the
nearest port of New Zealand is easier said than done. It is worthy to note that deviation
from the route of the vessel will definitely result to loss of a fortune in dollars not only to the
respondents [petitioners herein] but likewise to the owners of the cargoes being shipped by
the said vessel.
Petitioners never denied making this statement. Given the prevailing circumstances, the
appellate courts award of P50,000.00 as exemplary damages is adequate, fair, and
reasonable.[27]
Although the labor arbiter awarded attorneys fees, which award was subsequently affirmed
by the NLRC and the Court of Appeals, the basis for the same was not discussed in his
decision nor borne out by the records of this case, and should therefore be deleted. There
must always be a factual basis for the award of attorneys fees.[28] This is consistent with
the policy that no premium should be placed on the right to litigate.[29]
WHEREFORE, the 1 December 1999 Decision and 11 February 2000 Resolution of the
Court of Appeals are AFFIRMED, with the modification that petitioners must also pay
private respondent P50,000.00 as moral damages and the award of attorneys fees is
deleted.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.
THIRD DIVISION
[G.R. No. 150147. January 20, 2004]
LYDIA BUENAOBRA, JOSIELYN FIEL, MARGIE MADRID, ROWENA MIRANDA, JUVY
ENDAYA, JUDY CARONAN, JOSEPHINE BARTOLOME, LITA MACALINAO, MARLITA
AMBIL, RIZA AMBIL, ANENCIA RECANA, LORENA REYES, JULIO BALAGTAS,
SALVACION FELISMENA, GINA SINLAO, MARITA CHAVEZ, JIMENA DRADA,
YOLANDA ROLDAN, RAFAELA OLICIA, ANGELEO FUENTES, EUFROCINA ALMERA,
FELICISIMA DE GUZMAN, ADELINA CALIM, SUSANITA SULAPAS, LOLITA
MALICDEM, TERESITA BORLAZA, ESTER OVERIO, IMELDA AGUIRRE, MARIBEL
BELTRAN, MYLENE TAMAYO, ANNIE GREGORIO, TERESA CLARINO, TERESA
VILLANUEVA, MARIETTA ARCAYA, MILAGROS DAGDAGAN, PAULINO PREALDE,
MONINA VALLEJO, RITA MAGSINO, SOLIDAD LABAY, MARIA BINARAO, MELCHORA
DELA CRUZ, SUSAN BITAS, EMELY CAYETANO, EMILY DELA CRUZ, ZENAIDA
SALAS, BITUIN VALDEZ, AFRICA GUEVARRA, NELIA MORALES, ELOISA REYES,
AIDA CAYETANO, BENITA CAMPOSANO, ADELIA IGNACIO, NENITA SARCIA,
VIOLETA RONCAL, DOROTEA ALASKA, BLISELDA GALONGAN, SHIRLEY JOCSON,
MARITES VELOZ, ROGELIO CAPUZ, MARDIOLINA ALIOC, MARIETTA MADRID,
LOURDES MERCADO, ARACELLY CERDENOLA, REMEDIOS TAGNONG, MARISSA
SANTOS, JOSEFINA CANALDA, ZENAIDA DAMANDANTE, CONCHITA BELARMINO,
MARIVIC TRINIDAD, MARGARITA GUMBAN, ANGELES FERNANDEZ, MARIA
BERNAL, MORALINDA DUARTE, IMELDA TUNGOL, ALONA INNOCENCIO, MA.
TERESA CRUZ, ANALIZA GABRIEL, MELODIEN CARANDANG, CRESENCIA ACEBO,
MARILYN CASIM, HERMINIA PINEDA, NORIE TORINO, ERLINDA TADEO, CECILIA
LLAVORE, ANA GINA GALMAN, IMELDA SALARDA, LUISA SAROL, LOLITA MALICSE,
AILEEN PAPANIO, EDITHA GANAL, RESTIE VISTAL, LUCELYN QUISOY, ESTELA
PABIO BRIONES, AUREA TUBIS, SAMUEL MALICSE, AURORA MISSION, ANALYN
CALICA, LEILANI ALEJAGA, LILIA BRIZUELA, ROSITA FACTOR, MERCEDES
MENDOZA, WARLITO COLOMA, PERLEEN MUI, JOSEPHINE BALDRES, ELENA
MAGDANGAL, IRMA BENGCO, CRISTITA GERALDEZ, ROMEO PANDO, ESTRELLITA
ZILMAR, ANGELITA SANDIG, NENITA LARIOSA, MARITA PANTI, AURORA
HERNANDEZ, DINNA SILVA, EVANGELINE CASIM, LUISA SOLAYAO, ANNABELLE SY,
MARINA REBLENCA, MARITESS GERANDOY, ELENA AGUDA, PERCY GARCIA,
GERARDO TAPIT, AMADOR HADE, MYRA BORJA, ELVIRA ALBAY, LELIOSA
MORANO, VERONICA GUINDAY, JULIETA ALMAYDA, VILMA SALDO, MAY ANN
REPAYO, GLENDA SARAO, NELLY CARAGA, JOSEPHINE TAQUIQUI, TRINIDAD
BARROCA, DULCE ENDAYA, RIZA TADLIP, NENITA LAGAMAYO, EUFRENCINA
ROLDAN, ELENA VELASQUEZ, MARIVIC DEPANTI, MONINA LOCSIN, ANA RAMOS,
ANICIA LEUTIEJA, JOSEFINA MANUEL, AMALIA DAEP, JULIE MANGANAAN,
ROWENA ANYAYA, LUNINGNING ANYAYA, CARMENCITA ANYAYA, ROWENA FIEL,
VENAMEL BEA, NIDA PABLO, LOLITA BLANCO, ROSEMARIE MORALES, NATIVIDAD
CANETE, CORAZON GOROSPE, MADONNA RAGONOT, GEMMA DACAL, and
CLARITA MENDOZA, petitioners, vs. LIM KING GUAN, JOHNNY LIM, NGO CHAP,
CRISTINA NGO, GILBERTO LIM, CHENG SEN WANG, HUNG PANG CHING, CHEN
HSIU TSUNG as corporate officers of UNIX INTERNATIONAL EXPORT CORPORATION,
and CHEN HSIU TSUNG, LIM KING GUAN, HUNG PANG CHING, WANG CHENG SEN,
JOHNNY LIM, GILBERTO LIM, NGO CHIAP, CRISTINA NGO, KATLEEN LIM, MARIE
SOLEDAD CLEMENTE, ROSALINA N. LO, KIM PO GONZALES, and AMELIA NGA as
stockholders of record of UNIX INTERNATIONAL EXPORT CORPORATION, and FUJI
ZIPPER MANUFACTURING CORPORATION, respondents.
DECISION
CORONA, J.:
This is a petition for review seeking for the reversal of the decision[1] of the Court of
Appeals dated May 29, 2001, dismissing the petition for certiorari of Lydia Buenaobra, et.
al. and affirming the orders of the National Labor Relations Commission (NLRC), Third
Division, dated November 27, 1998 and February 15, 1999, which respectively directed
private respondents to post a cash or surety bond and dismissed petitioners motion for
reconsideration.
The facts follow.
Petitioners were employees of private respondent Unix International Export Corporation
(UNIX), a corporation engaged in the business of manufacturing bags, wallets and the like.
Sometime in 1991 and 1992, petitioners filed several cases against UNIX and its
incorporators and officers for unfair labor practice, illegal lockout/dismissal, underpayment
of wages, holiday pay, proportionate 13th month pay, unpaid wages, interest, moral and
exemplary damages and attorneys fees.
The cases were consolidated and tried jointly. On February 23, 1993, labor arbiter Jose S.
de Vera rendered a decision:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
ordering respondent Unix Export Corporation to pay complainants, as follows:
1. P5,821,838.40 as backwages;
2. P1,484,912.00 as separation pay;
3. P527,748.00 as wage differentials;
4. P33,830.00 as regular holiday pay differentials; and
5. P365,551.95 as proportionate 13th month pay for 1990.
All other claims of the complainants are hereby dismissed for lack of merit. Likewise, the
complaint of Angelina Dimasin is dismissed with prejudice.
There being no appeal by respondents or petitioners, the decision of labor arbiter de Vera
eventually became final and executory. However, petitioners complained that the decision
could not be executed because UNIX allegedly diverted, invested and transferred all its
money, assets and properties to respondent Fuji Zipper Manufacturing Corporation (FUJI)
whose stockholders and officers were also those of UNIX.
Thus, on March 25, 1997, petitioners filed another complaint against respondents UNIX, its
corporate officers and stockholders of record, and FUJI. Petitioners mainly prayed that
respondents UNIX and FUJI be held jointly and severally held liable for the payment of the
monetary awards ordered by labor arbiter de Vera.
On May 31, 1998, labor arbiter Felipe Pati rendered a decision on the second complaint:
WHEREFORE, judgment is hereby rendered piercing the veil of corporate fiction of the two
respondent sister corporations which by virtue of this Decision are now considered as
mere associations of persons jointly and severally pay the subject amount of
P8,233,880.30 out of the properties and unpaid subscription on subscribed Capital Stock
of the Board of Directors, Corporate Officers, Incorporators and Stockholders of said
respondent corporations, plus the amount of P3,000,000.00 and P1,000,000.00 in the form
of moral and exemplary damages, respectively, as well as 10% attorneys fees from any
recoverable amounts.
Other claims are hereby dismissed for lack of merit.
On July 30, 1998, private respondents FUJI, its officers and stockholders filed a
memorandum on appeal and a motion to dispense with the posting of a cash or surety
appeal bond on the ground that they were not the employers of petitioners. They alleged
that they could not be held responsible for petitioners claims and to require them to post
the bond would be unjust and unfair, and not sanctioned by law.
On November 27, 1998, the NLRC, Third Division rendered the first assailed order[2]:
PREMISES CONSIDERED, instant motion to exempt from filing appeal bond is hereby
DENIED for lack of merit. Respondents are hereby directed to post cash or surety bond in
the amount of P8,233,880.30 within an unextendible period of ten (10) days upon receipt.
Otherwise the appeal shall be dismissed.
Petitioners moved for reconsideration of the said order, arguing that the timely posting of
an appeal bond is mandatory for the perfection of an appeal and should be complied with.
On February 15, 1999, the NLRC, Third Division rendered the second assailed order:
WHEREFORE, premises considered, complainants Motion for Reconsideration is hereby
DISMISSED for lack of merit. Respondents Supplemental Memorandum of Appeal is
admitted. Respondents and counsel are likewise hereby directed to submit a joint
declaration under oath within five (5) days upon receipt. Otherwise the appeal shall be
dismissed.
Petitioners filed a petition in the Court of Appeals imputing grave abuse of discretion to the
NLRC, Third Division when it allowed private respondents to post the mandated cash or
surety bond four months after the filing of their memorandum on appeal.
On May 29, 2001, the Court of Appeals dismissed the petition for lack of merit. Hence, this
petition under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court
of Appeals and praying that the orders dated February 15, 1999 and November 27, 1998
of the NLRC, Third Division be set aside for having been issued without or in excess of its
jurisdiction and with grave abuse of discretion.
The petition has no merit.
The provision of Article 223 of the Labor Code requiring the posting of bond on appeals
involving monetary awards must be given liberal interpretation in line with the desired
objective of resolving controversies on the merits.[3] If only to achieve substantial justice,
strict observance of the reglementary periods may be relaxed if warranted. The NLRC,
Third Division could not be said to have abused its discretion in requiring the posting of
bond after it denied private respondents motion to be exempted therefrom.
It is true that the perfection of an appeal in the manner and within the period prescribed by
law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect
of making the judgment final and executory. However, technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the
parties.[4] We have allowed appeals from the decisions of the labor arbiter to the NLRC,
even if filed beyond the reglementary period, in the interest of justice. The facts and
circumstances of the instant case warrant liberality considering the amount involved and
the fact that petitioners already obtained a favorable judgment on February 23, 1993
against their employer UNIX.
In the same decision which has already become final and executory, labor arbiter de Vera
held:
This Branch upholds and maintains in the absence of substantial evidence to the contrary
that both respondent corporations have legitimate distinct and separate juridical
personalities. Thus, respondent Fuji Zipper Manufacturing, Inc. has been erroneously
impleaded in this case.[5]
It is only fair and just that respondent FUJI be afforded the opportunity to be heard on
appeal before the NLRC, specially in the light of labor arbiter Patis later decision holding
FUJI jointly and severally liable with UNIX in the payment of the monetary awards
adjudged by labor arbiter de Vera against UNIX.
In the absence of any showing that the NLRC committed grave abuse of discretion, or
otherwise acted without or in excess of jurisdiction, this Court is bound by its findings.
Furthermore, the Court of Appeals upheld the assailed orders of the said Commission.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
SECOND DIVISION
INTERCONTINENTAL G.R. No. 152843
BROADCASTING CORPORATION,
Petitioner,
Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.
REYNALDO BENEDICTO, deceased, substituted by his surviving spouse LOURDES V.
BENEDICTO, and children, namely: REYNALDO V. BENEDICTO, SHIRLEY V.
BENEDICTO-TAN, EDGAR V. BENEDICTO and LILIBETH V. BENEDICTO-DE LA
VICTORIA,*
Respondents. Promulgated:
July 20, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CORONA, J.:
This is a petition for review on certiorari[1] of the October 18, 2001 decision[2] and March
18, 2002 resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 53413 which in turn
affirmed the March 5, 1999 decision[4] and June 10, 1999 resolution[5] of the National
Labor Relations Commission (NLRC) in NLRC NCR CA Case No. 017886-99.
Petitioner alleged that Intercontinental Broadcasting Corporation is a government-owned
and controlled corporation.[6] It is engaged in the business of mass media communications
including, among others, the operation of television Channel 13 (IBC 13).[7]
In 1993, Reynaldo Benedicto was appointed by Ceferino Basilio, the general manager[8]
then of petitioner, as marketing manager with a monthly compensation of P20,000 plus 1%
commission from collections of all advertising contracts consummated.[9]
In a letter dated October 11, 1994 signed by Tomas Gomez III, at that time the president of
petitioner, Benedicto was terminated from his position.[10]
On December 3, 1996, Benedicto filed a complaint with the NLRC for illegal dismissal and
damages. He alleged that after his appointment, he was able to increase the televiewing,
listening and audience ratings of petitioner which resulted in its improved competitive
financial strength.[11] Specifically, in 1994, he claimed that he successfully initiated,
pursued and consummated an advertising contract with VTV Corporation for a period of
five years involving the amount of P600 million.[12] However, on October 11, 1994, he was
terminated from his position without just or authorized cause.
Labor arbiter Jovencio LL. Mayor, Jr.,[13] in a decision dated August 17, 1998, ruled in
favor of Benedicto finding that he was indeed illegally dismissed. Consequently, Mayor: (1)
ordered his reinstatement with full backwages from the time of his dismissal up to his
actual reinstatement (amounting to P920,000 at the time of the promulgation of the
decision); (2) directed petitioner to pay his 1% commission on the contract with VTV
Corporation (P645,000), attorneys fees in the amount of 10% of the total award (P156,500)
and (3) dismissed the claim for moral and exemplary damages.[14]
Finding the award excessive, petitioner, on October 15, 1998, filed with the NLRC its
memorandum on appeal with motion to re-compute the award on which the appeal bond
was to be based.[15] This motion was not acted upon,[16] hence, on December 10, 1998,
petitioner proceeded to file the appeal bond based on the amounts[17] awarded in the
judgment appealed from.[18]
In a decision promulgated on March 5, 1999, the NLRC dismissed the appeal and ruled
that petitioner failed to perfect its appeal since it did not file the appeal bond within the
reglementary period. The CA affirmed the NLRCs decision.

Thus this petition with application for preliminary injunction and/or temporary restraining
order alleging the following assignment of errors:
I. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING THE ASSAILED
DECISION/RESOLUTION OF THE [NLRC] ON MERE TECHNICALITY, FAILING TO
RECOGNIZE THAT PETITIONER HAS IN FACT PERFECTED ITS APPEAL UNDER
EXISTING LAW AND JURISPRUDENCE[;]
II. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING IN TOTO THE
ASSAILED RESOLUTION/DECISION DEPRIVING PETITIONER OF ITS RIGHT TO
APPEAL, BY IGNORING THE MERITS OF THE MOTION TO RECOMPUTE AWARD TO
REDUCE BOND AND ITS SIGNIFICANCE IN RELATION TO THE PERFECTION OF THE
APPEAL[;]
III. WITH DUE RESPECT, THE [CA] ERRED IN NOT PASSING UPON THE
SUBSTANTIVE MERITS OF THE CASE, SPECIALLY ON THE VALIDITY OF THE
REINSTATEMENT OF [BENEDICTO] AT AGE SEVENTY TWO (72), CONTRARY TO
LAW AND JURISPRUDENCE, AND THE GRANT OF BACKWAGES BEYOND [THE] AGE
FOR COMPULSORY RETIREMENT AT 65[;]
IV. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING IN TOTO THE
ASSAILED RESOLUTION/DECISION THAT GRANTS 5-YEAR AUTOMATIC INCREASE
OF AWARD [SUCH] AS FROM P1.565M TO 2.711M WITHOUT SETTING
[BENEDICTO]S MOTION TO RECOMPUTE AWARD FOR HEARING AND WITHOUT
DUE NOTICE THEREOF DEPRIVING THE PETITIONER OF ITS PROPERTY WITHOUT
DUE PROCESS[;]
V. THE [CA] ERRED IN IGNORING THE ISSUE OF JURISDICTION RAISED
BY PETITIONER.[19]
On June 26, 2002, this Court issued a temporary restraining order enjoining Benedicto and
the NLRC from implementing the decision of labor arbiter Mayor.[20]
During the pendency of the case, on November 6, 2002, Benedicto passed away.[21] He
was substituted by his surviving spouse Lourdes V. Benedicto and their four children.[22]
After this petition was given due course, Atty. Rodolfo B. Barriga, who claimed to have
been hired by Benedicto as collaborating counsel, filed a motion dated December 17, 2002
praying to be reinstated as counsel of record of respondents.[23] The Court, in a resolution
dated March 26, 2003, denied the motion since any attorney-client relationship between
him and Benedicto, if it indeed existed, was terminated by the latters death. Thereafter,
Atty. Barriga filed a motion to determine attorneys fees and notice and statement of
charging lien for attorneys fees dated May 5, 2003 praying, among others, that we
determine and approve his attorneys fees and approve the notice of his charging lien.[24]
Now the resolution of the issues.
Petitioner raises the issue of jurisdiction without, however, explaining properly the basis of
its objections.[25] Such half-hearted and belated attempt to argue the NLRCs alleged lack
of jurisdiction cannot possibly be taken seriously at this late stage of the proceedings.
The NLRC and the CA dismissed petitioners appeal. Both held that petitioner failed to
perfect its appeal. Petitioner had ten calendar days from its receipt of the labor arbiters
decision on October 5, 1998 to appeal. While it filed its memorandum on appeal with
motion to re-compute award on October 15, 1998, the appeal bond was posted after the
appeal period.
Under the second paragraph of Article 223 of the Labor Code, when a judgment involving
monetary award is appealed by the employer, the appeal is perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the NLRC in an amount equivalent to the monetary award in the judgment. This assures
the workers that if they finally prevail in the case, the monetary award will be given to them
on dismissal of the employers appeal.[26] It is also meant to discourage employers from
using the appeal to delay or evade payment of their obligations to the employees.[27]
Nevertheless, such amount of the bond may be reduced by the NLRC in meritorious
cases, on motion of the appellant.[28] Indeed, an unreasonable and excessive amount of
bond is oppressive and unjust, and has the effect of depriving a party of his right to
appeal.[29]
The provision of Article 223 of the Labor Code requiring the posting of a bond for the
perfection of an appeal of a monetary award must be given liberal interpretation in line with
the desired objective of resolving controversies on the merits.[30] If only to achieve
substantial justice, strict observance of the reglementary periods may be relaxed if
warranted.[31] However, this liberal interpretation must be justified by substantial
compliance with the rule. As we declared in Buenaobra v. Lim King Guan:[32]
It is true that the perfection of an appeal in the manner and within the period prescribed by
law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect
of making the judgment final and executory. However, technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the
parties. We have allowed appeals from the decisions of the labor arbiter to the NLRC,
even if filed beyond the reglementary period, in the interest of justice.[33]
In this case, petitioner posted the bond when the NLRC did not act on its motion for re-
computation of the award. There was thus substantial compliance that justified a liberal
application of the requirement on the timely filing of the appeal bond. Moreover, petitioner
presented a meritorious ground in questioning the computation of the backwages, as we
shall discuss below.
We now proceed to the merits of the case.
The labor arbiter found that Benedicto was an employee (the marketing manager) of
petitioner.[34] He also determined that there was no just or authorized cause for
Benedictos termination. Neither did petitioner comply with the two-notice requirement for
valid termination under the law. He therefore concluded that Benedicto was illegally
dismissed.[35]
These factual findings of the NLRC, confirmed by the CA, are binding on us since they are
supported by substantial evidence. Petitioner, aside from merely stating that Benedictos
appointment was unauthorized,[36] did not extensively deal with the issue of whether
Benedicto was in fact its employee. Besides, it is estopped from denying such fact
considering its admission that its former President, Tomas Gomez III, wrote him a letter of
termination on October 11, 1994.[37] Petitioner, furthermore, never contested the finding of
illegal dismissal. Accordingly, there are no strong reasons for us to again delve into the
facts.
Instead, the bulk of petitioners arguments focused on the labor arbiters order of
reinstatement and award of backwages. The issue of reinstatement was mooted by
Benedictos death in 2002.
As for the award of backwages, petitioner insists that the award should be limited to what
Benedicto was entitled to as of the compulsory retirement age of 65 years. When the labor
arbiter promulgated his decision (wherein he awarded the amount of P920,000 as
backwages), Benedicto was already 68 years old. In an order dated August 10, 1999, he
further increased the backwages by P180,000.[38]
We agree with petitioner that Benedicto was entitled to backwages only up to the time he
reached 65 years old, the compulsory retirement age under the law.[39] When Benedicto
was illegally dismissed on October 11, 1994, he was already 64 years old. He turned 65
years old on December 1, 1994[40] at which age he was deemed to have retired. Since
backwages are granted on grounds of equity for earnings lost by an employee due to his
illegal dismissal,[41] Benedicto was entitled to backwages only for the period he could
have worked had he not been illegally dismissed, i.e. from October 11, 1994 to December
1, 1994.[42]
Petitioner also questions the award by the labor arbiter of Benedictos 1% commission on
the blocktime sale agreement with VTV Corporation in the amount of P645,000.[43] The
arbiter found that the agreement was initiated by and consummated through Benedictos
efforts and that he was entitled to the commission.[44] This is another factual matter that is
binding on us. However, it is unclear how the labor arbiter arrived at the amount adjudged.
We therefore rule that in computing the amount of the commission Benedicto was entitled
to, the following should be considered:
First, because Benedicto was entitled to backwages only from October 11 to December 1,
1994 when he turned 65 years old, petitioner should pay his commission only for this
period.
Second, by nature, commissions are given to employees only if the employer receives
income.[45] Employees, as a reward, receive a percentage of the earnings of the
employer, which they, through their efforts, helped produce.[46] Commissions are also
given in the form of incentives or encouragement so that employees will be inspired to put
a little more industry into their tasks. Commissions can also be considered as direct
remunerations for services rendered.[47] All these different concepts of commissions are
incongruent with the claim that an employee can continue to receive them indefinitely after
reaching his mandatory retirement age.
Benedictos right to the commissions was coterminous with his employment with
petitioner[48] and this ended when he reached the compulsory retirement age.
Lastly, the stipulation[49] providing for commissions (which did not specify the period of
entitlement) would be too burdensome if interpreted to mean that Benedicto had a right to
it even after his employment with petitioner. Doubts in contracts should be settled in favor
of the greatest reciprocity of interests.[50] A lopsided and open-minded construction could
not have been the parties contemplation. Had that been their intent, then they should have
spelled it out in no uncertain terms.
The labor arbiter should therefore re-compute the commission Benedicto was entitled to in
accordance with these guidelines.
Petitioner is also liable for 10% of the total amount for attorneys fees since Benedicto and
the present respondents were compelled to litigate and incur expenses to enforce and
protect his rights.[51]
With respect to Atty. Barrigas motion, we note that this entails a factual determination and
examination of the evidence. Since Atty. Barriga still has to prove his entitlement to the
attorneys fees he is claiming and the amount thereof (if he is so entitled), this may be
taken up in the NLRC which will execute the judgment.[52]
In summary, this case shall be remanded to the labor arbiter for re-computation of
backwages and commissions to be paid by petitioner to respondent(s) for the period
October 11, 1994 to December 1, 1994 and 10% of the total amount as attorneys fees.
The labor arbiter shall also set for further hearing Atty. Barrigas motion to determine his
attorneys fees and thereafter to fix the amount thereof if he is so entitled.
WHEREFORE, the assailed decision dated October 18, 2001 and resolution dated March
18, 2002 of the Court of Appeals in CA-G.R. SP No. 53413 are hereby REVERSED and
SET ASIDE.
Petitioner is ORDERED to pay the deceased respondents backwages and commissions to
his heirs from the time he was illegally dismissed on October 11, 1994 up to the time he
reached compulsory retirement age on December 1, 1994. Likewise, petitioner is
ORDERED to pay attorneys fees equivalent to 10% of the total monetary award
(backwages plus commissions). For this purpose, the case is hereby ordered REMANDED
to the labor arbiter for the re-computation of the amounts due.
The labor arbiter is also DIRECTED to set for further hearing Atty. Rodolfo B. Barrigas
motion to determine his attorneys fees and thereafter to fix the amount thereof if due to
him.
Our temporary restraining order issued on June 26, 2002 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
FIRST DIVISION
[G. R. No. 143215. July 11, 2002]
SOLIMAN SECURITY SERVICES, INC. and/or TERESITA L. SOLIMAN, petitioners, vs.
THE COURT OF APPEALS and EDUARDO VALENZUELA, respondents.
DECISION
VITUG, J.:
Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner
Soliman Security Services assigned at the BPI-Family Bank, Pasay City. On 09 March
1995, he received a memorandum from petitioners relieving him from his post at the bank,
said to be upon the latters request, and requiring him to report to the security agency for
reassignment. The following month, or on 07 April 1995, respondent filed a complaint for
illegal dismissal on the ground that his services were terminated without a valid cause and
that, during his tenure at the bank, he was not paid his overtime pay, 13th month pay, and
premium pay for services rendered during holidays and rest days. He averred that, after
receiving the memorandum of 09 March 1995, he kept on reporting to the office of
petitioners for reassignment but, except for a brief stint in another post lasting for no more
than a week, he was put on a floating status.

Petitioners contended that the relief of respondent from his post, made upon request of the
client, was merely temporary and that respondent had been offered a new post but the
latter refused to accept it. Petitioners argued that respondents floating status for barely 29
days did not constitute constructive dismissal.
On 31 July 1995, the Labor Arbiter, Ariel Cadiente Santos, arrived at a decision holding
petitioners guilty of constructive dismissal and ordering the reinstatement of the
complainant to his former position with full backwages from the date of his dismissal until
his actual reinstatement; directing the Research and Information Unit to compute the
various monetary benefits awarded to the complainant; and adjudging the payment, by
way of attorneys fees, of ten percent (10%) of all sums owing to the complainant.
On 16 October 1998, petitioners filed an appeal to the National Labor Relations
Commission (NLRC).
On 11 November 1998, the NLRC issued an order directing petitioners to submit an
affidavit to the effect that their appeal bond was genuine and that it would be in force and
effect until the final disposition of the case. In his reply memorandum, dated 28 November
1998, respondent, asseverating that petitioners failed to deposit the required bond for the
appeal, sought the appeal to be declared as not having been validly perfected. On 19
January 1999, petitioners submitted a manifestation and affidavit in compliance with the
11th November 1998 order of the NLRC.[1] Apparently satisfied, the NLRC, on 30 April
1999, gave due course to the appeal and rendered the presently assailed decision,
reversing that of the Labor Arbiter, to wit:
WHEREFORE, the decision appealed from is hereby SET ASIDE. However, respondent
[before the NLRC] is hereby ordered to pay complainant separation pay computed at one-
half (1/2) month for every year of service, reckoned from date of employment on October
9, 1990 up to September 9, 1995, the date the complainant should have been
redeployed.[2]
A motion for reconsideration, filed by herein private respondent Valenzuela, was denied by
the NLRC.
Valenzuela forthwith brought the matter up to the Court of Appeals. On the thesis that the
only issue interposed was whether or not the NLRC committed grave abuse of discretion
when it took cognizance of the appeal and reversed the decision of the Labor Arbiter
despite the failure of herein petitioners to validly post the appeal bond, the appellate court
responded in the affirmative, set aside the assailed decision of the NLRC and reinstated
that of the Labor Arbiter. A motion to reconsider the decision was denied.
In the instant recourse before this Court, petitioners claim that the Court of Appeals
(Eleventh Division) has committed grave abuse of discretion amounting to lack or excess
of jurisdiction in declaring petitioners to have failed in perfecting their appeal with the
NLRC.
This Court finds merit in the petition.
Private respondent would posit that the appeal of petitioners to the NLRC should be
considered to have been made on 19 January 1999 (when petitioner submitted, pursuant
to the NLRC order, a statement under oath to the effect that the surety bond it had posted
was genuine and confirmed it to be in effect until the final termination of the case) which
was beyond the ten-day period for perfecting an appeal. The records before the Court
would show, however, that an appeal bond was posted with the NLRC at the same time
that the appeal memorandum of petitioners was filed on 16 October 1998. A certified true
copy of the appeal bond[3] would indicate that it was received by the Commission on 16
October 1998, the date reflected by the stamp-mark thereon. The surety bond issued by
the Philippine Charter Insurance Corporation bore the date of 14 October 1998 or two days
before the appeal memorandum was seasonably filed on 16 October 1998. The Order,[4]
dated 11 November 1998, of the NLRC categorically stated that records [would] disclose
that the instant appeal [was] accompanied by a surety bond, as the Decision sought to be
appealed involved a monetary award. The NLRC, in fact, ordered petitioner to submit an
affidavit to confirm that its appeal bond was genuine and would be in force and effect until
the final disposition of the case. The Commissions declaration that the appeal was
accompanied by a surety bond indicated that there had been compliance with Article
223[5] of the Labor Code.
An appeal to the NLRC is perfected once an appellant files the memorandum of appeal,
pays the required appeal fee and, where an employer appeals and a monetary award is
involved, the latter posts an appeal bond or submits a surety bond issued by a reputable
bonding company.[6] In line with the desired objective of labor laws to have controversies
promptly resolved on their merits, the requirements for perfecting appeals are given liberal
interpretation and construction.[7]
The only issue on the merits of the case is whether or not private respondent should be
deemed constructively dismissed by petitioner for having been placed on floating status,
i.e., with no reassignment, for a period of 29 days. The question posed is not new. In the
case of Superstar Security Agency, Inc., vs. NLRC,[8] this Court, addressing a similar
issue, has said:
x x x The charge of illegal dismissal was prematurely filed. The records show that a month
after Hermosa was placed on a temporary off-detail, she readily filed a complaint against
the petitioners on the presumption that her services were already terminated. Temporary
off-detail is not equivalent to dismissal. In security parlance, it means waiting to be posted.
It is a recognized fact that security guards employed in a security agency may be
temporarily sidelined as their assignments primarily depend on the contracts entered into
by the agency with third parties (Agro Commercial Security Agencies, Inc. vs. NLRC, et al.,
G.R. Nos. 82823-24, 31 July 1989). However, it must be emphasized that such temporary
inactivity should continue only for six months. Otherwise, the security agency concerned
could be liable for constructive dismissal.[9]
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain,
on the part of an employer has become so unbearable as to leave an employee with no
choice but to forego continued employment.[10] The temporary off-detail of respondent
Valenzuela is not such a case.
WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of
the Court of Appeals are SET ASIDE and the decision of the National Labor Relations
Commission in NCR CN. 04-02620-95 is REINSTATED. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Ynares-Santiago, and Austria-Martinez, JJ.,
concur.
EN BANC
[G.R. No. 130866. September 16, 1998]
ST. MARTIN FUNERAL HOME, petitioner, vs. NATIONAL LABOR RELATIONS
MARTINEZ, COMMISSION and BIENVENIDO ARICAYOS, respondents.
DECISION
REGALADO, J.:
The present petition for certiorari stemmed from a complaint for illegal dismissal filed by
herein private respondent before the National Labor Relations Commission (NLRC),
Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent
alleges that he started working as Operations Manager of petitioner St. Martin Funeral
Home on February 6, 1995. However, there was no contract of employment executed
between him and petitioner nor was his name included in the semi-monthly payroll. On
January 22, 1996, he was dismissed from his employment for allegedly misappropriating
P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to
the Bureau of Internal Revenue (BIR).[1]
Petitioner on the other hand claims that private respondent was not its employee but only
the uncle of Amelita Malabed, the owner of petitioner St. Martins Funeral Home. Sometime
in 1995, private respondent, who was formerly working as an overseas contract worker,
asked for financial assistance from the mother of Amelita. Since then, as an indication of
gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the
business.
In January 1996, the mother of Amelita passed away, so the latter she took over the
management of the business. She then discovered that there were arrears in the payment
of taxes and other government fees, although the records purported to show that the same
were already paid. Amelita then made some changes in the business operation and private
respondent and his wife were no longer allowed to participate in the management thereof.
As a consequence, the latter filed a complaint charging that petitioner had illegally
terminated his employment.[2]
Based on the position papers of the parties, the labor arbiter rendered a decision in favor
of petitioner on October 25, 1996 declaring that no employer-employee relationship existed
between the parties and, therefore, his office had no jurisdiction over the case.[3]
Not satisfied with the said decision, private respondent appealed to the NLRC contending
that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2)
in holding that he worked as a volunteer and not as an employee of St. Martin Funeral
Home from February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in
ruling that there was no employer-employee relationship between him and petitioner.[4]
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision
and remanding the case to the labor arbiter for immediate appropriate proceedings.[5]
Petitioner then filed a motion for reconsideration which was denied by the NLRC in its
resolution dated August 18, 1997 for lack of merit,[6] hence the present petition alleging
that the NLRC committed grave abuse of discretion.[7]
Before proceeding further into the merits of the case at bar, the Court feels that it is now
exigent and opportune to reexamine the functional validity and systemic practicability of
the mode of judicial review it has long adopted and still follows with respect to decisions of
the NLRC. The increasing number of labor disputes that find their way to this Court and the
legislative changes introduced over the years into the provisions of Presidential Decree
(P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.)
129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a
reassessment of that procedural aspect.
We prefatorily delve into the legal history of the NLRC. It was first established in the
Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were
expressly declared to be appealable to the Secretary of Labor and, ultimately, to the
President of the Philippines.
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to
take effect six months after its promulgation.[8] Created and regulated therein is the
present NLRC which was attached to the Department of Labor and Employment for
program and policy coordination only.[9] Initially, Article 302 (now, Article 223) thereof also
granted an aggrieved party the remedy of appeal from the decision of the NLRC to the
Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and
abolished such appeals. No appellate review has since then been provided for.
Thus, to repeat, under the present state of the law, there is no provision for appeals from
the decision of the NLRC.[10] The present Section 223, as last amended by Section 12 of
R.A. No. 6715, instead merely provides that the Commission shall decide all cases within
twenty days from receipt of the answer of the appellee, and that such decision shall be
final and executory after ten calendar days from receipt thereof by the parties.
When the issue was raised in an early case on the argument that this Court has no
jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor,
since there is no legal provision for appellate review thereof, the Court nevertheless
rejected that thesis. It held that there is an underlying power of the courts to scrutinize the
acts of such agencies on questions of law and jurisdiction even though no right of review is
given by statute; that the purpose of judicial review is to keep the administrative agency
within its jurisdiction and protect the substantial rights of the parties; and that it is that part
of the checks and balances which restricts the separation of powers and forestalls arbitrary
and unjust adjudications.[11]
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the
remedy of the aggrieved party is to timely file a motion for reconsideration as a
precondition for any further or subsequent remedy,[12] and then seasonably avail of the
special civil action of certiorari under Rule 65,[13] for which said Rule has now fixed the
reglementary period of sixty days from notice of the decision. Curiously, although the 10-
day period for finality of the decision of the NLRC may already have lapsed as
contemplated in Section 223 of the Labor Code, it has been held that this Court may still
take cognizance of the petition for certiorari on jurisdictional and due process
considerations if filed within the reglementary period under Rule 65.[14]
Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally
provided as follows:
SEC. 9. Jurisdiction. - The Intermediate Appellate Court shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate
jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial
Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders,
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards,
or commissions, except those falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of
the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual issues raised
in cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under the
Labor Code of the Philippines and by the Central Board of Assessment Appeals.[15]
Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902
effective March 18, 1995, to wit:
SEC. 9. Jurisdiction. - The Court of Appeals shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate
jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial
Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Social Security
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in cases
falling within its original and appellate jurisdiction, including the power to grant and conduct
new trials or further proceedings. Trials or hearings in the Court of Appeals must be
continuous and must be completed within, three (3) months, unless extended by the Chief
Justice.
It will readily be observed that, aside from the change in the name of the lower appellate
court,[16] the following amendments of the original provisions of Section 9 of B.P. No. 129
were effected by R.A. No. 7902, viz.:
1. The last paragraph which excluded its application to the Labor Code of the Philippines
and the Central Board of Assessment Appeals was deleted and replaced by a new
paragraph granting the Court of Appeals limited powers to conduct trials and hearings in
cases within its jurisdiction.
2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3)
of the section, such that the original exclusionary clause therein now provides except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. (Italics
supplied)
3. Contrarily, however, specifically added to and included among the quasi-judicial
agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are
the Securities and Exchange Commission, the Social Security Commission, the
Employees Compensation Commission and the Civil Service Commission.
This, then, brings us to a somewhat perplexing impass, both in point of purpose and
terminology. As earlier explained, our mode of judicial review over decisions of the NLRC
has for some time now been understood to be by a petition for certiorari under Rule 65 of
the Rules of Court. This is, of course, a special original action limited to the resolution of
jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have
been brought to us, grave abuse of discretion amounting to lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the
Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to
therein except, among others, those falling within the appellate jurisdiction of the Supreme
Court in accordance with x x x the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, x x x. This would necessarily contradict what has been ruled
and said all along that appeal does not lie from decisions of the NLRC.[17] Yet, under such
excepting clause literally construed, the appeal from the NLRC cannot be brought to the
Court of Appeals, but to this Court by necessary implication.
The same exceptive clause further confuses the situation by declaring that the Court of
Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction
of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129,
and those specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of
course, be properly excluded from the exclusive appellate jurisdiction of the Court of
Appeals. However, because of the aforementioned amendment by transposition, also
supposedly excluded are cases falling within the appellate jurisdiction of the Supreme
Court in accordance with the Labor Code. This is illogical and impracticable, and Congress
could not have intended that procedural gaffe, since there are no cases in the Labor Code
the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of
the Supreme Court or of any other court for that matter.
A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that
there may have been an oversight in the course of the deliberations on the said Act or an
imprecision in the terminology used therein. In fine, Congress did intend to provide for
judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but
there was an inaccuracy in the term used for the intended mode of review. This conclusion
which we have reluctantly but prudently arrived at has been drawn from the considerations
extant in the records of Congress, more particularly on Senate Bill No. 1495 and the
Reference Committee Report on S. No. 1495/H. No. 10452.[18]
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship
speech[19] from which we reproduce the following excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized
the Court of Appeals and at the same time expanded its jurisdiction and powers. Among
others, its appellate jurisdiction was expanded to cover not only final judgment of Regional
Trial Courts, but also all final judgment(s), decisions, resolutions, orders or awards of
quasi-judicial agencies, instrumentalities, boards and commissions, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution,
the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and
subparagraph 4 of Section 17 of the Judiciary Act of 1948.
Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the
transfer of some of its burden of review of factual issues to the Court of Appeals. However,
whatever benefits that can be derived from the expansion of the appellate jurisdiction of
the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa
Blg. 129 which excludes from its coverage the decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of Assessment Appeals.
Among the highest number of cases that are brought up to the Supreme Court are labor
cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in
Section 9 and, additionally, extends the coverage of appellate review of the Court of
Appeals in the decision(s) of the Securities and Exchange Commission, the Social Security
Commission, and the Employees Compensation Commission to reduce the number of
cases elevated to the Supreme Court. (Emphases and corrections ours)
xxx
Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the
ideal situation of drastically reducing the workload of the Supreme Court without depriving
the litigants of the privilege of review by an appellate tribunal.
In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986
in the Annual Report of the Supreme Court:
x x x Amendatory legislation is suggested so as to relieve the Supreme Court of the
burden of reviewing these cases which present no important issues involved beyond the
particular fact and the parties involved, so that the Supreme Court may wholly devote its
time to cases of public interest in the discharge of its mandated task as the guardian of the
Constitution and the guarantor of the peoples basic rights and additional task expressly
vested on it now to determine whether or not there has been a grave abuse of discretion
amounting to lack of jurisdiction on the part of any branch or instrumentality of the
Government.
We used to have 500,000 cases pending all over the land, Mr. President. It has been cut
down to 300,000 cases some five years ago. I understand we are now back to 400,000
cases. Unless we distribute the work of the appellate courts, we shall continue to mount
and add to the number of cases pending.
In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted,
the Committee on Justice and Human Rights requests the support and collegial approval
of our Chamber.
xxx
Surprisingly, however, in a subsequent session, the following Committee Amendment was
introduced by the said sponsor and the following proceedings transpired:[20]
Senator Roco. On page 2, line 5, after the line Supreme Court in accordance with the
Constitution, add the phrase THE LABOR CODE OF THE PHILIPPINES UNDER P.D.
442, AS AMENDED. So that it becomes clear, Mr. President, that issues arising from the
Labor Code will still be appealable to the Supreme Court.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.
Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also
discussed with our Colleagues in the House of Representatives and as we understand it,
as approved in the House, this was also deleted, Mr. President.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.
Senator Roco. There are no further Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved. (Italics supplied)
xxx
Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed
on second reading and being a certified bill, its unanimous approval on third reading
followed.[21]; Record of the Senate, Vol. V, No. 63, pp. 180-181.21 The Conference
Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore
been approved by the House of Representatives, the same was likewise approved by the
Senate on February 20, 1995,[22] inclusive of the dubious formulation on appeals to the
Supreme Court earlier discussed.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC
to the Supreme Court were eliminated, the legislative intendment was that the special civil
action of certiorari was and still is the proper vehicle for judicial review of decisions of the
NLRC. The use of the word appeal in relation thereto and in the instances we have noted
could have been a lapsus plumae because appeals by certiorari and the original action for
certiorari are both modes of judicial review addressed to the appellate courts. The
important distinction between them, however, and with which the Court is particularly
concerned here is that the special civil action of certiorari is within the concurrent original
jurisdiction of this Court and the Court of Appeals;[23] whereas to indulge in the
assumption that appeals by certiorari to the Supreme Court are allowed would not
subserve, but would subvert, the intention of Congress as expressed in the sponsorship
speech on Senate Bill No. 1495.
Incidentally, it was noted by the sponsor therein that some quarters were of the opinion
that recourse from the NLRC to the Court of Appeals as an initial step in the process of
judicial review would be circuitous and would prolong the proceedings. On the contrary, as
he commendably and realistically emphasized, that procedure would be advantageous to
the aggrieved party on this reasoning:
On the other hand, Mr. President, to allow these cases to be appealed to the Court of
Appeals would give litigants the advantage to have all the evidence on record be
reexamined and reweighed after which the findings of facts and conclusions of said bodies
are correspondingly affirmed, modified or reversed.
Under such guarantee, the Supreme Court can then apply strictly the axiom that factual
findings of the Court of Appeals are final and may not be reversed on appeal to the
Supreme Court. A perusal of the records will reveal appeals which are factual in nature
and may, therefore, be dismissed outright by minute resolutions.[24]
While we do not wish to intrude into the Congressional sphere on the matter of the wisdom
of a law, on this score we add the further observations that there is a growing number of
labor cases being elevated to this Court which, not being a trier of fact, has at times been
constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual
findings; that the Court of Appeals is procedurally equipped for that purpose, aside from
the increased number of its component divisions; and that there is undeniably an
imperative need for expeditious action on labor cases as a major aspect of constitutional
protection to labor.
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals
from the NLRC to the Supreme Court are interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65. Consequently, all such petitions should
henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on
the hierarchy of courts as the appropriate forum for the relief desired.
Apropos to this directive that resort to the higher courts should be made in accordance
with their hierarchical order, this pronouncement in Santiago vs. Vasquez, et al.[25] should
be taken into account:
One final observation. We discern in the proceedings in this case a propensity on the part
of petitioner, and, for that matter, the same may be said of a number of litigants who
initiate recourses before us, to disregard the hierarchy of courts in our judicial system by
seeking relief directly from this Court despite the fact that the same is available in the lower
courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law
to be sought therein. This practice must be stopped, not only because of the imposition
upon the precious time of this Court but also because of the inevitable and resultant delay,
intended or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or as better
equipped to resolve the issues since this Court is not a trier of facts. We, therefore,
reiterate the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the exercise
of our primary jurisdiction.
WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby
REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court
of Appeals for appropriate action and disposition consistent with the views and ruling
herein set forth, without pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 82211-12 March 21, 1989
TERESITA MONTOYA, petitioner,
vs.
TERESITA ESCAYO, JOY ESCAYO, AIDA GANANCIAL, MARY ANN CAPE, CECILIA
CORREJADO, ERLINDA PAYPON and ROSALIE VERDE, AND NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Rolando N. Medalla and Segundo Y Chua for petitioner.
The Solicitor General for public respondent.
Archie S. Baribar for private respondents.
SARMIENTO, J.:
This petition for certiorari seeks the annullment and setting aside of the resolution 1 9dated
August 20, 1987 of the National Labor Relations Commission (NLRC), Third Division,
which reversed and set aside the order dated September 27, 1985 of Labor Arbiter
Ethelwoldo R. Ovejera of the NLRC's Regional Arbitration Branch No. VI, Bacolod City,
dismissing the complaint filed by the private respondents against the petitioner. This
petition raises a singular issue, i.e., the applicability of Presidential Decree (P.D.) No.
1508, more commonly known as the Katarungang Pambarangay Law, to labor disputes.
The chronology of events leading to the present controversy is as follows:
The private respondents were all formerly employed as salesgirls in the petitioner's store,
the "Terry's Dry Goods Store," in Bacolod City. On different dates, they separately filed
complaints for the collection of sums of money against the petitioner for alleged unpaid
overtime pay, holiday pay, 13th month pay, ECOLA, and service leave pay: for violation of
the minimum wage law, illegal dismissal, and attorney's fees. The complaints, which were
originally treated as separate cases, were subsequently consolidated on account of the
similarity in their nature. On August 1, 1984, the petitioner-employer moved (Annex "C" of
Petition) for the dismissal of the complaints, claiming that among others, the private
respondents failed to refer the dispute to the Lupong Tagapayapa for possible settlement
and to secure the certification required from the Lupon Chairman prior to the filing of the
cases with the Labor Arbiter. These actions were allegedly violative of the provisions of
P.D. No. 1508, which apply to the parties who are all residents of Bacolod City.
Acting favorably on the petitioner's motion, Labor Arbiter Ethelwoldo R. Ovejera, on
September 27, 1985, ordered the dismissal of the complaints. The private respondents
sought the reversal of the Labor Arbiter's order before the respondent NLRC. On August
20, 1987, the public respondent rendered the assailed resolution reversing the order of
Ovejera, and remanded the case to the Labor Arbiter for further proceedings. A motion for
reconsideration was filed by the petitioner but this was denied for lack of merit on October
28, 1987. Hence, this petition.
It is the petitioner's contention that the provisions of the Katarungang Pambarangay Law
(P.D. No. 1508) relative to the prior amicable settlement proceedings before the Lupong
Tagapayapa as a jurisdictional requirement at the trial level apply to labor cases. More
particularly, the petitioner insists that the failure of the private respondents to first submit
their complaints for possible conciliation and amicable settlement in the proper barangay
court in Bacolod City and to secure a certification from the Lupon Chairman prior to their
filing with the Labor Arbiter, divests the Labor Arbiter, as well as the respondent
Commission itself, of jurisdiction over these labor controversies and renders their
judgments thereon null and void.
On the other hand, the Solicitor General, as counsel for the public respondent NLRC, in his
comment, strongly argues and convincingly against the applicability of P.D. No. 1508 to
labor cases.
We dismiss the petition for lack of merit, there being no satisfactory showing of any grave
abuse of discretion committed by the public respondent.

The provisions of P.D. No. 1508 requiring the submission of disputes before the barangay
Lupong Tagapayapa prior to their filing with the court or other government offices are not
applicable to labor cases.
For a better understanding of the issue in this case, the provisions of P.D. No. 1508
invoked by the petitioner are quoted:
SEC. 6. Conciliation pre-condition to filing of complaint. No complaint, petition, action or
proceeding involving any matter within the authority of the Lupon as provided in Section 2
hereof shall be filed or instituted in court or any other government office for adjudication
unless there has been a confrontation of the parties before the Lupon Chairman or the
Pangkat and no conciliation or settlement has been reached as certified by the Lupon
Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless
the settlement has been repudiated. However, the parties may go directly to court in the
following cases:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of per sonal liberty calling for
habeas corpus proceedings;
(3) Actions coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property and support pendente lite; and
(4) Where the action may otherwise be barred by the Statute of Limitations.
As correctly pointed out by the Solicitor General in his comment to the petition, even from
the three "WHEREAS" clauses of P.D. No. 1508 can be gleaned clearly the decree's
intended applicability only to courts of justice, and not to labor relations commissions or
labor arbitrators' offices. The express reference to "judicial resources", to "courts of
justice", "court dockets", or simply to "courts" are significant. On the other band, there is no
mention at all of labor relations or controversies and labor arbiters or commissions in the
clauses involved.
These "WHEREAS" clauses state:
WHEREAS, the perpetuation and official recognition of the time-honored tradition of
amicably settling disputes among family and barangay members at the barangay level
without judicial resources would promote the speedy administration of justice and
implement the constitutional mandate to preserve and develop Filipino culture and to
strengthen the family as a basic social institution;
WHEREAS, the indiscriminate filing of cases in the courts of justice contributes heavily and
unjustifiably to the congestion of court dockets, thus causing a deterioration in the quality
of justice;
WHEREAS, in order to help relieve the courts of such docket congestion and thereby
enhance the quality of Justice dispensed by the courts, it is deemed desirable to formally
organize and institutionalize a system of amicably settling disputes at the barangay level;
(Emphasis supplied.)
In addition, Letter of Instructions No. 956 and Letter of Implementation No. 105, both
issued on November 12, 1979 by the former President in connection with the
implementation of the Katarungang Pambarangay Law, affirm this conclusion. These
Letters were addressed only to the following officials: all judges of the Courts of first
Instance, Circuit Criminal Courts, Juvenile and Domestic Relations Courts, Courts of
Agrarian Relations, City Courts and Municipal Courts, and all Fiscals and other
Prosecuting Officers. These presidential issuances make clear that the only official
directed to oversee the implementation of the provisions of the Katarungang Pambarangay
Law (P.D. No. 1508) are the then Minister of Justice, the then Minister of Local
Governments and Community Development, and the Chief Justice of the Supreme Court.
If the contention of the petitioner were correct, the then Minister (now Secretary) of Labor
and Employment would have been included in the list, and the two presidential issuances
also would have been addressed to the labor relations officers, labor arbiters, and the
members of the National Labor Relations Commission. Expressio unius est exclusio
alterius.
Nor can we accept the petitioner's contention that the "other government office" referred to
in Section 6 of P.D. No. 1508 includes the Office of the Labor Arbiter and the Med-Arbiter.
The declared concern of the Katarungan Pambarangay Law is "to help relieve the courts of
such docket congestion and thereby enhance the quality of justice dispensed by the
courts." Thus, the" other government office" mentioned in Section 6 of P.D. No. 1508
refers only to such offices as the Fiscal's Office or, in localities where there is no fiscal, the
Municipal Trial Courts, where complaints for crimes (such as those punishable by
imprisonment of not more than 30 days or a, fine of not more than P 200.00) falling under
the jurisdiction of the barangay court but which are not amicably settled, are subsequently
filed for proper disposition.
But, the opinion of the Honorable Minister of Justice (Opinion No. 59, s. 1983) to the
contrary notwithstanding, all doubts on this score are dispelled by The Labor Code Of The
Philippines (Presidential Decree No. 442, as amended) itself. Article 226 thereof grants
original and exclusive jurisdiction over the conciliation and mediation of disputes,
grievances, or problems in the regional offices of the Department of Labor and Employ-
ment. It is the said Bureau and its divisions, and not the barangay Lupong Tagapayapa,
which are vested by law with original and exclusive authority to conduct conciliation and
mediation proceedings on labor controversies before their endorsement to the appropriate
Labor Arbiter for adjudication. Article 226, previously adverted to is clear on this regard. It
provides:
ART. 226. Bureau of Labor Relations.- The Bureau of Labor Relations and the Labor
relations divisions in the regional officer of the Department of Labor shall have original and
exclusive authority to act, at their own initiative or upon request of either or both parties, on
all inter-union and intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor-management relations in all workplaces whether agricultural or non-
agricultural, except those arising from the implementation or interpretation of collective
bargaining agreements which shall be the subject of grievance procedure and/or voluntary
arbitration.
The Bureau shall have fifteen (15) working days to act on all labor cases, subject to
extension by agreement of the parties, after which the Bureau shall certify the cases to the
appropriate Labor Arbiters. The 15-working day deadline, however, shall not apply to
cases involving deadlocks in collective bargaining which the Bureau shall certify to the
appropriate Labor Arbiters only after all possibilities of voluntary settlement shall have
been tried.
Requiring conciliation of labor disputes before the barangay courts would defeat the very
salutary purposes of the law. Instead of simplifying labor proceedings designed at
expeditious settlement or referral to the proper court or office to decide it finally, the
position taken by the petitioner would only duplicate the conciliation proceedings and
unduly delay the disposition of the labor case. The fallacy of the petitioner's submission
can readily be seen by following it to its logical conclusion. For then, if the procedure
suggested is complied with, the private respondent would have to lodge first their
complaint with the barangay court, and then if not settled there, they would have to go to
the labor relations division at the Regional Office of Region VI of the Department of Labor
and Employment, in Bacolod City, for another round of conciliation proceedings. Failing
there, their long travail would continue to the Office of the Labor Arbiter, then to the NLRC,
and finally to us. This suggested procedure would destroy the salutary purposes of P.D.
1508 and of The Labor Code Of The Philippines. And labor would then be given another
unnecessary obstacle to hurdle. We reject the petitioner's submission. It does violence to
the constitutionally mandated policy of the State to afford full protection to labor. 2
Finally, it is already well-settled that the ordinary rules on procedure are merely suppletory
in character vis-a-vis labor disputes which are primarily governed by labor laws. 3 And
"(A)ll doubts in the implementation and interpretation of this Code (Labor), including its
implementing rules and regulations, shall be resolved in favor of labor. 4
WHEREFORE, the petition is DISMISSED. Costs against the petitioner.
SO ORDERED.
FIRST DIVISION
EQUITABLE BANKING CORPORATION (now known as EQUITABLE-PCI BANK),
Petitioner,
- versus -
Before Us is a Petition for Review on Certiorari with Motion to Refer the Petition to the
Court En Banc filed by Equitable Banking Corporation (now known as Equitable-PCI
Bank), seeking to reverse the Decision[1] and Resolution[2] of the Court of Appeals, dated
6 April 2004 and 28 July 2004, respectively, as amended by the Supplemental Decision[3]
dated 26 October 2004 in CA-G.R. SP No. 75013, which reversed and set aside the
Resolutions of the National Labor Relations Commission (NLRC), dated 28 March 2001
and 24 September 2002 in NLRC-NCR Case No. 00-11-05252-89.
The Antecedents
As culled from the records, respondent Sadac was appointed Vice President of the Legal
Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel
thereof on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Banks Legal
Department, in a letter-petition to the Chairman of the Board of Directors, accused
respondent Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in
leadership of the department. On the ground of lack of confidence in respondent Sadac,
under the rules of client and lawyer relationship, petitioner Bank instructed respondent
Sadac to deliver all materials in his custody in all cases in which the latter was appearing
as its counsel of record. In reaction thereto, respondent Sadac requested for a full hearing
and formal investigation but the same remained unheeded. On 9 November 1989,
respondent Sadac filed a complaint for illegal dismissal with damages against petitioner
Bank and individual members of the Board of Directors thereof. After learning of the filing
of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on
10 August 1989, respondent Sadac was removed from his office and ordered disentitled to
any compensation and other benefits.[4]
In a Decision[5] dated 2 October 1990, Labor Arbiter Jovencio Ll. Mayor, Jr., dismissed the
complaint for lack of merit. On appeal, the NLRC in its Resolution[6] of 24 September 1991
reversed the Labor Arbiter and declared respondent Sadacs dismissal as illegal. The
decretal portion thereof reads, thus:

RICARDO SADAC, WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2,
Respondent. 1990 be, as it is hereby, SET ASIDE, and a new one ENTERED declaring the dismissal of
the complainant as illegal, and consequently ordering the respondents jointly and severally
G.R. No. 164772 to reinstate him to his former position as bank Vice-President and General Counsel without
loss of seniority rights and other privileges, and to pay him full backwages and other
Present: benefits from the time his compensation was withheld to his actual reinstatement, as well
PANGANIBAN, C.J. as moral damages of P100,000.00, exemplary damages of P50,000.00, and attorneys fees
Chairperson, equivalent to Ten Percent (10%) of the monetary award. Should reinstatement be no
YNARES-SANTIAGO,* longer possible due to strained relations, the respondents are ordered likewise jointly and
AUSTRIA-MARTINEZ,** severally to grant separation pay at one (1) month per year of service in the total sum of
CALLEJO, SR., and P293,650.00 with backwages and other benefits from November 16, 1989 to September
CHICO-NAZARIO, JJ. 15, 1991 (cut off date, subject to adjustment) computed at P1,055,740.48, plus damages
of P100,000.00 (moral damages), P50,000.00 (exemplary damages) and attorneys fees
Promulgated: equal to Ten Percent (10%) of all the monetary award, or a grand total of
P1,649,329.53.[7]
June 8, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Petitioner Bank came to us for the first time via a Special Civil Action for Certiorari
assailing the NLRC Resolution of 24 September 1991 in Equitable Banking Corporation v.
DECISION National Labor Relations Commission, docketed as G.R. No. 102467.[8]

In our Decision[9] of 13 June 1997, we held respondent Sadacs dismissal illegal. We said
CHICO-NAZARIO, J.: that the existence of the employer-employee relationship between petitioner Bank and
respondent Sadac had been duly established bringing the case within the coverage of the
Labor Code, hence, we did not permit petitioner Bank to rely on Sec. 26, Rule 138[10] of
the Rules of Court, claiming that the association between the parties was one of a client-
lawyer relationship, and, thus, it could terminate at any time the services of respondent
Sadac. Moreover, we did not find that respondent Sadacs dismissal was grounded on any
of the causes stated in Article 282 of the Labor Code. We similarly found that petitioner
Bank disregarded the procedural requirements in terminating respondent Sadacs
employment as so required by Section 2 and Section 5, Rule XIV, Book V of the
Implementing Rules of the Labor Code. We decreed:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the
following MODIFICATIONS: That private respondent shall be entitled to backwages from
termination of employment until turning sixty (60) years of age (in 1995) and, thereupon, to
retirement benefits in accordance with law; that private respondent shall be paid an
additional amount of P5,000.00; that the award of moral and exemplary damages are
deleted; and that the liability herein pronounced shall be due from petitioner bank alone,
the other petitioners being absolved from solidary liability. No costs.[11]
On 28 July 1997, our Decision in G.R. No. 102467 dated 13 June 1997 became final and
executory.[12]
Pursuant thereto, respondent Sadac filed with the Labor Arbiter a Motion for Execution[13]
thereof. Likewise, petitioner Bank filed a Manifestation and Motion[14] praying that the
award in favor of respondent Sadac be computed and that after payment is made,
petitioner Bank be ordered forever released from liability under said judgment.
Per respondent Sadacs computation, the total amount of the monetary award is
P6,030,456.59, representing his backwages and other benefits, including the general
increases which he should have earned during the period of his illegal termination.
Respondent Sadac theorized that he started with a monthly compensation of P12,500.00
in August 1981, when he was appointed as Vice President of petitioner Banks Legal
Department and later as its General Counsel in December 1981. As of November 1989,
when he was dismissed illegally, his monthly compensation amounted to P29,365.00 or
more than twice his original compensation. The difference, he posited, can be attributed to
the annual salary increases which he received equivalent to 15 percent (15%) of his
monthly salary.
Respondent Sadac anchored his claim on Article 279 of the Labor Code of the Philippines,
and cited as authority the cases of East Asiatic Company, Ltd. v. Court of Industrial
Relations,[15] St. Louis College of Tuguegarao v. National Labor Relations
Commission,[16] and Sigma Personnel Services v. National Labor Relations
Commission.[17] According to respondent Sadac, the catena of cases uniformly holds that
it is the obligation of the employer to pay an illegally dismissed employee the whole
amount of the salaries or wages, plus all other benefits and bonuses and general
increases to which he would have been normally entitled had he not been dismissed; and
therefore, salary increases should be deemed a component in the computation of
backwages. Moreover, respondent Sadac contended that his check-up benefit, clothing
allowance, and cash conversion of vacation leaves must be included in the computation of
his backwages.
Petitioner Bank disputed respondent Sadacs computation. Per its computation, the amount
of monetary award due respondent Sadac is P2,981,442.98 only, to the exclusion of the
latters general salary increases and other claimed benefits which, it maintained, were
unsubstantiated. The jurisprudential precedent relied upon by petitioner Bank in assailing
respondent Sadacs computation is Evangelista v. National Labor Relations
Commission,[18] citing Paramount Vinyl Products Corp. v. National Labor Relations
Commission,[19] holding that an unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. Furthermore, petitioner
Bank argued before the Labor Arbiter that the award of salary differentials is not allowed,
the established rule being that upon reinstatement, illegally dismissed employees are to be
paid their backwages without deduction and qualification as to any wage increases or
other benefits that may have been received by their co-workers who were not dismissed or
did not go on strike.
On 2 August 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. rendered an Order[20] adopting
respondent Sadacs computation. In the main, the Labor Arbiter relying on Millares v.
National Labor Relations Commission[21] concluded that respondent Sadac is entitled to
the general increases as a component in the computation of his backwages. Accordingly,
he awarded respondent Sadac the amount of P6,030,456.59 representing his backwages
inclusive of allowances and other claimed benefits, namely check-up benefit, clothing
allowance, and cash conversion of vacation leave plus 12 percent (12%) interest per
annum equivalent to P1,367,590.89 as of 30 June 1999, or a total of P7,398,047.48.
However, considering that respondent Sadac had already received the amount of
P1,055,740.48 by virtue of a Writ of Execution[22] earlier issued on 18 January 1999, the
Labor Arbiter directed petitioner Bank to pay respondent Sadac the amount of
P6,342,307.00. The Labor Arbiter also granted an award of attorneys fees equivalent to
ten percent (10%) of all monetary awards, and imposed a 12 percent (12%) interest per
annum reckoned from the finality of the judgment until the satisfaction thereof.
The Labor Arbiter decreed, thus:
WHEREFORE, in view of al (sic) the foregoing, let an ALIAS Writ of Execution be issued
commanding the Sheriff, this Branch, to collect from respondent Bank the amount of
Ph6,342,307.00 representing the backwages with 12% interest per annum due
complainant.[23]
Petitioner Bank interposed an appeal with the NLRC, which reversed the Labor Arbiter in a
Resolution,[24] promulgated on 28 March 2001. It ratiocinated that the doctrine on general
increases as component in computing backwages in Sigma Personnel Services and St.
Louis was merely obiter dictum. The NLRC found East Asiatic Co., Ltd. inapplicable on the
ground that the original circumstances therein are not only peculiar to the said case but
also completely strange to the case of respondent Sadac. Further, the NLRC disallowed
respondent Sadacs claim to check-up benefit ratiocinating that there was no clear and
substantial proof that the same was being granted and enjoyed by other employees of
petitioner Bank. The award of attorneys fees was similarly deleted.
The dispositive portion of the Resolution states:
WHEREFORE, the instant appeal is considered meritorious and accordingly, the
computation prepared by respondent Equitable Banking Corporation on the award of
backwages in favor of complainant Ricardo Sadac under the decision promulgated by the
Supreme Court on June 13, 1997 in G.R. No. 102476 in the aggregate amount of
P2,981,442.98 is hereby ordered.[25]
Respondent Sadacs Motion for Reconsideration thereon was denied by the NLRC in its
Resolution,[26] promulgated on 24 September 2002.
Aggrieved, respondent Sadac filed before the Court of Appeals a Petition for Certiorari
seeking nullification of the twin resolutions of the NLRC, dated 28 March 2001 and 24
September 2002, as well as praying for the reinstatement of the 2 August 1999 Order of
the Labor Arbiter.
For the resolution of the Court of Appeals were the following issues, viz.:
(1) Whether periodic general increases in basic salary, check-up benefit, clothing
allowance, and cash conversion of vacation leave are included in the computation of full
backwages for illegally dismissed employees;
(2) Whether respondent is entitled to attorneys fees; and
(3) Whether respondent is entitled to twelve percent (12%) per annum as interest on all
accounts outstanding until full payment thereof.
Finding for respondent Sadac (therein petitioner), the Court of Appeals rendered a
Decision on 6 April 2004, the dispositive portion of which is quoted hereunder:
WHEREFORE, premises considered, the March 28, 2001 and the September 24, 2002
Resolutions of the National Labor Relations Commissions (sic) are REVERSED and SET
ASIDE and the August 2, 1999 Order of the Labor Arbiter is REVIVED to the effect that
private respondent is DIRECTED TO PAY petitioner the sum of PhP6,342,307.00,
representing full back wages (sic) which sum includes annual general increases in basic
salary, check-up benefit, clothing allowance, cash conversion of vacation leave and other
sundry benefits plus 12% per annum interest on outstanding balance from July 28, 1997
until full payment.
Costs against private respondent.[27]
The Court of Appeals, citing East Asiatic held that respondent Sadacs general increases
should be added as part of his backwages. According to the appellate court, respondent
Sadacs entitlement to the annual general increases has been duly proven by substantial
evidence that the latter, in fact, enjoyed an annual increase of more or less 15 percent
(15%). Respondent Sadacs check-up benefit, clothing allowance, and cash conversion of
vacation leave were similarly ordered added in the computation of respondent Sadacs
basic wage.
Anent the matter of attorneys fees, the Court of Appeals sustained the NLRC. It ruled that
our Decision[28] of 13 June 1997 did not award attorneys fees in respondent Sadacs favor
as there was nothing in the aforesaid Decision, either in the dispositive portion or the body
thereof that supported the grant of attorneys fees. Resolving the final issue, the Court of
Appeals imposed a 12 percent (12%) interest per annum on the total monetary award to
be computed from 28 July 1997 or the date our judgment in G.R. No. 102467 became final
and executory until fully paid at which time the quantification of the amount may be
deemed to have been reasonably ascertained.
On 7 May 2004, respondent Sadac filed a Partial Motion for Reconsideration[29] of the 6
April 2004 Court of Appeals Decision insofar as the appellate court did not award him
attorneys fees. Similarly, petitioner Bank filed a Motion for Partial Reconsideration thereon.
Following an exchange of pleadings between the parties, the Court of Appeals rendered a
Resolution,[30] dated 28 July 2004, denying petitioner Banks Motion for Partial
Reconsideration for lack of merit.
Assignment of Errors
Hence, the instant Petition for Review by petitioner Bank on the following assignment of
errors, to wit:
(a) The Hon. Court of Appeals erred in ruling that general salary increases should be
included in the computation of full backwages.
(b) The Hon. Court of Appeals erred in ruling that the applicable authorities in this case
are: (i) East Asiatic, Ltd. v. CIR, 40 SCRA 521 (1971); (ii) St. Louis College of Tuguegarao
v. NLRC, 177 SCRA 151 (1989); (iii) Sigma Personnel Services v. NLRC, 224 SCRA 181
(1993); and (iv) Millares v. NLRC, 305 SCRA 500 (1999) and not (i) Art. 279 of the Labor
Code; (ii) Paramount Vinyl Corp. v. NLRC, 190 SCRA 525 (1990); (iii) Evangelista v.
NLRC, 249 SCRA 194 (1995); and (iv) Espejo v. NLRC, 255 SCRA 430 (1996).
(c) The Hon. Court of Appeals erred in ruling that respondent is entitled to check-up
benefit, clothing allowance and cash conversion of vacation leaves notwithstanding that
respondent did not present any evidence to prove entitlement to these claims.
(d) The Hon. Court of Appeals erred in ruling that respondent is entitled to be paid legal
interest even if the principal amount due him has not yet been correctly and finally
determined.[31]
Meanwhile, on 26 October 2004, the Court of Appeals rendered a Supplemental Decision
granting respondent Sadacs Partial Motion for Reconsideration and amending the
dispositive portion of the 6 April 2004 Decision in this wise, viz.:
WHEREFORE, premises considered, the March 24 (sic), 2001 and the September 24,
2002 Resolutions of the National Labor Relations Commission are hereby REVERSED
and SET ASIDE and the August 2, 1999 Order of the Labor Arbiter is hereby REVIVED to
the effect that private respondent is hereby DIRECTED TO PAY petitioner the sum of
P6,342,307.00, representing full backwages which sum includes annual general increases
in basic salary, check-up benefit, clothing allowance, cash conversion of vacation leave
and other sundry benefits and attorneys fees equal to TEN PERCENT (10%) of all the
monetary award plus 12% per annum interest on all outstanding balance from July 28,
1997 until full payment.
Costs against private respondent.[32]
On 22 November 2004, petitioner Bank filed a Supplement to Petition for Review[33]
contending in the main that the Court of Appeals erred in issuing the Supplemental
Decision by directing petitioner Bank to pay an additional amount to respondent Sadac
representing attorneys fees equal to ten percent (10%) of all the monetary award.
The Courts Ruling
I.
We are called to write finis to a controversy that comes to us for the second time. At the
core of the instant case are the divergent contentions of the parties on the manner of
computation of backwages.
Petitioner Bank asseverates that Article 279 of the Labor Code of the Philippines does not
contemplate the inclusion of salary increases in the definition of full backwages. It
controverts the reliance by the appellate court on the cases of (i) East Asiatic; (ii) St. Louis;
(iii) Sigma Personnel; and (iv) Millares. While it is in accord with the pronouncement of the
Court of Appeals that Republic Act No. 6715, in amending Article 279, intends to give more
benefits to workers, petitioner Bank submits that the Court of Appeals was in error in
relying on East Asiatic to support its finding that salary increases should be included in the
computation of backwages as nowhere in Article 279, as amended, are salary increases
spoken of. The prevailing rule in the milieu of the East Asiatic doctrine was to deduct
earnings earned elsewhere from the amount of backwages payable to an illegally
dismissed employee.
Petitioner Bank posits that even granting that East Asiatic allowed general salary increases
in the computation of backwages, it was because the inclusion was purposely to cushion
the blow of the deduction of earnings derived elsewhere; with the amendment of Article
279 and the consequent elimination of the rule on the deduction of earnings derived
elsewhere, the rationale for including salary increases in the computation of backwages no
longer exists. On the references of salary increases in the aforementioned cases of (i) St.
Louis; (ii) Sigma Personnel; and (iii) Millares, petitioner Bank contends that the same were
merely obiter dicta. In fine, petitioner Bank anchors its claim on the cases of (i) Paramount
Vinyl Products Corp. v. National Labor Relations Commission;[34] (ii) Evangelista v.
National Labor Relations Commission;[35] and (iii) Espejo v. National Labor Relations
Commission,[36] which ruled that an unqualified award of backwages is exclusive of
general salary increases and the employee is paid at the wage rate at the time of the
dismissal.
For his part, respondent Sadac submits that the Court of Appeals was correct when it ruled
that his backwages should include the general increases on the basis of the following
cases, to wit: (i) East Asiatic; (ii) St. Louis; (iii) Sigma Personnel; and (iv) Millares.
Resolving the protracted litigation between the parties necessitates us to revisit our
pronouncements on the interpretation of the term backwages. We said that backwages in
general are granted on grounds of equity for earnings which a worker or employee has lost
due to his illegal dismissal.[37] It is not private compensation or damages but is awarded in
furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of
a private right but rather in the nature of a command to the employer to make public
reparation for dismissing an employee either due to the formers unlawful act or bad
faith.[38] The Court, in the landmark case of Bustamante v. National Labor Relations
Commission,[39] had the occasion to explicate on the meaning of full backwages as
contemplated by Article 279[40] of the Labor Code of the Philippines, as amended by
Section 34 of Rep. Act No. 6715. The Court in Bustamante said, thus:
The Court deems it appropriate, however, to reconsider such earlier ruling on the
computation of backwages as enunciated in said Pines City Educational Center case, by
now holding that conformably with the evident legislative intent as expressed in Rep. Act
No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee,
should not, as a general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is
that the employee, while litigating the legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full backwages have to be paid by the employer
as part of the price or penalty he has to pay for illegally dismissing his employee. The
clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to
workers than was previously given them under the Mercury Drug rule or the deduction of
earnings elsewhere rule. Thus, a closer adherence to the legislative policy behind Rep.
Act No. 6715 points to full backwages as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee during the period
of his illegal dismissal. In other words, the provision calling for full backwages to illegally
dismissed employees is clear, plain and free from ambiguity and, therefore, must be
applied without attempted or strained interpretation. Index animi sermo est.[41]
Verily, jurisprudence has shown that the definition of full backwages has forcefully evolved.
In Mercury Drug Co., Inc. v. Court of Industrial Relations,[42] the rule was that backwages
were granted for a period of three years without qualification and without deduction,
meaning, the award of backwages was not reduced by earnings actually earned by the
dismissed employee during the interim period of the separation. This came to be known as
the Mercury Drug rule.[43] Prior to the Mercury Drug ruling in 1974, the total amount of
backwages was reduced by earnings obtained by the employee elsewhere from the time of
the dismissal to his reinstatement. The Mercury Drug rule was subsequently modified in
Ferrer v. National Labor Relations Commission[44] and Pines City Educational Center v.
National Labor Relations Commission,[45] where we allowed the recovery of backwages
for the duration of the illegal dismissal minus the total amount of earnings which the
employee derived elsewhere from the date of dismissal up to the date of reinstatement, if
any. In Ferrer and in Pines, the three-year period was deleted, and instead, the dismissed
employee was paid backwages for the entire period that he was without work subject to
the deductions, as mentioned. Finally came our ruling in Bustamante which superseded
Pines City Educational Center and allowed full recovery of backwages without deduction
and without qualification pursuant to the express provisions of Article 279 of the Labor
Code, as amended by Rep. Act No. 6715, i.e., without any deduction of income the
employee may have derived from employment elsewhere from the date of his dismissal up
to his reinstatement, that is, covering the entirety of the period of the dismissal.
The first issue for our resolution involves another aspect in the computation of full
backwages, mainly, the basis of the computation thereof. Otherwise stated, whether
general salary increases should be included in the base figure to be used in the
computation of backwages.
In so concluding that general salary increases should be made a component in the
computation of backwages, the Court of Appeals ratiocinated, thus:
The Supreme Court held in East Asiatic, Ltd. v. Court of Industrial Relations, 40 SCRA 521
(1971) that general increases should be added as a part of full backwages, to wit:
In other words, the just and equitable rule regarding the point under discussion is this: It is
the obligation of the employer to pay an illegally dismissed employee or worker the whole
amount of the salaries or wages, plus all other benefits and bonuses and general
increases, to which he would have been normally entitled had he not been dismissed and
had not stopped working, but it is the right, on the other hand of the employer to deduct
from the total of these, the amount equivalent to the salaries or wages the employee or
worker would have earned in his old employment on the corresponding days he was
actually gainfully employed elsewhere with an equal or higher salary or wage, such that if
his salary or wage in his other employment was less, the employer may deduct only what
has been actually earned.
The doctrine in East Asiatic was subsequently reiterated, in the cases of St. Louis College
of Tugueg[a]rao v. NLRC, 177 SCRA 151 (1989); Sigma Personnel Services v. NLRC, 224
SCRA 181 (1993) and Millares v. National Labor Relations Commission, 305 SCRA 500
(1999).
Private respondent, in opposing the petitioners contention, alleged in his Memorandum
that only the wage rate at the time of the employees illegal dismissal should be considered
private respondent citing the following decisions of the Supreme Court: Paramount Vinyl
Corp. v. NLRC 190 SCRA 525 (1990); Evangelista v. NLRC, 249 SCRA 194 (1995);
Espejo v. NLRC, 255 SCRA 430 (1996) which rendered obsolete the ruling in East Asiatic,
Ltd. v. Court of Industrial Relations, 40 SCRA 521 (1971).

We are not convinced.
The Supreme Court had consistently held that payment of full backwages is the price or
penalty that the employer must pay for having illegally dismissed an employee.
In Ala Mode Garments, Inc. v. NLRC 268 SCRA 497 (1997) and Bustamante v. NLRC and
Evergreen Farms, Inc. 265 SCRA 61 (1996) the Supreme Court held that the clear
legislative intent in the amendment in Republic Act 6715 was to give more benefits to
workers than was previously given them under the Mercury Drug rule or the deductions of
earnings elsewhere rule.
The Paramount Vinyl, Evangelista, and Espejo cases cited by private respondent are
inapplicable to the case at bar. The doctrines therein came about as a result of the old
Mercury Drug rule, which was repealed with the passage of Republic Act 6715 into law. It
was in Alex Ferrer v. NLRC 255 SCRA 430 (1993) when the Supreme Court returned to
the doctrine in East Asiatic, which was soon supplanted by the case of Bustamante v.
NLRC and Evergreen Farms, Inc., which held that the backwages to be awarded to an
illegally dismissed employee, should not, as a general rule, be diminished or reduced by
the earnings derived from him during the period of his illegal dismissal. Furthermore, the
Mercury Drug rule was never meant to prejudice the workers, but merely to speed the
recovery of their backwages.
Ever since Mercury Drug Co. Inc. v. CIR 56 SCRA 694 (1974), it had been the intent of the
Supreme Court to increase the backwages due an illegally dismissed employee. In the
Mercury Drug case, full backwages was to be recovered even though a three-year
limitation on recovery of full backwages was imposed in the name of equity. Then in
Bustamante, full backwages was interpreted to mean absolutely no deductions regardless
of the duration of the illegal dismissal. In Bustamante, the Supreme Court no longer
regarded equity as a basis when dealing with illegal dismissal cases because it is not
equity at play in illegal dismissals but rather, it is employers obligation to pay full back
wages (sic). It is an obligation of the employer because it is the price or penalty the
employer has to pay for illegally dismissing his employee.
The applicable modern definition of full backwages is now found in Millares v. National
Labor Relations Commission 305 SCRA 500 (1999), where although the issue in Millares
concerned separation pay separation pay and backwages both have employees wage rate
at their foundation.
x x x The rationale is not difficult to discern. It is the obligation of the employer to pay an
illegally dismissed employee the whole amount of his salaries plus all other benefits,
bonuses and general increases to which he would have been normally entitled had he not
been dismissed and had not stopped working. The same holds true in case of retrenched
employees. x x x
xxxx
x x x Annual general increases are akin to allowances or other benefits. [46] (Italics ours.)
We do not agree.
Attention must be called to Article 279 of the Labor Code of the Philippines, as amended
by Section 34 of Rep. Act No. 6715. The law provides as follows:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.
(Emphasis supplied.)
Article 279 mandates that an employees full backwages shall be inclusive of allowances
and other benefits or their monetary equivalent. Contrary to the ruling of the Court of
Appeals, we do not see that a salary increase can be interpreted as either an allowance or
a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused
with either. The term allowances is sometimes used synonymously with emoluments, as
indirect or contingent remuneration, which may or may not be earned, but which is
sometimes in the nature of compensation, and sometimes in the nature of
reimbursement.[47] Allowances and benefits are granted to the employee apart or
separate from, and in addition to the wage or salary. In contrast, salary increases are
amounts which are added to the employees salary as an increment thereto for varied
reasons deemed appropriate by the employer. Salary increases are not separate grants by
themselves but once granted, they are deemed part of the employees salary. To extend
the coverage of an allowance or a benefit to include salary increases would be to strain
both the imagination of the Court and the language of law. As aptly observed by the NLRC,
to otherwise give the meaning other than what the law speaks for by itself, will open the
floodgates to various interpretations.[48] Indeed, if the intent were to include salary
increases as basis in the computation of backwages, the same should have been explicitly
stated in the same manner that the law used clear and unambiguous terms in expressly
providing for the inclusion of allowances and other benefits.
Moreover, we find East Asiatic inapplicable to the case at bar. In East Asiatic, therein
petitioner East Asiatic Company, Ltd. was found guilty of unfair labor practices against
therein respondent, Soledad A. Dizon, and the Court ordered her reinstatement with back
pay. On the question of the amount of backwages, the Court granted the dismissed
employee the whole amount of the salaries plus all general increases and bonuses she
would have received during the period of her lay-off with the corresponding right of the
employer to deduct from the total amounts, all the earnings earned by the employee during
her lay-off. The emphasis in East Asiatic is the duty of both the employer and the
employee to disclose the material facts and competent evidence within their peculiar
knowledge relative to the proper determination of backwages, especially as the earnings
derived by the employee elsewhere are deductions to which the employer are entitled.
However, East Asiatic does not find relevance in the resolution of the issue before us.
First, the material date to consider is 21 March 1989, when the law amending Article 279
of the Labor Code, Rep. Act No. 6715, otherwise known as the Herrera-Veloso Law, took
effect. It is obvious that the backdrop of East Asiatic, decided by this Court on 31 August
1971 was prior to the current state of the law on the definition of full backwages. Second, it
bears stressing that East Asiatic was decided at a time when even as an illegally
dismissed employee is entitled to the whole amount of the salaries or wages, it was the
recognized right of the employer to deduct from the total of these, the amount equivalent to
the salaries or wages the employee or worker would have earned in his old employment
on the corresponding days that he was actually gainfully employed elsewhere with an
equal or higher salary or wage, such that if his salary or wage in his other employment was
less, the employer may deduct only what has been actually earned.[49] It is for this reason
the Court centered its discussion on the duty of both parties to be candid and open about
facts within their knowledge to establish the amount of the deductions, and not leave the
burden on the employee alone to establish his claim, as well as on the duty of the court to
compel the parties to cooperate in disclosing such material facts. The inapplicability of
East Asiatic to respondent Sadac was sufficiently elucidated upon by the NLRC, viz.:
A full discernment of the pertinent portion of the judgment sought to be executed in East
Asiatic Co., Ltd. would reveal as follows:
x x x to reinstate Soledad A. Dizon immediately to her former position with backwages
from September 1, 1958 until actually reinstated with all the rights and privileges acquired
and due her, including seniority and such other terms and conditions of employment AT
THE TIME OF HER LAY-OFF
The basis on which this doctrine was laid out was summed up by the Supreme Court
which ratiocinated in this light. To quote:
x x x on the other hand, of the employer to deduct from the total of these, the amount
equivalent to these salaries or wages the employee or worker would have earned in his old
employment on the corresponding days that he was actually gainfully employed elsewhere
with an equal or higher salary or wage, such that if his salary or wage in his other
employment was less, the employer may deduct only what has been actually earned x x x
(Ibid, pp. 547-548).
But the Supreme Court, in the instant case, pronounced a clear but different judgment from
that of East Asiatic Co. decretal portion, in this wise:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the
following MODIFICATIONS: that private respondent shall be entitled to backwages from
termination of employment until turning sixty (60) years of age (in 1995) and, thereupon, to
retirement benefits in accordance with law; xxx
Undisputably (sic), it was decreed in plain and unambiguous language that complainant
Sadac shall be entitled to backwages. No more, no less.
Thus, this decree for Sadac cannot be considered in any way, substantially in essence,
with the award of backwages as pronounced for Ms. Dizon in the case of East Asiatic Co.
Ltd.[50]
In the same vein, we cannot accept the Court of Appeals reliance on the doctrine as
espoused in Millares. It is evident that Millares concerns itself with the computation of the
salary base used in computing the separation pay of petitioners therein. The distinction
between backwages and separation pay is elementary. Separation pay is granted where
reinstatement is no longer advisable because of strained relations between the employee
and the employer. Backwages represent compensation that should have been earned but
were not collected because of the unjust dismissal. The bases for computing the two are
different, the first being usually the length of the employees service and the second the
actual period when he was unlawfully prevented from working.[51]
The issue that confronted the Court in Millares was whether petitioners housing and
transportation allowances therein which they allegedly received on a monthly basis during
their employment should have been included in the computation of their separation pay. It
is plain to see that the reference to general increases in Millares citing East Asiatic was a
mere obiter. The crux in Millares was our pronouncement that the receipt of an allowance
on a monthly basis does not ipso facto characterize it as regular and forming part of salary
because the nature of the grant is a factor worth considering. Whether salary increases are
deemed part of the salary base in the computation of backwages was not the issue in
Millares.
Neither can we look at St. Louis of Tuguegarao to resolve the instant controversy. What
was mainly contentious therein was the inclusion of fringe benefits in the computation of
the award of backwages, in particular additional vacation and sick leaves granted to
therein concerned employees, it evidently appearing that the reference to East Asiatic in a
footnote was a mere obiter dictum. Salary increases are not akin to fringe benefits[52] and
neither is it logical to conceive of both as belonging to the same taxonomy.
We must also resolve against the applicability of Sigma Personnel Services to the case at
bar. The basic issue before the Court therein was whether the employee, Susan Sumatre,
a domestic helper in Abu Dhabi, United Arab Emirates, had been illegally dismissed, in
light of the contention of Sigma Personnel Services, a duly licensed recruitment agency,
that the former was a mere probationary employee who was, on top of this status, mentally
unsound.[53] Even a cursory reading of Sigma Personnel Services citing St. Louis College
of Tuguegarao would readily show that inclusion of salary increases in the computation of
backwages was not at issue. The same was not on all fours with the instant petition.
What, then, is the basis of computation of backwages? Are annual general increases in
basic salary deemed component in the computation of full backwages? The weight of
authority leans in petitioner Banks favor and against respondent Sadacs claim for the
inclusion of general increases in the computation of his backwages.
We stressed in Paramount that an unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal, thus:
The determination of the salary base for the computation of backwages requires simply an
application of judicial precedents defining the term "backwages". Unfortunately, the Labor
Arbiter erred in this regard. An unqualified award of backwages means that the employee
is paid at the wage rate at the time of his dismissal [Davao Free Worker Front v. Court of
Industrial Relations, G.R. No. L-29356, October 27, 1975, 67 SCRA 418; Capital Garments
Corporation v. Ople, G.R. No. 53627, September 30, 1982, 117 SCRA 473; Durabilt
Recapping Plant & Company v. NLRC, G.R. No. 76746, July 27, 1987, 152 SCRA 328].
And the Court has declared that the base figure to be used in the computation of
backwages due to the employee should include not just the basic salary, but also the
regular allowances that he had been receiving, such as the emergency living allowances
and the 13th month pay mandated under the law [See Pan-Philippine Life Insurance
Corporation v. NLRC, G.R. No. 53721, June 29, 1982, 144 SCRA 866; Santos v. NLRC,
G.R. No. 76721, September 21, 1987, 154 SCRA 166; Soriano v. NLRC, G.R. No. 75510,
October 27, 1987, 155 SCRA 124; Insular Life Assurance Co., Ltd. v. NLRC, supra.][54]
(Emphasis supplied.)
There is no ambivalence in Paramount, that the base figure to be used in the computation
of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive
of regular allowances that the employee had been receiving such as the emergency living
allowances and the 13th month pay mandated under the law.
In Evangelista v. National Labor Relations Commission,[55] we addressed the sole issue
of whether the computation of the award of backwages should be based on current wage
level or the wage levels at the time of the dismissal. We resolved that an unqualified award
of backwages means that the employee is paid at the wage rate at the time of his
dismissal, thus:
As explicitly declared in Paramount Vinyl Products Corp. vs. NLRC, the determination of
the salary base for the computation of backwages requires simply an application of judicial
precedents defining the term backwages. An unqualified award of backwages means that
the employee is paid at the wage rate at the time of his dismissal. Furthermore, the award
of salary differentials is not allowed, the established rule being that upon reinstatement,
illegally dismissed employees are to be paid their backwages without deduction and
qualification as to any wage increases or other benefits that may have been received by
their co-workers who were not dismissed or did not go on strike.[56]
The case of Paramount was relied upon by the Court in the latter case of Espejo v.
National Labor Relations Commission,[57] where we reiterated that the computation of
backwages should be based on the basic salary at the time of the employees dismissal
plus the regular allowances that he had been receiving. Further, the clarification made by
the Court in General Baptist Bible College v. National Labor Relations Commission,[58]
settles the issue, thus:
We also want to clarify that when there is an award of backwages this actually refers to
backwages without qualifications and deductions. Thus, We held that:
The term backwages without qualification and deduction means that the workers are to be
paid their backwages fixed as of the time of the dismissal or strike without deduction for
their earnings elsewhere during their layoff and without qualification of their wages as thus
fixed; i.e., unqualified by any wage increases or other benefits that may have been
received by their co-workers who are not dismissed or did not go on strike. Awards
including salary differentials are not allowed. The salary base properly used should,
however, include not only the basic salary but also the emergency cost of living allowances
and also transportation allowances if the workers are entitled thereto.[59] (Italics supplied.)
Indeed, even a cursory reading of the dispositive portion of the Courts Decision of 13 June
1997 in G.R. No. 102467, awarding backwages to respondent Sadac, readily shows that
the award of backwages therein is unqualified, ergo, without qualification of the wage as
thus fixed at the time of the dismissal and without deduction.
A demarcation line between salary increases and backwages was drawn by the Court in
Paguio v. Philippine Long Distance Telephone Co., Inc.,[60] where therein petitioner
Paguio, on account of his illegal transfer sought backwages, including an amount equal to
16 percent (16%) of his monthly salary representing his salary increases during the period
of his demotion, contending that he had been consistently granted salary increases
because of his above average or outstanding performance. We said:
In several cases, the Court had the opportunity to elucidate on the reason for the grant of
backwages. Backwages are granted on grounds of equity to workers for earnings lost due
to their illegal dismissal from work. They are a reparation for the illegal dismissal of an
employee based on earnings which the employee would have obtained, either by virtue of
a lawful decree or order, as in the case of a wage increase under a wage order, or by
rightful expectation, as in the case of ones salary or wage. The outstanding feature of
backwages is thus the degree of assuredness to an employee that he would have had
them as earnings had he not been illegally terminated from his employment.
Petitioners claim, however, is based simply on expectancy or his assumption that, because
in the past he had been consistently rated for his outstanding performance and his salary
correspondingly increased, it is probable that he would similarly have been given high
ratings and salary increases but for his transfer to another position in the company.
In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this
contention is based merely on speculation. Furthermore, it assumes that in the other
position to which he had been transferred petitioner had not been given any performance
evaluation. As held by the Court of Appeals, however, the mere fact that petitioner had
been previously granted salary increases by reason of his excellent performance does not
necessarily guarantee that he would have performed in the same manner and, therefore,
qualify for the said increase later. What is more, his claim is tantamount to saying that he
had a vested right to remain as Head of the Garnet Exchange and given salary increases
simply because he had performed well in such position, and thus he should not be moved
to any other position where management would require his services.[61]
Applying Paguio to the case at bar, we are not prepared to accept that this degree of
assuredness applies to respondent Sadacs salary increases. There was no lawful decree
or order supporting his claim, such that his salary increases can be made a component in
the computation of backwages. What is evident is that salary increases are a mere
expectancy. They are, by its nature volatile and are dependent on numerous variables,
including the companys fiscal situation and even the employees future performance on the
job, or the employees continued stay in a position subject to management prerogative to
transfer him to another position where his services are needed. In short, there is no vested
right to salary increases. That respondent Sadac may have received salary increases in
the past only proves fact of receipt but does not establish a degree of assuredness that is
inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadacs
computation of his full backwages which includes his prospective salary increases cannot
be permitted.
Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of
wage and not salary, and therefore, the rule is inapplicable to him. It is respondent Sadacs
stance that he was not paid at the wage rate nor was he engaged in some form of manual
or physical labor as he was hired as Vice President of petitioner Bank. He cites Gaa v.
Court of Appeals[62] where the Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the
purpose of Article 1708 of the Civil Code which mandates that, [t]he laborers wage shall
not be subject to execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance. In labor law, however, the distinction appears to be
merely semantics. Paramount and Evangelista may have involved wage earners, but the
petitioner in Espejo was a General Manager with a monthly salary of P9,000.00 plus
privileges. That wage and salary are synonymous has been settled in Songco v. National
Labor Relations Commission.[63] We said:
Broadly, the word salary means a recompense or consideration made to a person for his
pains or industry in another mans business. Whether it be derived from salarium, or more
fancifully from sal, the pay of the Roman soldier, it carries with it the fundamental idea of
compensation for services rendered. Indeed, there is eminent authority for holding that the
words wages and salary are in essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S.839, 841, 89 App. Div.
481; 38 Am. Jur. 496). Salary, the etymology of which is the Latin word salarium, is often
used interchangeably with wage, the etymology of which is the Middle English word
wagen. Both words generally refer to one and the same meaning, that is, a reward or
recompense for services performed. Likewise, pay is the synonym of wages and salary
(Blacks Law Dictionary, 5th Ed). x x x[64] (Italics supplied.)
II.
Petitioner Bank ascribes as its second assignment of error the Court of Appeals ruling that
respondent Sadac is entitled to check-up benefit, clothing allowance and cash conversion
of vacation leaves notwithstanding that respondent Sadac did not present any evidence to
prove entitlement to these claims.[65]
The determination of respondent Sadacs entitlement to check-up benefit, clothing
allowance, and cash conversion of vacation leaves involves a question of fact. The well-
entrenched rule is that only errors of law not of facts are reviewable by this Court in a
petition for review.[66] The jurisdiction of this Court in a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure, as amended, is limited to reviewing
only errors of law, not of fact, unless the factual findings being assailed are not supported
by evidence on record or the impugned judgment is based on a misapprehension of
facts.[67] This Court is also not precluded from delving into and resolving issues of facts,
particularly if the findings of the Labor Arbiter are inconsistent with those of the NLRC and
the Court of Appeals.[68] Such is the case in the instant petition. The Labor Arbiter and the
Court of Appeals are in agreement anent the entitlement of respondent Sadac to check-up
benefit, clothing allowance, and cash conversion of vacation leaves, but the findings of the
NLRC were to the contrary. The Labor Arbiter sustained respondent Sadacs entitlement to
check-up benefit, clothing allowance and cash conversion of vacation leaves. He gave
weight to petitioner Banks acknowledgment in its computation that respondent Sadac is
entitled to certain benefits, namely, rice subsidy, tuition fee allowance, and medicine
allowance, thus, there exists no reason to deprive respondent Sadac of his other benefits.
The Labor Arbiter also reasoned that the petitioner Bank did not adduce evidence to
support its claim that the benefits sought by respondent Sadac are not granted to its
employees and officers. Similarly, the Court of Appeals ratiocinated that if ordinary
employees are entitled to receive these benefits, so it is with more reason for a Vice
President, like herein respondent Sadac to receive the same.
We find in the records that, per petitioner Banks computation, the benefits to be received
by respondent are monthly rice subsidy, tuition fee allowance per year, and medicine
allowance per year.[69] Contained nowhere is an acknowledgment of herein claimed
benefits, namely, check-up benefit, clothing allowance, and cash conversion of vacation
leaves. We cannot sustain the rationalization that the acknowledgment by petitioner Bank
in its computation of certain benefits granted to respondent Sadac means that the latter is
also entitled to the other benefits as claimed by him but not acknowledged by petitioner
Bank. The rule is, he who alleges, not he who denies, must prove. Mere allegations by
respondent Sadac does not suffice in the absence of proof supporting the same.
III.
We come to the third assignment of error raised by petitioner Bank in its Supplement to
Petition for Review, assailing the 26 October 2004 Supplemental Decision of the Court of
Appeals which amended the fallo of its 6 April 2004 Decision to include attorneys fees
equal to TEN PERCENT (10%) of all the monetary award granted to respondent Sadac.
Petitioner Bank posits that neither the dispositive portion of our 13 June 1997 Decision in
G.R. No. 102467 nor the body thereof awards attorneys fees to respondent Sadac. It is
postulated that the body of the 13 June 1997 Decision does not contain any findings of
facts or conclusions of law relating to attorneys fees, thus, this Court did not intend to grant
to respondent Sadac the same, especially in the light of its finding that the petitioner Bank
was not motivated by malice or bad faith and that it did not act in a wanton, oppressive, or
malevolent manner in terminating the services of respondent Sadac.[70]
We do not agree.
At the outset it must be emphasized that when a final judgment becomes executory, it
thereby becomes immutable and unalterable. The judgment may no longer be modified in
any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the Court rendering it or by the highest Court of the land. The
only recognized exceptions are the correction of clerical errors or the making of so-called
nunc pro tunc entries which cause no prejudice to any party, and, of course, where the
judgment is void.[71] The Courts 13 June 1997 Decision in G.R. No. 102467 became final
and executory on 28 July 1997. This renders moot whatever argument petitioner Bank
raised against the grant of attorneys fees to respondent Sadac. Of even greater import is
the settled rule that it is the dispositive part of the judgment that actually settles and
declares the rights and obligations of the parties, finally, definitively, and authoritatively,
notwithstanding the existence of inconsistent statements in the body that may tend to
confuse.[72]
Proceeding therefrom, we make a determination of whether the Court in Equitable Banking
Corporation v. National Labor Relations Commission,[73] G.R. No. 102467, dated 13 June
1997, awarded attorneys fees to respondent Sadac. In recapitulation, the dispositive
portion of the aforesaid Decision is hereunder quoted:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the
following MODIFICATIONS: That private respondent shall be entitled to backwages from
termination of employment until turning sixty (60) years of age (in 1995) and, thereupon, to
retirement benefits in accordance with law; that private respondent shall be paid an
additional amount of P5,000.00; that the award of moral and exemplary damages are
deleted; and that the liability herein pronounced shall be due from petitioner bank alone,
the other petitioners being absolved from solidary liability. No costs.[74]
The dispositive portion of the 24 September 1991 Decision of the NLRC awards
respondent Sadac attorneys fees equivalent to ten percent (10%) of the monetary award,
viz:
WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2,
1990 be, as it is hereby, SET ASIDE and a new one ENTERED declaring the dismissal of
the complainant as illegal, and consequently ordering the respondents jointly and severally
to reinstate him to his former position as bank Vice-President and General Counsel without
loss of seniority rights and other privileges, and to pay him full backwages and other
benefits from the time his compensation was withheld to his actual reinstatement, as well
as moral damages of P100,000.00, exemplary damages of P50,000.00, and attorneys fees
equivalent to Ten Percent (10%) of the monetary award. Should reinstatement be no
longer possible due to strained relations, the respondents are ordered likewise jointly and
severally to grant separation pay at one (1) month per year of service in the total sum of
P293,650.00 with backwages and other benefits from November 16, 1989 to September
15, 1991 (cut off date, subject to adjustment) computed at P1,055,740.48, plus damages
of P100,000.00 (moral damages), P50,000.00 (exemplary damages) and attorneys fees
equal to Ten Percent (10%) of all the monetary award, or a grand total of
P1,649,329.53.[75] (Italics Ours.)
As can be gleaned from the foregoing, the Courts Decision of 13 June 1997 AFFIRMED
with MODIFICATION the NLRC Decision of 24 September 1991, which modification did
not touch upon the award of attorneys fees as granted, hence, the award stands.
Juxtaposing the decretal portions of the NLRC Decision of 24 September 1991 with that of
the Courts Decision of 13 June 1997, we find that what was deleted by the Court was the
award of moral and exemplary damages, but not the award of attorneys fees equivalent to
Ten Percent (10%) of the monetary award. The issue on the grant of attorneys fees to
respondent Sadac has been adequately and definitively threshed out and settled with
finality when petitioner Bank came to us for the first time on a Petition for Certiorari in
Equitable Banking Corporation v. National Labor Relations Commission, docketed as G.R.
No. 102467. The Court had spoken in its Decision of 13 June 1997 in the said case which
attained finality on 28 July 1997. It is now immutable.
IV.
We proceed with the penultimate issue on the entitlement of respondent Sadac to twelve
percent (12%) interest per annum on the outstanding balance as of 28 July 1997, the date
when our Decision in G.R. No. 102467 became final and executory.
In Eastern Shipping Lines, Inc. v. Court of Appeals,[76] the Court, speaking through the
Honorable Justice Jose C. Vitug, laid down the following rules of thumb:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The
provisions under Title XVIII on Damages of the Civil Code govern in determining the
measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual or
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate of interest shall be
12% per annum to be computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court
at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or extrajudicially
(Article 1169, Civil Code) but when such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph
2 above, shall be 12% per annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.[77]
It is obvious that the legal interest of twelve percent (12%) per annum shall be imposed
from the time judgment becomes final and executory, until full satisfaction thereof.
Therefore, petitioner Bank is liable to pay interest from 28 July 1997, the finality of our
Decision in G.R. No. 102467.[78] The Court of Appeals was not in error in imposing the
same notwithstanding that the parties were at variance in the computation of respondent
Sadacs backwages. What is significant is that the Decision of 13 June 1997 which
awarded backwages to respondent Sadac became final and executory on 28 July 1997.
V.
Finally, petitioner Banks Motion to Refer the Petition En Banc must necessarily be denied
as established in our foregoing discussion. We are not herein modifying or reversing a
doctrine or principle laid down by the Court en banc or in a division. The instant case is not
one that should be heard by the Court en banc.[79]
Fallo
WHEREFORE, the petition is PARTIALLY GRANTED in the sense that in the computation
of the backwages, respondent Sadacs claimed prospective salary increases, check-up
benefit, clothing allowance, and cash conversion of vacation leaves are excluded. The
petition is PARTIALLY DENIED insofar as we AFFIRMED the grant of attorneys fees equal
to ten percent (10%) of all the monetary award and the imposition of twelve percent (12%)
interest per annum on the outstanding balance as of 28 July 1997. Hence, the Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 75013, dated 6 April 2004 and
28 July 2004, respectively, and the Supplemental Decision dated 26 October 2004 are
MODIFIED in the following manner, to wit:
Petitioner Bank is DIRECTED TO PAY respondent Sadac the following:
(1) BACKWAGES in accordance with Our Decision dated 13 June 1997 in G.R. No.
102467 with a clarification that the award of backwages EXCLUDES respondent Sadacs
claimed prospective salary increases, check-up benefit, clothing allowance, and cash
conversion of vacation leaves;
(2) ATTORNEYS FEES equal to TEN PERCENT (10%) of the total sum of all monetary
award; and
(3) INTEREST of TWELVE PERCENT (12%) per annum is hereby imposed on the total
sum of all monetary award from 28 July 1997, the date of finality of Our Decision in G.R.
No. 102467 until full payment of the said monetary award.
The Motion to Refer the Petition to the Court En Banc is DENIED.
No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 152329. April 22, 2003]
ALEJANDRO ROQUERO, petitioner, vs. PHILIPPINE AIRLINES, INC., respondent.
DECISION
PUNO, J.:
Brought up on this Petition for Review is the decision of the Court of Appeals dismissing
Alejandro Roquero as an employee of the respondent Philippine Airlines, Inc.
Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent
Philippine Airlines, Inc. (PAL for brevity). From the evidence on record, it appears that
Roquero and Pabayo were caught red-handed possessing and using Methampethamine
Hydrochloride or shabu in a raid conducted by PAL security officers and NARCOM
personnel.
The two alleged that they did not voluntarily indulge in the said act but were instigated by a
certain Jojie Alipato who was introduced to them by Joseph Ocul, Manager of the Airport
Maintenance Division of PAL. Pabayo alleged that Alipato often bragged about the drugs
he could smuggle inside the company premises and invited other employees to take the
prohibited drugs. Alipato was unsuccessful, until one day, he was able to persuade
Pabayo to join him in taking the drugs. They met Roquero along the way and he agreed to
join them. Inside the company premises, they locked the door and Alipato lost no time in
preparing the drugs to be used. When they started the procedure of taking the drugs,
armed men entered the room, arrested Roquero and Pabayo and seized the drugs and the
paraphernalia used.[1] Roquero and Pabayo were subjected to a physical examination
where the results showed that they were positive of drugs. They were also brought to the
security office of PAL where they executed written confessions without the benefit of
counsel.[2]
On March 30, 1994, Roquero and Pabayo received a notice of administrative charge[3] for
violating the PAL Code of Discipline. They were required to answer the charges and were
placed under preventive suspension.
Roquero and Pabayo, in their reply to notice of administrative charge,[4] assailed their
arrest and asserted that they were instigated by PAL to take the drugs. They argued that
Alipato was not really a trainee of PAL but was placed in the premises to instigate the
commission of the crime. They based their argument on the fact that Alipato was not
arrested. Moreover, Alipato has no record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by PAL.[5]
Thus, they filed a case for illegal dismissal.[6]
In the Labor Arbiters decision, the dismissal of Roquero and Pabayo was upheld. The
Labor Arbiter found both parties at fault PAL for applying means to entice the complainants
into committing the infraction and the complainants for giving in to the temptation and
eventually indulging in the prohibited activity. Nonetheless, the Labor Arbiter awarded
separation pay and attorneys fees to the complainants.[7]
While the case was on appeal with the National Labor Relations Commission (NLRC), the
complainants were acquitted by the Regional Trial Court (RTC) Branch 114, Pasay City, in
the criminal case which charged them with conspiracy for possession and use of a
regulated drug in violation of Section 16, Article III of Republic Act 6425, on the ground of
instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It
ordered reinstatement to their former positions but without backwages.[8] Complainants
did not appeal from the decision but filed a motion for a writ of execution of the order of
reinstatement. The Labor Arbiter granted the motion but PAL refused to execute the said
order on the ground that they have filed a Petition for Review before this Court.[9] In
accordance with the case of St. Martin Funeral Home vs. NLRC and Bienvenido
Aricayos,[10] PALs petition was referred to the Court of Appeals.[11]
During the pendency of the case with the Court of Appeals, PAL and Pabayo filed a Motion
to Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered into a
compromise agreement.[12] The motion was granted in a Resolution promulgated by the
Former Thirteenth Division of the Court of Appeals on January 29, 2002.[13]
The Court of Appeals later reversed the decision of the NLRC and reinstated the decision
of the Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it denied the
award of separation pay and attorneys fees to Roquero on the ground that one who has
been validly dismissed is not entitled to those benefits.[14]
The motion for reconsideration by Roquero was denied. In this Petition for Review on
Certiorari under Rule 45, he raises the following issues:
1. Whether or not the instigated employee shall be solely responsible for an action arising
from the instigation perpetrated by the employer;
2. Can the executory nature of the decision, more so the reinstatement aspect of a labor
tribunals order be halted by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered in the meantime?
3. Would the employer who refused to reinstate an employee despite a writ duly issued be
held liable to pay the salary of the subject employee from the time that he was ordered
reinstated up to the time that the reversed decision was handed down?[15]
I
There is no question that petitioner Roquero is guilty of serious misconduct for possessing
and using shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of
Discipline which states:
Any employee who, while on company premises or on duty, takes or is under the influence
of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be
dismissed.[16]
Serious misconduct is defined as the transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment.[17] For serious misconduct to warrant the dismissal
of an employee, it (1) must be serious; (2) must relate to the performance of the
employees duty; and (3) must show that the employee has become unfit to continue
working for the employer.[18]
It is of public knowledge that drugs can damage the mental faculties of the user. Roquero
was tasked with the repair and maintenance of PALs airplanes. He cannot discharge that
duty if he is a drug user. His failure to do his job can mean great loss of lives and
properties. Hence, even if he was instigated to take drugs he has no right to be reinstated
to his position. He took the drugs fully knowing that he was on duty and more so that it is
prohibited by company rules. Instigation is only a defense against criminal liability. It
cannot be used as a shield against dismissal from employment especially when the
position involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL complied with the
twin-notice requirement before dismissing the petitioner. The twin-notice rule requires (1)
the notice which apprises the employee of the particular acts or omissions for which his
dismissal is being sought along with the opportunity for the employee to air his side, and
(2) the subsequent notice of the employers decision to dismiss him.[19] Both were given
by respondent PAL.
II
Article 223 (3rd paragraph) of the Labor Code,[20] as amended by Section 12 of Republic
Act No. 6715,[21] and Section 2 of the NLRC Interim Rules on Appeals under RA No.
6715, Amending the Labor Code,[22] provide that an order of reinstatement by the Labor
Arbiter is immediately executory even pending appeal. The rationale of the law has been
explained in Aris (Phil.) Inc. vs. NLRC:[23]
In authorizing execution pending appeal of the reinstatement aspect of a decision of the
Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxxxxxxxx
These duties and responsibilities of the State are imposed not so much to express
sympathy for the workingman as to forcefully and meaningfully underscore labor as a
primary social and economic force, which the Constitution also expressly affirms with equal
intensity. Labor is an indispensable partner for the nations progress and stability.
xxxxxxxxx
x x x In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending appeal.
xxxxxxxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily since
the appeal may be decided in favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated employee and his family.
The order of reinstatement is immediately executory. The unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a writ of
execution.[24] Unless there is a restraining order issued, it is ministerial upon the Labor
Arbiter to implement the order of reinstatement. In the case at bar, no restraining order
was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him
in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as
if he was reinstated, from the time of the decision of the NLRC until the finality of the
decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the Rules of
Court are applied only in a suppletory manner and only to effectuate the objectives of the
Labor Code and not to defeat them.[25] Hence, even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is not required
to reimburse whatever salary he received for he is entitled to such, more so if he actually
rendered services during the period.
IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but respondent
PAL is ordered to pay the wages to which Roquero is entitled from the time the
reinstatement order was issued until the finality of this decision.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 142732-33 December 4, 2007
MARILOU S. GENUINO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM FERGUSON,
and AZIZ RAJKOTWALA, respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 142753-54
CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MARILOU GENUINO, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to set aside the September 30,
1999 Decision1 and March 31, 2000 Resolution2 of the Court of Appeals (CA) in the
consolidated cases docketed as CA-G.R. SP Nos. 51532 and 51533. The appellate court
dismissed the parties' petitions involving the National Labor Relations Commission's
(NLRC's) Decision3 and Resolution,4 which held that Marilou S. Genuino was validly
dismissed by Citibank, N.A. (Citibank). The NLRC likewise ordered the payment of salaries
from the time that Genuino was reinstated in the payroll to the date of the NLRC decision.
Upon reconsideration, however, the CA modified its decision and held that Citibank failed
to observe due process in CA-G.R. SP No. 51532; hence, Citibank should indemnify
Genuino in the amount of PhP 5,000. Both parties are now before this Court assailing
portions of the CA's rulings. In G.R. Nos. 142732-33, Genuino assails the CA's finding that
her dismissal was valid. In G.R. Nos. 142753-54, Citibank questions the CA's finding that
Citibank violated Genuino's right to procedural due process and that Genuino has a right to
salaries.
Citibank is an American banking corporation duly licensed to do business in the
Philippines. William Ferguson was the Manila Country Corporate Officer and Business
Head of the Global Finance Bank of Citibank while Aziz Rajkotwala was the International
Business Manager for the Global Consumer Bank of Citibank.5
Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division
Head with the rank of Assistant Vice-President. She received a monthly compensation of
PhP 60,487.96, exclusive of benefits and privileges.6
On August 23, 1993, Citibank sent Genuino a letter charging her with "knowledge and/or
involvement" in transactions "which were irregular or even fraudulent." In the same letter,
Genuino was informed she was under preventive suspension.7

Genuino wrote Citibank on September 13, 1993 and asked the bank the following:
a. Confront our client with the factual and legal basis of your charges, and afford her an
opportunity to explain;
b. Substantiate your charge of fraudulent transactions against our client; or if the same
cannot be substantiated;
c. Correct/repair/compensate the damage you have caused our client.8
On September 13, 1993, Citibank, through Victorino P. Vargas, its Country Senior Human
Resources Officer, sent a letter to Genuino, the relevant portions of which read:
Genuino's counsel replied through a letter dated September 17, 1993, demanding for a bill
of particulars regarding the charges against Genuino. Citibank's counsel replied on
September 20, 1993, as follows:
1.2. [T]he bank has no intention of converting the administrative investigation of this case
to a full blown trial. What it is prepared to do is give your client, as required by law and
Supreme Court decisions, an opportunity to explain her side on the issue of whether she
violated the conflict of interest ruleeither in writing (which could be in the form of a letter-
reply to the September 13, 1993 letter to Citibank, N.A.) or in person, in the administrative
investigation which is set for tomorrow afternoon vis--vis the bank clients/parties
mentioned in the letter of Citibank, N.A.
xxxx

As you are well aware, the bank served you a letter dated August 23, 1993 advising you 2.2. You will certainly not deny that we have already fully discussed with you what is meant
that ongoing investigations show that you are involved and/or know of irregular by the conflict with the bank's interest vis--vis the bank clients/parties named in the
transactions which are at the very least in conflict with the bank's interest, and, may even September 13, 1993 letter of Citibank to Ms. Genuino. As we have repeatedly explained to
be fraudulent in nature. you, what the bank meant by it is that your client and Mr. Dante Santos, using the facilities
of their family corporations (Torrance and Global) appear to have participated in the
These transactions are those involving Global Pacific and/or Citibank and the following diversion of bank clients' funds from Citibank to, and investment thereof in, other
bank clients, among others: companies and that they made money in the process, in violation of the conflict of law rule.
It is her side of this issue that Citibank, N.A. is waiting to receive/hear from Ms. Genuino.10
1. Norma T. de Jesus
Genuino did not appear in the administrative investigation held on September 21, 1993.
2. Carmen Intengan/Romeo Neri Her lawyers wrote a letter to Citibank's counsel asking "what bank clients' funds were
diverted from the bank and invested in other companies, the specific amounts involved, the
3. Mario Mamon manner by which and the date when such diversions were purportedly affected." In reply,
Citibank's counsel noted Genuino's failure to appear in the investigation and gave Genuino
4. Vienna Ochoa/IETI up to September 23, 1993 to submit her written explanation. Genuino did not submit her
written explanation.11
5. William Samara
On September 27, 1993, Citibank informed Genuino of the result of their investigation. It
6. Roberto Estandarte found that Genuino with Santos used "facilities of Genuino's family corporation, namely,
Global Pacific, personally and actively participated in the diversion of bank clients' funds to
7. Rita Browner products of other companies that yielded interests higher than what Citibank products
offered, and that Genuino and Santos realized substantial financial gains, all in violation of
8. Ma. Redencion Sumpaico existing company policy and the Corporation Code, which for your information, carries a
penal sanction."12
9. Cesar Bautista
Genuino's employment was terminated by Citibank on grounds of (1) serious misconduct,
10. Teddy Keng (2) willful breach of the trust reposed upon her by the bank, and (3) commission of a crime
against the bank.13
11. NDC-Guthrie
On October 15, 1993, Genuino filed before the Labor Arbiter a Complaint14 against
12. Olivia Sy Citibank docketed as NLRC Case No. 00-10-06450-93 for illegal suspension and illegal
dismissal with damages and prayer for temporary restraining order and/or writ of
In view of the foregoing, you are hereby directed to explain in writing three (3) days from preliminary injunction. The Labor Arbiter rendered a Decision15 on May 2, 1994, the
your receipt hereof why your employment should not be terminated in view of your dispositive portion of which reads:
involvement in these irregular transactions. You are also directed to appear in an
administrative investigation of the matter which is set on Tuesday, Sept. 21, 1993 at 2:00 WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be without
P.M. at the HR Conference Room, 6th Floor, Citibank Center. You may bring your counsel just cause and in violation of her right to due process, respondent CITIBANK, N.A., and
if you so desire.9 any and all persons acting on its behalf or by or under their authority are hereby ordered to
reinstate complainant immediately to her former position as Treasury Sales Division Head
or its equivalent without loss of seniority rights and other benefits, with backwages from
August 23, 1993 up to April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.)
subject to adjustment until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos and
P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary
award as attorney's fees.16
Both parties appealed to the NLRC. The NLRC, in its September 3, 1994 Decision in
NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed the Labor Arbiter's
decision with the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision
of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on
the ground of serious misconduct and breach of trust and confidence and consequently
DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the
salaries due to the complainant from the date it reinstated complainant in the payroll
(computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date
of this decision.
SO ORDERED.17
The parties' motions for reconsideration were denied by the NLRC in a resolution dated
October 28, 1994.18
The Ruling of the Court of Appeals
On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R. No. 118023
with this Court. Citibank's petition for certiorari, on the other hand, was docketed as G.R.
No. 118667. In the January 27, 1999 Resolution, we referred these petitions to the CA
pursuant to our ruling in St. Martin Funeral Home v. NLRC.19
Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532 while Citibank's
petition was docketed as CA-G.R. SP No. 51533. Genuino prayed for the reversal of the
NLRC's decision insofar as it declared her dismissal valid and legal. Meanwhile, Citibank
questioned the NLRC's order to pay Genuino's salaries from the date of reinstatement until
the date of the NLRC's decision.
The CA promulgated its decision on September 30, 1999, denying due course to and
dismissing both petitions.20 Both parties filed motions for reconsideration and on March
31, 2000, the appellate court modified its decision and held:
WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms. Marilou S.
Genuino five thousand pesos (P5,000.00) as indemnity for non-observance of due process
in CA-G.R. SP No. 51532, this Court's 30 September 1999 decision is REITERATED and
AFFIRMED in all other respects.
SO ORDERED.21
Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN
ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe procedural due
process in terminating her employment. This failure is allegedly an indication that there
were no valid grounds in dismissing her. In G.R. Nos. 142753-54, Citibank questions the
ruling that Genuino has a right to reinstatement under Article 223 of the Labor Code.
Citibank contends that the Labor Arbiter's finding is not supported by evidence; thus, the
decision is void. Since a void decision cannot give rise to any rights, Citibank opines that
there can be no right to payroll reinstatement.
The dismissal was for just cause but lacked due process
We affirm that Genuino was dismissed for just cause but without the observance of due
process.
In a string of cases, 22 we have repeatedly said that the requirement of twin notices must
be met. In the recent case of King of Kings Transport, Inc. v. Mamac, we explained:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.23
The Labor Arbiter found that Citibank failed to adequately notify Genuino of the charges
against her. On the contrary, the NLRC held that "the function of a 'notice to explain' is only
to state the basic facts of the employer's charges, which x x x the letters of September 13
and 17, 1993 in question have fully served."24
We agree with the CA that the dismissal was valid and legal, and with its modification of
the NLRC ruling that PhP 5,000 is due Genuino for failure of Citibank to observe due
process.

The Implementing Rules and Regulations of the Labor Code provide that any employer
seeking to dismiss a worker shall furnish the latter a written notice stating the particular
acts or omissions constituting the grounds for dismissal.25 The purpose of this notice is to
sufficiently apprise the employee of the acts complained of and enable him/her to prepare
his/her defense.
In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did
not identify the particular acts or omissions allegedly committed by Genuino. The August
23, 1993 letter charged Genuino with having "some knowledge and/or involvement" in
some transactions "which have the appearance of being irregular at the least and may
even be fraudulent." The September 13, 1993 letter, on the other hand, mentioned
"irregular transactions" involving Global Pacific and/or Citibank and 12 bank clients. Lastly,
the September 20, 1993 letter stated that Genuino and "Mr. Dante Santos, using the
facilities of their family corporations (Torrance and Global) appear to have participated in
the diversion of bank clients' funds from Citibank to, and investment thereof in, other
companies and that they made money in the process, in violation of the conflict of law rule
[sic]." The extent of Genuino's alleged knowledge and participation in the diversion of
bank's clients' funds, manner of diversion, and amounts involved; the acts attributed to
Genuino that conflicted with the bank's interests; and the circumstances surrounding the
alleged irregular transactions, were not specified in the notices/letters.
While the bank gave Genuino an opportunity to deny the truth of the allegations in writing
and participate in the administrative investigation, the fact remains that the charges were
too general to enable Genuino to intelligently and adequately prepare her defense.
The two-notice requirement of the Labor Code is an essential part of due process. The first
notice informing the employee of the charges should neither be pro-forma nor vague. It
should set out clearly what the employee is being held liable for. The employee should be
afforded ample opportunity to be heard and not mere opportunity. As explained in King of
Kings Transport, Inc., ample opportunity to be heard is especially accorded the employees
sought to be dismissed after they are specifically informed of the charges in order to give
them an opportunity to refute such accusations leveled against them. Since the notice of
charges given to Genuino is inadequate, the dismissal could not be in accordance with due
process.
While we hold that Citibank failed to observe procedural due process, we nevertheless find
Genuino's dismissal justified.
Citibank maintains that Genuino was aware of the bank's Corporate Policy Manual
specifically Chapter 3 on "Principles and Policies" with regard to avoiding conflicts of
interest. She had even submitted a Conflict of Interest Survey to Citibank. In that survey,
she denied any knowledge of engaging in transactions in conflict with Citibank's interests.
Citibank, for its part, submitted evidence showing 99% ownership of Global stocks by
Genuino and Santos. In July 1993, Citibank discovered that Genuino and Santos were
instrumental in the withdrawal by bank depositors of PhP 120 million of investments in
Citibank. This amount was subsequently invested in another foreign bank, Internationale
Nederlanden Bank, N.V., under the control of Global and Torrance, another corporation
controlled by Genuino and Santos. 26 Citibank also filed two criminal complaints against
Genuino and Santos for violations of the conflict of interest rule provided in Sec. 31 in
relation to Sec. 14427 of the Corporation Code.28
We note also that during the proceedings before the Labor Arbiter, Citibank presented the
following affidavits, with supporting documentary evidence against Genuino:
1) Vic Lim, an officer of Citibank who investigated the anomalies of Genuino and Santos,
concluded that Genuino and Santos realized substantial financial gains out of the transfer
of monies as supported by the following documents:
1) [S]ome of the Term Investment Applications (TIA), Applications for Money Transfer, all
filled up in the handwriting of Ms. Marilou Genuino. These documents cover/show the
transfer of the monies of the Citibank clients from their money placements/deposits with
Citibank, N.A. to Global and/or Torrance.
2) [S]ome of the checks that were drawn by Global and Torrance against their Citibank
accounts in favor of the other companies by which Global and Torrance transferred the
monies of the bank clients to the other companies.
3) [S]ome of the checks drawn by the other companies in favor of Global or Torrance by
which the other companies remitted back to Global and/or Torrance the monies of the
bank clients concerned.
4) [S]ome of the checks drawn by Global and Torrance against their Citibank accounts in
favor of Mr. Dante Santos and Ms. Marilou Genuino, covering the shares of the latter in the
spreads or margins Global and Torrance had derived from the investments of the monies
of the Citibank clients in the other companies.
5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by which
Global and Torrance remitted back to said bank clients their principal investments (or
portions thereof) and the rates of interests realized from their investment placed with the
other companies less the spreads made by Global and/or Torrance, Mr. Dante L. Santos
and Ms. Marilou Genuino.29
In Lim's Reply-Affidavit with attached supporting documents, he stated that out of the
competing money placement activities, Genuino and Santos derived financial gains
amounting to PhP 2,027,098.08 and PhP 2,134,863.80, respectively.30
2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of the Global
Consumer Bank of Citibank and whose superiors were Genuino and Santos, stated that:
Based on documents that have subsequently come to my knowledge, I realized that the
two (Genuino and Dante L. Santos), with the active cooperation of Redencion Sumpaico
(the Accountant of Global) had brokered for their own benefits and/or of Global the sale
of the financial products of Citibank called "Mortgage Backed Securities" or MBS and in the
process made money at the expense of the (Citibank) investors and the bank.31
3) Patrick Cheng attested to other transactions from which Genuino, Santos, and Global
brokered the Mortgage Backed Securities (MBS), namely: ICC/Nemesio and Olivia Sy
transaction, San Miguel Corporation/ICC, CIPI/Asiatrust, FAPE, PERAA and Union Bank,
and NDC-Guthrie transactions.32
In her defense, Genuino asserts that Citibank has no evidence of any wrongful act or
omission imputable to her. According to her, she did not try to conceal from the bank her
participation in Global and she even disclosed the information when Global designated
Citibank as its depositary. She avers there was no conflict of interest because Global was
not engaged in Citibank's accepting deposits and granting loans, nor in money placement
activities that compete with Citibank's activities; and neither does Citibank invest in the
outlets used by Global. She claims that the controversy between Santos and Global had
already been amicably resolved in a Compromise Agreement between the two parties.33
Genuino further asserts that the letter of termination did not indicate what existing
company policy had been violated, and what acts constituted serious misconduct or willful
breach of the trust reposed by the bank. She claims that Lim's testimony that the checks
issued by Global in her name were profits was malicious, hearsay, and lacked factual
basis. She also posits that as to the withdrawals of clients, she could not possibly dictate
on the depositors. She pointed out that the depositors even sent Citibank a letter dated
August 25, 1993 informing the bank that the withdrawals were made upon their express
instructions. Genuino avers the bank's loss of confidence should have to be proven by
substantial evidence, setting out the facts upon which loss of confidence in the employee
may be made to rest.34
Contrary to the Labor Arbiter's finding, the NLRC found the following facts supported by
the records:
a) Respondent bank has a conflict of interest rule, embodied in Chapter 3 of its Corporate
Policy Manual, prohibiting the officers of the bank from engaging in business activities,
situations or circumstances that are in conflict with the interest of the bank.
b) Complainant was familiar with said conflict of interest rule of the bank and of her duty to
disclose to the bank in writing any personal circumstances which conflicts or appears to be
in conflict with Citibank's interest.
c) Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact
to the bank.
d) Global Pacific is engaged in money placement business like Citibank, N.A.; that in
carrying out its said money placement business, it used funds belonging to Citibank clients
which were withdrawn from Citibank with participation of complainant and Dante L. Santos.
In one transaction of this nature, P120,000,000.00 belonging to Citibank clients was
withdrawn from Citibank, N.A. and placed in another foreign bank, under the control of
Global Pacific. Said big investment money was returned to Citibank, N.A. only when
Citibank, N.A. filed an injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or MBS, another financial
product of Citibank. It was the duty of complainant Genuino and Dante L. Santos to sell
said product on behalf of Citibank, N.A. and for Citibank N.A.'s benefit. In the brokering of
the ABS or MBS, Global Pacific made substantial profits which otherwise would have gone
to Citibank, N.A. if only they brokered the ABS or MBS for and on behalf of Citibank, N.A.
Art. 282(c) of the Labor Code provides that an employer may terminate an employment for
fraud or willful breach by the employee of the trust reposed in him/her by his/her employer
or duly authorized representative. In order to constitute as just cause for dismissal, loss of
confidence should relate to acts inimical to the interests of the employer.35 Also, the act
complained of should have arisen from the performance of the employee's duties.36 For
loss of trust and confidence to be a valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts sufficient to
warrant the employee's separation from work.37 We also held that:
[L]oss of confidence is a valid ground for dismissing an employee and proof beyond
reasonable doubt of the employee's misconduct is not required. It is sufficient if there is
some basis for such loss of confidence or if the employer has reasonable ground to
believe or to entertain the moral conviction that the employee concerned is responsible for
the misconduct and that the nature of his participation therein rendered him unworthy of
the trust and confidence demanded by his position.38
As Assistant Vice-President of Citibank's Treasury Department, Genuino was tasked to
solicit investments, and peso and dollar deposits for, and keep them in Citibank; and to sell
and/or push for the sale of Citibank's financial products, such as the MBS, for the account
and benefit of Citibank.39 She held a position of trust and confidence. There is no way she
could deny any knowledge of the bank's policies nor her understanding of these policies as
reflected in the survey done by the bank. She could not likewise feign ignorance of the
businesses of Citibank, and of Global and Torrance. Assuming that Citibank did not
engage in the same securities dealt with by Global and Torrance; nevertheless, it is to the
interests of Citibank to retain its clients and continue investing in Citibank. Curiously,
Genuino did not even dissuade the depositors from withdrawing their monies from
Citibank, and was even instrumental in the transfers of monies from Citibank to a
competing bank through Global and Torrance, the corporations under Genuino's control.
All the pieces of evidence compel us to conclude that Genuino did not have her employer's
interest. The letter of the bank's clients which attested that the withdrawals from Citibank
were made upon their instructions is of no import. It did not explain why they preferred to
invest in Global and Torrance, nor did it mention that Genuino tried to dissuade them from
withdrawing their deposits. Genuino herself admitted her relationship with some of the
depositors in her affidavit, to wit:
6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning the alleged
scheme employed in the questioned transactions, insinuating an "in" and "out" movement
of funds of the seven (7) depositors, the truth is that after said "depositors"
instructed/authorized us to effect the withdrawal of their respective monies from Citibank to
attain the common goal of higher yields utilizing Global as the vehicle for bulk purchases of
securities or papers not dealt with/offered by Citibank, said pooled investment remained
with Global, and were managed through Global for over a year until the controversy arose;
10. The seven (7) "depositors" mentioned in Mr. Lim's Affidavits are the long-time friends
of affiant Genuino who had formed a loosely constituted investment group for purposes of
realizing higher yields derivable from pooled investments, and as the advisor of the group
she had in effect chosen Citibank as the initial repository of their respective monies prior to
the implementation of plans for pooled investments under Global. Hence, she had known
and dealt with said "depositors" before they became substantial depositors of Citibank.
She did not come across them because of Citibank.40 (Emphasis supplied.)
All told, Citibank had valid grounds to dismiss Genuino on ground of loss of confidence.
In view of Citibank's failure to observe due process, however, nominal damages are in
order but the amount is hereby raised to PhP 30,000 pursuant to Agabon v. NLRC. The
NLRC's order for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter
employers from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.41
Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of due process
under the CA's March 31, 2000 Resolution in CA-G.R. SP No. 51532 is increased to PhP
30,000.
Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank "to
pay the salaries due to the complainant from the date it reinstated complainant in the
payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until
the date of this decision," the Court hereby cancels said award in view of its finding that the
dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee during the pendency of the
appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices.42 However, if the employee
was reinstated to work during the pendency of the appeal, then the employee is entitled to
the compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement,
and her dismissal is based on a just cause, then she is not entitled to be paid the salaries
stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
WHEREFORE, the petitions of Genuino in G.R. Nos. 142732-33 are DENIED for lack of
merit. The petitions of Citibank in G.R. Nos. 142753-54 are GRANTED. The September
30, 1999 Decision and March 31, 2000 Resolution in CA-G.R. SP Nos. 51532 and 51533
are AFFIRMED with MODIFICATION that Genuino is entitled to PhP 30,000 as indemnity
for non-observance of due process. Item (3) in the dispositive portion of the September 3,
1994 Decision of the NLRC in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94)
is DELETED and SET ASIDE, and said NLRC decision is MODIFIED as follows:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision
of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on
the ground of serious misconduct and breach of trust and confidence and consequently
DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the
complainant nominal damages in the amount of PhP 30,000.
SO ORDERED.
EN BANC
[G.R. No. 118651. October 16, 1997]
PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION and
LOURDES A. DE JESUS, respondents.
DECISION
FRANCISCO, J.:
The facts are as follows:
Private respondent Lourdes A. de Jesus is petitioners reviser/trimmer since 1980. As
reviser/trimmer, de Jesus based her assigned work on a paper note posted by petitioners.
The posted paper which contains the corresponding price for the work to be accomplished
by a worker is identified by its P.O. Number. On August 15, 1992, de Jesus worked on
P.O. No. 3853 by trimming the cloths ribs. She thereafter submitted tickets corresponding
to the work done to her supervisor. Three days later, de Jesus received from petitioners
personnel manager a memorandum requiring her to explain why no disciplinary action
should be taken against her for dishonesty and tampering of official records and
documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming.
The memorandum also placed her under preventive suspension for thirty days starting
from August 19, 1992. In her handwritten explanation, de Jesus maintained that she
merely committed a mistake in trimming P.O. No. 3853 as it has the same style and design
as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that
she may have been negligent in presuming that the same work was to be done with P.O.
No. 3853, but not for dishonesty or tampering Petitioners personnel department,
nonetheless, terminated her from employment and sent her a notice of termination dated
September 18, 1992.
On September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners.
The Labor Arbiter who heard the case noted that de Jesus was amply accorded procedural
due process in her termination from service. Nevertheless, after observing that de Jesus
made some further trimming on P.O. No. 3853 and that her dismissal was not justified, the
Labor Arbiter held petitioners guilty of illegal dismissal. Petitioners were accordingly
ordered to reinstate de Jesus to her previous position without loss of seniority rights and
with full backwages from the time of her suspension on August 19, 1992. Dissatisfied with
the Labor Arbiters decision, petitioners appealed to the public respondent National Labor
Relations Commission (NLRC). In its July 21, 1994 decision, the NLRC[1] ruled that de
Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be
trimmed for having the same style and design as P.O. No. 3824, thus petitioners cannot be
entirely faulted for dismissing de Jesus. The NLRC declared that the status quo between
them should be maintained and affirmed the Labor Arbiters order of reinstatement, but
without backwages. The NLRC further directed petitioner to pay de Jesus her back
salaries from the date she filed her motion for execution on September 21, 1993 up to the
date of the promulgation of [the] decision.[2] Petitioners filed their partial motion for
reconsideration which the NLRC denied, hence this petition anchored substantially on the
alleged NLRCs error in holding that de Jesus is entitled to reinstatement and back salaries.
On March 6, 1996, petitioners filed its supplement to the petition amplifying further their
arguments. In a resolution dated February 20, 1995, the Court required respondents to
comment thereon. Private respondent de Jesus and the Office of the Solicitor General, in
behalf of public respondent NLRC, subsequently filed their comments. Thereafter,
petitioners filed two rejoinders [should be replies] to respondents respective comments.
Respondents in due time filed their rejoinders.
These are two interrelated and crucial issues, namely: (1) whether or not de Jesus was
illegally dismissed, and (2) whether or not an order for reinstatement needs a writ of
execution.
Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is
entitled to reinstatement to her previous position for she was not illegally dismissed in the
first place. In support thereof, petitioners quote portions of the NLRC decision which stated
that respondent [petitioners herein] cannot be entirely faulted for dismissing the
complaint[3] and that there was no illegal dismissal to speak of in the case at bar.[4]
Petitioners further add that de Jesus breached the trust reposed in her, hence her
dismissal from service is proper on the basis of loss of confidence, citing as authority the
cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; Coca-Cola Bottlers Phil.,
Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del Norte Electric Cooperative,[5] 154
SCRA 500.
The arguments lack merit.
The entire paragraph which comprises the gist of the NLRCs decision from where
petitioners derived and isolated the aforequoted portions of the NLRCs observation reads
in full as follows:
We cannot fully subscribe to the complainants claim that she trimmed the ribs of PO3853
in the light of the sworn statement of her supervisor Rebecca Madarcos (Rollo, p. 64) that
no trimming was necessary because the ribs were already of the proper length. The
complainant herself admitted in her sinumpaang salaysay (Rollo, p. 45) that Aking
napansin na hindi pantay-pantay ang lapad ng mga ribs PO3853 - mas maigsi ang nagupit
ko sa mga ribs ng PO3853 kaysa sa mga ribs ng mga nakaraang POs. The complaint
being an experienced reviser/trimmer for almost twelve (12) years should have called the
attention of her supervisor regarding her observation of PO3853. It should be noted that
complainant was trying to claim as production output 447 pieces of trimmed ribs of
PO3853 which respondents insists that complainant did not do any. She was therefore
negligent in presuming that the ribs of PO3853 should likewise be trimmed for having the
same style and design as PO3824. Complainant cannot pass on the blame to her
supervisor whom she claimed checked the said tickets prior to the submission to the
Accounting Department. As explained by respondent, what the supervisor does is merely
not the submission of tickets and do some checking before forwarding the same to the
Accounting Department. It was never disputed that it is the Accounting Department who
does the detailed checking and computation of the tickets as has been the company policy
and practice. Based on the foregoing and considering that respondent cannot be entirely
faulted for dismissing complainant as the complainant herself was also negligent in the
performance of her job, We hereby rule that status quo between them should be
maintained as a matter of course. We thus affirm the decision of Labor Arbiter reinstating
the complainant but without backwages. The award of backwages in general are granted
on grounds of equity for earnings which a worker or employee has lost due to his illegal
dismissal. (Indophil Acrylic Mfg. Corporation vs. NLRC, G.R. No. 96488 September 27,
1993) There being no illegal dismissal to speak in the case at bar, the award for
backwages should necessarily be deleted.[6]
We note that the NLRCs decision is quite categorical in finding that de Jesus was merely
negligent in the performance of her duty. Such negligence, the Labor Arbiter delineated,
was brought about by the petitioners plain improvidence. Thus:
After careful assessment of the allegations and documents available on record, we are
convinced that the penalty of dismissal was not justified.
At the outset, it is remarkable that respondents did not deny nor dispute that P.O. 3853
has the same style and design as P.O. 3824; that P.O. 3824 was made as guide for the
work done on P.O. 3853; and, most importantly, that the notation correction on P.O. 3824
was made only after the error was discovered by respondents Accounting Department.
Be sure that as it may, the factual issue in this case is whether or not complaint trimmed
the ribs of P.O. 3853?
Respondents maintained that she did not because the record in Accounting Department
allegedly indicates that no trimming is to be done on P.O. 3853. Basically, this allegation is
unsubstantiated.
It must be emphasized that in termination cases the burdent of proof rests upon the
employer.
In the instant case, respondents mere allegation that P.O. 3853 need not be trimmed does
not satisfy the proof required to warrant complainants dismissal.
Now, granting that the Accounting record is correct, we still believe that complainant did
some further trimming on P.O. 3853 based on the following grounds:
First, Supervisor Rebecca Madarcos who ought to know the work to be performed
because she was in-charged of assigning jobs, reported no anomally when the tickets
were submitted to her.
Incidentally, supervisor Madarcos testimony is suspect because if she could recall what
she ordered the complainant to do seven (7) months ago (to revise the collars and
plackets of shirts) there was no reason for her not to detect the alleged tampering at the
time complainant submitted her tickets, after all, that was part of her job, if not her main
job.
Secondly, she did not exceed her quota, otherwise she could have simply asked for more.
That her output was remarkably big granting misinterpreted it is true, is well explained in
that the parts she had trimmed were lesser compared to those which she had cut before.
In this connection, respondents misinterpreted the handwritten explanation of the
complainant dated 20 August 1992, because the letter never admits that she never
trimmed P.O. 3853, on the contrary the following sentence,
Sa katunayan nakapagbawas naman talaga ako na di ko inaasahang inalis na pala ang
presyo ng Sec. 9 P.O. 3853 na ito.
is crystal clear that she did trim the ribs on P.O. 3853. [7]
Gleaned either from the Labor Arbiters observations or from the NLRCs assessment, it
distinctly appears that petitioners accusation of dishonesty and tampering of official
records and documents with intention of cheating against de Jesus was not substantiated
by clear and convincing evidence. Petitioners simply failed, both before the Labor Arbiter
and the NLRC, to discharge the burdent of proof and to validly justify de Jesus dismissal
from service. The law, in this light, directs the employers, such as herein petitioners, not to
terminate the services of an employee except for a just or authorized cause under the
Labor Code.[8] Lack of a just cause in the dismissal from service of an employee, as in this
case, renders the dismissal illegal, despite the employers observance of procedural due
process.[9] And while the NLRC stated that there was no illegal dismissal to speak of in
the case at bar and that petitioners cannot be entirely faulted therefor, said statements are
inordinate pronouncements which did not remove the assailed dismissal from the realm of
illegality. Neither can these pronouncements preclude us from holding otherwise.
We also find the imposition of the extreme penalty of dismissal against de Jesus as
certainly harsh and grossly disproportionate to the negligence committed, especially where
said employee holds a faithful and an untarnished twelve-year service record. While an
employer has the inherent right to discipline its employees, we have always held that this
right must always be exercised humanely, and the penalty it must impose should be
commensurate to the offense involved and to the degree of its infraction.[10] The employer
should bear in mind that, in the exercise of such right, what is at stake is not only the
employees position but her livelihood as well.
Equally unmeritorious is petitioners assertion that the dismissal is justified on the basis of
loss of confidence. While loss of confidence, as correctly argued by petitioners, is one of
the valid grounds for termination of employment, the same, however, cannot be used as a
pretext to vindicate each and every instance of unwarranted dismissal. To be a valid
ground, it must shown that the employee concerned is responsible for the misconduct or
infraction and that the nature of his participation therein rendered him absolutely unworthy
of the trust and confidence demanded by his position.[11] In this cae, petitioners were
unsuccessful in establishing their accusations of dishonesty and tampering of records with
intention of cheating. Indeed, even if petitioners allegations against de Jesus were true,
they just the same failed to prove that her position needs the continued and unceasing
trust of her employees functions.[12] Surely, de Jesus who occupies the position of a
reviser/trimmer does not require the petitioners perpetual and full confidence. In this
regard, petitioners reliance on the cases of Ocean Terminal Services, Inc. v. NLRC; Coca-
Cola Bottlers Phil., Inc. v. NLRC; and Piedad v. Lanao del Norte Electric Cooperative,
which when perused involve positions that require the employers full trust and confidence,
is wholly misplaced. In Ocean Terminal Services, for instance, the dismissed employee
was designated as expediter and canvasser whose responsibility is mainly to make
emergency procurements of tools and equipments and was entrusted with the necessary
cash for buying them. The case of Coca-Cola Bottlers, on the other hand, involves a sales
agent whose job exposes him to the everyday financial transactions involving the
employers goods and funds, while that of Piedad concerns a bill collector who essentially
handles the employers cash collections. Undoubtedly, the position of a reviser/trimmer
could not be equated with that of a canvasser, sales agent, or a bill collector. Besides, the
involved employees in the three aforementioned cases were clearly proven guilty of
infractions unlike private respondent in the case at bar. Thus, petitioners dependence on
these cited cases is inaccurate, to say the least. More, whether or not de Jesus meets the
days quota of work she, just the same, is paid the daily minimum wage.[13]
Corollary to our determination that de Jesus was illegally dismissed is her imperative
entitlement to reinstatement and backwages as mandated by law.[14] Whence, we move
to the second issue, i.e., whether or not an order for reinstatement needs a writ of
execution.
Petitioners theory is that an order for reinstatement is not self-executory. They stress that
there must be a writ of execution which may be issued by the NLRC or by the Labor
Arbiter motu proprio or on motion of an interested party. They further maintain that even if
a writ of execution was issued, a timely appeal coupled by the posting of appropriate
supersedeas bond, which they did in this case, effectively forestalled and stayed execution
of the reinstatement order of the Labor Arbiter. As supporting authority, petitioners
emphatically cite and bank on the case of Maranaw Hotel Resort Corporation (Century
Park Sheraton Manila) v. NLRC, 238 SCRA 190.
Private respondent de Jesus, for her part, maintains that petitioners should have reinstated
her immediately after the decision of the Labor Arbiter ordering her reinstatement was
promulgated since the law mandates that an order for reinstatement is immediately
executory. An appeal, she says, could not stay the execution of a reinstatement order for
she could either be admitted back to work or merely reinstated in the payroll without need
of a writ of execution. De Jesus argues that a writ of execution is necessary only for the
enforcement of decisions, orders, or awards which have acquired finality. In effect, de
Jesus is urging the Court to re-examine the ruling laid down in Maranaw.
Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March
21, 1989, pertinently provides:
ART. 223. Appeal. --Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal maybe
entertained only on any of the following grounds:
xxx xxx xxx
In an event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reistated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
xxx xxx xxx
We initially interpreted the aforequoted provision in Inciong v. NLRC.[15] The Court[16]
made this brief comment:
The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or
three (3) months before Article 223 of the Labor Code was amended by Republic Act 6715
(which became law on March 21, 1989), providing that a decision of the Labor Arbiter
ordering the reinstatement of a dismissed or separated employee shall be immediately
executory insofar as the reinstatement aspect is concerned, and the posting of an appeal
bond by the employer shall not stay such execution. Since this new law contains no
provision giving it retroactive effect (Art. 4, Civil Code), the amendment may not be applied
to this case.
which the Court adopted and applied in Callanta v. NLRC.[17] In Zamboanga City Water
District v. Buat,[18] the Court construed Article 223 to mean exactly what it says. We said:
Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or
separated employee insofar as the reinstatement aspect is concerned, shall be
immediately executory, even pending appeal. The employer shall reinstate the employee
concerned either by: (a) actually admitting him back to work under the same terms and
conditions prevailing prior to his dismissal or separation; or (b) at the option of the
employer, merely reinstating him in the payroll. Immediate reinstatement is mandated and
is not stayed by the fact that the employer has appealed, or has posted a cash or surety
bond pending appeal.[19]
We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting
System (CBS) DZWX[20] and laid down the rule that an employer who fails to comply with
an order of reinstatement makes him liable for the employees salaries. Thus:
Petitioners construe the above paragraph to mean that the refusal of the employer to
reinstate an employee as directed in an executory order of reinstatement would make it
liable to pay the latters salaries. This interpretation is correct. Under Article 223 of the
Labor Code, as amended, an employer has two options in order for him to comply with an
order of reinstatement, which is immediately executory, even pending appeal. Firstly, he
can admit the dismissed employee back to work under the same terms and conditions
prevailing prior to his dismissal or separation or to a substantially equivalent position if the
former position is already filled up as we have ruled in Union of Supervisors (RB) NATU
vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso vs. Castro, 141 SCRA 252 [1986].
Secondly, he can reinstate the employee merely in the payroll. Failing to exercise any of
the above options, the employer can be compelled under pain of contempt, to pay instead
the salary of the employee. This interpretation is more in consonance with the
constitutional protection to labor (Section 3, Art. XIII, 1987 Constitution). The right of a
person to his labor is deemed to be property within the meaning of the constitutional
guaranty that no one shall be deprived of life, liberty, and property without due process of
law. Therefore, he should be protected against any arbitrary and unjust deprivation of his
job (Bondoc vs. Peoples Bank and Trust Co., Inc., 103 SCRA 599 [1981]). The employee
should not be left without any remedy in case the employer unreasonably delays
reinstatement. Therefore, we hold that the unjustified refusal of the employer to reinstate
an illegally dismissed employee entitles the employee to payment of his salaries x x x.[21]
The Court, however, deviated from this construction in the case of Maranaw.
Reinterpreting the import of Article 223 in Maranaw, the Court[22] declared that the
reinstatement aspect of the Labor Arbiters decision needs a writ of execution as it is not
self-executory, a declaration the Court recently reiterated and adopted in Archilles
Manufacturing Corp. v. NLRC.[23]
We note that prior to the enactment of R.A. No. 6715, Article 223[24] of the Labor Code
contains no provision dealing with the reinstatement of an illegally dismissed employee.
The amendment introduced by R.A. No. 6715 is an innovation and a far departure from the
old law indicating therby the legislatures unequivocal intent to insert a new rule that will
govern the reinstatement aspect of a decision or resolution in any given labor dispute. In
fact, the law as now worded employs the phrase shall immediately be executory without
qualification emphasizing the need for prompt compliance. As a rule, shall in a statute
commonly denotes an imperative obligation and is inconsistent with the idea of
discretion[25] and that the presumption is that the word shall, when used in a statute, is
mandatory.[26] An appeal or posting of bond, by plain mandate of the law, could not even
forestall nor stay the executory nature of an order of reinstatement. The law, moreover, is
unambiguous and clear. Thus, it must be applied according to its plain and obvious
meaning, according to its express terms. In Globe-Mackay Cable and Radio Corporation v.
NLRC,[27] we held that:
Under the principles of statutory construction, if a statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation.
This plain-meaning rule or verba legis derived from the maxim index animi sermo est
(speech is the index of intention) rests on the valid presumption that the words employed
by the legislature in a statute correctly express its intent by the use of such words as are
found in the statute. Verba legis non est recedendum, or from the words of a statute there
should be no departure.[28]
And in conformity with the executory nature of the reinstatement order, Rule V, Section 16
(3) of the New Rules of Procedure of the NLRC strictly requires the Labor Arbiter to direct
the employer to immediately reinstate the dismissed employee. Thus:
In case the decision includes an order of reinstatement, the Labor Arbiter shall direct the
employer to immediately reinstate the dismissed or separated employee even pending
appeal. The order of reinstatement shall indicate that the employee shall either be
admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the payroll.
In declaring that reinstatement order is not self-executory and needs a writ of execution,
the Court, in Maranaw, adverted to the rule provided under Article 224. We said:
It must be stressed, however, that although the reinstatement aspect of the decision is
immediately executory, it does not follow that it is self-executory. There must be a writ of
execution which may be issued motu proprio or on motion of an interested party. Article
224 of the Labor Code provides:
ART. 224. Execution of decisions, orders or awards. (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-
arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue
a writ of execution on a judgment within five (5) years from the date it becomes final and
executory (emphasis supplied)
The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the NLRC
also provides:
The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly authorized
hearing officer of origin shall, motu propio or on motion of any interested party, issue a writ
of execution on a judgment within five (5) years from the date it becomes final and
executory . No motion for execution shall be entertained nor a writ be issued unless the
Labor Arbiter is in possession of the records of the case which shall include an entry of
judgment. (emphasis supplied)
xxx xxx xxx
In the absence them of an order for the issuance of a writ of execution on the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no legal
obligation to admit back to work the private respondent under the terms and conditions
prevailing prior to her dismissal or, at the petitioners option, to merely reinstate her in the
payroll. An option is a right of election to exercise a privilege, and the option in Article 223
of the Labor Code is exclusively granted to the employer. The event that gives rise for its
exercise is not the reinstatement decree of a Labor Arbiter, but the writ for its execution
commanding the employer to reinstate the employee, while the final act which compels the
employer to exercise the option is the service upon it of the writ of execution when, instead
of admitting the employee back to his work, the employer chooses to reinstate the
employee in the payroll only. If the employer does not exercise this option, it must forthwith
admit the employee back to work, otherwise it may be punished for contempt.[29]
A closer examination, however, shows that the necessity for a writ of execution under
Article 224 applies only to final and executory decisions which are not within the coverage
of Article 223. For comparison, we quote the material portions of the subject articles:
ART. 223. Appeal. x x x
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
xxx xxx xxx
ART. 224. Execution of decisions, orders, or awards. --(a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-
arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue
a writ of execution on a judgment within five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized officer to execute or enforce final
decicions, orders or awards of the Secretary of Labor and Employment or regional director,
the Commission, the arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be
the duty of the responsible officer to separately furnish immediately the counsels of record
and the parties with copies of said decisions, orders or awards. Failure to comply with the
duty prescribed herein shall subject such responsible officer to appropriate administrative
sanctions."
Article 224 states that the need for a writ of execution applies only within five (5) years
from the date a decision, an order or awards becomes final and executory. It cannot relate
to an award or order of reinstatement still to be appealed or pending appeal which Article
223 contemplates. The provision of Article 223 is clear that an award for reinstatement
shall be immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. The legislative content is quite
obvious, i.e., to make an award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of execution as prerequisites
for the execution of a reinstatement award would certainly betray and run counter to the
very object and intent of Article 223, i. e., the immediate execution of a reinstatement
order. The reason is simple. An application for a writ of execution and its issuance could
be delayed for numerous reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could
easily delay the issuance of the writ thereby setting at naught the strict mandate and noble
purpose envisioned by Article 223. In other words, if the requirements of Article 224 were
to govern, as we so declared in Maranaw, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to have ordaineda valid and
sensible law, one which operates no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved
and the evil sought to be remedied.[30] And where statues are fairly susceptible of two or
more construction, that construction should be adopted which will most tend to give effect
to the manifest intent of the law maker and promote the object for which the statute was
enacted, and a construction should be rejected which would tend to render abortive other
provisions of the statute and to defeat the object which the legislator sought to attain by its
enactment.[31] In introducing a new rule on the reinstatement aspect of a labor decision
under R.A. No. 6715, Congress should not be considered to be indulging in mere semantic
exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the
reinstatement order in the exercise of its sound discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor
laws should be resolved in favor of labor. In ruling that an order or award for reinstatement
does not require a writ of execution the Court is simply adhering and giving meaning to this
rule. Henceforth, we rule that an award or order for reinstatement is self-executory. After
receipt of the decision or resolution ordering the employee's reinstatement, the employer
has the right to choose whether to re-admit the employee to work under the same terms
and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll.
In either instance, the employer has to inform the employee of his choice. The notification
is based on practical considerations for without notice, the employee has no way of
knowing if he has to report for work or not.
WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is hereby
REINSTATED.
Costs against petitioner.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan,
Mendoza, Hermosisima, Jr., Panganiban, and Torres, Jr., JJ., concur.
SECOND DIVISION
[G.R. No. 123375. February 28, 2005]
GENARO BAUTISTA, petitioner, vs. HON. COURT OF APPEALS and THE OFFICIALS
AND BOARD OF DIRECTORS OF KAISAHAN AT KAPATIRAN NG MGA
MANGGAGAWA AT KAWANI SA METROPOLITAN WATERWORKS AND SEWERAGE
SYSTEM UNION, REPRESENTED BY ITS PRESIDENT, PRUDENCIO CRUZ,
respondents.
DECISION
CHICO-NAZARIO, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the Decision[1] and Resolution[2] of the Court of Appeals, dated 09
October 1995 and 08 January 1996, respectively. The court a quo, in said Decision, held
that the jurisdiction to determine the proper representative of employees in the
Metropolitan Waterworks and Sewerage System pertains to the Department of Labor and
Employment, more particularly to the Bureau of Labor Relations.
The Facts
On 07 May 1993, after a petition for election of officers of Kaisahan at Kapatiran ng mga
Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-
MWSS) was filed by Bonifacio De Guzman, former auditor of KKMK-MWSS, a Resolution
was issued by Perlita Bathan-Velasco, in her capacity as Director of the Bureau of Labor
Relations (BLR), the decretal portion of which states:
Wherefore, the instant petition is hereby granted and the Kaisahan at Kapatiran ng mga
Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-
MWSS) is hereby directed to immediately conduct an election of the following union
officers: 1. President, 2. 1st Vice President, 3. 2nd Vice President, 4. Executive Secretary,
5. Assistant Executive Secretary, 6. Treasurer, 7. Assistant Treasurer, 8. Auditor, 9.
Assistant Auditor, 10. Public Relations Officer, 11. Twenty Three (23) Directors, 12. Four
Sergeants at Arms, and 13. Business Manager, after the usual pre-election conferences.
The Labor Organizations Division, this Bureau, shall supervise the conduct of said
election.[3]
A Motion for Reconsideration was filed by the incumbent officers of KKMK-MWSS, led by
its President, Genaro Bautista, with the BLR, but was denied by Perlita Bathan-Velasco on
08 July 1993.
An appeal was filed with the Office of the Secretary of Labor and Employment where the
order of the BLR was assailed as having been issued with grave abuse of discretion and
without jurisdiction.[4]
On 24 August 1993, an Order was issued by the Office of the Secretary of Labor and
Employment, through Undersecretary Bienvenido Laguesma, part of which reads:
Records clearly show that the subject of the present controversy is an intra union conflict
involving an employees organization in the public sector created and registered pursuant
to Executive Order No. 180. Consequently, this office (referring to the Secretary of Labor
and Employment) has no other recourse but to dismiss the appeal for lack of jurisdiction.
...
Wherefore, the instant appeal is hereby dismissed for lack of jurisdiction. Accordingly, let
the entire records of this case be returned to the Bureau of Labor Relations, for
appropriate action.[5]
The then incumbent officers of KKMK-MWSS, represented by its President, Genaro C.
Bautista, filed a special civil action for certiorari which was, however, dismissed. The
Court, on 20 September 1993, issued the following Resolution:
G.R. No. 111635 (Incumbent Officers of KKMK-MWSS represented by its President
Genaro C. Bautista v. Hon. Bienvenido E. Laguesma, in his capacity as Undersecretary of
Labor and Employment, Hon. Perlita Bathan-Velasco, in her capacity as Officer-In-Charge
of the Bureau of Labor Relations, Bonifacio De Guzman and 544 other members of KKMK-
MWSS). Acting on the special civil action for certiorari, with prayer for the issuance of a
temporary restraining order, the Court Resolved to DISMISS the petition for being
insufficient in form and substance, and for want of a genuine justiciable issue.
Petitioners claim to be incumbent officers of the Kaisahan at Kapatiran ng mga
Manggagawa sa Metropolitan Waterworks and Sewerage System (KKMK-MWSS).
However, they are not individually named in the petition.
In the main, the petition argues that public respondents have no jurisdiction over an intra-
union dispute among government employees, hence, cannot order a new election of
officers. A cursory reading of the Order of 24 August 1993 issued by respondent
Undersecretary reveals that he agrees with this view. Thus
Records clearly show that the subject of the present controversy is an intra-union conflict
involving an employees organization in the public sector created and registered pursuant
to Executive Order No. 180. Consequently, this Office (referring to the Secretary of Labor
and Employment) has no other recourse but to dismiss the appeal for lack of jurisdiction.
There is no valid issue therefore to be resolved in the instant petition.[6]
This Resolution of the Court became final and executory on 27 October 1994 and was
recorded in the Book of Entries of Judgments.[7]
Earlier, or on 25 November 1993, a Petition for Prohibition with Prayer for a Temporary
Restraining Order/Injunction[8] was filed by Genaro Bautista, et al., against Perlita Bathan-
Velasco, Director, Eugenia Fernandez, Med-Arbiter, and Johnny P. Garcia, Chief, Labor
Organizations Division, all of the BLR, before the Regional Trial Court (RTC), Quezon City,
Branch 87. The petition sought to enjoin the herein respondents from proceeding with the
election of officers of KKMK-MWSS scheduled on 02 December 1993, and to permanently
prohibit them from exercising jurisdiction over the conduct of election of the officers of the
KKMK-MWSS.
On 26 November 1993, the RTC, Quezon City, Branch 87, through Judge Elsie Ligot
Telan, issued a temporary restraining order, quoted as follows:
A verified petition for prohibition with prayer for a temporary restraining order/injunction has
been filed by the plaintiffs. The petition being sufficient in form and substance, and so as
not to render the issues raised moot and academic, the defendants are hereby ordered to
temporarily refrain from proceeding with the election of officers of the KKMK-MWSS
scheduled on December 2, 1993, until further orders from the Court.
Let the prayer for issuance of injunction be set for hearing on December 7, 1993 at 8:30
a.m., at which date and time, defendants may show cause why the same should not be
granted.
Let summons together with copies of the complaint be served upon the defendants.[9]
Copies of this Order were served upon the defendants therein on 29 November 1993.[10]
On 02 December 1993, the election of the officers of KKMK-MWSS pushed through
despite the issuance of the temporary restraining order. Another Order was issued by
Branch 87 on the same date, hereunder quoted:
Counsel for petitioners appeared today with an urgent ex-parte manifestation stating that
despite the order of this Court, dated November 26, 1993, restraining the defendants
temporarily from proceeding with the election of officers of the KKMK-MWSS scheduled for
today, until further orders, and that the officials of the MWSS had been served copy of this
order, the election is now being held in utter defiance and disobedience of the said order of
this Court.
To substantiate the above manifestation report are affidavits attached thereto executed by
Angelito Ignacio, alleged incumbent Asst. Treasurer of the KKMK-MWSS and Mario Perez,
incumbent assistant auditor, respectively, swearing to the truth that the prohibited elections
are now being held at the compounds of the MWSS, Balara, Quezon City, and at
Arroceros, Manila.
The defendants in this case together with Teofilo Asuncion and Gregorio Garcia, who were
furnished copy of the order and such other persons who are involved in conducting [of] the
election and/or sanctioning the same are hereby given up to 4:30 oclock this afternoon to
explain why they should not be punished for contempt in defying the order of this Court
dated November 26, 1993.
The Court hereby reiterates its order restraining the defendants, their agents, assigns and
representatives, and any or all persons having to do with such elections, specifically the
management of the MWSS and all others acting in cooperation with them or acting on their
behalf or direction, from conducting or continuing or tolerating the elections scheduled
today.[11]
On 07 December 1993, another Order was issued by the RTC, Quezon City, Branch 87,
part of which reads:
. . . [T]he defendants, as well as all their agents, assigns, representatives and any or all
persons having to do with the elections, scheduled on December 2, 1993, including the
BLR officials and the management of the Metropolitan Waterworks and Sewerage System,
and all others cooperating with them, or acting on their behalf and direction, are hereby
restrained from continuing or tolerating the election process in question at any stage
thereof, and if already accomplished in defiance of the orders of this Court, the said
defendants are ordered to refrain from giving effect to the election by ratifying and
registering the same and recognizing the persons supposedly elected. Further, the
persons allegedly elected in said elections are hereby ordered to refrain from assuming
office and acting as officers of the KKMK-MWSS.[12]
On 28 December 1993, an order for the issuance of a writ of preliminary injunction was
issued by Branch 87.[13] A day later, or on 29 December 1993, a Writ of Preliminary
Injunction was issued by the RTC, the pertinent portion of which reads:
NOW THEREFORE, you the respondents, your agents and representatives, particularly
the officers concerned ordering them until further orders of this Court to refrain from giving
any effect to the elections above adverted to by ratifying and registering the same, and
recognizing as officers the persons supposedly elected; and for the latter to refrain from
assuming office and acting as officers of the KKMK-MWSS.[14]
After the case was re-raffled to Branch 220, RTC, Quezon City,[15] presided by Judge
Prudencio Altre Castillo, Jr., the respondents, on 20 June 1994, filed a Reiteration of
Motion to Dismiss and Motion to Lift Writ of Preliminary Injunction,[16] on the ground of
lack of jurisdiction and that the injunction does not anymore serve its purpose.[17] Branch
220 issued an Order dated 01 July 1994, dismissing the case, the decretal portion of which
states:
WHEREFORE, the instant case is dismissed. The Writ is ordered quashed and Petitioners
are hereby ordered to show cause why their injunction bond should not be confiscated in
favor of the respondents.[18]
A motion for reconsideration was filed by Bautista, et al., dated 16 July 1994, alleging
among other things, that the RTC has jurisdiction considering that the case before it was
an action for prohibition, which was cognizable by it.[19] As a result of which Branch 220
issued another Order[20] dated 27 December 1994 reinstating the Writ of Preliminary
Injunction and injunction bond.
A motion for reconsideration was filed by the private respondents but was denied by
Branch 220 in its order dated 27 April 1995.[21]
On 18 May 1995, a petition for certiorari, prohibition and mandamus with prayer for
Preliminary Injunction and/or Restraining Order was filed before the Court of Appeals by
private respondents herein.[22] In it, the orders of Branch 220 dated 27 December 1994
and 27 April 1995 were assailed for having been issued with grave abuse of discretion.
On 09 October 1995, a Decision was rendered by the Court of Appeals finding for the
private respondents, upholding that the BLR had jurisdiction over an intra-union dispute,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING PREMISES, the instant petition for certiorari, prohibition
and mandamus is hereby GRANTED. The assailed orders of December 27, 1994 and April
27, 1995 are hereby SET ASIDE and NULLIFIED for reasons above-stated. No costs.[23]
Petitioner then filed a motion for reconsideration dated 27 October 1995,[24] but was
denied by the court a quo in its Resolution dated 08 January 1996, which is quoted
hereunder:
This Court hereby resolves the following:
(1) to DENY the motion for the issuance of temporary restraining order of the petitioners,
considering that the instant case has already been decided on October 9, 1995;
(2) to DENY the motion for reconsideration of the respondents, it appearing that there are
no new issues raised which would warrant the reversal or modification of Our decision.[25]
On 13 February 1996, a petition for review on certiorari was filed before this Court by
Genaro Bautista[26] seeking the reversal and setting aside of the Decision and Resolution
of the Court of Appeals cited earlier.
Meanwhile, on 28 May 1996, a petition for mandamus was filed by Genaro Bautista, as
President, and by the other officers[27] and members of the board[28] of KKMK-MWSS
against Angel L. Lazaro III, Administrator, MWSS, and the Board of Trustees of MWSS,
before the RTC, Quezon City, raffled again to Branch 220, docketed as Sp. Proc. No. Q-
96-27586.[29] In this petition, it was prayed, among other things, that Angel Lazaro III and
the Board of Trustees of MWSS give due recognition to Genaro Bautista, et al., as officers
of KKMK-MWSS, and that the union dues be released to the latter.
On 27 June 1996, an Urgent Motion for Issuance of Temporary Restraining Order[30] was
filed before this Court by the private respondents praying that Regional Trial Court Judge
Prudencio Altre Castillo be enjoined from hearing the mandamus case.
Then Associate Justice Teodoro R. Padilla, as Chairman of the First Division, issued a
Temporary Restraining Order on 08 July 1996, a portion of which reads:
NOW, THEREFORE, you (respondents), your officers, agents, representatives, and/or
persons acting upon your orders or, in your place or stead, are hereby ENJOINED to
desist from hearing the case in SP Case No. Q-96-27586 entitled Genaro Bautista, et al.
vs. Angel L. Lazaro, Administrator, Metropolitan Waterworks and Sewerage System
(MWSS), Board of Trustees (MWSS).
A Motion to Lift Temporary Restraining Order[31] and a Supplemental Motion[32] thereto
were later filed by Genaro Bautista, et al.
Thereafter, petitioner Genaro Bautista filed an urgent motion to declare the administrator,
Angel L. Lazaro III, and manager, Erlich V. Barraquias, of the Legal Department of the
MWSS in indirect contempt of court.[33] The petitioner, in this motion, alleged that Lazaro
and Barraquias both failed to follow the opinions rendered by the Office of the Government
Corporate Counsel (OGCC) to the effect that the petitioner and his set of officers are still
the rightful parties with whom MWSS management has to deal with in all union matters as
they continue to be the incumbent officers.[34] The Court issued a Resolution[35] dated 18
June 1997 requiring the said administrator and manager to comment on the motion. A joint
comment was thereafter filed by Lazaro and Barraquias dated 28 July 1997. In it, they
contended that the first two opinions rendered by the OGCC were overtaken by the
Decision and Resolution of the Court of Appeals, now the subjects of this petition for
review on certiorari, wherein it declared that the regular courts have no jurisdiction to
prohibit the holding of the election of the officers and members of the board of KKMK-
MWSS, as it is lodged with the BLR. When they again sought the guidance of the OGCC
as to the effect of the aforementioned Decision of the Court of Appeals, another opinion
was issued by the OGCC which, they said, did not resolve that question but instead merely
reiterated its previous opinions deviant to the conclusions of the Court of Appeals.[36]
THE ISSUE AND PENDING INCIDENTS
The bombardment of cases filed before several fora notwithstanding, the solitary question
raised by the petitioner is simply whether or not the RTC has jurisdiction over a case
involving an intra-union dispute (election of officers) of an employees organization in the
public sector (MWSS).[37]
Stated in another way, does the BLR have jurisdiction to call for and conduct the election
of officers of an employees association in the public sector?

Pending resolution in the instant case are the motions to lift the temporary restraining order
in the mandamus case before the lower court and to declare the administrator and the
manager of the Legal Department of the MWSS in indirect contempt of court.
THE COURTS RULINGS
The decision of the Court of Appeals relied on our earlier ruling in the case of Association
of Court of Appeals Employees (ACAE) v. Ferrer-Calleja.[38] In this case, we held that the
BLR has the jurisdiction to call for and supervise the conduct of certification elections in the
public sector, viz:
. . . In the same way that CSC validly conducts competitive examinations to grant requisite
eligibilities to court employees, we see no constitutional objection to DOLE handling the
certification process in the Court of Appeals, considering its expertise, machinery, and
experience in this particular activity. Executive Order No. 180 requires organizations of
government employees to register with both CSC and DOLE. This ambivalence
notwithstanding, the CSC has no facilities, personnel, or experience in the conduct of
certification elections. The BLR has to do the job.
Executive Order No. 180 states that certificates of registration of the legitimate employee
representatives must be jointly approved by the CSC Chairman and the DOLE Secretary.
Executive Order No. 180 is not too helpful in determining whose opinion shall prevail if the
CSC Chairman and the DOLE Secretary arrive at different conclusions. At any rate, we
shall deal with that problem when it occurs. Insofar as power to call for and supervise the
conduct of certification elections is concerned, we rule against the petitioner.[39]
The petitioner contends that the aforecited case finds no application in the case at bar for
the following reasons.
First, the ACAE case involved a conflict between two government unions in the Court of
Appeals, a situation not obtaining in the instant case because what is involved here is only
one and the same employees organization, the KKMK-MWSS.[40]
Second, the ACAE case concerned a certification election, i.e., which between the two
government unions should be considered as the bargaining unit before the Court of
Appeals, while the present case embraces the issue of who among the members of the
organization shall be elected as officers and members of the board.[41]
The petitioner likewise advances the theory that the power of the BLR, as found in
Executive Order No. 180, is limited only to the registration of a union in a government
corporation, and to call for a certification election.[42]
Moreover, the petitioner assails the ruling of the court a quo to the effect that his group
participated in the questioned elections and submitted themselves to the jurisdiction of the
BLR. According to him, the records will readily show that they did not in any way join in
it.[43]
We disagree in petitioners assertions, hence, the petition must fail.
It may be true that the ACAE case involved a certification election between two unions in a
government entity. However, this does not mean that our previous ruling cannot apply in
the instant case.
The authority of the BLR in assuming jurisdiction over a certification election, or any inter-
union or intra-union conflicts, is found in Article 226 of the Labor Code of the Philippines,
which reads:
ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the
Labor Relations Division in the regional offices of the Department of Labor shall have
original and exclusive authority to act, at their own initiative or upon request of either or
both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management relations in all workplaces whether
agricultural or nonagricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to
extension by agreement of the parties.
It is quite clear from this provision that BLR has the original and exclusive jurisdiction on all
inter-union and intra-union conflicts. An intra-union conflict would refer to a conflict within
or inside a labor union, and an inter-union controversy or dispute, one occurring or carried
on between or among unions.[44] The subject of the case at bar, which is the election of
the officers and members of the board of KMKK-MWSS, is, clearly, an intra-union conflict,
being within or inside a labor union. It is well within the powers of the BLR to act upon. The
petitioner is asking us to make an illogical edict by declaring that our ruling in the ACAE
case, considering that it involved an inter-union conflict, should not apply to the instant
case for the reason that the latter involves an intra-union conflict. This, we cannot do
because the law is very clear on this matter.
Executive Order No. 180 (1987),[45] particularly Section 16 thereof, is completely lucid as
to the settlement of disputes involving government employees, viz:
SEC. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be
followed in the resolution of complaints, grievances and cases involving government
employees.[46]
Since Article 226 of the Labor Code has declared that the BLR shall have original and
exclusive authority to act on all inter-union and intra-union conflicts, then there should be
no more doubt as to its jurisdiction.
We likewise find bereft of merit petitioners claim that his group did not in any way
participate in the subject elections, and therefore, the principle of estoppel cannot apply.
In the Order of the RTC dated 01 July 1994, it appears that the petitioner, indeed,
participated in the election. A portion of the Order states:
Candidate Votes
Genaro C. Bautista 288
Prudencio Cruz 1080
Bonifacio De Guzman 1081[47]
The petitioner was, undoubtedly, a candidate in the election. The 288 votes for him were
counted in his favor.
Further, the petitioner and his group submitted a list of candidates before the BLR dated
04 October 1993[48], which included the name of petitioner himself.

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the
Court of Appeals being in accord with law, are hereby AFFIRMED. Accordingly, the Urgent
Motion to Declare the Administrator and Manager, Legal Department, MWSS, in indirect
contempt of court is DENIED, and the temporary restraining order earlier issued is hereby
made permanent. Costs against the petitioner.
SO ORDERED.
THIRD DIVISION
[G.R. No. 82488. February 28, 1990.]
VICENTE ATILANO/ROSE SHIPPING LINES, Petitioner, v. HON. DIONISIO C. DE LA
SERNA, Undersecretary, Department of Labor and Employment, HON. ADRIAN
LOMUNTAD, Regional Director, Department of Labor and Employment, Regional Office
No. 7, MAMINTAS O. SANDALAN, CESAR PETALCORIN, JONATHAN SARADOR,
BONIFACIO LASOLA, NILO CLAROS, GODOFREDO GRANADA, CRISTITUTO
DAQUEL, LEONARDO LARGO, TOMAS OTADOY, LUIS GONZALES, PAULINO SIDO,
GILBERT OSABEL, WILLIAM RONDOVIO, RUEL ORGE, NOLASCO P. AUSTERO,
WILFREDO FLORES and BERNARDITO P. MANALO, Respondents.
Joaquin G. Chung, Jr. Law Offices and Assarga Law Firm for Petitioner.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; PD 850; REGIONAL DIRECTOR;
VISITORIAL; AND ENFORCEMENT POWER; APPLICABLE LEGAL PROVISION
GOVERNING THE EXERCISE THEREOF EMBODIED IN PD 850. LSED Case No.
055-85 was commenced on 20 May 1985; the order of the Regional Director in said case,
which is here sought to be set aside, was issued on 16 January 1986, while the order of
the same official denying petitioners motion to dismiss for lack of merit was rendered on
24 April 1986. The order of the Undersecretary of Labor here assailed was, as already
noted, issued on 3 March 1988. At all material times i.e., from 20 May 1985 through to 3
March 1988, the legal provisions governing the exercise of the visitorial and enforcement
powers of the Regional Directors of Labor were embodied in P.D. No. 850 (promulgated on
16 December 1975) and Executive Order No. 111 (promulgated on 24 December 1986),
amending Article 128 (b) of the Labor Code.
2. ID.; ID.; ID.; POSSESSED ENFORCEMENT/ADJUDICATION AUTHORITY
OVER UNCONTESTED MONEY CLAIMS WHERE THE EMPLOYER-EMPLOYEE
RELATIONSHIP REMAINED. In Maternity and Childrens Hospital v. the Honorable
Secretary of Labor, the Court made clear that under Article 128 of the Labor Code, as
amended, the Regional Director of Labor possessed "enforcement/adjudication authority"
over uncontested money claims where the employer-employee relationship remained.
3. ID.; ID.; ID.; ID.; AUTHENTICITY OF QUITCLAIMS, RELEASES AND WAIVER
COULD BE VERIFIED BY THE REGIONAL DIRECTORS. On the basis of the
submission of (quitclaims, releases and waiver) papers, petitioner now pretends that he
had controverted the claims of private respondents and that he had raised issues which
could not be resolved without considering evidentiary matters not verifiable in the normal
course of inspection, and that therefore the present case should go to the Labor Arbiter.
We do not find petitioners argument persuasive. We believe that the question of the
authenticity or genuineness of the quitclaims, releases and waivers supposedly signed by
private respondents, but vehemently denied by the latter, could be verified by the Regional
Director in the course of, and in connection with, examination of the petitioners books and
records of which such supposed quitclaims, etc. (if at all genuine) must have formed part.
We note also that after petitioner on 19 May 1986 filed a motion for reconsideration or
appeal from the Regional Directors order of 16 January 1986, with the Secretary of Labor,
the Secretary of Labor requested the Regional Director to conduct conferences or hearings
for the purpose of verifying the genuineness and authenticity of private respondents
signatures on the quitclaim papers submitted by petitioner. A report by an LSW officer of
the Regional Directors office showed that: (a) eight (8) of the private respondents denied
the genuineness of their purported signatures appearing on the quitclaim and release
papers shown to them for identification and (b) executed affidavits stating that they had not
executed any document in favor of petitioner . . .
4. ID.; ID.; ID.; ID.; REQUIREMENTS THAT COMPROMISE AGREEMENT MUST
BE SIGNED IN THE PRESENCE OF THE REGIONAL DIRECTOR NOT FOLLOWED IN
CASE AT BAR. The quitclaim papers which petitioner alleges embodied a compromise
or settlement agreement were in any case not duly executed, that is, they were not signed
in the presence of the Regional Director or his duly authorized representative, in disregard
of the requirements of Section 8, Rule II of the Rules on the Disposition of Labor
Standards Cases in the Regional Offices, which provide that: "Section 8. Compromise
Agreement. Should the party arrive at an agreement as to the whole or part of the
dispute, said agreement shall be reduced [to] writing and signed by the parties in the
presence of the regional director or his duly authorized representative."cralaw virtua1aw
library
5. ID.; ID.; ID.; RETAINS VISITORIAL AND ENFORCEMENT POWERS UNDER
ARTICLE 128(b) OF LABOR CODE; JURISDICTION OVER AMOUNT EXCEEDING
P5,000, REQUISITES. On 2 March 1989, Republic Act No. 6715 amending certain
provisions of the Labor Code was enacted. In his concurring opinion in the Resolution of
the Motion for Reconsideration in Briad Agro Development Corporation v. de la Cerna, Et
Al., Mr. Justice Narvasa underscored that Republic Act No. 6715 had left Article 128 (b) of
the Labor Code intact, in the sense that the Regional Director retains his visitorial and
enforcement powers thereunder and could exercise such powers even though the amount
involved was in excess of P5,000.00 provided that the employer had not contested the
findings of the LSW officers by raising issues which can not be resolved without
considering evidentiary matters not verifiable in the course of normal inspection.
6. ID.; ID.; ID.; ID.; AMENDMENTS INTRODUCED BY RA 6715 CANNOT BE
APPLIED RETROACTIVELY SO AS TO SET ASIDE AND NULLIFY EARLIER
COMPLETED EXERCISES OF JURISDICTION. Should it be assumed for purposes of
argument merely, that under Article 217 (6) of the Labor Code as last amended by
Republic Act No. 6715, jurisdiction over wage claims like those involved in LSED Case No.
055-85 was transferred to the Labor Arbiter, it must still be pointed out that the
amendments introduced by Republic Act No. 6715 cannot be applied retroactively so as to
set aside and nullify earlier, completed exercises of jurisdiction which had resulted in a
decision which had become final and executory long before the enactment of Republic Act
No. 6715. As noted earlier, at the time LSED Case No. 055-85 was commenced and at the
time decision thereon was rendered by the Regional Director and affirmed by the
Undersecretary of Labor, both officials undeniably had jurisdiction over the subject matter
of LSED Case No. 055-85. That jurisdiction was not wiped out by the coming into effect of
Republic Act No. 6715.
7. ID.; RULES ON THE DISPOSITION OF LABOR STANDARD CASES; LACK OF
INSPECTION WAS CURED WHEN THE REGIONAL DIRECTOR CALLED THE PARTIES
TO CONFERENCES. Finally, petitioner points to the failure of public respondent
Regional Director to conduct an actual inspection of the establishment owned by petitioner,
contending that the absence of such an inspection nullified the decision rendered by the
Regional Director. This argument fails to take into account two (2) things: firstly, that the
inability of the LSW officers of the Regional Director to conduct an actual inspection was
due to refusal of petitioners own employees to permit inspection in the alleged absence of
petitioner; secondly, Section 7, Rule II of the Rules on the Disposition of Labor Standards
Cases provides that: the lack of inspection was cured when the Regional Director called
the parties to several conferences, at which conferences, petitioner could have presented
whatever he had in his books and records to refute the claims of private respondents;
petitioner did not do so and his failure must be deemed a waiver of his right to contest the
conclusions of the Regional Director on the basis of the evidence and records actually
made available to him.
DECISION
FELICIANO, J.:
This Petition for Certiorari is directed against the order of respondent Undersecretary of
Labor and Employment dated 3 March 1988 which sustained the decision of respondent
Regional Director in LSED Case No. 055-85. That decision awarded salary differentials,
allowances, 13th month pay and overtime pay to the seventeen (17) private respondent
employees of petitioner Vicente Atilano who is doing business under the rubric Rose
Shipping Lines.
On 20 May 1985, private respondents filed a letter-complaint in the Regional Office of the
then Ministry of Labor and Employment, Cebu City, against petitioner Rose Shipping Lines
and its Proprietor/Manager Vicente Atilano docketed as LSED Case No. 055-85. The
letter-complaint alleged violations by petitioner of labor standard laws on minimum wages,
allowances, 13th month pay and overtime pay.chanrobles.com:cralaw:red
Acting on the letter-complaint, the Office of the Regional Director ordered a Labor
Standards and Welfare Officer (LSW officer, hereinafter) to conduct a complaint inspection
on 22 July 1985 at the establishment of petitioner in Cebu City. However, no actual
inspection was effected because the owner, petitioner Mr. Vicente Atilano, was allegedly
on a business trip to Manila, and his employees declined to allow the inspection in his
absence.
Respondent Regional Director subsequently summoned the parties to conciliation
conferences the first of which was held on 5 August 1985 where only the complainants
(private respondents herein) appeared. The conference was then rescheduled to 16
August 1985 and on that meeting both the parties were represented. Another hearing was
held on 21 August 1985 and there the private respondents submitted their position paper
elaborating and documenting their claims. Petitioner did not file any position paper.
On 16 August 1985, while the above case was in progress, private respondents filed
another complaint against petitioner for unpaid wages covering the month of July 1985
which case was docketed as LSED Case No. 061-85. On 26 August 1985, the parties
were called to a conference regarding this second complaint during which petitioner
Vicente Atilano appeared and promised to pay private respondents their unpaid salaries
for the month of July not later than 30 August 1985, and their salaries for the month of
August 1985 not later than 2 September 1985. Petitioner, however, failed to comply with
this promise. On 6 September 1985, the Regional Director issued a Compliance Order
requiring petitioner to pay private respondents the aggregate amount of Thirty Seven
Thousand Sixty Five Pesos and Sixty Centavos (P37,065.60) representing the unpaid
wages being claimed under the second complaint (LSED Case No. 061-85).
Petitioner filed a motion for reconsideration of the Compliance Order, which was denied for
lack of merit in a Resolution dated 11 October 1985. Counsel for private respondents
immediately moved for the issuance of a writ of execution. The case was later appealed by
petitioner to the then Minister of Labor and Employment which appeal was, however,
dismissed on the ground that it was filed out of time. Petitioner then filed a motion to quash
the writ of execution which motion was also denied. But in an order dated 26 January
1986, LSED Case No. 061-85 was dismissed on the ground that the claims of all the
complaints had been fully settled by the petitioner.
Meanwhile, on 16 January 1986, the Regional Director issued an order in LSED Case No.
055-85 (the earlier case) the dispositive portion of which provided as
follows:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, respondent ROSE SHIPPING LINES and the
Manager/Proprietor is (sic) hereby ordered to pay the claims of the complainants in the
aggregate sum of SIX HUNDRED SIXTY THOUSAND FIVE HUNDRED NINETY FOUR
PESOS AND 46/1000 (P660,594.46), Philippine currency, within 15 days from the receipt
thereof, . . ."cralaw virtua1aw library
Petitioner did not file a motion for reconsideration of the above order but instead filed an
ex-parte motion to dismiss dated 24 January 1986 alleging that the case (No. 055-86) had
been rendered moot and academic by the quitclaims and release papers dated 4 January
1986 signed by complainants in favor of respondents.
Private respondents filed an opposition to the ex-parte motion to dismiss, contending that
the quitclaims and release papers referred to by petitioner (which quitclaims and papers
had been prepared by petitioner) were intended to support the dismissal of LSED Case
No. 061-85 (the later case) only.
In his comment on private respondents opposition to the ex-parte motion to dismiss,
petitioner contended that the two (2) cases involved identical claims and concerned the
same parties, and that the dismissal of LSED Case No. 061-85 was res judicata in respect
of LSED Case No. 055-85. Petitioner added that the dispositive portion of the order
dismissing LSED Case No. 061-85 refers not only to the claims of private respondents in
the said case but to all claims of private respondents against petitioner including those
which are the subject of LSED Case No. 055-85.
Several conciliation conferences on the motion to dismiss were subsequently held and
both parties agreed that they would submit their respective position papers after which
petitioners motion to dismiss would be deemed submitted for resolution.
On 24 April 1986, public respondent Regional Director denied petitioners motion to
dismiss for lack of merit. A motion for reconsideration or appeal was filed with the
Secretary of the Department of Labor and Employment on 19 May 1986. Petitioner more
than a year later filed a Manifestation and Motion with the Secretary dated 23 July 1987,
enclosing therein a different set of quitclaims and releases also prepared by petitioner but
allegedly signed by private respondents dated 9 July 1986 (i.e., different from those earlier
referred to by petitioner in his ex-parte motion to dismiss filed with the Regional Director).
On 3 March 1988, public respondent Undersecretary of Labor rendered the questioned
order dismissing petitioners motion for reconsideration or appeal for lack of
merit.chanrobles.com:cralaw:red
In the instant Petition for Certiorari, petitioner makes the following arguments:chanrob1es
virtual 1aw library
1. Public respondents acted without jurisdiction over the nature and subject matter
of private respondents purported money claims.
2. Public respondents acted in excess of jurisdiction in not endorsing the matter to
the National Labor Relations Commission for adjudication.
3. Public respondents acted with grave abuse of discretion in not conducting an
actual inspection on the purported charges of labor standards violations.
4. Public respondents acted with grave abuse of discretion amounting to lack of
jurisdiction in summarily granting private respondents claims.
The main issue to be resolved herein is whether or not the public respondents, Regional
Director and Undersecretary of Labor, have jurisdiction over the subject matter of the case.
Petitioner contends that the power to adjudicate the money claims here involved is vested
solely in the Labor Arbiter.
1. LSED Case No. 055-85 was commenced on 20 May 1985; the order of the
Regional Director in said case, which is here sought to be set aside, was issued on 16
January 1986, while the order of the same official denying petitioners motion to dismiss for
lack of merit was rendered on 24 April 1986. The order of the Undersecretary of Labor
here assailed was, as already noted, issued on 3 March 1988. At all material times i.e.,
from 20 May 1985 through to 3 March 1988, the legal provisions governing the exercise of
the visitorial and enforcement powers of the Regional Directors of Labor were embodied in
P.D. No. 850 (promulgated on 16 December 1975) and Executive Order No. 111
(promulgated on 24 December 1986), amending Article 128 (b) of the Labor Code which,
as amended, provided as follows:jgc:chanrobles.com.ph
"ART. 128. Visitorial and enforcement power. . . .
(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in
cases where the relationship of employer-employee still exist, the Minister of Labor and
Employment or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions of
this Code and other labor legislation based on the findings of labor regulation officers or
industrial safety engineers made in the course of inspection, and to issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor regulation officer and raises issues
which cannot be resolved without considering evidentiary matters that are not verifiable in
the normal course of inspection.
x x x"
In Maternity and Childrens Hospital v. the Honorable Secretary of Labor, 1 the Court made
clear that under Article 128 of the Labor Code, as amended, the Regional Director of Labor
possessed enforcement/adjudication authority" over uncontested money claims where the
employer-employee relationship remained. The Court, through Mr. Justice Medialdea,
said:jgc:chanrobles.com.ph
"As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance
by an employer with labor standards provisions of the Labor Code and other legislation. It
is Our considered opinion however, that the inclusion of the phrase, `The provisions of
Article 217 of this Code to the contrary notwithstanding and in cases where the relationship
of employer-employee still exists . . . in Article 128 (b), as amended, above-cited, merely
confirms/reiterates the enforcement/adjudication authority of the Regional Director over
uncontested money claims in cases where an employer-employee relationship still exists.
Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos.
6, 7 and 37, it is clear that it has always been the intention of our labor authorities to
provide our workers immediate access (when still feasible, as where an employer-
employee relationship still exists) to their rights and benefits, without being inconvenienced
by arbitration/litigation processes that prove to be not only nerve-wracking, but financially
burdensome in the long run.
Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer
of labor standards cases from the arbitration system to the enforcement system is.
. . . to assure the workers the rights and benefits due to him under labor standard laws,
without having to go through arbitration. . .
so that
. . . the workers would not litigate to get what legally belongs to
him . . . ensuring delivery . . . free of charge.
Social justice legislation, to be truly meaningful and rewarding to our workers, must not be
hampered in its application by long-winded arbitration and litigation. Rights must be
asserted and benefits received with the least inconvenience. Labor laws are meant to
promote, not defeat, social justice.
x x x
The proceedings before the Regional Director must, perforce, be upheld on the basis of
Article 128 (b) as amended by E.O. No. 111, dated December 24, 1986, this executive
order to be considered in the nature of a curative statute with retrospective application.
(Progressive Workers Union, Et. Al. v. Hon. F.P. Aguas, Et. Al. [supra]; M. Garcia v. Judge
A. Martinez, Et Al., G.R. No. L-47629, May 28, 1979, 90 SCRA 331)." (Citations omitted;
Emphasis supplied).
2. Applying the Maternity and Childrens Hospital case to the case at bar, we
consider that petitioner did not effectively controvert the money claims of private
respondents against him, which claims originated from labor standards violations asserted
to have been committed by petitioner.
The records of the present case show that petitioner, for reasons satisfactory to himself,
did not contest the claims of private respondents despite the multiple opportunities therefor
afforded to him. Petitioner did not file any answer to the letter-complaint submitted by
private respondents to the Office of the Regional Director; neither did he file a position
paper before that Office to controvert private respondents claims. It was only after the
Regional Director had already rendered his ruling of 16 January 1986 in LSED Case No.
055-85 that petitioner tried to controvert the said claims by arguing that private
respondents had subsequently executed quitclaims and releases in his favor. We note that
petitioner did not question the correctness of the computations of the amounts due to each
of the private respondents nor that said claims had not theretofore been paid by petitioner.
After rendition of the Regional Directors decision, petitioner attempted to set up a defense
of subsequent compromise of and payment to or waiver by private respondents of their
claims and presented what he contends were quitclaims, releases and waivers signed by
private respondents. On the basis of the submission of such papers, petitioner now
pretends that he had controverted the claims of private respondents and that he had raised
issues which could not be resolved without considering evidentiary matters not verifiable in
the normal course of inspection, and that therefore the present case should go to the
Labor Arbiter.
We do not find petitioners argument persuasive. We believe that the question of the
authenticity or genuineness of the quitclaims, releases and waivers supposedly signed by
private respondents, but vehemently denied by the latter, could be verified by the Regional
Director in the course of, and in connection with, examination of the petitioners books and
records of which such supposed quitclaims, etc. (if at all genuine) must have formed part.
We note also that after petitioner on 19 May 1986 filed a motion for reconsideration or
appeal from the Regional Directors order of 16 January 1986, with the Secretary of Labor,
the Secretary of Labor requested the Regional Director to conduct conferences or hearings
for the purpose of verifying the genuineness and authenticity of private respondents
signatures on the quitclaim papers submitted by petitioner. A report by an LSW officer of
the Regional Directors office showed that:chanroblesvirtualawlibrary
(a) eight (8) of the private respondents denied the genuineness of their purported
signatures appearing on the quitclaim and release papers shown to them for identification
and examination;
(b) the same private respondents executed affidavits stating that they had not
executed any document in favor of petitioner; that the quitclaims, etc. submitted by
petitioner were simulated and forged; and that private respondents had not tried to settle
the case (LSED Case No. 055-85). 2
On the basis of the foregoing report, the Undersecretary of Labor stated in his 3 March
1988 order that:jgc:chanrobles.com.ph
"In the face of the foregoing circumstances, we have no alternative but to deny
respondents motion. Let it be noted that a careful examination of the signatures appearing
in the quitclaims and releases will readily show quite apparent variance vis-a-vis the
signatures affixed in the complaint. This aroused our suspicion on their due execution and
genuineness and prompted us to cause the calling of concerned parties for verification.
Said doubts and suspicion were confirmed and further strengthened by the outright denial
made by complainants during the conferences called as well as in the sworn statements
they subsequently submitted. We wish to state at this juncture that while it is our policy to
encourage voluntary settlement of disputes, this Office can not approve a compromise
agreement or settlement which is being questioned and in fact being denied by one of the
parties. While it is true that respondents submitted quitclaims and releases and other
documents purportedly executed by complainants to show that they have no more claims
against respondents, said documents could not be given any weight after the complainants
personally appeared during the hearing and declared that their signatures appearing
thereon were simulated and forged and at the same time denied that any settlement was
arrived at. Besides, the fact that those documents were supposed to be executed as early
as July 9, 1986 but were submitted to this Office after more than a year has lapsed puts
serious doubts on their authenticity. For if indeed there was an amicable settlement
reached that early, why did it take respondent that long to notify us of the same and move
for the dismissal of this case. More importantly, would it not be appropriate and logical for
the parties, assisted by their respective counsels to file a joint motion to dismiss, if really
they have come to terms. 3
The quitclaim papers which petitioner alleges embodied a compromise or settlement
agreement were in any case not duly executed, that is, they were not signed in the
presence of the Regional Director or his duly authorized representative, in disregard of the
requirements of Section 8, Rule II of the Rules on the Disposition of Labor Standards
Cases in the Regional Offices, which provide that:jgc:chanrobles.com.ph
"Section 8. Compromise Agreement. Should the party arrive at an agreement as
to the whole or part of the dispute, said agreement shall be reduced [to] writing and signed
by the parties in the presence of the regional director or his duly authorized
representative." (Emphasis supplied)
Thus, the issue of the authenticity and genuineness of the two (2) sets of supposed
quitclaims had been squarely raised before and passed upon and resolved by the
Regional Director and the Undersecretary of Labor. We note that petitioner did not submit
any rebuttal evidence before the Regional Director or his representatives. We note also
that the set of supposed quitclaims purportedly signed as early as 9 July 1986, were first
presented by petitioner in his Manifestation and Motion filed with the Undersecretary of
Labor dated 23 July 1987, that is, more than a year after execution; and that, upon the
other hand, the joint affidavits supposedly signed by private respondents attesting to the
genuineness of the purported quitclaims are dated only as of 14 September 1987, or more
than a year after the supposed quitclaims were signed.
The record thus strongly suggests that the issue of the genuineness or authenticity of the
purported quitclaim documents was an issue belatedly manufactured by petitioner in the
effort to evade the jurisdiction of the Regional Director and delay payment of the amounts
awarded by the Regional Director.
3. On 2 March 1989, Republic Act No. 6715 amending certain provisions of the
Labor Code was enacted. In his concurring opinion in the Resolution of the Motion for
Reconsideration in Briad Agro Development Corporation v. de la Cerna, Et Al., 4 Mr.
Justice Narvasa underscored that Republic Act No. 6715 had left Article 128 (b) of the
Labor Code intact, in the sense that the Regional Director retains his visitorial and
enforcement powers thereunder and could exercise such powers even though the amount
involved was in excess of P5,000.00 provided that the employer had not contested the
findings of the LSW officers by raising issues which can not be resolved without
considering evidentiary matters not verifiable in the course of normal
inspection:jgc:chanrobles.com.ph
"In the resolution, therefore, of any question of jurisdiction over a money claim arising from
employer-employee relations, the first inquiry should be into whether the employment
relation does indeed still exist between the claimant and the Respondent.
If the relation no longer exists, and the claimant does not seek reinstatement, the case is
cognizable by the Labor Arbiter, not by the Regional Director. On the other hand, if the
employment relation still exists, or reinstatement is sought, the next inquiry should be into
the amount involved.
If the amount involved does not exceed P5,000.00, the Regional Director undeniably has
jurisdiction. But even if the amount of the claim exceeds P5,000.00, the claim is not on that
account necessarily removed from the Regional Directors competence. In respect thereof,
he may still exercise the visitorial and enforcement powers vested in him by Article 128 of
the Labor Code, as amended, supra; that is to say, he may still direct his labor regulations
officers or industrial safety engineers to inspect the employers premises and examine his
records; and if the officers should find that there have been violations of labor standards
provisions, the Regional Director may, after due notice and hearing, order compliance by
the employer therewith and issue a writ of execution to the appropriate authority for the
enforcement thereof. However, this power may not, to repeat, be exercised by him where
the employer contests the labor regulations officers findings and raises issues which
cannot be resolved without considering evidentiary matters not verifiable in the normal
course of inspection. In such an event, the case will have to be referred to the
corresponding Labor Arbiter for adjudication, since it falls within the latters exclusive
original jurisdiction." (Emphasis supplied)
As already pointed out above, petitioner here did not controvert the findings of the LSW
officers and the decision of the Regional Director, and that the issue he subsequently
raised could, in any event, have been resolved, as it was in fact verified and resolved, in
the normal course of inspection and conferences among petitioner and private
respondents.cralawnad
4. Should it be assumed for purposes of argument merely, that under Article 217 (6)
of the Labor Code as last amended by Republic Act No. 6715, jurisdiction over wage
claims like those involved in LSED Case No. 055-85 was transferred to the Labor Arbiter, it
must still be pointed out that the amendments introduced by Republic Act No. 6715 cannot
be applied retroactively so as to set aside and nullify earlier, completed exercises of
jurisdiction which had resulted in a decision which had become final and executory long
before the enactment of Republic Act No. 6715. As noted earlier, at the time LSED Case
No. 055-85 was commenced and at the time decision thereon was rendered by the
Regional Director and affirmed by the Undersecretary of Labor, both officials undeniably
had jurisdiction over the subject matter of LSED Case No. 055-85. That jurisdiction was
not wiped out by the coming into effect of Republic Act No. 6715. 5
5. Finally, petitioner points to the failure of public respondent Regional Director to
conduct an actual inspection of the establishment owned by petitioner, contending that the
absence of such an inspection nullified the decision rendered by the Regional Director.
This argument fails to take into account two (2) things: firstly, that the inability of the LSW
officers of the Regional Director to conduct an actual inspection was due to refusal of
petitioners own employees to permit inspection in the alleged absence of petitioner;
secondly, Section 7, Rule II of the Rules on the Disposition of Labor Standards Cases
provides that:jgc:chanrobles.com.ph
"Sec. 2. Complaint inspection. All such complaints shall immediately be forwarded to
the Regional Director who shall refer the case to the appropriate unit in the Regional Office
for assignment to a Labor Standards and Welfare Officer (LSWO) for field inspection.
When the field inspection does not produce the desired results, the Regional Director shall
summon the parties for summary investigation to expedite the disposition of the case . . ."
(Emphasis supplied)
Thus, the lack of inspection was cured when the Regional Director called the parties to
several conferences, at which conferences, petitioner could have presented whatever he
had in his books and records to refute the claims of private respondents; petitioner did not
do so and his failure must be deemed a waiver of his right to contest the conclusions of the
Regional Director on the basis of the evidence and records actually made available to him.
WHEREFORE, the Petition is DISMISSED for lack of merit. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 90519 March 23, 1992
UNION OF FILIPINO WORKERS (UFW), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SIMEX INTERNATIONAL INC., LILIA
SANTANDER, GEORGE SANTANDER and JOSEPH SANTANDER, respondents.
MELENCIO-HERRERA, J.:
This Petition for Certiorari seeks to set aside the Decision of public respondent National
Labor Relations Commission (NLRC), dated 26 August 1989, which reversed the Decision
of the Labor Arbiter, dated 27 June 1988, and sustained the closure of private respondent
company, SIMEX International Inc., as valid.
On 4 September 1987, a Petition for Direct Certification among the rank-and-file workers of
SIMEX was filed before the Med Arbiter, docketed as Case No. 00-09-634-87 (Petition for
Direct Certification), with the hearing thereof set for 18 September 1987. These workers
subsequently affiliated with petitioner Union of Filipino Workers (UFW).
On 19 September 1987, thirty-six (36) workers of the "lumpia" department were not given
their usual working materials and equipment for that day and, instead, were asked to clean
their respective working areas. Since these workers were employed on a "pakiao" basis,
they refused. Nevertheless, they still reported for work on 21 September 1987 but to their
surprise, they found out that SIMEX had removed all materials and equipments from their
workplaces. The Union claims that its members were, therefore, effectively locked out.
From 1 October 1987 to 7 October 1987, sixteen (16) more workers from the other
departments were similarly refused employment. As a consequence, these workers,
through UFW, instituted a Complaint for Unfair Labor Practices and violation of labor
standard laws against SIMEX and its principal officers and stockholders, namely private
respondents Lilia, George and Joseph, all surnamed SANTANDER, docketed as NLRC-
NCR-00-09-03329-87 (for Illegal Dismissal/Lockout of 36 "lumpia" department workers and
16 others, etc.).
On 9 October 1987, however, SIMEX had filed a Notice of "Permanent Shutdown/Total
Closure of All Units of Operation in the Establishment" with the Department of Labor and
Employment to take effect on 9 November 1987, allegedly due to business reverses
brought about by the enormous rejection of their products for export to the United States.
This notice of closure rendered the Petition for Direct Certification moot and academic.
Notices of Closure were placed in conspicuous places around the company premises.
Meanwhile, in sympathy with their fifty-two (52) co-workers who were allegedly illegally
dismissed by SIMEX and in "protest to the continued acts of unfair labor practices
committed" by SIMEX, thirty-nine (39) other workers staged a picket outside the company
premises from 10 October 1987 to 27 October 1987. By reason thereof, SIMEX's
supposed offer of separation pay totalling P280,000.00 was withdrawn. When these
workers lifted their picket on 27 October 1987 and voluntarily reported for work, SIMEX
refused to give them their usual work. They were dismissed effective 1 November 1987.
Another Complaint for Unfair Labor Practice was, therefore, filed against the same
respondents, this time involving the thirty-nine (39) workers who picketed the company
premises in sympathy with their other co-workers, docketed as NLRC-NCR-11-03887-87
(for Unfair Labor Practice, Illegal Dismissal/Lockout of thirty-nine [39]workers). It is this
case that is the subject of this Petition for Certiorari.
On 27 June 1988, the Labor Arbiter rendered his verdict declaring that the closure of
SIMEX was a mere subterfuge in order to discourage the formation of the union. The
respondents, SIMEX and the SANTANDERs, were found guilty of unfair labor practice and
were ordered, jointly and solidarily, to reinstate the 39 workers without loss of seniority
rights, benefits and privileges, with full backwages from 1 November 1987 until such time
that these workers are actually reinstated. They were also ordered to pay ten per cent
(10%) of the total awards as attorney's fees.
On appeal, the NLRC, in a Decision dated 28 August 1989, set aside the Labor Arbiter's
Decision when it held that the "determination of the wisdom or expediency to close a
department in a corporation, e.g., the 'lumpia' department in this case, due to financial
reverses, is the sole prerogative of the corporation." It ruled that since SIMEX had filed a
Notice of Closure on 9 October 1987 and had complied with the requirements of the
applicable rules and regulations when it posted in their main gate the aforesaid Notice, its
failure to accept the workers of UFW did not constitute unfair labor practice considering
that SIMEX had already closed the "lumpia" department. Hence, SIMEX was merely
ordered to pay the workers affected a separation pay equivalent to one (1) month's salary
for every year of service rendered.
Petitioner UFW has thus elevated its cause before us in this Petition for Certiorari, seeking
the reversal of the NLRC Decision, for having been rendered with grave abuse of
discretion, and the reinstatement instead of the Decision of the Labor Arbiter and its
affirmance in toto.
The public and private respondents in this case were required to file their respective
Comments. Since the Solicitor General adopted a position contrary to that of the NLRC,
the Court required the latter to file its own Comment, which it has done.
After the Comments, Reply, Rejoinders and the parties' respective Memoranda were
submitted, private respondents SIMEX and the SANTANDERs filed a Manifestation, dated
10 December 1990 (p. 212, Rollo), signed by Atty. Julio F. Andres, Jr., stating that after
they had manifested to the Court on 9 December 1990 that they were adopting their
Memorandum, they discovered that an "Acknowledgment Receipt and Undertaking," dated
9 June 1989, had already been signed between private respondent George SANTANDER
and petitioner's former counsel, Atty. Modesto S. Mendoza, whereby this case as well as
two (2) others had already been settled and compromised. Thereby, this controversy has
become moot and academic. Said Undertaking reads:
I, MODESTO S. MENDOZA, . . ., have today RECEIVED FROM SIMEX
INTERNATIONAL, INC., through its Vice-President, MR. GEORGE SANTANDER, the
following amounts:
P500,000.00 in cash and
P50,000.00 PCIB check No. 496869 dated Sept. 9, 1989
P50,000.00 PCIB check No. 496870 dated Dec. 9, 1989
P50,000.00 PCIB check No. 496871 dated March. 9, 1990
P50,000.00 PCIB check No. 496872 dated June 9, 1990
in full and complete settlement of NLRC-NCR-CASE NOS. 00-09-03329-87, 00-11-3887-
87 and 00-01-00255-88.
I undertake to take charge of obtaining the signatures of the proper officers of the union to
sign the Motion to Dismiss in order to implement the full and final settlement of said cases
between complainant and respondents.
I further undertake and warrant that with this payment by the respondents, the complainant
Union and each of their members, hereby RELEASE AND DISCHARGE the SIMEX
INTERNATIONAL INC., each (sic) Officers, agents and representative (sic) fro any
demands, claims and liabilities from any cause whatsoever, arising out of their
employment with the said respondents (sic) corporation.
UFW maintains, however, that the settlement did not materialize because of its objections
as shown by the fact that it had not filed a Motion to Dismiss and Quitclaim in this case.
The issues for determination then are: 1) whether or not a compromise had been reached
by the parties; and 2) whether or not there was a valid closure of SIMEX that entitled it to
terminate the employment of its thirty-nine (39) employees. A plea is also made that the
individual private respondents SANTANDERs be dropped from the suit since they only
acted within the scope of their authority.
We incline to the view that no valid compromise agreement was arrived at in this case.
The alleged settlement involved three (3) cases, one of which charges alleged violation of
labor standards. Compromise agreements involving labor standards cases must be
reduced to writing and signed in the presence of the Regional Director or his duly
authorized representative (Atilano v. De la Cruz, G.R. No. 82488, 28 February 1990, 182
SCRA 886). Section 8, Rule II of the Rules on the Disposition of Labor Standards Cases in
the Regional Offices provides:
Sec. 8. Compromise Agreement. Should the party arrive at an agreement as to the
whole or part of the dispute, said agreement shall be reduced [to] writing and signed by the
parties in the presence of the regional director or his duly authorized representative.
The questioned "Acknowledgment Receipt and Undertaking" did not comply with this
requisite. It was not, therefore, duly executed.
Even assuming arguendo that it was, Atty. Modesto Mendoza, counsel for petitioner UFW,
whose services were subsequently terminated, was not duly authorized to enter into a
compromise with SIMEX and the SANTANDERs. As aptly pointed out by the Solicitor
General, Article 1878 of the Civil Code provides that a Special Power of Authority is
required before an agent can be authorized to enter into a compromise. It reads:
Art. 1878. Special powers of attorney are necessary in the following cases:
xxx xxx xxx
(3) To compromise, to submit questions to arbitration, to renounce the right to
appeal from a judgment, to waive objections to the venue of an action or to abandon a
prescription already acquired. (Emphasis ours).
No evidence was adduced that would show that the aforementioned counsel for UFW was
authorized to enter into a compromise. Correspondingly, he cannot release and discharge
SIMEX and the SANTANDERs from their obligation. A perusal of the "Acknowledgment
Receipt and Undertaking" reveals that no representative of UFW signed the alleged
settlement.
The fact that said counsel undertook to obtain the signatures of the proper officers of UFW
shows that his action was still subject to ratification by the union members. This
confirmation was never secured as shown by the fact that no motion for the dismissal of
the case at bar had been filed by UFW or on its behalf "in order to implement the full and
final settlement of said case," unlike in NLRC-NCR Case No. 00-01-00255-88 where such
a Motion had been filed. In an Affidavit, dated 6 May 1991 (p. 258, Rollo), Atty. Mendoza
also declared that respondent George Santander had stopped the payment of the three (3)
postdated checks, which statement has not been refuted by private respondents.
We now shift to the issue bearing on the legality of the closure of SIMEX. Article 283 (then
Article 284) of the Labor Code provides:
Art. 283. Closure of the establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment and undertaking not due to serious business
losses or financial losses, the separation pay shall be equivalent to one (1) month pay or at
least one half (1/2) month pay for every year of service, whichever is higher. A fraction of
at least six (6) months shall be considered one (1) whole year. (Emphasis in text supplied).
Under this provision, the closure of a business establishment is a ground for the
termination of the services of any employee unless the closing is for the purpose of
circumventing the provisions of law. But, while business reverses can be a just cause for
terminating employees, they must be sufficiently proven by the employer (Indino v. NLRC,
G.R. No. 80352, 29 September 1989, 178 SCRA 168).
In the case at bar, SIMEX alleged that it suffered export rejections amounting to
$78,959.54 for 1985, $1,654.00 for 1986 and $28,414.11 for 1987, respectively. It alleged
that these export rejections resulted in huge financial losses to the company (Rollo, p. 96)
so much so that remedial measures were instituted as suppliers hesitated to given the
company their usual credit terms (ibid, p. 97).
The audited financial statement of SIMEX, however, clearly depicted that for 1985 and
1986, the company actually derived retained earnings of P35,593.21 and P73, 241.25,
respectively. The private respondents never refuted this fact. Instead, they merely insisted
that these export rejections resulted in heavy losses for the company. These export
rejections may have, indeed, contributed to a reduction of SIMEX's earnings. The
company, however, was not suffering from business losses, as claimed, at the time of
application for closure.
Indeed, there is no question that an employer may reduce its work force to prevent losses.
However, these losses must be serious, actual and real (Lopez Sugar Corporation v.
Federation of Free Workers, G.R. No. 75000-01, 30 August 1990, 189 SCRA 179).
Otherwise, this "ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning business losses or reverses in their business
ventures in order to ease out employees (Garcia v. NLRC, G.R. No. L-67825, 4 September
1987, 153 SCRA 639).
In this regard, then, SIMEX failed to prove its claim. What were submitted as evidence
were mere receipts of export rejections, nothing more. SIMEX never adduced evidence
that would reflect the extent of losses suffered as a result of the export rejections, which
failure is fatal to its cause.
The Notice of Closure filed by SIMEX had indicated that it will have a permanent shutdown
and/or total closure of all its units of operation. This was not so. Workers belonging to the
Marketing and Export Divisions were never laid off. A SEC Certification, dated 4 February
1988, shows that SIMEX never applied for dissolution. The Labor Arbiter also found as a
fact that SIMEX continued to export its products, including "eggroll wrap," long after its
target date of closure.
In explaining this discrepancy, SIMEX merely alleged that not all its operations were
closed. Even on this score alone, therefore, private respondents' position must be rejected.
These factors strongly give more credence to the Solicitor General and UFW's contention
that the alleged closure of business of SIMEX was "but a subterfuge to discourage
formation of a union" and that SIMEX was guilty of union busting. To all appearances, the
company had filed a Notice of Closure simply to pre-empt the employees from forming a
union within the company.
The SANTANDERs' prayer that they be dropped from this case must also be rejected.
They should have adopted that recourse during the earlier stages. Moreover, UFW has
adequately shown that the individual private respondents were not only officers of the
company but its major stockholders as well (see Carmelcraft Corporation v. NLRC, G.R.
Nos. 90634-35, 6 June 1990, 186 SCRA 393).
Lastly, if SIMEX has not yet recovered the balance of the compromise money given to then
counsel for petitioner, its recourse is to file the appropriate civil or criminal case against the
latter. After all, in said counsel's Affidavit, he has stated that he is ready to return the
balance of what he had received after payment of the amount due in NLRC-NCR Case No.
00-01-00255-88.
WHEREFORE, the Petition for Certiorari is GRANTED. The Decision of respondent NLRC,
dated 26 August 1989, is hereby SET ASIDE and the Decision of the Labor Arbiter, dated
27 June 1988, is hereby REINSTATED and AFFIRMED in toto.
Costs against private respondents.
SO ORDERED.
SECOND DIVISION
[G.R. No. 146780. March 11, 2005]
DENNIS A. CHUA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
SCHERING-PLOUGH CORPORATION, EPITACIO TITONG, JR., DANNY T. YU, and
ROBERTO TADA, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure from the October 31, 2000 Decision[1] and January 18, 2001 Resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 57722.
The antecedents are as follows:
On June 1, 1995, petitioner Dennis Chua was hired as a Professional Medical
Representative by Schering-Plough Corporation (SPC). The petitioner became a regular
employee on December 1, 1995, and he was, thereafter, assigned to the Bicol Region. As
a Professional Medical Representative, he was tasked to promote SPC and its products to
physicians, hospitals, paramedics, including trade and government outlets in his assigned
territory.[2]
To facilitate his duties as a medical representative, the petitioner was given a Kia Pride
vehicle on June 28, 1995.[3] Under the company car plan, the petitioner would be entitled
to purchase the said car in July 1997, at a price corresponding to ten percent (10%) of the
market value at the time of the purchase.[4]
One of the petitioners duties was to submit a Daily Coverage Report (DCR) every Monday,
or at least to mail the same to the Field Operations Manager.[5] Furthermore, he was
required to have call cards signed by any of the eighty (80) doctors under his coverage to
show that he indeed visited them and handed out promotional items. This system enabled
the SPC to know how many doctors the petitioner had visited in a week and the number of
call cards he was required to submit.
Meanwhile, respondent Roberto Z. Tada, Field Operations Manager of the corporation for
the Bicol Region, noticed that the petitioner filed his DCRs late on two occasions, and in
batches at that. Specifically, a batch of DCRs up to January 10, 1997 was filed only on
March 13, 1997, while another batch was filed only on March 18, 1997. The petitioner also
failed to submit the requisite DCRs for the period covering February 10, 1997 to April 7,
1997. Respondent Tada also found some discrepancies in the DCRs submitted by the
petitioner.
On April 6, 1997, respondent Tada confronted the petitioner regarding the said
discrepancies. Respondent Tada pointed out that while numerous doctors were listed in
some of the DCRs submitted by the petitioner, the call cards supposed to have been
signed by them remained blank. Respondent Tada asked the petitioner to explain the
discrepancies, but the latter merely replied, Pagbigyan mo na lang ako, boss. Tulungan
mo na lang ako, boss.[6] On April 8, 1997, Tada went to the petitioners residence and
confiscated all the paraphernalia used by the latter for his fieldwork, including the call
cards and medicine samples. The car assigned to the respondent was likewise
confiscated.
On April 9, 1997, the petitioner filed an application for a three-day sick leave, but indicated
therein that he was going on leave only for two (2) days, from April 10 to 11, 1997. He
claimed that he was suffering from severe diarrhea and with fever. [7] However, after the
lapse of his applied leave of absence, the petitioner failed to report for work.
Apparently, on April 15, 1997, the petitioner had already filed a complaint for illegal
dismissal with the National Labor Relations Commission (NLRC) against the SPC, Epitacio
Titong, Jr. (as President and General Manager), Danny T. Yu (as Division Manager) and
Roberto Z. Tada (as Field Operations Manager), seeking the payment of backwages,
moral damages, attorneys fees and other monetary benefits. The petitioner alleged that he
was dismissed from employment as early as April 8, 1997 without any just or authorized
cause, and without due process. He likewise prayed to be allowed to acquire the car
assigned to him under the company car plan.
The summons was received by the SPC on April 17, 1997. Nevertheless, a day before or
on April 16, 1997, the petitioner received a telegram[8] from the SPC instructing him to
report to the office on April 18, 1997 and to see respondent Danny T. Yu who was the
Division Manager. The petitioner, however, failed to comply.
On April 18, 1997, respondent Tada sent a Memorandum[9] to the petitioner requiring the
latter to explain the following matters:
1. No Daily Coverage Report (DCR) submitted from February 10, 1997 up to April 7, 1997;
2. DCRs submitted were very much delayed, example: batch of DCRs up to January 10,
1997 were received 13 March 1997, batch of DCRs up to February 7, 1997 were received
18 March 1997;
3. More than 80 doctors allegedly visited and reported in DCRs covering the period
September 1996 up to February 7, 1997 but whose individual doctors call cards are
without the necessary signatures to prove they were visited. Why are these doctors
reported as calls in your DCR and samples reportedly issued without MD's signatures or
acknowledgment;
4. Why the doctors call cards have no dates opposite the alleged signatures;
5. Claims for expense reimbursements covering the period February 16, 1997 up to March
31, 1997 without the corresponding DCRs;
6. You did not report to Mr. D.T. Yu in the office last April 18, 1997 despite the telegram
sent to you requiring you to report.[10]
The same letter informed the petitioner that he was under preventive suspension effective
April 11, 1997 while the case was under investigation.
On May 8, 1997, while the case for illegal dismissal was pending resolution before the
arbitration branch of the NLRC, the SPC sent another letter[11] to the petitioner, informing
him that his employment was terminated effective at the close of business hours of May 6,
1997. The SPC emphasized that the petitioner had been given an opportunity to explain
his side, and that he had failed to do so. He was required to immediately turn over to
respondent Tada all accounts, property and money in his possession.[12]
During the proceedings before the Labor Arbiter, the petitioner asserted that he was not
given an opportunity to know the nature of the charges against him, nor a chance to
explain his side. He further asserted that respondent Tada forced him to resign on the
allegation of late submission of reports, but that he refused and instead filed an application
for leave of absence. Respondent Tada then got angry and confiscated all the materials he
used as a medical representative. The petitioner explained that his dismissal prevented
him from submitting the DCRs for the period of February 10, 1997 to April 7, 1997.
The SPC alleged, by way of answer to the complaint, that respondent Tada noticed
discrepancies and anomalies in the DCRs filed by petitioner, including the late filing thereof
in batches, and the failure to submit DCRs for the period of February 10, 1997 to April 7,
1997. Respondent Tada also noticed discrepancies in the doctors call cards, which were
either unsigned, or, if at all signed, did not contain pertinent dates. It alleged that it sent a
memorandum to the petitioner requiring him to explain his side, but that the latter failed to
do so. The SPC emphasized that the petitioner was dismissed on the ground of gross and
habitual neglect of duties.
On September 30, 1998, Labor Arbiter Ramon Valentin C. Reyes rendered a Decision
declaring the petitioners dismissal from employment as illegal. The Labor Arbiter held that
the SPC failed to establish any ground for the petitioners dismissal and ordered the SPC to
reinstate him. The dispositive portion of the decision reads:
WHEREFORE, premises all considered, judgment is hereby rendered declaring
complainants dismissal illegal and ordering respondents:
1.) To reinstate complainant to his former position as medical representative without loss
of seniority rights and other privileges;
2.) To pay him full backwages and other monetary benefits from the time his compensation
was withheld from him up to the time of his actual reinstatement without deductions for
whatever earnings he may have received elsewhere during the period of his dismissal or in
the amount of P164,340.00 (Basic pay of P5,600.00 + P3,530.00) In base and out base
allowances April 1997 to September 30, 1998 or 18 mos. x P9,130.00 = (P164,340.00);
3.) Ordering respondents to deliver to complainant the company car to which he is entitled
to under the company car plan, subject to the payment by him of lawful charges; and
4.) Ordering respondents to pay complainant the amount of P5,000.00 by way of indemnity
and attorneys fees in a sum equivalent to ten percent (10%) of the monetary awards
herein made in his favor.
All other claims are dismissed for lack of merit.
SO ORDERED.[13]
The Labor Arbiter ruled that the SPC failed to prove any just or authorized cause for the
petitioners dismissal. He also declared that the petitioner was not able to comply with
respondent Tadas memorandum requiring an explanation as to the alleged discrepancies,
since the SPC had already dismissed the petitioner before he could do so.
Upon motion of the petitioner, a Writ of Execution[14] was issued on December 3, 1998,
ordering the SPC to reinstate the petitioner to his former position without loss of seniority
rights. Pursuant thereto, the petitioner was reinstated in the corporations payroll as of
December 8, 1998.[15] Meanwhile, the SPC appealed the decision of the Labor Arbiter to
the NLRC.
On October 19, 1999, the NLRC issued a Resolution,[16] the dispositive portion of which
reads:
WHEREFORE, premises considered, the appeal is partially GRANTED and the Decision
dated 30 September 1998 is AFFIRMED only in so far as the award of indemnity is
concerned. Accordingly, a new decision is hereby entered finding respondent to have
validly dismissed complainant.
SO ORDERED.[17]
The NLRC declared that while the petitioner was dismissed on valid grounds, he was not
afforded due process. The NLRC ratiocinated that the petitioner was effectively dismissed
on April 8, 1997, the date when the car and the other paraphernalia used by him as a
medical representative were confiscated; he then no longer had the means to act as such
employee of the SPC. It was only several days later when the petitioner was given an
opportunity to explain his side. The NLRC concluded that while the petitioners dismissal
was based on a valid ground, he was not afforded due process. Hence, while the NLRC
deleted the award for backwages and other monetary awards, it retained the amount of
P5,000.00 by way of indemnity in favor of the petitioner.
The petitioner filed a motion for reconsideration of the said resolution, but the same was
dismissed.[18]
The petitioner sought relief from the CA by way of a petition for certiorari, docketed as CA-
G.R. SP No. 57722. The petitioner claimed that his dismissal was without just cause. He
alleged that even assuming that his dismissal was for a just cause, the NLRC should have
ordered the payment of backwages, and not merely an indemnity award of P5,000.00
based on ineffectual notice of termination. He cited the ruling of the Court in Serrano v.
NLRC[19] to bolster his claim.
On October 31, 2000, the CA rendered a decision affirming, in toto, the resolution of the
NLRC. The CA declared that the NLRC did not commit grave abuse of discretion in finding
that the petitioners dismissal was based on a valid ground. The CA further held that the
doctrine in Serrano adverted to could not be applied in the petitioners case as it was not
yet in existence at the time the NLRC issued the assailed Resolution.
The petitioner filed a motion for reconsideration which the appellate court denied in a
Resolution[20] dated January 18, 2001.
Hence, this petition.
The petitioner raises the following as errors in support of his petition:
I
THE COURT OF APPEALS GRAVELY ERRED, BLATANTLY DISREGARDED THE LAW
AND ESTABLISHED JURISPRUDENCE, IN UPHOLDING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION.
II
THE COURT OF APPEALS GRAVELY ERRED AND FAILED TO AFFORD PROTECTION
TO LABOR IN NOT APPLYING TO THE INSTANT CASE THE DOCTRINE LAID DOWN
BY THIS HONORABLE COURT IN SERRANO VS. NLRC, ET AL., G.R. NO. 117040,
JANUARY 27, 2000.[21]
Anent the first issue, the petitioner contends that considering the respondents failure to
comply with the two-notice statutory requirement, he is entitled to backwages, conformably
to the ruling of this Court in Serrano v. NLRC.[22] He asserts that although he was
dismissed on April 8, 1997, the ruling of the Court in the said case is still applicable.
In their comment on the petition, the respondents aver that the ruling of this Court should
not be applied retroactively as it would violate the constitutional prescription against ex
post facto laws.
The petitioners termination from employment was anchored on the following: (a) gross and
habitual neglect; (b) serious misconduct; and (c) willful disobedience to the lawful orders of
the employer. Thus, it all boils down to the filing of the requisite DCRs due every Monday.
As found by both the NLRC and the CA, the petitioner failed to file the DCRs on time on
several occasions, and instead filed them in batches. Furthermore, the petitioner failed to
submit the DCRs for February 10, 1997 to April 7, 1997. Considering that about ninety
percent (90%) of the petitioners work as a medical representative entails fieldwork, such
DCRs were vital to his job; the DCRs were the primary basis upon which the petitioners
employer could track his accomplishments and work progress. Without the said DCRs, the
employer would have no basis to determine if the petitioner was actually performing his
assigned tasks or not.
The petitioner himself did not dispute the delayed filing of the DCRs, and his failure to
submit those for February 10, 1997 to April 7, 1997. The petitioner himself admitted that he
was not able to submit the required DCRs because of his busy schedule, in his Reply
Position Paper filed with the Labor Arbiter.[23] The petitioner even postulated that he could
have completed and submitted the said DCRs, had he not been terminated from
employment.[24]
In the same light, the petitioner also failed to submit several doctors call cards, and
submitted others which were incomplete; that is, undated although signed by the doctors. It
must be stressed that the said call cards were also vital to the petitioners fieldwork. The
requirement of asking the doctors to affix their signatures in the call cards, the date of the
visit, as well as the samples and promotional items, if any, given to the doctors, enabled
the SPC to verify whether such doctors were indeed visited by the petitioner.
Gross negligence under Article 282 of the Labor Code, as amended, connotes want of
care in the performance of ones duties, while habitual neglect implies repeated failure to
perform ones duties for a period of time, depending upon the circumstances.[25] Clearly,
the petitioners repeated failure to submit the DCRs on time, as well as the failure to submit
the doctors call cards constitute habitual neglect of duties. Needless to state, the foregoing
clearly indicate that the employer had a just cause in terminating the petitioners
employment.
As to the second issue of whether or not the petitioner is entitled to backwages, we agree
with the ruling of the NLRC and the appellate court that the petitioner is not entitled to
backwages. The petitioners contention that the ruling of the Court in Serrano v. NLRC[26]
should apply even if he was dismissed even before said ruling of the Court has no merit.
When the petitioner was dismissed, the ruling of the Court in Wenphil Corporation v.
NLRC,[27] that an employee who was not accorded his statutory right to two-notice before
his dismissal by his employer was entitled only to indemnity, was the prevailing doctrine.
It can be recalled that in both Wenphil and Serrano, the respective employers therein failed
to comply with the statutory two-notice requirement. The employer was ordered to pay
indemnity to the employee in the Wenphil case; in Serrano, the employer was ordered to
pay backwages from the time the employment was terminated until it was determined that
the termination was for a just cause, due to the employers failure to comply with the
statutory requirement which rendered the employees dismissal without legal effect.
The matter has been laid to rest in the recent case of Agabon v. NLRC,[28] where the
Court held that a violation of an employees statutory right to two notices prior to the
termination of his employment for a just cause entitles him to nominal damages of
P30,000.00, absent sufficient evidence to support an award for actual or moral damages.
The Court ruled in the Agabon case that it was abandoning the doctrine laid down in
Serrano in this wise:
After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissal for cause but without
observance of the twin requirements of notice and hearing, the better rule is to abandon
the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause
but imposing sanctions on the employer. Such sanctions, however, must be stiffer than
that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.[29]
IN LIGHT OF ALL THE FOREGOING, the assailed Decision of the Court of Appeals is
AFFIRMED with MODIFICATION. The respondents are ORDERED to pay, jointly and
severally, indemnity to the petitioner in the amount of Thirty Thousand Pesos
(P30,000.00). No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
FIRST DIVISION
[G.R. No. 108001. March 15, 1996]
SAN MIGUEL CORPORATION, ANGEL G. ROA and MELINDA MACARAIG, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION (Second Division), LABOR ARBITER
EDUARDO J. CARPIO, ILAW AT BUKLOD NG MANGGAWA (IBM), ET AL., respondents.
SYLLABUS
1. LABOR LAW AND SOCIAL LEGISLATION; LABOR CODE; LABOR ARBITER;
ORIGINAL AND EXCLUSIVE JURISDICTION; TERMINATION DISPUTES AND UNFAIR
LABOR PRACTICES; EXCEPTIONS; NOT PRESENT IN CASE AT BAR. - The law in
point is Article 217 (a) of the Labor Code. It is elementary that this law is deemed written
into the CBA. In fact, the law speaks in plain and unambiguous terms that termination
disputes, together with unfair labor practices, are matters falling under the original and
exclusive jurisdiction of the Labor Arbiter. The sole exception can be found under Article
262 of the same Code, which provides: The voluntary arbitrator or panel of voluntary
arbitrators, upon agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks. The exception, being
present, the Labor Arbiter properly has jurisdiction over the complaint filed by the
respondent union for illegal dismissal and unfair labor practice. The filing of a request for
reconsideration by the respondent union, which is the condition sine qua non to categorize
the termination dispute and the ULP complaint as a grievable dispute as per CBA, was
decidedly absent in the case at bench. Hence, the respondent union acted well within their
rights in filing their complaint directly with the Labor Arbiter.
2. ID.; ID.; ID.; ID.; ID.; DETERMINED BY ALLEGATIONS OF THE COMPLAINT. The
questioned discharges due to alleged redundancy can hardly be considered company
personnel policies and therefore need not directly be subject to the grievance machinery
nor to voluntary arbitration. All of the dismissed employees were officers and members of
their respective unions, and their employers failed to give a satisfactory explanation as to
why this group of employees was singled out. It may be the case that the discharges may
really be for a bona fide authorized caused under Article 283 of the Labor Code. But it is
also possible that such may be a scheme to camouflage the real intention of discriminating
against union members. In any case, these matters will be best ventilated in a hearing
before the Labor Arbiter. The complaint alleges facts sufficient to constitute a bona fide
case of ULP, cognizable by the Labor Arbiter. This is consistent with the rule that
jurisdiction over the subject matter is determined by the allegations of the complaint.
APPEARANCES OF COUNSEL
Roco Guag Kapunan Migallos & Jardeleza for petitioners.
The Solicitor General for public respondent.
Potenciano A. Flores, Jr. for private respondents.
DECISION
HERMOSISIMA, JR., J.:
In the herein petition for certiorari under Rule 65, petitioners question the jurisdiction of the
Labor Arbiter to hear a complaint for unfair labor practice, illegal dismissal, and damages,
notwithstanding the provision for grievance and arbitration in the Collective Bargaining
Agreement.
Let us unfurl the facts.
Private respondents, employed by petitioner San Miguel Corporation (SMC) as mechanics,
machinists, and carpenters, were and still are, bona fide officers and members of private
respondent Ilaw at Buklod ng Manggagawa.
On or about July 31, 1990, private respondents were served a Memorandum from
petitioner Angel G. Roa, Vice-President and Manager of SMCs Business Logistics Division
(BLD), to the effect that they had to be seperated from the service effective October 31,
1990 on the ground of redundancy or excesss personnel. Respondent union, in behalf of
private respondents, opposed the intended dismissal and asked for a dialogue with
management.
Accordingly, a series of dialogues were held between petitioners and private respondents.
Even before the conclusion of said dialogues, the aforesaid petitioner Angel Roa issued
another Memorandum on October 1, 1990 informing private respondents that they would
be dismissed from work effective as of the close of business hours on November 2, 1990.
Private respondents were in fact purged on the date aforesaid.
Thus, on February 25, 1991, private respondents filed a complaint against petitioners for
Illegal Dismissal and Unfair Labor Practices, with a prayer for damages and attorneys fees,
with the Arbitration Branch of respondent National Labor Relations Commission. The
complaint[1] was assigned to Labor Arbiter Eduardo F. Carpio for hearing and proper
disposition.
On April 15, 1991, petitioners filed a motion to dismiss the complaint, alleging that
respondent Labor Arbiter had no jurisdiction over the subject matter of the complaint, and
that respondent Labor Arbiter must defer consideration of the unfair labor practice
complaint until after the parties have gone through the grievance procedure provided for in
the existing Collective Bargaining Agreement (CBA). Respondent Labor Arbiter denied this
motion in a Resolution, dated September 23, 1991.
The petitioners appealed the denial to respondent Commission on November 8, 1991.
Unimpressed by the grounds therefor, respondent Commission dismissed the appeal in its
assailed Resolution, dated August 11, 1992. Petitioners promptly filed a Motion for
Reconsideration which, however, was denied through the likewise assailed Resolution,
dated October 29, 1992.
Hence, the instant petition for certiorari alleging the following grounds was filed by the
petitioners:
I.
RESPONDENT LABOR ARBITER CANNOT EXERCISE JURISDICTION OVER THE
ALLEGED ILLEGAL TERMINATION AND ALLEGED ULP CASES WITHOUT PRIOR
RESORT TO GRIEVANCE AND ARBITRATION PROVIDED UNDER THE CBA.
II
THE STRONG STATE POLICY ON THE PROMOTION OF VOLUNTARY MODES OF
SETTLEMENT OF LABOR DISPUTES CRAFTED IN THE CONSTITUTION AND THE
LABOR CODE DICTATES THE SUBMISSION OF THE CBA DISPUTE TO GRIEVANCE
AND ARBITRATION.[2]
Petitioners posit the basic principle that a collective bargaining agreement is a contract
between management and labor that must bind and be enforced in the first instance as
between the parties thereto. In this case, the CBA between the petitioners and respondent
union provides, under Section 1, Article V entitled ARBITRATION, that wages, hours of
work, conditions of employment and/or employer-employee relations shall be settled by
arbitration. Petitioners thesis is that the dispute as to the termination of the union members
and the unfair labor practice should first be settled by arbitration, and not directly by the
labor arbiter, following the above provision of the CBA, which ought to be treated as the
law between the parties thereto.
The argument is unmeritorious. The law in point is Article 217 (a) of the Labor Code. It is
elementary that this law is deemed written into the CBA. In fact, the law speaks in plain
and unambiguous terms that termination disputes, together with unfair labor practices, are
matters falling under the original and exclusive jurisdiction of the Labor Arbiter, to wit:
Article 217. Jurisdiction of Labor Arbiters and the Commission - (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide x x x the following cases involving all workers, whether agricultural or
non-agricultural:
(1) Unfair labor practice cases:
(2) Termination disputes;
x x x x x x x x x.
The sole exception to the above rule can be found under Article 262 of the same Code,
which provides:
Aricle 262. Jurisdiction over other labor disputes - The voluntary arbitrator or panel of
voluntary arbitrators, upon agreement of the parties, shall also hear and decide all other
labor disputes including unfair labor practices and bargaining deadlocks. (As added by
R.A. 6715)
We subjected the records of this case, particularly the CBA, to meticulous scrutiny and we
find no agreement between SMC and the respondent union that would state in unequivocal
language that petitioners and the respondent union conform to the submission of
termination disputes and unfair labor practices to voluntary arbitration. Section 1, Article V
of the CBA, cited by the herein petitioners, certainly does not provide so. Hence,
consistent with the general rule under Article 217 (a) of the Labor Code, the Labor Arbiter
properly has jurisdiction over the complaint filed by the respondent union on February 25,
1991 for illegal dismissal and unfair labor practice.
Petitioners point however to Section 2, Article III of the CBA, under the heading Job
Security, to show that the dispute is a proper subject of the grievance procedure, viz:
x x x The UNION, however, shall have the right to seek reconsideration of any discharge,
lay-off or disciplinary action, and such requests for reconsideration shall be considered a
dispute or grievance to be dealt with in accordance with the procedure outlined in Article IV
hereof [on Grievance Machinery] x x x[3] (Emphasis ours)
Petitioners allege that respondent union requested management for a reconsideration and
review of the companys decision to terminate the employment of the union members. By
this act, petitioners argue, respondent union recognized that the questioned dismissal is a
grievable dispute by virtue of Section 2, Article III of the CBA. This allegation was strongly
denied by the respondent union. In a Memorandum filed for the public respondent NLRC,
the Solicitor General supported the position of the respondent union that it did not seek
reconsideration from the SMC management in regard to the dismissal of the employees.

Petitioners fail miserably to prove that, indeed, the respondent union requested for a
reconsideration or review of the management decision to dismiss the private respondents.
A punctilious examination of the records indubitably reveals that at no time did the
respondent union exercise its right to seek reconsideration of the companys move to
terminate the employment of the union members, which request for reconsideration would
have triggered the application of Section 2, Article III of the CBA, thus resulting in the
treatment of the dispute as a grievance to be dealt with in accordance with the Grievance
Machinery laid down in Article IV of, the CBA. Stated differently, the filing of a request. for
reconsideration by the respondent union, which is the condition sine qua non to categorize
the termination dispute and the ULP complaint as a grievable dispute, was decidedly
absent in the case at bench. Hence, the respondent union acted well within their rights in
filing their complaint for illegal dismissal and ULP directly with the Labor Arbiter under
Article 217 (a) of the Labor Code.
Second. Petitioners insist that involved in the controversy is the interpretation and
implementation of the CBA which is grievable and arbitrable by law under Article 217(c) of
the Labor Code, viz:
ART. 217(c). Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or enforcement of
company personnel policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration as may be provided in said
agreements. (As amended by R.A. 6715).
Petitioners theorize that since respondents questioned the discharges, the main question
for resolution is whether SMC had the management right or prerogative to effect the
discharges on the ground of redundancy, and this necessarily calls for the interpretation or
implementation of Article III (Job Security) in relation to Article IV (Grievance Machinery)of
the CBA.[4]
Petitioners theory does not hold water. There is no connection whatsoever between SMCs
management prerogative to effect the discharges and the interpretation or implementation
of Articles III and IV of the CBA. The only relevant provision under Article III that may need
interpretation or implementation is Section 2 which was cited herein. However, as patiently
pointed out by this court, said provision does not come into play considering that the union
never exercised its right to seek reconsideration of the discharges effected by the
company. It would have been different had the union sought reconsideration. Such
recourse under Section 2 would have been treated as a grievance under Article IV
(Grievance Machinery) of the CBA, thus calling for the possible interpretation or
implementation of the entire provision on Grievance Machinery as agreed upon by the
parties. This was not the case however. The union brought the termination dispute directly
to the Labor Arbiter rendering Articles III and IV of the CBA inapplicable for the resolution
of this case.
The discharges, petitioners also contend, call for the interpretation or enforcement of
company personnel policies, particulary SMCs personnel policies on lay-offs arising from
redundacy, and so, they may be considered grievable and arbitrable by virtue of Article 2
17(c). Not necessarily so. Company personnel policies are guiding principles stated in
broad, long-range terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal with matters affecting efficiency and well-
being of employees and include, among others, the procedure in the administration of
wages, benefits, promotions, transfer and other personnel movements which are usually
not spelled out in the collective agreement. The usual source of grievances, however, is
the rules and regulations governing disciplinary actions.[5] Judging therefrom, the
questioned discharges due to alleged redundancy can hardly be cosidered company
personnel policies and therefore need not directly be subject to the grievance machinery
nor to voluntary arbitration.
Third. Petitioners would like to persuade us that respondents ULP claims are merely
conclusory and cannot serve to vest jurisdiction to the Labor Arbiters. Petitioners argue
with passion: How was the discharges (sic) right to self-organization restrained by their
termination? Respondent did not show.. There is no allegation of the existence of anti-
union animus or of the ultimate facts showing how the discharges affected the rights to
self-organization of individual respondents.[6] In short, petitioners maintain that
respondents complaint does not allege a genuine case for ULP.
The Court is not convinced.
The complaint alleges that:
5. Individual complainants are bona fide officers and members of complainant Ilaw at
Buklod ng Manggagawa (IBM). They are active and militant in the affairs and activities of
the union.
xxx xxx xxx
23. The dismissal or lock-out from work of the individual complainants clearly constitutes
an act of unfair labor practices in the light of the fact that the work being performed by the
individual complainants are being contracted out by the respondent company, and,
therefore, deprives individual complainants of their right to work and it constitutes a
criminal violation of existing laws.
xxx xxx xxx
25. The acts of the respondent company in economically coercing employees to accept
payment of seperation and/or retirement benefits, pending final resolution of the labor
disputes between the parties constitute acts of unfair labor practice in the light of the fact
that there is undue interference, restraint, and coercion of employees in the exercise of
their right to self-organization and collective bargaining.[7]
Short of pre-empting the proceedings before the Labor Arbiter, the above complaint,
makes Out a genuine case for ULP.
In Manila Pencil Co. v. CIR,[8] This Court had occasion to observe that even where
business conditions justified a lay-off of employees, unfair labor practices were committed
in the form of discriminatory dismissal where only unionists were permanently dismissed.
This was despite the valid excuse given by the Manila Pencil Company that the dismissal
of the employees was due to the reduction of the companys dollar allocations for
importation and that both union members and non-union members were laid-off. The
Court, thru Justice Makalintal, rebuffed the petitioner Company and said:
x x x The explanation, however, does not by any means account for the permanent
dismissal of five of the unionists, where it does not appear that non-unionists were similarly
dismissed.
xxx xxx xxx
And the discrimination shown by the Company strongly is confirmed by the fact that during
the period from October 1958 to August 17, 1959 it hired from fifteen to twenty new
employees and ten apprentices. It says these employees were for its new lead factory, but legal conferment thereof, jurisdiction cannot be appropriated by an official or tribunal (sic)
is (sic) not shown that the five who had been permanently dismissed were not suitable for no matter how well-intentioned it is, even in the pursuit of the clearest substantial right
work in that new factory. (Concurring Opinion of Justice Barredo, Estanislao v. Honrado, 114 SCRA 748, 29 June
1982).[14]
A similar ruling was made by this Court in Peoples Bank and Trust Co. v. Peoples Bank
and Trust Co. Employees Union[9] involving the lay-off by a bank of sixty-five (65) In the same manner, petitioners cannot arrogate into the powers of voluntary arbitrators
employees who were active union members allegedly by reason of retrechment. The Court the original and exclusive jurisdiction of Labor Arbiters over unfair labor practices,
likewise found the employer in that case to have committed ULP in effecting the termination disputes, and claims for damages, in the absence of an express agreement
discharges. between the parties in order for Article 262[15] of the Labor Law to apply in the case at
bar.[16]
This Court was more emphatic however in Bataan Shipyard and Engineering Co., Inc. v.
NLRC, et al.:[10] WHEREFORE, the instant petition is DISMISSED for lack of merit and the resolutions of
the National Labor Relations Commission dated August 11, 1992 and October 29, 1992
Under the circumstances obtaining in this case, We are inclined to believe that the are hereby AFFIRMED.
company had indeed been discriminatory in selecting the employees who were to be
retrenched. All of the retrenched employees are officers and members of the NAFLU. The SO ORDERED
record of the case is bereft of any satisfactory explanation from the Company regarding
this situation. As such, the action taken by the firm becomes highly suspect. It leads Us to SECOND DIVISION
conclude that the firm had been discriminating against membership in the NAFLU, an act
which amounts to interference in the employees exercise of their right of self-organization.
Under Art. 249 (now Art. 248) of the Labor Code of the Philippines, such interference is MINDORO LUMBER G.R. No. 158753
considered an act of unfair labor practice on the part of the Company x x x. (Emphasis AND HARDWARE,
ours) Petitioner,
Present:
It matters not that the cause of termination in the above cited cases was retrenchment PUNO, J., Chairman,*
while that in the instant case was redundancy. The important fact is that in all of these - versus - AUSTRIA-MARTINEZ,** CALLEJO, SR.,
cases, including the one at bar, all of the dismissed employees were officers and members TINGA, and
of their respective unions, and their employers failed to give a satisfactory explanation as CHICO-NAZARIO, JJ.
to why this group of employees was singled out.
EDUARDO D. BACAY, ELMER
It may be the case that employees other than union members may have been terminated LANOT, NICANOR MANLISES, JR.,
also by petitioner SMC on account of its redundancy program. If that is true, the FREDERICK MAJABA, RODEL
discharges may really be for a bona fide authorized cause under Article 283[11] of the OBANDO, ROMAN ISINSAO,
Labor Code. On the other hand, it is also possible that such may only be a clever scheme ELMAR MONTON, JUANITO
of the petitioner company to camouflage its real intention of discriminating against union OSINSAO, CARMELO OLOYA,
members particularly the private respondents. In any case, these matters will be best ROBERTO SUMO, ROLANDO
ventilated in a hearing before the Labor Arbiter. CASIANO, NICASIO LUZ,
LEODEGARIO SAGANG, RUDY
It is for the above reason that we cannot hold the petitioners guilty of the ULP charge. This ENTERIA, ELMAR LIM, RAFAEL
will be the task of the Labor Arbiter. We however find that based on the cicumstances OBANDO, CRISPIN MANAO, JR.,
surrounding this case and settled jurisprudence on the subject, the complaint filed by the LINO LAQUI, ESMAR LOTO, SR.,
private respondents on February 25, 1991 alleges facts sufficient to costitute a bona fide LYRINE MAGSICO, MARITES Promulgated:
case of ULP, and therefore properly cognizable by the Labor Arbiter under Article 2 17(a) OBANDO, EMMALEN VILLANUEVA,
of the Labor Code. This is consistent with the rule that jurisdictioin over the subject matter MARILOU LIM, MARISSA MOTOL,
is determined by the allegations of the complaint.[12] ALLEN MOGOL, CARMENCITA
NAPOLITANO, ROLANDO GAMILLA, June 8, 2005
Finally, petitioners try to impress on this Court the strong State policy on the promotion of ELMER LACSON, REYNALDO
voluntary modes of settlement of labor disputes crafted in the Constitution and the Labor MAJABA and FAUSTINO SEO,
Code which dictate the submission of the CBA dispute to grievance and arbitration.[13] Respondents.
x----------------------------------------------------x
In this regard, the response of the Solicitor General is apt:

Petitioners deserve commendation for divulging and bringing to public respondents

attention the noble legislative intent behind the law mandating the inclusion of grievance
and voluntary arbitration provisions in the CBA. However, in the absence of an express ______________________
* On official leave.
**Acting Chairman.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure
assailing the November 22, 2002 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP
No. 66727, as well as its June 12, 2003 Resolution.
The facts are as follows:
The private respondents are employees of petitioner Mindoro Lumber and Hardware
(Mindoro Lumber). On July 1, 1998, the private respondents, through then union president
Eduardo Bacay, filed a Complaint against Mindoro Lumber before the Region IV Office of
the Department of Labor and Employment (DOLE) for non-payment of overtime pay, legal
holiday pay, 13th month pay, non-payment/underpayment of minimum wage and
allowances. The case was docketed as LSED-RO400-9807-CI-001.[2] Pursuant to the said
complaint, the DOLE conducted an inspection on July 10, 1998 under Inspection Authority
No. RO400-9807-CI-005. It was thereafter determined that Mindoro Lumber committed
several violations, to wit:
1. Underpayment of wages;
2. Non-payment of Regular Holiday pay;
3. Non-payment of 5-days service incentive leave pay;
4. Record Keeping - Payrolls/dtr were not available at the time of inspection and also
production records;
5. Non-submission of the [following]:
a. labor component
b. annual medical report
c. annual acc./illness exposure data report
d. safety committee organization
6. Non-coverage of SSS to affected employees.[3]
Meanwhile, on August 9, 1998, the private respondents executed several Affidavits
(Sinumpaang Salaysay),[4] declaring therein that since they each started working on July
1, 1995, they were made to work for seven days a week starting 7:00 a.m. until 5:00 p.m.,
with lunch break from 11:30 a.m. to 1:00 p.m. They further declared that their wages were
below the rates prescribed by the applicable wage orders, and that they were not paid
overtime pay, holiday pay or premium pay. The private respondents stated that the total
amount each of them were entitled to, aside from what they were actually receiving by way
of salary and other emoluments, ranged from P6,744.20 to P242,626.90. They further
averred that their wages were made compliant with the prevailing regional minimum wages
starting July 16, 1998, and for the first time, payroll and daily time records were being kept.
The counsel for the private respondents then filed a Manifestation before the Regional
Office of the DOLE, praying that an order be issued directing Mindoro Lumber to pay the
amounts due to them as reflected in their respective Sinumpaang Salaysay totaling
P3,577,276.10.[5]
On September 2, 1998, the private respondents executed a Sama-samang Salaysay sa
Pag-uurong ng Sakdal (Joint Affidavit of Withdrawal
of Complaint),[6] declaring therein that by virtue of the amount each of them received
(which amount was either P3,000.00 or P6,000.00 per employee), they were withdrawing
their claim against Mindoro Lumber in Case No. LSED-RO400-9807-CI-001. Pursuant
thereto, their counsel filed a motion to dismiss.[7]
It appears, however, that based on an affidavit executed by Eduardo Bacay, he had
resigned from Mindoro Lumber as of June 6, 1998.[8] Relative thereto, he had also filed a
complaint for Unfair Labor Practice and Illegal Dismissal, docketed as NLRC Case No.
RAB-IV-7-10167-98-ORM. However, on September 2, 1998, Bacay executed an
Affidavit[9] declaring that he was no longer interested in pursuing the said case and that he
had voluntarily resigned from Mindoro Lumber. By virtue of Bacays affidavit, Labor Arbiter
Nieves V. De Castro issued an Order dismissing NLRC Case No. RAB-IV-7-10167-98-
ORM.[10]
Meanwhile, Elmer Lanot was elected as the new union president.
On June 27, 1999, the private respondents executed a Sama-Samang Salaysay (Joint
Affidavit), declaring therein that before Bacay resigned from Mindoro Lumber, he
persuaded them to execute the Sama-samang Salaysay
sa Pag-uurong ng Sakdal, in exchange for receiving the amount of P6,000.00 each. Such
amount, however, was grossly disproportionate to their entitlement under the law; hence,
they were withdrawing the said Sama-samang Salaysay sa Pag-uurong ng Sakdal, and
were authorizing Lanot to pursue their claim against Mindoro Lumber.[11] Pursuant
thereto, Lanot filed a motion before the Regional Office of the DOLE, praying that the
employees be paid the amounts due to each of them, and that the Sama-samang
Salaysay sa Pag-uurong ng Sakdal be declared null and void.[12]
On November 4, 1999, Regional Director Alex E. Maraan issued an Order[13] dismissing
Case No. LSED-RO400-9807-CI-001, and declared that the Sama-samang Salaysay
executed by the employees of Mindoro Lumber was valid.
The private respondents then filed an appeal before the Office of the Secretary of Labor,
questioning the propriety of the November 4, 1999 Order of the Regional Director.
On March 27, 2001, Labor Secretary Patricia A. Sto. Tomas issued an Order[14] granting
the appeal, and ordered the entire records of the case remanded to the Regional Office for
further proceedings, without prejudice to the deduction of whatever amount received by the
complainant workers. The Secretary of Labor declared as follows:
The only issue to be resolved in the case at bar is whether or not the Sama-samang
Salaysay sa Pag-uurong ng Sakdal is valid and binding.
Doctrinally, a compromise agreement is binding upon the parties if it is not contrary to law,
morals, good customs, public order and public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding upon parties and may
not later be disowned simply because there was a change of mind.
However, in the case at bar, the Sama-samang Salaysay sa Pag-uurong ng Sakdal attests
that the complainant-workers who signed the said documents (sic) each received the
amount of P3,000.00 to P6,000.00. This is far from the computation of the supposed
claims stated in their Sinumpaang Salaysay ranging from P53,672.60 to as much as
P104,359.60 each complainant. The fact that the amount given in exchange for the waiver
is very much less than the amount claimed renders the waiver null and void. By reason of
public policy, quitclaims are ineffective to bar recovery for the full measure of the workers
right (Republic Planters Bank vs. NLRC, et. al., G.R. No. 117460, January 6, 1997).
Further, the Supreme Court in the case of Rolando Malinao and Eduardo Malinao vs.
NLRC, et al., G.R. No. 119492, November 24, 1999, citing Peftok Integrated Services, Inc.
vs. NLRC, 293 SCRA 507, held:
It is decisively clear that they (guards) affixed their signatures to subject waivers and/or
quitclaims for fear that they would not be paid their salaries on pay day or worse, still, their
services would be terminated if they did not sign those papers. In short, there was no
voluntariness in the execution of the quitclaims or waivers in question. It should be borne
in mind that in this jurisdiction, quitclaims, waivers or releases are looked upon with
disfavor. Necessitous men are not free men. They are commonly frowned upon as
contrary to public policy and ineffective to bar claims for the full measure of the workers
legal rights. (Emphasis supplied).[15]
Mindoro Lumber moved to have the Order of the Secretary of Labor reconsidered, but the
same was denied on July 24, 2001.[16]
Mindoro Lumber forthwith elevated the matter to the CA by way of a petition for certiorari
under Rule 65 of the Rules of Court, arguing that the Sama-samang Salaysay sa Pag-
uurong ng Sakdal was valid and binding,
and was in the nature of a compromise agreement executed pursuant to the provisions of
Article 227 of the Labor Code. Mindoro Lumber stressed that the same was voluntarily
executed by its employees.
Meanwhile, on December 21, 2001, Regional Director Ricardo S. Martinez, Sr. issued a
Writ of Execution[17] seeking to enforce the March 27, 2001 and July 24, 2001 Orders of
the Secretary of Labor. In the said writ, the Regional Director commanded the Deputy
Sheriff to proceed to Mindoro Lumber and require the latter to pay an aggregate amount of
P3,191,663.20 to the complaining employees. Mindoro Lumber forthwith filed a motion for
the issuance of a temporary restraining order and writ of preliminary injunction. On January
21, 2002, the CA issued a temporary restraining order.[18]
On November 22, 2002, the CA rendered its decision dismissing the petition. A motion for
reconsideration proved futile.
Hence, this petition.
Mindoro Lumber, now as the petitioner, raises the following lone error:
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS
REVERSIBLE ERROR IN FINDING THAT THE HONORABLE SECRETARY OF LABOR
AND EMPLOYMENT DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN ISSUING
HER ASSAILED TWIN ORDERS OF MARCH 27, 2001 AND JULY 24, 2001.[19]
The threshold issues raised in this petition are (a) whether or not the Sama-samang
Salaysay sa Pag-uurong ng Sakdal constitutes a valid compromise agreement as defined
under Article 227 of the Labor Code of the Philippines, as amended; and (b) whether or not
the acknowledgment of the respondents that they each received the amount of either
P3,000.00 or P6,000.00 embodied in the said Salaysay constitutes a valid quitclaim.
Anent the first issue, the petitioner posits that the Sama-samang Salaysay sa Pag-uurong
ng Sakdal meets the requirements of Article 227 of the Labor Code on compromise
agreements. The petitioner emphasized that the Sama-samang Salaysay was voluntarily
executed by the private respondents and involves a mutual act of the parties: on the part of
the petitioner, by granting the amounts paid, and on the part of the private respondents, in
agreeing to withdraw their claim with the view of achieving industrial peace in the
workplace.
The petitioner points out that while the Sama-samang Salaysay sa Pag-uurong ng Sakdal
was executed without the assistance of the Bureau of Labor Relations (BLR) or the DOLE
Regional Office, the November 4, 1999 Order of the Regional Director in Case No. LSED-
RO400-9807-CI-001 nonetheless shows that when Eduardo Bacay appeared before the
said office, he was assisted by counsel.
The petitioners pose is bereft of merit.
Article 227 of the Labor Code, as amended, provides:
Art. 227. Compromise Agreements. Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the assistance of
the Bureau or the regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of non-compliance thereof or if
there is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.
The assistance of the BLR or the regional office of the DOLE in the execution of a
compromise settlement is a basic requirement;[20] without it, there can be no valid
compromise settlement. In this case, the petitioner admits that the purported compromise
settlement was executed by the private respondents without such required assistance. The
closest form of assistance adverted to by the petitioner in this case was that of Bacays
counsel when the latter appeared before the Office of the Regional Director to file the
following: the Sama-samang Salaysay sa Pag-uurong ng Sakdal executed by the private
respondents; a Sinumpaang Salaysay executed by Bacay withdrawing the complaint; and
the Motion to Dismiss. Such assistance, however, is not the assistance required by Article
227. As such, the Sama-samang Salaysay sa Pag-uurong ng Sakdal executed by the
respondents cannot qualify as a valid compromise settlement.
Anent the second issue, the petitioner points out that the settlement embodied in the said
Sama-samang Salaysay sa Pag-uurong ng Sakdal should be respected as the law
between it and its employees. The petitioner even stressed that while quitclaims are
commonly frowned upon, not all waivers and quitclaims are invalid as against public policy.
The petitioner is correct in saying that there are legitimate waivers that represent a
voluntary and reasonable settlement of a workers claim which should be respected by the
courts as the law between the parties.[21] Indeed, not all quitclaims are per se invalid or
against public policy, except (1) where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or (2) where the terms of settlement are
unconscionable on their faces; in these cases, the law will step in to annul the
questionable transactions.[22] Such quitclaims are regarded as ineffective to bar the
workers from claiming the full measure of their legal rights.[23]
In this case, however, it cannot be argued that there is no gross disparity between the P3,000.00
amount actually received by each private respondent as compared to the amount owing P20,380.60
him or her, as shown in the following list: Lino Laqui
P3,000.00
P14,380.60
Esmar Loto, Sr.
Amount received[24] P3,000.00
P20,380.60
Amount due[25] Lyrine Magsico
Elmer Lanot P6,000.00
P6,000.00 P242,626.90
P75,345.60 Marites Obando
Nicanor Manlises, Jr. P6,000.00
P6,000.00 P222,400.00
P97,118.60 Emmalen Villanueva
Frederick Majaba P6,000.00
P6,000.00 P242,626.90
P97,118.60 Marilou Lim
Rodel Obando P6,000.00
P6,000.00 P222,721.90
P104,359.60 Marissa Motol
Roman Isinsao P6,000.00
P6,000.00 P242,626.90
P97,118.60 Allen Mogol
Elmar Monton P6,000.00
P6,000.00 P242,626.90
P88,387.60 Carmencita Napolitano
Juanito Osinsao P6,000.00
P6,000.00 P242,626.90
P97,118.60 Rolando Gamilla
Carmelo Oloya P3,000.00
P6,000.00 P21,164.60
P82,535.60 Elmer Lacson
Roberto Sumo P3,000.00
P6,000.00 P29,164.60
P75,345.60 Reynaldo Majaba
Rolando Casiano P6,000.00
P6,000.00 P97,118.60
P75,345.60 Faustino Seo
Nicasio Luz P3,000.00
P6,000.00 (no information)
P53,672.60
Leodegario Sagang
P6,000.00
P88,387.60 The foregoing clearly illustrates that the private respondents individual claims, ranging
Rudy Enteria from P6,744.20 to P242,626.90, are grossly disproportionate to what each of them actually
P6,000.00 received under the Sama-samang Salaysay sa Pag-uurong ng Sakdal. The amount of the
P6,744.20 settlement is indubitably unconscionable; hence, ineffective to bar the workers from
Elmar Lim claiming the full measure of their legal rights.
P6,000.00
P73,690.60 IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED for lack of merit. Case
Rafael Obando No. LSED-RO400-9807-CI-001 is hereby REMANDED to the Region IV Office of the
P3,000.00 Department of Labor and Employment for appropriate proceedings.
P14,380.60
Crispin Manao, Jr. SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 75700-01 August 30, 1990
LOPEZ SUGAR CORPORATION, petitioner,
vs.
FEDERATION OF FREE WORKERS, PHILIPPINE LABOR UNION ASSOCIATION
(PLUA-NACUSIP) and NATIONAL LABOR RELATIONS COMMISSION, respondents.
Sicangco, Diaz, Ortiz and Lapak for petitioner.
Reynaldo J. Gulmatico for private respondents.
FELICIANO, J.:
In this Petition, petitioner Lopez Sugar Corporation seeks reversal of the Decision dated 2
July 1986 of public respondent National labor Relations Commission ("NLRC") which
affirmed the decision of the Labor Arbiter dated 30 September 1983. The Labor Arbiter (a)
had denied petitioner's application to retrench some of its employees and (b) had ordered
the reinstatement of twenty-seven (27) employees and to pay them full backwages from
the time of termination until actual reinstatement.
Petitioner, allegedly to prevent losses due to major economic problems, and exercising its
privilege under Article XI, Section 2 of its 1975-1977 Collective Bargaining Agreement
("CBA") entered into between petitioner and private respondent Philippine Labor Union
Association ("PLUA-NACUSIP"), caused the retrenchment and retirement of a number of
its employees.
Thus, on 3 January 1980, petitioner filed with the Bacolod District Office of the then
Ministry of Labor and Employment ("MOLE") a combined report on retirement and
application for clearance to retrench, dated 28 December 1979, 1 affecting eighty six (86)
of its employees. This was docketed as NLRC Case Ne. A-217-80. Of these eighty-six (86)
employees, fifty-nine (59) were retired effective 1 January 1980 and twenty-eight (27) were
to be retrenched effective 16 January 1980 "in order to prevent losses."
Also, on 3 January 1980, private respondent Federation of Free Workers ("FFW"), as the
certified bargaining agent of the rank-and-file employees of petitioner, filed with the
Bacolod District Office of the MOLE a complaint dated 27 December 1979 for unfair labor
practices and recovery of union dues docketed as NLRC Case No. A-198-80. In said
complainant, FFW claimed that the terminations undertaken by petitioner were violative of
the security of tenure of its members and were intended to "bust" the union and hence
constituted an unfair labor practice. FFW claimed that after the termination of the services
of its members, petitioner advised 110 casuals to report to its personnel office. FFW further
argued that to justify retrenchment, serious business reverses must be "actual, real and
amply supported by sufficient and convincing evidence." FFW prayed for reinstatement of
its members who had been retired or retrenched.
Petitioner denied having hired casuals to replace those it had retired or retrenched. It
explained that the announcement calling for 110 workers to report to its personnel office
was only for the purpose of organizing a pool of extra workers which could be tapped
whenever there were temporary vacancies by reason of leaves of absence of regular
workers.
On 22 January 1980, another report on retirement affecting an additional twenty-five (25)
employees effective 1 February 1980 was filed by petitioner. 2
On 3 March 1980, petitioner filed its Position Paper in NLRC Case No. A-217-80
contending that certain economic factors jeopardizing its very existence rendered the
dismissals necessary. Petitioner explained:
As a business firm, the Applicant must earn [a] fair return of (sic) its investment. Its income
is generated from the sales of the Central's shares of sugar and molasses production. It
has however no control of the selling price of both products. It is of common knowledge
that for the past years the price of sugar has been very low. In order to survive, the
Applicant has effected several forms of cost reduction. Now that there is hope in the price
of sugar the applicant is again faced with two major economic problems, i.e., the stoppage
of its railway operation and the spiralling cost of production.
The Applicant was forced to stop its railway operation because the owners of the land
upon which the Applicant's railway lines traverse are no longer willing to allow the
Applicant to make further use of portions of their lands. . . .
The other economic problem that confronted the Applicant is the rising cost of labor,
materials, supplies, equipment, etc. These two major economic problems the rising cost of
production and the stoppage of its railway facilities, put together pose a very serious threat
against the economic survival of the Applicant. In view of this, the Applicant was
constrained to touch on the last phase of its cost reduction program which is the reduction
of its workforce.
xxx xxx xxx
The Applicant as a business proposition must be allowed to earn income in order to
survive. This is the essence of private enterprise. Being plagued with two major economic
problems, the applicant is not expected to remain immobile. It has to react accordingly. As
many other business firms have resorted to reduction of force in view of the present
economic crisis obtaining here and abroad, the applicant was likewise compelled to do the
same as a last alternative remedy for survival. 3
In a decision dated 30 September 1983, 4 the Labor Arbiter denied petitioner's application
for clearance to retrench its employees on the ground that for retrenchment to be valid, the
employer's losses must be serious, actual and real and must be amply supported by
sufficient and convincing evidence. The application to retire was also denied on the ground
that petitioner's prerogative to so retire its employees was granted by the 1975-77
collective bargaining agreement which agreement had long ago expired. Petitioner was,
therefore, ordered to reinstate twenty-seven retired or retrenched employees represented
by private respondent Philippine Labor Union Association ("PLUA") and FFW and to pay
them full backwages from the time of termination until actual reinstatement.
Both dissatisfied with the Labor Arbiter's decision, petitioner and respondent FFW
appealed the case to public respondent NLRC. On appeal, the NLRC, finding no justifiable
reason for disturbing the decision of the Labor Arbiter, affirmed that decision on 2 July
1986. 5
Hence, this Petition for certiorari making the following arguments:
1. That portions of the decision of public respondent NLRC dated July 2, 1986
affirming the decision of Labor Arbiter Ethelwoldo Ovejera dated September 30, 1983 are
contrary to law and jurisprudence;
2. That said decision subject of this petition are in some respects not supported by
evidence and self-contradictory;
3. That said decision subject of this petition were rendered with grave abuse of
discretion and in excess of jurisdiction;
4. That the dismissals at bar are valid and based on justifiable
grounds. 6
Petitioner contends that the NLRC acted with grave abuse of discretion in denying its
combined report on retirement and application for clearance to retrench. Petitioner argues
that under the law, it has the right to reduce its workforce if made necessary by economic
factors which would endanger its existence, and that for retrenchment to be valid, it is not
necessary that losses be actually sustained. The existence of valid grounds to anticipate or
expect losses would be sufficient justification to enable the employer to take the necessary
actions to prevent any threat to its survival.
Upon the other hand the Solicitor General argued that the Decision rendered by the Labor
Arbiter and affirmed by the NLRC is supported by substantial evidence on record; that,
therefore, no grave abuse of discretion was committed by public respondent NLRC when it
rendered that Decision.
Article 283 of the Labor Code provides:
Article 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
cricumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employer at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a se pay equivalent to at least
his one (1) month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases, of closures or cessation
of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year. (Emphasis supplied)
In ts ordinary connotation, he phrase "to revent losses" means hat retrenchment or
termination of the services of some employees is authorized to be undertaken by the
employer sometime before the losses anticipated are actually sustained or realized. It is
not, in other words, the intention of the lawmaker to compel the employer to stay his hand
and keep all his employees until sometime after losses shall have in fact materialized ; 7 if
such an intent were expressly written into the law, that law may well be vulnerable to
constitutional attack as taking property from one man to give to another. This is simple
enough.
At the other end of the spectrum, it seems equally clear that not every asserted possibility
of loss is sufficient legal warrant for reduction of personnel. In the nature of things, the
possibility of incurring losses is constantly present, in greater or lesser degree, in the
carrying on of business operations, since some, indeed many, of the factors which impact
upon the profitability or viability of such operations may be substantially outside the control
of the employer. Thus, the difficult question is determination of when, or under what
circumstances, the employer becomes legally privileged to retrench and reduce the
number of his employees.
We consider it may be useful to sketch the general standards in terms of which the acts of
petitioner employer must be appraised. Firstly, the losses expected should be substantial
and not merely de minimis in extent. If the loss purportedly sought to be forestalled by
retrenchment is clearly shown to be insubstantial and inconsequential in character, the
bona fide nature of the retrenchment would appear to be seriously in question. Secondly,
the substantial loss apprehended must be reasonably imminent, as such imminence can
be perceived objectively and in good faith by the employer. There should, in other words,
be a certain degree of urgency for the retrenchment, which is after all a drastic recourse
with serious consequences for the livelihood of the employees retired or otherwise laid-off.
Because of the consequential nature of retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the expected losses. The employer should have
taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other
costs than labor costs. An employer who, for instance, lays off substantial numbers of
workers while continuing to dispense fat executive bonuses and perquisites or so-called
"golden parachutes", can scarcely claim to be retrenching in good faith to avoid losses. To
impart operational meaning to the constitutional policy of providing "full protection" to labor,
the employer's prerogative to bring down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic means e.g., reduction of both
management and rank-and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising costs, etc. have been
tried and found wanting.
Lastly, but certainly not the least important, alleged if already realized, and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing
evidence. The reason for requiring this quantum of proof is readily apparent: any less
exacting standard of proof would render too easy the abuse of this ground for termination
of services of employees. In Garcia v. National Labor Relations Commissions, 8 the Court
said:
. . . But it is essentially required that the alleged losses in business operations must be
prove[n] (National Federation of Labor Unions [NAFLU] vs. Ople, 143 SCRA 124 [1986]).
Otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning business losses or reverses in their business
ventures in order to ease out employees. (Emphasis supplied) 9
Whether or not an employer would imminently suffer serious or substantial losses for
economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to
determine. In the instant case, the Labor Arbiter found no sufficient and convincing
evidence to sustain petitioner's essential contention that it was acting in order to prevent
substantial and serious losses. The Labor Arbiter said:
There is no question that an employer may reduce its work force to prevent losses,
however, these losses must be serious, actual and real. In the instant case, even
assuming arguendo that applicant company was, in fact, surrounded by the major
economic problems stated earlier, the question may be asked will it suffer serious
losses as a result of the said economic problems? We find the answer to be negative. We
have scanned the records but failed to find evidence submitted to show that applicant
company would suffer serious business losses or reverses as a consequence of the
alleged major economic problems. In fact, applicant company asseverated that these
problems only threatens its survival, hence, it had to reduce its work force. Another thing,
while applicant company was retrenching its regular employees, it also hired the services
of casuals. This militated its claim to reduce its work force to set up cost reduction. It must
be stated that settled is the rule that serious business losses or reverses must be actual,
real and amply supported by sufficient and convincing evidence. 10 (Emphasis supplied)
We are in principle bound by such findings in accordance with well-established
jurisprudence that the factual findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but even to finality, 11 unless,
indeed, petitioner is able to show that the Labor Arbiter and the NLRC simply and
arbitrarily disregarded evidence before them or had misapprehended evidence of such a
nature as to compel a contrary conclusion if properly appreciated.
The submissions made by petitioner in this respect are basically that from the crop year
1975-1976 to the crop year 1980-981, the amount of cane deliveries made to petitioner
Central was declining and that the degree of utilization of the mill's capacity and the sugar
recovery from the cane actually processed, were similarly declining. 12 Petitioner also
argued that the competition among the existing sugar mills for the limited supply of sugar
cane was lively and that such competition resulted in petitioner having to close
approximately thirty-eight (38) of its railroad lines by the end of 1979. 13 According to
the petitioner, the cost of producing one (1) picul of sugar during the same period (i.e.,
from crop year 1976-1977 to crop year 1979-1980) increased from P69.97 to P93.11.
The principal difficulty with petitioner's case as above presented was that no proof of actual
declining gross and net revenues was submitted. No audited financial statements showing
the financial condition of petitioner corporation during the above mentioned crop years
were submitted. Since financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of a company, it is
not easy to understand why petitioner should have failed to submit such financial
statements.
Moreover, while petitioner made passing reference to cost reduction measures it had
allegedly undertaken, it was, once more, a fairly conspicuous failure to specify the cost-
reduction measures actually undertaken in good faith before resorting to retrenchment.
Upon the other hand, it appears from the record that petitioner, after reducing its work
force, advised 110 casual workers to register with the company personnel officer as extra
workers. Petitioner, as earlier noted, argued that it did not actually hire casual workers but
that it merely organize(d] a pool of "extra workers" from which workers could be drawn
whenever vacancies occurred by reason of regular workers going on leave of absence.
Both the Labor Arbiter and the NLRC did not accord much credit to petitioner's explanation
but petitioner has not shown that the Labor Arbiter and the NLRC were merely being
arbitrary and capricious in their evaluation. We note also that petitioner did not claim that
the retrenched and retired employees were brought into the "pool of extra workers" rather
than new casual workers.
Petitioner next contends that the NLRC committed grave abuse of discretion in affirming
the ruling of the Labor Arbiter that the retirements effected by petitioner were na valid since
the basis therefor, i.e. Article XI Section 2 of the 1975-1977 CBA, had by then already
expired and was thus no longer enforceable or operative. 14 Article XI, 2 of the CBA
provides:
2. Section 2. Any employee may apply for after having rendered the of at least
eighteen (18) year of service to the COMPANY. The COMPANY, as a right , may retire
any employee who has rendered twenty (20) years of service, or has reached the age of
sixty (60) years. Employees who are physically incapacitated to continue to work in the
COMPANY upon certification of the COMPANY Physician, shall be entitled to a separation
pay equivalent to the retirement benefits herein provided for that may have accrued. The
heirs or surviving legally married spouse of the deceased employee shall be granted by
the COMPANY the amount equivalent to the accrued retirement benefit of the deceased
employee at the time of his death." 15 (Emphasis supplied)
Petitioner argues that the CBA was "extended" not merely by implication, but by reciprocal
acts in the sense that even after the CBA had expired, petitioner continued to give, and
the workers continued to receive, the benefits and exercise the prerogatives provided
therein. Under these circumstances, petitioner urges, the employees are estopped from
denying the extended effectivity of the CBA.
The Solicitor General, as well as private respondents, argue basically that petitioner's right
to retire its employees was coterminous with the life of the CBA.
On this point, we must find for petitioner. Although the CBA expired on 31 December 1977,
it continued to have legal effects as between the parties until a new CBA had been
negotiated and entered into. This proposition finds legal support in Article 253 of the Labor
Code, which provides:
Article 253 Duty to bargain collectively when there exists a collective bargaining
agreement. When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice to terminate or modify
the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both
parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties. (Emphasis supplied)
Accordingly, in the instant case, despite the lapse of the formal effectivity of the CBA by
virtue of its own provisions, the law considered the same as continuing in force and effect
until a new CBA shall have been validly executed. Hence, petitioner acted within legal
bounds when it decided to retire several employees in accordance with the CBA. That the
employees themselves similarly acted in accordance with the CBA is plain from the record.
Even after the expiration of the CBA, petitioner's employees continued to receive the
benefits and enjoy the privileges granted therein. They continued to avail of vacation and
sick leaves as computed in accordance with Articles VII and VIII of the CBA. They also
continued to avail of medical and dental aid under Article IX, death aid and bereavement
leave under Articles X and XIV, insurance coverage under Article XVI and housing
allowance under Article XVIII. Seventeen (17) employees even availed of Section XI
(dealing with retirement) when they voluntarily retired between 1 January 1978 and 31
December 1980 and received retirement pay computed on the basis of Section 3 of the
same article. If the workers chose to avail of the CBA despite its expiration, equity if not
the law-dictates that the employer should likewise be able to invoke the CBA.
The fact that several workers signed quitclaims will not by itself bar them from joining in the
complaint. Quitclaims executed by laborers are commonly frowned upon as contrary to
public policy and ineffective to bar claims for the full measure of the worker's legal rights. In
AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU, 16 the Court held:
In labor jurisprudence, it is well establish that quitclaims and/or complete releases
executed by the employees do not estop them from pursuing their claims arising from the
unfair labor practice of the employer. The basic reason for this is that such quitclaimants
and/or complete releases are against public policy and, therefore, null and void. The
acceptance of termination pay does not divest a laborer of the right to prosecute his
employer for unfair labor practice acts. (Cario vs. ACCFA, L-19808, September 29, 1966,
18 SCRA 183; Philippine Sugar Institute vs. CIR, L-13475, September 29, 1960, 109 Phil.
452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 704)
In the Cario case, supra, the Supreme Court, speaking thru Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer
and employee, obviously, do not stand on the same footing The employer drove the
employee to the wall. The latter must have to get hold of money. Because, out of job, he
had to face the harsh necessities of life. He thus found himself in no position to resist
money proffered. His, then, is a case of adherence, not of choice. One thing sure,
however, is that petitioners did not relent their claim. They pressed it. They are deemed
not to have waived any of their rights. Renuntiatio non praesumitur (Emphasis supplied)
We conclude that because the attempted retrenchment on the part of the petitioner was
legally ineffective, all retrenched employees should be reinstated and backwages paid
them corresponding to a period of three (3) years without qualification or deduction, in
accordance with the three-year rule laid down in a long line of cases. 17 In the case of
employees who had received payments for which they had executed quitclaims, the
amount of such payments shall be deducted from the backwages due to them. Where
reinstatement is no longer possible because the positions they had previously filled are no
longer in existence, petitioner shall pay backwages plus, in lieu of reinstatement,
separation pay in the amount of one-month's pay for every year of service including the
three (3) year-period of putative service for which backwages will be paid. Upon the other
hand, we find valid the retirement of those employees who were retired by petitioner
pursuant to the applicable provisions of the CBA.
WHEREFORE, the Petition for Certiorari is partially GRANTED due course and the
Decision dated 2 July 1986 of the public respondent NLRC is hereby MODIFIED to the
extent that it had affirmed that portion of the Decision of the Labor Arbiter dated 30
September 1983 ordering the reinstatement judgment of employees who had been retired
by petitioner under the applicable provisions of the CBA. Except as so modified, the
Decision of the NLRC is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 95013 September 21, 1994
TRADE UNIONS OF THE PHILIPPINES/FEBRUARY SIX MOVEMENT TUPAS/FSM),
petitioner,
vs.
HON BIENVENIDO LAGUESMA, TRANSUNION CORPORATION-GLASS DIVISION,
AND INTEGRATED LABOR ORGANIZATION (ILO-PHILIPPINES), respondents.
Alar, Comia, Manalo and Associates Law Offices for petitioner.
Arcaya & Associates for Transunion Corp.-Glass Division.
Francisco A. Mercado, Jr. for Integrated Labor Organization (ILO-Phils.)
PUNO, J.:
Petitioner Trade Unions of the Philippines-February Six Movement (TUPAS-FSM) seeks
the reversal of the Resolution, dated July 25, 1990, rendered by then Secretary of Labor
and Employment Ruben D. Torres, In OS-MA-A-5-167-90, which dismissed the petition for
certification election filed by petitioner TUPAS-FSM for being prematurely filed. 1
The controlling facts, as culled from the records, are as follows:
On March 23, 1990 TUPAS-FSM filed a petition for certification election with the Regional
Office No. IV of the Department of Labor and Employment (DOLE), for the purpose of
choosing a bargaining representative for the rank-and-file employees of Transunion
Corporation's industrial plant, situated in Canlubang, Laguna, known as the Transunion
Corporation-Glassware Division. Petitioner had then secured a Certification , dated
March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE (Region IV), that
"Transunion Corporation" has no existing collective bargaining agreement with any labor
organization. 2
It appears, however, that before the filing of said petition, or on November 15, 1989,
Integrated Labor Organization (ILO-Phils.) was duly certified by DOLE as the sole and
exclusive bargaining agent of the rank-and-file employees of Transunion Corporation-
Glassware Division. 3 On November 28, 1989, a collective bargaining agreement (CBA)
was the forged between Transunion-Glassware Division and ILO-Phils. covering the
company's rank-and-file employees, The CBA, with a five-year term from December 1,
1989 to December 1, 1994, was ratified by a great majority of the rank-and -filers on
December 8, 1989. 4 In the meantime, the President of ILO-PHILS died. An inter-union
conflict followed and the subject CBA was filed with DOLE, for registration purposes, only
on March 14, 1990, more or less, three (3) months from its execution. Finally, on May 4,
1990, the Certification of Registration was issued by DOLE through Regional Director
Romeo A. Young. 5
ILO-Phils., intervened in the certification election proceedings initiated by TUPAS-FSM. It
opposed the petition in view of the existing CBA between ILO and the Transunion
Corporation-Glassware Division. It stresses that the petition for certification election should
be entertained only during the freedom period, or sixty day before the expiration of the
CBA. Med-Arbiter Orlando S. deal Cruz dismissed the petition on the ground of
prematurity.
TUPAS-FSM appealed contending: (1) that pursuant to Article 231 of the Labor Code.
CBAs shall be file with the Regional Office of the DOLE within thirty (30) days from the
date of signing thereof; (2) that said requirement is mandatory, although it would not affect
the enforceability of the CBA as between the parties thereto; and (3) since the CBA was
filed outside the 30-day period specified under Article 231 of the Labor Code, the
prohibition against certification election under Article 232 of the same Code should not
apply to third parties such as petitioner.
As stated earlier, the Secretary of Labor and Employment affirmed the impugned Order of
the Med-Arbiter, ruling that the belated submission of the CBA was excusable and that the
requirement of the law was substantially complied with upon the filing of a copy of the CBA
prior to the filing of the petition for certification election. TUPAS-FSM then filed a motion for
reconsideration, but it was also denied, Hence, this petition for certiorari where petitioner
alleged:
GRAVE ABUSE OF DISCRETION ON THE PART OF THE PUBLIC RESPONDENTS
AMOUNTING TO LOSS OF JURISDICTION; and
THE RESOLUTION IS CONTRARY TO THE FACTS AND THE LAW.
The petition lacks merit.
Petitioner raises both factual and legal issues in this present petition.
First, the factual issues. Relying on the March 22, 1990 Dole Certification issued by
Director Bautista, Jr., supra, petitioner insists there was no existing CBA between
Transunion Corporation and any labor organization when it filed its petition for certification
election on March 23, 1990. To further strengthen its position, petitioner charges that the
filing of the CBA was antedated to march 14, 1990, to make it appear that the same was
already existing and filed before the filing of the petition for certification election. Petitioner
also claims that since Article 231 of the Labor Code mandates DOLE to act on the CBA
filed in its office within Five (5) days from date of filing thereof, the subject CBA was filed
on April 30, 1990, or five (5) days before its registration on May 4, 1990.
The argument deserves scant consideration. It is elementary that the special civil action for
certiorari under Rule 65 of the Revised Rules of Court can be availed of to nullify or modify
the proceedings before the concerned tribunal, board, or officer exercising judicial
functions who has acted without or in excess of its jurisdiction or with grave abuse of
discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law. This Court is not a trier of facts and it is not its function to examine
and evaluate the probative value of all evidence presented to the concerned tribunal which
formed the basis of its impugned decision, resolution or order. 6 Following this hoary rule,
it is inappropriate to review the factual findings of the Med-arbiter and the Secretary of
Labor, regarding the date of filing of the CBA on March 14, 1990 prior to the filing of the
petition for certification election; the company's voluntary recognition and DOLE's
certification of ILO-PHILS. as the sole and exclusive bargaining representative of the rank-
and-file employees of Transunion Corporation-Glassware Division; and the subsequent
registration of the CBA. They are binding on this Court as they are supported by
substantial evidence. In contrast, petitioners bare allegation pertaining to the "antedating"
of the date of filing of the CBA is unsubstantiated and based purely on conjectures.
It is crystal clear from the records that the rank-and- file employees of private respondent's
Glassware Division are, at present, represented by ILO-PHILS. Hence, petitioner's reliance
on the March 22, 1990 Certification issued by Director Bautista, Jr., is misplaced. The
existence and filing of their CBA was confirmed in a Certification, dated April 24, 1990,
issued by Director Romeo A. Young of DOLE-Region IV. 7 The Certification of ILO-PHILS.
"as the sole and exclusive bargaining agent of the rank-and-file workers of Transunion-
Glassware Division," means it shall remain as such during the existence of the CBA, to the
exclusion of other labor organizations, including petitioner, and no petition questioning the
majority status of the incumbent bargaining agent shall be entertained, nor shall
certification election be conducted, outside of the fifty-day freedom period immediately
before the expiry date of the five-year term of the CBA. 8
We now resolved the legal issue. Petitioner points out that the subject CBA was filed
beyond the 30-day period prescribed under Article 231 of the Labor Code. It also insists
that under Article 232 of the Labor Code, the prohibition on the filing of a petition for
certification election applies when the CBA had been duly registered and, in this case,
since the CBA was not registered in accordance with the Art. 231, the prohibition will not
apply. We disagree.
Article 231 an s232 of the Labor Code read:
Art. 231. Registry of unions and file of collective agreements. - . . . .
Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties
shall submit copies of the same directly to the Bureau or the Regional Office of the
Department of Labor and Employment for registration accompanied with verified proofs of
its posting n two conspicuous places in the place of work and ratification by the majority of
all the workers in the bargaining unit. The Bureau or Regional Office shall act upon the
application for registration of such Collective Bargaining Agreement within five (5) days
from receipts thereof. The Regional Office shall furnish the Bureau with a copy of the
Collective Bargaining agreement within five (5) days form its submission.
xxx xxx xxx
Art. 232. Prohibition on Certification Election. The Bureau shall not entertain any
petition for certification election or any other action which may disturb the administration of
duly registered existing collective bargaining agreement affecting the parties except under
Articles 253, 253-A and 256 of this Code.
Corollary thereto, Article 253-A of the same Code reads:
Art. 253-A. Any Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five (5) years. No
petition questioning agent shall be entertained and no certification election shall be
conducted by the Department of Labor and Employment outside the sixty-day period
immediately before the date of expiry of such five year term of the Collective Bargaining
Agreement. . . . .
It appears that the procedural requirement of filing the CBA within 30 days from date of
execution under Article 231 was not met. The subject CBA was executed on November 28,
1989. It was ratified on December 8, 1989, and then filed with DOLE for registration
purposes on March 14, 1990. Be that as it may, the delay in the filing of the CBA was
sufficiently explained, i.e., there was an inter-union conflict on who would succeed to the
presidency of ILO-PHILS. The CBA was registered by the DOLE only on May 4, 1990. It
would be injudicious for us to assume, as what petitioner did, that the said CBA was filed
only on April 30, 1990, or five (5) days before its registration, on the unsupported surmise
that it was done to suit the law that enjoins Regional Offices of Dole to act upon an
application for registration of a CBA within five (5) days from its receipt thereof. In the
absence of any substantial evidence that DOLE officials or personnel, in collusion with
private respondent, had antedated the filing date of the CBA, the presumption on regularity
in the performance of official functions hold.
More importantly, non-compliance with the cited procedural requirement should not
adversely affect the substantive validity of the CBA between ILO-PHILS and the
Transunion Corporation-Glassware Division covering the company's rank and file
employees. A collective bargaining agreement is more than a contract. It is highly
impressed with public interest for it is an essential instrument to promote industrial peace.
Hence, it bears the blessings not only of the employer and employees concerned but even
the Department of Labor and Employment. To set it aside on technical grounds is not
conducive to the public good.
IN VIEW WHEREOF, the impugned July 25, 1990 Resolution, and August 23, 1990 Order
of Secretary Ruben D. Torres and Undersecretary Bienvenido E. Laguesma. respectively,
in OS-MA-A-5-167-90, is AFFIRMED in toto. Costs against petitioned.
SO ORDERED.
FIRST DIVISION
[G.R. No. 116172. October 10, 1996]
SAN MIGUEL FOODS, INC.-CEBU B-MEG FEED PLANT, petitioner, vs. HON.
BIENVENIDO E. LAGUESMA, Undersecretary of DOLE and ILAW AT BUKLOD NG
MANGGAGAWA (IBM), respondents.
DECISION
HERMOSISIMA, JR., J.:
This is a petition for certiorari under Rule 65 to review and set aside two Resolutions of
Mediator-Arbiter Achilles V. Manit, dated January 5, 1994 and April 6, 1994, and the
affirmation Order on appeal of the public respondent, Undersecretary Bienvenido E.
Laguesma of the Department of Labor and Employment. The petition below was entitled:
In Re: Petition for Direct Certification as the Sole and Exclusive Bargaining Agent of All
Monthly Paid Employees of SMFI-Cebu B-Meg Feeds Plant, docketed as OS-MA-A-3-51-
94 (RO700-9309-RU-036).
The essential facts are not disputed.
On September 24, 1993, a petition for certification election among the monthly-paid
employees of the San Miguel Foods, Inc.-Cebu B-Meg Feeds Plant was filed by private
respondent labor federation Ilaw at Buklod ng Manggagawa (IBM, for brevity) before Med-
Arbiter Achilles V. Manit, alleging, inter alia, that it is a legitimate labor organization duly
registered with the Department of labor and Employment (DOLE) under the Registration
Certificate No. 5369-IP. SMFI-Cebu B-Meg Feeds Plant (SMFI, for brevity), herein
petitioner, is a business entity duly organized and existing under the laws of the Philippines
which employs roughly seventy-five (75) monthly paid employees, almost all of whom
support the present petition. It was submitted in said petition that there has been no
certification election conducted in SMFI to determine the sole and exclusive bargaining
agent thereat for the past two years and that the proposed bargaining unit, which is SMFIs
monthly paid employees, is an unorganized one. It was also stated therein that petitioner
IBM (herein private respondent) has already complied with the mandatory requirements for
the creation of its local or affiliate in SMFIs establishment.
On October 25, 1993, herein petitioner SMFI filed a Motion to Dismiss the aforementioned
petition dated September 24, 1993 on the ground that a similar petition remains pending
between the same parties for the same cause of action before Med-Arbiter Achilles V.
Manit.
SMFI was referring to an evidently earlier petition, docketed as CE CASE NO R0700-
9304-RU-016, filed on April 28, 1993 before the office of Med-Arbiter Manit. Indeed, both
petitions involved the same parties, cause of action and relief being prayed for, which is
the issuance of an order by the Med-Arbiter allowing the conduct of a certification election
in SMFIs establishment. The contention is that the judgment that may be rendered in the
first petition would be determinative of the outcome of the second petition, dated
September 24, 1993.
On December 2, 1993, private respondent IBM filed its Opposition to SMFIs Motion to
Dismiss contending, among others, that the case referred to by SMFI had already been
resolved by Med-Arbiter Manit in his Resolution and Order date July 26, 1993[1] and
September 2, 1993,[2] respectively, wherein IBMs first petition for certification election was
denied mainly due to IBMs failure to comply with certain mandatory requirements of the
law. This denial was affirmed by the Med-Arbiter in another Order dated November 12,
1993[3] wherein the Resolutions dated July 26, 1993 and September 2, 1993 were made
to stand. Thus, IBM argues that there having been no similar petition pending before Med-
Arbiter Manit, another petition for certification election may be refiled as soon as the said
requirements are met. These requirements were finally satisfied before the second petition
for certification election was brought on September 24, 1993.
On January 5, 1994, Med-Arbiter Manit, this time, granted the second petition for
certification election of private respondent IBM in this wise:
Let, therefore, a certification election be conducted among the monthly paid rank and file
employees of SMFI-CEBU B-MEG FEEDS PLANT at Lo-oc, Mandaue City. The choices
shall be: YES-for IBM AT SMFI-CEBU B-MEG; and NO-for No Union.
The parties are hereby notified of the pre-election conference which will take place on
January 17, 1994 at 3:00 oclock in the afternoon to set the date and time of the election
and to thresh out the mechanics thereof. On said date and time the respondent is directed
to submit the payroll of its monthly paid rank and file employees for the month of June
1993 which shall be the basis for the list of the eligible voters. The petitioner is directed to
be ready to submit a list of the monthly paid rank and file employees of SMFI-CEBU B-
MEG FEEDS PLANT when the respondent fails to submit the required payroll.
SO ORDERED.[4]
Petitioner SMFI appealed the foregoing Order to the Secretary of Labor and Employment
alleging that the Med-Arbiter erred in directing the conduct of certification election
considering that the local or chapter of IBM at SMFI is still not a legitimate labor
organization with a right to be certified as the exclusive bargaining agent in petitioners
establishment based on two grounds: (1) the authenticity and due execution of the Charter
Certificate submitted by IBM in favor of its local at SMFI cannot yet be ascertained as it is
still now known who is the legitimate and authorized representative of the IBM Federation
who may validly issue said Charter Certificate; and (2) a group of workers or a local union
shall acquire legal personality only upon the issuance of a Certificate of Registration by the
Bureau of Labor Relations under Article 234 of the Labor Code, which IBM at SMFI did not
possess.
In a resolution dated April 6, 1994, public respondent Undersecretary Bienvenido
Laguesma, by authority of the Secretary of Labor and Employment, denied petitioners
appeal, viz.:
WHEREFORE, the appeal is hereby denied for lack of merit and the Order of the Med-
Arbiter is hereby affirmed.
Let the records of this case be forwarded to the Regional Office of origin for the immediate
conduct of certification election subject to the usual pre-election conference.
SO RESOLVED.[5]
Thereafter, a Motion for Reconsideration was filed which was also denied by the public
respondent in his Order dated May 24, 1994.[6]
Hence, the instant petition interposing the following justifications:
1) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY
ABUSED HIS DISCRETION WHEN HE ARBITRARILY RULED THAT A LOCAL OR
CHAPTER OF A LABOR FEDERATION, LIKE RESPONDENT IBM, NEED NOT OBTAIN
A CERTIFICATE OF REGISTRATION FROM THE BUREAU OF LABOR RELATIONS TO
ACQUIRE LEGAL PERSONALITY, WHEN ARTICLE 234 OF THE LABOR CODE OF THE
PHILIPPINES AND SECTION 3 OF RULE II OF BOOK V OF THE RULES
IMPLEMENTING THE LABOR CODE, AS AMENDED, CLEARLY PROVIDES THAT A
GROUP OF WORKERS OR A LOCAL UNION SHALL ACQUIRE LEGAL PERSONALITY
ONLY UPON THE ISSUANCE OF THE CERTIFICATE OF REGISTRATION BY THE
BUREAU OF LABOR RELATIONS. AND,
2) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY
ABUSED HIS DISCRETION WHEN HE PREMATURELY AND ARBITRARILY RULED
THAT RESPONDENT IBM IS A LEGITIMATE LABOR ORGANIZATION WHEN THE
AUTHENTICITY AND DUE EXECUTION OF THE CHARTER CERTIFICATE SUBMITTED
BY RESPONDENT IBM CANNOT YET BE ASCERTAINED BECAUSE IT IS STILL NOT
KNOWN WHO ARE THE LEGITIMATE OFFICERS OF THE IBM FEDERATION WHO
MAY VALIDLY ISSUE SAID CHARTER CERTIFICATE AS THE CASE FILED TO
RESOLVE THE ISSUE ON WHO ARE THE LEGITIMATE OFFICERS OF THE IBM
FEDERATION IS STILL PENDING RESOLUTION BEFORE THIS HONORABLE
SUPREME COURT.[7]
The petition has no merit.
Petitioner asserts that IBM at SMFI is not a legitimate labor organization notwithstanding
the fact that it is a local or chapter of the IBM Federation. This is so because under Article
234 of the Labor Code, any labor organization shall acquire legal personality upon the
issuance of the Certificate of Registration by the Bureau of Labor Relations.
We do not agree.
I participated in such meetings;
Article 212(h) of the Labor Code defines a legitimate labor organization as any labor
organization duly registered with the Department of Labor and Employment, and includes
any branch or local thereof.
It is important to determine whether or not a particular labor organization is legitimate since
legitimate labor organizations have exclusive rights under the law which cannot be
exercised by non-legitimate unions, one of which is the right to be certified as the exclusive
representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining. These rights are found under Article 242 of the Labor
Code, to wit:
ART. 242. Rights of legitimate organizations.--A legitimate labor organization shall have
the right:
(a) To act as the representative of its members for the purpose of collective bargaining;
(b) To be certiified as the exclusive representative of all the employees in an appropriate
collective bargaining unit for purposes of collective bargaining;
(c) To be furnished by the employer, upon written request, with his annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and exclusive bargaining
representative of the employees in the bargaining unit, or within sixty (60) calendar days
before the expiration of the existing collective bargaining agreement, or during the
collective bargaining negotiation;
(d) To own property, real or personal, for the use and benefit of the labor organization and
its members;
(e) To sue and be sued in its registered name; and
(f) To undertake all other activities designed to benefit the organization and its members,
including cooperative, housing welfare and other projects not contrary to law.
x x x x x x x x x."
The pertinent question, therefore, must be asked: When does a labor organization acquire
legitimacy?
Ordinarily, a labor organization attains the status of legitamacy only upon the issuance in
its name of a Certificate of Registration by the Bureau of Labor Relations pursuant to
Articles 234 and 235 of the Labor Code, viz.:
ART. 234. Requirements of registration.--Any applicant labor organization, association or
group of unions or workers shall acquire legal personality and shall be entitled to the rights
and privileges granted by law to legitimate labor organizations upon issuance of the
certificate of registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the workers who
(c) The names of all its members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies of its annual
financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its
adoption or ratification, and the list of the members who participated in it.
ART. 235. Action on application. -- The Bureau shall act on all applications for registration
within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or the
treasurer of the organization, as the case may be, and attested to by its president.
The foregoing procedure is not the only way by which a labor union may become
legitimate, however. When an unregistered union becomes a branch, local or chapter of a
federation, some of the aforementioned requirements for registration are no longer
required.[8] Section 3, Rule II, Book V of the Implementing Rules of the Labor Code
governs the procedure for union affiliation, the relevant portions of which provide:
Sec. 3. Union Affiliation: Direct Membership with National Union. An affiliate of a labor
federation or national union may be a local or chapter thereof or an independently
registered union.
(a) The labor federation or national union concerned shall issue a chapter certificate
indicating the creation or establishment of a local or chapter, copy of which shall be
submitted to the Bureau of Labor Relations within thirty (30) days from issuance of such
charter certificate.
(b) An independently registered union shall be considered an affiliate of a labor federation
or national union after submission to the Bureau of the contract or agreement of affiliation
within thirty (30) days after its execution.
xxxxxxxxx
(e) The local or chapter of a labor federation or national union shall have and maintain a
constitution and by-laws, set of officers and book of accounts. For reporting purposes, the
procedure governing the reporting of independently registered unions, federations or
national unions shall be observed.
Paragraph (a) refers to a local or chapter of a federation which did not undergo the
rudiments of registration while paragraph (b) refers to an independently registered union
which affiliated with a federation. Implicit in the foregoing differentiation is the fact that a
local or chapter need not be independently registered. By force of law (in this case, Article
212 [h]), such local or chapter becomes a legitimate labor organization upon compliance
with the aforementioned provisions of Section 3[9] (a) and (e), without having to be issued
a Certificate of Registration in its favor by the BLR.
The cases of Lopez Sugar Corporation v. Secretary of Labor and Employment,[10]
Phoenix Iron and Steel Corporation v. Secretary of Labor and Employment,[11] and
Protection Technology, Inc. v. Secretary, Department of Labor and Employment,[12] all
going back to our landmark holding in Progressive Development Corporation v. Secretary,
Department of Labor and Employment,[13] unequivocably laid down the rule, thus:
A local or chapter therefore becomes a legitimate labor organization only upon submission
of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or national
union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of
accounts all of which are certified under oath by the secretary or treasurer, as the case
may be, of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not
become a legitimate labor organization.
Corollarily, the satisfaction of all these requirements by the local or chapter shall vest upon
it the status of legitimacy with all its concomitant statutory privileges, one of which is the
right to be certified as the exclusive representative of all the employees in an appropriate
bargaining unit.
In the case at bench, public respondent Bienvenido E. Laguesma, in affirming the finding
of the Med-Arbiter that IBM at SMFI is a legitimate labor organization,[14] made the
following material pronouncements amply supported by the records:
[t]he resolution of the issue raised by the respondent on whether or not petitioner is a
legitimate labor organization will depend on the documents submitted by the petitioner in
the second petition.
A close scrutiny of the records shows that at the time of the filing of the subject petition on
24 September 1993 by the petitioner Ilaw at Buklod ng Manggagawa, for and in behalf of
its local affiliate IBM at SMFI-CEBU B-MEG, the latter has been clothed with the status
and/or character of a legitimate labor organization. This is so, because on 19 July 1993,
petitioner submitted to the Bureau of Labor Relations (BLR), this Department, the following
documents: charter certificate, constitution and by-laws, names and addresses of the
union officers and a certification of the unions secretary on the non-availability of the
unions Books of Accounts. Said documents (except the charter certificate) are certified
under oath and attested to by the local unions secretary and President, respectively.[15]
Petitioner SMFI does not dispute the fact that IBM at SMFI has complied with the second
set of requirements, i.e., constitution, by-laws, et. al. What is controverted is the non-
compliance with the requirement as to the charter certificate which must be submitted to
the BLR within thirty (30) days from its issuance by the labor federation. While the
presence of a charter certificate is conceded, petitioner maintains that the validity and
authenticity of the same cannot yet be ascertained as it is still not known who is the
legitimate and authorized representative of the IBM Federation who may validly issue said
charter certificate in favor of its local, IBM at SMFI. According to petitioner, there are two
(2) contending sets of officers of the IBM Federation at the time the charter certificate was
issued in favor of IBM at SMFI, the faction of Mr. Severino O. Meron and that of Mr.
Edilberto B. Galvez.
On this point, public respondent, in upholding the legitimate status of IBM at SMFI, backed
up by the Solicitor General, had this to say:
The contention of the respondent that unless and until the issue on who is the legitimate
national president, of the Ilaw at Buklod ng Manggagawa is resolved, the petitioner cannot
claim that it has a valid charter certificate necessary for it to acquire legal personality is
untenable. We wish to stress that the resolution of the said issue will not in any way affect
the validity of the charter certificate issued by the IBM in favor of the local union. It must be
borne in mind that the said charter certificate was issued by the IBM in its capacity as a
labor organization, a juridical entity which has a separate and distinct legal personality
from its members. When as in this case, there is no showing that the Federation acting as
a separate entity is questioning the legality of the issuance of the said charter certificate,
the legality of the issuance of the same in favor of the local union is presumed. This,
notwithstanding the alleged controversy on the leadership of the federation.[16]
We agree with this position of the public respondent and the Solicitor General. In addition,
private respondents Comment to this petition indicates that in the election of officers held
to determine the representatives of IBM, the faction of Mr. Meron lost to the group of Mr.
Edilberto Galvez, and the latter was acknowledged as the duly elected IBM National
President.[17] Thus, the authority of Mr. Galvez to sign the charter certificate of IBM at
SMFI, as President of the IBM Federation,[18] can no longer be successfully questioned. A
punctilious examination of the records presents no evidence to the contrary and petitioner,
instead of squarely refuting this point, skirted the issue by insisting that the mere presence
of two contending factions in the IBM prevents the issuance of a valid and authentic
charter certificate in favor of IBM at SMFI. This averment of petitioner simply does not
deserve any merit.
II

In any case, this Court notes that it is petitioner, the employer, which has offered the most
tenacious resistance to the holding of a certification election among its monthly-paid rank-
and-file employees. This must not be so, for the choice of a collective bargaining agent is
the sole concern of the employees.[19] The only exception to this rule is where the
employer has to file the petition for certification election pursuant to Article 258[20] of the
Labor Code because it was requested to bargain collectively,[21] which exception finds no
application in the case before us. Its role in a certification election has aptly been
described in Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano,[22]
as that of a mere by-stander. It has no legal standing in a certification election as it cannot
oppose the petition or appeal the Med-Arbiters orders related thereto. An employer that
involves itself in a certification election lends suspicion to the fact that it wants to create a
company union.[23] This Court should be the last agency to lend support to such an
attempt at interference with a purely internal affair of labor.[24]
While employers may rightfully be notified or informed of petitions of such nature, they
should not, however, be considered parties thereto with the concomitant right to oppose it.
Sound policy dictates that they should maintain a strictly hands-off policy.[25]
It bears stressing that no obstacle must be placed to the holding of certification
elections,[26] for it is a statutory policy that should not be circumvented.[27] The
certification election is the most democratic and expeditious method by which the laborers
can freely determine the union that shall act as their representative in their dealings with
the establishment where they are working.[28] It is the appropriate means whereby
controversies and disputes on representation may be laid to rest, by the unequivocal vote
of the employees themselves.[29] Indeed, it is the keystone of industrial democracy.[30]
III
Petitioner next asseverates that the Charter Certificate submitted by the private
respondent was defective in that it was not certified under oath and attested to by the
organizations secretary and President.
Petitioner is grasping at straws. Under our ruling in the Progressive Development
Corporation[31] case, what is required to be certified under oath by the secretary or
treasurer and attested to by the locals president are the constitution and by-laws, a
statement on the set of officers, and the books of accounts of the organization. The charter
certificate issued by the mother union need not be certified under oath by the secretary or
treasurer and attested to by the locals president.
IV
Petitioner, in its Reply to public respondents Comment, nevertheless calls the attention of
this court to the fact that, contrary to the assertion of private respondent IBM that it is a
legitimate labor federation and therefore has the capacity and authority to create a local or
chapter at SMFI, the Chief of the Labor Organizations Division of the Bureau of Labor
Relations Manila had allegedly issued a certification last January 17, 1995 to the effect that
private respondent is not a legitimate labor federation.[32]
This is a factual issue which petitioner should have raised before the Med-Arbiter so as to
allow the private respondent ample opportunity to present evidence to the contrary. This
Court is definitely not the proper venue to consider this matter for it is not a trier of facts. It
is noteworthy that petitioner did not challenge the legal personality of the federation in the
proceedings before the Med-Arbiter. Nor was this issue raised in petitioners appeal to the
Office of the Secretary of Labor and Employment. This matter is being raised for the first
time in this petition. An issue which was neither alleged in the pleadings nor raised during
the proceedings below cannot be ventilated for the first time before this Court. It would be
offensive to the basic rule of fair play, justice and due process.[33] Certiorari is a remedy
narrow in its scope and inflexible in character. It is not a general utility tool in the legal
workshop.[34] Factual issues are not a proper subject for certiorari, as the power of the
Supreme Court to review labor cases is limited to the issue of jurisdiction and grave abuse
of discretion.[35] It is simply unthinkable for the public respondent Undersecretary of Labor
to have committed grave abuse of discretion in this regard when the issue as to the legal
personality of the private respondent IBM Federation was never interposed in the appeal
before said forum.
V
Finally, the certification election sought to be stopped by petitioner is, as of now, fait
accompli. The monthly paid rank-and-file employees of SMFI have already articulated their
choice as to who their collective bargaining agent should be. In the certification election
held on August 20, 1994,[36] the SMFI workers chose IBM at SMFI to be their sole and
exclusive bargaining agent. This democratic decision deserves utmost respect. Again, it
bears stressing that labor legislation seeks in the main to protect the interest of the
members of the working class. It should never be used to subvert their will.[37]
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 96425 February 4, 1992
PROGRESSIVE DEVELOPMENT CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT,
MED-ARBITER EDGARDO DELA CRUZ and PAMBANSANG KILUSAN NG PAGGAWA
(KILUSAN)-TUCP, respondents.
Beltran, Bacungan & Candoy for petitioner.
Jimenez & Associates co-counsel for petitioner.
GUTIERREZ, JR., J.:
The controversy in this case centers on the requirements before a local or chapter of a
federation may file a petition for certification election and be certified as the sole and
exclusive bargaining agent of the petitioner's employees.
Petitioner Progressive Development Corporation (PDC) filed this petition for certiorari to
set aside the following:
1) Resolution dated September 5, 1990, issued by respondent Med-Arbiter Edgardo
dela Cruz, directing the holding of the certification election among the regular rank-and-file
employees of PDC:
2) Order dated October 12, 1990, issued by the respondent Secretary of Labor and
Employment, denying PDC's appeal; and
3) Order dated November 12, 1990, also issued by the respondent Secretary,
denying the petitioner's Motion for Reconsideration.
On June 19, 1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN) -TUCP
(hereinafter referred to as Kilusan) filed with the Department of Labor and Employment
(DOLE) a petition for certification election among the rank-and-file employees of the
petitioner alleging that it is a legitimate labor federation and its local chapter, Progressive
Development Employees Union, was issued charter certificate No. 90-6-1-153. Kilusan
claimed that there was no existing collective bargaining agreement and that no other
legitimate labor organization existed in the bargaining unit.
Petitioner PDC filed its motion to dismiss dated July 11, 1990 contending that the local
union failed to comply with Rule II Section 3, Book V of the Rules Implementing the Labor
Code, as amended, which requires the submission of: (a) the constitution and by-laws; (b)
names, addresses and list of officers and/or members; and (c) books of accounts.
On July 16 , 1990, respondent Kilusan submitted a rejoinder to PDC's motion to dismiss
claiming that it had submitted the necessary documentary requirements for registration,
such as the constitution and by-laws of the local union, and the list of officers/members
with their addresses. Kilusan further averred that no books of accounts could be submitted
as the local union was only recently organized.
In its "Supplemental Position Paper" dated September 3, 1990, the petitioner insisted that
upon verification with the Bureau of Labor Relations (BLR), it found that the alleged
minutes of the organizational meeting was unauthenticated, the list of members did not
bear the corresponding signatures of the purported members, and the constitution and by-
laws did not bear the signature of the members and was not duly subscribed. It argued that
the private respondent therefore failed to substantially comply with the registration
requirements provided by the rules. Additionally, it prayed that Med-Arbiter Edgardo dela
Cruz inhibit himself from handling the case for the reason that he allegedly had prejudged
the same.
In his September 5, 1990 resolution, Med Arbiter dela Cruz held that there was substantial
compliance with the requirements for the formation of the chapter. He further stated that
mere issuance of the charter certificate by the federation was sufficient compliance with
the rules. Considering that the establishment was unorganized, he maintained that a
certification election should be conducted to resolve the question of representation.
Treating the motion for reconsideration filed by the PDC as an appeal to the Office of the
Secretary, Undersecretary Laguesma held that the same was merely a "reiteration of the
issues already ventilated in the proceedings before the Med-Arbiter, specifically, the matter
involving the formal organization of the chapter." (Rollo, p. 20) PDC's motion for
reconsideration from the aforementioned ruling was likewise denied. Hence, this petition.
In an order dated February 25, 1991, the Court resolved to issue a temporary restraining
order enjoining the public respondents from carrying out the assailed resolution and orders
or from proceeding with the certification election. (Rollo, pp. 37-39)
It is the petitioner's contention that a labor organization (such as the Kilusan) may not
validly invest the status of legitimacy upon a local or chapter through the mere expedient of
issuing a charter certificate and submitting such certificate to the BLR (Rollo, p. 85)
Petitioner PDC posits that such local or chapter must at the same time comply with the
requirement of submission of duly subscribed constitution and by-laws, list of officers and
books of accounts. (Rollo, p. 35) PDC points out that the constitution and by-laws and list
of officers submitted were not duly subscribed. Likewise, the petitioner claims that the
mere filing of the aforementioned documents is insufficient; that there must be due
recognition or acknowledgment accorded to the local or chapter by BLR through a
certificate of registration or any communication emanating from it. (Rollo, p. 86)
The Solicitor General, in behalf of the public respondent, avers that there was a substantial
compliance with the requirements for the formation of a chapter. Moreover, he invokes
Article 257 of the Labor Code which mandates the automatic conduct by the Med-Arbiter of
a certification election in any establishment where there is no certified bargaining
agreement.
The Court has repeatedly stressed that the holding of a certification election is based on a
statutory policy that cannot be circumvented. (Airtime Specialists, Inc. v. Ferrer-Calleja,
180 SCRA 749 [1989]; Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988];
George and Peter Lines, Inc. v. Associated Labor Unions, 134 SCRA 82 [1986]). The
workers must be allowed to freely express their choice in a determination where everything
is open to their sound judgment and the possibility of fraud and misrepresentation is
eliminated.
But while Article 257 cited by the Solicitor General directs the automatic conduct of a
certification election in an unorganized establishment, it also requires that the petition for
certification election must be filed by a legitimate labor organization. Article 242
enumerates the exclusive rights of a legitimate labor organization among which is the right
to be certified as the exclusive representative of all the employees in an appropriate
collective bargaining unit for purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor organization
duly registered with the DOLE and includes any branch or local thereof." (Emphasis
supplied) Rule I, Section 1 (j), Book V of the Implementing Rules likewise defines a
legitimate labor organization as "any labor organization duly registered with the DOLE and
includes any branch, local or affiliate thereof. (Emphasis supplied)
The question that now arises is: when does a branch, local or affiliate of a federation
become a legitimate labor organization?
Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR.
Under Article 234 (Requirements of Registration):
Any applicant labor organization, association or group of unions or workers shall acquire
legal personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration based on the
following requirements:
(a) Fifty-pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meeting and the list of the workers who
participated in such meetings;
(c) The names of all its members comprising at least twenty 20% percent of all the
employees in the bargaining unit where it seek to operate;
(d) If the applicant has been in existence for one or more years, copies , of its annual
financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union, the minutes of
its adoption or ratification and the list of the members who participated in it.
And under Article 235 (Action on Application)
The Bureau shall act on all applications for registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or the
treasurer of the organization, as the case may be, and attested to by its president.
Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that the
application should be signed by at least twenty percent (20%) of the employees in the
appropriate bargaining unit and be accompanied by a sworn statement of the applicant
union that there is no certified bargaining agent or, where there is an existing collective
bargaining agreement duly submitted to the DOLE, that the application is filed during the
last sixty (60) days of the agreement.
The respondent Kilusan questions the requirements as too stringent in their application but
the purpose of the law in prescribing these requisites must be underscored. Thus, in
Philippine Association of Free Labor Unions v. Secretary of Labor, 27 SCRA 40 (1969), the
Court declared:
The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the
freedom of assembly and association guaranteed in the Bill of Rights is devoid of factual
basis. The registration prescribed in Paragraph (b) of said section is not a limitation to the
right of assembly or association, which may be exercised with or without said registration.
The latter is merely a condition sine qua non for the acquisition of legal personality by the
labor organizations, associations or unions and the possession of the "rights and privileges
granted by law to legitimate labor organizations." The Constitution does not guarantee
these rights and the privileges, much less said personality, which are mere statutory
creations, for the possession and exercise of which registration is required to protect both
labor and the public against abuses, fraud or impostors who pose as organizers, although
not truly accredited agents of the union they purport to represent. Such requirement is a
valid exercise of the police power, because the activities in which labor organizations,
associations and unions of workers are engaged affect public interest, which should be
protected. Furthermore, the obligation to submit financial statements, as a condition for the
non-cancellation of a certificate of registration, is a reasonable regulation for the benefit of
the members of the organization, considering that the same generally solicits funds or
membership, as well as oftentimes collects, on behalf of its members, huge amounts of
money due to them or to the organization. (Emphasis supplied)
But when an unregistered union becomes a branch, local or chapter of a federation, some
of the aforementioned requirements for registration are no longer required. The provisions
governing union affiliation are found in Rule II, Section 3, Book V of the Implementing
Rules, the relevant portions of which are cited below:
Sec. 3. Union affiliation; direct membership with national union. An affiliate of a labor
federation or national union may be a local or chapter thereof or an independently
registered union.
a) The labor federation or national union concerned shall issue a charter certificate
indicating the creation or establishment of a local or chapter, copy of which shall be
submitted to the Bureau of Labor Relations within thirty (30) days from issuance of such
charter certificate.
b) An independently registered union shall be considered an affiliate of a labor
federation or national union after submission to the Bureau of the contract or agreement of
affiliation within thirty (30) days after its execution.
xxx xxx xxx
e) The local or chapter of a labor federation or national union shall have and
maintain a constitution and by laws, set of officers and books and accounts. For reporting
purposes, the procedure governing the reporting of independently registered unions,
federations or national unions shall be observed.
Paragraph (a) refers to the local or chapter of a federation which did not undergo the
rudiments of registration while paragraph (b) refers to an independently registered union
which affiliated with a federation. Implicit in the foregoing differentiation is the fact that a
local or chapter need not be independently registered. By force of law (in this case, Article
212[h]); such local or chapter becomes a legitimate labor organization upon compliance
with the aforementioned provisions of Section 3.
Thus, several requirements that are otherwise required for union registration are omitted,
to wit:
(1) The requirement that the application for registration must be signed by at least
20% of the employees in the appropriate bargaining unit;
2) The submission of officers' addresses, principal address of the labor
organization, the minutes of organizational meetings and the list of the workers who
participated in such meetings;
3) The submission of the minutes of the adoption or ratification of the constitution
and by the laws and the list of the members who participated in it.
Undoubtedly, the intent of the law in imposing lesser requirements in the case of the
branch or local of a registered federation or national union is to encourage the affiliation of
a local union with the federation or national union in order to increase the local union's
bargaining powers respecting terms and conditions of labor.
The petitioner maintains that the documentary requirements prescribed in Section 3(c),
namely: the constitution and by-laws, set of officers and books of accounts, must follow the
requirements of law. Petitioner PDC calls for the similar application of the requirement for
registration in Article 235 that all requisite documents and papers be certified under oath
by the secretary or the treasurer of the organization and attested to by the president.
In the case at bar, the constitution and by-laws and list of officers submitted in the BLR,
while attested to by the chapter's president, were not certified under oath by the secretary.
Does such defect warrant the withholding of the status of legitimacy to the local or
chapter?
In the case of union registration, the rationale for requiring that the submitted documents
and papers be certified under oath by the secretary or treasurer, as the case may be, and
attested to by president is apparent. The submission of the required documents (and
payment of P50.00 registration fee) becomes the Bureau's basis for approval of the
application for registration. Upon approval, the labor union acquires legal personality and is
entitled to all the rights and privileges granted by law to a legitimate labor organization.
The employer naturally needs assurance that the union it is dealing with is a bona fide
organization, one which has not submitted false statements or misrepresentations to the
Bureau. The inclusion of the certification and attestation requirements will in a marked
degree allay these apprehensions of management. Not only is the issuance of any false
statement and misrepresentation a ground for cancellation of registration (see Article 239
(a), (c) and (d)); it is also a ground for a criminal charge of perjury.
The certification and attestation requirements are preventive measures against the
commission of fraud. They likewise afford a measure of protection to unsuspecting
employees who may be lured into joining unscrupulous or fly-by-night unions whose sole
purpose is to control union funds or to use the union for dubious ends.
In the case of the union affiliation with a federation, the documentary requirements are
found in Rule II, Section 3(e), Book V of the Implementing Rules, which we again quote as
follows:
(c) The local chapter of a labor federation or national union shall have and maintain
a constitution and by-laws, set of officers and books of accounts. For reporting purposes,
the procedure governing the reporting of independently registered unions, federations or
national unions shall be observed. (Emphasis supplied)
Since the "procedure governing the reporting of independently registered unions" refers to
the certification and attestation requirements contained in Article 235, paragraph 2, it
follows that the constitution and by-laws, set of officers and books of accounts submitted
by the local and chapter must likewise comply with these requirements. The same
rationale for requiring the submission of duly subscribed documents upon union
registration exists in the case of union affiliation. Moreover, there is greater reason to exact
compliance with the certification and attestation requirements because, as previously
mentioned, several requirements applicable to independent union registration are no
longer required in the case of formation of a local or chapter. The policy of the law in
conferring greater bargaining power upon labor unions must be balanced with the policy of
providing preventive measures against the commission of fraud.
A local or chapter therefore becomes a legitimate labor organization only upon submission
of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or
national union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of
accounts all of which are certified under oath by the secretary or treasurer, as the case
may be, of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not
become a legitimate labor organization.
In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the required
documents under oath is fatal to its acquisition of a legitimate status.
We observe that, as borne out by the facts in this case, the formation of a local or chapter
becomes a handy tool for the circumvention of union registration requirements. Absent the
institution of safeguards, it becomes a convenient device for a small group of employees to
foist a not-so-desirable federation or union on unsuspecting co-workers and pare the need
for wholehearted voluntariness which is basic to free unionism. The records show that on
June 16, 1990, Kilusan met with several employees of the petitioner. Excerpts of the
"Minutes of the Organizational/General Membership Meeting of Progressive Development
Employees Union (PDEU) Kilusan," are quoted below:
The meeting was formally called to order by Bro. Jose V. Parungao, KILUSAN secretary
for organization by explaining to the general membership the importance of joining the
union. He explained to the membership why they should join a union, and briefly explained
the ideology of the Pambansang Kilusan ng Paggawa-TUCP as a democratically based
organization and then read the proposed Constitution and By-Laws, after which said
Constitution and By-Laws was duly and unanimously ratified after some clarification.
Bro. Jose Parungao was also unanimously voted by the group to act as the chairman of
the COMELEC in holding the organizational election of officers of the union.
Bro. Jose Parungao, officially opened the table for nomination of candidates after which
the election of officers followed by secret balloting and the following were the duly elected
officers. (Original Record, p. 25)
The foregoing shows that Kilusan took the initiative and encouraged the formation of a
union which automatically became its chapter. On June 18, 1990, Kilusan issued a charter
certificate in favor of PDEU-KILUSAN (Records, page 1). It can be seen that Kilusan was
moving very fast.
On June 19, 1990, or just three days after the organizational meeting, Kilusan filed a
petition for certification election (Records, pages 2 and 3) accompanied by a copy each of
the charter certificate, constitution and by-laws and minutes of the organizational meeting.
Had the local union filed an application for registration, the petition for certification election
could not have been immediately filed. The applicant union must firstly comply with the
"20% signature" requirement and all the other requisites enumerated in Article 234.
Moreover, since under Article 235 the BLR shall act on any application for registration
within thirty (30) days from its filing, the likelihood is remote that, assuming the union
complied with all the requirements, the application would be approved on the same day it
was filed.
We are not saying that the scheme used by the respondents is per se illegal for precisely,
the law allows such strategy. It is not this Court's function to augment the requirements
prescribed by law in order to make them wiser or to allow greater protection to the workers
and even their employer. Our only recourse is, as earlier discussed, to exact strict
compliance with what the law provides as requisites for local or chapter formation.
It may likewise be argued that it was Kilusan (the mother union) and not the local union
which filed the petition for certification election and, being a legitimate labor organization,
Kilusan has the personality to file such petition.
At this juncture, it is important to clarify the relationship between the mother union and the
local union. In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.,
66 SCRA 512 [1975]), the Court held that the mother union, acting for and in behalf of its
affiliate, had the status of an agent while the local union remained the basic unit of the
association, free to serve the common interest of all its members subject only to the
restraints imposed by the constitution and by-laws of the association. Thus, where as in
this case the petition for certification election was filed by the federation which is merely an
agent, the petition is deemed to be filed by the chapter, the principal, which must be a
legitimate labor organization. The chapter cannot merely rely on the legitimate status of the
mother union.
The Court's conclusion should not be misconstrued as impairing the local union's right to
be certified as the employees' bargaining agent in the petitioner's establishment. We are
merely saying that the local union must first comply with the statutory requirements in
order to exercise this right. Big federations and national unions of workers should take the
lead in requiring their locals and chapters to faithfully comply with the law and the rules
instead of merely snapping union after union into their folds in a furious bid with rival
federations to get the most number of members.
WHEREFORE, the petition is GRANTED. The assailed resolution and orders of
respondent Med-Arbiter and Secretary of Labor and Employment, respectively, are hereby
SET ASIDE. The temporary restraining order dated February 25, 1991 is made permanent.
SO ORDERED.
93 Phil. 747
BAUTISTA ANGELO, J.:
This is a petition for review of the resolution of the Court of Industrial Relations dated
March 1, 1952 wherein it held that petitioner, whose permit had been withdrawn, lost its
personality to prosecute the present case and, consequently, in pursuance of Sections 4
and 7 of Commonwealth Act No. 103, as amended, it should be substituted for its
individual members with the warning that, upon failure to do so, the case should be
dismissed.
Petitioner was a labor union which was registered in accordance with law and was granted
permit to act as such by the Department of Labor on February 12, 1948.
On November 29, 1949, petitioner filed a petition with the Court of Industrial Relations,
docketed as Case No. 390-V, wherein it submitted several grievances and demands
against respondent, a corporation organized under the laws of the Philippines, for
arbitration and settlement.
On March 3, 1950, petitioner filed an incidental motion against the same respondent,
which was docketed as Case No. 390-V-(1), complaining about the separation from the
service without justifiable cause of sixteen (16) of its laborers and employees and praying
that they be reinstated.
On March 23, 1950, respondent filed a motion to dismiss on two grounds: (1) that
petitioner does not represent respondent's workers; and (2) less than thirty-one (31)
workers are involved in the case. This motion was opposed in writing by petitioner and,
after proper hearing during which both parties presented pertinent evidence, the court
denied the motion because it found that at least eighty-two (82) of the members of
petitioning union were actually employed by respondent and were affected by the dispute.
The court found further that petitioner was a legitimate labor organization registered under
the provisions of Commonwealth Act No. 213.
On February 28, 1950, petitioner paid the fee for the renewal of its permit to the Bureau of
Labor with the request that said permit be renewed, but because of its failure to meet
certain requirement relative to the inspection of its books of accounts, on August 25, 1950,
the Secretary of Labor advised petitioner that its name as a labor union had been dropped
from the list of registered labor organizations.
On January 16, 1951, instead of pressing for action on its request for renewal of the
permit, petitioner took steps to organize itself, as it did, as a non-stock corporation under
the Corporation Law by filing the necessary papers with the Securities and Exchange
Commission with the result that Certificate of Incorporation No. 5754 was issued to it on
January 20, 1951.
On August 8, 1951, respondent filed a new motion to dismiss, this time based on the
ground that petitioner, not being a registered union, has no capacity to sue under
Commonwealth Act No. 213, and therefore this case should be dismissed.
On October 18, 1951, the court maintained its former stand denying the motion for lack of
merit; but, on motion for reconsideration by respondent, the court reversed its stand
holding that petitioner lacks capacity to sue and ordering that petitioner be substituted for
its individual members, as otherwise the case would be dismissed. Not agreeable to this
ruling, petitioner brought this petition for review.
We are of the opinion that petitioner has lost its capacity to sue in the present case as a
labor union entitled "to all the rights and privileges granted by law" when on August 25,
1950, the Secretary of Labor dropped its name from the list registered labor organizations
in view of its failure to comply with certain requirement relative to the inspection of its
books of accounts.
Commonwealth Act No. 213 has been enacted in order to allow labor union to organize
itself and acquire a personality distinct and separate from its members and to serve as an
instrumentality to conclude collective bargaining agreements and enjoy all the rights and
privileges granted by law to a labor organization. But in order that it may acquire such
personality, it is necessary that it first comply with certian requirements, one of them being
that it must register and secure a permit to operate as such from the Department of Labor.
The procedure to secure this permit iw well laid down in the law. An application shall be
filed with the Secretary of Labor, who shall conduct an investigation of the activites of the
applying labor organization and if, on such investigation, it shall appear that the applicant
is entitled to registration, he shall issue a permit therefor upon payment of the registration
fee of five pesos. (Section 3, Commonwealth Act No. 213.)
That such is the clear implication of the law is evident. A labor organization is not
considered legitimate in contemplation of law unless that requirement has been complied
with. Thus, the law postulates that "a legitimate labor organization is an organization,
association or union of laborers duly registered and permitted to operate by the
Department of Labor", and that "the registration of, and the issuance of a permit to, any
legitimate labor organization shall entitle it to all the rights and privileges granted by law.
(Sections 1 and 2, Commonwealth Act No. 213.) To be considered a legitimate labor
organization with the right to enjoy all the rights and privileges recognized by law, it is
therefore necessary that it be registered and permitted to operate as required by law.
These rights and privileges are none other than those accorded by Commonwealth Act No.
213, among them, the right to conclude collective bargaining agreements and to appear in
behalf of its members before the Court of Industrial Relations "for the purpose of seeking
better working and living conditions, fair wages, and shorter working hours for laborers,
and, in general, to promote the material, social and moral well-being of its members."
(Section 2, Commonwealth Act No. 213.)
The fact that petitioner has organized itself under the Corporation Law as a non-stock
corporation and has obtained a certificate of incorporation from the Securities and
Exchange Commission is of no moment, for such incorporation has only the effect of giving
to it juridical personality before regular courts of justice. Such incorporation cannot be
availed of by it to enjoy the rights and privileges granted by law to a legitimate labor
organization.
The foregoing observations notwithstanding, we are of the opinion that the failure of
petitioner to secure the renewal of its permit from the Labor Department will not operate as
a dismissal of this case, it appearing that when it filed the present petition it had juridical
personality and respondent court had acquired jurisdiction over the case. In previous
cases where a similar question was raised, this Court denied the motion to dismiss upon
the theory that jurisdiction once acquired is not lost until the case is completely decided.
Thus, in a recent case this Court held:
"The second point raised by petitioner is likewise without merit. In the first place, there
being more than 30 laborers involved and the Secretary of Labor having certified the
dispute to the Court of Industrial Relations, that Court duly acquired jurisdiction over the
case (International Oil Factory vs. NLU, Inc., 73 Phil. 401; Section 4, C. A. 103). This
jurisdiction was not lost when the Department of Labor suspended the permit of the
respondent Kaisahan as a labor organization. For once jurisdiction is acquired by the
Court of Industrial Relations it is retained until the case is completely decided. (Manila
Hotel Employees Association vs. Manila Hotel Co. et al., 73 Phil. 374.)" (La Campana
Coffee Factory, Inc., et al. vs. Kaisahan Ng Mga Manggagawa Sa La Campana [KKH], et
al., supra, p. 160.)
In conclusion, we hold that the present case can be continued without need of any
substitution of parties subject however to the understanding that whatever decision may be
rendered therein will only be binding upon those members of petitioning union who have
not signified their desire to withdraw from the case before its trial and decision on the
merits.
Wherefore, the resolution appealed from is hereby modified in the sense above indicated,
and it is ordered that this case be remanded to the respondent court for further
proceedings, without pronouncement as to costs.
Paras, C. J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, Jugo and Labrador,
JJ., concur.
THIRD DIVISION
[G.R. No. 142000. January 22, 2003]
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner,
vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.
DECISION
CARPIO-MORALES, J.:
Before this Court on certiorari under Rule 45 is the petition of the Tagaytay Highlands
International Golf Club Incorporated (THIGCI) assailing the February 15, 2002 decision of
the Court of Appeals denying its petition to annul the Department of Labor and
Employment (DOLE) Resolutions of November 12, 1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)Philippine
Transport and General Workers Organization (PTGWO), Local Chapter No. 776, a
legitimate labor organization said to represent majority of the rank-and-file employees of
THIGCI, filed a petition for certification election before the DOLE Mediation-Arbitration
Unit, Regional Branch No. IV.
THIGCI, in its Comment[1] filed on November 27, 1997, opposed THEUs petition for
certification election on the ground that the list of union members submitted by it was
defective and fatally flawed as it included the names and signatures of supervisors,
resigned, terminated and absent without leave (AWOL) employees, as well as employees
of The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of
the 192 signatories to the petition, only 71 were actual rank-and-file employees of THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it
annexed[2] to its Comment to the petition for certification election. And it therein
incorporated the following tabulation[3] showing the number of signatories to said petition
whose membership in the union was being questioned as disqualified and the reasons for
disqualification:
# of Signatures Reasons for Disqualification
13 Supervisors of THIGCI
6 Resigned employees of THIGCI
2 AWOL employees of THIGCI
53 Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc.
14 Supervisors of The Country Club at Tagaytay Highlands, Inc.
6 Resigned employees of The Country Club at Tagaytay Highlands, Inc.
3 Terminated employees of The Country Club at Tagaytay Highlands, Inc.
1 AWOL employees of The Country Club at Tagaytay Highlands, Inc.
4 Signatures that cannot be deciphered
16 Names in list that were erased
2 Names with first names only
THIGCI also alleged that some of the signatures in the list of union members were secured
through fraudulent and deceitful means, and submitted copies of the handwritten denial
and withdrawal of some of its employees from participating in the petition.[4]
Replying to THIGCIs Comment, THEU asserted that it had complied with all the
requirements for valid affiliation and inclusion in the roster of legitimate labor organizations
pursuant to DOLE Department Order No. 9, series of 1997,[5] on account of which it was
duly granted a Certification of Affiliation by DOLE on October 10, 1997;[6] and that Section
5, Rule V of said Department Order provides that the legitimacy of its registration cannot
be subject to collateral attack, and for as long as there is no final order of cancellation, it
continues to enjoy the rights accorded to a legitimate organization.
THEU thus concluded in its Reply[7] that under the circumstances, the Med-Arbiter should,
pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department
Order No. 09, automatically order the conduct of a certification election.
By Order of January 28, 1998, [8] DOLE Med-Arbiter Anastacio Bactin ordered the holding
of a certification election among the rank-and-file employees of THIGCI in this wise,
quoted verbatim:

We evaluated carefully this instant petition and we are of the opinion that it is complete in
form and substance. In addition thereto, the accompanying documents show that indeed
petitioner union is a legitimate labor federation and its local/chapter was duly reported to
this Office as one of its affiliate local/chapter. Its due reporting through the submission of
all the requirements for registration of a local/chapter is a clear showing that it was already
included in the roster of legitimate labor organizations in this Office pursuant to
Department Order No. 9 Series of 1997 with all the legal right and personality to institute
this instant petition. Pursuant therefore to the provisions of Article 257 of the Labor Code,
as amended, and its Implementing Rules as amended by Department Order No. 9, since
the respondents establishment is unorganized, the holding of a certification election is
mandatory for it was clearly established that petitioner is a legitimate labor organization.
Giving due course to this petition is therefore proper and appropriate.[9] (Emphasis
supplied)
Passing on THIGCIs allegation that some of the union members are supervisory, resigned
and AWOL employees or employees of a separate and distinct corporation, the Med-
Arbiter held that the same should be properly raised in the exclusion-inclusion proceedings
at the pre-election conference. As for the allegation that some of the signatures were
secured through fraudulent and deceitful means, he held that it should be coursed through
an independent petition for cancellation of union registration which is within the jurisdiction
of the DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed to
submit the job descriptions of the questioned employees and other supporting documents
to bolster its claim that they are disqualified from joining THEU.
THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June 4,
1998, set aside the said Med-Arbiters Order and accordingly dismissed the petition for
certification election on the ground that there is a clear absence of community or mutuality
of interests, it finding that THEU sought to represent two separate bargaining units
(supervisory employees and rank-and-file employees) as well as employees of two
separate and distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-
Baldoz, by authority of the DOLE Secretary, issued DOLE Resolution of November 12,
1998[10] setting aside the June 4, 1998 Resolution dismissing the petition for certification
election. In the November 12, 1998 Resolution, Undersecretary Dimapilis-Baldoz held that
since THEU is a local chapter, the twenty percent (20%) membership requirement is not
necessary for it to acquire legitimate status, hence, the alleged retraction and withdrawal of
support by 45 of the 70 remaining rank-and-file members . . . cannot negate the legitimacy
it has already acquired before the petition; that rather than disregard the legitimate status
already conferred on THEU by the Bureau of Labor Relations, the names of alleged
disqualified supervisory employees and employees of the Country Club, Inc., a separate
and distinct corporation, should simply be removed from the THEUs roster of membership;
and that regarding the participation of alleged resigned and AWOL employees and those
whose signatures are illegible, the issue can be resolved during the inclusion-exclusion
proceedings at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-Arbiter for
the conduct of certification election.
THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution having been
denied by the DOLE Undersecretary by Resolution of December 29, 1998,[11] it filed a
petition for certiorari before this Court which, by Resolution of April 14, 1999,[12] referred it
to the Court of Appeals in line with its pronouncement in National Federation of Labor
(NFL) v. Hon. Bienvenido E. Laguesma, et al.,[13] and in strict observance of the hierarchy
of courts, as emphasized in the case of St. Martin Funeral Home v. National Labor
Relations Commission.[14]
By Decision of February 15, 2000,[15] the Court of Appeals denied THIGCIs Petition for
Certiorari and affirmed the DOLE Resolution dated November 12, 1998. It held that while a
petition for certification election is an exception to the innocent bystander rule, hence, the
employer may pray for the dismissal of such petition on the basis of lack of mutuality of
interests of the members of the union as well as lack of employer-employee relationship
following this Courts ruling in Toyota Motor Philippines Corporation v. Toyota Motor
Philippines Corporation Labor Union et al[16] and Dunlop Slazenger [Phils.] v. Hon.
Secretary of Labor and Employment et al,[17] petitioner failed to adduce substantial
evidence to support its allegations.
Hence, the present petition for certiorari, raising the following
ISSUES/ASSIGNMENT OF ERRORS:
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION
DATED 12 NOVEMER 1998 HOLDING THAT SUPERVISORY EMPLOYEES AND NON-
EMPLOYEES COULD SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-
AND-FILE MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY OF
RESPONDENT UNIONS STATUS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE RESOLUTION
DATED 12 NOVEMBER 1998 HOLDING THAT THE DISQUALIFIED EMPLOYEES
STATUS COULD READILY BE RESOLVED DURING THE INCLUSION AND
EXCLUSION PROCEEDINGS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT THE
ALLEGATIONS OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE OF
RESPONDENT UNION TO DENY THE SAME AND BY THE SHEER WEIGHT OF
EVIDENCE INTRODUCED BY PETITIONER AND CONTAINED IN THE RECORDS OF
THE CASE[18]
The statutory authority for the exclusion of supervisory employees in a rank-and-file union,
and vice-versa, is Article 245 of the Labor Code, to wit:
Article 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own.
While above-quoted Article 245 expressly prohibits supervisory employees from joining a
rank-and-file union, it does not provide what would be the effect if a rank-and-file union
counts supervisory employees among its members, or vice-versa.
Citing Toyota[19] which held that a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all, and the subsequent case of
Progressive Development Corp. Pizza Hut v. Ledesma[20] which held that:
The Labor Code requires that in organized and unorganized establishments, a petition for
certification election must be filed by a legitimate labor organization. The acquisition of
rights by any union or labor organization, particularly the right to file a petition for
certification election, first and foremost, depends on whether or not the labor organization
has attained the status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that
the former look into the legitimacy of the respondent Union by a sweeping declaration that
the union was in the possession of a charter certificate so that for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate organization,[21]
(Underscoring and emphasis supplied),
petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., anterior to the
granting of an order allowing a certification election, to inquire into the composition of any
labor organization whenever the status of the labor organization is challenged on the basis
of Article 245 of the Labor Code.[22]
Continuing, petitioner argues that without resolving the status of THEU, the DOLE
Undersecretary conveniently deferred the resolution on the serious infirmity in the
membership of [THEU] and ordered the holding of the certification election which is
frowned upon as the following ruling of this Court shows:
We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity
in the membership of the respondent union can be remedied in the pre-election conference
thru the exclusion-inclusion proceedings wherein those employees who are occupying
rank-and-file positions will be excluded from the list of eligible voters. Public respondent
gravely misappreciated the basic antipathy between the interest of supervisors and the
interest of rank-and-file employees. Due to the irreconcilability of their interest we held in
Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor Union, viz:
xxx
Clearly, based on this provision [Article 245], a labor organization composed of both rank-
and-file and supervisory employees is no labor organization at all. It cannot, for any guise
or purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot posses any of the
rights of a legitimate labor organization, including the right to file a petition for certification
election for the purpose of collective bargaining. It becomes necessary, therefore, anterior
to the granting of an order allowing a certification election, to inquire into the composition
of any labor organization whenever the status of the labor organization is challenged on
the basis of Article 245 of the Labor Code. (Emphasis by petitioner) (Dunlop Slazenger
(Phils.), v. Secretary of Labor, 300 SCRA 120 [1998]; Underscoring and emphasis
supplied by petitioner.)
The petition fails. After a certificate of registration is issued to a union, its legal personality
cannot be subject to collateral attack. It may be questioned only in an independent petition
for cancellation in accordance with Section 5 of Rule V, Book IV of the Rules to Implement
the Labor Code (Implementing Rules) which section reads:
Sec. 5. Effect of registration. The labor organization or workers association shall be
deemed registered and vested with legal personality on the date of issuance of its
certificate of registration. Such legal personality cannot thereafter be subject to collateral
attack, but may be questioned only in an independent petition for cancellation in
accordance with these Rules. (Emphasis supplied)
The grounds for cancellation of union registration are provided for under Article 239 of the
Labor Code, as follows:
Art. 239. Grounds for cancellation of union registration. The following shall constitute
grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification;
(b) Failure to submit the documents mentioned in the preceding paragraph within thirty
(30) days from adoption or ratification of the constitution and by-laws or amendments
thereto;
(c) Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, the list of voters, or failure to subject these documents
together with the list of the newly elected/appointed officers and their postal addresses
within thirty (30) days from election;
(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after
the losing of every fiscal year and misrepresentation, false entries or fraud in the
preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in
any activity prohibited by law;
(f) Entering into collective bargaining agreements which provide terms and conditions of
employment below minimum standards established by law;
(g) Asking for or accepting attorneys fees or negotiation fees from employers;
(h) Other than for mandatory activities under this Code, checking off special assessments
or any other fees without duly signed individual written authorizations of the members;
(i) Failure to submit list of individual members to the Bureau once a year or whenever
required by the Bureau; and
(j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis
supplied),
while the procedure for cancellation of registration is provided for in Rule VIII, Book V of
the Implementing Rules.
The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud
under the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted
Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to
have already acquired juridical personality which may not be assailed collaterally.
As for petitioners allegation that some of the signatures in the petition for certification
election were obtained through fraud, false statement and misrepresentation, the proper
procedure is, as reflected above, for it to file a petition for cancellation of the certificate of
registration, and not to intervene in a petition for certification election.
Regarding the alleged withdrawal of union members from participating in the certification
election, this Courts following ruling is instructive:
[T]he best forum for determining whether there were indeed retractions from some of the
laborers is in the certification election itself wherein the workers can freely express their
choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees should
in every possible instance be determined by secret ballot rather than by administrative or
quasi-judicial inquiry. Such representation and certification election cases are not to be
taken as contentious litigations for suits but as mere investigations of a non-adversary,
fact-finding character as to which of the competing unions represents the genuine choice
of the workers to be their sole and exclusive collective bargaining representative with their
employer.[23]

As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie
given, as found by the court a quo, its failure to present substantial evidence that the
assailed employees are actually occupying supervisory positions.

While petitioner submitted a list of its employees with their corresponding job titles and
ranks,[24] there is nothing mentioned about the supervisors respective duties, powers and
prerogatives that would show that they can effectively recommend managerial actions
which require the use of independent judgment.[25]

As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:[26]

Designation should be reconciled with the actual job description of subject employees x x x
The mere fact that an employee is designated manager does not necessarily make him
one. Otherwise, there would be an absurd situation where one can be given the title just to
be deprived of the right to be a member of a union. In the case of National Steel
Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that:

What is essential is the nature of the employees function and not the nomenclature or title
given to the job which determines whether the employee has rank-and-file or managerial
status or whether he is a supervisory employee. (Emphasis supplied).[27]

WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to
the office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the
immediate conduct of a certification election subject to the usual pre-election conference.

SO ORDERED.