G.R. Nos. 82763-64 March 19, 1990 DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA, and LABOR ALLIANCE FOR NATIONAL DEVELOPMENT, respondents. The Legal Counsel for petitioner. Piorello E. Azura, Errol Ismael, B. Palaci and Maria Lourdes C. Legaspi for APT. Pablo B. Castillon for respondent LAND.

In February 1982, Joselito Albay, one of the employees dismissed in September 1981, filed a complaint before the National Labor Relations Commission (NLRC) against LIRAG for illegal dismissal (Case No. 22090-82). On 1 March 1982, LAND, on behalf of 180 dismissed members, also filed a Complaint against LIRAG seeking separation pay, 13th month pay, gratuity pay, sick leave and vacation leave pay and emergency allowance (Case No. 3-2581-82). These two cases were consolidated and jointly heard by the NLRC. Said complainants have since been joined by supervisors and managers. In a Decision, dated 30 July 1982, Labor Arbiter Apolinar L. Sevilla ordered LIRAG to pay the individual complainants. The NLRC (Third Division) affirmed the same on 28 March 1982. That judgment became final and executory. On 15 April 1983, a Writ of Execution was issued. On the same day, DBP extrajudicially foreclosed the mortgaged properties for failure of LIRAG to pay its mortgage obligation. As the only bidder at the foreclosure sale, DBP acquired said mortgaged properties for P31,346,462.90. Since DBP was the sole mortgagee, no actual payment was made, the amount of the bid having been merely credited in partial satisfaction of LIRAG's indebtedness. By reason of said foreclosure, the Writ of Execution issued in favor of the complainants remained unsatisfied. A Notice of Levy on Execution on the properties of LIRAG was then entered. On 7 December 1984, LAND filed a "Motion for Writ of Execution and Garnishment" of the proceeds of the foreclosure sale. On 30 May 1985, upon motion of LAND, Labor Arbiter Apolinar L. Sevilla ordered the DBP impleaded "in the interest of justice and due process," and required it to intervene. On 12 February 1986, and over the opposition of DBP, Labor Arbiter Sevilla granted the Writ of Garnishment and directed DBP to remit to the NLRC the sum of P6,292,380.00 out of the proceeds of the foreclosed properties of LIRAG sold at public auction in order to satisfy the judgment previously rendered.

MELENCIO-HERRERA, J.: This Petition for Certiorari addresses itself to the 12 February 1986 Order of the National Labor Relations Commission directing petitioner Development Bank of the Philippines (DBP) to remit the sum of P6,292,380.00 "out of proceeds of the foreclosed properties of Lirag Textile Mills Inc., sold at public auction in order to satisfy the judgment" in NLRC Cases Nos. NCR-3-2581-82 and 2-2090-82. The background facts of these two cases may be summarized as follows: The complainants in the two cases filed below were former employees of Lirag Textile Mills, Inc. (LIRAG, for short). LIRAG was a mortgage debtor of DBP. Private respondent Labor Alliance for National Development (LAND, for brevity) was the bargaining representative of the more or less 800 former rank and file employees of LIRAG. Around September 1981, LIRAG started terminating the services of its employees on the ground of retrenchment. By December of the said year there were already 180 regular employees separated from the service. LIRAG has since ceased operations presumably due to financial reverses.

DBP sought reconsideration of the above Order on the grounds of NLRC's lack of jurisdiction over it since it was not a party to the case, and that it was deprived of its property without due process of law. Public respondent, Labor Arbiter Isabel P. Ortiguerra denied reconsideration on 25 May 1987. DBP appealed that denial to the NLRC. In the meantime, on 3 February 1987, by virtue of Proclamation Nos. 50 and 50-A, the Asset Privatization Trust (APT) became the transferee of the DBP foreclosed assets of LIRAG. On 12 July 1989, by virtue of that transfer, we deemed APT impleaded as a party-petitioner and gave it time within which to file its pleading. It submitted a Memorandum on 22 November 1989. It appears that on 21 December 1987, a partial Compromise Agreement was entered into between APT and LAND (Litex Chapter) whereby APT paid the complainants-employees, ex gratia, the sum of P750,000.00 "in full settlement of their claims, past and present, with respect to all assets of LITEX transferred by DBP to APT." That amount was received by LAND's local President. Apparently, however, on 25 January 1988, LAND, through its national President, filed its opposition to the Compromise Agreement for being contrary to law, morals and public policy. On 25 March 1988, the NLRC (First Division) affirmed the appealed Order and dismissed the DBP appeal. DBP is now before us seeking a review and reversal. On 30 January 1989, the Court resolved to give due course to the petition and to require the parties to submit simultaneous memoranda. On 1 February 1990, the Court's Second Division referred the case to the Court en banc, which the latter accepted on the same date. It is true that DBP was not an original party and that it was ordered impleaded only after the Writs of Execution were not satisfied because the properties levied upon on execution had been foreclosed extrajudicially by it. DBP had to be impleaded, however, for the proper satisfaction of a final judgment. Being an incident in the execution of the final judgment award, NLRC retained jurisdiction and control over the case and could issue such orders as were necessary for the implementation of that award. Its inclusion as a party could not have been accomplished at the earlier stages of the

proceedings because at the time of the filing of the Complaint, private respondents' cause of action was only against LIRAG. DBP cannot rightfully contend that it was deprived of due process. It was given the opportunity to be heard and to present its evidence. It had actually filed its Opposition to the Motion for Execution and Garnishment filed by LAND on 7 January 1985, and the Order granting the Motion was issued only after hearing. DBP had also addressed an appeal to the NLRC. It had submitted, therefore, to the jurisdiction of the NLRC. Now, for the core issue whether or not the NLRC gravely abused its discretion in affirming the Order of the Labor Arbiter granting the Writ of Garnishment out of the proceeds of LIRAG's properties foreclosed by DBP to satisfy the judgment in these cases. We are constrained to rule in the affirmative. Article 110 of the Labor Code provides: Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. In implementation of the foregoing, Section 10, Rule VIII, Book III of the Revised Rules and Regulations Implementing the Labor Code, as amended, provides: Sec. 10. Payment of wages in case of bankruptcy. Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. (Emphasis supplied).
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In interpreting the foregoing provisions, the Court, in Development Bank of the Philippines vs. Santos (G.R. Nos. 78261-62, 8 March 1989), categorically stated: It is quite clear from the provision that a declaration of bankruptcy or a judicial liquidation must be present before the workers preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order. . . . Since then, however, Article 110 has been amended by Republic Act No. 6715 and now reads as follows: Sec. 1. Article 110 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines, is hereby further amended to read as follows: Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. (Amendments emphasized). The amendment expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. Section 10, Rule III, Book III of the Omnibus Rules Implementing the Labor Code has also been amended by Section 1 of the Rules and Regulations Implementing RA 6715 as approved by the then Secretary of Labor and Employment on 24 May 1989, and now provides: Sec. 10. Payment of wages and other monetary claims in case of bankruptcy. In case of bankruptcy or

liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid. Notably, the terms "declaration" of bankruptcy or "judicial" liquidation have been eliminated. Does this mean then that liquidation proceedings have been done away with? We opine in the negative, upon the following considerations: 1. Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits. Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in isolation. Rather, Article 110 must be read in relation to the provisions of the Civil Code concerning the classification, concurrence and preference of credits, which provisions find particular application in insolvency proceedings where the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding manner. . . . Republic vs. Peralta (G.R. No. L-56568, May 20, 1987, 150 SCRA 37). 2. In the same way that the Civil Code provisions on classification of credits and the Insolvency Law have been brought into harmony, so also must the kindred provisions of the Labor Law be made to harmonize with those laws. 3. In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvents's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated (De Barretto vs. Villanueva, No. L14938, December 29, 1962, 6 SCRA 928). The rationale therefore has been expressed in the recent case of DBP vs. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we quote:

A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtors are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale the debtor's specific property? Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established (Kuenzle & Streiff (Ltd.) vs. Villanueva, 41 Phil 611 (1916); Barretto vs. Villanueva, G.R. No. 14938, 29 December 1962, 6 SCRA 928; Philippine Savings Bank vs. Lantin, G.R. 33929, 2 September 1983, 124 SCRA 476). 4. A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. In the words of Republic vs. Peralta, supra: Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such complaints for unpaid wages are already covered by Article 2241, number 6: "claims for laborers wages, on

the goods manufactured or the work done;" or by Article 2242, number 3: "claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works, upon said buildings, canals and other works." To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244. 5. The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in the order of preference established by Article 2244 of the Civil Code (Republic vs. Peralta, supra). In fact, under the Insolvency Law (Section 29) a creditor holding a mortgage or lien of any kind as security is not permitted to vote in the election of the assignee in insolvency proceedings unless the value of his security is first fixed or he surrenders all such property to the receiver of the insolvent's estate. 6. Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean "absolute preference," the same should be given only prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4, Civil Code). Thereby, any infringement on the constitutional guarantee on nonimpairment of the obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of fact, DBP's mortgage credit antedated by several years the amendatory law, RA No. 6715. To give Article 110 retroactive effect would be to wipe out the mortgage in DBP's favor and expose it to a risk which it sought to protect itself against by requiring a collateral in the form of real property.
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In fine, the right to preference given to workers under Article 110 of the Labor Code cannot exist in any effective way prior to the time of its presentation in distribution proceedings. It will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the "claims of the Government and other creditors" may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest, since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony. WHEREFORE, Certiorari is GRANTED, and the assailed Decision of public respondent, the National Labor Relations Commission (NLRC), dated 25 March 1988, is hereby SET ASIDE. The Development Bank of the Philippines, the Asset Privatization Trust, the Labor Alliance for National Development (LAND), and other creditors who may be so minded, are hereby directed, within sixty (60) days from notice, to institute involuntary insolvency proceedings before the proper Court where all the assets of Lirag Textile Mills, Inc., may be inventoried, the preferences of all its creditors determined, and their claims discharged in a binding and conclusive manner. No costs. SO ORDERED.

G.R. No. 126773 April 14, 1999 RUBBERWORLD (PHILS.), INC., or JULIE YAP ONG, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MARILYN F. ARELLANO, EMILY S. LEGASPI, MYRNA S. GALGANA, MERCEDITA R. SONGCO, WILFREDO V. SANTOS, JOSEPHINE S. RAMOS, REDENTOR G. HONA, LUZ B. HONA, ROLANDO B. CRUZ, GUILLERMA R. MUZONES, CARMELITA V. HALILI, SUSAN A. REYES, EMILY A. ROBILLOS, PLACIDO REYES, MANOLITO DELA CRUZ, VICTORINO C. FRANCISCO, ROGER B. MARIAS, VIOLETA ALEJO, RICARDO T. TORRES, EMMA DELA TORRE, PERLA N. MANZANERO, FRANCISCO D. SERDONCILLO, LUISITO P. HERNANDEZ, RAYMOND PEREA, EDITHA A. SERDONCILLO, FRANCISCO GENER, MARIO B. REYES, VALERIANO A. HERRERA, JORGE S. SEERES, ELENA S. IGNACIO, EMERITA S. CACHERO, NERIZA G. ENRIQUEZ, LOLITA M. FABULAR, NORMITA M. HERNANDEZ, DOMINADOR P. ENRIQUEZ, respondents.

The foregoing summarizes this Court's grant of the Petition for Certiorari under Rule 65 of the Rules of Court, assailing the April 26, 1996 Resolution 2 promulgated by the NLRC 3 which upheld the labor arbiter's refusal to suspend proceedings involving monetary claims of the petitioner's employees. Petitioner likewise assails the June 20, 1996 NLRC Resolution 4 which denied its Motion for Reconsideration. On November 20, 1996, this Court issued a temporary restraining order, signed by then Chief Justice Andres R. Narvasa, "restraining the public respondents from further conducting proceedings in the aforesaid cases effective immediately . . . The Facts The facts are undisputed. They are narrated by the Office of the Solicitor general as follows: Petitioner . . . is a domestic corporation which used to be in the business of manufacturing footwear, bags and garments. It filed with the Securities and Exchange Commission on November 24, 1994 a petition for suspension of payments praying that it be declared in a state of suspension of payments and that the SEC accordingly issue an order restraining its creditors from enforcing their claims against petitioner corporation. It further prayed for the creation of a management committee as well as for the approval of the proposed rehabilitation plan and memorandum of agreement between petitioner corporation and its creditors. In an order dated December 28, 1994, the SEC favorably ruled on the petition for suspension of payments thusly: Accordingly, with the creation of the Management Committee, all actions for claims against Rubberworld Philippines, Inc. pending before any
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PANGANIBAN, J Presidential Decree 902-A, as amended, provides that "upon the appointment of a management committee, rehabilitation receiver, board or body pursuant to this Decree, all actions for claims against corporations, partnerships, or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. 1 Such suspension is intended to give enough breathing space for the management committee or rehabilitation receiver to make the business viable again, without having to divert attention and resources to litigations in various fora. Among the actions suspended are those for money claims before labor tribunals, like the National Labor Relations Commission (NLRC) and the labor arbiters. Statement of the Case

court, tribunal, office, board, body Commission of Sheriff are hereby deemed SUSPENDED. Consequently, all pending incidents for preliminary injunctions, writ of attachments (sic), foreclosures and the like are hereby rendered moot and academic. Private respondents, who claim to be employees of petitioner corporation, filed against petitioners [from] April to July 1995 their respective complaints for illegal dismissal, unfair labor practice, damages and payment of separation pay, retirement benefits, 13th month pay and service incentive pay. Petitioners moved to suspend the proceedings in the above labor cases on the strength of the SEC Order dated December 28, 1994. Likewise, petitioners cited the rulings of BF Homes vs. Court of Appeals (190 SCRA 262), Alemar's Sibal & Sons. Inc., vs. Elbinias (186 SCRA 94) and Bank of Philippine Islands vs. Court of Appeals (229 SCRA 223) to support their motion to suspend the proceedings in the labor cases. In an Order dated September 25, 1995, the Labor Arbiter denied the aforesaid motion holding that the injunction contained in the SEC Order applied only to the enforcement of established rights and did not include the suspension of proceedings involving claims against petitioner which have yet to be ascertained. The Labor Arbiter further held that the order of the SEC suspending all actions for claims against petitioners does not cover the claims of private respondents in the labor cases because said claims and the concomitant liability of petitioners still had to be determined, thus carrying no dissipation of the assets of petitioners.1wphi1.nt

Petitioners appealed the adverse order of the Labor Arbiter to public respondent which, in a Resolution dated April 26, 1996, dismissed the appeal for lack of merit and, instead, sustained the rulings of the Labor Arbiter. The motion for reconsideration of petitioners fared no better and was denied by public respondent in a Resolution dated June 20, 1996. 5 Hence, this petition. 6 The Issue Petitioner raises only one issue: Whether or not the Respondent NLRC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in affirming the order of Labor Arbiter Voltaire A. Balitaan denying petitioners' motion to suspend proceedings despite the Order of the Securities and Exchange Commission under Sec. 6 (c) of P.D. 902-A directing the suspension of all actions against a company under the first stages of insolvency proceedings. 7 This Court's Ruling The petition is meritorious. Sole Issue: Suspension of Proceedings Jurisprudence teaches us: . . . where the petition filed is one for declaration of a state of suspension of payments due to a recognition of the inability to pay one's debts and liabilities, and where the
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petitioning corporation either: (a) has sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due (solvent but illiquid) or (b) has no sufficient property (insolvent) but is under the management of a rehabilitation receiver or a management committee, the applicable law is P.D. 902-A pursuant to Sec. 5 par. (d) thereof. However, if the petitioning corporation has no sufficient assists to cover its liabilities and is not under a rehabilitation receiver or a management committee created under P.D. 902-A and does not seek merely to have the payments of its debts suspended, but seeks a declaration of insolvency . . . the applicable law is Act 1956 [The Insolvency Law] on voluntary Insolvency, ...8 In the case at bar, Petitioner Rubberworld filed before the SEC a Petition for Declaration of Suspension of Payments, as well as a proposed rehabilitation plan. On December 28, 1994, the SEC ordered the creation of a management committee and the suspension of all actions for claims against Rubberworld. Clearly, the applicable law is PD 902-A, as amended, the relevant provisions of which read: Sec. 5. In addition to the regulatory adjudicative functions of the Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx d) Petitions of corporations, partnerships or associations to be declared in the state of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts regulatory but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a

rehabilitation receiver or management committee created pursuant to this Decree. Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: . . . Provided, finally, That upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships, or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver," all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended. 9 The justification for the automatic stay of all pending actions for claims "is to enable the management committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. 10 Parenthetically, the rehabilitation of a financially distressed corporation benefits its employees, creditors, stockholders and, in a larger sense, the general public, And in considering whether to rehabilitate or not, the SEC gives preference to the interest of creditors, including employees. The

reason its that shareholders can recover their investments only upon liquidation of the corporation, and only if there are assets remaining after all corporate creditors are paid. 11 Labor Claims Included in Suspension Order The solicitor general, representing Public Respondent NLRC, argues that the rationale for an automatic stay will not be frustrated even if the NLRC proceeds with the disposition of these labor cases, because any favorable obtained by the private respondents would only establish their rights as creditors. The solicitor general also contends that the assailed Resolutions of the NLRC will not result in an undue preference for the assets of Rubberworld, as the private respondents will still present their claims before the management committee. 12 We disagree. The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. 13 Allowing labor cases to proceed clearly defeats the purpose of the automatic stays and severally encumbers the management committee's and resources. The said committee would need to defend against these suits, to the detriment of its primary and urgent duty to work towards rehabilitating the corporation and making it viable again. The rule otherwise would open the floodgates to other similarly situated claimants and forestall if not defeat the rescue efforts. Besides, even if the NLRC awards the claims of private respondents, as it did, its ruling could not be enforced as long as the petitioner is under the management committee. 14 In Chua v. National Labor Relations Commission, 15 we ruled that labor claims cannot proceed independently of a bankruptcy liquidation proceeding, since these claims "would spawn needless controversy, delays, and confusion." 16 With more reason, allowing labor claims to continue in spite of a SEC suspension order in a rehabilitation case would merely lead to such results.

The solicitor general insists that since Article 217 of the Labor Code 17 vested [public respondent with jurisdiction to hear and decide these labor cases, the NLRC did not exceed its jurisdiction when it refused to suspend the proceeding therein. 18 The Court is not persuaded. Article 217 of the Labor Code should be construed not in isolation but in harmony with PD 902-A, according to the basic rule in statutory construction that implied repeals are not favored. 19 Indeed, it is axiomatic that each and every statute must be construed in a way that would avoid conflict with existing laws. 20 true, the NLRC has the power to hear and decide labor disputes, but such authority is deemed suspended when PD 902-A is put into effect by the Securities and Exchange Commission. Preference in Favor of Workers in Case of Bankruptcy or Liquidation The private respondents contend that automatic stay under PD 902-A is not applicable to the instant case; otherwise, the preference granted to workers by Article 110 of the Labor Code would be rendered ineffective. 21 This contention is misleading. The preferential right of workers and employees under Article 110 of the Labor code may be invoked only upon the institution of insolvency or judicial liquidation proceeding. 22 Indeed, it is well-settled that "a declaration of bankruptcy or a judicial liquidation must be present before preferences over various money claims may be enforced." 23 But debtors resort to preference of credit giving preferred creditors the rights to have their claims paid ahead of those of other claimants only when their assets are insufficient to pay their debts fully. 24 The purpose of rehabilitation proceedings is precisely to enable the company to gain a new lease on life and thereby allow creditors to be paid their claims from its earnings. In insolvency proceedings, on the other hand, the company stops operating, and the claims of creditors are satisfied from the assets of the insolvent corporation. The present case involves the rehabilitation, not the liquidation, of petitioner-corporation. Hence, the preference of credit granted to workers or employees under Article 110 of the Labor Code is not applicable. Duration of Automatic
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Stay Under PD 902-A Finally, private respondents posit that under Section 6 of the Insolvency Law, the December 28, 1994 Order of the SEC suspending all actions for claims against Rubberworld should have expired after three months, in the absence of an agreement between the company and the corporate creditors. 25 Private respondents also accuse the SEC of abusing its power by "allowing said suspension order to remain pending for many years without resolving and approving any rehabilitation plan." 26 They contend that "[t]his is fatal to the instant petition for it had been a party to the abuse by the SEC of its suspension order." 27 This Court notes that PD 902-A itself does not provide for the duration of the automatic stay. Neither does the Order 28 of the SEC. Hence, the suspensive effect has no time limit and remains in force as long as reasonably necessary to accomplish the purpose of the Order. 29 On the other hand, the attack against the SEC's alleged "abuse of power" is misplaced. Under review in this Petition for Certiorari are Resolutions of the NLRC, nor of the SEC. The scope of this review is thus limited to whether the NLRC gravely abused or exceeded its jurisdiction in refusing to heed the SEC Order of Suspension and in issuing its challenged Resolutions. In any event, the bare allegation of inaction is insufficient to condemn the Securities and Exchange Commission and the management committee where, it should be noted, all affected parties, including the labor union in the company, are represented. WHEREFORE, the petition is hereby GRANTED. The assailed Resolutions of the NLRC dated April 26, 1996, and June 20, 1996, are REVERSED and SET ASIDE. No costs. SO ORDERED.

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G.R. No. 117195

February 20, 1996

DANNY T. RASONABLE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, JOEY GUEVARRA AND VICTORY LINER, INC., respondents. DECISION PUNO, J.: On March 19, 1993, petitioner DANNY T. RASONABLE filed a complaint for illegal dismissal with the Regional Arbitration Branch No. III, San Fernando, Pampanga, against private respondents VICTORY LINER, INC. and JOEY GUEVARRA, praying for reinstatement, payment of backwages and other benefits, damages and attorney's fees.1 In a Decision,2 dated November 8, 1993, Labor Arbiter Ariel C. Santos found private respondents guilty of illegal dismissal. They were ordered to pay petitioner the total sum of P84,957.47, representing the latter's backwages from March 1, 1993 (when petitioner was illegally dismissed) up to November 8, 1993 (the date of the Labor Arbiter's Decision), 13th month pay, separation pay equivalent to one-half month salary for every year of service and ten percent (10%) of the total award as attorney's fees. Dissatisfied, both parties appealed to the National Labor Relations Commission (NLRC). In his appeal,3 petitioner prayed that the Labor Arbiter's Decision be modified by awarding him instead full backwages, separation pay equivalent to one (1) month pay for every year of service, and other benefits which he would have received had he not been illegally dismissed. Upon the other hand, private respondents claimed that the Labor Arbiter decided their case when it was not as yet submitted for decision as the parties were then in the verge of striking an amicable settlement. They prayed that the case be remanded to the Labor Arbiter for settlement and/or reception of further evidence of both parties.4

In a Decision,5 dated March 30, 1994, the NLRC modified the Decision of the Labor Arbiter by increasing the award of separation pay from one-half (1/2) month pay to one (1) month pay for every year of service and by deleting the award of attorney's fees. Both parties moved for reconsideration. Both motions were denied.6 They filed separate petitions for certiorari to this Court. Private respondents' petition, entitled "Victory Liner, Inc. v. NLRC, et al." (G.R. No. 116848) was filed on September 8, 1994 and they reiterated their position before the NLRC. The THIRD DIVISION of this Court, in a Minute Resolution, dated September 21, 1994, denied due course to private respondents' petition. Their motion for reconsideration was denied with finality on November 16, 1994.7 Upon the other hand, petitioner filed the petition at bar against private respondents and the NLRC on October 6, 1994. His petition was given due course and the parties were directed to file their respective Memorandum. In his petition, petitioner charges that public respondent NLRC committed grave abuse of discretion: (a) in deleting the award of attorney's fees, and; (b) in failing to award other benefits, like holiday pay, service incentive leave pay, 13th month pay, backwages and separation pay accruing from November 8, 1993 (the date of the labor arbiter's Decision) up to the finality thereof. At the outset, it bears emphasis that when the Third Division of this Court denied due course to private respondents' petition (G.R. No. 116848), the Court in effect wrote finis to the issue of illegal dismissal. It is thus settled that petitioner was illegally dismissed from service. Similarly a non-issue is the labor arbiter's award of separation pay in lieu of reinstatement which was not challenged by petitioner in his appeal to the NLRC. What then remains is the determination of the monetary awards to be adjudged to petitioner and the period covered thereby. We hold that public respondent NLRC committed grave abuse of discretion when it ruled that there is no basis for the award of attorney's fees in favor of petitioner. It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interests, he is entitled to an award of attorney's fees. 8

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We come now to the other monetary benefits being claimed by petitioner. Public respondent denied petitioner's claim for service incentive pay and holiday pay on the ground that petitioner failed to present substantial evidence to support his claim. In the absence of a clear showing by petitioner of grave abuse of discretion on the part of the public respondent, its factual finding binds this Court. Next, petitioner contends that as a result of his illegal dismissal, he is entitled to an award of separation pay, backwages and 13th month pay not only from the time the complaint was filed up to the November 8, 1993 Decision of the Labor Arbiter but also from the time the arbiter's decision was rendered up to the finality of said decision. He faults the ruling of the public respondent that under Art. 279 of the Labor Code, as amended by Section 34 of R.A. 6715, an illegally dismissed employee shall be entitled to reinstatement and to his full backwages and other benefits computed from the time his compensation was withheld from him up to the time of his actual reinstatement. In the case at bar, instead of ordering petitioner's reinstatement, the Labor Arbiter awarded to petitioner separation pay. It computed the separation pay on the basis of petitioner's length of service, i.e. from the time of his employment up to the time of dismissal. Petitioner is thus deemed separated from service as of the date of the arbiter's decision awarding him separation pay. Hence, public respondent held that petitioner is no longer entitled to an award of 13th month pay and backwages after the date of the decision of the labor arbiter granting petitioner separation pay, the employer-employee relationship having ceased. We find merit in petitioner's contention. A look back on our law and jurisprudence on illegal dismissal is in order. Originally, an illegally dismissed employee is entitled to the payment of backwages from the date of dismissal to the date of reinstatement less the amount he may have earned elsewhere during said period. Should the laborer decide not to return to work, the deduction should be made up to the time the judgment becomes final.9 Hence, under the old law, payment of backwages is computed from the time of dismissal up to finality of decision in case the laborer is not reinstated. To prevent double compensation, the earnings derived by a dismissed employee in other jobs during the period his case is pending is deducted from the grant of backwages to be awarded to him. Likewise, the award of backwages would carry with it payment of

the benefits to which an employee would have been entitled if he were not dismissed. Thereafter, in the case of Mercury Drug Co. v. Court of Industrial Relations,10 the Court simplified the computation of backwages which was unduly delaying the speedy termination of illegal dismissal cases by limiting its payment to three (3) years without qualification or deduction. Under the Mercury Drug rule, the worker is to be paid his backwages fixed as of the time of his dismissal without deduction for their earnings elsewhere during their lay-off and without qualification of their wages as thus fixed, i.e., unqualified by any increases or other benefits that may have been received by their co-workers who were not dismissed. 11 Such award is understood to be inclusive of leave benefits: in making the award, the court necessarily takes into consideration holidays, vacation leaves; all working days are paid for regardless of whether or not the same fall on holidays or employee's leave days; the regular allowances that the employee had been receiving should however be included in the salary base. 12 The Mercury Drug rule was changed by Article 279 of the Labor Code, as amended by Section 34 of R.A. 6715.13 It provides: 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). As the law stands now, an employee who has been illegally dismissed after the effectivity of R.A. 6715 shall be entitled to reinstatement, full backwages and other benefits for the entire period that he was out of work and until actual reinstatement. However, in lieu of reinstatement, petitioner may instead be awarded separation pay. Separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment.14 The grant of separation pay

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does not preclude an award for backwages for the latter represents the amount of earnings lost by reason of the unjustified dismissal. Additionally, a dismissed employee is entitled to 13th month pay. 15 Public respondent holds that award of separation pay implies termination of employment as of the date of the decision. Hence, from the date of the decision of the labor arbiter granting separation pay, an illegally dismissed employee is no longer entitled to an award of backwages and 13th month pay, the employer-employee relationship having been severed. We are not persuaded. In a number of cases,16 we ruled that there is no inconsistency in the grant of both backwages and separation pay to an illegally dismissed employee. In Lim v. NLRC, supra, the Court elucidated the propriety of awarding both separation pay and backwages in this wise: We have ordered the payment of both (separation pay and backwages) . . . as otherwise, the employee might be deprived of benefits justly due him. Thus, if an employee who has worked only one year is sustained by the labor court after three years from his unjust dismissal, granting him separation pay only would entitle him to only one month salary. There is no reason why he should not also be paid three years backwages corresponding to the period when he could not return to his work or could not find employment elsewhere. A mere order for reinstatement issued by the labor arbiter is totally different from actual restoration of an employee to his previous position. It is for this reason that Article 279, as amended by R.A. 6715, provides for payment of full backwages and other benefits from the time of dismissal up to the time of actual reinstatement. Thus, in case reinstatement is adjudged, the award of backwages and other benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and extends up to the time said order of reinstatement is actually carried out. Correlatively, an award of separation pay, in lieu of reinstatement, and other benefits due to the employee, without actual payment thereof, does not have the effect of terminating the employment of an illegally dismissed employee. The award of the labor arbiter could still be overturned or modified and, in most cases, its execution could be unreasonably delayed.17 Thus, until actual receipt of the award of separation pay, the employer-employee relationship subsists,

entitling the illegally dismissed employee to an award of backwages, 13th month pay and other benefits from the time of his dismissal until finality of the decision of the labor arbiter. With the enactment of R.A. 6715, we now go back to the policy adopted by this Court prior to the Mercury Drug rule, i.e., payment of full backwages shall be made from the date of dismissal up to finality of the judgment should reinstatement be not decreed, less the amount which the dismissed employee may have earned during said period, taking into consideration the increases and other benefits, including the 13th month pay, received by his co-employees who were not dismissed. Payment of separation pay shall be computed from the date of the dismissed employee's service until finality of our decision.18 IN VIEW WHEREOF, the petition is hereby GRANTED. The Decision of public respondent NLRC is MODIFIED. The labor arbiter's award of attorney's fees is reinstated. Payment of backwages, less earnings elsewhere, and qualified by increases and other benefits (including the 13th month pay) shall be computed from the date of his dismissal until the finality of our decision. Payment of the separation pay, on the other hand, shall be computed from the date of petitioner's employment until finality of our decision. No cost. SO ORDERED.

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G.R. No. 116354 December 4, 1997 HEIRS OF THE LATE R/O REYNALDO ANIBAN represented by BRIGIDA P. ANIBAN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE TRANSMARINE CARRIERS, INC., NORWEGIAN SHIP MANAGEMENT, INC. A/S, and PIONEER INSURANCE AND SURETY CORPORATION, respondents.

A claim was also made for additional death benefits under the Collective Bargaining Agreement executed between Associated Marine Officers and Seamen's Union of the Philippines and NORWEGIAN represented by TRANSMARINE, to wit: Article 11 Compensation for loss of Life Death caused by an Occupational Injury or Disease. In the event of death of an officer due to an occupational injury or disease while serving on board, while travelling to and from the vessel on Company's business or due to marine peril, the Company will pay his beneficiaries a compensation in accordance with the POEA's rules and regulations . . . . It is agreed that these beneficiaries will be the following next of kin: The officer's spouse, children or parents in this preferential order. The company will pay an additional compensation to the beneficiaries listed aboved with same preferential order to that compensation provided by the POEA Rules and Regulations. The additional compensation will be US$30,000.00 plus US$8,000.00 to each child under the age of eighteen (18) years, maximum US$24,000.00 (not exceeding 3 children). The claim was granted only to the extent of US$13,000.00 provided under the POEA Standard Employment Contract. The claim under the CBA was rejected on the ground that myocardial infarction of which R/O Aniban died was not an occupational disease as to entitle his heirs to the additional death benefits provided therein. Consequently, Brigida Aniban and her children filed a formal complaint for non-payment of death compensation benefits under the CBA. 6 On 11 January 1994 the POEA ruled that myocardial infarction was an occupational disease in the case of R/O Aniban and granted the prayer of his heirs for payment of death benefits under the POEA Standard Employment Contract as well as under the Collective Bargaining
14

BELLOSILLO, J.: BRIGIDA P. ANIBAN representing the heirs of the late Reynaldo Aniban assails the decision of the National Labor Relations Commission (NLRC), 1 reversing that of the Philippine Overseas Employment Administration (POEA) which ruled that myocardial infarction was an occupational decease in the case of radio operator Reynaldo Aniban and awarded, aside from attorney's fees of US$6,700.00, a total of US$67,000.00 in death benefits to his heirs: US$13,000.00 for death benefits under the POEA Standard Employment Contract; US$30,000.00 for death benefits under the Collective Bargaining Agreement; and US$24,000.00 as additional compensation for his three (3) children under eighteen (18) years of age at US$8,000.00 each, 2 as well as denying the motion for its reconsideration. 3 Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc. (TRANSMARINE) acting in behalf of its foreign principal Norwegian Ship Management A/S (NORWEGIAN) 4 as radio operator (R/O) on board the vessel "Kassel" for a contract period of his employment, R/O Aniban died due to myocardial infarction. 5 He was survived by a pregnant wife and three (3) minor children who prayed for death benefits provided under par. (1) of the POEA Standard Employment Contract thus 1. In case of death of the seaman during the term of his contract, the employer shall pay his beneficiaries the Philippine currency equivalent to the amount of: . . . . b. US$13,000.00 for other officers including radio operators and master electricians.

Agreement plus attorney's fees of US$6,700.00 equivalent to 10 % of the total award. 7 On appeal, however, the NLRC reversed the POEA and denied the claim for additional death benefits on the ground that it was the Employees Compensation Commission (ECC) which had original and exclusive jurisdiction to hear and determine the claim for death benefits. 8 A motion to reconsider the decision of the NLRC was denied; hence, this petition by the heirs of R/O Reynaldo Aniban. Two issues are raised before us: (a) whether the POEA has jurisdiction to determine the claim of petitioners for death benefits, and (b) whether myocardial infarction is an occupational disease as to entitle petitioners to the death benefits provided under the CBA. It must be stated at the outset that the proper issue raised before us is that dealing with the jurisdiction of the POEA to resolve the claim for additional death benefits since the NLRC denied the claim on this sole ground. However, we are likewise addressing the second issue, i.e., merits of the claim, to afford the parties the relief they seek and prevent further needless delay in the resolution thereof. On the issue of jurisdiction, it is not disputed that R/O Reynaldo Aniban was a Filipino seaman and that he died on board the vessel of his foreign employer during the existence of his employment contract, hence, this claim for death benefits by his widow and children. The law applicable at the time the complaint was filed on 13 November 1992 was Art. 20 of the Labor Code as amended by E.O. Nos. 797 9 and 247 10 which clearly provided that "original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee relations, arising out of or by virtue of any law or contract involving Filipino seamen for overseas employment is vested with the POEA. 11 On the other hand, the jurisdiction of the ECC comes into play only when the liability of the State Insurance Fund is in issue, as correctly suggested by the Solicitor General. The ECC was created under Title II, Bk. IV, of the Labor Code with the heading of Employees Compensation and State Insurance Fund. In addition to its powers and duties enumerated in Art.

177, Art. 180 explicitly provides that the Commission exercises appellate jurisdiction only over decisions rendered by either the Government Service Insurance System (GSIS) or Social Security System (SSS) in the exercise of their respective original and exclusive jurisdictions. Hence, the ECC may not be considered as having jurisdiction over money claims, albeit death compensation benefits, of overseas contract workers. Thus, in so ruling, the NLRC clearly committed grave abuse of discretion. As regards the second issue, i.e., whether the death Reynaldo Aniban due to myocardial infarction is compensable, the POEA ruled in the affirmative when it likened the infirmity to a "heart attack" commonly aggravated by pressure and strain. It was observed that R/O Aniban, in addition to undergoing physical exertion while performing his duties as radio operator, was also exposed to undue pressure and strain as he was required to be on call twenty-four (24) hours a day to receive/transmit messages and to keep track of weather conditions. Such pressure and strain were aggravated by being away from his family, a plight commonly suffered by all seamen. In the case of R/O Aniban, the separation was particularly distressful as his pregnant wife was due to deliver their fourth child. Hence, the POEA ruled that myocardial infarction was an occupational disease. We cannot rule otherwise. Reynaldo Aniban was healthy at the time he boarded the vessel of his foreign employer. His medical records reveal that he had no health problem except for a "defective central vision secondary to injury." 12 Hence, he was certified "fit to work as radio operator" by the examining physician. However, R/O Aniban died three (3) months after he boarded "Kassel" due to myocardial infarction. As aforesaid, the POEA ruled that the cause of death could be considered occupational. Being a factual finding by the administrative agency tasked with its determination, such conclusion deserves respect and must be accorded finality. 13 Besides we have already repeatedly ruled that death due to myocardial infarction is compensable. 14 In Eastern Shipping Lines, Inc. v. POEA, 15 although compensability was not the main issue, we upheld the decision of the POEA adjudging as compensable the death of a seaman on board the vessel of his foreign employer due to myocardial infarction. Although it may be conceded in the instant case that the physical exertion involved in carrying out the functions of a radio operator may have been quite minimal, we cannot discount the pressure and strain that went with the position of radio operator. As radio operator, Reynaldo Aniban had to place
15

his full attention in hearing the exact messages received by the vessel and to relay those that needed to be transmitted to the mainland or to other vessels. We have already recognized that any kind of work or labor produces stress and strain normally resulting in the wear and tear of the human body. 16 It is not required that the employment contributed even in a small degree to its development. 17 It must be stressed that the strict rules of evidence are not applicable in claims for compensation considering that probability and not the ultimate degree of certainty is the test of proof in compensation proceedings. 18 It is a matter of judicial notice that an overseas worker, having to ward off homesickness by reason of being physically separate from his family for the entire duration of his contract, bears a great degree of emotional strain while making an effort to perform his work well. The strain is even greater in the case of a seaman who is constantly subjected to the perils of the sea while at work abroad and away from his family. In this case, there is substantial proof that myocardial infarction is an occupational disease for which Aniban's employer obligated itself to pay death benefits and additional compensation under the CBA in the event of the demise of its employee by reason thereof. On the award of attorney's fees which NLRC deleted on the ground that there was no unlawful withholding of wages, suffice it to say that Art. 111 of the Labor Code does not limit the award of attorney's fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the award of attorney's fees which exceed 10% of the amount of wages recovered. Thus, under the circumstances, attorney's fees are recoverable for the services rendered by petitioner's counsel to compel Aniban's employer to pay its monetary obligations under the CBA. However the amount of P50,000.00 claimed as attorneys' fees in this case is the reasonable compensation based on the records and not the maximum 10% of the total award as granted by POEA. The reduction of unreasonable attorney's fees is within our regulatory powers. 19 WHEREFORE, the assailed Decision and Resolution of the National Labor Relations Commission are REVERSED and SET ASIDE.

The Decision of the Philippine Overseas Employment Administration dated 10 January 1994 ordering respondents Philippine Transmarine Carriers, Inc., Norwegian Ship Management A/S, and Pioneer Insurance and Surety Corporation jointly and severally to pay the heirs of the late R/O Reynaldo Aniban represented by his widow Brigida P. Aniban the following amounts in Philippine currency at the prevailing rate of exchange at the time of payment: (a) US$13,000.00 for death benefits in accordance with POEA Standard Employment Contract; (b) US30,000.00 death benefits under the Collective Bargaining Agreement; (c) US$24,000.00 additional compensation for the three (3) children under 18 years of age at US$8,000.00 each; and, (d) US$6,700.00 for attorney's fees, is REINSTATED and ADOPTED herein, with the MODIFICATION that the award of US$6,700.00 or its equivalent in Philippine currency for attorney's fees is reduced to P50,000.00, with costs against private respondents. SO ORDERED.

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G.R. No. 102636 September 10, 1993 METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V. BALINANG, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and TRUST COMPANY, respondents. Gilbert P. Lorenzo for petitioners.

Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day, . . .: Provided, That those already receiving above the minimum wage rates up to one hundred pesos(P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day, . . . xxx xxx xxx

Marcial G. dela Fuente for private respondents. (d) If expressly provided for and agreed upon in the collective bargaining agreements, all increase in the daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall be credited as compliance with the increases in the wage rates prescribed herein, provided that, where such increases are less than the prescribed increases in the wage rates under this Act, the employer shall pay the difference. Such increase shall not include anniversary wage increases, merit wage increase and those resulting from the regularization or promotion of employees. Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall

VITUG, J.: In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP (MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the implementation by the Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating an increase in pay of P25 per day for certain employees in the private sector, created a distortion that would require an adjustment under said law in the wages of the latter's other various groups of employees. On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary employees in the list of employees who would benefit from the first P900 increase but the bank had adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were given the increase to the exclusion of probationary employees. Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy determination be establishing the mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for industrial dispersal to the countryside, and for other purposes," took effect. Its provisions, pertinent to this case, state:

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not in any way delay the applicability of the increase in the wage rates prescribed under this Section. Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase to its regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase. Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into (a) the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the correction of the alleged distortion in pay. In order to avert an impeding strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the Labor Code. 1 The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC. The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter disregard with the bank's contention that the increase in its implementation of Republic Act 6727 did not constitute a distortion because "only 143 employees or 6.8% of the bank's population of a total of 2,108 regular employees" benefited. He stressed that "it is not necessary that a big number of wage earners within a company be benefited by the mandatory increase before a wage distortion may be considered to have taken place," it being enough, he said, that such increase "result(s) in the severe contraction of an intentional quantitative difference in wage between employee groups." The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary rates between and among groups of employees is not based purely on skills or length of service but also on "other logical bases of differentiation, a P900.00 wage gap intentionally provided in a collective bargaining agreement as a quantitative difference in wage

between those who WERE regular employees as of January 1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of differentiation (that) deserves protection from any distorting statutory wage increase." Otherwise, he added, "a minimum wage statute that seek to uplift the economic condition of labor would itself destroy the mechanism of collective bargaining which, with perceived stability, has been labor's constitutional and regular source of wage increase for so long a time now." Thus, since the "subjective quantitative difference" between wage rates had been reduced from P900.00 to barely P150.00, correction of the wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727 should be made. The labor arbiter disposed of the case, thus: WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular employees as of January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly increase effective July 1, 1989. SO ORDERED. 2 The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1, reversed the decision of the Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and Domingo H. Zapanta, the NLRC said: . . . a wage distortion can arise only in a situation where the salary structure is characterized by intentional quantitative differences among employee groups determined or fixed on the basis of skills, length of service, or other logical basis of differentiation and such differences or distinction are obliterated (In Re: Labor Dispute at the Bank of the Philippine Islands, NCMB-RB7-11-096-89, Secretary of Labor and Employment, February 18, 1991).

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As applied in this case, We noted that in the new wage salary structure, the wage gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in the wage gap between levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between said levels is not significant as to obliterate or result in severe contraction of the intentional quantitative differences in salary rates between the employees groups. For this reason, the basis requirement for a wage in this case. Moreover, there is nothing in the law which would justify an across-the-board adjustment of P750.00 as ordered by the labor Arbiter. WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is hereby entered, dismissing the complaint for lack of merit. SO ORDERED. 3 In her dissent, Presiding Commissioner Edna Bonto-Perez opined: There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited but clearly there is a contraction. Would such contraction be severe as to warrant the necessary correction sanctioned by the law in point, RA 6727? It is may considered view that the quantitative intended distinction in pay between the two groups of workers in respondent company was contracted by more than fifty (50%) per cent or in particular by more or less eighty-three (83%) per cent hence, there is no doubt that there is an evident severe contraction resulting in the complained of wage distortion. Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be an across the board increase which is not the intention of RA 6727. For that

matter, herein complainants cannot by right claim for the whole amount of P750.00 a month or P25.00 per day granted to the workers covered by the said law in the sense that they are not covered by the said increase mandated by RA 6727. They are only entitled to the relief granted by said law by way of correction of the pay scale in case of distortion in wages by reason thereof. Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the Regional Tripartite Wages and Productivity Commission for correction of pay scale structures in case of wage distortion as in the case at bar which is: Minimum Wage = % x Prescribed = Distortion Increased Adjustment Actual Salary would be the most equitable and fair under the circumstances obtaining in this case. For this very reason, I register my dissent from the majority opinion and opt for the modification of the Labor Arbiter's decision as afore-discussed. 4 The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied, the MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a) "to acknowledge the existence of a wage distortion in the wage or salary rates between and among the employee groups of the respondent bank as a result of the bank's partial implementation" of Republic Act 6727 and (b) to give due course to its claim for an across-theboard P25 increase under Republic Act No. 6727. 5 We agree with the Solicitor General that the petition is impressed with merit. 6

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The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus: (p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or severe contradiction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor official's findings rest. 8 As such, factual findings of the NLRC are generally accorded not only respect but also finality provided that its decision are supported by substantial evidence and devoid of any taint of unfairness of arbitrariness. 9 When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom. In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a wage distortion arising from the bank's implementation of the P25 wage increase; they do differ, however, on the extent of the distortion that can warrant the adoption of corrective measures required by law. The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of an increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in wage or salary rates" would occur "between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." In mandating an adjustment, the law did not require that there be an elimination or total

abrogation of quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of imagination, be considered less than severe. The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which the parties are thereby concluded. 11 The Solicitor General, in recommending the grant of due course to the petition, has correctly emphasized that the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by law or not, unless there are compelling reasons otherwise, must prevail and be given effect. 12 In keeping then with the intendment of the law and the agreement of the parties themselves, along with the often repeated rule that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor, 13 we must approximate an acceptable quantitative difference between and among the CBA agreed work levels. We, however, do not subscribe to the labor arbiter's exacting prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also of the view that giving the employees an across-the-board increase of P750 may not be conducive to the policy of encouraging "employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation," particularly in this case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the Court, through Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC: 14 . . . . (T)o compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interests of labor is concerned. . . .

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We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage distortion, 15 to well be the appropriate measure to balance the respective contentions of the parties in this instance. We also view it as being just and equitable. WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject to the MODIFICATION that the wage distortion in question be corrected in accordance with the formula expressed in the dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision is immediately executory. SO ORDERED.

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G.R. No. 131247 January 25, 1999 PRUBANKERS ASSOCIATION, petitioner, vs. PRUDENTIAL BANK & TRUST COMPANY, respondent.

WHEREFORE, it is hereby ruled that the Bank's separate and regional implementation of Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches created a wage distortion in the Bank nationwide which should be resolved in accordance with Art. 124 of the Labor Code. 3 The Facts

PANGANIBAN, J.: Wage distortion presupposes an increase in the compensation of the lower ranks in an office hierarchy wirhout a corresponding raise for higher-tiered employees in the same region of the country, resulting in the elimination or the severe diminution of the distinction between the two groups. Such distortion does not arise when a wage order gives employees in one branch of a bank higher compensation than that given to their counterparts in other regions occupying the same pay scale, who are not covered by said wage order. In short, the implementation of wage orders in one region but not in others does not in itself necessarily result in wage distortion. The Case Before us is a Petition for Review on Certiorari, challenging the November 6, 1997 Decision 1 of the Court of Appeals in CA-GR SP No. 42525. The dispositive portion of the challenged Decision reads: WHEREFORE, the petition is GRANTED. The assailed decision of the Voluntary Arbitration Committee dated June 18, 1996 is hereby REVERSED and SET ASIDE for having been issued with grave abuse of discretion tantamount to lack of or excess of jurisdiction, and a new judgment is rendered finding that no wage distortion resulted from the petitioner's separate and regional implementation of Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario. The June 18, 1996 Decision of the Voluntary Arbitration Commitee, 2 which the Court of Appeals reversed and set aside, disposed as follows:

The facts of the case are summarized by the Court of Appeals thus: On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period [t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region. Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon and Tagbilaran. The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by

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Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03. On June 7, 1994, respondent Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said wage orders. Respondent Association then demanded in the Labor Management Committee meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee formed for that purpose was composed of the following: public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo T. Anonuevo and Emerico O. de Guzman as members. The issue presented before the Committee was whether or not the bank's separate and regional implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage distortion in the bank nationwide. The Arbitration Committee on June 18, 1996 rendered questioned decision. 4 Ruling of the Court of Appeals In ruling that there was no wage distortion, the Court of Appeals held that the variance in the salary rates of employees in different regions of the country was justified by RA 6727. It noted that "the underlying considerations in issuing the wage orders are diverse, based on the

distinctive situations and needs existing in each region. Hence, there is no basis to apply the salary increases imposed by Wage Order No. VII-03 to employees outside of Region VII." Furthermore, the Court of Appeals ruled that "the distinctions between each employee group in the region are maintained, as all employees were granted an increase in minimum wage rate. 5 The Issues In its Memorandum, petitioner raises the following issues: 6 I Whether or not the Court of Appeals departed from the usual course of judicial procedure when it disregarded the factual findings of the Voluntary Arbitration Committee as to the existence of wage distortion. II Whether or not the Court of Appeals committed grave error in law when it ruled that wage distortion exists only within a region and not nationwide. III Whether or not the Court of Appeals erred in implying that the term "establishment" as used in Article 125 of the Labor Code refers to the regional branches of the bank and not to the bank as a whole. The main issue is whether or not a wage distortion resulted from respondent's implementation of the aforecited Wage Orders. As a preliminary matter, we shall also take up the question of forum-shopping.

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The Court's Ruling The petition is devoid of merit. 7 Preliminary Issue: Forum-Shopping Respondent asks for the dismissal of the petition because petitioner allegedly engaged in forum-shopping. It maintains that petitioner failed to comply with Section 2 of Rule 42 of the Rules of Court, which requires that parties must certify under oath that they have not commenced any other action involving the same issues in the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, they must state the status of the same; and if they should thereafter learn that a similar action or proceeding has been filed or is pending before the said courts, they should promptly inform the aforesaid courts or any other tribunal or agency within five days therefrom. Specifically, petitioner accuses respondent of failing to inform this Court of the pendency of NCMB-NCR-RVA-O4-012-97 entitled "In Re: Voluntary Arbitration between Prudential Bank and Prubankers Association" (hereafter referred to as "voluntary arbitration case"), an action involving issues allegedly similar to those raised in the present controversy. In its Reply, petitioner effectively admits that the voluntary arbitration case was already pending when it filed the present petition. However, it claims no violation of the rule against forum-shopping, because there is no identity of causes of action and issues between the two cases. We sustain the respondent. The rule on forum-shopping was first included in Section 17 of the Interim Rules and Guidelines issued by this Court on January 11, 1983, which imposed a sanction in this wise: "A violation of the rule shall constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned." Thereafter, the Court restated the rule in Revised Circular No. 28-91 and Administrative Circular No. 04-94. Ultimately, the rule was embodied in the 1997 amendments to the Rules of Court. As explained by this Court in First Philippine International Bank v. Court of Appeals, 8 forum-shopping exists where the elements of litis pendentia

are present, and where a final judgment in one case will amount to res judicata in the other. Thus, there is forum-shopping when, between an action pending before this Court and another one, there exist: "a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgement rendered in the other action, will, regardless of which party is successful amount to res judicata in the action under consideration; said requisites also constitutive of the requisites for auter action pendant or lis pendens." 9 Another case elucidates the consequence of forum-shopping: "[W]here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest." 10 The voluntary arbitration case involved the issue of whether the adoption by the Bank of regionalized hiring rates was valid and binding. On the other hand, the issue now on hand revolves around the existence of a wage distortion arising from the Bank's separate and regional implementation of the two Wage Orders in the affected branches. A closer look would show that, indeed, the requisites of forum-shopping are present. First, there is identity of parties. Both cases are between the Bank and the Association acting on behalf of all its members. Second, although the respective issues and reliefs prayed for in the two cases are stated differently, both actions boil down to one single issue: the validity of the Bank's regionalization of its wage structure based on RA 6727. Even if the voluntary arbitration case calls for striking, down the Bank's regionalized hiring scheme while the instant petition calls for the correction of the alleged wage distortion caused by the regional implementation of Wage Order No. VII-03, the ultimate relief prayed for in both cases is the maintenance of the Bank's national wage structure. Hence, the final disposition of one would constitute res judicata in the other. Thus, forumshopping is deemed to exist and, on this basis, the summary dismissal of both actions is indeed warranted. Nonetheless, we deem it appropriate to pass upon the main issue on its merit in view of its importance.
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Main Issue: Wage Distortion The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727, which reads: Art. 124. Standards/Criteria for Minimum Wage Fixing ... As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination of severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. Elaborating on this statutory definition, this Court ruled: "Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. . . . . The concept of a wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees" 11 Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates

2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one 3. The elimination of the distinction between the two levels 4. The existence of the distortion in the same region of the country In the present case, it is clear that no wage distortion resulted when respondent implemented the subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, lengh of service and other logical bases of differentiation was preserved. In other words, the quantitative difference in compensation between different pay classes remained the same in all branches in the affected region. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion. Petitioner argues that a wage distortion exists, because the implementation of the two Wage Orders has resulted in the discrepancy in the compensation of employees of similar pay classification in different regions. Hence, petitioner maintains that, as a result of the two Wage Orders, the employees in the affected regions have higher compensation than their counterparts of the same level in other regions. Several tables are presented by petitioner to illustrate that the employees in the regions covered by the Wage Orders are receiving more than their counterparts in the same pay scale in other regions. The Court is not persuaded. A wage parity between employees in different rungs, is not at issue here, but a wage disparity between employees in the same rung but located in different regions of the country. Contrary to petitioner's postulation, a disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law. As previously enunciated, it is the
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hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a wage distortion arises when a wage order engenders wage parity between employees in different rungs of the organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in the same region. Different Regional Wages Mandated by RA 6727 Petitioner's claim of wage distortion must also be denied for one other reason. The difference in wages between employees in the same pay scale in different regions is not the mischief sought to be banished by the law. In fact, Republic Act No. 6727 (the Wage Rationalization Act), recognizes "existing regional disparities in the cost of living." Section 2 of said law provides: Sec 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth. The State shall promote collective bargaining as the primary mode of settling wages and other terms and conditions of employment; and whenever necessary, the minimum wage rates shall be adjusted in a fair and equitable manner, considering existing regional disparities in the cost of living and other socio-economic factors and the national economic and social development plans. RA 6727 also amended Article 124 of the Labor Code, thus: I. II. a. b. c. d. e. f. g. h.

Art. 124. Standards/Criteria for Minimum Wage Fixing. The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the frame work of the national economic and social development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: The demand for living wages; Wage adjustment vis-a-vis the consumer price index; The cost of living and changes or increases therein; The needs of workers and their families; The need to induce industries to invest in the countryside; Improvements in standards of living; The prevailing wage levels; Fair return of the capital invested and capacity to pay of employers; Effects on employment generation and family income; and The equitable distribution of income and wealth along the imperatives of social and economic development.

From the above-quoted rationale of the law, as well as the criteria enumerated, a disparity in wages between employees with similar positions in different regions is necessarily expected. In insisting that the employees of the same pay class in different regions should receive the same compensation, petitioner has apparently misunderstood both the meaning of wage distortion and the intent of the law to regionalize wage rates. It must be understood that varying in each region of the country are controlling factors such as the cost of living; supply and demand of basic goods, services and necessities; and the purchasing power of the peso. Other considerations underscore the necessity of the law. Wages in some areas may be increased in order to prevent migration to the National Capital Region and, hence, to decongest the metropolis. Therefore, what the

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petitioner herein bewails is precisely what the law provides in order to achieve its purpose. Petitioner claims that it "does not insist that the Regional Wage Boards created pursuant to RA 6727 do not have the authority to issue wage orders based on the distinctive situations and needs existing in each region. So also, . . . it does not insist that the [B]ank should not implement regional wage orders. Neither does it seek to penalize the Bank for following Wage Order VII-03. . . . What it simply argues is that it is wrong for the Bank to peremptorily abandon a national wage structure and replace the same with a regionalized structure in violation of the principle of equal pay for equal work. And, it is wrong to say that its act of abandoning its national wage structure is mandated by law." As already discussed above, we cannot sustain this argument. Petitioner contradicts itself in not objecting, on the one hand, to the right of the regional wage boards to impose a regionalized wage scheme; while insisting, on the other hand, on a national wage structure for the whole Bank. To reiterate, a uniform national wage structure is antithetical to the purpose of RA 6727. The objective of the law also explains the wage disparity in the example cited by petitioner: Armae Librero, though only in Pay Class 4 in Mabolo, was, as a result of the Wage Order, receiving more than Bella Cristobal, who was already in Pay Class 5 in Subic. 12 RA 6727 recognizes that there are different needs for the different situations in different regions of the country. The fact that a person is receiving more in one region does not necessarily mean that he or she is better off than a person receiving less in another region. We must consider, among others, such factors as cost of living, fulfillment of national economic goals, and standard of living. In any event, this Court, in its decisions, merely enforces the law. It has no power to pass upon its wisdom or propriety. Equal Pay for Equal Work Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA 6727 mandates that wages in every region must be set by the particular wage board of that region,

based on the prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic conditions in the two regions are different. Meaning of "Establishment" Petitioner further contends that the Court of Appeals erred in interpreting the meaning of "establishment" in relation to wage distortion. It quotes the RA 6727 Implementing Rules, specifically Section 13 thereof which speaks of "workers working in branches or agencies of establishments in or outside the National Capital Region." Petitioner infers from this that the regional offices of the Bank do not themselves constitute, but are simply branches of, the establishment which is the whole bank. In effect, petitioner argues that wage distortion covers the pay scales even of employees in different regions, and not only those of employees in the same region or branch. We disagree. Sec. 13 provides that the "minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital Region shall be those applicable in the place where they are sanctioned" The last part of the sentence was omitted by petitioner in its argument. Given the entire phrase, it is clear that the statutory provision does not support petitioner's view that "establishment" includes all branches and offices in different regions. Further negating petitioner's theory is NWPC Guideline No. 1 (S. 1992) entitled "Revised Guidelines on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increases Granted by the Regional Tripartite Wages and Productivity Board," which states that "establishment" "refers to an economic unit which engages in one or predominantly one kind of economic activity with a single fixed location." Management Practice Petitioner also insists that the Bank has adopted a uniform wage policy, which has attained the status of an established management practice; thus, it is estopped from implementing a wage order for a specific region only. We are not persuaded. Said nationwide uniform wage policy of the Bank had
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been adopted prior to the enactment of RA 6727. After the passage of said law, the Bank was mandated to regionalize its wage structure. Although the Bank implemented Wage Order Nos. NCR-01 and NCR-02 nationwide instead of regionally even after the effectivity of RA 6727, the Bank at the time was still uncertain about how to follow the new law. In any event, that single instance cannot be constitutive of "management practice." WHEREFORE, the petition is DENIED and the assailed Decision is AFFIRMED. Costs against petitioner. SO ORDERED.

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G.R. No. 131750 November 16, 1998 FRANCISCO GUICO, JR., doing business under the name and style of COPYLANDIA SERVICES & TRADING, petitioner, vs. THE HON. SECRETARY OF LABOR & EMPLOYMENT LEONARDO A. QUISUMBING, THE OFFICE OF REGIONAL DIRECTOR OF REGION I, DEP'T. OF LABOR & EMPLOYMENT, ROSALINA CARRERA, ET. AL., respondents.

On July 13, 1995, petitioner's representative submitted a Joint Affidavit signed and executed by the 21 employees expressing their disinterest in prosecuting the case and their waiver and release of petitioner from his liabilities arising from non-payment and underpayment of their salaries and other benefits. Individually signed documents dated December 21, 1994, purporting to be the employees' Receipt, Waiver and Quitclaim were also submitted. 4 In the investigation conducted by Hearing Officer Adonis Peralta on July 21, 1995, the 21 employees claimed that they signed the Joint Affidavit for fear of losing their jobs. They added that their daily salary was increased to P92.00 effective July 1, 1995, but the incentive and commission schemes were discontinued. They alleged that they did not waive the unpaid benefits due to them. 5 On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Order 6 favorable to the 21 employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and 22, 1994, could not cause the dismissal of the labor standards case against the petitioner since the same were executed before the filing of the said case. Moreover, the employees repudiated said waiver and quitclaim. Second, he held that despite the salary increase granted by the petitioner, the daily salary of the employees was still below the minimum daily wage rate of P119.00 under Wage Order No. RBI-03. Thirdly, he held that the removal of the commission and incentive schemes during the pendency of the case violated the prohibition against elimination or diminution of benefits under Article 100 of the Labor Code, as amended. The dispositive portion of the Order states: WHEREFORE, premises considered and pursuant to the Rules on the Disposition of Labor Standards Cases in the Regional Offices issued by the Secretary of Labor and Employment on 16 September 1987, respondent Copylandia Services and Trading thru its owner/manager Mr. Francisco Guico, is hereby ORDERED to pay the employees the amount of ONE MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY CENTAVOS (P1,081,756.70) representing their backwages, distributed as follows:

PUNO, J.: This is a petition for certiorari seeking a review of two (2) Orders 1 issued by the respondent Secretary of Labor and Employment dismissing petitioner's appeal. The case started when the Office of the Regional Director, Department of Labor and Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representative under Article 128 of the Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following violations involving twentyone (21) employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with pay. 2 The first hearing of the case was held on June 14, 1995, where petitioner was represented by Joseph Botea, Officer-in-Charge of the Dagupan City outlets, while the 21 employees were represented by Leilani Barrozo, Gemma Gales, Majestina Raymundo and Laureta Clauna. It was established that a copier operator was receiving a daily salary ranging from P35.00 to P60.00 plus commission of P20.00 per P500.00 worth of photocopying. There was also incentive pay of P20.00 per P250.00 worth of photocopying in excess of the first P500.00. 3

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1. Rosalina Carrera P 68,010.91 2. Joanna Ventura 28,568.10 3. Mercelita Paredes 68,010.91 4. Aida Licuanan 68,010.91 5. Gemma Gales 68,010.91 6. Clotilda Zarata 27,808.33 7. Consolacion Miguel 65,708.28 8. Gemma Macalalay 68,010.91 9. Wandy Aquino 19,559.58 10. Laureta Clauna 68,010.91 11. Josephine Valdez 27,808.33 12. Leilani Berrozo 27,808.33 13. Majestina Raymundo 68,010.91 14. Theresa Rosario 68,010.91 15. Edelyn Maramba 68,010.91 16. Yolly Dimabayao 40,380.60 17. Vilma Calaguin 68,010.91 18. Maila Balolong 40,380.60

19. Clarissa Villena 27,808.33 20. Maryann Galinato 68,010.91 21. Desiree Cabansag 27,808.33 Total P1,081,756.70. and to submit proof of payment to this Office within seven (7) day is from receipt hereof. Otherwise, a Writ of Execution will be issued to enforce this Order. SO ORDERED. 7 Petitioner received a copy of the Order on November 10, 1995. On November 15, 1995, petitioner filed a Notice of Appeal. 8 The next day, he filed a Memorandum of Appeal accompanied by a Motion to Reduce Amount of Appeal Bond and a Manifestation of an Appeal Bond. In his appeal memorandum, 9 petitioner questioned the jurisdiction of the Regional Director citing Article 123 of the Labor Code, as amended, 10 and Section 1, Rule IX of the Implementing Rules of Republic Act No. 6715. 11 He argued that the Regional Director has no jurisdiction over the complaint of the 21 employees since their individual monetary claims exceed the P5,000.00 limit. He alleged that the Regional Director should have indorsed the case to the Labor Arbiter for proper adjudication and for a more formal proceeding where there is ample opportunity for him to present evidence to contest the claims of the employees. He further alleged that the Regional Director erred in computing the monetary award since it was done without regard to the actual number of days and time worked by the employees. He also faulted the Regional Director for not giving credence to the Receipt, Waiver and Quitclaim of the employees. In the Motion to Reduce Amount of Appeal Bond, 12 petitioner claimed he was having difficulty in raising the monetary award which he denounced as exorbitant. Pending resolution of the motion, he posted an appeal bond in

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the amount of P105,000.00 insisting that the jurisdiction of the Regional Director is limited to claims of P5,000.00 per employee and there were 21 employees involved in the case. On November 22, 1995, petitioner also filed a request to hold in abeyance any action relative to the case for a possible amicable settlement with the employees. 13 On January 10, 1996, District Labor Officer Adonis Peralta forwarded a Report showing that the petitioner and most of the 21 employees had reached a compromise agreement. The Release, Waiver and Quitclaim was signed by the following employees and show the following amounts they received, viz: 1. Aida Licuanan P 3,000.00 2. Clarissa Villena 3,000.00 3. Gemma Gales 3,000.00 4. Desiree Cabansag 3,000.00 5. Clotilda Zarata 3,000.00 6. Consolacion Miguel 5,000.00 7. Josephine Valdez 3,000.00 8. Maryann Galinato 5,000.00 9. Theresa Rosario 3,000.00 10. Yolly Dimabayao 3,000.00 11. Vilma Calaguin 3,000.00 12. Gemma Macalalay 3,000.00

13. Edelyn Maramba 5,000.00 14. Charito Gonzales 3,000.00 15. Joanna Ventura 3,000.00 Four (4) employees did not sign in the compromise agreement. They insisted that they be paid what is due to them according to the Order of the Regional Director in the total amount of P231,841.06. They were Laureta Clauna, Majestina Raymundo, Leilani Barrozo and Rosalina Carrera. 14 In a letter 15 dated February 23, 1996, the Regional Director informed petitioner that he could not give due course to his appeal since the appeal bond of P105,000.00 fell short of the amount due to the 4 employees who did not participate in the settlement of the case. In the same letter, he directed petitioner to post, within ten (10) days from receipt of the letter, the amount of P126,841.06 or the difference between the monetary award due to the 4 employees and the appeal bond previously posted. On March 13, 1996, petitioner filed a Motion for Reconsideration to Reduce Amount of Appeal Bond. 16 He manifested that he has closed down his business operations due to severe financial losses and implored the Regional Director to accept the appeal bond already filed for reasons of justice and equity. In an Order dated December 3, 1936, the respondent Secretary denied the foregoing Motion for Reconsideration on the ground that the directive from the Regional Director to post an additional surety bond is contained in a "mere letter" which cannot be the proper subject of a Motion for Reconsideration and/or Appeal before his office. He added that for failure of the petitioner to post the correct amount of surety or cash bond, his appeal was not perfected following Article 128 (b) of the Labor Code, as amended. Despite the non-perfection of the appeal, respondent Secretary looked into the Receipt, Waiver and Quitclaim signed by the employees and rejected it on the ground that the consideration was unconscionably inadequate. He ruled, nonetheless, that the amount received by the said employees should be deducted from the judgment award and the difference should be paid by the petitioner.
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On December 26, 1996, petitioner filed a Motion for Reconsideration. On February 13, 1997, he filed a Motion to Admit Additional Bond and posted the amount of P126,841.06 in compliance with the order of the Regional Director in his letter dated February 13, 1996. 17 On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He ruled that the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional limitations imposed by Article 129 on the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representatives. In addition, he held that petitioner is now estopped from questioning the computation made by the Regional Director as a result of the compromise agreement he entered into with the employees. Lastly, he reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the employees was not valid. Petitioner is now before this Court raising the following issues: I Whether or not Public Respondent acted with grave abuse of discretion amounting to lack or in excess of jurisdiction when he set aside the Release and Quitclaim executed by the seventeen (sic) complainants before the Office of the Regional Director when Public Respondent himself ruled that the Appeal of the Petitioner was not perfected and, therefore, Public Respondent did not acquire jurisdiction over the case. II Whether or not Public Respondent acted with grave abuse of discretion amounting to lack or in excess of jurisdiction when in complete disregard of Article 227 of the Labor Code, Public Respondent set aside and nullified the Release and Quitclaim executed by the seventeen (sic) complainants.

III Whether or not Public Respondent acted with grave abuse of discretion amounting to lack or in excess of jurisdiction when he affirmed the Order of the Regional Director who, in complete disregard of the due process requirements of law, computed the monetary award given to the private respondents without notice to petitioner and without benefit of hearing. IV Whether or not petitioner is deemed estopped from appealing the decision of the Regional Director when it (sic) entered into a compromise settlement with complainants/private respondents. The threshold issues that need to be settled in this case are: (1) whether or not the Regional Director has jurisdiction over the instant labor standards case, and (2) whether or not petitioner perfected his appeal. With regard to the issue of jurisdiction, petitioner alleged that the Regional Director has no jurisdiction over the instant case since the individual monetary claims of the 21 employees exceed P5,000.00. He further argued that following Article 129 of the Labor Code, as amended, and Section 1, Rule IX of the Implementing Rules of Republic Act No. 6715, the jurisdiction over this case belongs to the Labor Arbiter, and the Regional Director should have indorsed it to the appropriate regional branch of the National Labor Relations Commission (NLRC). On the other hand, the respondent Secretary held that the jurisdictional limitation imposed by Article 129 on his visitorial and enforcement power under Article 128 (b) of the Labor Code, as amended, has been repealed by Republic Act No. 7730. 18 He pointed out that the amendment "[n]otwithstanding the provisions of Article 129 and 217 of the Labor Code to the contrary" erased all doubts as to the amendatory nature of the new law, and in effect, overturned this Court's ruling in the case of Servando's Inc. v. Secretary of Labor and Employment. 19

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We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, this Court's ruling in Servando that the visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz: Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of the Code and other labor legislation based on the findings of the labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall 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 employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis supplied.) The records of the House of Representatives 20 show that Congressmen Alberto S. Veloso and Eriberto V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that "this bill seeks to do away with the jurisdictional limitations imposed through said ruling (referring to Servando) and to finally settle any lingering doubts on the

visitorial and enforcement powers of the Secretary of Labor and Employment." 21 Petitioner's reliance on Servando is thus untenable. The next issue is whether petitioner was able to perfect his appeal to the Secretary of Labor and Employment. Article 128(b) of the Labor Code clearly provides that the appeal bond must be "in the amount equivalent to the monetary award in the order appealed from." The records show that petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected. IN VIEW WHEREOF, the petition for certiorari is dismissed. No pronouncement as to costs.

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G.R. No. 154101

March 10, 2006

EJR CRAFTS CORPORATION, Petitioner, vs. HON. COURT OF APPEALS, DIRECTOR BARTOLOME C. AMOGUIS, NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT, DERSECRETARY JOSE M. ESPAOL, JR., DEPARTMENT OF LABOR AND EMPLOYMENT, NIVEA MAHILUM, MICHELLE JAVIER, CONDANCIA SANTOS, ELIZABETH RAMOS, VIRGINIA FROTUGO, NOEMI PASIG, NELIA RICOHERMOSA, NIMFA CORTAN, AMELIA MATAMOROSA, BABYLYN1 ANDAL, MARGARITA SALASIBAO, MERCEDES GALLO, STEFANNY MORENO, AMY DEL MUNDO, VIRGINIA SUMALVALOG, BERNARDO ACERO, VIRGINIA SANTOS, RAPELO RELLETA, LOUISE CAMAEG, PRICILLA CANLAS, LOREN LOLITA, LORNA BUCARILLE, MERLA FERNANDEZ, GLORIA ABAD, LIGAYA SUPINA, PATIRICO LOURDES, RITA BATAN, MA. FE BERNALES, MARCELINA ADONGA, RODOLFO DOMINGO, ESTEVA WESIN, ANALYN EUGENIO, JOSEPHINE ARGONIA, LINA MAGNO, YOLLY BOCO, JEAN ARO, ALMANZA GERARDO, MIRA SOLON, MAYLIN SABALILAG, MERCY QUITOLA, MARIBEL LAVILLA, JOSEPHINE ESGUERDO, FORTEL MEGMINDA, ALMA DIAZ, LEA CALISURA, MAMERTA BALLESTEROS, MELY GENOGUIN, LORNA DACASIN, CARMEN MARIETA, AUREA AMBAHAN and ANNIE RESA, Respondents. DECISION CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure assailing the Decision2 of the Court of Appeals which dismissed the special civil action for certiorari filed by petitioner seeking to annul the Resolutions3 of the Undersecretary of Labor affirming the Order 4 of the Regional Director, National Capital Region (NCR), which found petitioner liable to private respondents in the amount of P1,382,332.80 for underpayment of wages, regular holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay.

Sometime in 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay against petitioner before the Regional Office, NCR of the Department of Labor and Employment (DOLE). Acting on the complaint, Regional Director Bartolome Amoguis issued an inspection authority to Senior Labor Enforcement Officer Napoleon Santos. On 22 August 1997, an inspection was conducted on the premises of petitioners offices wherein the following violations of labor standards law were discovered, to wit: nonpresentation of employment records (payrolls and daily time records); underpayment of wages, regular holiday pay, and overtime pay; and nonpayment of 13th month pay and service incentive leave pay. On the same day, the Notice of Inspection Result was received by and explained to the manager of petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office thereafter conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner failed to question the findings of the Labor Inspector received by and explained to the corporations manager. Thus, on 6 November 1997, Regional Director Amoguis issued the assailed Order, the decretal portion of which reads: WHEREFORE, premises considered, respondents EJR CRAFTS CORPORATION and/or MR. SASIGWANI DAVE and MR. JAE KUAN LEE is hereby ordered to pay JEAN ARO, ET AL., the total amount of ONE MILLION THREE HUNDRED EIGHTY-TWO THOUSAND THREE HUNDRED THIRTY-TWO PESOS and 80/100 (P1,382,332.80) corresponding to their claims within ten (10) days from receipt hereof, otherwise, a WRIT OF EXECUTION shall be issued.5 Petitioner then filed a Motion for Reconsideration of said Order on 21 November 1997 arguing that the Regional Director has no jurisdiction over the case as private respondents were allegedly no longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection was conducted, and that private respondents claims are within

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the exclusive and original jurisdiction of the Labor Arbiters. Petitioner further contends that it was never served with the notices of the hearings nor was it notified of the inspection results, thus denying it of due process. In the 14 May 1998 Order of the Labor Secretary Cresenciano B. Trajano, petitioners Motion for Reconsideration was treated as an app eal and petitioner was directed to file an appeal bond equivalent to the amount adjudged in the assailed Order within 10 calendar days from receipt of the order; otherwise, the appeal will be dismissed for not having been perfected. On 3 June 1998, petitioner filed a supplemental motion for reconsideration and a motion for reduction of bond. Thereafter, petitioner filed a manifestation and motion praying that the surety bond in the amount of P100,000.00 be approved as compliance with the order of Secretary Trajano. In an order dated 10 July 1998, Undersecretary Jose M. Espaol, Jr. denied the motion for reduction of bond for lack of merit, and petitioner was ordered to post a cash or surety bond in the amount of P1,382,332.80, which petitioner complied with on 31 July 1998 by filing a surety bond in the amount ordered. On 24 November 1998, Undersecretary Espaol issued the assailed Resolution affirming the Order of the Regional Director with modification that Mr. Dave Sasigwani and Mr. Jae Kwan Lee are not personally liable. The Motion for Reconsideration filed by petitioner was subsequently denied for lack of merit. Upon receipt of the Resolution denying its motion for reconsideration, petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals. Said petition was thereafter dismissed in the Decision dated 20 July 2001. According to the appellate court: The pivotal issue in this case is whether the Regional Director has jurisdiction over the claims of herein private respondents. We find in favor of the private respondents. It is admitted that for the Regional Director to exercise the power to order compliance, or the so-called "enforcement power" under Article 128(b) of P.D. No. 442 as amended, it is necessary that the employer-employee relationship still exists.

In support of its contention that it is the Labor Arbiter and not the Regional Director who has jurisdiction over the claims of herein private respondents, petitioner contends that at the time the complaint was filed, the private respondents were no longer its employees. However, aside from photocopies of documents entitled "Release and Quitclaim," no other evidence was adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are unreliable and incompetent without the original and deserves little credence or weight. Moreover, when compared to other documents in the records of this case, the entries in said "Release and Quitclaim" raise serious doubts as to the authenticity and veracity of such photocopies. Upon perusal of such "Release and Quitclaim", We find that the entries therein do not correspond with the declarations of the private respondents in the Questionnaires/Affidavits which they filled up and submitted to the DOLE. xxxx As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the formers favor (Prangan vs. NLRC, 289 SCRA 142). xxxx Left with no other evidence of its allegation, petitioners denial becomes a negative and self-serving evidence which has no weight in law. Accordingly, the allegation of lack of jurisdiction necessarily fails. xxxx Petitioners allegation that it was denied due process is not well taken. A perusal of the records, particularly the Notice of Inspection Result, reveals that petitioner, through its manager Mr. Jae Kwan Lee, was served a copy of the result of the inspection and that the same was explained to him.

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The said notice of inspection result advised petitioner to submit within five (5) working days to the Regional Office its questions or objections to the findings of the Labor Enforcement Officer, otherwise an order of compliance shall be issued. However, instead of submitting its objections or question such findings, petitioner chose to remain silent even after it was notified of the hearings to be conducted on said case. It is only after an order was issued by the Regional Director directing the petitioner to pay a substantial amount that it began to assert its right. Clearly, there was no denial of due process. Furthermore, petitioner was given another chance to present its case when it filed a motion for reconsideration which the DOLE considered an appeal. Finally, the Undersecretary of Labor correctly affirmed the Order of the Regional Director since the assailed Order was not without basis. Said order of Regional Director Amoguis was based on the uncontested result of the inspection, on the Questionnaires/Affidavits of the private respondents, and on the applicable provision of the Labor Code. Moreover, petitioner failed to prove its case during the appeal since it did not adduce evidence sufficient to warrant reversal of the assailed Order of Regional Director. Accordingly, We find the assailed resolutions to be in harmony with the evidence on record and existing law and jurisprudence. WHEREFORE, based on the foregoing premises, the instant petition is hereby DISMISSED.6 Petitioners Motion for Reconsideration was subsequently denied in a Resolution dated 28 June 2002. Hence, the instant petition seeking the resolution of the following issues: I. Whether or not public respondent Regional Director has jurisdiction over the case;

II. Whether or not public respondents had committed grave abuse of discretion in dismissing the appeal and/or motion for reconsideration and the subsequent petition for certiorari of the petitioner; III. Whether or not the public respondents had denied to the petitioner its right to due process of law; IV. Whether or not, in the possibility that public respondent Regional Director has jurisdiction over the case, his decision was a faithful application of the law and correct appreciation of the evidence on record. Petitioner maintains that the Regional Director has no jurisdiction over the instant case since private respondents have ceased to be connected with the petitioner at the time of the filing of the complaint as well as when the inspection/investigation was conducted by the Labor Enforcement Officer. According to petitioner, this fact is supported by the Quitclaim and Release forms submitted by petitioner and attached as annexes to the petition for certiorari filed before the Court of Appeals, as it is clearly stated therein that private respondents had already finished their contract with petitioner. Thus, petitioner contends that there being no employer-employee relationship between private respondents and petitioner, the claims of the private respondents for payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiter. It is further argued by petitioner that it was denied due process as it was not given an opportunity to prove before the Regional Director that private respondents had already severed their employment with the corporation and had been paid the claimed monetary benefits because they were never notified of the inspection results nor of the hearings conducted. At this juncture, it would be wise to stress that the arguments espoused by petitioner in support of its position are anchored on alleged facts the contrary of which have been found by the Regional Director, the Undersecretary of Labor, and the Court of Appeals. In essence, petitioner implores this Court to ascertain and evaluate certain material facts which, however, are not within the province of the Court to consider in petitions for review, especially since said facts have already been determined by the

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administrative agency involved and such findings thereafter affirmed by the appellate court. As a rule, findings of fact by administrative agencies are accorded great respect, if not finality by the courts. As stated in the case of Villaflor v. Court of Appeals7: The findings of fact of an administrative agency must be respected as long as they are supported by substantial evidence, even if such evidence might not be overwhelming or even preponderant. It is not the task of an appellate court to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence. Furthermore, as a general rule, findings of fact of the Court of Appeals are final and conclusive and cannot be reviewed on appeal by the Supreme Court, provided they are borne out by the record or based on substantial evidence.8 It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.9 Therefore, this Court not being a trier of facts cannot pass upon the authenticity and veracity of the quitclaim and release forms the only piece of evidence presented by petitioner to support its contention that no employer-employee relationship exists between petitioner and private respondents at the time of the filing of the complaint. The said quitclaim and release forms had already been considered by both the Undersecretary of Labor and the Court of Appeals and found to be "unreliable and do not correspond to other documents on record which would prove that private respondents were working for the petitioner up to August 1997."10 The conclusion reached by both the Undersecretary of Labor and the Court of Appeals, after thoroughly considering all pieces of evidence presented before them regarding this issue, must now be regarded with great respect and finality by this Court. While it is true that there are instances when this Court may resolve factual issues, such as: 1) when the findings are grounded entirely on speculation, surmises, or conjectures; 2) when the inference made is manifestly

mistaken, absurd or impossible; 3) when there is grave abuse of discretion; 4) when the judgment is based on a misapprehension of facts; 5) when the findings of facts are conflicting; 6) when in making its findings, the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; 7) when the findings are contrary to the trial court; 8) when the findings are conclusions without citation of specific evidence on which they are based; 9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; 10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; or 11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion;11 however, none of these exceptions are applicable in the instant case. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, we agree with the Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states: Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall 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 employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.12

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With respect to petitioners claim that it had been denied due process as it was not served a copy of the inspection report and neither was it notified of the hearings, thus refusing it the opportunity to contest the findings of the Labor Enforcement Officer and the jurisdiction of the Regional Director, We cannot but agree with both the Undersecretary of Labor and the Court of Appeals that such assertion is bereft of merit. A perusal of the records will reveal that petitioner corporations manager Mr. Jae Kwan Lee was served a copy of the Inspection Report and that the same was explained to him on the same day that the said inspection was conducted. As correctly pointed out by the Undersecretary of Labor, by affixing his signature thereon, Mr. Jae Kwan Lee acknowledged receipt of the same and that he has understood its contents. Nevertheless, petitioner failed to object to the findings of the Labor Enforcement Officer. Moreover, petitioner was again given an opportunity to contest such findings when it was summoned by the Office of Chief Labor Enforcement Division to attend the summary investigation on 8 and 22 September 1997, but petitioner failed to attend. It was only after the Regional Director issued an order adjudging petitioner liable to pay private respondents the amount of P1,382,332.80 that it commenced to question the jurisdiction of the Regional Director over the complaints of private respondents. Evidently, petitioner was never denied its right to due process, but rather it chose not to participate in the proceedings until an order unfavorable to its interests was issued. WHEREFORE, premises considered, the petition for review is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 53791 is hereby AFFIRMED. With Costs. SO ORDERED.

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