FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents
Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648;
DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND
REGULATIONS. — The provisions of section 1 of Commonwealth Act No. 648 do not confer
legislative power upon the Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and under which they
promulgated the rules and regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy laid down by the National
Assembly in said Act, to wit, "to promote safe transit upon, and avoid obstructions on, roads
and streets designated as national roads by acts of the National Assembly or by executive
orders of the President of the Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic thereon makes such action
necessary or advisable in the public convenience and interest." The delegated power, if at
all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be
predicated. To promulgate rules and regulations on the use of national roads and to
determine when and how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly discharged by the National
Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for executing the law.
But it cannot be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. —
Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the
paramount police power of the state. Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit upon and avoid obstructions
on national roads, in the interest and convenience of the public. In enacting said law,
therefore, the National Assembly was prompted by considerations of public convenience and
welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least,
a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said
law, and the state in order to promote the general welfare may interfere with personal
liberty, with property, and with business and occupations. Persons and property may be
subjected to all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental
aim of our Government the rights of the individual are subordinated. Liberty is a blessing
without which life is a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority be made to prevail over

liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and, personal
discipline, so that there may be established the resultant equilibrium, which means peace
and order and happiness for all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the residuum of liberty which resides in
the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely
the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated to insure economic stability
of all the competent elements of society, through the maintenance of a proper economic
and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all governments
on the time-honored principle of salus populi est suprema lex. Social justice, therefore,
must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended
to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the greatest good to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before this court this petition for a writ of prohibition against the respondents, A. D.
Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of
Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications;
Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of
Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17,
1940, resolved to recommend to the Director of Public Works and to the Secretary of Public
Works and Communications that animal-drawn vehicles be prohibited from passing along
Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30
a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m.,
from a period of one year from the date of the opening of the Colgante Bridge to traffic;
that the Chairman of the National Traffic Commission, on July 18, 1940 recommended to
the Director of Public Works the adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which
authorizes said Director of Public Works, with the approval of the Secretary of Public Works
and Communications, to promulgate rules and regulations to regulate and control the use of
and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his
first indorsement to the Secretary of Public Works and Communications, recommended to
the latter the approval of the recommendation made by the Chairman of the National Traffic

Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to
animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing
at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public
Works and Communications, in his second indorsement addressed to the Director of Public
Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be
closed to traffic of animal-drawn vehicles, between the points and during the hours as
above indicated, for a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles are not allowed to pass and
pick up passengers in the places above-mentioned to the detriment not only of their owners
but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of
Public Works, with the approval of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the regulation and control of the use of
and traffic on national roads and streets is unconstitutional because it constitutes an undue
delegation of legislative power. This contention is untenable. As was observed by this court
in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been
better stated than in the early Ohio case decided by Judge Ranney, and since followed in a
multitude of cases, namely: ’The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion as to what it shall be, and
conferring an authority or discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no valid objection can be
made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion,
as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed
by the Legislature to an executive department or official. The Legislature may make
decisions of executive departments or subordinate officials thereof, to whom it has
committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248
Fed., 141.) The growing tendency in the decisions is to give prominence to the ’necessity’ of
the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works, with the approval of the Secretary
of Public Works and Communications, shall promulgate the necessary rules and regulations
to regulate and control the use of and traffic on such roads and streets. Such rules and
regulations, with the approval of the President, may contain provisions controlling or
regulating the construction of buildings or other structures within a reasonable distance
from along the national roads. Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized representatives whenever the
condition of the road or the traffic thereon makes such action necessary or advisable in the
public convenience and interest, or for a specified period, with the approval of the Secretary
of Public Works and Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public
Works and the Secretary of Public Works and Communications. The authority therein
conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe
transit upon and avoid obstructions on, roads and streets designated as national roads by

acts of the National Assembly or by executive orders of the President of the Philippines" and
to close them temporarily to any or all classes of traffic "whenever the condition of the road
or the traffic makes such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the determination of what the law
shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the use
of national roads and to determine when and how long a national road should be closed to
traffic, in view of the condition of the road or the traffic thereon and the requirements of
public convenience and interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said that the exercise of such
discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491): "To assert
that a law is less than a law, because it is made to depend on a future event or act, is to rob
the Legislature of the power to act wisely for the public welfare whenever a law is passed
relating to a state of affairs not yet developed, or to things future and impossible to fully
know." The proper distinction the court said was this: "The Legislature cannot delegate its
power to make the law; but it can make a law to delegate a power to determine some fact
or state of things upon which the law makes, or intends to make, its own action depend. To
deny this would be to stop the wheels of government. There are many things upon which
wise and useful legislation must depend which cannot be known to the law-making power,
and, must, therefore, be a subject of inquiry and determination outside of the halls of
legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated
June 12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R.
No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the
principle of separation of powers has been made to adapt itself to the complexities of
modern governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation," not only in the United States and England but in practically all
modern governments. Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers has,
to a large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the promulgation of certain rules
and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
unlawful interference with legitimate business or trade and abridge the right to personal
liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims
to promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was
prompted by considerations of public convenience and welfare. It was inspired by a desire
to relieve congestion of traffic. which is, to say the least, a menace to public safety. Public
welfare, then, lies at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty, with property, and with
business and occupations. Persons and property may be subjected to all kinds of restraints
and burdens, in order to secure the general comfort, health, and prosperity of the state

(U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights
of the individual are subordinated. Liberty is a blessing without which life is a misery, but
liberty should not be made to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over liberty because then the
individual will fall into slavery. The citizen should achieve the required balance of liberty and
authority in his mind through education and personal discipline, so that there may be
established the resultant equilibrium, which means peace and order and happiness for all.
The moment greater authority is conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the people. The paradox lies in the
fact that the apparent curtailment of liberty is precisely the very means of insuring its
preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case
of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the
police power is a continuing one, and a business lawful today may in the future, because of
the changed situation, the growth of population or other causes, become a menace to the
public health and welfare, and be required to yield to the public good." And in People v.
Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within the
police power of the state today things which were not thought of as being within such power
yesterday. The development of civilization, the rapidly increasing population, the growth of
public opinion, with an increasing desire on the part of the masses and of the government
to look after and care for the interests of the individuals of the state, have brought within
the police power many questions for regulation which formerly were not so
considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and
economic security of all the people. The promotion of social justice, however, is to be
achieved not through a mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of
laws and the equalization of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the existence
of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest
good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs
against the petitioner. So ordered.

Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

3which reinstated the Labor Arbiter’s June 16. J. Jerome Sanchez and Marilou Marfil and re-employed two of her batch mates. 2005 Decision of the First Division of the Court of Appeals in CA-G. and holding that respondent Caroline C. petitioner informed respondent that her probationary employment will be severed at the close of the business hours of March 12. 2005 SAN MIGUEL CORPORATION. reads: . The facts show that on April 17. Her employment was thus terminated effective March 12. 036413-03.10 On June 16. 2001. 2001. hence. 20056 Resolutions of the Court of Appeals which denied petitioner’s motions for reconsideration.R. 168194 & 168603 December 13. 84081.8 On the other hand. respondent was refused entry to petitioner’s premises. Rosendo To and Ruel Rocha. was a regular employee of petitioner San Miguel Corporation whose dismissal was valid but ineffectual for non-compliance with the requirement of one month notice in termination due to redundancy. Petitioner. Anticipating an increase in sales volume. 2001. SP No. petitioner claimed that respondent was a probationary employee whose services were terminated as a result of the excess manpower that could no longer be accommodated by the company. who met an accident. CAROLINE C. 83725. 2001. SP No. Respondent was allegedly employed on April 17. petitioner hired respondent as an account specialist on a probationary status effective September 4. 20055 and May 13. who were redeployed to other positions. it hired new recruits. Nos. This restructuring led to an initial excess of 49 regular employees.R. 2000.7 On March 13. 2003 Resolution2 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. an account specialist. On June 24. vs. 2005 Decision of the Third Division of the Court of Appeals in CA-G. Respondent. Del Rosario. and created the Centralized Key Accounts Group. The dispositive portion thereof. petitioner’s expected business growth did not materialize. respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits. 2000 and was assigned at petitioner’s Greater Manila Area-Key Accounts Group (GMA-KAG) Beer Sales Group. 2000 9 as a temporary reliever of Patrick Senen.R.1 affirming the December 30. respondent was employed by petitioner as key account specialist.: The instant consolidated petitions for review seek to set aside the (1) January 7. However. 2003 Judgment4 finding that respondent is an illegally dismissed regular employee of petitioner.__ FIRST DIVISION G. Respondent alleged that petitioner feigned an excess in manpower because after her dismissal. Likewise questioned are the June 16. 2003. 2002. including the one occupied by respondent. namely. the Labor Arbiter rendered a decision declaring respondent a regular employee because her employment exceeded six months and holding that she was illegally dismissed as there was no authorized cause to terminate her employment. DEL ROSARIO. DECISION YNARES-SANTIAGO. On March 9. it reorganized the GMA-KAG. The Arbiter further ruled that petitioner’s failure to rebut respondent’s claim that it hired additional employees after she was dismissed belie the company’s alleged redundancy. and the (2) February 23.

2003 Complainant’s award for separation pay and full backwages already amount to P36. Complainant’s award for full backwages shall be accordingly adjusted to cover the period from the time she was ineffectually dismissed on March 13.461./12 = P20. Complainant’s award for holiday pay and moral and exemplary damages is (sic) hereby deleted. The portion of the Labor Arbiter’s assailed Decision in the above-entitled case.00.000.00 plus 10% attorney’s fees. It is hereby declared that Complainant’s dismissal from employment is valid but ineffectual. Respondents’ appeal is partly GRANTED.00 P273.00 x 27 mos.192.00 x 27 mos. moral and exemplary damages of P50. finding Complainant’s dismissal illegal and ordering her reinstatement. 2000 up to the date of this Resolution.875.000.15 x 10 days = 3.634.000. premises considered.00 Service Incentive Leave P346. judgment is hereby rendered declaring the dismissal of complainant as illegal and ordering her reinstatement with full backwages. respectively.31.00/26 days = P346. Her award for attorney’s fees shall likewise be accordingly adjusted to ten percent (10%) of her total monetary award. .00 and P311.15 x 20 days = P6. thus – WHEREFORE.42 and P7. premises considered.00 2-2-29 Holiday Pay: P9. the latter modified the decision of the Labor Arbiter holding that respondent is a regular employee whose termination from employment was valid but ineffectual for petitioner’s failure to comply with the 30-day notice to the employee and the Department of Labor and Employment (DOLE).50 13th Month Pay P9.000.15/day =P346. Respondent San Miguel Corporation is hereby ordered to pay Complainant separation pay equivalent to her one-month pay per year of service reckoned from her first day of employment therewith on April 17. computed thus: Backwages: 2003-6-16 2001-3-17 = P9.000.923.00 SO ORDERED. 2001 up to the date of this Resolution. As of October 17.WHEREFORE.250. respectively.000. is SET ASIDE.11 On appeal by petitioner to the NLRC. Complainant’s award for unpaid service incentive leave pay and 13th month pay shall be reduced to P1.514. = P243.

SP No. judgment is hereby rendered declaring the dismissal as illegal and ordering her reinstatement with full backwages. provides: WHEREFORE. SP No.000. 84081. dated December 30. 2004.00 x 27 months = P 243. are hereby REVERSED and SET ASIDE. the public respondent NLRC’s assailed resolutions dated 30 December 2003 and 20 February 2004 are hereby affirmed.000.00 x 27 mos.50 13th month Pay P 9. 83725 be set .R. but deleted the award for holiday pay for lack of basis. 2003 and February 20. In CA-G. petitioner instituted these two separate petitions for review praying that the questioned decisions and resolutions of the Court of Appeals in CA-G. SP No.00 2-2-29 Service Incentive Leave P 346. 2003 Decision of the Labor Arbiter is hereby REINSTATED with some MODIFICATION and should read as follows: WHEREFORE. SP No.R.00 SO ORDERED. The appellate court noted that petitioner gave no satisfactory explanation for the hiring of employees after respondent’s termination and the absence of company criteria in determining who among the employees will be dismissed. the assailed NLRC resolutions. 84081 and CA-G.13 the NLRC denied the motions for reconsideration filed by both parties. the petition is GRANTED.SO ORDERED. SO ORDERED. The decretal portion thereof. moral and exemplary damages of P50. the First Division of the Court of Appeals granted the respondent’s petition and reinstated with modification the Labor Arbiter’s decision finding her to be an illegally dismissed regular employee.15 x 10 days = P 3.000.00 P 266. as follows: WHEREFORE.14 In CA-G.250.00 plus 10% attorney’s fees. petitioner and respondent filed separate petitions with the Court of Appeals. Thereafter. computed thus: Backwages: 2003-6-16 2001-3-17 = P 9.R.12 In a resolution dated February 20./12 = P 20. 83725.000. Accordingly. Accordingly.15 Hence. The June 16.711. 2004. in consideration of the foregoing. the instant petition is perforce dismissed. the Third Division of the Court of Appeals dismissed the company’s petition and affirmed the decision of the NLRC.R.461.

Hence. . self-serving. 2000 to March 12. At any rate. or when it is required by the nature of the work. probationers but also of some of its regular employees. 18 The best proof that petitioner should have presented to prove the probationary status of respondent is her employment contract. petitioner is invoking a redundancy which allegedly resulted in the termination not only of the trainees. particularly when they coincide with those of the Labor Arbiter are accorded respect and even finality. the burden of proving the circumstances that would justify the employee’s dismissal rests with the employer. and (2) whether or not respondent was illegally dismissed. her termination from employment must be for a just or authorized cause. And while it is true that by way of exception. her services still had to be terminated because there are no more regular positions in the company. even assuming that the employment of respondent from April 7. in the interpretation of employment contracts. The 2 Payroll Authorities19 offered by petitioner showing that respondent was hired as a replacement. the continuous employment of respondent as an account specialist for almost 11 months. Neither will petitioner’s belated claim before the Court of Appeals that respondent became a probationary employee starting October 1. her alleged probationary employment already exceeded six months. Moreover. such as when the same is established by company policy. six months and eight days to be precise. is only temporary. Undoubtedly. Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy.e. 2000. 2000. the payroll authorities indicating that respondent’s probationary status became effective as of such date are of scant evidentiary value since it does not show the conformity of respondent. 2005. as a probationary employee do not constitute substantial evidence. whether oral or written. None. 2000. the NLRC and the two Divisions of the Court of Appeals consistently held that respondent is a regular employee of petitioner company. none of these documents bear the conformity of respondent. in Cebu Royal Plant v.17 This applies with more vigor to the factual issue of respondent’s employment status. 24 Hence. her dismissal would be illegal. 2000 to September 3. 2001. and that the reckoning period of her probationary employment is September 4. respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner. and later. like the present controversy. 16 the Court consolidated the petitions. all doubts must be resolved in favor of labor. The settled rule is that factual findings of quasi-judicial bodies like the NLRC.20 none of these exceptional circumstance were proven in the present case. In termination cases.21 she should still be declared a regular employee because by the time she was dismissed on March 12.. Deputy Minister of Labor. the contract of employment in the instant case. otherwise. Thus.22 a worker was found to be a regular employee notwithstanding the presentation by the employer of a Payroll Authority indicating that said employee was hired on probation. In a resolution dated August 8. The issues for resolution are: (1) whether or not respondent is a regular employee of petitioner. the period of probationary employment may exceed six months when the parties so agree. should be construed as one vesting respondent with a regular status and security of tenure. because the Labor Arbiter. i. Having ruled that respondent is a regular employee. means that she was a regular employee and not a temporary reliever or a probationary employee. 2001. from April 17. since it was shown that he was terminated four days after the 6th month of his purported probationary employment. Indeed. and (3) if so. the records show that their findings are supported by substantial evidence. As correctly found by the NLRC. whether or not respondent is entitled to any monetary benefit.23 work against respondent. which appears to be an oral agreement since no written form was presented by petitioner. It thus argued in the alternative that even assuming that respondent qualified for regular employment. As earlier stated.aside and that respondent’s complaint be dismissed. and are therefore. having been presented.

Jr. In other words. NLRC. in view of an excess in manpower.27 it was held that the following evidence may be proffered to substantiate redundancy. properly terminable is an exercise of business judgment of the employer. these notices and the proof of payment of separation pay to the dismissed regular employees should have been offered to establish that there was excess manpower in petitioner’s GMA-KAG caused by a decline in the sales volume.31 In dismissing respondent. decreased volume of business. v. petitioner presented an affidavit of its Sales Manager and a memorandum of the company both to the effect that there is a need to redeploy its regular employees and terminate the employment of temporary employees. over petitioner who is only a probationary employee. the documents or proof needed to resolve the validity of the termination. Succinctly put.28For one. 25 In Asufrin.30 If there was indeed a valid redundancy effected by petitioner. These documents could have gained greater weight had petitioner presented its old and new staffing pattern. Granting that petitioner was able to substantiate the validity of its reorganization or restructuring. feasibility studies/proposal. the prudent recourse in termination cases is to safeguard the prized security of tenure of employees and to require employers to present the best evidence obtainable. as well as the proof showing the failure to attain the same. the said memorandum and affidavit are self-serving. therefore. These documents. In the case at bar. do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion. viz: . In Panlilio v. or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. realignment or reorganization" which resulted in the dismissal of not only probationary employees but also of regular employees. on the viability of the newly created positions. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC. exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.29 is highlighted by the non-presentation by petitioner of the required notice to the DOLE and to the separated employees. provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. (b) efficiency. e. it had to give priority to the regular employees. failed to effect a fair and reasonable criterion in dismissing respondent.Redundancy. job description and the approval by the management of the restructuring. for purposes of the Labor Code. to wit: … the new staffing pattern.26 it was held that the determination that the employee’s services are no longer necessary or sustainable and. a position is redundant where it is superfluous. and (c) seniority. however. and superfluity of a position or positions may be the outcome of a number of factors. The criteria in implementing a redundancy are: (a) less preferred status. the newly created and abolished positions and the documents showing the target business. temporary employee. it is not enough for a company to merely declare that it has become overmanned. petitioner averred that in choosing the employee to be retained and to be placed in the limited available positions. the lingering doubt as to the existence of redundancy or of petitioner’s so called "restructuring. it nevertheless. For another. A contrary ruling would encourage employers to prevent the regularization of an employee by simply invoking a feigned or unsubstantiated redundancy program. San Miguel Corporation. are in the possession of employers. In balancing the interest between labor and capital. such as overhiring of workers. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.g. the other signatories to the memorandum were not even identified. This is clear from the termination letter to respondent. Moreover. especially so because in most cases.

The existing temporary employees will have to be separated in order to give way to the aforesaid redeployment. where the Court refused to give credence to the redundancy invoked by the employer inasmuch as the company adopted no criterion in dismissing the employee. 2001. provides: ARTICLE 279. supplied) Considering that respondent was illegally dismissed. Jr. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title.There were recent developments and initiatives from Management which have direct implications to the organization of GMA Sales. Article 279 of the Labor Code. to wit: 1. it hired new recruits and re-employed two of her batch mates. However.32 It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales unit was the employment status of the employee. The instant case is no different from Asufrin. Considering that these employees are regular. in the implementation thereof. the Court finds that petitioner was not able to discharge the burden of proving that the dismissal of respondent was valid. San Miguel Corporation. In view of this Management direction. both render invalid the redundancy because both have the ultimate effect of illegally dismissing an employee. Security of tenure.. 3.. (Emphasis. What further militated against the alleged redundancy advanced by petitioner is their failure to refute respondent’s assertion that after her dismissal. it presented no proof to fortify its denial. resulting in the dismissal of the latter. and promotional initiatives undertaken during the year. The expected business growth for the year 2000 did not materialize despite the augmentation of our Sales manpower. Management will be constrained to redeploy them to other areas within GMA Sales. Other than the lame excuse that it is respondent who has the burden of proving the same. In sum.. petitioner has in its possession the documents that would disprove the fact of hiring new employees. . up to her actual reinstatement. reconfiguration. we regret to inform you that your probationary employment with the Company will be severed at the close of business hours of March 12. As a regular employee of petitioner from the date of her . Again. In cases of regular employment. There is a need to re-align other SMBD Sales units in order to further enhance synergy in the sales and distribution of SMC products. 2. computed from the time her compensation was actually withheld from her on March 13. v. she is entitled not only to reinstatement but also to payment of full backwages. 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. 2001. the absence of criteria and the erroneous implementation of the criterion selected. 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. 4. petitioner erroneously classified respondent as a probationary employee. but instead of presenting evidence to belie respondent’s contentions. Verily. it refrained from doing so and conveniently passed the burden to respondent. The realignment of these units will result to excess manpower specifically in GMA Sales.

or was oppressive to labor or done in a manner contrary to morals. are AFFIRMED with MODIFICATIONS. For this purpose. Book III of the Omnibus Rules Implementing the Labor Code. i. Finally. 84081 which reinstated with modification the June 16. holding that respondent is an illegally dismissed regular employee of petitioner.35 Section 8.R. the case is ordered REMANDED to the Labor Arbiter for the computation of the amounts due respondent. 2003 Resolution of the NLRC in NLRC NCR CA No. Book III of its Implementing Rules.. 2005 Resolution of the Court of Appeals in CA-G. irrespective of the number of working days therein. plus service incentive leave. 2005 Decision and the May 13. however. the employment status of respondent is declared regular. Similarly. or grave anxiety resulted therefrom. we held in San Miguel Corporation v. 13th month pay and attorney’s fees equivalent to 10% of the total monetary award. that social humiliation. without loss of seniority rights. the Court of Appeals correctly deleted said award.R. 83725 which affirmed the December 30. SP No. Petitioner is ordered to immediately reinstate respondent as a regular employee to her previous position. The award of moral and exemplary damages should therefore be deleted. Moral and exemplary damages cannot be justified solely upon the premise that the employer dismissed his employee without cause or due process. exemplary damages are recoverable only when the dismissal was effected in a wanton. she is likewise entitled to other benefits. additional facts must be pleaded and proved. as in the instant controversy. the petitions are DENIED. the Court cannot sustain the award of moral and exemplary damages in favor of respondent. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR: . and her dismissal from employment. Article 2208 of the Civil Code. The January 7.37 The award of attorney’s fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. The termination must be attended with bad faith. Under Section 2. unless such position no longer exists. employees who are uniformly paid by the month. No. entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Respondent is not. Hence. 2005 Decision and the June 16. illegal.. SP No. Aballa. 036413-03 declaring that the dismissal of respondent Caroline C.33 Anent attorney’s fees. 2000. SO ORDERED. a regular employee of petitioner. in which case she shall be given a substantially equivalent position. Del Rosario. respondent did not proffer substantial evidence that would overcome the legal presumption of good faith on the part of petitioner. There need only be a showing that the lawful wages were not paid accordingly.36 and paragraph 7. et al. To merit the award of these damages. a maximum of 10% of the total monetary award by way of attorney’s fees is justifiable under Article 111 of the Labor Code.employment on April 17. service incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement. No. and the February 23. 2003 Decision of the Labor Arbiter in NLRC-NCR- 00-04495-2002. 2005 Resolution and of the Court of Appeals in CA-G. 2001. oppressive or malevolent manner.38 In the present case.34 that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests. wounded feelings. computed from the time her compensation was actually withheld on March 13. Rule VIII. As MODIFIED. WHEREFORE. or fraud. Petitioner is further ordered to pay respondent backwages.e. of course. Rule IV. good customs or public policy and. was valid but ineffectual. up to her actual reinstatement. shall be presumed to be paid for all the days in the month whether worked or not.

.. 1995. On March 4. vs. 2004 in CA-G. J. 1998. She is a graduate of Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic Technology. 7431 by December 31. the unlicensed employee will be transferred to an area which does not require a license to practice if a slot is available. Petitioners. On April 22. the Director of the Institute of Radiology issued another memorandum to petitioner Maribel S. 1995. otherwise.R. 1984. On September 12. 162053 March 7. Santos was hired as X-Ray Technician in the Radiology department of private respondent St. Luke's Medical Center. SP No.: Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA) dated January 29. 1997. On November 23. Santos requiring the latter to comply with Republic Act. Santos informing the latter that the management of private respondent SLMC has approved her retirement in lieu of separation pay. On March 13. No. LUKE'S MEDICAL CENTER. Santos advising her that only a license can assure her of her continued employment at the Institute of Radiology of the private respondent SLMC and that the latter is giving her the last chance to take and pass the forthcoming board examination scheduled in June 1998. Congress passed and enacted Republic Act No. private respondent SLMC shall be constrained to take action which may include her separation from employment. otherwise. INC. 1998. (SLMC) on October 13." Said law requires that no person shall practice or offer to practice as a radiology and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board of Radiologic Technology. 2002 rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 7431 by taking and passing the forthcoming examination scheduled in June 1997. otherwise. the Director of the Institute of Radiology issued a notice to petitioner Maribel S. On May 14. the Director of the Institute of Radiology. private respondent SLMC may be compelled to retire her from employment should there be no other position available where she may be absorbed. Inc.Respondents. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S. 1997. 2007 ST.R. 026225-00. 1997. Santos directing the latter to submit her PRC Registration form/Examination Permit per Memorandum dated March 4. The antecedent facts are as follows: Petitioner Maribel S. NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. 7431 known as the "Radiologic Technology Act of 1992. the Director of the Institute of Radiology issued a final notice to petitioner Maribel S. DECISION AZCUNA. No. 1992. the Assistant Executive Director-Ancillary Services and HR Director of private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to comply with the requirement of Republic Act No. SANTOS. __ FIRST DIVISION G. AED-Division of Ancillary Services issued a memorandum to petitioner Maribel S. 75732 affirming the decision2 dated August 23.

The position is indeed vacant. 1999. Maribel Santos' behalf. President of the Philippine Association of Radiologic Technologists. may I correct you that the agreement is. In the meantime. requested the latter to accommodate petitioner Maribel S. the Personnel Manager of private respondent SLMC again issued a "Notice of Separation from the Company" to petitioner Maribel S. In a letter dated September 24." "by giving them an assignment in any department of your hospital awaiting their chance to pass the future Board Exam. petitioner Alliance of Filipino Workers (AFW).. regardless of the vacant position Ms. the Personnel Manager of private respondent SLMC issued a "Notice of Separation from the Company" to petitioner Maribel S. a certain Jack C. she must go through the usual application procedures. . Judith Betita. the need to undergo the prescribed steps. She was given 30 days from issuance of the notice of termination to look for appropriate openings which incidentally she wittingly declined to utilize. 1998 in view of the latter's refusal to accept private respondent SLMC's offer for early retirement. The notice also states that while said private respondent exerted its efforts to transfer petitioner Maribel S. Ms. Rita Marasigan. will not suffice for purposes of recruitment processing. 1999 addressed to Ms. On March 2. Lappay. 1999. wrote Ms. through its President and Legal Counsel. 1998. She did this knowing fully well that the consequences would be that her application beyond the 30-day period or after the effective date of her termination from SLMC would be considered a re-application with loss of seniority and shall be subjected to the pertinent application procedures. Santos filed a complaint against private respondent SLMC for illegal dismissal and non-payment of salaries. Santos' transfer while she was employed with SLMC given the prescribed period. Personnel Manager of private respondent SLMC. in order to be considered for the vacant position. Santos included) "for not passing yet the Board of Examination for X- ray Technology. 1998. the managers requesting to fill any vacancy has a say on the matter and correctly so. petitioner Maribel S. Ms. The formal letter. Santos decides to apply. Inc. requesting the latter to give "due consideration" to the organization's three (3) regular members of his organization (petitioner Maribel S. allowances and other monetary benefits. as well as other pre- employment requirements. As to the consensus referred to in your letter. Santos and assign her to the vacant position of CSS Aide in the hospital arising from the death of an employee more than two (2) months earlier. her qualifications do not fit with any of the present vacant positions in the hospital.On November 26." On January 6. The manager's inputs are necessarily factored into the standard recruitment procedures. Santos effective December 30. Santos is welcome to apply for any vacant position on the condition that she possesses the necessary qualifications. Hence. She likewise prayed for the award of moral and exemplary damages plus attorney's fees. I am afraid. In a letter dated December 18. in a letter dated September 22. As you know. 1999. Indeed we have gone through the mechanics to accommodate Ms. Please refer to our Recruitment Policy for particulars especially on minimum requirements of the job and the need to meet said requirements. 1999 formally requesting to fill up the vacant regular position of a CSS Aide in Ms. Rita Marasigan replied thus: Gentlemen: Thank you for your letter of September 22. 1999 after the latter failed to present/ submit her appeal for rechecking to the Professional Regulation Commission (PRC) of the recent board examination which she took and failed. Santos to other position/s. Santos effective February 5. As a matter of fact. Human Resources Director of private respondent SLMC.

Personnel Manager of private respondent SLMC wrote Mr. on the other hand. Marasigan offered Ms. or assuming she was not qualified for any vacant position even if she tried to look for one within the prescribed period. Santos opted to file a complaint before the Labor Courts and not to avail of the opportunity given her. . Ms. Atty. The Dietary Department has already been experiencing serious backlog of work due to the said vacancy. All other claims of petitioner were dismissed for lack of merit. one of the 3 X-ray Technologists in similar circumstances as Ms.00) representing her separation pay. in a letter dated December 27. HR Director. If we fail to hear from her or from you as her representatives by that time. I simply cannot understand why she also refused the separation pay offered by Management in an amount beyond the minimum required by law only to re-apply at SLMC. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos (₱115. the Labor Arbiter came out with a Decision ordering private respondent SLMC to pay petitioner Maribel S. Judith Betita. because she opted to apply for the appropriate vacant position and qualified for it within the prescribed 30-day period. Rita Marasigan.R. Angelito Calderon. here's hoping that our Union can timely influence our employees to choose their options well as it has in the past. Santos at the time successfully managed to get herself transferred to E. Please be informed that said position is in need of immediate staffing. (Signed) RITA MARASIGAN Subsequently. Management is giving Ms. Santos until the end of this month to give her decision. 1999.500. as you may recall. Martir promised to talk to Ms. Management cannot afford to wait for her decision while the operation of the said department suffers from vacancy.Needless to mention. Why Ms. we still have no definite reply from her. In that meeting. Dissatisfied. Ms. Santos replied that she would think about the offer. Santos. Ms. To date. 21. we will consider it as a waiver and we will be forced to offer the position to other applicants so as not to jeopardize the Dietary Department's operation. President of petitioner union as follows: Dear Mr. 1999. during the conference held on Dec. The other X-ray Technologist. Calderon: This is with regard to the case of Ms. Greg Del Prado the terms regarding the re-hiring of Ms. 2000. Therefore. petitioner Maribel S. Again. Please note that more than 2 months has passed since Ms. was eventually terminated not just for his failure to comply with the licensure requirement of the law but for cause (refusal to serve a customer). 14. Santos perfected an appeal with the public respondent NLRC. discussed with you and Mr. which option would be available to her anyway even (if she) chose to accept the separation pay! Well. Maribel Santos. Marasigan offered this compromise. Santos the position of Secretary at the Dietary Department. 1999. Maribel Santos. (Signed) JUDITH BETITA Personnel Manager On September 5. Please recall that last Oct. Again we failed to hear her reply through him. Ms. 1999. For your immediate action. and inform us of her reply by Dec. 8.

It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution promulgated on December 27. public respondent NLRC promulgated its Decision affirming the Decision of the Labor Arbiter. order. Petitioner thereafter filed a petition for certiorari with the CA which.5 True this rule admits of certain exceptions as. The petition lacks merit. affirmed the decision of the NLRC. Requirement for the Practice of Radiologic Technology and X-ray Technology. persons who desire to . 2002.On August 23. no person shall practice or offer to practice as a radiologic and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board. No. The requirement for a certificate of registration is set forth under R. a precondition for obtaining the certificate of registration from the Board. . While the right of workers to security of tenure is guaranteed by the Constitution. Consequently. 2002. Generally. education. II. or the findings of fact are not supported by the evidence on record 6 or are so glaringly erroneous as to constitute grave abuse of discretion. It is argued. 3 For its part. This contention is untenable. and the general welfare of the people. 15. that petitioner Santos' failure to comply with the certification requirement did not constitute just cause for termination as it violated her constitutional right to security of tenure. though. Whether the CA overlooked certain material facts and circumstances on petitioners' legal claim in relation to the complaint for illegal dismissal. and 5) petitioner Santos' non-transfer to another position in the SLMC was a valid exercise of management prerogative. Hence. private respondent St. 4) private respondent's decision to terminate petitioner Santos was made in good faith and was not the result of unfair discrimination.A. as previously mentioned. this petition raising the following issues: I. 2) the CA did not commit grave abuse of discretion in upholding the NLRC and the Labor Arbiter's ruling that petitioner was legally dismissed. however. It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos' separation from work is her failure to pass the board licensure exam for X-ray technicians. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the issues on the merit of petitioner's constitutional right of security of tenure. (SLMC) argues in its comment4 that: 1) the petition should be dismissed for failure of petitioners to file a motion for reconsideration. its exercise may be reasonably regulated pursuant to the police power of the State to safeguard health. the Court has always accorded respect and finality to the findings of fact of the CA particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence. when the judgment is based on a misapprehension of facts. peace. for example. Hence. Luke's Medical Center. morals. safety. 3) petitioner was legally and validly terminated in accordance with Republic Act Nos. 74318 thus: Sec. Ultimately. Inc. has been convincingly shown by petitioners to apply in the present case.7 None of these exceptions. the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by private respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of Radiologic Technology. the Court sees no reason to disturb such findings of fact of the CA. 4226 and 7431.Unless exempt from the examinations under Sections 16 and 17 hereof.

Certainly. Neither can the courts step in to force private respondent to reassign or transfer petitioner Santos under these circumstances. private respondent could not be expected to retain petitioner Santos despite the inimical threat posed by the latter to its business. Petitioner Santos is not in the position to demand that she be given a different work assignment when what necessitated her transfer in the first place was her own fault or failing. complainant-appellant cannot insist on her "sterling work performance without any derogatory record" to make her qualify as an x-ray technician in the absence of a proper certificate of Registration from the Board of Radiologic Technology which can only be obtained by passing the required examination.15 . educations. The law is clear that the Certificate of Registration cannot be substituted by any other requirement to allow a person to practice as a Radiologic Technologist and/or X-ray Technologist (Technician). Respondent-appellee being engaged in the hospital and health care business.) 7431 and 4226 are recognized as an exercise of the State's inherent police power. petitioner Santos was still unable to comply and pass the required exam. morals. The state is justified in prescribing the specific requirements for x-ray technicians and/or any other professions connected with the health and safety of its citizens. Indeed. Despite these warnings. 13 It would be unreasonable to compel private respondent to wait until its license is cancelled and it is materially injured before removing the cause of the impending evil. 9 The most concrete example of this would be in the field of medicine. the requirement for Board certification was set by statute.engage in the learned professions requiring scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers. To reiterate.10 The same rationale applies in the regulation of the practice of radiologic and x-ray technology. The clear and unmistakable intention of the legislature in prescribing guidelines for persons seeking to practice in this field is embodied in Section 2 of the law: Sec. (Nos. Statement of Policy. the Court quotes with approval the disquisition of public respondent NLRC in its decision dated August 23. The prerogative to determine the place or station where an employee is best qualified to serve the interests of the company on the basis of the his or her qualifications. the latter cannot close its eyes and [let] complainant-appellant's private interest override public interest. 2. treatment and research through the application of machines and/or equipment using radiation.11 In this regard. fairness and due process demand that an employer should not be penalized for situations where it had no participation or control. is a proper subject of the cited law.A.12 No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken by it conformably to an existing statute. It is undeniable that her continued employment without the required Board certification exposed the hospital to possible sanctions and even to a revocation of its license to operate. . It has long been recognized that the regulation of this field is a reasonable method of protecting the health and safety of the public to protect the public from the potentially deadly effects of incompetence and ignorance among those who would practice medicine. thus. the records bear out the fact that petitioner Santos was given ample opportunity to qualify for the position and was sufficiently warned that her failure to do so would result in her separation from work in the event there were no other vacant positions to which she could be transferred. the practice of which in all its branches has been closely regulated by the State. having in mind the legal requirements of these laws. It should be noted that the police power embraces the power to prescribe regulations to promote the health. training and performance belongs solely to the employer. Justice. 14 The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial authority. good order.It is the policy of the State to upgrade the practice of radiologic technology in the Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to ensure safe and proper diagnosis. 2002: The enactment of R. This notwithstanding. safety or general welfare of the people.

In the past. This was a valid exercise of management prerogative. to be sure. Santos did not even seriously apply for another position in the company. the Court has ruled that an objection founded on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the position.17 Furthermore. PUNO Chairperson Chief Justice ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA Associate Justice Asscociate Justice CANCIO C. Private respondent is free to determine. No.16 Labor laws.R. petitioners not having alleged nor proven that the reassigned employee did not qualify for the position where she was transferred. CRUZ. all elements of employment. do not authorize interference with the employer's judgment in the conduct of the latter's business. vs. Costs against petitioners. it does not mean that every labor dispute will be decided in favor of the workers. ADOLFO S. Nuevas for petitioner. petitioner. 1988 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY.: . The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. who likewise failed to pass the required exam. 80609 August 23. respondents. the petition is DENIED for lack of merit. GARCIA +____ EN BANC G. using its own discretion and business judgment. WHEREFORE. None of these exceptions is present in the instant case. the records show that Ms. The fact that another employee. Nicanor G. was allowed by private respondent to apply for and transfer to another position with the hospital does not constitute unlawful discrimination. J.While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor. SO ORDERED. "from hiring to firing" except in cases of unlawful discrimination or those which may be provided by law. THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY. AZCUNA Associate Justice WE CONCUR: REYNATO S.

quoted award as having been made with grave abuse of discretion. in effect rewarded rather than punished for her dishonesty. which cannot be a substitute for law. 1 Investigated and heard. the public respondent claims that the employee is sufficiently punished with her dismissal. 5 The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outhide the premises of respondent company and that their act of giving P3. We find the same to be equitable. The award is made on the ground of equity and compassion. the dispositive portion of labor arbiter's decision declared: WHEREFORE. Anent the award of separation pay as financial assistance in complainant's favor. for which she is to suffer the penalty of dismissal. Helen Bangayan and Mrs.. Mercantile Corporation of Davao.800. As the Court put it in the Firestone case: .The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. thereby impliedly accepting the validity of her dismissal. 3 Both the petitioner and the private respondent appealed to the National Labor Relations Board. the NLRC said: . she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1987. such award puts a premium on dishonesty and encourages instead of deterring corruption. Considering that Dr. therefore.00 without any receipt is tantamount to corruption of public officers.800. Nevertheless. which upheld the said decision in toto and dismissed the appeals. In the case of the private respondent. After consideration of the evidence and arguments of the parties. a traffic operator of the Philippine Long Distance Telephone Company. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. she was found guilty as charged and accordingly separated from the service. the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. In support of this position.2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. Moreover. however. an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. For its part. the instant complaint is dismissed for lack of merit. Lariosa 6 and Soco v. taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. 4 The private respondent took no further action. it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor. was accused by two complainants of having demanded and received from them the total amount of P3. In its challenged resolution of September 22. While we do not in any way approve of complainants (private respondent) mal feasance. She is. is now before us to question the affirmance of the above. complainant must be given one month pay for every year of service as financial assistance. However.. Marilyn Abucay. the company was sustained and the complaint was dismissed for lack of merit. The petitioner. and without any legal authorization or justification.

Deputy Minister of Labor and Employment. that where the exception has been applied. respectively. NLRC. was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. Similar action was taken in Filipro. v. based upon considerations of equity. In fact. the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC. the emplovee was allowed full separation pay corresponding to his 11 years of service. NLRC. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. hand in hand with management. 13 The cases above cited constitute the exception. the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was certainly more serious than the second. v. 16 Hence.year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. Article XIII expressly recognizes the vital role of labor. In the said case. However. 11 the employee's 3. the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub. in the advancement of the national economy and the welfare of the people in general. 14 being ethical rather than jural and belonging to the sphere of morals than of law. Equity has been defined as justice outside law. The Court notes. it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18-year service. Thus. the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company.topic for labor. considering that Lariosa had worked with the company for eleven years with no known previous bad record. 12 full separation pay for 6.. it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. but he was still granted three months separation pay corresponding to his 3-year service. et al . NLRC. 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. Inc. 10. the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service. In Soco. and particularly the protection of the rights of the workers. the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Inc. Inc. but in Filipro the award was two months separation pay for 2 years service. In New Frontier Mines. instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies. among other grounds. The enhancement of their welfare is one of the primary concerns of the present charter. The reason is that our Constitution is replete with positive commands for the promotion of social justice. No less curiously. however. however. NLRC. the employee was granted only one-half month separation pay for every year of her 15year service. In Engineering Equipment. Strictly speaking. 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one- half month's salary for every year of her service of 15 years. It would seem then that length of service is not . 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. v. In view of the foregoing. In Metro Drug Corporation v. We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. but in Metro. In Firestone. and 16 years service. And in San Miguel Corporation v.

on the ground of social justice. and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. while inept. was required regardless of the nature or degree of the ground proved. it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. like theft or illicit sexual relations with a fellow worker. At best it may mitigate the penalty but it certainly will not condone the offense. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. this being another authorized ground. Under these and similar circumstances. The Court feels that distinctions are in order. or whatever other name it is called. But where the cause of the separation is more serious than mere inefficiency. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Of course it has. Where the reason for the valid dismissal is. as the petitioner correctly argues. We note that heretofore the separation pay. be it mere inefficiency or something graver like immorality or dishonesty. It is time we rationalized the exception. particularly if he has worked for some time with the company. is not depraved. We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. the generosity of the law must be more discerning. He too may be validly replaced. the situation is changed completely. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards. Indeed. the employer may not be required to give the dismissed employee separation pay. This great policy of our Constitution is not meant for the protection of those who have proved . This is no longer mere incompetence but clear dishonesty. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. or financial assistance. for example. A contrary rule would. if the employee who steals from the company is granted separation pay even as he is validly dismissed. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. as it were. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises. especially to labor. which is an allowable ground. the grant of separation pay to the dismissed employee may be both just and compassionate. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct.necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence. This policy should be re-examined. when it was considered warranted. For example. the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. The benediction of compassion was made to cover a multitude of sins. have the effect. however. habitual intoxication or an offense involving moral turpitude. to make it fair to both labor and management. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. of rewarding rather than punishing the erring employee for his offense.

should be computed at the rate of one month salary for every year of service. respondents. The private respondent has been dismissed for dishonesty. the local-hires of private respondent School. No.1987.: Receiving salaries less than their counterparts hired abroad. is LIFTED. Melencio-Herrera. 128845 June 1. Bidin. ___ G.they are not worthy of it. TRAJANO in his capacity as the Acting Secretary of Labor and Employment. concur. Applying the above considerations. LEONARDO A. Inc. Cortes and Medialdea. should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. Gancayco. The fact that she has worked with the PLDT for more than a decade. cry discrimination. the petition is GRANTED. vs. is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. That is the principle we uphold today. That is a principle long honored in this jurisdiction.. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.. The temporary restraining order dated March 23. CRESENCIANO B. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. That the local-hires are paid more than their colleagues in other schools is. DR. we hold that the grant of separation pay in the case at bar is unjustified. We agree. Feliciano. from Philippine or other nationalities. Paras. The point is that employees should be given equal pay for work of equal value. The challenged resolution of September 22.1 To enable the School to continue carrying out its educational program and improve its standard of instruction. 1988. beside the point. HON. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila.R. 2000 INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE). which is hereby DISALLOWED. Gutierrez. is AFFIRMED in toto except for the grant of separation pay in the form of financial assistance. pursuant to Presidential Decree 732. The Court also rules that the separation pay. and INTERNATIONAL SCHOOL. petitioner. JJ. It is so ordered. HON. QUISUMBING in his capacity as the Secretary of Labor and Employment. If regarded as a justification for moderating the penalty of dismissal. Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad. J. (the School. like the workers who have tainted the cause of labor with the blemishes of their own character. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee.. That is a principle that rests on fundamental notions of justice. it will actually become a prize for disloyalty. assuming the length of such service is deemed material. mostly Filipinos.nêt Private respondent International School. 17 WHEREFORE. Narvasa. of course. such personnel being exempt from otherwise applicable laws and regulations . KAPUNAN.1âwphi1. INC. if it is to be considered at all. for short). Jr. if found due under the circumstances of each case. Sarmiento.

The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education.attending their employment. Petitioner now seeks relief in this Court. Where is one's home economy? c.3 When negotiations for a new collective bargaining agreement were held on June 1995. effective means of transportation. classifying the same into two: (1) foreign-hires and (2) local-hires. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. 1996. petitioner International School Alliance of Educators. the School hires both foreign and local teachers as members of its faculty. leave his family and friends. namely: (a) the "dislocation factor" and (b) limited tenure. the DOLE Acting Secretary. This issue. the faculty member is classified as a local hire. contested the difference in salary rates between foreign and local-hires. petitioner filed a notice of strike. On September 7. and take the risk of deviating from a promising career path — all for the purpose of pursuing his profession as an educator. eventually caused a deadlock between the parties. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family. . What is one's domicile? b. The School explains: A foreign-hire would necessarily have to uproot himself from his home country. 1995. Then DOLE Secretary Leonardo A. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a.1avvphi1 These include housing. Trajano. and home leave travel allowance. transportation. To which country does one owe economic allegiance? d. he or she is deemed a foreign-hire. otherwise. On June 10. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure. Accordingly. allowance for the education of one's children. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. and of course the primary benefit of a basic salary/retirement compensation. as well as the question of whether foreign-hires should be included in the appropriate bargaining unit. Crescenciano B. shipping costs. the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after along period in a foreign land. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19. but this time in a foreign land. issued an Order resolving the parity and representation issues in favor of the School. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines? 2 Should the answer to any of these queries point to the Philippines. adequate insurance against illness and death. The School grants foreign-hires certain benefits not accorded local-hires. except laws that have been or will be enacted for the protection of employees. taxes. 1997. Because of a limited tenure. "a legitimate labor union and the collective bargaining representative of all faculty members"4 of the School.

with nationalities other than Filipino. these provisions demonstrate the parties' recognition of the difference in the status of two types of employees.Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. 7 . A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. Truth to tell. the former enjoying only a limited tenure. under terms and conditions that are consistent with accepted international practice. in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract. Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. the difference in their salaries. Verily. The Union cannot also invoke the equal protection clause to justify its claim of parity. among the student population. Furthermore. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad.6 The Acting secretary upheld the point-of-hire classification for the distinction in salary rates: The Principle "equal pay for equal work" does not find applications in the present case. regardless of race. having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School. The School disputes these claims and gives a breakdown of its faculty members. To our mind. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. who have been hired locally and classified as local hires. The compensation package given to local-hires has been shown to apply to all. To apply parity therefore. there is a substantial distinction between foreign hires and local hires. hence. there are foreigners who have been hired locally and who are paid equally as Filipino local hires. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS).5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. numbering 38 in all.

11 The Universal Declaration of Human Rights. in particular women being guaranteed conditions of work not inferior to those enjoyed by men. The Constitution 18 also directs the State to promote "equality of employment opportunities for all. has incorporated this principle as part of its national laws. Social. with equal pay for equal work. give everyone his due. 12 the International Covenant on Economic.We cannot agree. skill. and observe honesty and good faith. the very antithesis of fairness and justice. in Article 7 thereof. for example. 14 the Convention against Discrimination in Education. 10 i. The Constitution8 in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity." These conditions are not restricted to the physical workplace — the factory. particularly in terms of wages. and Cultural Rights. Social. where the relations between capital and labor are often skewed in favor of capital." Similarly. the International Covenant on Economic. and Cultural Rights.9 likewise proscribes discrimination. [to] act with justice. 20 Discrimination. which springs from general principles of law. which ensure.e. Remuneration which provides all workers. That public policy abhors inequality and discrimination is beyond contention. based on the test of what is reasonable. Our Constitution and laws reflect the policy against these evils. The Philippines. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work. the general principles of fairness and justice. 111) Concerning Discrimination in Respect of Employment and Occupation 16 — all embody the general principle against discrimination." It would be an affront to both the spirit and letter of these provisions if the State. effort and . and political inequalities. Article 135. General principles of law include principles of equity. race or creed. xxx xxx xxx The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." The very broad Article 19 of the Civil Code requires every person. prohibits and penalizes 21 the payment of lesser compensation to a female employee as against a male employee for work of equal value. In the workplace. closes its eyes to unequal and discriminatory terms and conditions of employment. Notably. inequality and discrimination by the employer are all the more reprehensible. supra. 15 the Convention (No. reduce social. the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless of sex. in particular: a. 13 the International Convention on the Elimination of All Forms of Racial Discrimination. the office or the field — but include as well the manner by which employers treat their employees. The Constitution 17 specifically provides that labor is entitled to "humane conditions of work. is frowned upon by the Labor Code. economic. in spite of its primordial obligation to promote and ensure equal employment opportunities. International law.. as a minimum." Persons who work with substantially equal qualifications. "in the exercise of his rights and in the performance of his duties. through its Constitution. with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind.

" 25 "to afford labor full protection. it is not for that employee to explain why he receives less or why the others receive more." 26 The State. indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. has the right and duty to regulate the relations between labor and capital. the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services. such as housing." In Songco v. certainly. the presumption is that these employees perform equal work.) as "a reward or recompense for services performed. 23 The Court finds this argument a little cavalier. therefore. comprised of all or less than all of the entire body of employees. taxes and home leave travel allowances. 22 This rule applies to the School.) While we recognize the need of the School to attract foreign-hires. the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. must yield to the common good. we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. The employer has discriminated against that employee.responsibility. its "international character" notwithstanding. should be paid similar salaries. salaries should not be used as an enticement to the prejudice of local-hires. Whether it be derived from "salarium." the pay of the Roman soldier. transportation. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. 28 Should such contracts contain stipulations that are contrary to public policy. consistent with equity to the employer. 24 we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. collective bargaining agreements included. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. Both groups have similar functions and responsibilities. which they perform under similar working conditions. "Salary" is defined in Black's Law Dictionary (5th ed. If an employer accords employees the same position and rank." Similarly. This presumption is borne by logic and human experience. (Emphasis supplied. does not deserve the sympathy of this Court. The practice of the School of according higher salaries to foreign-hires contravenes public policy and. it carries with it the fundamental idea of compensation for services rendered. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. If the employer pays one employee less than the rest. The employer in this case has failed to discharge this burden. In this case. 27 These relations are not merely contractual but are so impressed with public interest that labor contracts." or more fancifully from "sal." 29 The . it is for the employer to explain why the employee is treated unfairly. National Labor Relations Commission. however. That would be adding insult to injury. There is no evidence here that foreign- hires perform 25% more efficiently or effectively than the local-hires.1avvphi1 We agree. under similar conditions. A bargaining unit is "a group of employees of a given employer. The Constitution enjoins the State to "protect the rights of workers and promote their welfare. For the same reason. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. shipping costs. courts will not hesitate to strike down these stipulations. that foreign-hires do not belong to the same bargaining unit as the local-hires.

such as substantial similarity of work and duties. respondent. SO ORDERED. Puno and Pardo. petitioner. the petition is GIVEN DUE COURSE. and private respondent labor union PAMAO-NFL. 1997.R. transportation. INC. shipping costs. The collective bargaining history in the School also shows that these groups were always treated separately. and justify the exclusion of the former from the latter. Simply put. SO ORDERED. are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than local-hires. 3 The core of the present controversy is the interpretation of the provision for "free meals" under Section 3 of Article XVIII of the 1996-2001 Collective Bargaining Agreement (CBA) between petitioner Dole Philippines. or similarity of compensation and working conditions (Substantial Mutual Interests Rule). 30 The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. 146650 January 13. (3) prior collective bargaining history. 31 It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. taxes. foreign-hires are accorded certain benefits not granted to local-hires. and (4) similarity of employment status. Inc. 2000 decision1 which in turn upheld the Order issued by the voluntary arbitrator 2 dated 12 October 1998.. The Orders of the Secretary of Labor and Employment dated June 10.factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine). WHEREFORE. premises considered. vs. JJ. PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL). These benefits. Section 3 of the collective bargaining agreement to those employees who have actually performed overtime works even for exactly three (3) hours only. concur. CORONA. J. 2003 DOLE PHILIPPINES. Respondent is hereby directed to extend the "free meal" benefit as provided for in Article XVIII. No.. are reasonably related to their status as foreign-hires. assailing the January 9. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. __ G. Foreign-hires have limited tenure. judgment is hereby rendered in favor of the complainant.: Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil Procedure. how many hours of overtime work must a Dole employee render to be entitled to the free meal under Section 3 of Article XVIII . such as housing. the dispositive portion of which reads: WHEREFORE. 1996 and March 19. 2001 resolution of the Court of Appeals which denied petitioner’s motion for reconsideration of its September 22. The petition is hereby GRANTED IN PART. and home leave travel allowance. local-hires enjoy security of tenure. (2) affinity and unity of the employees' interest. Although foreign-hires perform similar functions under the same working conditions as the local-hires.

Among the provisions of the new CBA is the disputed section on meal allowance under Section 3 of Article XVIII on Bonuses and Allowances. the voluntary arbitrator. Thus.. However. 2000. three hours of actual overtime work or (b) more than three hours of actual overtime work? The antecedents are as follows: On February 22. petitioner elevated the matter to the Court of Appeals by way of a petition for review on certiorari. some departments of Dole reverted to the previous practice of granting free meals after exactly three hours of actual overtime work. a review of the pertinent section of past CBAs is in order. The COMPANY agrees to grant a MEAL ALLOWANCE of FOUR (P4. On the other hand. as presently practiced. private respondent filed a complaint before the National Conciliation and Mediation Board alleging that petitioner Dole refused to comply with the provisions of the 1996-2001 CBA because it granted free meals only to those who rendered overtime work for more than three hours and not to those who rendered exactly three hours overtime work. To arrive at a correct interpretation of the disputed provision of the CBA. other departments continued the practice of granting free meals only after more than three hours of overtime work. The 1990-1995 CBA provision on meal allowance was amended by the parties in the 1993-1995 CBA Supplement. a new five-year Collective Bargaining Agreement for the period starting February 1996 up to February 2001. private respondent union and the voluntary arbitrator see it as meaning after exactly three hours of actual overtime work. or no less than. MEAL ALLOWANCE. the Court of Appeals rendered its decision upholding the assailed order. Petitioner sought a reconsideration of the above order but the same was denied. was executed by petitioner Dole Philippines. The "meal allowance" provision in the 1996-2001 CBA is not new. Hence.00) after THREE (3) hours of actual overtime work.00) PESOS to all employees who render at least TWO (2) hours or more of actual . The CBA covering the period 21 September 1985 to 20 September 1988 provided: Section 3. The parties agreed to submit the dispute to voluntary arbitration. deciding in favor of the respondent. issued an order directing petitioner Dole to extend the "free meal" benefit to those employees who actually did overtime work even for exactly three hours only. and the use of the words "after" and "after more than" to qualify the amount of overtime work to be performed by an employee to entitle him to the free meal. 1996. MEAL ALLOWANCE.4 Pursuant to the above provision of the CBA.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a workday. Thereafter. and FREE MEALS. It was also in the 1985-1988 CBA and the 1990-1995 CBA. Thus. and private respondent Pawis Ng Makabayang Obrero-NFL (PAMAO-NFL). Petitioner Dole asserts that the phrase "after three hours of actual overtime work" should be interpreted to mean after more than three hours of actual overtime work. which reads: Section 3.of the 1996-2001 CBA? Is it when he has rendered (a) exactly. The COMPANY agrees to grant a MEAL ALLOWANCE of TEN PESOS (P10. not exceeding TWENTY FIVE PESOS (P25. The clear changes in each CBA provision on meal allowance were in the amount of the meal allowance and free meals. On September 22. the instant petition. Inc.

Petitioner asserts that the phrase "after three (3) hours of actual overtime work" does not mean after exactly three hours of actual overtime work. as amended). However."7 We note that the phrase "more than" was neither in the 1985-1988 CBA nor in the original 1990-1995 CBA. Respondent."6 The provision above was later amended when the parties renegotiated the economic provisions of the CBA pursuant to Article 253-A of the Labor Code. The COMPANY agrees to grant a MEAL SUBSIDY of NINE PESOS (P9. overtime work on a workday. not "after more than" or "in excess of" three hours overtime work. Section 3 of Article XVIII of the 14 January 1993 to 13 January 1995 Supplement to the 1990-1995 CBA reads: Section 3. and FREE MEALS. not exceeding SIXTEEN PESOS (P16. which reverted to the phrase "after three (3) hours"."5 The CBA for 14 January 1990 to 13 January 1995 likewise provided: Section 3. The disputed provision of the CBA is clear and unambiguous. or no less than. as presently practiced. regardless of the absence of said phrase in all the past CBAs. it had always been the policy of petitioner corporation to give the meal allowance only after more than 3 hours of overtime work. MEAL ALLOWANCE. The terms are explicit and the language of the CBA is not susceptible to any other interpretation. It was inserted only in the 1993-1995 CBA Supplement. after THREE (3) hours of actual overtime work. as presently practiced. Petitioner asserts that the "more than" in the 1993-1995 CBA Supplement was mere surplusage because. why was it included only in the 1993-1995 CBA Supplement and the parties had to negotiate its deletion in the 1996-2001 CBA? Clearly then. Hence. maintains that "after three (3) hours of actual overtime work" simply means after rendering exactly. as presently practiced.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a workday. and FREE MEALS. But said phrase is again absent in Section 3 of Article XVIII of the 1996-2001 CBA. three hours of overtime work. three hours of actual overtime work. and FREE MEALS. The Court finds logic in private respondent’s interpretation. on the other hand. or no less than. it means after more than three hours of actual overtime work.00) after more than THREE (3) hours of actual overtime work (Section 3. the reversion to the wording of previous CBAs can only mean that the parties intended that free meals be given to employees after exactly. MEAL ALLOWANCE. Petitioner insists that this has been the interpretation and practice of Dole for the past thirteen years. which is simply that an employee shall be entitled to a free meal if he has rendered exactly. not exceeding TWENTY ONE PESOS (P21. The omission of the phrase "more than" between "after" and "three hours" in the present CBA spells a big difference.00) after THREE (3) hours of actual overtime work. if this were true. The COMPANY agrees to grant a MEAL ALLOWANCE of EIGHT PESOS (P8. .00) to all employees who render at least TWO (2) hours or more of actual overtime work on a workday. the literal meaning of "free meals after three (3) hours of overtime work" shall prevail. No amount of legal semantics can convince the Court that "after more than" means the same as "after". three hours of actual overtime work. or no less than.

belongs to the employer x x x". a collective bargaining agreement or the general principles of fair play and justice. if so. 10 Petitioner Dole cannot assail the voluntary arbitrator’s interpretation of the CBA for the supposed impairment of its management prerogatives just because the same interpretation is contrary to its own. WHEREFORE. 9 This situation constitutes one of the limitations. and THE COURT OF APPEALS. It is subject to the limitations found in law. assailing the Decision1 of the Special Eighth Division of the Court of Appeals dated 06 March 2002. vs.R. petition is hereby denied. under what conditions. respectively.Petitioner also invokes the well-entrenched principle of management prerogative that "the power to grant benefits over and beyond the minimum standards of law. THE FACTS The facts of this case are quite simple and not in dispute. Ancheta of the National Conciliation and Mediation Board (NCMB) dated 25 September 2001 and 05 November 2001. as amended. The exercise of management prerogative is not unlimited. or the Labor Code for that matter. even if the law is solicitous of the welfare of the employees. and Carpio-Morales. Puno. 155059.. it must also protect the right of the employer to exercise what clearly are management prerogatives. ___ Republic of the Philippines SUPREME COURT SECOND DIVISION G.8 Petitioner claims that. it has the right to determine whether it will grant a "free meal" benefit to its employees and. Assailed likewise. which declared the private respondent herein not guilty of violating Article 100 of the Labor Code. which denied the motion for reconsideration of the petitioner.. 2005 AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION. concur. Said Decision upheld the Decision2 and Order3 of Voluntary Arbitrator Angel A. April 29. being the employer. No. INC. for lack of merit. Respondents. J. Panganiban. SO ORDERED. According to this principle. (Chairman). The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law. . is the Resolution 4 of the Court of Appeals dated 12 July 2002.: Before Us is a special civil action for certiorari. JJ. We do not think so. Sandoval-Gutierrez. DECISION CHICO-NAZARIO. AMERICAN WIRE AND CABLE CO. Petitioner. To see it otherwise would amount to an impairment of its rights as an employer.

The Company however. Christmas party and 35% premium for work rendered during Holy Week and Christmas season and for not granting any promotional increase to the alleged fifteen (15) Daily-Rated Union Members in the absence of a promotion. suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed. On 21 June 2001. On 25 September 2001. in consultation with the Unions on grounds of equity and fairness. the new job classifications were in the nature of a promotion. . Ancheta. The dispositive portion of the said Decision is quoted hereunder: WHEREFORE. Holy Tuesday. when it unilaterally withdrew the subject benefits. necessitating the grant of an increase in the salaries of the said 15 members. There are two unions in this company. we find no cogent reason to change. c. an original action was filed before the NCMB of the Department of Labor and Employment (DOLE) by the two unions for voluntary arbitration. an Order8 was issued by Voluntary Arbitrator Angel A. and when no promotional increase was granted to the affected employees. with all the foregoing considerations. Inc. as amended. On 04 July 2001... 26. Christmas Party. They alleged that the private respondent. it is hereby declared that the Company is not guilty of violating Article 100 of the Labor Code. Ancheta. Assigned as Voluntary Arbitrator was Angel A. Ancheta in favor of the private respondent. or disturb said decision. a Decision5 was rendered by Voluntary Arbitrator Angel A. the parties simultaneously filed their respective position papers with the Office of the Voluntary Arbitrator. a Submission Agreement was filed by the parties before the Office for Voluntary Arbitration. Holy Wednesday. Service Award. the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union). modify. These are the following: a. On 05 November 2001. 27. NCMB.American Wire and Cable Co. b.6 A motion for reconsideration was filed by both unions7 where they alleged that the Voluntary Arbitrator manifestly erred in finding that the company did not violate Article 100 of the Labor Code. is a corporation engaged in the manufacture of wires and cables. 28 and 29. On 16 February 2001. is directed to grant the service award to deserving employees in amounts and extent at its discretion. without valid cause. According to petitioner. December 23. Part of the Order is quoted hereunder: Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly discussed and explained based on the pleadings and documentary evidenc[e] adduced by the contending parties. Promotional Increase. 35% premium pay of an employee’s basic pay for the work rendered during Holy Monday. as amended. or specifically for withdrawing the service award. and DOLE. and d. A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned new job classifications.

SP No.16 citing grave abuse of discretion amounting to lack of jurisdiction. premises considered. contending that the Court of Appeals misappreciated the facts of the case. Our decision dated 25 September 2001 is affirmed "en toto. they assert. let the instant MOTION[S] FOR RECONSIDERATION be. ASSIGNMENT OF ERRORS The petitioner assigns as errors the following: I THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100 OF THE LABOR CODE. The Court of Appeals denied the motion in its Resolution dated 12 July 200214 because it did not present any new matter which had not been considered in arriving at the decision. The petitioner averred that Voluntary Arbitrator Angel A. TO WIT: 1) 35% PREMIUM PAY.12 A motion for reconsideration13 was filed by the petitioner. WITH THE FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON PROFITS. Ancheta dated September 25. and that it committed serious error when it ruled that the unaudited financial statement bears no importance in the instant case. petitioner instituted the instant special civil action for certiorari. SP No. as amended. The decretal portion of the decision reads: WHEREFORE.15 Dissatisfied with the court a quo’s ruling. AS A MATTER OF LONG ESTABLISHED COMPANY PRACTICE."9 An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the Court of Appeals10 and docketed as CA-G.R. Ancheta erred in finding that the company did not violate Article 100 of the Labor Code. LINE AND SINKER. a Decision in favor of herein respondent company was promulgated by the Special Eighth Division of the Court of Appeals in CA-G. denied for lack of merit. 68182. The Decision of Voluntary Arbitrator Angel A. 11 On 06 March 2002. the Voluntary Arbitrator erred in adopting the company’s unaudited Revenues and Profitability Analysis for the years 1996-2000 in justifying the latter’s withdrawal of the questioned benefits. the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED. II THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK. when the subject benefits were unilaterally withdrawn. The dispositive portion of the Resolution states: WHEREFORE. as they are hereby. AAA-10-6-4-2001 are hereby AFFIRMED and UPHELD. WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE MEMBERS OF PETITIONER UNION. 68182. the motion for reconsideration is hereby DENIED for lack of merit. 2001 in VA Case No. 2001 and his Order dated November 5. 2) CHRISTMAS PARTY AND ITS INCIDENTAL BENEFITS.WHEREFORE. . Further. AS AMENDED. WHICH IN TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL. AND 3) SERVICE AWARD. for lack of merit.R. THE RESPONDENT COMPANY’S SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM THE PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.

PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. 100. deliberately. Article 100 of the Labor Code provides: ART. the solitary issue that must be addressed by this Court is whether or not private respondent is guilty of violating Article 100 of the Labor Code. THE COURT’S RULING Before we address the sole issue presented in the instant case. it is best to first discuss a matter which was raised by the private respondent in its Comment. The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for selected days during the Holy Week and Christmas season. the holding of the Christmas Party and its incidental benefits.19 With that out of the way. The Court shall resolve the solitary issue on the merits for future guidance of the bench and bar." the grant of the same. rather than on technicality. As such. but simply.18 The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of paramount importance. or other employee benefits being enjoyed at the time of promulgation of this Code. and without the consent of the former. or a construction of a difficult question of law. and the giving of service awards violated Article 100 of the Labor Code. CANNOT BE UNILATERALLY WITHDRAWN BY RESPONDENT COMPANY. there is no question that the Supreme Court has the discretion to dismiss it if it is defective. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements.20 . According to it. as amended. we shall now resolve whether or not the respondent company is guilty of violating Article 100 of the Labor Code. when the benefits/entitlements given to the members of petitioner union were withdrawn. it cannot be withdrawn from the petitioner at respondent’s whim and caprice. by reason of its long and regular concession. sound policy dictates that it is far better to dispose the case on the merits. ISSUE Synthesized. The private respondent contends that this case should have been dismissed outright because of petitioner’s error in the mode of appeal.III THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS. the petitioner should have elevated the instant case to this Court through a petition for review on certiorari under Rule 45. However. Even assuming that it can be treated as a "bonus. as amended. of the 1997 Rules on Civil Procedure. may be regarded as part of regular compensation. the grant has been a practice over a long period of time. The benefits/entitlements were not given to petitioner due to an error in interpretation.17 Assuming arguendo that the mode of appeal taken by the petitioner is improper. The benefits in question were given by the respondent to the petitioner consistently. and not through a special civil action for certiorari under Rule 65. The benefits given by the respondent cannot be considered as a "bonus" as they are not founded on profit. and unconditionally since time immemorial. The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner.

NLRC29 we have characterized what a bonus is. the petitioner insists that since the former was unaudited. However. it asserts that a promotional increase in their salaries was in order.23 where we held that financial statements audited by independent auditors constitute the normal method of proof of the profit and loss performance of the company. Our ruling in the case of Bogo-Medellin Sugarcane Planters Association.27 The respondent company likewise asseverates that the 15 members of petitioner union were not actually promoted. The company’s financial performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding economy.With respect to the fifteen (15) employees who are members of petitioner union that were given new job classifications. The normal and/or legal method for establishing profit and loss of a company is through a financial statement audited by an independent auditor. we held: … The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. viz: A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. it is critical that a determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not. except when it is made part of the wage.21 On respondent company’s Revenues and Profitability Analysis for the years 1996-2000.. the respondent corporation avers that the grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. 22 The petitioner cites our ruling in the case of Saballa v. the latter contends that the cases cited by the petitioner indeed uniformly ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. it only necessarily follows that the company’s financial situation at present is already very much different from where it was three or four years ago. The grant of these benefits was conditional based upon the financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed thereby justifying the discontinuance of said grants. these cases do not require that the only legal method to ascertain profit and loss is through an audited financial statement. The granting of a bonus is a management prerogative.28 From the foregoing contentions. . it should not have justified the company’s sudden withdrawal of the benefits/entitlements. There was only a realignment of positions. et al. and not whether the company acquired profit or not. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. the petitioner argues that it is the employee’s length of service which is taken as a factor in the grant of this benefit. et al. The cases only provide that an audited financial statement is the normal method. it appears that for the Court to resolve the issue presented. v. Hence. NLRC.25 In answer to all these. Salary adjustment is a must due to their promotion. Thus. Inc. In the case of Producers Bank of the Philippines v. On the matter of the withdrawal of the service award. In this case. a bonus is not a demandable and enforceable obligation. whether they are demandable and enforceable obligations. salary or compensation of the employee.24was likewise invoked. NLRC. something given in addition to what is ordinarily received by or strictly due the recipient.26 On the subject of the unaudited financial statement presented by the private respondent. and assuming they are so.

and the cash incentives given together with the service awards are all in excess of what the law requires each employer to give its employees. . They were never incorporated in the Collective Bargaining Agreement (CBA). as held by the Court of Appeals: Anent the Christmas party and raffle of prizes. For a bonus to be enforceable. and have not yet been incorporated in the CBA. which are bonuses. the records reveal that these benefits/entitlements have not been subjects of any express agreement between the union and the company.36The downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it.35evidently to cut costs. and must be shown to have been consistent and deliberate. the holding of Christmas parties with raffle. To be considered a "regular practice. What is clear from the records is that over the years. The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season. can these bonuses be considered part of the wage or salary or compensation making them enforceable obligations? The Court does not believe so. As propitiously observed by the Court of Appeals: . the petitioner has not denied having made proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the CBA. are demandable or not. Also. Aside from the general averment of the petitioner that this benefit had been granted by the private respondent since time immemorial. In fact. [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the law. 33 The Christmas parties and its incidental benefits. Stated another way. The consequential question therefore that needs to be settled is if the subject benefits/entitlements. it must have been promised by the employer and expressly agreed upon by the parties. Further.34 There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location changed from paid venues to one which was free of charge. Since they are above what is strictly due to the members of petitioner-union.Based on the foregoing pronouncement. there had been no evidence adduced that it had been a regular practice. . the grant of these two aforementioned bonuses cannot be considered to have been the private respondent’s long and regular practice.38 . As observed by the Voluntary Arbitrator.30 or it must have had a fixed amount31 and had been a long and regular practice on the part of the employer. which.32 The benefits/entitlements in question were never subjects of any express agreement between the parties. We agree with the Voluntary Arbitrator that the same was merely sponsored by the respondent corporation out of generosity and that the same is dependent on the financial performance of the company for a particular year…37 The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. whenever management sees necessary. and the giving of cash incentive together with the service award cannot be said to have fixed amounts. unless they have been made a part of the wage or salary or compensation of the employees." the giving of the bonus should have been done over a long period of time. the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and with the express reservation from respondent corporation’s owner that it cannot continue to rant the same in view of the company’s current financial situation. there had been a downtrend in the amount given as service award. the granting of the same was a management prerogative. it is obvious that the benefits/entitlements subjects of the instant case are all bonuses which were given by the private respondent out of its generosity and munificence. may be withdrawn.

. and Tinga. pp. p.. SO ORDERED. concur.40 WHEREFORE. which affirmed and upheld the decision of the Voluntary Arbitrator. Austria-Martinez. 10-11. 214. Villarama. On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries. 216-222. 7 Rollo. Footnotes 1 Rollo. 201-213. p. in view of all the foregoing. the assailed Decision and Resolution of the Court of Appeals dated 06 March 2002 and 12 July 2002. No pronouncement as to costs. respectively. pp. the holding of Christmas parties with its incidental benefits. and the grant of cash incentive together with the service award are all bonuses which are neither demandable nor enforceable obligations of the private respondent. 191-200. 4 Rollo. pp. pp. 8 Rollo. 6 Rollo. are hereby AFFIRMED. the Daily Rated Union’s claim for promotional increase likewise fall[s] there being no promotion established under the records at hand. 2-30. Jr. 241. 2 Rollo. JJ. viz: … Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15 employees. pp. Del Castillo concurring.. 199-200. pp. with Associate Justices Conchita Carpio-Morales and Mariano L. 9 Id.39 Having thus ruled that the additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season. 3 Rollo. Penned by Associate Justice Martin S. pp. Callejo. Sr. (Chairman). 10 CA Rollo.To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past generosity. 11 Ibid. it is not necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the private respondent. Puno. p. 214. 191-200. 5 Rollo. . the factual finding of the Voluntary Arbitrator is revealing.

. without authority from the Executive Committee or Board of Directors. respondent. SP No. For the years 1989 and 1990. remanding to the Labor Arbiter for further hearings the complaint for payment of separation pay. However.441. are generally not honored by banks. petitioner. Borromeo joined the petitioner Bank on June 1. J. MARIANO M. SR. denying the petitioner Bank’s motion for reconsideration.375 in favor of Joel Maniwan. the respondent was promoted to the position of Assistant Vice-President. the respondent was laterally transferred to Cagayan de Oro City as Branch Manager of the petitioner Bank’s branch thereat. DECISION CALLEJO. 57365. vs. the respondent. in 1992. DAUD/BP is the acronym for checks "Drawn Against Uncollected Deposits/Bills Purchased. 2004 CHINA BANKING CORPORATION. he was promoted to Senior Manager Level II. 2002 of the Court of Appeals in CA-G. a DAUD/BP accommodation is a credit accommodation granted to a few and select bank clients through the withdrawal of uncollected or uncleared check deposits from their current account. approved several DAUD/BP accommodations amounting to ₱2. DAUD/BP accommodations may be granted only by a bank officer upon express authority from its Executive Committee or Board of Directors. with Edmundo Ramos as surety. the respondent received a "highly satisfactory" performance rating and was given the corresponding profit sharing/p>erformance bonus. Further.441. Subsequently. Moreover. 1996.___ G. he was promoted from Manager Level I to Manager Level II.375 were returned unpaid from September 20. a total of ten out-of-town checks (7 PCIB checks and 3 UCPB checks) of various dates amounting to ₱2. prior to his last promotion and then unknown to the petitioner Bank." Such checks. Borromeo against the petitioner Bank. 1996. 156515 October 19. in 1996. in 1995. which are not sufficiently funded by cash. Branch Banking Group for the Mindanao area effective October 16. As a result of the DAUD/BP accommodations in favor of Maniwan. he consistently received a "very good" performance rating for each of the said years and again received the corresponding profit sharing/p>erformance bonus. 1996 to October 17.R. No. In 1994. mid-year bonus. Then again.R." . Each promotion had the corresponding increase in the respondent’s salary as well as in the benefits he received from the petitioner Bank. profit share and damages filed by respondent Mariano M. Each of the returned checks was stamped with the notation "Payment Stopped/Account Closed. He then had the rank of Manager Level I. Finally. 1989 as Manager assigned at the latter’s Regional Office in Cebu City. BORROMEO. Likewise. he was promoted to Senior Manager Level I. with a "highly satisfactory" performance rating. Under the petitioner Bank’s standard operating procedures. The factual antecedents of the case are as follows: Respondent Mariano M. From 1991 up to 1995. sought to be reversed is the appellate court’s Resolution dated January 6.: Before the Court is the petition for review on certiorari filed by China Banking Corporation seeking the reversal of the Decision1 dated July 19. 2003.

00? When did the accommodations start exceeding the limit of ₱500. 1 to 3). 1996. Checks have remained unpaid. Maniwan and Ramos and referred the matter to our Legal Dept.4 million upon the request of Mr. The petitioner Bank further learned that these DAUD/BP accommodations exceeded the limit granted to clients. Samuel L. the CASA account was opened jointly as &/or (Maniwan &/or Ramos). 1997.President and Head-Visayas Mindanao Division. 5. thus: 1. Edmund Ramos. 1996. 1996 for the respondent." It was only then that the petitioner Bank came to know of the DAUD/BP accommodations in favor of Maniwan.On October 8. Maniwan. No 3. The excess accommodations started in July ’96 without higher management approval. None 2. Edmund Ramos. Checks started bouncing on September 20. The account was personally endorsed and referred to us by Mr.000. The memorandum stated that the loan was "to regularize/liquidate subject’s (referring to Maniwan) DAUD availments. what steps have they done to pay the checks returned?2 In reply thereto.000. Justification for lapses committed (Item nos. and this request was subsequently approved by undersigned. Chiong. the respondent. what efforts. the petitioner Bank’s First Vice. sought clarification from the latter on the following matters: 1) When DAUD/BP accommodations were allowed. thru his lawyer. Mr. 6. Divisoria Br. 4.4 million loan to Maniwan. for filing of appropriate legal action. Atty. The branch sent demand letters to Messrs.. answered the foregoing queries in seriatim and explained. Acting on this information. Oscar Musni has signified their intention to settle by Feb. in his Memorandum dated November 19. He even . Ramos gave us his full assurance that the checks that we intend to purchase are the same drawee that Metrobank has been purchasing for the past one (1) year already. the respondent wrote a Memorandum to the petitioner Bank’s senior management requesting for the grant of a ₱2. Cagayan de Oro City. In fact.441. were granted without proper prior approval and already past due.00 when our records indicate that the borrowers B/p>-DAUD line is only for ₱500. The accommodations reach ₱2.375.00 and under whose authority? 4) When did the accommodated checks start bouncing? 5) What is the status of these checks now and what has the branch done so far to protect/ensure collectibility of the returned checks? 6) What about client Joel Maniwan and surety Edmund Ramos. in his Letter dated December 5. Mr. were made to establish the identity and/or legitimacy of the alleged broker or drawers of the checks accommodated? 2) Did the branch follow and comply with operating procedure which require that all checks accommodated for DAUD/BP should be previously verified with the drawee bank and history if not outright balances determined if enough to cover the checks? 3) How did the accommodations reach ₱2. 1996. Branch Manager of Metrobank. if any. surety.

The branch granted various BP/DAUD accommodations to clients Joel Maniwan/Edmundo Ramos in excess of approved lines through the following out-of-town checks which were returned for the reason "Payment Stopped/Account Closed": 1. undersigned conferred with the acting BOH VSYap if these checks are legitimate 3rd party checks.5MM. however.00 3. 1997.816. The branch. the respondent formally tendered his irrevocable resignation effective May 31.508MM. informed the former that his approval of the DAUD/BP accommodations in favor of Maniwan without authority and/or approval of higher management violated the petitioner Bank’s Code of Ethics.736.8 Far East Bank 2. On the other hand. Musni continues to insist that Mr.00 Million.675. Ramos signed as surety for Mr. 1997 addressed to the respondent. lapses in control and abuse of discretion by relying solely on the word.disclosed that these checks were verified by his own branch accountant and that Mr. assurance. As such. The memorandum addressed to the respondent stated: After a careful review and evaluation of the facts surrounding the above case.0 MBTC 5. Elbert Tan Yao Tin. it is also for the very same reason that other banks granted DAUD to subject account and.08 from the respondent’s total separation benefits or pay. Maniwan’s loan account was being co-maked by Mr.880. Corollary to this. the management earmarked only ₱836. the following have been conclusively established: 1. Ramos applied for a loan with us mortgaging his house.3 In another Letter dated April 8. To show his sincerity. In his Letter dated April 30.8 Million Allied Bank . PCIB Cebu Check No. I am now ready to face the consequence of my action.263.0 The attached letter of Mr. Further to this. surety and REM of Mr.507.443. a friend and a co-bank officer. Yang. 5 In the Memorandum dated May 23.637. in view of his resignation and considering the years of service in the petitioner Bank. Mr.00 2. is not totally negligent as officer to officer bank checking was done. In fact. 1997. 1997. he was directed to restitute the amount of ₱1. Atty. PCIB Cebu Check No.79 representing 90% of the total loss of ₱1. Undersigned accepts full responsibility for committing an error in judgment. therefore. 86256 ₱251. namely: Solidbank ₱1. the respondent notified Chiong of his intention to resign from the petitioner Bank and apologized "for all the trouble I have caused because of the Maniwan case. Maniwan for ₱2. lot and duplex with an estimated market value of ₱4. likewise. Edmund Ramos. Ramos dated 19 Nov. 86261 235. However.00 . vehemently denied benefiting therefrom. the petitioner Bank’s Senior Vice-President and Head-Branch Banking Group. son of Jose Tan Yao Tin of CIFC. PCIB Cebu Check No. Mr." 4 The respondent. Nancy D.10 incurred by the petitioner Bank. 8215 241. 1996 will speak for itself. Maniwan was gypped by a broker in the total amount of ₱10. the checks returned unpaid.

"Infraction of Bank procedures in handling any bank transactions or work assignment which results in a loss or probable loss. In view of these. Management finds your actions in violation of the Bank’s Code of Ethics: Table 6. 2: Authority and Subordination - "Failure to carry out lawful orders or instructions of superiors.00 10. no.528." Table 6.5. you are directed to restitute the amount of ₱1.00 6.." Your approval of the accommodations in excess of your authority without prior authority and/or approval from higher management is a violation of the above cited Rules. 1: Compliance with Standard Operating Procedures .615.263.00 5. The foregoing checks were accommodated through your approval which was in excess of your authority.920.00 9.2.. Cebu Check No. Cebu Check No.00 2. 6129 253.507. 216070 197. UCPB Tagbilaran Check No.467. Cebu Check No. 216073 263. 277. UCPB Tagbilaran Check No. Cebu Check No." and/or Table 6.630. Since the foregoing were established by your own admissions in your letter explanation dated 5 December 1996.. 4. However.736.6. UCPB Tagbilaran Check No. no.3. 6: Proper Conduct and Behavior - "Willful misconduct in the performance of duty whether or not the bank suffers a loss. The branch failed to follow the fundamental and basic procedures in handling BP/DAUD accommodations which made the accommodations basically flawed. 6117 267." and/or Table 6. 4.79 representing 90% of the total loss of ₱1. no. 6134 253. and the Audit Report and findings of the Region Head.. in light of your voluntary separation from the Bank effective May 31. 1: Work Responsibilities - "Dereliction of duty whether or not the Bank suffers a loss.658. 3.675. PCIB Bogo. 6122 198.418. PCIB Bogo. no.00 8. in view of the years of .00 7. PCIB Bogo.10 incurred by the Bank as your proportionate share. PCIB Bogo. The accommodations were attended by lapses in control consisting of failure to report the exception and failure to cover the account of Joel Maniwan with the required Credit Line Agreement. 1997.

Consequently. The petitioner Bank maintained its position to withhold the sum of ₱836. mid-year bonus and profit sharing. The Labor Arbiter. management shall earmark and segregate only the amount of ₱836. On the merits.. an officer of the petitioner Bank. the complaint for payment of separation pay. through counsel. the respondent filed with the National Labor Relations Commission (NLRC).637. The Bank further directs you to fully assist in the effort to collect from Joel Maniwan and Edmundo Ramos the sums due to the Bank. like the Labor Arbiter. the NLRC. 1997 addressed to the respondent.637. According to the Labor Arbiter. 6 In the Letter dated May 26. But even if the respondent had not given his consent. Even the respondent himself had admitted this breach in the letters that he wrote to the senior officers of the petitioner Bank. 1999. in blatant violation of the bank’s standard operating procedures and policies. Thereafter. dismissed the appeal as it affirmed in toto the findings and conclusions of the Labor Arbiter. 1999.08 from your total separation benefits/p>ay. in Cagayan de Oro City. was bound by the provisions of the said Code. again informed him that the management would withhold the sum of ₱836. profit share and damages against the petitioner Bank. the Labor Arbiter issued another Order submitting the case for resolution upon finding that he could judiciously pass on the merits without the necessity of further hearing.637. The amount withheld represented his proportionate share in the accountability vis-à-vis the DAUD/BP accommodations in favor of Maniwan. then he may file a supplemental position paper and adduce thereto evidence and additional supporting documents. the Labor Arbiter.service you have given to the Bank.08. The respondent. gave credence to the petitioner Bank’s allegation that the respondent offered to pledge his property to the bank and proposed the withholding of his . the respondent.08 from his separation pay. All the evidence will be evaluated by the Branch to determine whether or not a clarificatory hearing shall be conducted. the respondent. The parties submitted their respective position papers to the Labor Arbiter. 97174 filed against him by the petitioner Bank with the Regional Trial Court in Cagayan de Oro City. the respondent filed a motion to set case for trial or hearing.7 On February 26. mid-year bonus. Remedios Cruz.. had committed a serious infraction when. the respondent appealed to the National Labor Relations Commission. On even date. After the parties had filed their respective memoranda. Regional Arbitration Branch No. Aggrieved. The said amount would be released upon recovery of the sums demanded from Maniwan in Civil Case No. Acting thereon. likewise. in the Order dated January 29. petitioner Bank’s Vice-President of the Human Resources Division. made a demand on the petitioner Bank for the payment of his separation pay and other benefits. he approved the DAUD/BP accommodations in favor of Maniwan without authorization by senior management. the Labor Arbiter held that the petitioner Bank’s act of withholding the benefits due the respondent was justified under its Code of Ethics. denied the same stating that: . This Branch views that if complainant finds the necessity to controvert the allegations in the respondent’s pleadings. Thus. made the finding that the respondent offered to assign or convey a property that he owned to the petitioner Bank as well as proposed the withholding of the benefits due him to answer for the losses that the petitioner Bank incurred on account of unauthorized DAUD/BP accommodations. The NLRC preliminarily ruled that the Labor Arbiter committed no grave abuse of discretion when he decided the case on the basis of the position papers submitted by the parties. 1999. the Labor Arbiter promulgated the Decision8 dismissing the respondent’s complaint. the NLRC. the soonest possible time. as an officer of the petitioner Bank. 10. in the Decision dated October 20.

2002. denied the same as it found no compelling ground to . the NLRC concurred with the Labor Arbiter that the petitioner Bank was justified in withholding the benefits due the respondent. The CA further held that the Labor Arbiter. He vehemently denied having offered to pledge his property to the bank or proposed the withholding of his separation pay and other benefits. While the authority of the Labor Arbiter to decide a case based on the parties’ position papers and documents is indubitable. the CA opined that factual issues attendant to the case.11 Accordingly. he argued that the petitioner Bank deprived him of his right to due process because it unilaterally imposed the penalty of restitution on him. Further. was contrary not only to the fundamental principle of due process but to the petitioner Bank’s Code of Ethics as well. The respondent then filed a petition for certiorari with the Court of Appeals alleging that the NLRC committed grave abuse of discretion when it affirmed the findings and conclusions of the Labor Arbiter. maintained that the Labor Arbiter should not have decided the case on the basis of the parties’ position papers but should have conducted a full-blown hearing thereon. denied his motion. This. The CA found merit in the respondent’s contention that he was deprived of his right to due process by the petitioner Bank as no administrative investigation was conducted by it prior to its act of withholding the respondent’s separation pay and other benefits. including whether or not the respondent proposed the withholding of his benefits or pledged the same to the petitioner Bank. the CA set aside the decision of the NLRC and ordered that the records of the case be remanded to the Labor Arbiter for further hearings on the factual issues involved. the magnitude of the case and the withholding of Borromeo’s property as well as the willingness of the parties to conciliate. On July 19. Being a responsible bank officer. the CA rendered the Decision10 now being assailed by the petitioner Bank.9 The respondent moved for a reconsideration of the said decision but the NLRC. 2003. As manifested by the bank. failed to afford the respondent due process when it denied his motion to set case for trial or hearing. based on the petitioner Bank’s Code of Ethics. it did not contest Borromeo’s motion for hearing or trial inasmuch as the bank itself wanted to fully ventilate its side. in the assailed Resolution of January 6. Truly. The appeal is Dismissed for lack of merit. The respondent. in the Resolution of December 20. as must be remembered. Further.benefits in acknowledgment of the serious infraction he committed against the bank. make a hearing imperative. necessitated the conduct of a full-blown trial. has two main concerns. according to the appellate court. The decretal portion of the NLRC decision reads: WHEREFORE. The respondent was not informed of any charge against him in connection with the Maniwan DAUD/BP accommodations nor afforded the right to a hearing or to defend himself before the penalty of restitution was imposed on him. 1999. SO ORDERED. likewise. The appellate court explained that: Procedural due process. the prevention of unjustified or mistaken deprivation and the promotion of participation and dialogue by affected individuals in the decision-making process. The petitioner Bank filed a motion for reconsideration of the said decision but the CA. the respondent ought to know that. the decision of the Labor Arbiter is Affirmed. The DAUD/BP accommodations in favor of Maniwan allegedly could not be considered as a "loss" to the bank as the amounts may still be recovered. likewise. restitution may be imposed on erring employees apart from any other penalty for acts resulting in loss or damage to the bank.

The petitioner Bank points out that it was poised to conduct one but was preempted by the respondent’s resignation. By ordering the remand of the case to the Labor Arbiter. his superior.warrant reconsideration.13 The petitioner Bank posits that the sole factual issue that remained in dispute was whether the respondent pledged his benefits as guarantee for the losses the bank incurred resulting from the unauthorized DAUD/BP accommodations in favor of Maniwan. in his Comment. The petitioner Bank insists that the Labor Arbiter acted within his authority when he denied the respondent’s motion to set case for hearing or trial and instead decided the case on the basis of the position papers and evidence submitted by the parties. These reports further showed that he did not conceal these transactions to the management. AT ALL TIMES. its recourse to this Court alleging that the assailed CA decision is contrary to law and jurisprudence in that: I. by the senior management of the petitioner Bank. admitted that the DAUD/BP accommodations were granted "without higher management approval" and that he (the respondent) "accepts full responsibility for committing an error of judgment.. the CA allegedly unjustifiably analyzed and weighed all over again the evidence presented.12 Hence. The petitioner Bank takes exception to the findings of the appellate court that the respondent was not afforded the right to a hearing or to defend himself by the petitioner Bank as it did not conduct an administrative investigation. For his part. 1996. regarding the DAUD/BP transactions made by the branch. lapses in control and abuse of discretion . in reply to the clarificatory queries of Chiong. the respondent. respondent himself in his Letter dated December 5. THE LABOR ARBITER ACTED IN ACCORDANCE WITH THE REQUIREMENTS OF DUE PROCESS IN THE PROCEEDINGS A QUO. but he did not do so." Given the respondent’s admission. and Chiong never called his attention thereto nor stopped or reprimanded him therefor. the holding of a formal investigation was no longer necessary. II. He cites the regular reports he made to Chiong. In any case. According to the petitioner Bank. III. both the Labor Arbiter and the NLRC found that the respondent had indeed pledged his benefits to the bank. . albeit not expressly. On this issue. including that of Maniwan. THERE WAS NO VIOLATION BY PETITIONER BANK OF RESPONDENT’S RIGHT TO DUE PROCESS AS NO ADMINISTRATIVE INVESTIGATION WAS NEEDED TO BE CONDUCTED ON HIS ADMITTED MISCONDUCT. this factual finding should have been accorded respect by the CA as the same is supported by the evidence on record. maintains that the DAUD/BP accommodations in favor of Maniwan were approved. Due process simply demands an opportunity to be heard and the respondent was not denied of this as he was even given the opportunity to file a supplemental position paper and other supporting documents.. THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE NATIONAL LABOR RELATIONS COMMISSION ARE SUPPORTED BY SUBSTANTIAL EVIDENCE AND SHOULD HAVE BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF APPEALS IN ACCORDANCE WITH GOVERNING JURISPRUDENCE.

both bodies being deemed to have acquired expertise in matters within their jurisdiction. in contravention of its own Code of Ethics. likewise.20 In this case. He. In fact. The petition is meritorious. The Court rules in the affirmative. vigorously avers that. the factual findings of the Labor Arbiter and those of the NLRC concur on the following material points: the respondent was a responsible officer of the petitioner Bank. He was not informed in writing of any charge against him nor was he given the opportunity to defend himself. the assailed CA decision’s directive requiring him to conduct further hearings constitutes undue interference with the Labor Arbiter’s discretion. 1998. the respondent resigned from the petitioner Bank on May 31.16 As a corollary. he was denied due process by the petitioner Bank as it did not conduct any administrative investigation relative to the unauthorized DAUD/BP accommodations. he granted DAUD/BP accommodations in excess of the authority given to him and in violation of the bank’s standard operating procedures. the petitioner Bank’s Code of Ethics provides that restitution/forfeiture of benefits may be imposed on the employees for. the petitioner Bank had already instituted a civil case against Maniwan for the recovery of the sum and the RTC rendered judgment in the petitioner Bank’s favor. 1999 submitting the case for resolution upon finding that he could judiciously pass on the merits without the necessity of further hearing. where decisions may be reached on the basis of position papers. trial-type hearings are not even required as the cases may be decided based on verified position papers.18 The appellate court. incurred any actual loss as the amount owed by Maniwan may still be recovered from him. and. inter alia. are not bound by the technical niceties of the law and procedure and the rules obtaining in courts of law. In any case. i. the Labor Arbiter acted well within his authority when he issued the Order dated February 26. 19 As long as their decisions are devoid of any arbitrariness in the process of their deduction from the evidence proffered by the parties. when sufficiently supported by evidence on record. with supporting documents and their affidavits. infraction of the bank’s standard operating procedures. including the Labor Arbiter. to require the conduct of hearings would be to negate the rationale and purpose of the summary nature of the proceedings mandated by the Rules and to make mandatory the application of the technical rules of evidence. These factual findings are amply supported by the evidence on record. Before delving on the merits of the case. The findings of the Labor Arbiter and the NLRC that what he did are allegedly not supported by the evidence on record. On the other hand. whether the CA erred in remanding the case to the Labor Arbiter. committed reversible error in ordering the remand of the case to the Labor Arbiter for further hearings.. by his own admission. The respondent is of the view that restitution is not proper because the petitioner Bank has not.e. The Court shall first resolve the procedural issue raised in the petition. therefore. Moreover.15 The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot demand as a matter of right. it is well to remember that factual findings of the NLRC affirming those of the Labor Arbiter. 17 Hence.The respondent vehemently denies having offered the withholding of his benefits or pledged the same to the petitioner Bank. and are considered binding on this Court. the respondent argues that the petitioner Bank could not properly impose the accessory penalty of restitution on him without imposing the principal penalty of "Written Reprimand/Suspension" as provided under its Code of Ethics. The case is still pending appeal. It is settled that administrative bodies like the NLRC. . as yet. are accorded respect. all that is left is for the Court to stamp its affirmation. if not finality. 14 Rules of evidence are not strictly observed in proceedings before administrative bodies like the NLRC.

the petitioner Bank’s Code of Ethics provides: Table 6. if warranted.5. Forfeiture of benefits/p>rivileges may also be effected in cases where infractions or violations were incurred in connection with or arising from the application/availment thereof.2. But restitution shall in no way mitigate the penalties attached to the violation or infraction. The Bank may recover the amount involved by means of salary deduction or whatever legal means that will prompt offenders to pay the amount involved. assurance. Infraction of Written Suspension/ Dismissal* Dismissal* Bank procedures Reprimand/ in handling any Suspension* Bank transaction or work assignment which results in a loss or probable loss * With restitution.22 To the query "did the branch follow and comply with operating procedure which require that all checks accommodated for DAUD/BP should be previously verified with the drawee bank and history. however. had violated the petitioner Bank’s standard operating procedures. is the respondent’s statement that he "accepts full responsibility for committing an error in judgment." 26 More telling. Edmundo Ramos."28 The foregoing sufficiently establish that the respondent. lapses in control and abuse of discretion by relying solely on the word."27 The respondent added that he was "ready to face the consequence of [his] action. if not outright balances. Indeed. When the respondent was asked whether efforts were made to establish the identity and/or legitimacy of the drawers of the checks before the DAUD/BP accommodations were allowed. determined if enough to cover the checks?"23 again. it had been indubitably shown that the respondent admitted that he violated the petitioner Bank’s standard operating procedures in granting the DAUD/BP accommodations in favor of Maniwan without higher management approval. . clients or other parties doing business with the Bank. its employees.2 COMPLIANCE WITH STANDARD OPERATING PROCEDURES PENALTIES VIOLATIONS 1st 2nd 3rd 4th 1. Further.21 he replied in the negative."24 When asked under whose authority the excess DAUD/BP accommodations were granted. 25 the respondent expressly stated that they were "approved by undersigned (referring to himself)" and that the excess accommodation was granted "without higher management approval. Among others. the said Code states that: 7. by his own admissions. Restitution/Forfeiture of Benefits Restitution may be imposed independently or together with any other penalty in case of loss or damage to the property of the Bank. 1996 were particularly significant. the respondent answered "no. The respondent’s replies to the clarificatory questions propounded to him by way of the Memorandum dated November 19. surety and REM of Mr.

All that was needed was to inform him of the findings of the management36 and this was done by way of the Memorandum37 dated May 23. under the circumstances obtaining in this case. 35 More particularly."39 Even the petitioner Bank itself gives "the assurance that as soon as the Bank has satisfied a judgment in Civil Case No.31 Contrary to the respondent’s contention that the petitioner Bank could not properly impose the accessory penalty of restitution on him without imposing the principal penalty of "Written Reprimand/Suspension. The respondent. the respondent expressed that he "accepts full responsibility for committing an error in judgment. Due process simply demands an opportunity to be heard and this opportunity was not denied the respondent. likewise.It is well recognized that company policies and regulations are.000 was approved by him without higher management approval. Replying to the queries. 29 Moreover. such benefits shall be deposited with the bank by way of pledge. As the Labor Arbiter stressed in his decision. specifically. the Court rules that. the respondent. generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority. it could be reasonably gleaned that the said memorandum constituted notice of the charge against the respondent. it became unnecessary to hold any formal investigation. "the separation benefits due the complainant (the respondent herein) were merely withheld. The petitioner Bank was left with no other recourse but to impose the ancillary penalty of restitution. unless shown to be grossly oppressive or contrary to law. admitted. 97174." the latter’s Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other penalties. in view of his voluntary separation from the petitioner Bank." Contrary to his protestations. 1996 in which several clarificatory questions were propounded to him regarding the DAUD/BP accommodations in favor of Maniwan. if not outright balances determined if enough to cover the checks. it became unnecessary for the petitioner Bank to conduct an investigation on whether the respondent had committed an "[I]nfraction of Bank procedures in handling any Bank transaction or work assignment which results in a loss or probable loss" because the respondent already admitted the same. Significantly. in his Letter34 dated December 5. inter alia. admitted non-compliance with the bank’s standard operating procedures. he was furnished with the Memorandum 33 dated November 19."40 . in the meantime. the respondent is not wholly deprived of his separation benefits. management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. 1996. In the same letter. From the tenor thereof. that he approved the DAUD/BP accommodations in favor of Maniwan and the amount in excess of the credit limit of ₱500. that which required that all checks accommodated for DAUD/BP be previously verified with the drawee bank and history. by reason of his position. was required to act judiciously and to exercise his authority in harmony with company policies. lapses in control and abuse of discretion" and that he is "ready to face the consequence of his action. Among others. who. the respondent was given the opportunity to be heard and considering his admissions.32 Prior to the respondent’s resignation. 1997 addressed to the respondent."38 The NLRC made the same conclusion and was even more explicit as it opined that the respondent "is entitled to the benefits he claimed in pursuance to the Collective Bargaining Agreement but. 30 With more reason should these truisms apply to the respondent. Obviously. the respondent was asked whether the bank’s standard operating procedures were complied with and under whose authority the accommodations were granted. the imposition of the penalty of reprimand or suspension would be futile. Anent the issue that the respondent’s right to due process was violated by the petitioner Bank since no administrative investigation was conducted prior to the withholding of his separation benefits. His claim of denial of due process must perforce fail. no formal administrative investigation was necessary. It was certainly within the petitioner Bank’s prerogative to impose on the respondent what it considered the appropriate penalty under the circumstances pursuant to its company rules and regulations. the earmarked portion of his benefits will be released without delay.

He then requested payment of his commissions. from which he earned commissions amounting to ₱993. and like all other business enterprises.It bears stressing that the respondent was not just a rank and file employee.R. Products and Services (Netlink) hired Eric S.43 It is expected to exercise the highest degree of diligence in the selection and supervision of their employees. No. 160827 June 18.89 and US$7. 41 As such. he was. ERIC DELMO. the petitioner Bank’s business is essentially imbued with public interest and owes great fidelity to the public it deals with. In order to force him to resign. Delmo worked in the field most of the time. vs. Delmo (Delmo) as account manager tasked to canvass and source clients and convince them to purchase the products and services of Netlink.42 On the other hand.44 As a corollary. more or less. Petitioner. the latter has the right to be paid in such foreign currency once the same has become an established practice of the former.45 The law.000. 2002 of the Court of Appeals and its Resolution dated January 6. Respondent.R. The rate of exchange at the time of payment. SO ORDERED. like stressing his supposed absences and tardiness.President.000. The Resolution dated October 20. as earlier intimated. Netlink issued several memoranda detailing his supposed infractions of the company’s attendance policy. 1999 of the NLRC. is REINSTATED. Despite the memoranda. the petition is GRANTED. 1999 of the Labor Arbiter. SP No. characteristic of sensitive posts in corporate hierarchy. required to act judiciously and to exercise his authority in harmony with company policies. 2014 NETLINK COMPUTER INCORPORATED.558. authorized neither oppression nor self-destruction of an employer company which itself is possessed of rights that must be entitled to recognition and respect. J. but Netlink refused and only gave him partial cash advances chargeable to his commissions. DECISION BERSAMIN. 2003 in CA-G. Netlink Computer.00.46 WHEREFORE. His position carried authority for the exercise of independent judgment and discretion. 57365 are REVERSED AND SET ASIDE. At the time of his resignation. 1991. Netlink began to nitpick and fault find. controls.2 . Later on. He and his fellow account managers were not required to accomplish time cards to record their personal presence in the office of Netlink.1 He was able to generate sales worth ₱35. Branch Banking Group for the Mindanao area of the petitioner Bank. Antecedents On November 3. affirming the Decision dated February 26. The Decision dated July 19. its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected. not the rate of exchange at the time of the sales. he was the Assistant Vice.: In the absence of a written agreement between the employer and the employee that sales commissions shall be paid in a foreign currency. in protecting the rights of labor. ___ FIRST DIVISION G.588. Inc. Delmo continued to generate huge sales for Netlink.30.

reprimand.558. Allegedly.558. All other claims are hereby dismissed.30 .13th month pay for 1996 to 1998 993. Delmo was shocked when he was refused entry into the company premises by the security guard pursuant to a memorandum to that effect.89 . with the other account managers eventually having outperformed him.00) as indemnity for failure to observe procedural due process.000.89 .Backwages.000. complainant shall be paid separation pay of one-month pay for every year of service.000. 1996 to Sept. and suspension memoranda were given to employees who violated company rules and regulations. 1996.169. Netlink pointed out that Delmo had becomevery lax in his obligations. to wit: WHEREFORE. .On November 28.Netlink countered that there were guidelines regarding company working time and its utilization and how the employees’ time would be recorded.unpaid commissions ₱1. premises considered. Excepted from the rules were the company officers. Netlink claimed that it would be losing on the business transactions closed by Delmo due to the high costs of equipment. the decision of the Labor Arbiter a quo is hereby SET ASIDEand a new one ENTERED. all personnel were required to use the bundy clock to punch in and out in the morning.588. and the authorized personnel in the field project assignments. judgment is hereby rendered declaring complainant as illegally and unjustly dismissed and respondents are ordered to reinstate complainant to his former position without loss of seniority rights with full backwages and other benefits and respondents are hereby ordered to pay complainant as follows: ₱161. This incident prompted Delmo to file a complaint for illegal dismissal. to wit: WHEREFORE.00 .Total plus US$7.unpaid commissions plus 10% attorney’s fees The reinstatement aspect is immediately executory even pending appeal. basic pay and allowances from Nov. 1998 15. but such actions were considered as a necessary management tool to instill discipline.00 .3 In its answer to Delmo’s complaint.4 Ruling of the Labor Arbiter On September 23. the National Labor Relations Commission (NLRC) modified the decision of the Labor Arbiter by setting aside the backwages and reinstatement decreed by the Labor Arbiter due to the existence of valid and just causes for the termination of Delmo’s employment.5 Decision of the NLRC On appeal. In case reinstatement is no longer feasible. TWO THOUSAND PESOS (₱2. 1998. and in and out in the afternoon. ordering the respondents-appellantsto pay the following: 1. SO ORDERED. and in fact his biggest client had not yet paid. His personal belongings were still inside the company premises and he sought their return to him. Netlink asserted that warning. the Labor Arbiter ruled against Netlink and in favor of Delmo.

10% attorney’s fees of the total amount awarded.588. The order of the public respondent making the petitioner liable to the private respondent for the 13th month pay of the latter in the years 1997 and 1998 is contrary to its findings that there are valid and just cause for the termination of the private respondent from employment. the CA promulgated its assailed decision upholding the NLRC’s ruling subject to modifications. not be made liable for the said commission. The difference amounting to ₱776. 3. as We have discussed above. therefore.44 must likewise be deducted to the amount of ₱4. p. 5.45 in the form of advance payment. likewise. (Rollo. on the part of the petitioner to pay the private respondent for his commission for the said unpaid account has not yet arisen.799. pp. 397. that the obligation therefor has not yet arisen. 12) In view of the foregoing discussions. 398) The obligation therefore. US$7. Petitioner however claimed that since the amounts out of which the commission will be taken has not yet been paid fully. 066.45 must be deducted to the ₱993. likewise. However. public respondent committed grave abuse of discretion when it disregard the evidence on record which is not disputed by the private respondent that out of the total commissions of the private respondent. 713. likewise. private respondent’s biggest client has not paid fully the amount it owes to the petitioner as of March 10. Judgment of the CA On May 9.6 The NLRC denied the motion for reconsideration. 1997. 1998. 799. 558. the obligation to pay the commission has not yet arisen. and 1998. The evidence on record shows that the ALCATEL. 2. (Rollo. 558.558.89.89 commission. petitioner must. We. show that petitioner failed to refute by evidence that the private respondent is not entitled to the ₱993.000. Thus it is a grave abuse of discretion on the part of the public respondent to make petitioner liable to the private respondent for the payment of the said commission. Unpaid commission in the amount of ₱993. when it is clear on the record. since the payment of the commission is made to depend on the future and uncertain event – which is the payment of the accounts by the persons who have transacted business with the petitioner. agree with the petitioner that the private respondent is not entitled to 13th month pay in the years 1997 and 1998. after which Netlink filed a petition for certiorariin the CA.19 which represents the amount which the petitioner had admitted as the net commission payable to private respondent. (Rollo. 4. SO ORDERED. The difference thereof amounting to ₱772.30 as unpaid commission. ₱15. the advance payment made by the petitioner in favorof the private respondent in the amount of ₱216. pp. without payment by the former to the latter. although private respondent was not given his right to due process. 101. petitioner has paid the petitioner in the amount of ₱216. 779.25 shall represent the unpaid commission which shall be payable to the private respondent by the petitioner upon payment of the accounts out of which such commission shall be taken. 2003. 547 (1995)] where it was ruled that "where the dismissal of an employee is .89 unpaid commission of the private respondent.7 viz: In the present case.00 representing the 13th month pay for 1996. Perusal of the records. 32-33) The rule applicable in the present case is the decision of the Supreme Court in the case of Sebuguero vs National Labor Relations Commission [248 SCRA 532.

(Rollo. Issues Hence. pp..30 as unpaid commission. the price agreed upon should be at the exchange rate when the contract of sale had been consummated.588. viz: "Likewise the devaluation of the peso cannot be used as a shield against the complainant because that should have been the lookout of the respondent company in providing for such a clause that in case of devaluation. are deemed binding and conclusive upon the Court. US$7. p.066. premises considered. 328- 329) In this regardtherefore.000. 1998. SO ORDERED. TWO-THOUSAND PESOS (₱2. 6. For the lack of foresight and inefficiency of the respondent company and as regards its contracts or agreements with its clientele.e.19 representing the unpaid commissions that have accrued in favor of the private respondent.584. this appeal.3 of this Order.in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process." (Labor Arbiter Ricardo Olairez’ Decision. private respondent is entitled only to a 13th month pay computed pro-rata from January 1996 to November 1996 which as properly computed by the petitioner amounts to ₱4. 584. Neither is there any reason for us to agree with the petitioner that the computation of these commissions must be based on the value of [the] Peso in relation to a Dollar at the time of sale. the assailed Resolutions are hereby AFFIRMED with MODIFICATION. Inc.00 representing the unpaid 13th month pay of the private respondent. 5. ₱4.00) as indemnity for failure to observe procedural due process. 323 SCRA 121. 3. the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the requirements of or for failureto observe due process. petitioner should not be made to pay the 13th month pay to private respondent whose employment was terminated for cause but without due process in 1996. vs National Labor Relations Commission. . Rollo.779. ordering the petitioner to pay the private respondent the following: 1.00. 11-12. 11) With respect to the other arguments of the petitioner.i." (Permex. ₱4. September 23. Petitioner failed to refute by evidence that private respondent is not entitled to the commissions payable in US dollars. 4. xxxx Thus. 10% attorney’s fees of the total amount awarded excluding the amount contained in the No." Hence. We uphold the well settled rule that "the findings of facts of the NLRC.44 payable to the private respondent upon payment of the accounts out of which the said amount will be taken. 126). this Court is not persuaded. xxxx WHEREFORE. particularly where the NLRC and the Labor Arbiter are in agreement.pp. he was not furnished the twin requirements of notice and the opportunityto be heard. the complainant should not be made to suffer. ₱776. 2. As properly observed by the Labor Arbiter a quo.

that the jurisprudence established under Republic Act No. 529 and Republic Act No. Northwest Airlines. 529 with regard to the rate of conversion remains applicable. the contracting parties may stipulate that foreign currencies may be used for settling obligations. therefore. the phrase "supplements.Netlink submits that the CA committed a palpable and reversible error of law in not holding that the applicable exchange rate for computing the US dollar commissions of Delmo should be the rates prevailing at the time when the sales were actually generated. the Court cited Asia World Recruitment. In his comment. the parties may agree that the obligation ortransaction shall be settled in any other currency at the time of payment. 8183. This is pursuant to Republic Act No. namely: (1) whether or not the payment of the commissions should be in US dollars. and (2) whether or not the award ofattorney’s fees was warranted. that Netlink should not be allowed to flip-flop after it had paid commissions in US dollar on the sales generated by its sales agents on US-dollar denominated transactions. We remarked in C.8 Delmo counters that because he had earned in US dollars it was only fair that his commissions be paid in US dollars. both Republic Act No. and that attorney’s fees were warranted because of the unanimous finding that there was violation of procedural due process. However. actually paid by and collected from the customers. As a general rule. forbade Netlink from unilaterally reducing. 529 had the effect of removing the prohibition on the stipulation of currency other than Philippine currency. that commissions must be paid on the basis of the conversion of the US dollar to the Philippine peso at the time of sale. It follows.1âwphi1 The absence of the contractual stipulation notwithstanding. Netlink only sought a declaration that the US dollar commissions be paid using the exchange rate at the time of sale. Instead of denying the allegation.F. However. Sharp & Co. The principle of non-diminution of benefits.11 that the repeal of Republic Act No. This was impliedly admitted by Netlink when it did not refute the allegation that the commissions earned by Delmo and its other sales agents had been paid in US dollars. discontinuing or eliminating the practice. Sharp. There was no written contract between Netlink and Delmo stipulating that the latter’s commissions would be paid in US dollars. diminishing. In its reply. To be considered for resolution are. and that no cogent and justifiable reason existed for the award of attorney’s fees. Netlink was still liable to pay Delmo in US dollars because the practice of paying its sales agents in US dollars for their US dollar-denominatedsales had become a company policy. In C. not the rates prevailing at the time of the payment.therefore. v. However. and in awarding attorney’s fees.Inc. Verily. Inc. 12 to the effect that the real value of the foreign exchange-incurred obligation up to the date of itspayment should be preserved. or other employee benefits" in Article 100 is construed to mean the compensation and privileges received by an employee aside from regular salaries or wages. . NLRC.9 Netlink maintains that the commissions of Delmo should be based on sales generated. Ruling of the Court The appeal lacks merit.F. which has been incorporated in Article 10013 of the Labor Code. 8183 did not stipulate the applicable rate of exchange for the conversion of foreign currency-incurred obligations to their peso equivalent.10 which provides as follows: Section 1. such that obligations or transactions could already be paid in the currency agreed upon by the parties. All monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines. v. the following. all obligations shall be paid in Philippine currency.

2003. an award of attorney's fees equivalent to ten percent (10%) of the total award is legally and morally justifiable. discontinued or eliminated by the employer. we find that jurisprudence has not laid down any rule requiring a specific mmimum number of years. There is no doubt that in the present case. LEONARDO-DE .18 WHEREFORE. 301 SCRA 223. Semana. Jr. the private respondent has incurred expenses for the protection and enforcement of his right to his commissions. we affirm the following justification of the CA in granting attorney's fees to Delmo. A. In Davao Integrated Port Stevedoring Services v. In Davao Fruits Corporation v.14 the company practice lasted for six years. the Court DENIES the petition for review on certiorari. AFFIRMS the decision promulgated on May 9. Associated Labor Unions. viz: The award of attorney's fees must. where it was held that "in actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect her rights and interests. likewise. even if not so claimed. 17 the employer kept the practice of including non- basic benefits such as paid leaves for unused sick leave and vacation in the computation of their 13th- month pay for at least two years. SO ORDERED LUCAS P. With the payment of US dollar commissions having ripened into a company practice. 235. or three years and four months.. Finally. Inc. for three years and nine months. National Labor Relations Commission. SERENO Chief Justice TERESITA J. be upheld in line of (sic) the decision of the Supreme Court in the case of Consolidated Rural Bank (Cagayan Valley). diminished. vs. In Sevilla Trading Company v.With regard to the length of timethe company practice should have been observed to constitute a voluntary employer practice that cannot be unilaterally reduced. BERSAMIN Associate Justice WE CONCUR: MARIA LOURDES P. To rule otherwise would be to cause an unjust diminution of the commissions due and owing to Delmo. and ORDERS the petitioner to pay the costs of suit. there is no way that the commissions due to Delmo were to be paid in US dollars or their equivalent in Philippine currency determined at the time of the sales. 15 the employer. In Tiangco v. approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers.16 the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980. Leogardo. Abarquez.