RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., petitioner, to RCPI's alleged liabilities under Wage Order No.
ilities under Wage Order No. 1; and with the Office of the
vs.
THE SECRETARY OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR OF
THE NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT
and UNITED RCPI COMMUNICATIONS LABOR ASSOCIATION (URCPICLA)-
FUR, respondents.
Ermitao, Asuncion, Manzano & Associates for petitioner.
The Solicitor General for public respondent.
Abad, Leano & Associates for respondent URCPICLA.
REGALADO, J.:
This petition for certiorari seeks the annulment of the orders issued by public
respondents in NWC Ref. No. W01-13, viz: (1) the order of May 7, 1986 of
respondent Regional Director requiring petitioner Radio Communications of the
Philippines, Inc. (hereinafter, RCPI) and its employees represented by Buklod ng
Manggagawa sa RCPI-NFL (BMRCPI-NFL, for brevity) to pay private respondent
United RCPI Communications Labor Association (URCPICLA-FUR for short) its
15% union service fee of P427,845.60, jointly and severally, and accordingly
directing the issuance of a writ of execution and garnishment of RCPI's bank
account for the satisfaction of said fee; (2) the order of August 16, 1986 of
respondent Secretary of Labor and Employment modifying the foregoing order
by reducing the union service fee to 10% of the awarded amounts and holding
petitioner solely liable for the payment of such fee; and (3) the order, dated
March 20, 1987, of respondent Secretary denying petitioner's motion for
reconsideration.
The records 1 show that on May 4, 1981, petitioner, a domestic corporation
engaged in the telecommunications business, filed with the National Wages
Council an application for exemption from the coverage of Wage Order No.
1. 2 The application was opposed by respondent URCPICLA-FUR, a labor
organization affiliated with the Federation of Unions of Rizal (FUR). On May 22,
1981, the National Wages Council, through its Chairman, rendered a letter-
decision 3 disapproving said application and ordering the petitioner to pay its
covered employees the mandatory living allowance of P2.00 daily effective
March 22, 1981. Said letter-decision was affirmed by the Office of the President
in O.P. Case No. 1882 and, subsequently, this Court in its resolution of July 15,
1985 in G.R. No. 70148 dismissed RCPI's petition for certiorari for lack of merit.
Entry of final judgment was issued by the Court on July 15, 1985. 4
Furthermore, it is not denied that as early as March 13, 1985, before the
aforesaid case was elevated to this Court, respondent union filed a motion for
the issuance of a writ of execution, asserting therein its claim to 15% of the total
backpay due to all its members as "union service fee" for having successfully
prosecuted the latter's claim for payment of wages and for reimbursement of
expenses incurred by FUR and prayed for the segregation and remittance of said
amount to FUR thru its National President. 5
In a subsequent "Motion for Immediate Issuance of Writ of Execution", dated
September 9, 1985, respondent union reiterated its claim for said union service
fee but this time in an amount equivalent to 20% of the total backpay due its
members, to be remitted to the institution previously adverted to. 6
On September 24, 1985, petitioner filed its opposition to said motion, asserting,
among others, that "there is no legal basis for respondent Union to have the
sum equivalent to 20% union service fee deducted from the amount due to
every recipient member". 7 An alias writ of execution was issued on September
26, 1985. 8
On October 24, 1985, without the knowledge and consent of respondent union,
petitioner entered into a compromise agreements 9 with BMRCPI-NFL as the
new bargaining agent of oppositors RCPI employees, the pertinent provisions
whereof are hereunder reproduced:
WHEREAS, there are now pending with the National Labor Relations
Commission Case No. NLRC-NCR- 11-5265-83 (NFL, et al. vs. RCPI) relative to
RCPI's alleged liabilities under P.D. 1713 and Wage Orders 1, 2 and 3 and NLRC
Certified Case No. 0356, with the National Wages Council and the Office of the
Regional Director, Ministry of Labor and Employment, National Capital Region
NWC Case Ref. No. WO-1-13 (O.P. Case No. 1882, S.C. G.R. No. 70148) relative
Regional Director, MOLE-NCR, a similar case (NCR-FSD-10-118- 83);
'WHEREAS, RCPI is one of the parties in the above cases and is herein
represented by its duly authorized representative/s while the
complainant/employees of RCPI are the other real parties in interest in the said
cases and are represented herein by BMRCPI-NFL, the duly certified bargaining
agent of the said complainant/employees;
WHEREAS, it is to the actual interest and benefit of the parties mentioned in the
preceding WHEREAS (the herein parties) that this Compromise Agreement be
entered into by and between them for the purpose of novating the above
mentioned cases, particularly any and all decisions therein, with the view of re-
defining the parties' rights and obligations under the various Presidential
Decrees and/or Wage Orders subjects of the above mentioned cases.
NOW, THEREFORE, for and in consideration of the foregoing premises and the
terms and conditions herein stated, the parties have agreed and bound
themselves as follows: THAT
1. RCPI by way of a compromise settlement acknowledges its alleged liability
under PD 1713 (mandatory third year) and Wage Order 1 (first and third year)
subject of the cases mentioned in the first WHEREAS hereof;
2. As consideration for the dismissal with prejudice of the above-captioned
cases and the novation thereof and of all decisions in said cases, the parties
hereby further agree that:
a) On November 30, 1985, RCPI shall pay to each of its employees/complainants
30% of whatever is due him/her under PD 1713 (mandatory third year) and
Wage Order 1 (first and third year) subject of the cases mentioned in the first
WHEREAS hereof;
b) The balance of 70% due to each employee/complainant under PD 1713
(mandatory third year) and Wage Order 1 (first and third year) subject of the
cases mentioned in the first WHEREAS hereof shall be the subject of re-opening
and/or negotiation by the parties on July 31, 1986 for the purpose of reaching a
compromise settlement thereon on terms mutually acceptable. Against this 30%
shall be deducted in full all personal cash advances of every covered employee;
c) Of and from the aforesaid total amount due every employee, 10% thereof
shall be considered as attorney's fee due Atty. Rodolfo Capocyan, the same to
be deducted from the remaining 70% and distributed to Atty. R. Capocyan at the
time of the distribution of the remaining 70%. In this connection, Atty. Rodolfo
Capocyan manifest (sic) that he is authorized by the covered employee (sic) to
collect 10% of whatever is/are due them as attorney's fees and undertakes and
binds himself to submit to RCPI the required individual check-off authorization
with respect to the 30%. He and the herein union assume sole responsibility for
and shall hold RCPI free and harmless from any claim, suit or complaint arising
from the deduction of this 10% attorney's fee,'
xxx
What transpired thereafter is more completely and undisputedly narrated by
the Solicitor General in behalf of public respondent, thus:
Thereupon, the parties to the compromise agreement filed a joint Motion to
Dismiss with Prejudice praying for the dismissal of the same with prejudice on
the ground that the decision of the National Wages Council dated May 22, 1981
had already been novated by the Compromise Agreement re-defining the rights
and obligations of the parties. Respondent Union on November 7, 1985
countered by opposing the motion and alleging that one of the signatories
thereof-Buklod ng Manggagawa sa RCPI is not a party in interest in the case but
that it was respondent Union which represented oppositors RCPI employees all
the way from the level of the National Wages Council up the Supreme Court.
Respondent Union therefore claimed that the Compromise Agreement is
irregular and invalid, apart from the fact that there was nothing to compromise
in the face of a final and executory decision.
On November 22, 1985, respondent Union filed an Urgent Motion for Lien (15%
Union Service Fee) calling attention to a Resolution passed and approved by the
URCPICLA-FUR Legislative Board on June 4, 1984 declaring respondent union
entitled to a sum equivalent to 15% of the total backpay received by each RCPI
employee from RCPI as union service fee and reimbursement of expenses
incurred in successfully handling the instant case. Respondent Union prayed
that RCPI be required to deposit with the Cashier of the National Capital Region,
Ministry of Labor and Employment an amount equivalent to 15% of the total
amount due to the covered employees as union service fee. Copy of this motion
was received by the Office of the President, RCPI on November 28, 1985.
xxx
'Acting on the Urgent Motion for Lien, Director Severo M. Pucan issued an Order
dated November 25, 1985 awarding to URCPICLA-FUR and FUR 15% of the total
backpay of RCPI employees as their union service fees, and directing RCPI to
deposit said amount with the cashier of the Regional Office for proper
disposition to said awardees.
Despite notice of the Order of November 25, 1985, and its accompanying letter
requesting the management of RCPI to withhold the 15% union service fee from
each employee affected, petitioner paid in full the covered employees on
November 29, 1985, without deducting the union service fee of 15%. In its
motion for reconsideration and to set aside the Order of November 25, 1985,
petitioner argued that said Order has been rendered moot and academic by the
fact that it had already paid in full the award under the decision of the National
Wages Council. It proposed instead that URCPICLA and/or FUR re-direct their
efforts at collection to the rank and file employees of RCPI. It also attacked the
questioned order as null and void ab anitio for lack of jurisdiction and due
process.
On December 16, 1985, respondent Union filed a petition praying for
garnishment of petitioner's funds in its depository banks to effect remittance of
its 15% union service fee in view of the payment in full by the latter of the
wages due its covered employees. Petitioner moved to dismiss the petition for
garnishment as illegal, irregular and highly anomalous. This was opposed by
respondent Union. 10
At this juncture, the record shows that on December 19, 1985, said Regional
Director issued an order declaring the decision fully satisfied and lifting all the
garnishments effected pursuant thereto "(C)onsidering that the Alias Writ of
Execution dated 26 September 1985 in this case had already been fully
satisfied. 11
However, it appears that thereafter, in an order dated May 7, 1986, NCR officer-
in-charge Romeo A. Young found petitioner RCPI and its employees jointly and
severally liable for the payment of the 15% union service fee amounting to
P427,845.60 to private respondent URCPICLA-FUR and consequently ordered
the garnishment of petitioner's bank account to enforce said claim. It was his
position that although the decision of the National Wages Council did not
categorically require payment of the 15% service fee directly to URCPICLA-FUR it
had acted as the counsel of record of petitioner's employees, hence said
payment could be authorized by applying suppletorily the provisions of Section
37, Rule 138 of the Rules of Court on attorney's lien. Said order further noted
that the transaction entered into by petitioner in favor of BMRCPI-NFL in the
guise of a compromise agreement, was made without the consent of URCPICLA-
FUR in clear defraudation of the latter's right to the 15% union service fee justly
due it. 12
Acting on petitioners "Omnibus Motion" seeking, among others, a
reconsideration of said order of May 7, 1986, which motion was treated as an
appeal, respondent Secretary of Labor and Employment issued an order on
August 18, 1986 modifying the order appealed from by holding petitioner solely
liable to respondent union for 10% of the awarded amounts as attorney's fees,
on the rationale that:
... oppositor's claim for attorney's fee was the ultimate consequence of the non-
compliance of RCPI with Wage Order No. 1. The RCPI employees were forced to
avail of the services of oppositor as counsel, RCPI having continuously withheld
payment of said benefit. They were forced to litigate up to the Supreme Court
for the protection of their interest. In the case of Cristobal vs. ECC, I,49280
promulgated February 26, 1981, 103 SCRA 339, the Supreme Court ruled that
'the defaulting employer or government agency remains liable for attorney's
fees because it compelled the complainant to employ the services of counsel by
unjustly refusing to recognize the validity of the claim.' Attorney's fee due the
oppositor is, thus, chargeable against RCPI. 13
Hence, the instant petition, basically on the sole issue of whether the public
respondents acted with grave abuse of discretion amounting to lack of
jurisdiction in holding the petitioner solely liable for "union service fee' to
respondent URCPICLA-FUR.
We hold in the negative.
The contention of petitioner that the challenged order of May 7, 1986 was
issued with grave abuse of discretion, for supposedly imposing an additional
obligation in the form of attorney's fees not contemplated in the decision of the
National Wages Council, is bereft of merit.
While it is true that the original decision of said Council; did not expressly
provide for payment of attorney's fees, that particular aspect or deficiency is
deemed to have been supplied, if not modified pro tanto, by the compromise
agreement subsequently executed between the parties. A cursory perusal of
said agreement shows an unqualified admission by petitioner that "from the
aforesaid total amount due every employee, 10% thereof shall be considered as
attorney's fee, 14 although, as hereinafter discussed, it sought to withhold it
from respondent union. Considering, however, that respondent union was
categorically found by the Labor Secretary to have been responsible for the
successful prosecution of the case to its ultimate conclusion in behalf of its
member, employees of herein petitioner, its right to fees for services rendered,
or what it termed as "union service fee," is indubitable.
The further pretension of petitioner that respondent union is not entitled to
attorney's fee or union service fee because it is not a member of the Bar is both
untenable and in disregard of the liberalized scheme and theory of
representation for labor adopted in the Labor Code.
As explained by the order of the Deputy Minister of August 18, 1986
hereinbefore adverted to
... The appearance of labor federations and local unions as counsel in labor
proceedings has been given legal sanction and we need only cite Art. 222 of the
Labor Code which allows non-lawyers to represent their organization or
members thereof.
It is undisputed that oppositor (private respondent herein) was the counsel on
record of the RCPI employees in their claim for EC0LA under Wage Order No. 1
since the inception of the proceedings at the National Wages Council up to the
Supreme Court. It had therefore a valid claim for attorney's fee which it called
union service fee'. .. 15 (Emphasis supplied).
As affirmed and further clarified by respondent Secretary of Labor and
Employment in his order of March 20, 1987
'While the claim for union service fee was initially directed against the union
members, there is no dispute that the claim was basically for attorney's fee. As a
matter of fact, RCPI admitted that the union service fee is 'for Compensation for
services rendered by the union. ... 16
We also cannot but look askance and take a quizzical view of the aforequoted
compromise agreement on which petitioner anchors its main arguments.
Aside from the fact that, as already stated, the same was concluded behind the
back of private respondent, so to speak, and with another labor union and a
lawyer neither of whom prior thereto had a hand in the recovery of benefits for
the RCPI employees concerned, there are certain indicia which cast serious
doubts on the motives and actuations therein of petitioner.
As already stated, as early as March 13, 1985, private respondent had moved for
the deduction of said fee from the total backpay awarded in the decision of the
Council. It reiterated such claim in its motion for a writ of execution filed on
September 10, 1985 after this Court had dismissed the petition for certiorari
filed by petitioner in G.R. No. 70148. Petitioner was fully aware of these
proceedings since it even filed its opposition thereto on September 23, 1985,
but in the aforestated order of November 25, 1985, private respondent was
awarded 15% of the total backpay of the RCPI employees as its union service
fee, with petitioner being directed to deposit said amount with the NCR office.
Yet, on November 29, 1985, petitioner, despite timely notice of said order and in
total disregard thereof, directly paid its employees the full amount of their
backpay, without deducting the union service fee. 17
Again, as is evident in the aforequoted provisions of the compromise
agreement, petitioner was bound to pay only 30% of the amount due each
employee on November 30, 1985, while the balance of 70% would still be the
subject of renegotiation by the parties on July 31, 1986. Yet, despite such
conditions beneficial to it, petitioner paid in full the backpay of its employees on
November 29, 1985, ignoring the service fee due the private respondent.
Worse, petitioner supposedly paid to one Atty. Rodolfo M. Capocyan the 10%
fee that properly pertained to herein private respondent, an unjustified and
baffling diversion of funds. It tried to explain away such obvious tergiversation
by claiming that said 10% fee corresponded to the other claims embraced in the
compromise agreement but not the liability under Wage Order No. 1, an
apocryphal contradiction of its contrary admission in Paragraph 7 of its
Reply 18 and the provisions of Paragraph 2(c) of the compromise agreement.
On top of that, the records do not show any rejoinder or explanation by
petitioner of this grave revelation and accusation of the Solicitor General:
But the spurious and fraudulent character of such disposition made by
petitioner is clearly inferable from the circumstances that: ... (2) there is no such
Atty. Rodolfo Capocyan in the Attorney's Rollo of this Court (See Communication
from the Office of the Bar Confidant of the Supreme Court dated March 17,
1986 found on page 459 of the record). Atty. Capocyan, being a mere fictitious
character, his 'attorney's fees' which included the claim of private respondent,
necessarily devolved upon petitioner.
'It would now appear that petitioner had a secret interest over the 10% fees due
and owing to private respondent and thru the manipulations of petitioner's
agents were given the appearance of attorney's fees' to a certain Atty. Rodolfo
Capocyan. It cannot be denied that by such fraudulent method, private
respondent was deprived of its just and lawful fees. 19
Even the employment of the term "novation" in the compromise agreement
appears to have been dictated by the dubious motive to secure dismissal with
prejudice of the decision of the National Wages Council. For, despite the
express, albeit improper use of such term, there could have been no valid
novation of the prior judgment for the simple reason that the pre-existing
obligation thereunder and the new one sought to be created are not absolutely
incompatible. On the contrary, the compromise agreement expressly recognizes
the respective obligations of the parties in said judgment and precisely provides
a method by which the same shall be extinguished, which method is, as
expressly stated in said contract, by installment payments. The contract, instead
of containing provisions incompatible with the obligations in the judgment,
expressly ratifies such obligations and contains provisions for satisfying them.
The said agreement simply gave the petitioner a method and more time for the
satisfaction of said judgment. It did not extinguish the obligations contained in
the judgment, until the terms of said agreement had been fully complied with.
Had the petitioner continued to comply with the conditions of said agreement,
it could have successfully invoked its provisions against the issuance of a writ of
execution upon said judgment. The contract and the punctual compliance with
its terms only delayed the right of the respondent union to the execution of the
judgment. The judgment was not satisfied and the obligations existing
thereunder still subsisted until the terms of the agreement had been fully
complied with. 20
Finally, petitioner cannot invoke the lack of an individual written authorization
from the employees as a shield for its fraudulent refusal to pay the service fee of
private respondent. Prior to the payment made to its employees, petitioner was
ordered by the Regional Director to deduct the 15% attorney's fee from the
total amount due its employees and to deposit the same with the Regional
Labor Office. Petitioner failed to do so allegedly because of the absence of
individual written authorizations. Be that as it may, the lack thereof was
remedied and supplied by the execution of the compromise agreement whereby
the employees, expressly approved the 10% deduction and held petitioner RCPI
free from any claim, suit or complaint arising from the deduction thereof. When
petitioner was thereafter again ordered to pay the 10% fees to respondent
union, it no longer had any legal basis or subterfuge for refusing to pay the
latter.
We agree that Article 222 of the Labor Code requiring an individual written
authorization as a prerequisite to wage deductions seeks to protect the
employee against unwarranted practices that would diminish his compensation
without his knowledge and consent. 21 However, for all intents and purposes,
the deductions required of the petitioner and the employees do not run counter
to the express mandate of the law since the same are not unwarranted or
without their knowledge and consent. Also, the deductions for the union service
fee in question are authorized by law and do not require individual check-off
authorizations. 22
On the foregoing considerations, We find no cogent reason to disturb the order
of the Secretary of Labor and Employment finding petitioner liable for the union
service fee of private respondent.
WHEREFORE, the order of the Secretary of Labor of August 16, 1986 is hereby
AFFIRMED and the petition at bar is DISMISSED, with double costs against
petitioner. The temporary restraining order issued pursuant to the Resolution of
the Court of June 22, 1987 is LIFTED and declared of no further force and effect.
SO ORDERED.
ERNESTO M. APODACA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS
PHILS., INC., respondents.
Diego O. Untalan for petitioner.
The Solicitor General for public respondent.
Barcelona, Perlas, Joven & Academia Law Offices for private respondents.
GANCAYCO, J.:
Does the National Labor Relations Commission (NLRC) have jurisdiction to
resolve a claim for non-payment of stock subscriptions to a corporation?
Assuming that it has, can an obligation arising therefrom be offset against a
money claim of an employee against the employer? These are the issues
brought to this court through this petition for review of a decision of the NLRC
dated September 18, 1987.
The only remedy provided for by law from such a decision is a special civil action
for certiorari under Rule 65 of the Rules of Court based on jurisdictional grounds
or on alleged grave abuse of discretion amounting to lack or excess of
jurisdiction, not by way of an appeal by certiorari. Nevertheless, in the interest
of justice, this petition is treated as a special civil action for certiorari.
Petitioner was employed in respondent corporation. On August 28, 1985,
respondent Jose M. Mirasol persuaded petitioner to subscribe to 1,500 shares
of respondent corporation at P100.00 per share or a total of P150,000.00. He
made an initial payment of P37,500.00. On September 1, 1975, petitioner was
appointed President and General Manager of the respondent corporation.
However, on January 2, 1986, he resigned.
On December 19, 1986, petitioner instituted with the NLRC a complaint against
private respondents for the payment of his unpaid wages, his cost of living
allowance, the balance of his gasoline and representation expenses and his
bonus compensation for 1986. Petitioner and private respondents submitted
their position papers to the labor arbiter. Private respondents admitted that
there is due to petitioner the amount of P17,060.07 but this was applied to the
unpaid balance of his subscription in the amount of P95,439.93. Petitioner
questioned the set-off alleging that there was no call or notice for the payment
of the unpaid subscription and that, accordingly, the alleged obligation is not
enforceable.
In a decision dated April 28, 1987, the labor arbiter sustained the claim of
petitioner for P17,060.07 on the ground that the employer has no right to
withhold payment of wages already earned under Article 103 of the Labor Code.
Upon the appeal of the private respondents to public respondent NLRC, the
decision of the labor arbiter was reversed in a decision dated September 18,
1987. The NLRC held that a stockholder who fails to pay his unpaid subscription
on call becomes a debtor of the corporation and that the set-off of said
obligation against the wages and others due to petitioner is not contrary to law,
morals and public policy.
Hence, the instant petition.
The petition is impressed with merit.
Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute
between the stockholder and the corporation as in the matter of unpaid
subscriptions. This controversy is within the exclusive jurisdiction of the
Securities and Exchange Commission. 1
Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the
said subject matter under the circumstances of this case, the unpaid
subscriptions are not due and payable until a call is made by the corporation for
payment. 2 Private respondents have not presented a resolution of the board of
directors of respondent corporation calling for the payment of the unpaid
subscriptions. It does not even appear that a notice of such call has been sent to
petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the
amount due to petitioner from the amount receivable from him for the unpaid
subscriptions. 3 No doubt such set-off was without lawful basis, if not
premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the wages and other
benefits due petitioner. Article 113 of the Labor Code allows such a deduction
from the wages of the employees by the employer, only in three instances, to
wit:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
checkoff has been recognized by the employer or authorized in writing by the
individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.4
WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC
dated September 18, 1987 is hereby set aside and another judgment is hereby
rendered ordering private respondents to pay petitioner the amount of
P17,060.07 plus legal interest computed from the time of the filing of the
complaint on December 19, 1986, with costs against private respondents.
SO ORDERED.
NORMA MABEZA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL
SUPREME, respondents.
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent
National Labor Relations Commission dated April 28, 1994 vividly illustrates why
courts should be ever vigilant in the preservation of the constitutionally
enshrined rights of the working class. Without the protection accorded by our
laws and the tempering of courts, the natural and historical inclination of capital
to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner
and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991,
she and her co-employees at the Hotel Supreme in Baguio City were asked by
the hotel's management to sign an instrument attesting to the latter's
compliance with minimum wage and other labor standard provisions of
law. 1 The instrument provides: 2
JOINT AFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA
JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE
DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath,
depose and say:
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at
No. 416 Magsaysay Ave., Baguio City.
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective
shifts;
4. That we have no complaints against the management of the Hotel Supreme as
we are paid accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned and to
dispute the alleged report of the Labor Inspector of the Department of Labor
and Employment conducted on the said establishment on February 2, 1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May,
1991 at Baguio City, Philippines.
(Sgd.) (Sgd.) (Sgd.)
SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd.) (Sgd.) (Sgd.)
MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.
(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio
City, Philippines.
Asst. City Prosecutor
Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to
swear to the veracity and contents of the affidavit as instructed by
management. The affidavit was nevertheless submitted on the same day to the
Regional Office of the Department of Labor and Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by management for the sole
purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of
respondent's establishment on February 2, 1991) apparently adverse to the
private respondent. 3
After she refused to proceed to the City Prosecutor's Office on the same day
the affidavit was submitted to the Cordillera Regional Office of DOLE
petitioner avers that she was ordered by the hotel management to turn over the
keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to
proceed to the City Prosecutor's Office to attest to the affidavit. 5 She thereafter
reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the
hotel's cashier, Margarita Choy, informed her that she should not report to work
and, instead, continue with her unofficial leave of absence. Consequently, on
May 13, 1991, three days after her attempt to return to work, petitioner filed a
complaint for illegal dismissal before the Arbitration Branch of the National
Labor Relations Commission CAR Baguio City. In addition to her complaint for
illegal dismissal, she alleged underpayment of wages, non-payment of holiday
pay, service incentive leave pay, 13th month pay, night differential and other
benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91
and assigned to Labor Arbiter Felipe P. Pati.
Responding to the allegations made in support of petitioner's complaint for
illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati
that petitioner "surreptitiously left (her job) without notice to the
management" 6 and that she actually abandoned her work. He maintained that
there was no basis for the money claims for underpayment and other benefits
as these were paid in the form of facilities to petitioner and the hotel's other
employee. 7Pointing to the Affidavit of May 7, 1991, the private respondent
asserted that his employees actually have no problems with management. In a
supplemental answer submitted eleven (11) months after the original complaint
for illegal dismissal was filed, private respondent raised a new ground, loss of
confidence, which was supported by a criminal complaint for Qualified Theft he
filed before the prosecutor's office of the City of Baguio against petitioner on
July 4, 1991. 8
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's
complaint on the ground of loss of confidence. His disquisitions in support of his
conclusion read as follows:
It appears from the evidence of respondent that complainant carted away or
stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel
(Exhibits "9", "9-A," "9-B," "9-C" and "10" pages 12-14 TSN, December 1, 1992).
In fact, this was the reason why respondent Peter Ng lodged a criminal
complaint against complainant for qualified theft and perjury. The fiscal's office
finding a prima facie evidence that complainant committed the crime of
qualified theft issued a resolution for its filing in court but dismissing the charge
of perjury (Exhibit "4" for respondent and Exhibit "B-7" for complainant). As a
consequence, complainant was charged in court for the said crime (Exhibit "5"
for respondent and Exhibit "B-6" for the complainant).
With these pieces of evidence, complainant committed serious misconduct
against her employer which is one of the just and valid grounds for an employer
to terminate an employee (Article 282 of the Labor Code as amended). 9
On April 28, 1994, respondent NLRC promulgated its assailed
Resolution 10 affirming the Labor Arbiter's decision. The resolution
substantially incorporated the findings of the Labor Arbiter. 11 Unsatisfied,
petitioner instituted the instant special civil action for certiorari under Rule 65 of
the Rules of Court on the following grounds: 12
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED
LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART
OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL
OF THE COMPLAINANT FROM HER EMPLOYMENT;
2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR
ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON
THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION
PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH
IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES
AND BENEFITS;
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE
ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR
PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8,
1995 rejects private respondent's principal claims and defenses and urges this
Court to set aside the public respondent's assailed resolution. 13
We agree.
It is settled that in termination cases the employer bears the burden of proof to
show that the dismissal is for just cause, the failure of which would mean that
the dismissal is not justified and the employee is entitled to reinstatement. 14
In the case at bar, the private respondent initially claimed that petitioner
abandoned her job when she failed to return to work on May 8, 1991.
Additionally, in order to strengthen his contention that there existed sufficient
cause for the termination of petitioner, he belatedly included a complaint for
loss of confidence, supporting this with charges that petitioner had stolen a
blanket, a bedsheet and two towels from the hotel. 15 Appended to his last
complaint was a suit for qualified theft filed with the Baguio City prosecutor's
office.
From the evidence on record, it is crystal clear that the circumstances upon
which private respondent anchored his claim that petitioner "abandoned" her
job were not enough to constitute just cause to sanction the termination of her
services under Article 283 of the Labor Code. For abandonment to arise, there
must be concurrence of two things: 1) lack of intention to work; 16 and 2) the
presence of overt acts signifying the employee's intention not to work. 17
In the instant case, respondent does not dispute the fact that petitioner tried to
file a leave of absence when she learned that the hotel management was
displeased with her refusal to attest to the affidavit. The fact that she made this
attempt clearly indicates not an intention to abandon but an intention to return
to work after the period of her leave of absence, had it been granted, shall have
expired.
Furthermore, while absence from work for a prolonged period may suggest
abandonment in certain instances, mere absence of one or two days would not
be enough to sustain such a claim. The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to
work, 18 which is patently not the case here. In fact, several days after she had
been advised to take an informal leave, petitioner tried to resume working with
the hotel, to no avail. It was only after she had been repeatedly rebuffed that
she filed a case for illegal dismissal. These acts militate against the private
respondent's claim that petitioner abandoned her job. As the Solicitor General
in his manifestation observed:
Petitioner's absence on that day should not be construed as abandonment of
her job. She did not report because the cashier told her not to report anymore,
and that private respondent Ng did not want to see her in the hotel premises.
But two days later or on the 10th of May, after realizing that she had to clarify
her employment status, she again reported for work. However, she was
prevented from working by private respondents. 19
We now come to the second cause raised by private respondent to support his
contention that petitioner was validly dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to provide
employers with a blank check for terminating their employees. Such a vague, all-
encompassing pretext as loss of confidence, if unqualifiedly given the seal of
approval by this Court, could readily reduce to barren form the words of the
constitutional guarantee of security of tenure. Having this in mind, loss of
confidence should ideally apply only to cases involving employees occupying
positions of trust and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer's money or
property. To the first class belong managerial employees, i.e., those vested with
the powers or prerogatives to lay down management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions; and to the second class belong
cashiers, auditors, property custodians, etc., or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of
money or property. Evidently, an ordinary chambermaid who has to sign out for
linen and other hotel property from the property custodian each day and who
has to account for each and every towel or bedsheet utilized by the hotel's
guests at the end of her shift would not fall under any of these two classes of
employees for which loss of confidence, if ably supported by evidence, would
normally apply. Illustrating this distinction, this Court in Marina Port Services,
Inc. vs. NLRC, 20 has stated that:
To be sure, every employee must enjoy some degree of trust and confidence
from the employer as that is one reason why he was employed in the first place.
One certainly does not employ a person he distrusts. Indeed, even the lowly
janitor must enjoy that trust and confidence in some measure if only because he
is the one who opens the office in the morning and closes it at night and in this
sense is entrusted with the care or protection of the employer's property. The
keys he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the
trust and confidence of his employer, whose property he is safeguarding. Like
the janitor, he has access to this property. He too, is charged with its care and
protection.
Notably, however, and like the janitor again, he is entrusted only with
the physical task of protecting that property. The employer's trust and
confidence in him is limited to that ministerial function. He is not entrusted, in
the Labor Arbiter's words, with the duties of safekeeping and safeguarding
company policies, management instructions, and company secrets such as
operation devices. He is not privy to these confidential matters, which are
shared only in the higher echelons of management. It is the persons on such
levels who, because they discharge these sensitive duties, may be considered
holding positions of trust and confidence. The security guard does not belong in
such category. 21
More importantly, we have repeatedly held that loss of confidence should not
be simulated in order to justify what would otherwise be, under the provisions
of law, an illegal dismissal. "It should not be used as a subterfuge for causes 1981 to 1987 were less than minimum wage was because petitioner did not
which are illegal, improper and unjustified. It must be genuine, not a mere factor in the meals, lodging, electric consumption and water she received during
afterthought to justify an earlier action taken in bad faith." 22 the period in her computations. 26 Granting that meals and lodging were
provided and indeed constituted facilities, such facilities could not be deducted
without the employer complying first with certain legal requirements. Without
In the case at bar, the suspicious delay in private respondent's filing of qualified
satisfying these requirements, the employer simply cannot deduct the value
theft charges against petitioner long after the latter exposed the hotel's scheme
from the employee's ages. First, proof must be shown that such facilities are
(to avoid its obligations as employer under the Labor Code) by her act of filing
customarily furnished by the trade. Second, the provision of deductible facilities
illegal dismissal charges against the private respondent would hardly warrant
must be voluntarily accepted in writing by the employee. Finally, facilities must
serious consideration of loss of confidence as a valid ground for dismissal.
be charged at fair and reasonable value. 27
Notably, the Solicitor General has himself taken a position opposite the public
respondent and has observed that:
These requirements were not met in the instant case. Private respondent "failed
to present any company policy or guideline to show that the meal and lodging . .
If petitioner had really committed the acts charged against her by private
. (are) part of the salary;" 28 he failed to provide proof of the employee's written
respondents (stealing supplies of respondent hotel), private respondents should
authorization; and, he failed to show how he arrived at the valuations. 29
have confronted her before dismissing her on that ground. Private respondents
did not do so. In fact, private respondent Ng did not raise the matter when
petitioner went to see him on May 9, 1991, and handed him her application for Curiously, in the case at bench, the only valuations relied upon by the labor
leave. It took private respondents 52 days or up to July 4, 1991 before finally arbiter in his decision were figures furnished by the private respondent's own
deciding to file a criminal complaint against petitioner, in an obvious attempt to accountant, without corroborative evidence. On the pretext that records prior
build a case against her. to the July 16, 1990 earthquake were lost or destroyed, respondent failed to
produce payroll records, receipts and other relevant documents, where he could
have, as has been pointed out in the Solicitor General's manifestation, "secured
The manipulations of private respondents should not be countenanced. 23
certified copies thereof from the nearest regional office of the Department of
Labor, the SSS or the BIR." 30
Clearly, the efforts to justify petitioner's dismissal on top of the private
respondent's scheme of inducing his employees to sign an affidavit absolving
More significantly, the food and lodging, or the electricity and water consumed
him from possible violations of the Labor Code taints with evident bad faith
by the petitioner were not facilities but supplements. A benefit or privilege
and deliberate malice petitioner's summary termination from employment.
granted to an employee for the convenience of the employer is not a facility.
The criterion in making a distinction between the two not so much lies in the
Having said this, we turn to the important question of whether or not the kind (food, lodging) but the purpose. 31 Considering, therefore, that hotel
dismissal by the private respondent of petitioner constitutes an unfair labor workers are required to work different shifts and are expected to be available at
practice. various odd hours, their ready availability is a necessary matter in the
operations of a small hotel, such as the private respondent's hotel.
The answer in this case must inevitably be in the affirmative.
It is therefore evident that petitioner is entitled to the payment of the deficiency
The pivotal question in any case where unfair labor practice on the part of the in her wages equivalent to the fullwage applicable from May 13, 1988 up to the
employer is alleged is whether or not the employer has exerted pressure, in the date of her illegal dismissal.
form of restraint, interference or coercion, against his employee's right to
institute concerted action for better terms and conditions of employment. Additionally, petitioner is entitled to payment of service incentive leave pay,
Without doubt, the act of compelling employees to sign an instrument emergency cost of living allowance, night differential pay, and 13th month pay
indicating that the employer observed labor standards provisions of law when for the periods alleged by the petitioner as the private respondent has never
he might have not, together with the act of terminating or coercing those who been able to adduce proof that petitioner was paid the aforestated benefits.
refuse to cooperate with the employer's scheme constitutes unfair labor
practice. The first act clearly preempts the right of the hotel's workers to seek
However, the claims covering the period of October 1987 up to the time of filing
better terms and conditions of employment through concerted action.
the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended)
and its implementing rules limit all money claims arising out of employer-
We agree with the Solicitor General's observation in his manifestation that employee relationship to three (3) years from the time the cause of action
"[t]his actuation . . . is analogous to the situation envisaged in paragraph (f) of accrues. 32
Article 248 of the Labor Code" 24 which distinctly makes it an unfair labor
practice "to dismiss, discharge or otherwise prejudice or discriminate against an
We depart from the settled rule that an employee who is unjustly dismissed
employee for having given or being about to give testimony" 25 under the Labor
from work normally should be reinstated without loss of seniority rights and
Code. For in not giving positive testimony in favor of her employer, petitioner
other privileges. Owing to the strained relations between petitioner and private
had reserved not only her right to dispute the claim and proffer evidence in
respondent, allowing the former to return to her job would only subject her to
support thereof but also to work for better terms and conditions of
possible harassment and future embarrassment. In the instant case, separation
employment.
pay equivalent to one month's salary for every year of continuous service with
the private respondent would be proper, starting with her job at the Belfront
For refusing to cooperate with the private respondent's scheme, petitioner was Hotel.
obviously held up as an example to all of the hotel's employees, that they could
only cause trouble to management at great personal inconvenience. Implicit in
In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and
the act of petitioner's termination and the subsequent filing of charges against
our decision in Osmalik Bustamante, et al. vs. National Labor Relations
her was the warning that they would not only be deprived of their means of
Commission, 33 petitioner is entitled to full backwages from the time of her
livelihood, but also possibly, their personal liberty.
illegal dismissal up to the date of promulgation of this decision without
qualification or deduction.
This Court does not normally overturn findings and conclusions of quasi-judicial
agencies when the same are ably supported by the evidence on record.
Finally, in dismissal cases, the law requires that the employer must furnish the
However, where such conclusions are based on a misperception of facts or
employee sought to be terminated from employment with two written notices
where they patently fly in the face of reason and logic, we will not hesitate to
before the same may be legally effected. The first is a written notice containing
set aside those conclusions. Going into the issue of petitioner's money claims,
a statement of the cause(s) for dismissal; the second is a notice informing the
we find one more salient reason in this case to set things right: the labor
employee of the employer's decision to terminate him stating the basis of the
arbiter's evaluation of the money claims in this case incredibly ignores existing
dismissal. During the process leading to the second notice, the employer must
law and jurisprudence on the matter. Its blatant one-sidedness simply raises the
give the employee ample opportunity to be heard and defend himself, with the
suspicion that something more than the facts, the law and jurisprudence may
assistance of counsel if he so desires.
have influenced the decision at the level of the Arbiter.

Given the seriousness of the second cause (qualified theft) of the petitioner's
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare
dismissal, it is noteworthy that the private respondent never even bothered to
claim that the reason the monetary benefits received by petitioner between
inform petitioner of the charges against her. Neither was petitioner given the
opportunity to explain the loss of the articles. It was only almost two months
after petitioner had filed a complaint for illegal dismissal, as an afterthought,
that the loss was reported to the police and added as a supplemental answer to
petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of
notice and hearing prior to her termination violated her constitutional right to
due process. Under the circumstance an award of One Thousand Pesos
(P1,000.00) on top of payment of the deficiency in wages and benefits for the
period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National Labor
Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with
costs. For clarity, the economic benefits due the petitioner are hereby
summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date
of petitioner's illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay for the
same period;
3) Separation pay equal to one month's salary for every year of petitioner's
continuous service with the private respondent starting with her job at the
Belfront Hotel;
4) Full backwages, without qualification or deduction, from the date of
petitioner's illegal dismissal up to the date of promulgation of this decision
pursuant to our ruling in Bustamante vs. NLRC. 34
5) P1,000.00.
ORDERED.
BENJAMIN YU, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS
COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU
SHIAN JENG and CHEN HO-FU, respondents.
Jose C. Guico for petitioner.
Wilfredo Cortez for private respondents.
FELICIANO, J.:
Petitioner Benjamin Yu was formerly the Assistant General Manager of the
marble quarrying and export business operated by a registered partnership with
the firm name of "Jade Mountain Products Company Limited" ("Jade
Mountain"). The partnership was originally organized on 28 June 1984 with Lea
Bendal and Rhodora Bendal as general partners and Chin Shian Jeng, Chen Ho-
Fu and Yu Chang, all citizens of the Republic of China (Taiwan), as limited
partners. The partnership business consisted of exploiting a marble deposit
found on land owned by the Sps. Ricardo and Guillerma Cruz, situated in
Bulacan Province, under a Memorandum Agreement dated 26 June 1984 with
the Cruz spouses. 1 The partnership had its main office in Makati, Metropolitan
Manila.
Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March
1985, as Assistant General Manager with a monthly salary of P4,000.00.
According to petitioner Yu, however, he actually received only half of his
stipulated monthly salary, since he had accepted the promise of the partners
that the balance would be paid when the firm shall have secured additional
operating funds from abroad. Benjamin Yu actually managed the operations and
finances of the business; he had overall supervision of the workers at the marble
quarry in Bulacan and took charge of the preparation of papers relating to the
exportation of the firm's products.
Sometime in 1988, without the knowledge of Benjamin Yu, the general partners
Lea Bendal and Rhodora Bendal sold and transferred their interests in the
partnership to private respondent Willy Co and to one Emmanuel Zapanta. Mr.
Yu Chang, a limited partner, also sold and transferred his interest in the
partnership to Willy Co. Between Mr. Emmanuel Zapanta and himself, private
respondent Willy Co acquired the great bulk of the partnership interest. The
partnership now constituted solely by Willy Co and Emmanuel Zapanta
continued to use the old firm name of Jade Mountain, though they moved the
firm's main office from Makati to Mandaluyong, Metropolitan Manila. A
Supplement to the Memorandum Agreement relating to the operation of the
marble quarry was entered into with the Cruz spouses in February of 1988. 2 The
actual operations of the business enterprise continued as before. All the
employees of the partnership continued working in the business, all, save
petitioner Benjamin Yu as it turned out.
On 16 November 1987, having learned of the transfer of the firm's main office
from Makati to Mandaluyong, petitioner Benjamin Yu reported to the
Mandaluyong office for work and there met private respondent Willy Co for the
first time. Petitioner was informed by Willy Co that the latter had bought the
business from the original partners and that it was for him to decide whether or
not he was responsible for the obligations of the old partnership, including
petitioner's unpaid salaries. Petitioner was in fact not allowed to work anymore
in the Jade Mountain business enterprise. His unpaid salaries remained unpaid. 3
On 21 December 1988. Benjamin Yu filed a complaint for illegal dismissal and
recovery of unpaid salaries accruing from November 1984 to October 1988,
moral and exemplary damages and attorney's fees, against Jade Mountain, Mr.
Willy Co and the other private respondents. The partnership and Willy Co
denied petitioner's charges, contending in the main that Benjamin Yu was never
hired as an employee by the present or new partnership. 4
In due time, Labor Arbiter Nieves Vivar-De Castro rendered a decision holding
that petitioner had been illegally dismissed. The Labor Arbiter decreed his
reinstatement and awarded him his claim for unpaid salaries, backwages and
attorney's fees. 5
On appeal, the National Labor Relations Commission ("NLRC") reversed the
decision of the Labor Arbiter and dismissed petitioner's complaint in a
Resolution dated 29 November 1990. The NLRC held that a new partnership
consisting of Mr. Willy Co and Mr. Emmanuel Zapanta had bought the Jade
Mountain business, that the new partnership had not retained petitioner Yu in
his original position as Assistant General Manager, and that there was no law
requiring the new partnership to absorb the employees of the old partnership.
Benjamin Yu, therefore, had not been illegally dismissed by the new partnership
which had simply declined to retain him in his former managerial position or any
other position. Finally, the NLRC held that Benjamin Yu's claim for unpaid wages
should be asserted against the original members of the preceding partnership,
but these though impleaded had, apparently, not been served with summons in
the proceedings before the Labor Arbiter. 6
Petitioner Benjamin Yu is now before the Court on a Petition for Certiorari,
asking us to set aside and annul the Resolution of the NLRC as a product of grave
abuse of discretion amounting to lack or excess of jurisdiction.
The basic contention of petitioner is that the NLRC has overlooked the principle
that a partnership has a juridical personality separate and distinct from that of
each of its members. Such independent legal personality subsists, petitioner
claims, notwithstanding changes in the identities of the partners. Consequently,
the employment contract between Benjamin Yu and the partnership Jade
Mountain could not have been affected by changes in the latter's membership. 7
Two (2) main issues are thus posed for our consideration in the case at bar: (1)
whether the partnership which had hired petitioner Yu as Assistant General
Manager had been extinguished and replaced by a new partnerships composed
of Willy Co and Emmanuel Zapanta; and (2) if indeed a new partnership had
come into existence, whether petitioner Yu could nonetheless assert his rights
under his employment contract as against the new partnership.
In respect of the first issue, we agree with the result reached by the NLRC, that
is, that the legal effect of the changes in the membership of the partnership was
the dissolution of the old partnership which had hired petitioner in 1984 and the
emergence of a new firm composed of Willy Co and Emmanuel Zapanta in 1987.
The applicable law in this connection of which the NLRC seemed quite
unaware is found in the Civil Code provisions relating to partnerships. Article
1828 of the Civil Code provides as follows:
Art. 1828. The dissolution of a partnership is the change in the relation of the
partners caused by any partner ceasing to be associated in the carrying on as
distinguished from the winding up of the business. (Emphasis supplied)
Article 1830 of the same Code must also be noted:
Art. 1830. Dissolution is caused:
(1) without violation of the agreement between the partners;
xxx xxx xxx
(b) by the express will of any partner, who must act in good faith, when no
definite term or particular undertaking is specified;
xxx xxx xxx
(2) in contravention of the agreement between the partners, where the
circumstances do not permit a dissolution under any other provision of this
article, by the express will of any partner at any time;
xxx xxx xxx
(Emphasis supplied)
In the case at bar, just about all of the partners had sold their partnership
interests (amounting to 82% of the total partnership interest) to Mr. Willy Co
and Emmanuel Zapanta. The record does not show what happened to the
remaining 18% of the original partnership interest. The acquisition of 82% of the
partnership interest by new partners, coupled with the retirement or
withdrawal of the partners who had originally owned such 82% interest, was
enough to constitute a new partnership.
The occurrence of events which precipitate the legal consequence of dissolution
of a partnership do not, however, automatically result in the termination of the
legal personality of the old partnership. Article 1829 of the Civil Code states
that:
[o]n dissolution the partnership is not terminated, but continues until the
winding up of partnership affairs is completed.
In the ordinary course of events, the legal personality of the expiring partnership
persists for the limited purpose of winding up and closing of the affairs of the
partnership. In the case at bar, it is important to underscore the fact that the
business of the old partnership was simply continued by the new
partners, without the old partnership undergoing the procedures relating to
dissolution and winding up of its business affairs. In other words, the new
partnership simply took over the business enterprise owned by the preceeding
partnership, and continued using the old name of Jade Mountain Products
Company Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing its net assets, and
then re-assembling the said assets or most of them and opening a new business
enterprise. There were, no doubt, powerful tax considerations which underlay
such an informal approach to business on the part of the retiring and the
incoming partners. It is not, however, necessary to inquire into such matters.
What is important for present purposes is that, under the above described
situation, not only the retiring partners (Rhodora Bendal, et al.) but also the new
partnership itself which continued the business of the old, dissolved, one, are
liable for the debts of the preceding partnership. In Singson, et al. v. Isabela Saw
Mill, et al, 8 the Court held that under facts very similar to those in the case at
bar, a withdrawing partner remains liable to a third party creditor of the old
partnership. 9 The liability of the new partnership, upon the other hand, in the
set of circumstances obtaining in the case at bar, is established in Article 1840 of
the Civil Code which reads as follows:
Art. 1840. In the following cases creditors of the dissolved partnership
are also creditors of the person or partnership continuing the business:
(1) When any new partner is admitted into an existing partnership, or when any
partner retires and assigns (or the representative of the deceased partner
assigns) his rights in partnership property to two or more of the partners, or to
one or more of the partners and one or more third persons, if the business is
continued without liquidation of the partnership affairs;
(2) When all but one partner retire and assign (or the representative of a
deceased partner assigns) their rights in partnership property to the remaining
partner, who continues the business without liquidation of partnership affairs,
either alone or with others;
(3) When any Partner retires or dies and the business of the dissolved
partnership is continued as set forth in Nos. 1 and 2 of this Article, with the
consent of the retired partners or the representative of the deceased partner,
but without any assignment of his right in partnership property;
(4) When all the partners or their representatives assign their rights in
partnership property to one or more third persons who promise to pay the debts
and who continue the business of the dissolved partnership;
(5) When any partner wrongfully causes a dissolution and remaining partners
continue the businessunder the provisions of article 1837, second paragraph,
No. 2, either alone or with others, and without liquidation of the partnership
affairs;
(6) When a partner is expelled and the remaining partners continue the business
either alone or with others without liquidation of the partnership affairs;
The liability of a third person becoming a partner in the partnership continuing
the business, under this article, to the creditors of the dissolved partnership
shall be satisfied out of the partnership property only, unless there is a
stipulation to the contrary.
When the business of a partnership after dissolution is continued under any
conditions set forth in this article the creditors of the retiring or deceased
partner or the representative of the deceased partner, have a prior right to any
claim of the retired partner or the representative of the deceased partner
against the person or partnership continuing the business on account of the
retired or deceased partner's interest in the dissolved partnership or on account
of any consideration promised for such interest or for his right in partnership
property.
Nothing in this article shall be held to modify any right of creditors to set
assignment on the ground of fraud.
xxx xxx xxx
(Emphasis supplied)
Under Article 1840 above, creditors of the old Jade Mountain are also creditors
of the new Jade Mountain which continued the business of the old one without
liquidation of the partnership affairs. Indeed, a creditor of the old Jade
Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid wages,
is entitled to priority vis-a-visany claim of any retired or previous partner insofar
as such retired partner's interest in the dissolved partnership is concerned. It is
not necessary for the Court to determine under which one or mare of the above
six (6) paragraphs, the case at bar would fall, if only because the facts on record
are not detailed with sufficient precision to permit such determination. It is,
however, clear to the Court that under Article 1840 above, Benjamin Yu is
entitled to enforce his claim for unpaid salaries, as well as other claims relating
to his employment with the previous partnership, against the new Jade
Mountain.
It is at the same time also evident to the Court that the new partnership was
entitled to appoint and hire a new general or assistant general manager to run
the affairs of the business enterprise take over. An assistant general manager
belongs to the most senior ranks of management and a new partnership is
entitled to appoint a top manager of its own choice and confidence. The non-
retention of Benjamin Yu as Assistant General Manager did not therefore
constitute unlawful termination, or termination without just or authorized
cause. We think that the precise authorized cause for termination in the case at
bar was redundancy. 10 The new partnership had its own new General Manager,
apparently Mr. Willy Co, the principal new owner himself, who personally ran
the business of Jade Mountain. Benjamin Yu's old position as Assistant General
Manager thus became superfluous or redundant. 11 It follows that petitioner
Benjamin Yu is entitled to separation pay at the rate of one month's pay for
each year of service that he had rendered to the old partnership, a fraction of at
least six (6) months being considered as a whole year.
While the new Jade Mountain was entitled to decline to retain petitioner
Benjamin Yu in its employ, we consider that Benjamin Yu was very shabbily
treated by the new partnership. The old partnership certainly benefitted from
the services of Benjamin Yu who, as noted, previously ran the whole marble
quarrying, processing and exporting enterprise. His work constituted value-
added to the business itself and therefore, the new partnership similarly
benefitted from the labors of Benjamin Yu. It is worthy of note that the new
partnership did not try to suggest that there was any cause consisting of some
blameworthy act or omission on the part of Mr. Yu which compelled the new
partnership to terminate his services. Nonetheless, the new Jade Mountain did
not notify him of the change in ownership of the business, the relocation of the
main office of Jade Mountain from Makati to Mandaluyong and the assumption
by Mr. Willy Co of control of operations. The treatment (including the refusal to
honor his claim for unpaid wages) accorded to Assistant General Manager
Benjamin Yu was so summary and cavalier as to amount to arbitrary, bad faith
treatment, for which the new Jade Mountain may legitimately be required to
respond by paying moral damages. This Court, exercising its discretion and in
view of all the circumstances of this case, believes that an indemnity for moral
damages in the amount of P20,000.00 is proper and reasonable.
In addition, we consider that petitioner Benjamin Yu is entitled to interest at the
legal rate of six percent (6%) per annum on the amount of unpaid wages, and of
his separation pay, computed from the date of promulgation of the award of the
Labor Arbiter. Finally, because the new Jade Mountain compelled Benjamin Yu
to resort to litigation to protect his rights in the premises, he is entitled to
attorney's fees in the amount of ten percent (10%) of the total amount due from
private respondent Jade Mountain.
WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE
COURSE, the Comment filed by private respondents is treated as their Answer to
the Petition for Certiorari, and the Decision of the NLRC dated 29 November
1990 is hereby NULLIFIED and SET ASIDE. A new Decision is hereby ENTERED
requiring private respondent Jade Mountain Products Company Limited to pay
to petitioner Benjamin Yu the following amounts:
(a) for unpaid wages which, as found by the Labor Arbiter, shall be computed at
the rate of P2,000.00 per month multiplied by thirty-six (36) months (November
1984 to December 1987) in the total amount of P72,000.00;
(b) separation pay computed at the rate of P4,000.00 monthly pay multiplied by
three (3) years of service or a total of P12,000.00;
(c) indemnity for moral damages in the amount of P20,000.00;
(d) six percent (6%) per annum legal interest computed on items (a) and (b)
above, commencing on 26 December 1989 and until fully paid; and
(e) ten percent (10%) attorney's fees on the total amount due from private
respondent Jade Mountain.
Costs against private respondents.
QUINTIN ROBLEDO, MARIO SINLAO, LEONARDO SAAVEDRA, VICENTE
SECAPURI, DANIEL AUSTRIA, ET AL.,petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, BACANI SECURITY AND
ALLIED SERVICES CO., INC., AND BACANI SECURITY AND PROTECTIVE AGENCY
AND/OR ALICIA BACANI, respondents.
Benjamin C. Pineda for petitioners.
Villanueva, Ebora & Caa for private respondents.
MENDOZA, J.:
This is a petition for review of the decision of the First Division 1 of the National
Labor Relations Commission, setting aside the decision of the Labor Arbiter
which held private respondents jointly and severally liable to the petitioners for
overtime and legal holiday pay.
The facts of this case are as follows:
Petitioners were former employees of Bacani Security and Protective Agency
(BSPA, for brevity). They were employed as security guards at different times
during the period 1969 to December 1989 when BSPA ceased to operate.
BSPA was a single proprietorship owned, managed and operated by the late
Felipe Bacani. It was registered with the Bureau of Trade and Industry as a
business name in 1957. Upon its expiration, the registration was renewed on
July 1, 1987 for a term of five (5) years ending 1992.
On December 31, 1989, Felipe Bacani retired the business name and BSPA
ceased to operate effective on that day. At that time, respondent Alicia Bacani,
daughter of Felipe Bacani, was BSPA's Executive Directress.
On January 15, 1990 Felipe Bacani died. An intestate proceeding was instituted
for the settlement of his estate before the Regional Trial Court, National Capital
Region, Branch 155, Pasig, Metro Manila.
Earlier, on October 26, 1989, respondent Bacani Security and Allied Services Co.,
Inc. (BASEC, for brevity) had been organized and registered as a corporation
with the Securities and Exchange Commission. The following were the
incorporators with their respective shareholdings:
ALICIA BACANI 25,250 shares
LYDIA BACANI 25,250 shares
AMADO P. ELEDA 25,250 shares
VICTORIA B. AURIGUE 25,250 shares
FELIPE BACANI 20,000 shares
The primary purpose of the corporation was to "engage in the business of
providing security" to persons and entities. This was the same line of business
that BSPA was engaged in. Most of the petitioners, after losing their jobs in
BSPA, were employed in BASEC.
On July 5, 1990, some of the petitioners filed a complaint with
the Department of Labor and Employment, National Capital Region, for
underpayment of wages and nonpayment of overtime pay, legal holiday pay,
separation pay and/or retirement/resignation benefits, and for the return of
their cash bond which they posted with BSPA. Made respondents were BSPA
and BASEC. Petitioners were subsequently joined by the rest of the petitioners
herein who filed supplementary complaints.
On March 1, 1992, the Labor Arbiter rendered a decision upholding the right of
the petitioners. The dispositive portion of his decision reads:
CONFORMABLY WITH THE FOREGOING, the judgment is hereby rendered
finding complainants entitled to their money claims as herein above computed
and to be paid by all the respondents hereinin solidum except BSPA which has
already been retired from business.
Respondents are further ordered to pay attorney's fees equivalent to five (5)
percent of the awarded money claims.
All other claims are hereby dismissed for lack of merit.
SO ORDERED.
On appeal the National Labor Relations Commission reversed. In a decision
dated March 30, 1993, the NLRC's First Division declared the Labor Arbiter
without jurisdiction and instead suggested that petitioners file their claims with
the Regional Trial Court, Branch 155, Pasig, Metro Manila, where an intestate
proceeding for the settlement of Bacani's estate was pending. Petitioners
moved for a reconsideration but their motion was denied for lack of merit.
Hence this petition for review.
No appeal lies to review decisions of the NLRC. Nonetheless the petition in this
case was treated as a special civil action of certiorari to determine whether the
NLRC did not commit a grave abuse of its discretion in reversing the Labor
Arbiter's decision.
The issues in this case are two fold: first, whether Bacani Security and Allied
Services Co. Inc. (BASEC) and Alicia Bacani can be held liable for claims of
petitioners against Bacani Security and Protective Agency (BSPA) and,second, if
the claims were the personal liability of the late Felipe Bacani, as owner of BSPA,
whether the Labor Arbiter had jurisdiction to decide the claims.
Petitioners contend that public respondent erred in setting aside the Labor
Arbiter's judgment on the ground that BASEC is the same entity as BSPA the
latter being owned and controlled by one and the same family, namely the
Bacani family. For this reason they urge that the corporate fiction should be
disregarded and BASEC should be held liable for the obligations of the defunct
BSPA.
We find the petition to be without merit.
As correctly found by the NLRC, BASEC is an entity separate and distinct from
that of BSPA. BSPA is a single proprietorship owned and operated by Felipe
Bacani. Hence its debts and obligations were the personal obligations of its
owner. Petitioners' claim which are based on these debts and personal
obligations, did not survive the death of Felipe Bacani on January 15, 1990 and
should have been filed instead in the intestate proceedings involving his estate.
Indeed, the rule is settled that unless expressly assumed labor contracts are not
enforceable against the transferee of an enterprise. The reason for this is that
labor contracts are in personam. 2 Consequently, it has been held that claims for
backwages earned from the former employer cannot be filed against the new
owners of an enterprise. 3Nor is the new operator of a business liable for claims
for retirement pay of employees. 4
Petitioners claim, however, that BSPA was intentionally retired in order to allow
expansion of its business and even perhaps an increase in its capitalization for
credit purpose. According to them, the Bacani family merely continued the
operation of BSPA by creating BASEC in order to avoid the obligations of the
former. Petitioners anchor their claim on the fact that Felipe Bacani, after
having ceased to operate BSPA, became an incorporator of BASEC together with
his wife and daughter. Petitioners urge piercing the veil of corporate entity in
order to hold BASEC liable for BSPA's obligations.
The doctrine of piercing the veil of corporate entity is used whenever a court
finds that the corporate fiction is being used to defeat public convenience,
justify wrong, protect fraud, or defend crime, or to confuse legitimate issues, or
that a corporation is the mere alter ego or business conduit of a person or
where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct
of another corporation. 5 It is apparent, therefore, that the doctrine has no
application to this case where the purpose is not to hold the individual
stockholders liable for the obligations of the corporation but, on the contrary, to
hold the corporation liable for the obligations of a stockholder or stockholders.
Piercing the veil of corporate entity means looking through the corporate form
to the individual stockholders composing it. Here there is no reason to pierce
the veil of corporate entity because there is no question that petitioners' claims,
assuming them to be valid, are the personal liability of the late Felipe Bacani. It
is immaterial that he was also a stockholder of BASEC.
Indeed, the doctrine is stood on its head when what is sought is to make a
corporation liable for the obligations of a stockholder. But there are several
reasons why BASEC is not liable for the personal obligations of Felipe Bacani. For
one, BASEC came into existence before BSPA was retired as a business concern.
BASEC was incorporated on October 26, 1989 and its license to operate was
released on May 28, 1990, while BSPA ceased to operate on December 31, 1989.
Before, BSPA was retired, BASEC was already existing. It is, therefore, not true
that BASEC is a mere continuity of BSPA.
Second, Felipe Bacani was only one of the five (5) incorporators of BASEC. He
owned the least number of shares in BASEC, which included among its
incorporators persons who are not members of his family. That his wife Lydia
and daughter Alicia were also incorporators of the same company is not
sufficient to warrant the conclusion that they hold their shares in his behalf.
Third, there is no evidence to show that the assets of BSPA were transferred to
BASEC. If BASEC was a mere continuation of BSPA, all or at least a substantial
part of the latter's assets should have found their way to BASEC.
Neither can respondent Alicia Bacani be held liable for BSPA's obligations.
Although she was Executive Directress of BSPA, she was merely an employee of
the BSPA, which was a single proprietorship.
Now, the claims of petitioners are actually money claims against the estate of
Felipe Bacani. They must be filed against his estate in accordance with Sec. 5 of
Rule 86 which provides in part:
Sec. 5. Claims which must be filed under the notice. If not filed,
barred; exceptions. All claims for money against the decedent, arising from
contract, express or implied, whether the same be due, not due, or contingent,
all claims for funeral expenses and expenses for the last sickness of the
decedent, and judgment for money against the decedent, must be filed within
the time limited in the notice; otherwise they are barred forever, except that
they may be set forth as counterclaims in any action that the executor or
administrator may bring against the claimants . . .
The rationale for the rule is that upon the death of the defendant, a testate or
intestate proceeding shall be instituted in the proper court wherein all his
creditors must appear and file their claims which shall be paid proportionately
out of the property left by the deceased. The objective is to avoid duplicity of
procedure. Hence the ordinary actions must be taken out from the ordinary
courts. 6 Under Art. 110 of the Labor Code, money claims of laborers enjoy
preference over claims of other creditors in case of bankruptcy or liquidation of
the employer's business.
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
AVON DALE GARMENTS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LILIA DUMANTAY, ET
AL., respondents.
RESOLUTION
FRANCISCO, J.:
This special civil action for certiorari seeks to set aside the decision of the
National Labor Relations Commission, dated August 31, 1994, in NLRC CA
005068-93, for allegedly having been rendered with grave abuse of discretion.
Private respondents were employees of petitioner Avon Dale Garments, Inc. and
its predecessor-in-interest, Avon Dale Shirt Factory. Following a dispute brought
about by the rotation of workers, a compromise agreement was entered into
between petitioner and private respondents wherein the latter were terminated
from service and given their corresponding separation pay.
However, upon refusal of the petitioner to include in the computation of private
respondents' separation pay the period during which the latter were employed
by Avon Dale Shirt Factory, private respondents filed a complaint with the labor
arbiter claiming a deficiency in their separation pay (docketed as NLRC-NCR-00-
02-00810-93). According to private respondents, their previous employment
with petitioner's predecessor-in-interest, Avon Dale Shirt Factory, should be
credited in computing their separation pay considering that Avon Dale Shirt
factory was not dissolved and they were not in turn hired as new employees by
Avon Dale Garments, Inc.
In its decision dated May 14, 1993, the labor arbiter dismissed private
respondents' complaint and held that Avon Dale Shirt Factory and Avon Dale
Garments, Inc. are not one and the same entity as the former was in fact
dissolved on December 27, 1978, when it filed its Articles of Dissolution with the
Securities and Exchange Commission. 1
Private respondents appealed to the NLRC and the latter reversed the decision
of the labor arbiter after finding that upon dissolution of Avon Dale Shirt
Factory, Inc., there was no showing that its terminated employees, as creditors
insofar as their separation pay were concerned, were ever paid. Thus, petitioner
Avon Dale Garments, Inc., as successor-in-interest, was held liable for private
respondents' unpaid claim. 2
The instant petition is now brought before us by petitioner Avon Dale Garments,
Inc., anchored on the sole ground that, as a separate and distinct entity, it
should not be held liable for private respondents' separation pay from Avon
Dale Shirt Factory.
Pending resolution of the instant petition, counsel for private respondents,
instead of filing a comment to the petition, filed a Manifestation indicating that
the parties have already reached an amicable settlement on December 27,
1994, wherein private respondents were paid their corresponding separation
pay, after which, they executed a waiver and quitclaim. 3 It appeared however,
upon verification by the Office of the Solicitor General, that the aforementioned rendered by the Court of Appeals in CA-G.R. SP No. 63405, which declared
compromise agreement was executed between the parties without the herein petitioner Dole Philippines, Inc. as the employer of herein respondents,
knowledge and participation of the NLRC. 4 Medel Esteva and 86 others; found petitioner guilty of illegal dismissal; and
ordered petitioner to reinstate respondents to their former positions and to pay
the latter backwages.
The established rule is that compromise agreements involving labor standard
cases, like the one entered into by the parties herein, must be reduced in
writing and signed in the presence of the Regional Director or his duly The antecedent facts of the case are recounted as follows:
authorized representative. Otherwise, they are not deemed to be duly
executed. 5 For this reason, the compromise agreement submitted by private
Petitioner is a corporation duly organized and existing in accordance with
respondents' counsel cannot be recognized by this court for being improperly
Philippine laws, engaged principally in the production and processing of
executed.
pineapple for the export market.3 Its plantation is located in Polomolok, South
Cotabato.4
Nevertheless, we find the petition to be without merit as the assailed decision is
in complete accord with the law and evidence on record.
Respondents are members of the Cannery Multi-Purpose Cooperative
(CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938,
Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and otherwise known as the Cooperative Code of the Philippines, and duly-
distinct entity from Avon Dale Shirt Factory, absent any showing that there was registered with the Cooperative Development Authority (CDA) on 6 January
indeed an actual closure and cessation of the operations of the latter. The mere 1993.5 Members of CAMPCO live in communities surrounding petitioners
filing of the Articles of Dissolution with the Securities and Exchange Commission, plantation and are relatives of petitioners employees.
without more, is not enough to support the conclusion that actual dissolution of
an entity in fact took place.
On 17 August 1993, petitioner and CAMPCO entered into a Service
Contract.6 The Service Contract referred to petitioner as "the Company," while
On the contrary, the prevailing circumstances in this case indicated that CAMPCO was "the Contractor." Relevant portions thereof read as follows
petitioner company is not distinct from its predecessor Avon Dale Shirt Factory,
but in fact merely continued the operations of the latter under the same
1. That the amount of this contract shall be or shall not exceed TWO HUNDRED
owners, the same business venture, at same address 6, and even continued to
TWENTY THOUSAND ONLY (P220,000.00) PESOS, terms and conditions of
hire the same employees (herein private respondents).
payment shall be on a per job basis as specified in the attached schedule of
rates; the CONTRACTOR shall perform the following services for the COMPANY;
Thus, conformably with established jurisprudence, the two entities cannot be
deemed as separate and distinct where there is a showing that one is merely the
1.1 Assist the COMPANY in its daily operations;
continuation of the other. 7 In fact, even a change in the corporate name does
not make a new corporation, whether effected by a special act or under a
general law, it has no effect on the identity of the corporation, or on its 1.2 Perform odd jobs as may be assigned.
property, rights, or liabilities. 8 Respondent NLRC therefore, did not commit any
grave abuse of discretion in holding that petitioner should likewise include 2. That both parties shall observe the following terms and conditions as
private respondents' employment with Avon Dale Shirt Factory in computing stipulated, to wit:
private respondents' separation pay as petitioner failed to substantiate its claim
that it is a distinct entity.
2.1 CONTRACTOR must carry on an independent legitimate business, and must
comply with all the pertinent laws of the government both local and national;
ACCORDINGLY, the instant petition is hereby DISMISSED.

2.2 CONTRACTOR must provide all hand tools and equipment necessary in the
SO ORDERED. performance of their work.

DOLE PHILIPPINES, INC., Petitioner, However, the COMPANY may allow the use of its fixed equipment as a casual
vs. facility in the performance of the contract;
MEDEL ESTEVA, HENRY SILVA, GILBERT CABILAO, LORENZO GAQUIT, DANIEL
PABLO, EDWIN CAMILO, BENJAMIN SAKILAN, RICHARD PENUELA, ARMANDO
PORRAS, EDUARDO FALDAS, NILO DONDOYANO, MIGUEL DIAZ, ROMEL BAJO, 2.3 CONTRACTOR must comply with the attached scope of work, specifications,
ARTEMIO TENERIFE, EDDIE LINAO, JERRY LIGTAS, SAMUEL RAVAL, WILFREDO and GMP and safety practices of the company;
BLANDO, LORENZO MONTERO, JR., JAIME TESIPAO, GEORGE DERAL, ERNESTO
ISRAEL, JR., AGAPITO ESTOLOGA, JOVITO DAGUIO, ARSENIO LEONCIO, 2.4 CONTRACTOR must undertake the contract work under the following
MARLON BLANDO, JOSE OTELO CASPILLO, ARNOLD LIZADA, JERRY manner:
DEYPALUBOS, STEVEN MADULA, ROGELIO CABULAO, JR., ALVIN COMPOC,
EUGENIO BRITANA, RONNIE GUELOS, EMMANUEL JIMENA, GERMAN JAVA,
JESUS MEJICA, JOEL INVENTADO, DOMINGO JABULGO, RAMIL ENAD, a. on his own account;
RAYMUNDO YAMON, RITCHIE MELENDRES, JACQUEL ORGE, RAMON
BARCELONA, ERWIN ESPIA, NESTOR DELIDELI, JR., ALLAN GANE, ROMEO b. under his own responsibility;
PORRAS, RITCHIE BOCOG, JOSELITO ACEBES, DANNY TORRES, JIMMY
NAVARRO, RALPH PEREZ, SONNY SESE, RONALD RODRIQUES, ROBERTO
c. according to his manner and method, free from the control and direction of
ALLANEC, ERNIE GIGANTANA, NELSON SAMSON, REDANTE DAVILA, EDDIE
the company in all matters connected with the performance of the work except
BUSLIG, ALLAN PINEDA, JESUS BELGERA, VICENTE LABISTE, CARMENCITA
as to the result thereof;
FELISILDA, GEORGE DERLA, RUBEN TORMON, NEIL TAJALE, ORLANDO
ESPENILLA, RITCHEL MANEJAR, JOEL QUINTANA, ERWIN ALDE, JOEL CATALAN,
ELMER TIZON, ALLAN ESPADA, EUGENE BRETANA, RAMIL ENAD, RENE 3. CONTRACTOR must pay the prescribed minimum wage, remit SSS/MEDICARE
INGALLA, STEVEN MADULLA, RANDY REBUTAZO, NEIL BAGATILLA, ARSENIO premiums to proper government agencies, and submit copies of payroll and
LEONCIO, ROLANDO VILLEGAS and JUSLIUS TESIPAO, herein represented by proof of SSS/MEDICARE remittances to the COMPANY;
MEDEL ESTEVA, Authorized Representative,Respondents.
4. This contract shall be for a specific period of Six (6) months from July 1 to
DECISION December 31, 1993; x x x.

CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the
revised Rules of Civil Procedure seeking the reversal of the Decision,1 dated 20
May 2002, and the Amended Decision,2 dated 27 November 2003, both
Pursuant to the foregoing Service Contract, CAMPCO members rendered
services to petitioner. The number of CAMPCO members that report for work
and the type of service they performed depended on the needs of petitioner at
any given time. Although the Service Contract specifically stated that it shall only
be for a period of six months, i.e., from 1 July to 31 December 1993, the parties
had apparently extended or renewed the same for the succeeding years without
executing another written contract. It was under these circumstances that
respondents came to work for petitioner.
Investigation by DOLE
Concomitantly, the Sangguniang Bayan of Polomolok, South Cotabato, passed
Resolution No. 64, on 5 May 1993, addressed to then Secretary Ma. Nieves R.
Confessor of the Department of Labor and Employment (DOLE), calling her
attention to the worsening working conditions of the petitioners workers and
the organization of contractual workers into several cooperatives to replace the
individual labor-only contractors that used to supply workers to the petitioner.
Acting on the said Resolution, the DOLE Regional Office No. XI in Davao City
organized a Task Force that conducted an investigation into the alleged labor-
only contracting activities of the cooperatives in Polomolok.7
On 24 May 1993, the Senior Legal Officer of petitioner wrote a letter addressed
to Director Henry M. Parel of DOLE Regional Office No. XI, supposedly to correct
the misinformation that petitioner was involved in labor-only contracting,
whether with a cooperative or any private contractor. He further stated in the
letter that petitioner was not hiring cooperative members to replace the regular
workers who were separated from service due to redundancy; that the
cooperatives were formed by the immediate dependents and relatives of the
permanent workers of petitioner; that these cooperatives were registered with
the CDA; and that these cooperatives were authorized by their respective
constitutions and by-laws to engage in the job contracting business.8
The Task Force submitted a report on 3 June 1993 identifying six cooperatives
that were engaged in labor-only contracting, one of which was CAMPCO. The
DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the
representatives of the cooperatives named by the Task Force were given the
opportunity to explain the nature of their activities in relation to petitioner.
Subsequently, the cooperatives were required to submit their position papers
and other supporting documents, which they did on 30 August 1993. Petitioner
likewise submitted its position paper on 15 September 1993.9
On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an
Order10 in which he made the following findings
Records submitted to this Office show that the six (6) aforementioned
cooperatives are all duly registered with the Cooperative Development
Authority (CDA). These cooperatives were also found engaging in different
activities with DOLE PHILIPPINES, INC. a company engaged in the production of
pineapple and export of pineapple products. Incidentally, some of these
cooperatives were also found engaging in activities which are directly related to
the principal business or operations of the company. This is true in the case of
the THREE (3) Cooperatives, namely; Adventurers Multi Purpose Cooperative,
Human Resource Multi Purpose Cooperative and Cannery Multi Purpose
Cooperative.
From the foregoing findings and evaluation of the activities of Adventurers
Multi Purpose Cooperative, Human Resource Multi Purpose Cooperative and
Cannery Multi Purpose Cooperative, this Office finds and so holds that they are
engaging in Labor Only Contracting Activities as defined under Section 9, Rule
VIII, Book III of the rules implementing the Labor Code of the Philippines, as
amended which we quote:
"Section 9 Labor Only Contracting a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
2) The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operation of the employer
to which workers are habitually employed.
b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him."
WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE
COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE COOPERATIVE and
CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in
labor only contracting which is a prohibited activity. The same cooperatives are
therefore ordered to cease and desist from further engaging in such activities.
The three (3) other cooperatives, namely Polomolok Skilled Workers Multi
Purpose Cooperative, Unified Engineering and Manpower Service Multi Purpose
Cooperative and Tibud sa Katibawasan Multi Purpose Cooperative whose
activities may not be directly related to the principal business of DOLE
Philippines, Inc. are also advised not to engage in labor only contracting with the
company.
All the six cooperatives involved appealed the afore-quoted Order to the Office
of the DOLE Secretary, raising the sole issue that DOLE Regional Director
Director Parel committed serious error of law in directing the cooperatives to
cease and desist from engaging in labor-only contracting. On 15 September
1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE
Secretary, issued an Order11 dismissing the appeal on the basis of the following
ratiocination
The appeal is devoid of merit.
The Regional Director has jurisdiction to issue a cease and desist order as
provided by Art. 106 of the Labor Code, as amended, to wit:
"Art. 106. Contractor or subcontractor. x x x
xxxx
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor only contracting and job contracting as well as differentiations
within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code (Emphasis supplied)
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the forms of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly
related to the principal business of the employer. In such cases, the person or
the intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him."
in relation to Article 128(b) of the Labor Code, as amended by Republic Act No.
7730, which reads:
"Art. 128. Visitorial and Enforcement Power.
b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises issues
supported by documentary proof which were not considered in the course of
inspection.
An order issued by the duly authorized representative of the Secretary of Labor
and Employment under this article may be appealed to the latter. In case said
order involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash bond issued by a reputable bonding company
duly accredited by the Secretary of Labor and Employment in the amount
equivalent to the monetary award in the order appealed from."
The records reveal that in the course of the inspection of the premises of Dolefil,
it was found out that the activities of the members of the [cooperatives] are
necessary and desirable in the principal business of the former; and that they do
not have the necessary investment in the form of tools and equipments. It is
worthy to note that the cooperatives did not deny that they do not have enough
capital in the form of tools and equipment. Under the circumstances, it could
not be denied that the [cooperatives] are considered as labor-only contractors
in relation to the business operation of DOLEFIL, INC.
Thus, Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code, provides that:
"Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as a contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
x x x x"
Violation of the afore-quoted provision is considered a labor standards violation
and thus, within the visitorial and enforcement powers of the Secretary of Labor
and Employment (Art. 128).
The Regional Directors authority to issue a cease and desist order emanates
from Rule I, Section 3 of the Rules on Disposition of Labor Standard Cases in the
Regional Offices, to wit:
"Section 3. Authorized representative of the Secretary of Labor and
Employment. The Regional Directors shall be the duly authorized
representatives of the Secretary of Labor and Employment in the administration
and enforcement of the labor standards within their respective territorial
jurisdiction."
The power granted under Article 106 of the Labor Code to the Secretary of
Labor and Employment to restrict or prohibit the contracting out of labor to
protect the rights of workers established under the Code is delegated to the
Regional Directors by virtue of the above-quoted provision.
The reason why "labor-only" contracting is prohibited under the Labor Code is
that it encourages circumvention of the provisions of the Labor Code on the
workers right to security of tenure and to self-organization.
WHEREFORE, the respondents Appeal is hereby DISMISSED for lack of merit.
The Order of the Regional Director, Regional Office No. XI, Davao City, is
AFFIRMED.
After the motion for reconsideration of the foregoing Order was denied, no
further motion was filed by the parties, and the Order, dated 15 September
1994, of DOLE Undersecretary Trajano became final and executory. A Writ of
Execution12 was issued by DOLE Regional Office No. XI only on 27 July 1999,
years after the issuance of the order subject of the writ. The DOLE Regional
Office No. XI was informed that CAMPCO and two other cooperatives
"continued to operate at DOLE Philippines, Inc. despite the cease and desist
Order" it had issued. It therefore commanded the Sheriff to proceed to the
premises of CAMPCO and the two other cooperatives and implement its Order
dated 19 October 1993.
Respondents Complaint before the NLRC
Respondents started working for petitioner at various times in the years 1993
and 1994, by virtue of the Service Contract executed between CAMPCO and
petitioner. All of the respondents had already rendered more than one year of
service to petitioner. While some of the respondents were still working for
petitioner, others were put on "stay home status" on varying dates in the years
1994, 1995, and 1996 and were no longer furnished with work thereafter.
Together, respondents filed a Complaint,13 on 19 December 1996, with the
National Labor Relations Commission (NLRC), for illegal dismissal, regularization,
wage differentials, damages and attorneys fees.
In their Position Paper,14 respondents reiterated and expounded on the
allegations they previously made in their Complaint
Sometime in 1993 and 1994, [herein petitioner] Dolefil engaged the services of
the [herein respondents] through Cannery Multi-purpose Cooperative. A
cooperative which was organized through the initiative of Dolefil in order to fill
in the vacuum created as a result of the dismissal of the regular employees of
Dolefil sometime in 1990 to 1993.
The [respondents] were assigned at the Industrial Department of respondent
Dolefil. All tools, implements and machineries used in performing their task such
as: can processing attendant, feeder of canned pineapple at pineapple
processing, nata de coco processing attendant, fruit cocktail processing
attendant, and etc. were provided by Dolefil. The cooperative does not have
substantial capital and does not provide the [respondents] with the necessary
tools to effectively perform their assigned task as the same are being provided
by Dolefil.
The training and instructions received by the [respondents] were provided by
Dolefil. Before any of the [respondents] will be allowed to work, he has to
undergo and pass the training prescribed by Dolefil. As a matter of fact, the
trainers are employees of Dolefil.
The [respondents] perform their assigned task inside the premises of Dolefil. At
the job site, they were given specific task and assignment by Dolefils
supervisors assigned to supervise the works and efficiency of the complainants.
Just like the regular employees of Dolefil, [respondents] were subjected to the
same rules and regulations observe [sic] inside company premises and to some
extent the rules applied to the [respondents] by the company through its
officers are even stricter.
The functions performed by the [respondents] are the same functions
discharged by the regular employees of Dolefil. In fact, at the job site, the
[respondents] were mixed with the regular workers of Dolefil. There is no
difference in so far as the job performed by the regular workers of Dolefil and
that of the [respondents].
Some of the [respondents] were deprived of their employment under the
scheme of "stay home status" where they were advised to literally stay home
and wait for further instruction to report anew for work. However, they
remained in this condition for more than six months. Hence, they were
constructively or illegally dismissed.
Respondents thus argued that they should be considered regular employees of
petitioner given that: (1) they were performing jobs that were usually necessary
and desirable in the usual business of petitioner; (2) petitioner exercised control
over respondents, not only as to the results, but also as to the manner by which
they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor,
was merely a conduit of petitioner. As regular employees of petitioner,
respondents asserted that they were entitled to security of tenure and those
placed on "stay home status" for more than six months had been constructively
and illegally dismissed. Respondents further claimed entitlement to wage
differential, moral damages, and attorneys fees.
In their Supplemental Position Paper,15 respondents presented, in support of
their Complaint, the Orders of DOLE Regional Director Parel, dated 19 October
1993, and DOLE Undersecretary Trajano, dated 15 September 1994, finding that
CAMPCO was a labor-only contractor and directing CAMPCO to cease and desist
from any further labor-only contracting activities.
Petitioner, in its Position Paper16 filed before the NLRC, denied that respondents
were its employees.
Petitioner explained that it found the need to engage external services to
augment its regular workforce, which was affected by peaks in operation, work
backlogs, absenteeism, and excessive leaves. It used to engage the services of
individual workers for definite periods specified in their employment contracts
and never exceeding one year. However, such an arrangement became the
subject of a labor case,17 in which petitioner was accused of preventing the
regularization of such workers. The Labor Arbiter who heard the case, rendered
his Decision18 on 24 June 1994 declaring that these workers fell squarely within
the concept of seasonal workers as envisaged by Article 280 of the Labor Code,
as amended, who were hired by petitioner in good faith and in consonance with
sound business practice; and consequently, dismissing the complaint against
petitioner. The NLRC, in its Resolution,19 dated 14 March 1995, affirmed in
toto the Labor Arbiters Decision and further found that the workers were
validly and legally engaged by petitioner for "term employment," wherein the
parties agreed to a fixed period of employment, knowingly and voluntarily,
without any force, duress or improper pressure being brought to bear upon the
employees and absent any other circumstance vitiating their consent. The said
NLRC Resolution became final and executory on 18 June 1996. Despite the
favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to
discontinue such employment arrangement. Yet, the problem of petitioner as to
shortage of workforce due to the peaks in operation, work backlogs,
absenteeism, and excessive leaves, persisted. Petitioner then found a solution in
the engagement of cooperatives such as CAMPCO to provide the necessary
additional services.
Petitioner contended that respondents were owners-members of CAMPCO; that
CAMPCO was a duly-organized and registered cooperative which had already
grown into a multi-million enterprise; that CAMPCO was engaged in legitimate
job-contracting with its own owners-members rendering the contract work; that
under the express terms and conditions of the Service Contract executed
between petitioner (the principal) and CAMPCO (the contractor), the latter shall
undertake the contract work on its own account, under its own responsibility,
and according to its own manner and method free from the control and
direction of the petitioner in all matters connected with the performance of the
work, except as to the result thereof; and since CAMPCO held itself out to
petitioner as a legitimate job contractor, respondents, as owners-members of
CAMPCO, were estopped from denying or refuting the same.
Petitioner further averred that Department Order No. 10, amending the rules
implementing Books III and VI of the Labor Code, as amended, promulgated by
the DOLE on 30 May 1997, explicitly recognized the arrangement between
petitioner and CAMPCO as permissible contracting and subcontracting, to wit
Section 6. Permissible contracting and subcontracting. Subject to the
conditions set forth in Section 3(d) and (e) and Section 5 hereof, the principal
may engage the services of a contractor or subcontractor for the performance
of any of the following;
(a) Works or services temporarily or occasionally needed to meet abnormal
increase in the demand of products or services, provided that the normal
production capacity or regular workforce of the principal cannot reasonably
cope with such demands;
(b) Works or services temporarily or occasionally needed by the principal for
undertakings requiring expert or highly technical personnel to improve the
management or operations of an enterprise;
(c) Services temporarily needed for the introduction or promotion of new
products, only for the duration of the introductory or promotional period;
(d) Works or services not directly related or not integral to the main business or
operation of the principal, including casual work, janitorial, security,
landscaping, and messengerial services, and work not related to manufacturing
processes in manufacturing establishments;
(e) Services involving the public display of manufacturers products which does
not involve the act of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some particular, unusual, or peculiar
skills, expertise, tools or equipment the performance of which is beyond the
competence of the regular workforce or production capacity of the principal;
and
(g) Unless a reliever system is in place among the regular workforce, substitute
services for absent regular employees, provided that the period of service shall
be coextensive with the period of absence and the same is made clear to the
substitute employee at the time of engagement. The phrase "absent regular
employees" includes those who are serving suspensions or other disciplinary
measures not amounting to termination of employment meted out by the
principal, but excludes those on strike where all the formal requisites for the
legality of the strike have been prima facie complied with based on the records
filed with the National Conciliation and Mediation Board.
According to petitioner, the services rendered by CAMPCO constituted
permissible job contracting under the afore-quoted paragraphs (a), (c), and (g),
Section 6 of DOLE Department Order No. 10, series of 1997.
After the parties had submitted their respective Position Papers, the Labor
Arbiter promulgated its Decision20 on 11 June 1999, ruling entirely in favor of
petitioner, ratiocinating thus
After judicious review of the facts, narrated and supporting documents adduced
by both parties, the undersigned finds [and] holds that CAMPCO is not engaged
in labor-only contracting.
Had it not been for the issuance of Department Order No. 10 that took effect on
June 22, 1997 which in the contemplation of Law is much later compared to the
Order promulgated by the Undersecretary Cresencio Trajano of Department of
[L]abor and Employment, the undersigned could safely declared [sic] otherwise.
However, owing to the principle observed and followed in legal practice that the
later law or jurisprudence controls, the reliance to Secretary Trajanos order is
overturned.
Labor-only contracting as amended by Department [O]rder No. 10 is defined in
this wise:
"Labor-only contracting is prohibited under this Rule is an arrangement where
the contractor or subcontractor merely recruits, supplied [sic] or places workers
to perform a job, work or service for a principal, and the following elements are
present:
i) The contractor or sub-contractor does not have substantial capital or
investment to actually perform the job, work, or service under its own account
& responsibility, and
ii) The employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main
business of the principal."
Verification of the records reveals that per Annexes "J" and "K" of [herein
petitioner DolePhils] position paper, which are the yearly audited Financial
Statement and Balance Sheet of CAMPCO shows [sic] that it has more than
substantial capital or investment in order to qualify as a legitimate job
contractor.
We likewise recognize the validity of the contract entered into and between
CAMPCO and [petitioner] for the former to assists [sic] the latter in its
operations and in the performance of odd jobs such as the augmentation of
regular manning particularly during peaks in operation, work back logs,
absenteeism and excessive leave availment of respondents regular employees.
The rule is well-settled that labor laws discourage interference with an
employers judgment in the conduct of his business. Even as the law is solicitors
[sic] of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot
be denied (Yuco Chemical Industries vs. Ministry of [L]abor, GR No. 75656, May
28, 1990).
CAMPCO being engaged in legitimate contracting, cannot therefore declared
[sic] as guilty of labor-only contracting which [herein respondents] want us to
believe.
The second issue is likewise answered in the negative. The reason is plain and
simple[,] section 12 of Department [O]rder No. 10 states:
"Section 12. Employee-employer relationship. Except in cases provided for in
Section 13, 14, 15 & 17, the contractor or subcontractor shall be considered the
employer of the contractual employee for purposes of enforcing the provisions
of the Code."
The Resolution of NLRC 5th division, promulgated on March 14, 1 1995 [sic]
categorically declares:
"Judging from the very nature of the terms and conditions of their hiring, the
Commission finds the complainants to have been engaged to perform
work, although necessary or desirable to the business of respondent
company, for a definite period or what is community called TERM
EMPLOYMENT. It is clear from the evidence and record that the nature of the
business and operation of respondent company has its peaks and valleys and
therefore, it is not difficult to discern, inclement weather, or high availment by
regular workers of earned leave credits, additional workers categorized as
casuals, or temporary, are needed to meet the exigencies." (Underlining in the
original)
The validity of fixed-period employment has been consistently upheld by the
Supreme [C]ourt in a long line of cases, the leading case of which is Brent
School, Inc. vs. Zamora & Alegre, GR No. 48494, February 5, 1990. Thus at the
end of the contract the employer-employee relationship is terminated. It
behooves upon us to rule that herein complainants cannot be declared regular
rank and file employees of the [petitioner] company.
Anent the third issue, [respondents] dismally failed to provide us the exact
figures needed for the computation of their wage differentials. To simply alleged
[sic] that one is underpaid of his wages is not enough. No bill of particulars was
submitted. Moreover, the Order of RTWPB Region XI, Davao City dated February
21, 1996 exempts [petitioner] company from complying Wage Order No. 04 [sic]
in so far as such exemption applies only to workers who are not covered by the
Collective Bargaining Agreement, for the period January 1 to December 31,
1995,. [sic] In so far as [respondents] were not privies to the CBA, they were the
workers referred to by RTWPBs Order. [H]ence, [respondents] claims for wage
differentials are hereby dismissed for lack of factual basis.
We find no further necessity in delving into the issues raised by [respondents]
regarding moral damages and attorneys fees for being moot and academic
because of the findings that CAMPCO does not engaged [sic] in labor-only
contracting and that [respondents] cannot be declared as regular employees of
[petitioner].
WHEREFORE, premises considered, judgment is hereby rendered in the above-
entitled case, dismissing the complaint for lack of merit.
Respondents appealed the Labor Arbiters Decision to the NLRC, reiterating their
position that they should be recognized as regular employees of the petitioner
since CAMPCO was a mere labor-only contractor, as already declared in the
previous Orders of DOLE Regional Director Parel, dated 19 October 1993, and
DOLE Undersecretary Trajano, dated 15 September 1994, which already became
final and executory. The NLRC, in its Resolution,21 dated 29 February 2000,
dismissed the appeal and affirmed the Labor Arbiters Decision, reasoning as
follows
We find no merit in the appeal.
The concept of conclusiveness of judgment under the principle of "res judicata"
means that where between the first case wherein judgment is rendered and the
second case wherein such judgment is invoked, there is identity of parties, but
there is no identity of cause of action, the judgment is conclusive in the second
case, only as to those matters actually and directly controverted and
determined and not as to matters merely involved therein (Viray, etc. vs.
Marinas, et al., 49 SCRA 44). There is no denying that the order of the
Department of Labor and Employment, Regional Office No. XI in case No. RI100-
9310-RI-355, which the complainants perceive to have sealed the status of
CAMPCO as labor-only contractor, proceeded from the visitorial and
enforcement power of the Department Secretary under Article 128 of the Labor
Code. Acting on reports that the cooperatives, including CAMPCO, that operated
and offered services at [herein petitioner] company were engaging in labor-only
contracting activities, that Office conducted a routinary inspection over the
records of said cooperatives and consequently, found the latter to be engaging
in labor-only contracting activities. This being so, [petitioner] company was not a
real party-in-interest in said case, but the cooperatives concerned. Therefore,
there is no identity of parties between said case and the present case which
means that the afore-said ruling of the DOLE is not binding and conclusive upon
[petitioner] company.
It is not correct, however, to say, as the Labor Arbiter did, that the afore-said
ruling of the Department of Labor and Employment has been overturned by
Department Order No. 10. It is a basic principle that "once a judgment becomes
final it cannot be disturbed, except for clerical errors or when supervening
events render its execution impossible or unjust" (Sampaguita
Garmens [sic] Corp. vs. NLRC, G. R. No. 102406, June 7, 1994). Verily, the
subsequent issuance of Department Order No. 10 cannot be construed as
supervening event that would render the execution of said judgment impossible
or unjust. Department Order No. 10 refers to the ramification of some
provisions of the Rules Implementing Articles 106 and 109 of the Labor Code,
without substantially changing the definition of "labor-only" or "job contracting.
Well-settled is the rule that to qualify as an independent job contractor, one has
either substantial capital "or" investment in the form of tools, equipment and
machineries necessary to carry out his business (see Virginia Neri, et al. vs.
NLRC, et al., G.R. Nos. 97008-89, July 23, 1993). CAMPCO has admittedly a paid-
up capital of P4,562,470.25 and this is more than enough to qualify it as an
independent job contractor, as aptly held by the Labor Arbiter.
WHEREFORE, the appeal is DISMISSED for lack of merit and the appealed
decision is AFFIRMED.
Petition for Certiorari with the Court of Appeals
Refusing to concede defeat, respondents filed with the Court of Appeals a
Petition for Certiorari under Rule 65 of the revised Rules of Civil Procedure,
asserting that the NLRC acted without or in excess of its jurisdiction and with
grave abuse of discretion amounting to lack of jurisdiction when, in its
Resolution, dated 29 February 2000, it (1) ruled that CAMPCO was a bona fide
independent job contractor with substantial capital, notwithstanding the fact
that at the time of its organization and registration with CDA, it only had a paid-
up capital of P6,600.00; and (2) refused to apply the doctrine of res
judicata against petitioner. The Court of Appeals, in its Decision,22 dated 20 May
2002, granted due course to respondents Petition, and set aside the assailed
NLRC Decision. Pertinent portions of the Court of Appeals Decision are
reproduced below
In the case at bench, it was established during the proceedings before the
[NLRC] that CAMPCO has a substantial capital. However, having a substantial
capital does not per se qualify CAMPCO as a job contractor. In order to be
considered an independent contractor it is not enough to show substantial
capitalization or investment in the form of tools, equipment, machinery and
work premises. The conjunction "and," in defining what a job contractor is,
means that aside from having a substantial capital or investment in the form of
tools, equipment, machineries, work premise, and other materials which are
necessary in the conduct of his business, the contractor must be able to prove
that it also carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to
the results thereof. [Herein petitioner DolePhil] has failed to prove, except for
the substantial capital requirement, that CAMPCO has met the other
requirements. It was not established that CAMPCO is engaged or carries on an
independent business. In the performance of the respective tasks of workers
deployed by CAMPCO with [petitioner], it was not established that CAMPCO
undertook the contract of work it entered with [petitioner] under its own
account and its own responsibility. It is [petitioner] who provides the
procedures to be followed by the workers in the performance of their assigned
work. The workers deployed by CAMPCO to [petitioner] performed activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed since [petitioner] admitted
that these workers were engaged to perform the job of other regular employees
who cannot report for work.
Moreover, [NLRC] likewise gravely erred in not giving weight to the Order dated
19 October 1993 issued by the Office of the Secretary of the Department of
Labor and Employment, through Undersecretary Cresencio Trajano, which
affirmed the findings of the Department of Labor and Employment Regional
Office, Region XI, Davao City that Cannery Multi-Purpose Cooperative is one of
the cooperatives engaged in labor-only contracting activities.
In the exercise of the visitorial and enforcement power of the Department of
Labor and Employment, an investigation was conducted among the
cooperatives organized and existing in Polomolok, South Cotabato, relative to
labor-only contracting activities. One of the cooperatives investigated was
Cannery Multi-Purpose Cooperative. After the investigation, the Department of
Labor and Employment, Regional Office No. XI, Davao City, through its Regional
Director, issued the Order dated 19 October 1993, stating:
"WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE
COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE SKILLED COOPERATIVE and
CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in
labor only contracting which is a prohibited activity. The same cooperatives are
therefore ordered to cease and desist from further engaging in such activities.
xxxx
SO ORDERED."
Cannery Multi Purpose Cooperative, together with the other cooperatives
declared as engaged in labor-only contracting activity, appeal the above-findings
to the Secretary of the Department of Labor and Employment. Their appeal was
dismissed for lack of merit as follows:: [sic]
xxxx
[NLRC] held that CAMPCO, being not a real party-in interest in the above-case,
the said ruling is not binding and conclusive upon [petitioner]. This Court,
however, finds the contrary.
CAMPCO was one of the cooperatives investigated by the Department of Labor
and Employment, Regional Office No. XI, Davao City, pursuant to Article 128 of
the Labor Code. It was one of the appellants before the Secretary of the
Department of Labor questioning the decision of the Regional Director of DOLE,
Regional Office No. XI, Davao City. This Court noted that in the proceedings
therein, and as mentioned in the decision rendered by Undersecretary
Cresencio B. Trajano of the Department of Labor and Employment, Manila,
regarding the cooperatives appeal thereto, the parties therein, including
Cannery Multi-Purpose Cooperative, submitted to the said office their position
papers and Articles of Cooperatives and Certification of Registrations [sic] on 30
August 1993. This is a clear indicia that CAMPCO participated in the proceedings
therein. [NLRC], therefore, committed grave abuse of discretion amounting to
lack or excess of jurisdiction when it held that CAMPCO was never a party to the
said case.
[Petitioner] invokes Section 6 of Department Order No. 10, series of 1997,
issued by the Department of Labor and Employment which took effect on 22
June 1997. The said section identified the circumstances which are permissible
job contracting, to wit:
xxxx
[Petitioners] main contention is based on the decisions rendered by the labor
arbiter and [NLRC] which are both anchored on Department Order No. 10 issued
by the Department of Labor and Employment. The said department order
provided for several flexible working relations between a principal, a contractor
or subcontractor and the workers recruited by the latter and deployed to the
former. In the case at bench, [petitioner] posits that the engagement of
[petitioner] of the workers deployed by CAMPCO was pursuant to D.O. No. 10,
Series of 1997.
However, on 8 May 2001, the Department of Labor and Employment issued
Department Order No. 3, series of 2001, revoking Department Order No. 10,
series of 1997. The said department order took effect on 29 May 2001.
xxxx
Under Department Order No. 3, series of 2001, some contracting and
outsourcing arrangements are no longer legitimate modes of employment
relation. Having revoked Department Order No. 10, series of 1997, [petitioner]
can no longer support its argument by relying on the revoked department order.
Considering that [CAMPCO] is not a job contractor, but one engaged in labor-
only contracting, CAMPCO serves only as an agent of [petitioner] pursuant to
par. (b) of Sec. 9, Rule VIII, Book III of the Implementing Rules and Regulations of
the Labor Code, stating,
xxxx
However, the Court cannot declare that [herein respondents] are regular
employees of [petitioner]. x x x
xxxx
In the case at bench, although [respondents] were engaged to perform activities
which are usually necessary or desirable in the usual business or trade of private
respondent, it is apparent, however, that their services were engaged by
[petitioner] only for a definite period. [Petitioners] nature of business and
operation has its peaks. In order to meet the demands during peak seasons they
necessarily have to engage the services of workers to work only for a particular
season. In the case of [respondents], when they were deployed by CAMPCO
with [petitioner] and were assigned by the latter at its cannery department,
they were aware that they will be working only for a certain duration, and this
was made known to them at the time they were employed, and they agreed to
the same.
xxxx
The non-rehiring of some of the petitioners who were allegedly put on a
"floating status is an indication that their services were no longer needed. They
attained their "floating status" only after they have finished their contract of
employment, or after the duration of the season that they were employed. The
decision of [petitioner] in not rehiring them means that their services were no
longer needed due to the end of the season for which they were hired. And this
Court reiterates that at the time they were deployed to [petitioners] cannery
division, they knew that the services they have to render or the work they will
perform are seasonal in nature and consequently their employment is only for
the duration of the season.
ACCORDINGLY, in view of the foregoing, the instant petition for certiorari is
hereby GRANTED DUE COURSE. The decision dated 29 February 2000 and
Resolution dated 19 December 2000 rendered by [NLRC] are hereby SET ASIDE.
In place thereof, it is hereby rendered that:
1. Cannery Multi-Purpose Cooperative is a labor-only contractor as defined
under the Labor Code of the Philippines and its implementing rules and
regulations; and that
2. DOLE Philippines Incorporated is merely an agent or intermediary of Cannery
Multi-Purpose Cooperative.
All other claims of [respondents] are hereby DENIED for lack of basis.
Both petitioner and respondents filed their respective Motions for
Reconsideration of the foregoing Decision, dated 20 May 2002, prompting the
Court of Appeals to promulgate an Amended Decision on 27 November 2003, in
which it ruled in this wise:
This court examined again the documentary evidence submitted by the [herein
petitioner] and we rule not to disturb our findings in our Decision dated May 20,
2002. It is our opinion that there was no competent evidence submitted that
would show that CAMPCO is engaged to perform a specific and special job or
service which is one of the strong indicators that an entity is an independent
contractor. The articles of cooperation and by-laws of CAMPCO do not show
that it is engaged in performing a specific and special job or service. What is
clear is that it is a multi-purpose cooperative organized under RA No. 6938,
nothing more, nothing less.
As can be gleaned from the contract that CAMPCO entered into with the
[petitioner], the undertaking of CAMPCO is to provide [petitioner] with
workforce by assisting the company in its daily operations and perform odd jobs
as may be assigned. It is our opinion that CAMPCO merely acted as recruitment
agency for [petitioner]. CAMPCO by supplying manpower only, clearly
conducted itself as labor-only" contractor. As can be gleaned from the service
contract, the work performed by the [herein respondents] are directly related to
the main business of the [petitioner]. Clearly, the requisites of "labor-only"
contracting are present in the case at bench.
In view of the above ruling, we find it unnecessary to discuss whether the Order
of Undersecretary Trajano finding that CAMPCO is a "labor-only" contractor is a
determining factor or constitutes res judicata in the case at bench. Our findings
that CAMPCO is a "labor-only" contractor is based on the evidence
presented vis--vis the rulings of the Supreme Court on the matter.
Since, the argument that the [petitioner] is the real employer of the
[respondents], the next question that must be answered is what is the nature
of the employment of the petitioners?
xxxx
The afore-quoted [Article 280 of the Labor Code, as amended] provides for two
kinds of employment, namely: (1) regular (2) casual. In our Decision, we ruled
that the [respondents] while performing work necessary and desirable to the
business of the [petitioner] are seasonal employees as their services were
engaged by the [petitioner] for a definite period or only during peak season.
In the most recent case of Hacienda Fatima v. National Federation of
Sugarcane Workers Food and General Trade, the Supreme Court ruled that for
employees to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They
must have also been employedonly for the duration of one season. It is
undisputed that the [respondents] services were engaged by the [petitioner]
since 1993 and 1994. The instant complaint was filed in 1996 when the
[respondents] were placed on floating status. Evidently, [petitioner] employed
the [respondents] for more than one season. Therefore, the general rule on
regular employment is applicable. The herein petitioners who performed their
jobs in the workplace of the [petitioner] every season for several years, are
considered the latters regular employees for having performed works necessary
and desirable to the business of the [petitioner]. The [petitioners] eventual
refusal to use their serviceseven if they were ready, able and willing to
perform their usual duties whenever these were availableand hiring other
workers to perform the tasks originally assigned to [respondents] amounted to
illegal dismissal of the latter. We thus, correct our earlier ruling that the herein
petitioners are seasonal workers. They are regular employees within the
contemplation of Article 280 of the Labor Code and thus cannot be dismissed
except for just or authorized cause. The Labor Code provides that when there is
a finding of illegal dismissal, the effect is that the employee dismissed shall be
reinstated to his former position without loss of seniority rights with backwages
from the date of his dismissal up to his actual reinstatement.
This court however, finds no basis for the award of damages and attorneys fees
in favor of the petitioners.
WHEREFORE, the Decision dated May 20, 2002 rendered by this Court is
hereby AMENDED as follows:
1) [Petitioner] DOLE PHILIPPINES is hereby declared the employer of the
[respondents].
2) [Petitioner] DOLE PHILIPPINES is hereby declared guilty of illegal dismissal and
ordered to immediately reinstate the [respondents] to their former position
without loss of seniority rights and other benefits, and to pay each of the
[respondents] backwages from the date of the filing of illegal dismissal on
December 19, 1996 up to actual reinstatement, the same to be computed by the
labor arbiter.
3) The claims for damages and attorneys fees are hereby denied for lack of
merit.
No costs.23
The Petition at Bar
Aggrieved by the Decision, dated 20 May 2002, and the Amended Decision,
dated 27 November 2003, of the Court of Appeals, petitioner filed the instant
Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil
Procedure, in which it made the following assignment of errors
I.
THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDCIAL
PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED
THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER
AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND
EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS
AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT.
II.
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY
NOT IN ACCORD WITH THE CONSTITUTION, LAW, APPLICABLE RULES AND
REGULATIONS AND DECISIONS OF THE SUPREME COURT IN NOT HOLDING
THAT DEPARTMENT ORDER NO. 10, SERIES OF 1997 IS THE APPLICABLE
REGULATION IN THIS CASE. IN GIVING RETROACTIVE APPLICATION
TO DEPARTMENT ORDER NO. 3, SERIES OF 2001, THE COURT OF APPEALS
VIOLATED THE CONSTITUTIONAL PROVISION AGAINST IMPAIRMENT OF
CONTRACTS AND DEPRIVED PETITIONER OF THE DUE PROCESS OF THE LAW.
III.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN GIVING WEIGHT TO THE ORDER
DATED 19 OCTOBER 1993 ISSUED BY THE OFFICE OF SECRETARY OF LABOR,
WHICH AFFIRMED THE FINDINGS OF THE DOLE REGIONAL OFFICE (REGION XI,
DAVAO CITY) THAT CAMPCO IS ONE OF THE COOPERATIVES ENGAGED IN
LABOR-ONLY CONTRACTING ACTIVITIES.
IV.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN NOT RULING THAT RESPONDENTS,
BY ACTIVELY REPRESENTING THEMSELVES AND WARRANTING THAT THEY ARE
ENGAGED IN LEGITIMATE JOB CONTRACTING, ARE BARRED BY THE EQUITABLE
PRINCIPLE OF ESTOPPEL FROM ASSERTING THAT THEY ARE REGULAR
EMPLOYEES OF PETITIONER.
V.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT CAMPCO IS
ENGAGED IN THE PROHIBITED ACT OF "LABOR-ONLY CONTRACTING" DESPITE
THERE BEING SUBSTANTIAL EVIDENCE TO THE CONTRARY.
VI.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT PETITIONER IS THE
EMPLOYER OF RESPONDENTS AND THAT PETITIONER IS GUILTY OF ILLEGAL
DISMISSAL.24
This Courts Ruling
I
Anent the first assignment of error, petitioner argues that judicial review under
Rule 65 of the revised Rules of Civil Procedure is limited only to issues
concerning want or excess or jurisdiction or grave abuse of discretion. The
special civil action for certiorari is a remedy designed to correct errors of
jurisdiction and not mere errors of judgment. It is the contention of petitioner
that the NLRC properly assumed jurisdiction over the parties and subject matter
of the instant case. The errors assigned by the respondents in their Petition
for Certiorari before the Court of Appeals do not pertain to the jurisdiction of
the NLRC; they are rather errors of judgment supposedly committed by the the
NLRC, in its Resolution, dated 29 February 2000, and are thus not the proper
subject of a petition for certiorari. Petitioner also posits that the Petition
for Certiorari filed by respondents with the Court of Appeals raised questions of
fact that would necessitate a review by the appellate court of the evidence
presented by the parties before the Labor Arbiter and the NLRC, and that
questions of fact are not a fit subject for a special civil action for certiorari.
It has long been settled in the landmark case of St. Martin Funeral Home v.
NLRC,25 that the mode for judicial review over decisions of the NLRC is by a
petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The
different modes of appeal, namely, writ of error (Rule 41), petition for review
(Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be
availed of because there is no provision on appellate review of NLRC decisions in
the Labor Code, as amended.26 Although the same case recognizes that both the
Court of Appeals and the Supreme Court have original jurisdiction over such
petitions, it has chosen to impose the strict observance of the hierarchy of
courts. Hence, a petition for certiorari of a decision or resolution of the NLRC
should first be filed with the Court of Appeals; direct resort to the Supreme
Court shall not be allowed unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify
an availment of a remedy within and calling for the exercise by the Supreme
Court of its primary jurisdiction.
The extent of judicial review by certiorari of decisions or resolutions of the
NLRC, as exercised previously by the Supreme Court and, now, by the Court of
Appeals, is described in Zarate v. Olegario,27 thus
The rule is settled that the original and exclusive jurisdiction of this Court to
review a decision of respondent NLRC (or Executive Labor Arbiter as in this case)
in a petition for certiorari under Rule 65 does not normally include an inquiry
into the correctness of its evaluation of the evidence. Errors of judgment, as
distinguished from errors of jurisdiction, are not within the province of a special
civil action for certiorari, which is merely confined to issues of jurisdiction or
grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily
establish that respondent Commission or executive labor arbiter acted
capriciously and whimsically in total disregard of evidence material to or even
decisive of the controversy, in order that the extraordinary writ of certiorari will
lie. By grave abuse of discretion is meant such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction, and it must be shown that
the discretion was exercised arbitrarily or despotically. For certiorari to lie, there
must be capricious, arbitrary and whimsical exercise of power, the very
antithesis of the judicial prerogative in accordance with centuries of both civil
law and common law traditions.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds
that the NLRC, in its assailed decision or resolution, committed grave abuse of
discretion by capriciously, whimsically, or arbitrarily disregarding evidence
which is material or decisive of the controversy; and the Court of Appeals can
not make this determination without looking into the evidence presented by the
parties. Necessarily, the appellate court can only evaluate the materiality or
significance of the evidence, which is alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other
evidence on record.
As this Court elucidated in Garcia v. National Labor Relations Commission28 --
[I]n Ong v. People, we ruled that certiorari can be properly resorted to where
the factual findings complained of are not supported by the evidence on record.
Earlier, in Gutib v. Court of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice
in certiorari proceedings. The cases in which certiorari will issue cannot be
defined, because to do so would be to destroy its comprehensiveness and
usefulness. So wide is the discretion of the court that authority is not wanting to
show that certiorari is more discretionary than either prohibition or mandamus.
In the exercise of our superintending control over inferior courts, we are to be
guided by all the circumstances of each particular case "as the ends of justice
may require." So it is that the writ will be granted where necessary to prevent a
substantial wrong or to do substantial justice.
And in another case of recent vintage, we further held:
In the review of an NLRC decision through a special civil action for certiorari,
resolution is confined only to issues of jurisdiction and grave abuse of discretion
on the part of the labor tribunal. Hence, the Court refrains from reviewing
factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to
delve into factual matters where, as in the instant case, the findings of the NLRC
contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into
the records of the case and re-examine the questioned findings. As a corollary,
this Court is clothed with ample authority to review matters, even if they are not
assigned as errors in their appeal, if it finds that their consideration is necessary
to arrive at a just decision of the case. The same principles are now necessarily
adhered to and are applied by the Court of Appeals in its expanded jurisdiction
over labor cases elevated through a petition for certiorari; thus, we see no error
on its part when it made anew a factual determination of the matters and on
that basis reversed the ruling of the NLRC.
II
The second assignment of error delves into the significance and application to
the case at bar of the two department orders issued by DOLE. Department
Order No. 10, series of 1997, amended the implementing rules of Books III and
VI of the Labor Code, as amended. Under this particular DOLE department
order, the arrangement between petitioner and CAMPCO would qualify as
permissible contracting. Department Order No. 3, series of 2001, revoked
Department Order No. 10, series of 1997, and reiterated the prohibition on
labor-only contracting.
Attention is called to the fact that the acts complained of by the respondents
occurred well before the issuance of the two DOLE department orders in 1997
and 2001. The Service Contract between DOLE and CAMPCO was executed on
17 August 1993. Respondents started working for petitioner sometime in 1993
and 1994. While some of them continued to work for petitioner, at least until
the filing of the Complaint, others were put on "stay home status" at various
times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC
on 19 December 1996.
A basic rule observed in this jurisdiction is that no statute, decree, ordinance,
rule or regulation shall be given retrospective effect unless explicitly
stated.29 Since there is no provision at all in the DOLE department orders that
expressly allowed their retroactive application, then the general rule should be
followed, and the said orders should be applied only prospectively.
Which now brings this Court to the question as to what was the prevailing rule
on labor-only contracting from 1993 to 1996, the period when the occurrences
subject of the Complaint before the NLRC took place.
Article 106 of the Labor Code, as amended, permits legitimate job contracting,
but prohibits labor-only contracting. The said provision reads
ART. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as differentiations
within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
To implement the foregoing provision of the Labor Code, as amended, Sections
8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and
prior to their amendment by DOLE Department Order No. 10, series of 1997,
provided as follows
Sec. 8. Job contracting. There is job contracting permissible under the Code if
the following conditions are met;
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to his
own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to
the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine
through appropriate orders whether or not the contracting out of labor is
permissible in the light of the circumstances of each case and after considering
the operating needs of the employer and the rights of the workers involved. In
such case, he may prescribe conditions and restrictions to insure the protection
and welfare of the workers.
Since these statutory and regulatory provisions were the ones in force during
the years in question, then it was in consideration of the same that DOLE
Regional Director Parel and DOLE Undesrsecretary Trajano issued their Orders
on 19 September 1993 and 15 September 1994, respectively, both finding that
CAMPCO was engaged in labor-only contracting. Petitioner, in its third
assignment of error, questions the weight that the Court of Appeals gave these
orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27
November 2003.
III
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of
DOLE Undersecretary Trajano, dated 15 September 1994, were issued pursuant
to the visitorial and enforcement power conferred by the Labor Code, as
amended, on the DOLE Secretary and his duly authorized representatives, to wit
ART. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his
duly authorized representatives, including labor regulation officers, shall have
access to employers records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or matter which may
be necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations pursuant
thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of
inspection.
An order issued by the duly authorized representative of the Secretary of Labor
and Employment under this article may be appealed to the latter. In case said
order involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Secretary of Labor and Employment in the
amount equivalent to the monetary award in the order appealed from.
(Emphasis supplied.)
Before Regional Director Parel issued his Order, dated 19 September 1993, a
Task Force investigated the operations of cooperatives in Polomolok, South
Cotabato, and submitted a report identifying six cooperatives that were
engaged in labor-only contracting, one of which was CAMPCO. In a conference
before the DOLE Regional Office, the cooperatives named by the Task Force
were given the opportunity to explain the nature of their activities in relation to
petitioner; and, the cooperatives, as well as petitioner, submitted to the DOLE
Regional Office their position papers and other supporting documents to refute
the findings of the Task Force. It was only after these procedural steps did
Regional Director Parel issued his Order finding that three cooperatives,
including CAMPCO, were indeed engaged in labor-only contracting and were
directed to cease and desist from further engaging in such activities. On appeal,
DOLE Undersecretary Trajano, by authority of the DOLE Secretary, affirmed
Regional Director Parels Order. Upon denial of the Motion for Reconsideration
filed by the cooperatives, and no further appeal taken therefrom, the Order of
DOLE Undersecretary Trajano, dated 15 September 1994, became final and
executory.
Petitioner avers that the foregoing Orders of the authorized representatives of
the DOLE Secretary do not constitute res judicata in the case filed before the
NLRC. This Court, however, believes otherwise and finds that the final and
executory Orders of the DOLE Secretary or his authorized representatives
should bind the NLRC.
It is obvious that the visitorial and enforcement power granted to the DOLE
Secretary is in the nature of a quasi-judicial power. Quasi-judicial power has
been described by this Court in the following manner
Quasi-judicial or administrative adjudicatory power on the other hand is the
power of the administrative agency to adjudicate the rights of persons before
it. It is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards
laid down by the law itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it performs in a
judicial manner an act which is essentially of an executive or administrative
nature, where the power to act in such manner is incidental to or reasonably
necessary for the performance of the executive or administrative duty
entrusted to it. In carrying out their quasi-judicial functions the administrative
officers or bodies are required to investigate facts or ascertain the existence of
facts, hold hearings, weigh evidence, and draw conclusions from them as basis
for their official action and exercise of discretion in a judicial nature. Since
rights of specific persons are affected it is elementary that in the proper exercise
of quasi-judicial power due process must be observed in the conduct of the
proceedings.30 (Emphasis supplied.)
The DOLE Secretary, under Article 106 of the Labor Code, as amended, exercise
quasi-judicial power, at least, to the extent necessary to determine violations of
labor standards provisions of the Code and other labor legislation. He can issue
compliance orders and writs of execution for the enforcement of his orders. As
evidence of the importance and binding effect of the compliance orders of the
DOLE Secretary, Article 128 of the Labor Code, as amended, further provides
ART. 128. Visitorial and enforcement power.
xxxx
(d) It shall be unlawful for any person or entity to obstruct, impede, delay or
otherwise render ineffective the orders of the Secretary of Labor or his duly
authorized representatives issued pursuant to the authority granted under this
article, and no inferior court or entity shall issue temporary or permanent
injunction or restraining order or otherwise assume jurisdiction over any case
involving the enforcement orders issued in accordance with this article.
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of
DOLE Undersecretary Trajano, dated 15 September 1994, consistently found
that CAMPCO was engaging in labor-only contracting. Such finding
constitutes res judicata in the case filed by the respondents with the NLRC.
It is well-established in this jurisdiction that the decisions and orders of
administrative agencies, rendered pursuant to their quasi-judicial authority,
have upon their finality, the force and binding effect of a final judgment within
the purview of the doctrine of res judicata. The rule of res judicata, which
forbids the reopening of a matter once judicially determined by competent
authority, applies as well to the judicial and quasi-judicial acts of public,
executive or administrative officers and boards acting within their jurisdiction as
to the judgments of courts having general judicial powers. The orderly
administration of justice requires that the judgments or resolutions of a court or
quasi-judicial body must reach a point of finality set by the law, rules and
regulations, so as to write finis to disputes once and for all. This is a fundamental
principle in the Philippine justice system, without which there would be no end
to litigations.31
Res judicata has dual aspects, "bar by prior judgment" and "conclusiveness of
judgment." This Court has previously clarified the difference between the two
Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of
res judicata in actions in personam. to wit:
"Effect of judgment. - The effect of a judgment or final order rendered by a
court or judge of the Philippines, having jurisdiction to pronounce the judgment
or order, may be as follows:
xxxx
(b) In other cases the judgment or order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action or special proceeding, litigating
for the same thing and under the same title and in the same capacity;
(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment which
appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto."
Section 49(b) enunciates the first concept of res judicata known as "bar by prior
judgment," whereas, Section 49(c) is referred to as "conclusiveness of
judgment."
There is "bar by former judgment" when, between the first case where the
judgment was rendered, and the second case where such judgment is invoked,
there is identity of parties, subject matter and cause of action. When the three
identities are present, the judgment on the merits rendered in the first
constitutes an absolute bar to the subsequent action. But where between the
first case wherein Judgment is rendered and the second case wherein such
judgment is invoked, there is only identity of parties but there is no identity of
cause of action, the judgment is conclusive in the second case, only as to those
matters actually and directly controverted and determined, and not as to
matters merely involved therein. This is what is termed "conclusiveness of
judgment."
The second concept of res judicata, conclusiveness of judgment, is the one
applicable to the case at bar.
The same parties who participated in the proceedings before the DOLE Regional
Office are the same parties involved in the case filed before the NLRC. CAMPCO,
on behalf of its members, attended the conference before the DOLE Regional
Office; submitted its position paper; filed an appeal with the DOLE Secretary of
the Order of DOLE Regional Director Parel; and moved for reconsideration of the
subsequent Order of DOLE Undersecretary Trajano. Petitioner, although not
expressly named as a respondent in the DOLE investigation, was a necessary
party thereto, considering that CAMPCO was rendering services to petitioner
solely. Moreover, petitioner participated in the proceedings before the DOLE
Regional Office, intervening in the matter through a letter sent by its Senior
Legal Officer, dated 24 May 1993, and submitting its own position paper.
While the causes of action in the proceedings before the DOLE and the NLRC
differ, they are, in fact, very closely related. The DOLE Regional Office conducted
an investigation to determine whether CAMPCO was violating labor laws,
particularly, those on labor-only contracting. Subsequently, it ruled that
CAMPCO was indeed engaging in labor-only contracting activities, and
thereafter ordered to cease and desist from doing so. Respondents came before
the NLRC alleging illegal dismissal by the petitioner of those respondents who
were put on "stay home status," and seeking regularization of respondents who
were still working for petitioner. The basis of their claims against petitioner rests
on the argument that CAMPCO was a labor-only contractor and, thus, merely an
agent or intermediary of petitioner, who should be considered as respondents
real employer. The matter of whether CAMPCO was a labor-only contractor was
already settled and determined in the DOLE proceedings, which should be
conclusive and binding upon the NLRC. What were left for the determination of
the NLRC were the issues on whether there was illegal dismissal and whether
respondents should be regularized.
This Court also notes that CAMPCO and DOLE still continued with their Service
Contract despite the explicit cease and desist orders rendered by authorized
DOLE officials. There is no other way to look at it except that CAMPCO and DOLE
acted in complete defiance and disregard of the visitorial and enforcement
power of the DOLE Secretary and his authorized representatives under Article
128 of the Labor Code, as amended. For the NLRC to ignore the findings of DOLE
Regional Director Parel and DOLE Undersecretary Trajano is an unmistakable
and serious undermining of the DOLE officials authority.
IV
In petitioners fourth assignment of error, it points out that the Court of Appeals
erred in not holding respondents estopped from asserting that they were
regular employees of petitioner since respondents, as owners-members of
CAMPCO, actively represented themselves and warranted that they were
engaged in legitimate job contracting.
This Court cannot sustain petitioners argument.
It is true that CAMPCO is a cooperative composed of its members, including
respondents. Nonetheless, it cannot be denied that a cooperative, as soon as it
is registered with the CDA, attains a juridical personality of its own, 32separate
and distinct from its members; much in the same way that a corporation has a
juridical personality separate and distinct from its stockholders, known as the
doctrine of corporate fiction. The protection afforded by this doctrine is not
absolute, but the exception thereto which necessitates the piercing of the
corporate veil can only be made under specified circumstances. In Traders Royal
Bank v. Court of Appeals,33 this Court ruled that
Petitioner cannot put up the excuse of piercing the veil of corporate entity, as
this is merely an equitable remedy, and maybe awarded only in cases when the
corporate fiction is used to defeat public convenience, justify wrong, protect
fraud or defend crime or where a corporation is a mere alter ego or business
conduit of a person.
Piercing the veil of corporate entity requires the court to see through the
protective shroud which exempts its stockholders from liabilities that ordinarily,
they could be subject to, or distinguishes one corporation from a seemingly
separate one, were it not for the existing corporate fiction. But to do this, the
court must be sure that the corporate fiction was misused, to such an extent
that injustice, fraud, or crime was committed upon another, disregarding, thus,
his, her, or its rights. It is the corporate entity which the law aims to protect by
this doctrine.
Using the above-mentioned guidelines, is petitioner entitled to a piercing of the
"cooperative identity" of CAMPCO? This Court thinks not.
It bears to emphasize that the piercing of the corporate veil is an equitable
remedy, and among the maxims of equity are: (1) he who seeks equity must do
equity, and (2) he who comes into equity must come with clean hands. Hence, a
litigant may be denied relief by a court of equity on the ground that his conduct
has been inequitable, unfair, dishonest, fraudulent, or deceitful as to the
controversy in issue.34
Petitioner does not come before this Court with clean hands. It is not an
innocent party in this controversy.
Petitioner itself admitted that it encouraged and even helped the establishment
of CAMPCO and the other cooperatives in Polomolok, South Cotabato. These
cooperatives were established precisely to render services to petitioner. It is
highly implausible that the petitioner was lured into entering into the Service
Contract with CAMPCO in 1993 on the latters misrepresentation and false
warranty that it was an independent job contractor. Even if it is conceded that
petitioner was indeed defrauded into believing that CAMPCO was an
independent contractor, then the DOLE proceedings should have placed it on
guard. Remember that petitioner participated in the proceedings before the
DOLE Regional Office, it cannot now claim ignorance thereof. Furthermore, even
after the issuance of the cease and desist order on CAMPCO, petitioner still
continued with its prohibited service arrangement with the said cooperative. If
petitioner was truly defrauded by CAMPCO and its members into believing that
the cooperative was an independent job contractor, the more logical recourse
of petitioner was to have the Service Contract voided in the light of the explicit
findings of the DOLE officials that CAMPCO was engaging in labor-only
contracting. Instead, petitioner still carried on its Service Contract with CAMPCO
for several more years thereafter.
V
As previously discussed, the finding of the duly authorized representatives of
the DOLE Secretary that CAMPCO was a labor-only contractor is already
conclusive. This Court cannot deviate from said finding.
This Court, though, still notes that even an independent review of the evidence
on record, in consideration of the proper labor statutes and regulations, would
result in the same conclusion: that CAMPCO was engaged in prohibited activities
of labor-only contracting.
The existence of an independent and permissible contractor relationship is
generally established by the following criteria: whether or not the contractor is
carrying on an independent business; the nature and extent of the work; the
skill required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the
work to another; the employer's power with respect to the hiring, firing and
payment of the contractor's workers; the control of the premises; the duty to
supply the premises tools, appliances, materials and labor; and the mode,
manner and terms of payment.35
While there is present in the relationship of petitioner and CAMPCO some
factors suggestive of an independent contractor relationship (i.e., CAMPCO
chose who among its members should be sent to work for petitioner; petitioner
paid CAMPCO the wages of the members, plus a percentage thereof as
administrative charge; CAMPCO paid the wages of the members who rendered
service to petitioner), many other factors are present which would indicate a
labor-only contracting arrangement between petitioner and CAMPCO.36
First, although petitioner touts the multi-million pesos assets of CAMPCO, it
does well to remember that such were amassed in the years following its
establishment. In 1993, when CAMPCO was established and the Service
Contract between petitioner and CAMPCO was entered into, CAMPCO only
had P6,600.00 paid-up capital, which could hardly be considered substantial.37 It
only managed to increase its capitalization and assets in the succeeding years by
continually and defiantly engaging in what had been declared by authorized
DOLE officials as labor-only contracting.
Second, CAMPCO did not carry out an independent business from petitioner. It
was precisely established to render services to petitioner to augment its
workforce during peak seasons. Petitioner was its only client. Even as CAMPCO
had its own office and office equipment, these were mainly used for
administrative purposes; the tools, machineries, and equipment actually used by
CAMPCO members when rendering services to the petitioner belonged to the
latter.
Third, petitioner exercised control over the CAMPCO members, including
respondents. Petitioner attempts to refute control by alleging the presence of a
CAMPCO supervisor in the work premises. Yet, the mere presence within the
premises of a supervisor from the cooperative did not necessarily mean that
CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the
implementing rules of the Labor Code, as amended, required for permissible job
contracting that the contractor undertakes the contract work on his account,
under his own responsibility, according to his own manner and method, free
from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof. As
alleged by the respondents, and unrebutted by petitioner, CAMPCO members,
before working for the petitioner, had to undergo instructions and pass the
training provided by petitioners personnel. It was petitioner who determined
and prepared the work assignments of the CAMPCO members. CAMPCO
members worked within petitioners plantation and processing plants alongside
regular employees performing identical jobs, a circumstance recognized as an
indicium of a labor-only contractorship.38
Fourth, CAMPCO was not engaged to perform a specific and special job or
service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in
its daily operations, and perform odd jobs as may be assigned. CAMPCO
complied with this venture by assigning members to petitioner. Apart from that,
no other particular job, work or service was required from CAMPCO, and it is
apparent, with such an arrangement, that CAMPCO merely acted as a
recruitment agency for petitioner. Since the undertaking of CAMPCO did not
involve the performance of a specific job, but rather the supply of manpower
only, CAMPCO clearly conducted itself as a labor-only contractor.39
Lastly, CAMPCO members, including respondents, performed activities directly
related to the principal business of petitioner. They worked as can processing
attendant, feeder of canned pineapple and pineapple processing, nata de coco
processing attendant, fruit cocktail processing attendant, and etc., functions
which were, not only directly related, but were very vital to petitioners business
of production and processing of pineapple products for export.
The findings enumerated in the preceding paragraphs only support what DOLE
Regional Director Parel and DOLE Undersecretary Trajano had long before
conclusively established, that CAMPCO was a mere labor-only contractor.
VI
The declaration that CAMPCO is indeed engaged in the prohibited activities of
labor-only contracting, then consequently, an employer-employee relationship
is deemed to exist between petitioner and respondents, since CAMPCO shall be
considered as a mere agent or intermediary of petitioner.
Since respondents are now recognized as employees of petitioner, this Court is
tasked to determine the nature of their employment. In consideration of all the
attendant circumstances in this case, this Court concludes that respondents are
regular employees of petitioner.
Article 280 of the Labor Code, as amended, reads
ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually
necessary and desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of
engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if its is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
This Court expounded on the afore-quoted provision, thus
The primary standard, therefore, of determining a regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been performing the
job for at least one year, even if her performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of the
activity to the business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.40
In the instant Petition, petitioner is engaged in the manufacture and production
of pineapple products for export.1wphi1Respondents rendered services as
processing attendant, feeder of canned pineapple and pineapple processing,
nata de coco processing attendant, fruit cocktail processing attendant, and etc.,
functions they performed alongside regular employees of the petitioner. There
is no doubt that the activities performed by respondents are necessary or
desirable to the usual business of petitioner.
Petitioner likewise want this Court to believe that respondents employment
was dependent on the peaks in operation, work backlogs, absenteeism, and
excessive leaves. However, bearing in mind that respondents all claimed to have
worked for petitioner for over a year, a claim which petitioner failed to rebut,
then respondents continued employment clearly demonstrates the continuing
necessity and indispensability of respondents employment to the business of
petitioner.
Neither can this Court apply herein the ruling of the NLRC in the previous case
involving petitioner and the individual workers they used to hire before the
advent of the cooperatives, to the effect that the employment of these
individual workers were not regular, but rather, were valid "term
employments," wherein the employer and employee knowingly and voluntarily
agreed to employment for only a limited or specified period of time. The
difference between that case and the one presently before this Court is that the
members of CAMPCO, including respondents, were not informed, at the time of
their engagement, that their employment shall only be for a limited or specified
period of time. There is absence of proof that the respondents were aware and
had knowingly and voluntarily agreed to such term employment. Petitioner did
not enter into individual contracts with the CAMPCO members, but executed a
Service Contract with CAMPCO alone. Although the Service Contract of 1993
stated that it shall be for a specific period, from 1 July to 31 December 1993,
petitioner and CAMPCO continued the service arrangement beyond 1993. Since
there was no written renewal of the Service Contract,41 there was no further
indication that the engagement by petitioner of the services of CAMPCO
members was for another definite or specified period only.
Respondents, as regular employees of petitioner, are entitled to security of
tenure. They could only be removed based on just and authorized causes as
provided for in the Labor Code, as amended, and after they are accorded
procedural due process. Therefore, petitioners acts of placing some of the
respondents on "stay home status" and not giving them work assignments for
more than six months were already tantamount to constructive and illegal
dismissal.42
In summary, this Court finds that CAMPCO was a labor-only contractor and,
thus, petitioner is the real employer of the respondents, with CAMPCO acting
only as the agent or intermediary of petitioner. Due to the nature of their work
and length of their service, respondents should be considered as regular
employees of petitioner. Petitioner constructively dismissed a number of the
respondents by placing them on "stay home status" for over six months, and
was therefore guilty of illegal dismissal. Petitioner must accord respondents the
status of regular employees, and reinstate the respondents who it constructively
and illegally dismissed, to their previous positions, without loss of seniority
rights and other benefits, and pay these respondents backwages from the date
of filing of the Complaint with the NLRC on 19 December 1996 up to actual
reinstatement.
WHEREFORE, in view of the foregoing, the instant Petition is DENIED and the
Amended Decision, dated 27 November 2003, rendered by the Court of Appeals
in CA-G.R. SP No. 63405 is AFFIRMED.
Costs against the petitioner.
SO ORDERED.
EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner,
vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION
CONGRESS OF THE PHILIPPINES, respondents.
Sycip Salazar, Hernandez & Gatmaitan for petitioner.
Gilbert P. Lorenzo for private respondent.
SARMIENTO, J.:p
The petition is given due course and the various pleadings submitted being
sufficient to aid the Court in the proper resolution of the basic issues raised in
this case, we decide it without further ado.
The Employers Confederation of the Philippines (ECOP) is questioning the
validity of Wage Order No. NCR-01-A dated October 23, 1990 of the Regional
Tripartite Wages and Productivity Board, National Capital Region, promulgated
pursuant to the authority of Republic Act No. 6727, "AN ACT TO RATIONALIZE
WAGE POLICY DETERMINATION BY ESTABLISHING THE MECHANISM AND
PROPER STANDARDS THEREFORE, AMENDING FOR THE PURPOSE ARTICLE 99
OF, AND INCORPORATING ARTICLES 120, 121, 122, 123, 124, 126, AND 127
INTO, PRESIDENTIAL DECREE NO. 442 AS AMENDED, OTHERWISE KNOWN AS
THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING
WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR
OTHER PURPOSES," was approved by the President on June 9, 1989. Aside from
providing new wage rates, 1 the "Wage Rationalization Act" also provides,
among other things, for various Regional Tripartite Wages and Productivity
Boards in charge of prescribing minimum wage rates for all workers in the
various regions 2and for a National Wages and Productivity Commission to
review, among other functions, wage levels determined by the boards. 3
On October 15, 1990, the Regional Board of the National Capital Region issued
Wage Order No. NCR-01, increasing the minimum wage by P17.00 daily in the
National Capital Region. 4 The Trade Union Congress of the Philippines (TUCP)
moved for reconsideration; so did the Personnel Management Association of
the Philippines (PMAP). 5ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending
Wage Order No. NCR-01, as follows:
Section 1. Upon the effectivity of this Wage Order, all workers and employees in
the private sector in the National Capital Region already receiving wages above
the statutory minimum wage rates up to one hundred and twenty-five pesos
(P125.00) per day shall also receive an increase of seventeen pesos (P17.00) per
day.
ECOP appealed to the National Wages and Productivity Commission. On
November 6, 1990, the Commission promulgated an Order, dismissing the
appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration.
The Orders of the Commission (as well as Wage Order No. NCR-01-A) are the
subject of this petition, in which. ECOP assails the board's grant of an "across-
the-board" wage increase to workers already being paid more than existing
minimum wage rates (up to P125. 00 a day) as an alleged excess of authority,
and alleges that under the Republic Act No. 6727, the boards may only prescribe
"minimum wages," not determine "salary ceilings." ECOP likewise claims that
Republic Act No. 6727 is meant to promote collective bargaining as the primary
mode of settling wages, and in its opinion, the boards can not preempt
collective bargaining agreements by establishing ceilings. ECOP prays for the
nullification of Wage Order No. NCR 01-A and for the "reinstatement" of Wage
Order No. NCR-01.
The Court directed the Solicitor General to comment on behalf of the
Government, and in the Solicitor General's opinion, the Board, in prescribing an
across-the-board hike did not, in reality, "grant additional or other benefits to
workers and employees, such as the extension of wage increases to employees
and workers already receiving more than minimum wages ..." 6 but rather, fixed
minimum wages according to the "salary-ceiling method."
ECOP insists, in its reply, that wage is a legislative function, and Republic Act No.
6727 delegated to the regional boards no more "than the power to grant
minimum wage adjustments" 7 and "in the absence of clear statutory
authority," 8 the boards may no more than adjust "floor wages." 9
The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is
intended to correct "wage distortions" and the salary-ceiling method (of
determining wages) is meant, precisely, to rectify wage distortions. 10
The Court is inclined to agree with the Government. In the National Wages and
Productivity Commission's Order of November 6, 1990, the Commission noted
that the determination of wages has generally involved two methods, the "floor-
wage" method and the "salary-ceiling" method. We quote:
Historically, legislation involving the adjustment of the minimum wage made
use of two methods. The first method involves the fixing of determinate amount
that would be added to the prevailing statutory minimum wage. The other
involves "the salary-ceiling method" whereby the wage adjustment is applied to
employees receiving a certain denominated salary ceiling. The first method was
adopted in the earlier wage orders, while the latter method was used in R.A.
Nos. 6640 and 6727. Prior to this, the salary-ceiling method was also used in no
less than eleven issuances mandating the grant of cost-of-living allowances (P.D.
Nos. 525, 1123, 1614, 1634, 1678, 1713 and Wage Order Nos. 1, 2, 3, 5 and 6).
The shift from the first method to the second method was brought about by
labor disputes arising from wage distortions, a consequence of the
implementation of the said wage orders. Apparently, the wage order provisions
that wage distortions shall be resolved through the grievance procedure was
perceived by legislators as ineffective in checking industrial unrest resulting
from wage order implementations. With the establishment of the second
method as a practice in minimum wage fixing, wage distortion disputes were
minimized. 11
As the Commission noted, the increasing trend is toward the second mode, the
salary-cap method, which has reduced disputes arising from wage distortions
(brought about, apparently, by the floor-wage method). Of course, disputes are
appropriate subjects of collective bargaining and grievance procedures, but as
the Commission observed and as we are ourselves agreed, bargaining has
helped very little in correcting wage distortions. Precisely, Republic Act No. 6727
was intended to rationalize wages, first, by providing for full-time boards to
police wages round-the-clock, and second, by giving the boards enough powers
to achieve this objective. The Court is of the opinion that Congress meant the
boards to be creative in resolving the annual question of wages without labor
and management knocking on the legislature's door at every turn. The Court's
opinion is that if Republic No. 6727 intended the boards alone to set floor
wages, the Act would have no need for a board but an accountant to keep track
of the latest consumer price index, or better, would have Congress done it as
the need arises, as the legislature, prior to the Act, has done so for years. The
fact of the matter is that the Act sought a "thinking" group of men and women
bound by statutory standards. We quote:
ART. 124. Standards / Criteria for Minimum Wage Fixing. The regional
minimum wages to be established by the Regional Board shall be as nearly
adequate as is economically feasible to maintain the minimum standards of
living necessary for the health, efficiency and general well-being of the
employees within the framework of the national economic and social
development program. In the determination of such regional minimum wages,
the Regional Board shall, among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of emphasis
employers;
(i) Effects of employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of
economic and social development. 12
The Court is not convinced that the Regional Board of the National Capital
Region, in decreeing an across-the-board hike, performed an unlawful act of
legislation. It is true that wage-fixing, like rate constitutes an act Congress; 13 it is
also true, however, that Congress may delegate the power to fix
rates 14 provided that, as in all delegations cases, Congress leaves sufficient
standards. As this Court has indicated, it is impressed that the above-quoted
standards are sufficient, and in the light of the floor-wage method's failure, the
Court believes that the Commission correctly upheld the Regional Board of the
National Capital Region.
Apparently, ECOP is of the mistaken impression that Republic Act No. 6727 is
meant to "get the Government out of the industry" and leave labor and
management alone in deciding wages. The Court does not think that the law
intended to deregulate the relation between labor and capital for several
reasons: (1) The Constitution calls upon the State to protect the rights of
workers and promote their welfare; 15 (2) the Constitution also makes it a duty
of the State "to intervene when the common goal so demands" in regulating
property and property relations; 16 (3) the Charter urges Congress to give
priority to the enactment of measures, among other things, to diffuse the
wealth of the nation and to regulate the use of property; 17 (4) the Charter
recognizes the "just share of labor in the fruits of production;" 18 (5) under the
Labor Code, the State shall regulate the relations between labor and
management; 19 (6) under Republic Act No. 6727 itself, the State is interested in
seeing that workers receive fair and equitable wages; 20 and (7) the Constitution
is primarily a document of social justice, and although it has recognized the
importance of the private sector, 21 it has not embraced fully the concept of
laissez faire 22 or otherwise, relied on pure market forces to govern the
economy; We can not give to the Act a meaning or intent that will conflict with
these basic principles.
It is the Court's thinking, reached after the Court's own study of the Act, that the
Act is meant to rationalize wages, that is, by having permanent boards to decide
wages rather than leaving wage determination to Congress year after year and
law after law. The Court is not of course saying that the Act is an effort of
Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave
the question of wages to the expertise of experts. As Justice Cruz observed,
"[w]ith the proliferation of specialized activities and their attendant peculiar
problems, the national legislature has found it more necessary to entrust to
administrative agencies the power of subordinate legislation' as it is caned." 23
The Labor Code defines "wage" as follows:
"Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair
and reasonably value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the
employee. "Fair and reasonable value" shall not include any profit to the
employer or to any person affiliated with the employer. 24
The concept of "minimum wage" is, however, a different thing, and certainly, it
means more than setting a floor wage to upgrade existing wages, as ECOP takes
it to mean. "Minimum wages" underlies the effort of the State, as Republic Act
No. 6727 expresses it, "to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through
industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth," 25 and as the Constitution expresses it, to
affirm "labor as a primary social economic force." 26 As the Court indicated, the
statute would have no need for a board if the question were simply "how
much". The State is concerned, in addition, that wages are not distributed
unevenly, and more important, that social justice is subserved.
It is another question, to be sure, had Congress created "roving" boards, and
were that the case, a problem of undue delegation would have ensued; but as
we said, we do not see a Board (National Capital Region) "running riot" here,
and Wage Order No. NCR-01-A as an excess of authority.
It is also another question whether the salary-cap method utilized by the Board
may serve the purposes of Republic Act No. 6727 in future cases and whether
that method is after all, a lasting policy of the Board; however, it is a question
on which we may only speculate at the moment. At the moment, we find it to
be reasonable policy (apparently, it has since been Government policy); and if in
the future it would be perceptibly unfair to management, we will take it up
then.
WHEREFORE, premises considered, the petition is DENIED. No pronouncement
as to costs.
IT IS SO ORDERED.
NASIPIT LUMBER COMPANY, INC., and PHILIPPINE WALLBOARD
CORPORATION, petitioners,
vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION, WESTERN AGUSAN
WORKERS UNION (WAWU-ULGWP LOCAL 101), TUNGAO LUMBER WORKERS
UNION (TULWU-ULGWP LOCAL 102) and UNITED WORKERS UNION (UWU-
ULGWP LOCAL 103), respondents.
PANGANIBAN, J.:
The Labor Code, as amended by RA 6727 (the Wage Rationalization Act), grants
the National Wages and Productivity Commission (NWPC) the power to
prescribe rules and guidelines for the determination of appropriate wages in the
country. Hence, "guidelines" issued by the Regional Tripartite Wages and
Productivity Boards (RTWPB) without the approval of or, worse, contrary to
those promulgated by the NWPC are ineffectual, void and cannot be the source
of rights and privileges.
The Case
This is the principle used by the Court in resolving this petition
for certiorari under Rule 65 of the Rules of Court assailing the Decision 1 dated
March 8, 1993, promulgated by the NWPC 2 which disposed as follows:
WHEREFORE, premises considered, the Decision appealed from is hereby
MODIFIED. The application for exemption of Anakan Lumber Company is hereby
GRANTED for a period of one (1) year retroactive to the date subject Wage
Orders took effect until November 21, 1991. The applications for exemption of
Nasipit Lumber Company and Philippine Wallboard Corporation are hereby
DENIED for lack of merit, and as such, they are hereby ordered to pay their
covered workers the wage increases under subject Wage Orders retroactive to
the date of effectivity of said Wage Orders plus interest of one percent (1%) per
month.
SO ORDERED.
Petitioners also challenge the NWPC's Decision 3 dated November 17, 1993
which denied their motion for reconsideration.
The RTWPB's August 1, 1991 Decision, which the NWPC modified, disposed as
follows:
WHEREFORE, all foregoing premises considered, the instant petition for
exemption from compliance with Wage Order Nos. RX-01 and RX-01-A is hereby
approved under and by virtue of criteria No. 2, Section 3 of RTWPB Guidelines
No. 3 on Exemption, dated November 26, 1990, for a period of only one (1) year,
retroactive to the date said Wage Order took effect up to November 21, 1991.
SO ORDERED. 4
The Facts
The undisputed facts are narrated by the NWPC as follows:
On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board
issued Wage Order No. RX-01 which provides as follows:
Sec. 1. Upon the effectivity of this Wage Order, the increase in minimum wage
rates applicable to workers and employees in the private sector in Northern
Mindanao (Region X) shall be as follows:
a. The provinces of Agusan del Norte, Bukidnon, Misamis Oriental, and the Cities
of Butuan, Gingoog, and Cagayan de Oro P13.00/day
b. The provinces of Agusan del Sur, Surigao del Norte and Misamis Occidental,
and the Cities of Surigao Oroquieta, Ozamis and Tangub P11.00/day.
c. The province of Camiguin P9.00/day.
Subsequently, a supplementary Wage Order No. RX-01-A was issued by the
Board on November 6, 1990 which provides as follows:
Sec. 1. Upon the effectivity of the original Wage Order RX-01, all workers and
employees in the private sector in Region X already receiving wages above the
statutory minimum wage rates up to one hundred and twenty pesos (P120.00)
per day shall also receive an increase of P13, P11, P9 per day, as provided for
under Wage Order No. RX-01;
Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine
Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO), claiming
to be separate and distinct from each other but for expediency and practical
purposes, jointly filed an application for exemption from the above-mentioned
Wage Orders as distressed establishments under Guidelines No. 3, issued by the
herein Board on November 26, 1990, specifically Sec. 3(2) thereof which, among
others, provides:
A. For purposes of this Guidelines the following criteria to determine whether
the applicant-firm is actually distressed shall be used.
xxx xxx xxx
2. Establishment belonging to distressed industry an establishment that is
engaged in an industry that is distressed due to conditions beyond its control as
may be determined by the Board in consultation with DTI and NWPC. (Emphasis
supplied)
xxx xxx xxx
Applicants/appellees aver that they are engaged in logging and integrated wood
processing industry but are distressed due to conditions beyond their control, to
wit: 1) Depressed economic conditions due to worldwide recession; 2) Peace
and order and other emergency-related problems causing disruption and
suspension of normal logging operations; 3) Imposition of environmental fee for
timber production in addition to regular forest charges; 4) Logging moratorium
in Bukidnon; 5) A reduction in the annual allowable volume of cut logs of NALCO
& ALCO by 59%; 6) Highly insufficient raw material supply; 7) Extraordinary
increases in the cost of fuel, oil, spare parts, and maintenance; 8) Excessive
labor cost/production ratio that is more or less 47%; and 9) Lumber export ban.
On the other hand, oppositor/appellant Unions jointly opposed the application
for exemption on the ground that said companies are not distressed
establishments since their capitalization has not been impaired by 25%. 5
Citing liquidity problems and business decline in the wood-processing industry,
the RTWPB approved the applicants' joint application for exemption in this wise:
1. The Board considered the arguments presented by petitioners and the
oppositors. The Board likewise took note of the financial condition of petitioner
firms. One of the affiliates, Anakan Lumber Company, is confirmed to be
suffering from capital impairment by: 14:80% in 1988, 71.35% in 1989 and 100%
in 1990. On the other hand, NALCO had a capital impairment of 6.41%. 13.53%
and 17.04% in 1988, 1989 and 1990, respectively, while PWC had no capital
impairment from 1988 to 1990. However, the Board also took note of the fact
that petitioners are claiming for exemption, not on the strength of capital
impairment, but on the basis of belonging to a distressed industry an
establishment that is engaged in an industry that is distressed due to conditions
beyond its control as may be determined by the Board in consultation with DTI
and NWPC.
2. Inquiries made by the Board from the BOI and the DTI confirm that all
petitioner-firms are encountering liquidity problems and extreme difficulty
servicing their loan obligations.
3. A perusal of the Provincial Trade and Industry Development Plan for Agusan
del Norte and Butuan City where petitioners are operating their business,
confirms the existence of a slump in the wood-processing industry due to the
growing scarcity of [a] large volume of raw materials to feed the various
plywood and lumber mills in the area. A lot of firms have closed and shifted to
other ventures, the report continued, although the competitive ones are still in
operation.
4. The Board took note of the fact that most of the circumstances responsible
for the financial straits of petitioners are largely external, over which petitioners
have very little control. The Board feels that as an alternative to closing up their
business[es] which could bring untold detriment and dislocation to [their] 4,000
workers and their families, petitioners should be extended assistance and
encouragement to continue operating so that jobs could thereby be
preserved during these difficult times. One such way is for the Board to grant
them a temporary reprieve from compliance with the mandated wage increase
specifically W.O. RX-01 and RX-01-A only. 6
Dissatisfied with the RTWPB's Decision, the private respondents lodged an
appeal with the NWPC, which affirmed ALCO's application but reversed the
applications of herein petitioners, NALCO and PWC. The NWPC reasoned:
The Guidelines No. 3 dated November 26, 1990, issued by the herein Board
cannot be used as valid basis for granting applicants/appellees application for
exemption since it did not pass the approval of this Commission.
Under the Rules of Procedure on Minimum Wage Fixing dated June 4, 1990,
issued by this Commission pursuant to Republic Act 6727, particularly Section 1
of Rule VIII thereof provides that:
Sec. 1. Application For Exemption. Whenever a wage order provides for
exemption, applications thereto shall be filed with the appropriate Board which
shall process the same, subject to guidelines issued by the Commission.
(Emphasis supplied)
Clearly, it is the Commission that is empowered to set [the] criteria on
exemption from compliance with wage orders. While the Boards may issue
supplementary guidelines on exemption, the same should first pass the
Commission for the purpose of determining its conformity to the latter's general
policies and guidelines relative thereto. In fact, under the "Guidelines on
Exemption from Compliance with the Prescribed Wage/Cost of Living Allowance
Increases Granted by the Regional Tripartite Wages and Productivity Boards"
dated February 25, 1991, issued by the Commission, there is a provision that
"(T)he Board may issue supplementary guidelines for exemption . . . subject to
review/approval by the Commission". (Section 11). In the case at bar, after the
Commission Secretariat made some comments on said Guidelines No. 3, the
same was never submitted again for [the] Commission's approval either
justifying its original provisions or incorporating the comments made thereon.
Until and unless said Guidelines No. 3 is approved by the Commission, it has no
operative force and effect.
The applicable guidelines on exemption therefore is that one issued by the
Commission dated February 25, 1991, the pertinent portion of which reads:
Sec. 3. CRITERIA FOR EXEMPTION
xxx xxx xxx
2. Distressed Employers/Establishment:
a. In the case of a stock corporation, partnership, single proprietorship or non-
stock, non-profit organization engaged in business activity or charging fees for
its services.
When accumulated losses at end of the period under review have impaired by at
least 25 percent the:
Paid-up-capital at the end of the last full accounting period preceding the
application, in the case of corporations;
Total invested capital at the beginning of the last full accounting period
preceding the application, in the case of partnership and single proprietorships
(Emphasis supplied)
A perusal of the financial documents on record shows that for the year 1990,
which is the last full accounting period preceding the applications for
exemption, appellees NALCO, ALCO, and PWC incurred a capital impairment of
1.89%, 28.72%, and 5.03%, respectively. Accordingly, based on the criteria set
forth above in the NWPC Guidelines on Exemption, only the application for
exemption of ALCO should be approved in view of its capital impairment of
28.72%.
We are not unmindful of the fact that during the Board hearing conducted, both
labor and management manifested their desire for a uniform decision to apply
to all three (3) firms. However, we cannot grant the same for want of legal basis
considering that we are required by the rules to decide on the basis of the merit
of application by an establishment having a legal personality of its own. 7
In denying petitioners' motion for reconsideration, public respondent explained:
The fact that applicant companies relied in good faith upon Guidelines No. 3
issued by the Board a quo, the same is not sufficient reason that they should be
assessed based on the criteria of said Guidelines considering that it does not
conform to the policies and guidelines relative to wage exemption issued by this
Commission pursuant to Republic Act 6727. Consequently, it has no force and
effect. As such, said Guidelines No. 3 cannot therefore be a source of a right no
matter if one has relied on it in good faith. In like manner that the workers, who
are similarly affected, cannot be bound thereof.
Moreover, even assuming that Guidelines No. 3 conforms to the procedural
requirement, still, the same cannot be given effect insofar as it grants
exemption by industry considering that the subject Wage Order mentioned
only distressed establishments as one of those to be exempted thereof. It did
not mentionexemption by industries. Well-settled is the rule that an
implementing guidelines [sic] cannot expand nor limit the provision of [the] law
it seeks to implement. Otherwise, it shall be considered ultra vires. And,
contrary to applicant companies' claim, this Commission does not approve rules
implementing the Wage Orders issued by the Regional Tripartite Wages and
Productivity Boards. Perforce, it cannot be said that this Commission has
approved the Rules Implementing Wage Order No[s]. RX-01 and RX-01 A. 8
Hence, this recourse. 9
The Issue
Petitioners raise this solitary issue:
With all due respect, Public Respondent National Wages and Productivity
Commission committed grave abuse of discretion amounting to lack of or in
excess of jurisdiction in ruling that RTWPB-X-Guideline No. 3 has "no operative
force and effect", among others, and consequently, denying for lack of merit the
application for exemption of petitioners Nasipit Lumber Company, Inc. and
Philippine Wallboard Corporation from the coverage of Wage Orders Nos. RX-01
and RX-01-A.
In the main, the issue boils down to a question of power. Is a guideline issued by
an RTWPB without the approval of or, worse, contrary to the guidelines
promulgated by the NWPC valid?
The Court's Ruling
The petition is unmeritorious. The answer to the above question is in the
negative.
Sole Issue: Approval of NWPC Required
Petitioners contend that the NWPC gravely abused its discretion in overturning
the RTWPB's approval of their application for exemption from Wages Orders RX-
01 and RX-01-A. They argue that under Art. 122 (e) of the Labor Code, the
RTWPB has the power "[t]o receive, process and act on applications for
exemption from prescribed wage rates as may be provided by law or any wage
order." 10 They also maintain that no law expressly requires the approval of the
NWPC for the effectivity of the RTWPB's Guideline No. 3.
Assuming arguendo that the approval of the NWPC was legally necessary,
petitioners should not be prejudiced by their observance of the guideline,
pointing out that the NWCP's own guidelines 11 took effect "only on March 18,
1991 long after Guideline No. 3 was issued on November 26, 1990." 12 Lastly,
they posit that the NWPC guidelines "cannot be given retroactive effect as
[they] will effect or change the petitioners' vested rights." 13
The Court is not persuaded.
Power to Prescribe Guidelines
Lodged in the NWPC, Not in the RTWPB
The three great branches and the various administrative agencies of the
government can exercise only those powers conferred upon them by the
Constitution and the law. 14 It is through the application of this basic
constitutional principle that the Court resolves the instant case.
RA 6727 (the Wage Rationalization Act), amending the Labor Code, created both
the NWPC and the RTWPB and defined their respective powers. Article 121 of
the Labor Code lists the powers and functions of the NWPC, as follows:
Art. 121. Powers and Functions of the Commission. The Commission shall
have the following powers and functions:
(a) To act as the national consultative and advisory body to the President of the
Philippine[s] and Congress on matters relating to wages, incomes and
productivity;
(b) To formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels;
(c) To prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry
levels;
(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed
guidelines and national development plans;
(e) To undertake studies, researches and surveys necessary for the attainment
of its functions and objectives, and to collect and compile data and periodically
disseminate information on wages and productivity and other related
information, including, but not limited to, employment, cost-of-living, labor
costs, investments and returns;
(f) To review plans and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are consistent with national
development plans;
(g) To exercise technical and administrative supervision over the Regional
Tripartite Wages and Productivity Boards;
(h) To call, from time to time, a national tripartite conference of representatives
of government, workers and employers for the consideration of measures to
promote wage rationalization and productivity; and
(i) To exercise such powers and functions as may be necessary to implement this
Act.
xxx xxx xxx
(Emphasis supplied)
Article 122 of the Labor Code, on the other hand, prescribes the powers of the
RTWPB thus:
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards.
xxx xxx xxx
The Regional Boards shall have the following powers and functions in their
respective territorial jurisdiction:
(a) To develop plans, programs and projects relative to wages, income and
productivity improvement for their respective regions;
(b) To determine and fix minimum wage rates applicable in their region,
provinces or industries therein and to issue the corresponding wage orders,
subject to guidelines issued by the Commission;
(c) To undertake studies, researches, and surveys necessary for the attainment
of their functions, objectives and programs, and to collect and compile data on
wages, incomes, productivity and other related information and periodically
disseminate the same;
(d) To coordinate with the other Regional Boards as may be necessary to attain
the policy and intention of this Code.
(e) To receive, process and act on applications for exemption from prescribed
wage rates as may be provided by law or any Wage Order; and
(f) To exercise such other powers and functions as may be necessary to carry out
their mandate under this Code. (Emphasis supplied)
The foregoing clearly grants the NWPC, not the RTWPB, the power to "prescribe
the rules and guidelines" for the determination of minimum wage and
productivity measures. While the RTWPB has the power to issue wage orders
under Article 122 (b) of the Labor Code, such orders are subject to the
guidelines prescribed by the NWPC. One of these guidelines is the "Rules on
Minimum Wage Fixing," which was issued on June 4, 1990. 15 Rule IV, Section 2
thereof, allows the RTWPB to issue wage orders exempting enterprises from the
coverage of the prescribed minimum wages.16 However, the NWPC has the
power not only to prescribe guidelines to govern wage orders, but also to issue
exemptions therefrom, as the said rule provides that "[w]henever a wage order
provides for exemption, applications thereto shall be filed with the appropriate
Board which shall process the same, subject to guidelines issued by the
Commission." 17 In short, the NWPC lays down the guidelines which the RTWPB
implements.
Significantly, the NWPC authorized the RTWPB to issue exemptions from wage
orders, but subject to its review and approval. 18 Since the NWPC never assented
to Guideline No. 3 of the RTWPB, the said guideline is inoperative and cannot be
used by the latter in deciding or acting on petitioners' application for exemption.
Moreover, Rule VIII, Section 1 of the NWPC's Rules of Procedure on Minimum
Wage Fixing issued on June 4, 1990 which was prior to the effectivity of
RTWPB Guideline No. 3 requires that an application for exemption from wage
orders should be processed by the RTWPB, subject specifically to the guidelines
issued by the NWPC.
To allow RTWPB Guideline No. 3 to take effect without the approval of the
NWPC is to arrogate unto RTWPB a power vested in the NWPC by Article 121 of
the Labor Code, as amended by RA 6727. The Court will not countenance this
naked usurpation of authority. It is a hornbook doctrine that the issuance of an
administrative rule or regulation must be in harmony with the enabling law. If a
discrepancy occurs "between the basic law and an implementing rule or
regulation, it is the former that prevails." 19 This is so because the law cannot be
broadened by a mere administrative issuance. It is axiomatic that "[a]n
administrative agency cannot amend an act of Congress." 20 Article 122 (e) of the
Labor Code cannot be construed to enable the RTWPB to decide applications for
exemption on the basis of its own guidelines which were not reviewed an
approved by the NWPC, for the simple reason that a statutory grant of "powers
should not be extended by implication beyond what may be necessary for their
just and reasonable execution. Official powers cannot be merely assumed by
administrative officers, nor can they be created by the courts in the exercise of
their judicial functions." 21
There is no basis for petitioners' claim that their vested rights were prejudiced
by the NWPC's alleged retroactive application of its own rules 22 which were
issued on February 25, 1991 and took effect on March 18, 1991. 23 Such claim
cannot stand because Guideline No. 3, as previously discussed and as correctly
concluded by the NWPC, 24 was not valid and, thus, cannot be a source of a right;
much less, a vested one.
The Insertion in Guideline No. 3 of
"Distressed Industry" as a Criterion for
Exemption Void
The Court wishes to stress that the law does not automatically grant exemption
to all establishments belonging to an industry which is deemed "distressed."
Hence, RX-O1, Section 3 (4), must not be construed to automatically include all
establishments belonging to a distressed industry. The fact that the wording of a
wage order may contain some ambiguity would not help petitioners. Basic is the
rule in statutory construction that all doubts in the implementation and the
interpretation of the provisions of the Labor Code, as well as its implementing
rules and regulations, must be resolved in favor of labor. 25 By exempting all
establishments belonging to a distressed industry, Guideline No. 3
surreptitiously and irregularly takes away the mandated increase in the
minimum wage awarded to the affected workers. In so acting, the RTWPB
proceeded against the declared policy of the State, enshrined in the enabling
act, "to rationalize the fixing of minimum wages and to promote productivity-
improvement and gain-sharing measures to ensure a decent standard of living
for the workers and their families; to guarantee the rights of labor to its just
share in the fruits of production; . . ." 26 Thus, Guideline No. 3 is void not only
because it lacks NWPC approval and contains an arbitrarily inserted exemption,
but also because it is inconsistent with the avowed State policies protective of
labor.
NWPC Decision Not Arbitrary
To justify the exemption of a distressed establishment from effects of wage
orders, the NWPC requires the applicant, if a stock corporation like petitioners,
to prove that its accumulated losses impaired its paid-up capital by at least 25
percent in the last full accounting period preceding the application 27 or the
effectivity of the order. 28 In the case at bar, it is undisputed that during the
relevant accounting period, NALCO, ALCO and PWC sustained capital
impairments of 1.89, 28.72, and 5.03 percent, respectively. 29 Clearly, it was only
ALCO which met the exemption standard. Hence, the NWPC did not commit
grave abuse of discretion in approving the application only of ALCO and in
denying those of petitioners. Indeed, the NWPC acted within the ambit of its
administrative prerogative when it set guidelines for the exemption of a
distressed establishment. Absent any grave abuse of discretion, NWPC's actions
will not be subject to judicial review. 30 Accordingly, we deem the appealed
Decisions to be consistent with law.
WHEREFORE, the petition is hereby DISMISSED. The assailed Decisions are
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
CAGAYAN SUGAR MILLING COMPANY, petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ,
SR., and CARSUMCO EMPLOYEES UNION, respondents.
PUNO, J.:
In this petition for certiorari, petitioner CAGAYAN SUGAR MILLING COMPANY
(CARSUMCO) impugns the October 8, 1996 Decision of the Secretary of Labor,
dismissing its appeal and upholding the Order of Regional Director Ricardo S.
Martinez, Sr. finding petitioner guilty of violating Regional Wage Order No. RO2-
02.
The facts: On November 16, 1993, Regional Wage Order No. RO2-02 1 was
issued by the Regional Tripartite Wage and Productivity Board, Regional Office
No. II of the Department of Labor and Employment (DOLE). It provided, inter
alia, that:
Sec. 1. Upon effectivity of this Wage Order, the statutory minimum wage rates
applicable to workers and employees in the private sector in Region II shall be
increased as follows:
xxx xxx xxx
1.2 P 14.00 per day . . . Cagayan
xxx xxx xxx
On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office
examined the books of petitioner to determine its compliance with the wage
order. They found that petitioner violated the wage order as it did not
implement an across the board increase in the salary of its employees.
At the hearing at the DOLE Regional Office for the alleged violation, petitioner
maintained that it complied with Wage Order No. RO2-02 as it paid the
mandated increase in the minimum wage.
In an Order dated December 16, 1994, public respondent Regional Director
Ricardo S. Martinez, Sr. ruled that petitioner violated Wage Order RO2-02 by
failing to implement an across the board increase in the salary of its employees.
He ordered petitioner to pay the deficiency in the salary of its employees in the
total amount of P555,133.41.
On January 6, 1995, petitioner appealed to public respondent Labor Secretary
Leonardo A. Quisumbing. On the same date, the Regional Wage Board issued
Wage Order No. RO2-02-A, 2 amending the earlier wage order, thus:
Sec. 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity
of this Wage Order, the workers and employees in the private sector in Region 2
shall receive an across the board wage increase as follows:
xxx xxx xxx
1.2 P14.00 per day . . . Cagayan
xxx xxx xxx
Sec. 2. This amendment is curative in nature and shall retroact to the date of the
effectivity of Wage Order No. RO2-02.
On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and
affirmed the Order of Regional Director Martinez, Sr. Petitioner's motion for
reconsideration was likewise denied. 3
On February 12, 1997, private respondent CARSUMCO EMPLOYEES UNION
moved for execution of the December 16, 1994 Order. Regional Director
Martinet, Sr. granted the motion and issued the writ of execution. On March 4,
1997, petitioner moved for reconsideration to set aside the writ of execution.
On March 5, the DOLE regional sheriff served on petitioner a notice of
garnishment of its account with the Far East Bank and Trust Company. On March
10, the sheriff seized petitioner's dump truck and scheduled its public sale on
March 20, 1997.
Hence, this petition, with a prayer for the issuance of a temporary restraining
order (TRO).
On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing
the writ of execution. 4 On July 16, upon petitioner's motion, we amended the
TRO by also enjoining respondents from enforcing the Decision of the Secretary
of Labor and conducting further proceedings until further orders from this
Court. 5
In the case at bar, petitioner contends that:
I
WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN
VIOLATION OF THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF
PETITIONER'S RIGHT TO DUE PROCESS OF LAW.
II
WAGE ORDER NO. RO2-02 CLEARLY PROVIDED FOR THE FIXING OF A
STATUTORY MINIMUM WAGE RATE AND NOT AN ACROSS THE BOARD INCREASE
IN WAGES.
III
THE DECISION OF THE SECRETARY OF LABOR AND EMPLOYMENT IS NULL AND
VOID FOR LACK OF ANY LEGAL BASIS.
The petition has merit.
Wage Order No. RO2-02, passed on November 16, 1993, provided for an
increase in the statutory minimum wage rates for Region II. More than a year
later, or on January 6, 1995, the Regional Board passed Wage Order RO2-02-A
amending the earlier wage order and providing instead for an across the board
increase in wages of employees in Region II, retroactive to the date of effectivity
of Wage Order RO2-02.
Petitioner assails the validity of Wage Order RO2-02-A on the ground that it was
passed without the required public consultation and newspaper publication.
Thus, petitioner claims that public respondent Labor Secretary Quisumbing
abused his discretion in upholding the validity of said wage order.
We agree.
Article 123 of the Labor Code provides:
Art. 123. Wage Order. Whenever conditions in the region so warrant, the
Regional Board shall investigate and study all pertinent facts, and, based on the
standards and criteria herein prescribed, shall proceed to determine whether a
Wage Order should be issued. Any such Wage Order shall take effect after (15)
days from its complete publication in at least one (1) newspaper of general
circulation in the region.
In the performance of its wage-determining functions, the Regional Board shall
conduct public hearings/consultations giving notices to employees' and
employers' groups and other interested parties.
xxx xxx xxx
The record shows that there was no prior public consultation or hearings and
newspaper publication insofar as Wage Order No. RO2-02-A is concerned. In
fact, these allegations were not denied by public respondents in their Comment.
Public respondents' position is that there was no need to comply with the legal
requirements of consultation and newspaper publication as Wage order No.
RO2-02-A merely clarified the ambiguous provision of the original wage order.
We are not persuaded.
To begin with, there was no ambiguity in the provision of Wage Order RO2-02 as
it provided in clear and categorical terms for an increase in statutory minimum
wage of workers in the region. Hence, the subsequent passage of RO2-02-A
providing instead for an across the board increase in wages did not clarify the
earlier Order but amended the same. In truth, it changed the essence of the
original Order. In passing RO2-02-A without going through the process of public
consultation and hearings, the Regional Board deprived petitioner and other
employers of due process as they were not given the opportunity to ventilate
their positions regarding the proposed wage increase. In wage-fixing, factors
such as fair return of capital invested, the need to induce industries to invest in
the countryside and the capacity of employers to pay are, among others, taken
into consideration. 6 Hence, our legislators provide for the creation of Regional
Tripartite Boards composed of representatives from the government, the
workers and the employers to determine the appropriate wage rates per region
to ensure that all sides are heard. For the same reason, Article 123 of the Labor
Code also provides that in the performance of their wage-determining
functions, the Regional Board shall conduct public hearings and consultations,
giving notices to interested parties. Moreover, it mandates that the Wage Order
shall take effect only after publication in a newspaper of general circulation in
the region. It is a fundamental rule, borne out of a sense of fairness, that the
public is first notified of a law or wage order-before it can be held liable for
violation thereof. In the case at bar, it is indisputable that there was no public
consultation or hearing conducted prior to the passage of RO2-02-A. Neither
was it published in a newspaper of general circulation as attested in the
February 3, 1995 minutes of the meeting of the Regional Wage Board that the
non-publication was by consensus of all the board members. 7 Hence, RO2-02-A
must be struck down for violation of Article 123 of the Labor Code.
Considering that RO2-02-A is invalid, the next issue to settle is whether
petitioner could be held liable under the original wage order, RO2-02.
Public respondents insist that despite the wording of Wage Order RO2-02
providing for a statutory increase in minimum wage, the real intention of the
Regional Board was to provide for an across the board increase. Hence, they
urge that petitioner is liable for merely providing an increase in the statutory
minimum wage rates of its employees.
The contention is absurd. Petitioner clearly complied with Wage Order RO2-02
which provided for an increase in statutory minimum wage rates for employees
in Region II. It is not just to expect petitioner to interpret Wage RO2-02 to mean
that it granted an across the board increase as such interpretation is not
sustained by its text. Indeed, the Regional Wage Board had to amend Wage
Order RO2-02 to clarify this alleged intent.
In sum, we hold that RO2-02-A is invalid for lack of public consultations and
hearings and non-publication in a newspaper of general circulation, in violation
of Article 123 of the Labor Code. We likewise find that public respondent
Secretary of Labor committed grave abuse of discretion in upholding the
findings of Regional Director Ricardo S. Martinez, Sr. that petitioner violated
Wage Order RO2-02.
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Secretary of
Labor, dated October 8, 1996, is set aside for lack of merit.
SO ORDERED.
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and
ANTONIO V. BALINANG,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and
METROPOLITAN BANK and TRUST COMPANY, respondents.
Gilbert P. Lorenzo for petitioners.
Marcial G. dela Fuente for private respondents.
VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company
Employees Union-ALU-TUCP (MBTCEU) and its president, Antonio V. Balinang,
raise the issue of whether or not the implementation by the Metropolitan Bank
and Trust Company of Republic Act No. 6727, mandating an increase in pay of
P25 per day for certain employees in the private sector, created a distortion that
would require an adjustment under said law in the wages of the latter's other
various groups of employees.
On 25 May 1989, the bank entered into a collective bargaining agreement with
the MBTCEU, granting a monthly P900 wage increase effective 01 January 1989,
P600 wage increase 01 January 1990, and P200 wage increase effective 01
January 1991. The MBTCEU had also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900
increase but the bank had adamantly refused to accede thereto. Consequently,
only regular employees as of 01 January 1989 were given the increase to the
exclusion of probationary employees.
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to
rationalize wage policy determination be establishing the mechanism and
proper standards thereof, . . . fixing new wage rates, providing wage incentives
for industrial dispersal to the countryside, and for other purposes," took effect.
Its provisions, pertinent to this case, state:
Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of
all workers and employees in the private sector, whether agricultural or non-
agricultural, shall be increased by twenty-five pesos (P25) per day, . . .: Provided,
That those already receiving above the minimum wage rates up to one hundred
pesos(P100.00) shall also receive an increase of twenty-five pesos (P25.00) per
day, . . .
xxx xxx xxx
(d) If expressly provided for and agreed upon in the collective bargaining
agreements, all increase in the daily basic wage rates granted by the employers
three (3) months before the effectivity of this Act shall be credited as
compliance with the increases in the wage rates prescribed
herein, provided that, where such increases are less than the prescribed
increases in the wage rates under this Act, the employer shall pay the
difference. Such increase shall not include anniversary wage increases, merit
wage increase and those resulting from the regularization or promotion of
employees.
Where the application of the increases in the wage rates under this Section
results in distortions as defined under existing laws in the wage structure within
an establishment and gives rise to a dispute therein, such dispute shall first be
settled voluntarily between the parties and in the event of a deadlock, the same
shall be finally resolved through compulsory arbitration by the regional
branches of the National Labor Relations Commission (NLRC) having jurisdiction
over the workplace.
It shall be mandatory for the NLRC to conduct continous hearings and decide
any dispute arising under this Section within twenty (20) calendar days from the
time said dispute is formally submitted to it for arbitration. The pendency of a
dispute arising from a wage distortion shall not in any way delay the
applicability of the increase in the wage rates prescribed under this Section.
Pursuant to the above provisions, the bank gave the P25 increase per day, or
P750 a month, to its probationary employees and to those who had been
promoted to regular or permanent status before 01 July 1989 but whose daily
rate was P100 and below. The bank refused to give the same increase to its
regular employees who were receiving more than P100 per day and recipients
of the P900 CBA increase.
Contending that the bank's implementation of Republic Act 6727 resulted in the
categorization of the employees into (a) the probationary employees as of 30
June 1989 and regular employees receiving P100 or less a day who had been
promoted to permanent or regular status before 01 July 1989, and (b) the
regular employees as of 01 July 1989, whose pay was over P100 a day, and that,
between the two groups, there emerged a substantially reduced salary gap, the
MBTCEU sought from the bank the correction of the alleged distortion in pay. In
order to avert an impeding strike, the bank petitioned the Secretary of Labor to
assume jurisdiction over the case or to certify the same to the National Labor
Relations Commission (NLRC) under Article 263 (g) of the Labor Code. 1The
parties ultimately agreed to refer the issue for compulsory arbitration to the
NLRC.
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05
February 1991, the labor arbiter disregard with the bank's contention that the
increase in its implementation of Republic Act 6727 did not constitute a
distortion because "only 143 employees or 6.8% of the bank's population of a
total of 2,108 regular employees" benefited. He stressed that "it is not
necessary that a big number of wage earners within a company be benefited by
the mandatory increase before a wage distortion may be considered to have
taken place," it being enough, he said, that such increase "result(s) in the severe
contraction of an intentional quantitative difference in wage between employee
groups."
The labor arbiter concluded that since the "intentional quantitative difference"
in wage or salary rates between and among groups of employees is not based
purely on skills or length of service but also on "other logical bases of
differentiation, a P900.00 wage gap intentionally provided in a collective
bargaining agreement as a quantitative difference in wage between those who
WERE regular employees as of January 1, 1989 and those who WERE NOT as of
that date, is definitely a logical basis of differentiation (that) deserves protection
from any distorting statutory wage increase." Otherwise, he added, "a minimum
wage statute that seek to uplift the economic condition of labor would itself
destroy the mechanism of collective bargaining which, with perceived stability,
has been labor's constitutional and regular source of wage increase for so long a
time now." Thus, since the "subjective quantitative difference" between wage
rates had been reduced from P900.00 to barely P150.00, correction of the wage
distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727
should be made.
The labor arbiter disposed of the case, thus:
WHEREFORE, premises considered, the respondent is hereby directed to restore
to complainants and their members the Nine Hundred (P900.00) Pesos CBA
wage gap they used to enjoy over non-regular employees as of January 1, 1989
by granting them a Seven Hundred Fifty (P750.00) Pesos monthly increase
effective July 1, 1989.
SO ORDERED. 2
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by
a vote of 2 to 1, reversed the decision of the Labor Arbiter. Speaking, through
Commissioners Rustico L. Diokno and Domingo H. Zapanta, the NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is
characterized by intentional quantitative differences among employee groups
determined or fixed on the basis of skills, length of service, or other logical basis
of differentiation and such differences or distinction are obliterated (In Re:
Labor Dispute at the Bank of the Philippine Islands, NCMB-RB-7-11-096-89,
Secretary of Labor and Employment, February 18, 1991).
As applied in this case, We noted that in the new wage salary structure, the
wage gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were
maintained. While there is a noticeable decrease in the wage gap between
levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps
between said levels is not significant as to obliterate or result in severe
contraction of the intentional quantitative differences in salary rates between
the employees groups. For this reason, the basis requirement for a wage in this
case. Moreover, there is nothing in the law which would justify an across-the-
board adjustment of P750.00 as ordered by the labor Arbiter.
WHEREFORE, premises considered, the appealed decision is hereby set aside
and a new judgment is hereby entered, dismissing the complaint for lack of
merit.
SO ORDERED. 3
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
There may not be an obliteration nor elimination of said quantitative
distinction/difference aforecited but clearly there is a contraction. Would such
contraction be severe as to warrant the necessary correction sanctioned by the
law in point, RA 6727? It is may considered view that the quantitative intended
distinction in pay between the two groups of workers in respondent company
was contracted by more than fifty (50%) per cent or in particular by more or less
eighty-three (83%) per cent hence, there is no doubt that there is an evident
severe contraction resulting in the complained of wage distortion.
Nonetheless, the award of P750.00 per month to all of herein individual
complainants as ordered by the Labor Arbiter below, to my mind is not the most
equitable remedy at bar, for the same would be an across the board increase
which is not the intention of RA 6727. For that matter, herein complainants
cannot by right claim for the whole amount of P750.00 a month or P25.00 per
day granted to the workers covered by the said law in the sense that they are
not covered by the said increase mandated by RA 6727. They are only entitled
to the relief granted by said law by way of correction of the pay scale in case of
distortion in wages by reason thereof.
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on
21 May 1991 by the Regional Tripartite Wages and Productivity Commission for
correction of pay scale structures in case of wage distortion as in the case at bar
which is:
Minimum Wage = % x Prescribed = Distortion
Increased Adjustment
Actual Salary
would be the most equitable and fair under the circumstances obtaining in this
case.
For this very reason, I register my dissent from the majority opinion and opt for
the modification of the Labor Arbiter's decision as afore-discussed. 4
The MBTCEU filed a motion for reconsideration of the decision of the NLRC;
having been denied, the MBTCEU and its president filed the instant petition
for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a)
"to acknowledge the existence of a wage distortion in the wage or salary rates
between and among the employee groups of the respondent bank as a result of
the bank's partial implementation" of Republic Act 6727 and (b) to give due
course to its claim for an across-the-board P25 increase under Republic Act No.
6727. 5
We agree with the Solicitor General that the petition is impressed with merit. 6
The term "wage distortion", under the Rules Implementing Republic Act 6727, is
defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage
rates results in the elimination or severe contradiction of intentional
quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical bases of
differentiation.
The issue of whether or not a wage distortion exists as a consequence of the
grant of a wage increase to certain employees, we agree, is, by and large, a
question of fact the determination of which is the statutory function of the
NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the
evaluation of the sufficiency of the evidence upon which the labor official's
findings rest. 8 As such, factual findings of the NLRC are generally accorded not
only respect but also finality provided that its decision are supported by
substantial evidence and devoid of any taint of unfairness of
arbitrariness. 9 When, however, the members of the same labor tribunal are not
in accord on those aspects of a case, as in this case, this Court is well cautioned
not to be as so conscious in passing upon the sufficiency of the evidence, let
alone the conclusions derived therefrom.
In this case, the majority of the members of the NLRC, as well as its dissenting
member, agree that there is a wage distortion arising from the bank's
implementation of the P25 wage increase; they do differ, however, on the
extent of the distortion that can warrant the adoption of corrective measures
required by law.
The definition of "wage distortion," 10 aforequoted, shows that such distortion
can so exist when, as a result of an increase in the prescribed wage rate, an
"elimination or severe contraction of intentional quantitative differences in
wage or salary rates" would occur "between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical bases of
differentiation." In mandating an adjustment, the law did not require that there
be an elimination or total abrogation of quantitative wage or salary differences;
a severe contraction thereof is enough. As has been aptly observed by Presiding
Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction
between personnel groupings comes close to eighty-three (83%), which cannot, minimum wage of all workers and employees in the private sector, subject to
by any stretch of imagination, be considered less than severe. certain conditions.

The "intentional quantitative differences" in wage among employees of the In implementation of the law, private respondent Del Monte Philippines, Inc.
bank has been set by the CBA to about P900 per month as of 01 January 1989. It gave a P25.00/day increase to the P54.00/day wages of its temporary
is intentional as it has been arrived at through the collective bargaining process employees or "broilers." Because the regular employees, members of petitioner
to which the parties are thereby concluded. 11 The Solicitor General, in union, who were then receiving P100.80 a day were not granted a similar
recommending the grant of due course to the petition, has correctly increase, they complained to the management of private respondent.
emphasized that the intention of the parties, whether the benefits under a
collective bargaining agreement should be equated with those granted by law or
On February 14, 1990, the parties executed a Memorandum Agreement
not, unless there are compelling reasons otherwise, must prevail and be given
wherein private respondent, "in positive response to the union's
effect. 12
representations and notwithstanding that it has no legal or contractual
obligation," granted the members of petitioner union a P10.00/day wage
In keeping then with the intendment of the law and the agreement of the increase effective January 1, 1990, subject to the latter's right to claim
parties themselves, along with the often repeated rule that all doubts in the P15.00/day as balance, through compulsory arbitration. 2
interpretation and implementation of labor laws should be resolved in favor of
labor, 13 we must approximate an acceptable quantitative difference between
On June 5, 1990, petitioners (Associated Labor Union-TUCP, representing its
and among the CBA agreed work levels. We, however, do not subscribe to the
members, DMPIEU-ALU-TUCP, Local 302 and Geronimo de los Santos) filed a
labor arbiter's exacting prescription in correcting the wage distortion. Like the
complaint against private respondent in the National Labor Relations
majority of the members of the NLRC, we are also of the view that giving the
Commission (NLRC) Regional Arbitration Branch X in Cagayan de Oro City. They
employees an across-the-board increase of P750 may not be conducive to the
alleged that a wage distortion 3had been created by the grant to its temporary
policy of encouraging "employers to grant wage and allowance increases to
employees of a P25.00/day salary increase under Republic Act No. 6727, thereby
their employees higher than the minimum rates of increases prescribed by
reducing to P21.80 from the previous P46.80, the difference in salaries between
statute or administrative regulation," particularly in this case where both
the regular employees (herein petitioners) and the temporary employees.
Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the
Court, through Associate Justice Florentino Feliciano, also pointed out in Apex
Mining Company, Inc. v. NLRC: 14 On November 27, 1990, the Labor Arbiter, Noel Augusto S. Miranda, dismissed
the complaint for lack of merit. He found no wage distortion in view of a series
of salary increases which respondent had granted to petitioners
. . . . (T)o compel employers simply to add on legislated increases in salaries or
vis-a-vis the temporary employees, as shown by the following table:
allowances without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would be counter-productive so far as Pay of Union Pay of Temporary Difference
securing the interests of labor is concerned. . . . Members Employees

We find the formula suggested then by Commissioner Bonto-Perez, which has A. Prior to July 1, 1989 P100.80/day P54.00/day P46.80
also been the standard considered by the regional Tripartite Wages and
Productivity Commission for the correction of pay scale structures in cases of B. Effective July 1, 1989 P100.80/day P79.00/day P21.80 (Under R.A. No. 6727
wage distortion, 15 to well be the appropriate measure to balance the respective giving P25.00/day
contentions of the parties in this instance. We also view it as being just and increase to the tempo-
equitable. rary employees)

WHEREFORE, finding merit in the instant petition for certiorari, the same is C. Effective Sept. 1, 1989 P115.80/day P79.00/day P36.80
GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET ASIDE and (Under CBA giving
the decision of the labor arbiter is REINSTATED subject to the MODIFICATION P15.00/day increase to
that the wage distortion in question be corrected in accordance with the the union members)
formula expressed in the dissenting opinion of Presiding Commissioner Edna
Bonto-Perez. This decision is immediately executory.
D. Effective Jan. 1, 1990 P125.80/day P79.00/day P46.80
(Under Agreement on
SO ORDERED. Feb. 14, 1990 giving
P10.00/day increase
ASSOCIATED LABOR UNIONS-TUCP representing its members, DMPIEU-ALU- to the union members)
TUCP, LOCAL 302 and/or GERONIMO DE LOS SANTOS, petitioners,
vs. E. Effective Sept. 1, 1990 P140.80/day P79.00/day P61.80
THE HON. NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ATTY. (Under CBA giving
NOEL AUGUSTO S. MAGBANUA in his capacity as Labor Arbiter, and DEL P15.00/day increase
MONTE PHILIPPINES, INC., respondents. to the union members)

Seno, Mendoza & Associates for petitioners. On appeal the NLRC affirmed the Labor Arbiter's findings and denied petitioners'
motion for reconsideration. Hence this petition.
Nuevas & Nuevas Law Offices for private respondent.
Petitioners contend that the increases mandated by the parties' Collective
Bargaining Agreement and the voluntary agreement dated February 14, 1990
should not be considered as having corrected the wage distortion, since
employee benefits derived from law are exclusive, distinct, and separate from
MENDOZA, J.:
those obtained through negotiation and agreement.

This is a special civil action of certiorari to set aside the decision and resolution
dated June 22, 1992 and September 14, 1992 respectively of the National Labor
Relations Commission (Fifth Division). 1
The antecedent facts are as follows:
On July 1, 1989, Republic Act No. 6727, otherwise known as the Wage
Rationalization Act, took effect, granting a P25.00/day increase in the statutory
The contention has no merit.
Art. 124 of the Labor Code, as amended by Republic Act No. 6727, expressly
provides that where the application of any prescribed wage increase by virtue of
a law or wage order issued by any Regional Board results in distortions of the
wage structure within an establishment, the employer and the union shall
negotiate to correct the distortions. The law recognizes, therefore, the validity
of negotiated wage increases to correct wage distortions. The legislative intent
is to encourage the parties to seek solution to the problem of wage distortions
through voluntary negotiation or arbitration, rather than strikes, lockouts, or
other concerted activities of the employees or management. 4 Recognition and
validation of wage increases given by employers either unilaterally or as a result
of collective bargaining negotiations for the purpose of correcting wage
distortions are in keeping with the public policy of encouraging employers to
grant wage and allowance increases to their employees which are higher than
the minimum rates of increases prescribed by statute or administrative
regulation. 5 As this Court stated in Apex Mining, Inc. v. NLRC: 6
To compel employers simply to add on legislated increases in salary or
allowances without regard to what is already paid, would be to penalize
employers who grant their workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would be counterproductive so far as
securing the interest of labor is concerned.
Thus in Cardona v. NLRC, 7 it was held that there was no wage distortion where
the employer made salary adjustments in terms of restructing of benefits and
allowances and there was an increase pursuant to the CBA.
There is thus, to use the language of the law, no "effective obliterat[ion of] the
distinction embodied in [private respondent's] wage structure based on skills,
length of service, or other logical basis of differentiation" in this case. For it is
undisputed that the difference in wages between petitioners and the temporary
employees is now even greater than it used to be prior to the grant of the
P25.00/day increase to the latter pay pursuant to Republic Act No. 6727.
Finally, whether or not a wage distortion exists by reason of the grant of a wage
increase to certain employees is essentially a question of fact. In this case, the
findings of the Labor Arbiter, affirmed by the NLRC, that no wage distortion
exists being based on substantial evidence, are entitled to respect and finality. 8
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SANDIGAN NG
MANGGAGAWANG PILIPINO, represented by RANULFO PEDRERA,
President, respondents.
Gerardo C. Olaguer for petitioner.
Antonio Billiones, Sr. and Antonio Jolejole for private respondent.
FELICIANO, J.:
Respondent Sandigan ng Manggagawang Pilipino ("Sandigan") filed before the
Labor Arbiter a claim for Emergency Cost of Living Allowance ("ECOLA")
differential against petitioner Apex Mining Company, Inc. ("Apex") alleging that
Apex had paid its employees in its Maco, Davao del Norte operations, between
1 November 1954 until 28 March 1985, an aggregate cumulative daily ECOLA of
only P15.00 which was P2.00 below the cumulative minimum ECOLA of P17.00
(for non-agricultural workers) established under Wage Order No. 6; and that
petitioner had belatedly granted the additional P2.00 starting on 29 March 1985
only.
Apex denied having failed to comply with Wage Order No. 6, contending that it
had, by previous agreement, incorporated the alleged P2.00 deficiency into the
basic salary of its employees. In turn, Sandigan denies that such an agreement
had been made, but conceded that a P2.00 increase in basic salary had been
made by Apex, in compliance with a provision of the Collective Bargaining
Agreement ("CBA") then in force between Apex andSandigan, and not in
fulfillment of Apex's obligation under Wage Order No. 6. Sandigan pointed out
that Wage Order No. 6 had taken effect on 1 November 1984, several months
after the P2.00 had been integrated by Apex into the basic salary of its
employees.
In a supplemental memorandum, Apex reiterated that the daily salary increase
of P2.00 provided for in the then current CBA, to take effect on 1 February 1984,
had been subsequently credited as partial compliance with the P5.00 increment
mandated by Wage Order No. 5 (which took effect on 16 June 1984). Thus,
Apex, in compliance with Wage Order No. 5, accordingly increased the daily
ECOLA of its workers by P3.00 only (from P9.00 to P12.00), or P2.00 less than
the legislated ECOLA increase of P5.00 (which would have increased the total
daily ECOLA from P9.00 to P14.00). Petitioner Apex added that the integration
of P2.00 allowance into the basic salary provided for in the CBA had been
conformed to by Vicente Arniego, National President of Sandigan, and that in
any event, Wage Order No. 5 had itself authorized such integration. Since
petitioner Apex had integrated P2.00 (out of the P5.00) ECOLA provided for in
Wage Order No. 5, when Apex complied with the additional ECOLA increase
mandated by Wage Order No. 6, the resulting figure for the total or cumulative
ECOLA paid by Apex appeared to be only P15.00, until one took into account the
P2.00 (out of the P5.00 ECOLA increase mandated by Wage Order No. 5)
integrated into the employees' basic salary. Finally, petitioner Apex explained, it
had granted members of Sandigan an additional P2.00 effective 29 March 1985
not as an admission that it had previously failed to pay something legally due,
but only as a measure to diffuse the tense atmosphere between management
and the union created by the misunderstanding over the ostensible (as
distinguished from the real) total increase paid by petitioner Apex to its
employees.
In a decision dated 19 May 1987, the Labor Arbiter held that the wage increase
given in accordance with the CBA could not be credited as compliance with
increases mandated in the Wage Orders, and ordered petitioner Apex to pay
respondent Sandigan the claimed ECOLA differential of P2.00 for the period
from 1 November 1984 until 28 March 1985.
On appeal, the National Labor Relations Commission ("NLRC") affirmed the
Labor Arbiter's ruling.
There is no dispute that petitioner Apex, as the Labor Arbiter had found out, had
paid a P2.00 wage increase effective on 1 February 1984. There is also no
question that Apex raised the ECOLA of its workers by P3.00 starting on the
effectivity date of Wage Order No. 6 on November 1984. The question to be
resolved is whether or not Apex complied with the increases mandated by Wage
Orders Nos. 5 and 6. Resolution of this issue in turn hinges on the question of
whether or not the P2.00 per day increase in basic salary effective starting on 1
February 1984 granted by petitioner Apex pursuant to the CBA, was lawfully
credited towards compliance with increases in ECOLA required under Wage
Orders Nos. 5 and 6.
1. The P2.00 increase integrated in the basic salary of Apex's, employees,
effective on and after 1 February 1984, was concededly given under the
provisions of the CBA. Section 4 of Article VI of the CBA provided as follows:
It is understood that the grant of these general increases shall be as part of any
increase in basic pay and/or allowance that may hereafter be decreed or
imposed by law.
Both Wage Order No. 5 and Wage Order No. 6 expressly allowed the crediting of
increases in wages or allowances granted under collective bargaining
agreements towards compliance with increases in ECOLA requirements
prescribed by those Wage Orders. Section 7 o f Wage Order No. 5 provided as
follows:
All increases in wages and/or allowances granted by employers between
February 1, 1984 and the effectivity of this order [16 June 1984] shall be credited
as compliance with the minimum wage and allowance adjustments prescribed
herein . . .
Such increases shall not include anniversary wage increases provided in
collective bargaining agreements unless the agreements expressly provide
otherwise.
xxx xxx xxx
(Emphasis and brackets supplied)
Section 4 of Wage Order No. 6 had very similar language:
All increases in wages and/or allowances granted by employers between June
17, 1984 and the effectivity of this order [November 1, 1984] shall be credited as
compliance with the minimum wage and allowance adjustments prescribed
herein, provided that where the increases are less than the applicable amount
provided in this order, the employer shall pay the difference. Such increases
shall not include anniversary wage increases provided in collective bargaining
agreements unless the agreements expressly provide otherwise.
This Section shall not apply to merit wage increases and those resulting from the
regularization or promotion of employees. (Emphasis and brackets supplied)
It is important to note that the creditability provisions in Wage Orders Nos. 5
and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are
grounded in an important public policy. That public policy may be seen to be
the encouragement of employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. To obliterate the creditability provisions in the Wage
Orders through interpretation or otherwise, and to compel employers simply to
add on legislated increases in salaries or allowances without regard to what is
already being paid, would be to penalize employers who grant their workers
more than the statutorily prescribed minimum rates of increases. Clearly, this
would be counter-productive so far as securing the interests of labor is
concerned. The creditability provisions in the Wage Orders prevent the
penalizing of employers who are industry leaders and who do not wait for
statutorily prescribed increases in salary or allowances and pay their workers
more than what the law or regulations require.
2. Sandigan, however, argues that to consider the P2.00 increase in basic salary
effective 1 February 1984 provided by the CBA as compliance with the
requirements of Wage Orders Nos. 5 and 6, would be to violate Article 100 of
the Labor Code as well as Section 6 of the Rules Implementing Wage Order No.
6. These provisions read, respectively:
Art. 100. Prohibition against elimination or diminution of benefits Nothing in
(Book Three Conditions of Employment) shall be construed to eliminate or in
any way diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this Code. (Emphasis supplied)
Sec. 6. Non-diminution of benefits. The statutory minimum wage rates shall
be exclusive of whatever supplements and other benefits the workers
are enjoying without cost at the time of the effectivity of this Order. (Emphasis
supplied)
Clearly, the prohibition against elimination or diminution of benefits set out in
Article 100 of the Labor Code is specifically concerned with benefits already
enjoyed at the time of the promulgation of the Labor Code. Article 100 does not,
in other words, purport to apply to situations arising after the promulgation
date of the Labor Code. Section 6 of the Rules Implementing Wage Order No. 6
relates to "supplements and other benefits" which employees are already
"enjoying without cost at the time of the effectivity of [Wage] Order [No. 6]."
Such benefits which employees are already enjoying "without cost" could not,
under Section 6, suddenly be ascribed monetary value so as to offset or diminish
increases in the minimum wage rates prescribed by statute. Clearly, once more,
Section 6 does not relate to the problem at hand.
3. Sandigan further contends that the 1 February 1984 P2.00 increase in basic
salary was actually an "anniversary wage increase," and therefore not creditable
under Section 7 of Wage Order No. 5 and under Section 4 of Wage Order No. 6.
The P2.00 increase was given by petitioner Apex under Section 3, Rule VI of the
CBA which reads as follows:
Sec. 3. The COMPANY agrees to grant general wage increases to all employees
within bargaining unit as follows:
a) Two Pesos (P2.00) general increase per day upon the effectivity of this
Agreement (February 1, 1984);
b) One Peso and Fifty Centavos (P1.50) general increase per day effective on the
first anniversary date of this Agreement (February 1, 1985);
c) One Peso and Fifty Centavos (P1.50) general increase per day effective on the
second anniversary date of this Agreement (February 1, 1986). 1 (Emphasis
supplied)
It appears clear to the Court from an inspection of the above-quoted Section 3
that the P2.00 increase effective on 1 February 1984 was distinguishable from
the two (2) increases of P1.50 each, the first being effective on the first
anniversary date of the CBA (1 February 1985) and the second being effective on
the second anniversary date (1 February 1986). In other words, the two (2)
increases of 1.50 each, one being effective on 1 February 1985 and the second
effective on 1 February 1986, were precisely the non-creditable "anniversary
wage increases." Even if it be assumed, however, that the 1 February 1984
P2.00 increase were regarded (improperly) as an "anniversary wage increase"
still that P2.00 increase would be creditable towards the statutorily mandated
increases. For Wage Orders Nos. 5 and 6 themselves allowed crediting of
"anniversary wage increases" stipulated in a CBA towards statutory
increases, if the CBA itself (as here) expressly allowed such crediting. Section 4,
Article VI of the CBA, quoted earlier, authorized the crediting of "general
increases" towards statutorily mandated increases in basic pay or allowance. At
the same time, Section 3 of Article VI of the CBA, quoted above, described the
two (2) anniversary wage increases of P1.50 each, and the one-time P2.00
increase, as each constituting a "general increase."
4. What petitioner Apex did may perhaps be most economically presented in the
following tabular form:
ECOLA Increases Statutorily Mandated
by Wage Orders Nos. 4, 5, and 6
(For non-agricultural workers outside
Metro Manila)
Wage Mandatory Cumulated Apparent Actual Actual
Order Increase Increase Cumulated Cumulated Differential
No. (P0.00) (0.00) Increase 2 Increase 3 (0.00)
(P0.00) (P0.00)
4 9 9 9 9 0
5 5 14 12 14 0
6 3 17 15 17 0
The respondent Sandigan did not question the fact that petitioner Apex was in
compliance with the requirements of Wage Order No. 4.
In respect of Wage Order No. 5, Apex credited the P2.00 increase in basic salary,
effective 1 February 1984, towards compliance with the statutorily prescribed
ECOLA increase of P5.00. Thus, the apparent cumulated increase in ECOLA, as
shown in Apex's books, was only P12.00. However, the actual increases the
composite of basic salary and ECOLA aggregated P14.00. Since such crediting
was expressly allowed under Wage Order No. 5, it follows that petitioner Apex
was in compliance with Wage Order No. 5. No differential was therefore due
thereunder.
When Wage Order No. 6 was promulgated, it prescribed an increase of P3.00 in
ECOLA. Apex paid this mandatory increase and denominated all of it as ECOLA.
Thus, the apparent cumulated increase was P15.00. Since, however, Apex had
previously increased the basic salary by P2.00 effective 1 February 1984, the
aggregate actual increase (in basic salary plus ECOLA) was P17.00, the same
total or cumulated increase contemplated by Wage Orders Nos. 5 and 6. Thus,
again, Apex was actually in compliance with the requirements of Wage Order
No. 6, with the result that no differential was actually due from it.
It remains only to note that Section 7 of Wage Order No. 5 and section 4 of
Wage Order No. 6 expressly authorized the crediting of all the increases "in
wages" or "allowances." Thus, the fact that Apex had denominated the P2.00
increase effective 1 February 1984, as an increase in basic salary, rather than in
ECOLA, made no legal difference so far as concerns the creditability of such
increase. Indeed, integration of the P2.00 into the basic salary of the employees
was more beneficial to them than granting the P2.00 as part of their ECOLA: the
integration increased the base wage for purposes of computation of such items
as overtime and premium pay, fringe benefits and maternity pay. In fact, the
Implementing Rules of Wage Order No. 5, and Wage Order No. 6
itself, 4 expressly authorized increases in basic salary in lieu of increases in
ECOLA, provided the amounts thereof were not less than the amounts required
by the Wage Orders.
5. Lastly, Sandigan invokes Filipino Pipe Workers Union (NLU) v. Batario,
Jr., 5 where the Court, through its Third Division, made the broad statement that
statutory wage increases are to be considered separate from increases granted
through the medium of CBAs.
In Filipino Pipe Workers, the NLRC ordered the inclusion in its award in favor of
the union of a wage increase of P3.00 per day mandated by Wage Order Nos. 2
and 3, which took effect after the finality of the Labor Arbiter's decision but
pending its execution. In sustaining the award of the NLRC, the Court, through
former Chief Justice Fernan, said:
In his Comment on the petition, the Solicitor General stated that the said P3.00
a day increase was made pursuant to Wage Orders Nos. 2 and 3, which took
effect after the finality of the Labor Arbiter's decision but pending its execution.
A common section found in both Wage Orders Nos. 2 and 3, as well as in the
subsequent Wage Orders Nos. 5 and 6 uniformly provides that all increases
and/or allowances granted by employers within a specified period "shall be
credited as compliance with the minimum wage and allowance adjustments
prescribed herein, provided that where the increases are less than the
applicable amount provided in this Order, the employer shall pay the
difference. Such increases shall not include anniversary wage increases provided
in collective bargaining agreementsunless the agreement expressly provide
otherwise." (Emphasis in the original)
We interpret the above section to mean that every grant of daily increase in
statutory minimum wage rates and living allowance must be considered as
independent, separate or apart from the wage increases in the collective
bargaining agreement and must be integrated into the salary scale of the
employees to the end that the desired rates decreed by the National Wages
Council are attained. 6(Emphasis supplied)
It is apparent from the foregoing that the issue of creditability of an increase in
basic salary or allowance given pursuant to a CBA towards compliance with a
statutorily prescribed increase in emergency cost of living allowances (ECOLA)
was not at all involved and that the Court was not striking down the creditability
provisions in Wage Orders Nos. 2. 3, 5 and 6. All that the NLRC was saying was
that a wage increase which had come into effect after the Labor Arbiter's
decision could be included in the award and execution for the aggregate
amounts due obtained. In fact, the above underscored paragraph was
entirely obiter in character.
Petitioner Apex having lawfully credited the P2.00 increase in basic salary
towards compliance of the increase in ECOLA prescribed by Wage Orders Nos. 5
and 6, it follows that respondent Sandigan's ,claim to a differential in ECOLA
lacks basis in fact and in law.
ACCORDINGLY, the Court Resolved to GRANT the Petition for Certiorari. The
Decision of the NLRC in Case No. 2915-MC-XI-86, dated 9 September 1988, and
its Resolution dated 28 October 1988, denying petitioner's motion for
reconsideration, are hereby SET ASIDE and ANNULLED. No pronouncement as to
costs.
SO ORDERED.
METRO TRANSIT ORGANIZATION, INC., petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, Second
Division; EDNA BONTO-PEREZ, Presiding Commissioner; DOMINGO H.
ZAPANTA, Commissioner; ROGELIO I. RAYAZA, Commissioner; and THE
SUPERVISORY EMPLOYEES ASSOCIATION OF METRO (SEAM), respondents.
FELICIANO, J.:
In this Petition for Certiorari, petitioner Metro Transit Organization, Inc.
("Metro") asks us to set aside the Decision and Resolution of the National Labor
Relations Commission ("NLRC") dated 30 March and 22 June 1994 respectively
in NLRC-NCR-CA No. 000042-92 ordering it to pay its supervisory employees
amounts representing (i) a demanded wage increase based on company practice
and (ii) a correction or adjustment of an underpayment of an annual wage
increase granted in the collective bargaining agreement (CBA) between Metro
and herein private respondent Supervisory Employees Association Metro
("SEAM").
Petitioner Metro is the operator and manager of the Light Railway Transit
System in Metro Manila. It employs close to 1,000 rank-and-file and over 200
supervisory employees. Private respondent SEAM is a union composed of
supervisory employees of petitioner Metro. In May 1989, SEAM was certified as
the sole bargaining unit for the supervisory employees of Metro.
On 1 December 1989, the first collective bargaining agreement between
petitioner Metro and private respondent SEAM took effect. 1 Prior to December
1989, Metro had a CBA only with its rank-and-file employees. During the period
when no CBA governed the terms and conditions of employment between
Metro and its supervisory employees, whenever rank-and-file employees were
paid a statutorily mandated salary increase, supervisory employees were, as a
matter of practice, also paid the same amount plus P50.00.
On 17 April 1989, Metro paid its rank-and-file employees a salary increase of
P500.00 per month in accordance with the terms of their CBA. 2 Metro,
however, did not extend a corresponding salary increase to its supervisory
employees.
On 1 December 1989, Metro, in compliance with its CBA with SEAM, paid its
supervisory employees a salary increase of P800.00 per month.
On 17 April 1990, Metro paid its rank-and-file and supervisory employees a
P600.00 monthly increase. The payment thus made to rank-and-file employees
was in compliance with the second year salary increase provided in their CBA.
On the other hand, the P600.00 per month paid to supervisory employees
was advanced from their second year salary increase, provided in their CBA, of
P1,000.00 per month effective 1 December 1990. On 1 December 1990, Metro
paid its supervisory employees the remaining balance of P400.00 per month in
addition to the P600.00 a month it had earlier started to pay.
The third year salary increases due rank-and-file and supervisory employees
were paid on 17 April and 1 December 1991, respectively, as scheduled in their
corresponding CBAs.
On 24 March 1992, private respondent SEAM filed a Notice of Strike before the
National Conciliation and Mediation Board ("NCMB") charging petitioner Metro
with (a) discrimination in terms of wages; (b) underpayment of salary increase
per CBA for 1990 and/or adjustment of salaries for correction of
disparity/inequity in pay with rank-and-file employees and (c) harassment and
demotion of union officers. Conciliation and mediation efforts before the NCMB
failed.
On 23 June 1992, acting on a petition filed by Metro, the Secretary of Labor
assumed jurisdiction over the labor dispute and certified the same to public
respondent NLRC for same compulsory arbitration.
On 30 March 1994, the NLRC rendered its decision the dispositive portion of
which reads:
WHEREFORE, the Company is hereby ordered to pay the amount of P550.00 per
month wage increase effective April 17, 1989 and onwards to each supervisory
employee and likewise pay the sum of P600.00 per month representing
underpayment in the correction of inequities in pay or underpayment of CBA
wage increase effective December 1, 1990 and onwards.
The charge of harassment and demotion was dismissed for "lack of basis."
On 22 June 1994, NLRC denied the motion for reconsideration filed by Metro.
The instant Petition for Certiorari was filed on 14 July 1994 accompanied by a
prayer for issuance of a temporary restraining order to enjoin public
respondents from enforcing their award.
On 31 August 1994, the Court, after an oral hearing, issued a Resolution
encouraging petitioner Metro and private respondent SEAM to vigorously and
earnestly exercise their best efforts to reach an amicable and mutually
acceptable settlement of their claims and counterclaims. In the meantime, the
disputants were to maintain thestatus quo, in particular, private respondent
SEAM and public respondent NLRC were to refrain from seeking and granting,
respectively, the issuance of a writ of execution in respect of the decision of the
NLRC.
On 29 and 30 September 1994, petitioner Metro and private respondent SEAM
respectively informed the Court that their efforts amicably to settle their
dispute had failed. Cognizant of (a) the huge disparity between the financial
capability of Metro and the amount awarded to SEAM, 3 (b) the essential public
services being rendered by the parties and (c) in the interest of avoiding any
disruption of these basic services, the Court reiterated its Order of 31 August
1994 enjoining respondents SEAM and the NLRC from seeking and granting a
writ of execution until further orders from this Court.
The principal issues, to the mind of the Court, are: (a) whether or not a wage
distortion existed in respect of the salaries of the rank-and-file and supervisory
employees of petitioner Metro; and (b) assuming a wage distortion existed,
whether or not it has been corrected by petitioner Metro in accordance with
law. 4
Private respondent SEAM vigorously asserts that an already existing wage
distortion in respect of the salaries of rank-and-file and supervisory employees
was aggravated when Metro, on 17 April 1989, paid its rank-and-file employees
their CBA-stipulated P500.00 increase but did not grant a corresponding
increase (and a premium) to its supervisory employees. Furthermore, the
advance by Metro of the P600.00 on 17 April 1990 only "artificially" reduced the
existing distortion. The advance was, according to SEAM, extended merely to
give the appearance of a reduction of the existing distortion in pay between the
rank-and-file and supervisory employees. On 1 December 1990, when
supervisory employees were paid the balance of P400.00 the distortion existing
prior to 17 April 1990 was reinstated. Finally, SEAM claims, on top of the salary
increases granted to supervisory employees by their CBA, they should be paid
the increase corresponding to the P500.00 increase given rank-and-file
employees not only for 1989 but also onwards.
Upon the other hand, petitioner Metro firmly maintains that its practice of
giving higher increases to supervisory employees whenever rank-and-file
employees were given increases, should not be regarded as compulsory. The
grant of a corresponding increase to supervisory employees is a prerogative or
discretionary act of generosity by management considering there is no law or
company policy mandating it. Moreover, SEAM is estopped, Metro asserts, from
claiming such an increase. Despite its awareness of the P500.00 increase paid to
rank-and-file employees (pursuant to their CBA) on 17 April 1989, SEAM did not
negotiate in SEAM's own CBA for the retroactive payment or pushing forward
the effectivity date of its first increase of P800.00 to 17 April 1989. Finally, the
demanded P550.00 wage increase should be deemed, according to Metro,
included in the P800.00 salary increase paid supervisory employees on 1
December 1989.
In respect of the issue of underpayment, petitioner Metro denies that it
underpaid its supervisory employees. Metro maintains (a) that the first increase
of P800.00 effective 1 December 1989 as provided in its CBA with SEAM is
higher than the P500.00 increase paid its rank-and-file employees; (b) that
assuming arguendo a distortion in pay still existed, the same was corrected
when the majority of the supervisory employees, in a referendum, voted to
accept the advance payment of P600.00 out of the scheduled CBA increase of
P1,000.00 effective 1 December 1990; (c) it was actually SEAM who had
proposed the advance payment of P600.00 from their scheduled second year
increase of P1,000.00; (d) SEAM had further agreed that, come 1 December
1990, only the balance of P400.00 would have to be paid to supervisory
employees; and (e) payment by Metro of the balance of P400.00 on 1 December
1990 was merely its compliance with the scheduled second year increase
aligned with Metro's subsequent agreement with SEAM to advance the
effectivity date of the first P600.00.
In its Comment, the Office of the Solicitor General argues, rather cursorily, that
public respondent NLRC did not commit any grave abuse of discretion and that
its findings of fact must be accorded respect and finality.
I
In respect of the issue of existence of a wage distortion, the Court finds and so
holds that a wage distortion did occur when the salaries of rank-and-file
employees were increased by P500.00 per month on 17 April 1989 as stipulated
in their CBA and no corresponding increase was paid to the supervisory
employees. This fact was admitted by Atty. Virgilio C. Abejo, counsel for
petitioner Metro, during the oral hearing and Metro is bound by that
admission. 5
In addition, Atty. Abejo explained that his client, as a matter of practice, granted
its supervisory employees a salary increase (and a premium) whenever it paid its
rank-and-file employees a salary increase. 6
The defense of management prerogative or discretion invoked by petitioner
Metro in asserting that it is not obligated to grant supervisory employees a
salary increase whenever rank-and-file employee are granted an increase is, in
this case, unavailing.
Basically, Metro's argument is that such increase was merely a bonus given to
supervisory employees. 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 something
given in addition to what is ordinarily received by or strictly due to the
recipient. 7
The general rule is that a bonus is a gratuity or an act of liberality which the
recipient has no right to demand as a matter of right. 8 A bonus, however, is a
demandable or enforceable obligation when it is made part of the wage or
salary or compensation of the employee. 9 Whether or not a bonus forms part of
wages depends upon the circumstances and conditions for its payment. If it is
additional compensation which the employer promised and agreed to give
without any conditions imposed for its payment, such as success of business or
greater production or output, then it is part of the wage.But if it is paid only if
profits are realized or if a certain level of productivity is achieved, it can not be
considered part of the wage. Where it is not payable to all but only to some
employees and only when their labor becomes more efficient or more
productive, it is only an inducement for efficiency, a prize therefor, not a part of
the wage. 10
In the case at bar, the increase of P550.00 sought by private respondent SEAM
was neither an inducement nor was it contingent on (a) the success of the
business of petitioner Metro; or (b) the increased production or work output of
the company or (c) the realization of profits. The demand for this increase was
based on a company practice, admitted by Metro, of granting a salary increase
(and a premium) to supervisory employees whenever rank-and-file employees
were granted a salary increase. That those increases were precisely designed to
correct or minimize the wage distortion effects of increases given to rank-and-
file employees (under their CBA or under Wage Orders), highlights the fact that
those increases were part of the wage structure of supervisory employees. The
demanded increase therefore is not a bonus that is generally not demandable as
a matter of right. The demanded increase, in this instance, is an enforceable
obligation so far as the supervisory employees of Metro are concerned.
We conclude that the supervisory employees, who then (i.e., on 17 April 1989)
had, unlike the rank-and-file employees, no CBA governing the terms and
conditions of their employment, had the right to rely on the company practice
of unilaterally correcting the wage distortion effects of a salary increase given to
the rank-and-file employees, by giving the supervisory employees a
corresponding salary increase plus a premium. For reasons, however, shortly to
be stated in the disposition of the second issue, we hold that the P550.00
increase is demandable by SEAM only in respect of the period beginning 17 April
1989 and ending on 30 November 1989.
It is true enough that, in the present case, the wage distortion to be corrected
by the award of P550.00 increase for supervisory employees beginning 17 April
1989, was due to the time gap between the effectivity date (17 April 1989) of
the increase of P500.00 per month given to rank-and-file employees under their
CBA and the effectivity date (1 December 1989) of the P800.00 increase given to
supervisory employees under their own CBA. It is also true that had the P800.00
increase to supervisory employees been made retroactive to 17 April 1989 by an
appropriate synchronizing provision in the Metro-SEAM CBA, no wage distortion
would have arisen. The fact, however, remains that Metro and SEAM did not
agree upon such remedy in their CBA and that the CBA increase given to rank-
and-file employees did produce a distortion effect by obliterating or drastically
reducing the previous gap between the salary rates of rank-and-file and
supervisory employees. The point to be stressed is that considering the prior
practice of petitioner Metro, its supervisory employees had the right to expect
rectification of that distortion.
II
We turn to the issue of whether the wage distortion referred to above was
effectively rectified by petitioner Metro in accordance with law.
This issue arises because, as already noted, the NLRC in its 30 March 1994
Decision decreed that Metro shall pay the "P550.00 per month wage increase
effective April 17, 1989 and onwards" and similarly ordered the payment of
P600.00 per month which it found to have been underpaid "effective December
1, 1990 and onwards."
It is helpful to recall the general principles laid down in National Federation of
Labor v. National Labor Relations Commission, 11 where the Court discussed at
some length the relatively obscure concept of wage distortion. Those principles
may be summarily stated in the following manner:
(a) The concept of wage distortion assumes an existing grouping
CBA or classification
Effectivity Wage Increase Wage Increase Gap
of employees which establishes distinctions among such employees on some
Increase
relevant or legitimate basis. This classification is reflected Date
in a deferring wage Rank and File Supervisory (PHP)
rate for each of the existing classes of employees. Employees Employees
(PHP) (PHP)
(b) Wage distortions have often been the result of government-decreed
increases in minimum wages. There are, Year I
however, 4/17/89
other causes of wage 550.00 12 550.00 50
distortions, like the merger of two (2) companies (with differing classifications of
12/1/89 - 0.00 800.00 850
employees and different wage rates) where the surviving company absorbs all
the employees of the dissolved corporation. Year
(InII the present
4/17/90Metro case, as 600.00 13 600.00 850
already noted, the wage distortion arose because the effectivity dates of wage
12/1/90 - 0.00 400.00 1250
increases given to each of the two (2) classes of employees (rank-and-file and
supervisory) had not been synchronized in their
Yearrespective
III CBAs.)
4/17/91 750.00 550.00 500
12/1/91 - 0.00 1,000.00 1500
(c) Should a wage distortion exist, there is no legal requirement that, in the
rectification of that distortion by re-adjustment of the wage rates of the
differing classes of employees, the gap which had previously or historically
existed be restored in precisely the same amount. In other words, correction of
a wage distortion may be done by re-establishing a substantial orsignificant gap We consider the difference of P1,500.00 per month a significant differential that
(as distinguished from the historical gap) between the wage rates of the clearly distinguishes, on the basis of pay scales, a rank-and-file employee from a
differing classes of employees. supervisory employee.

(d) The re-establishment of a significant difference in wage rates may be the
result of resort to grievance procedures or collective bargaining negotiations.
In the present case, the Court must confront the task of determining whether
the CBA forged by Metro and SEAM had, along with the award of P550.00 per
month from 17 April 1989 to 1 December 1989, referred to in Part I above,
adequately corrected the wage distortion.
After careful examination of the provisions of the CBA between Metro and
SEAM, in particular the provisions relating to anniversary salary increases every
1 December beginning 1989 to 1991, we believe and so hold that together with
the increase of P550.00 referred to in Part I above, those provisions will have
adequately rectified the wage distortion which arose in respect of rank-and-file
and supervisory employees.
The CBA of supervisory employees granted them an aggregate monthly increase
of P2,800.00 over three (3) years:
Table I
Applying the above increases to the actual salaries being received by rank-and-
file and supervisory employees of Metro, we find that indeed the distortion
caused by the CBA-stipulated wage increase granted rank-and-file employees on
17 April 1989 was rectified by 1 December 1991.
The record before us does not include the actual amounts of the rank-and-file
and supervisory employees' salaries. In its position paper before the NCMB,
however, private respondent SEAM stated:
The highest salary of some rank-and-file employees at present (before adding
the CBA increase) is P4,790.00 which is higher that some supervisors with [a]
salary of P3,980.00. 14
Taking the above SEAM figures and adding to them the respective CBA-
stipulated increases to the salary of thehighest paid rank-and-file employee and
to the lowest paid supervisory employee, plus the P550.00 in wage already held
due to all supervisory employees as of 17 April 1989, we find that the salary of
the lowest paid supervisory employee was, by 1 December 1991, P690.00 more
than the salary of the highest paid rank-and-file employee:

CBA Effectivity Table IV

Increase Date Amount

CBA Effectivity Wage of Wage of Gap
Year I 1-Dec-89 P800.00
Increase Date Rank and Supervisory (PHP)
Year II 1-Dec-90 P1,000.00
File Employees Employees
Year III 1-Dec-91 P1,000.00
(PHP) (PHP)
4,790.00 3980.00 (810.00) 15
Upon the other hand, the CBA of the rank-and-file employees granted them
monthly increases totalling P1,850.00
Year I also over three (3) years:
4/17/89 5,290.00 4,530.00 16 (760.00) 17
12/1/89 5,290.00 5330.00 40.00
Table II
Year II 4/17/90 5,890.00 5,930.00 18 40.00

CBA Effectivity Amount 12/1/90 5,890.00 6330.00 440.00

Increase Date Year III 4/17/91 6,640.00 6330.00 (310.00) 19

Year I 17-Apr-89 P500.00 12/1/91 6640.00 7,330.00 690.00

Year II 17-Apr-90 P600.00

Year III 17-Apr-91 P750.00
After all the above listed salary increases had become effective, the last being
on 1 December 1991, supervisory employees as a group were receiving P950.00
more per month than rank-and-file employees as a group. Adding to this figure
the amount of P550.00 per month which we in Part I (supra) have held
petitioner Metro must pay, the increase in pay of supervisory employees would
be P1,500.00 more per month than the increases in pay of rank-and-file
employees:
The difference in monthly wage scales of P690.00 clearly and substantially
distinguishes, on the basis of pay, a rank-and-file employee from a supervisory
employee. 20 Since the above computation utilizes the salaries of highest paid
rank-and-file employee and the lowest paid supervisory employee, figures
supplied by SEAM, the differential of P690.00 represents merely
the minimum difference or gap that was restored or established once
implementation of the salary increases due to supervisory employees was
completed on 1 December 1991. That differential would, of course, be
significantly greater for average rank-and-file employees receiving a salary less
thanP4,790.00 and for average supervisory employees receiving a salary greater
than P3,980.00.

Table III
We turn to the related issue of whether the first year salary increase of P800.00
per month given to supervisory employees under their CBA covered or took the
place of the P550.00 increase we ruled is due them in Part I (supra) by virtue of
the previous unilateral practice of Metro.
Metro maintains that the P800.00 monthly salary increase paid to supervisory
employees starting on 1 December 1989, should be deemed to cover or include
the P550.00 in wage increase demanded by SEAM and held by us to be due to
SEAM from 17 April 1989 to 1 December 1989. In other words, Metro argues
that the wage distortion should be regarded as cured by the CBA-mandated
increase of P800.00 starting 1 December 1989.
We note that the CBA of Metro and SEAM did not contain any provision
stipulating that the P550.00 monthly increase would be credited against the
P800.00 increase. There was no crediting provision apparently because the
P550.00 monthly increase had not been provided for in the CBA with SEAM.
Even so, we agree with petitioner Metro's position. The issue of whether
increases in wages essential for correcting wage distortions may be credited
against CBA-mandated increases, is not an issue of first impression. In National
Federation of Labor v. National Labor Relations Commission, 21 the Court
rejected the argument of the NLRC that wage increases resulting from collective
bargaining negotiations should not be regarded as constituting compliance with
the direction to correct wage distortions arising from the effectivity of Wage
Orders. In National Federation of Labor, the Court, after quoting the following
excerpt from Apex Mining Company, Inc. v. National Labor Relations
Commission 22
It is important to note that the creditability provisions of Wage Orders Nos. 5
and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are
grounded in an important public policy. The public policy may be seen to be
the encouragement of employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. To obliterate the creditability provisions in Wage
Orders through interpretation or otherwise, and to compel employers simply to
add legislated increases in salaries or allowances without regard to what is
already being paid, would be to penalize employers who grant their workers
more than the statutorily prescribed minimum rates of increases. Clearly, this
would be counter-productive so far as securing the interests of labor is
concerned. The creditability provisions in the Wage Orders prevent the
penalizing of employers who are industry leaders and who do not wait for
statutorily prescribed increases in salary or allowances and pay their workers
more than what the law or regulations require. 23 (Emphasis partly in the original
and partly supplied)
said:
We believe that the same public policy requires recognition and validation, as it
were, of wage increases given by employers either unilaterally or as a result of
collective bargaining negotiations, in the effort to correct wage
distortions. 24 (Emphasis supplied)
In the instant case, the CBA-stipulated increase of P800.00 a month was
intended as the countervailing increase for supervisory employees, the rank-
and-file employees having already received their own increase approximately
eight (8) months earlier. In other words, the wage distortion in the present case
arose not because of a government-decreed increase in minimum wages or
because Metro simply refused to treat its supervisory employees, differently
from its rank-and-file workers, but rather because of a failure to synchronize the
CBA-stipulated increases for rank-and-file and for supervisory employees.
Moreover, as more than once pointed out above, the P800.00 monthly increase
given to supervisory employees should be taken in conjunction with the P550.00
month increase already awarded to supervisory employees under Part I above.
When these are taken together, the wage distortion which occurred on 17 April
1989 was completely and permanently corrected. There isno legal basis for
requiring Metro to pay not only the P800.00 month increase, but also, on top
thereof, the P550.00 monthly increase to supervisory employees, after 1
December 1989 and forever after.
From the foregoing, we conclude that beginning 1 December 1989, by the grant
of the award of P550.00 to supervisory employees in Part I (supra) and by the
operation of the Metro-SEAM CBA, the wage distortion which occurred on 17
April 1989 had been corrected. By 1 December 1991, a substantial gap or
differential had been re-established between the salaries of the rank-and-file
and supervisory employees of petitioner Metro. It was, therefore, grievous
abuse of discretion for the NLRC to disregard such rectification and to rule that
petitioner Metro was liable to its supervisory employees for P550.00 monthly
increase beyond 1 December 1989 and "onwards." That distortion, as already
pointed out, lasted only from 17 April 1989 up to 30 November 1989, since the
following day, 1 December 1989, the CBA of Metro and SEAM went into effect.
Similarly, we believe that the NLRC committed a grave abuse of discretion in
requiring Metro to pay the sum of P600.00 per month from 1 December
1990 and onwards, i.e., forever after. It will be recalled that Metro, upon
request of SEAM, had agreed that of the P1,000.00 monthly increase originally
scheduled to be effective under the CBA on 1 December 1990, P600.00 would
take effect instead on 17 April 1990. Metro agreed to do so precisely to remedy
the distortion that would otherwise have resulted (see Tables III and IV, supra)
and so, starting 17 April 1990, supervisory employees received a monthly
increase of P600.00; and starting 1 December 1990, they started receiving an
additional P400.00 or the total stipulated CBA increase of P1,000.00 per month.
Again, for the same reasons set out earlier, we consider that these additional
payments of P600.00 per month to supervisory employees from 17 April 1990
up to 1 December 1990 should be deemed included in the P1,000.00 monthly
increase effective from 1 December 1990 and onwards. Compelling Metro to
pay, starting 1 December 1990, not only the P1,000.00 per month increase
stipulated in the CBA but also an additional P600.00 per month, amounts to
allowing unjust enrichment of supervisory employees at the expense of their
employer Metro.
Finally, the Court is aware of the existence of a job evaluation study prepared by
Resources Consultants International, aimed at re-examining the wage structure
of rank-and-file and supervisory employees of Metro. 25The decision we
promulgate today is without prejudice to higher wages which rank-and-file and
supervisory employees may be receiving by virtue of implementation of such
report.
ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby
GRANTED DUE COURSE, and the Decision and Resolution of the NLRC dated 30
March and 22 June 1994, respectively, in NLRC-NCR-CA No. 000042-92 are
hereby SET ASIDE. In place thereof, another Decision is hereby RENDERED
requiring petitioner Metro Transit Organization, Inc. to pay to each of its
supervisory employees the amount of Five Hundred Fifty Pesos (P550.00) for
each month or fraction of a month, embraced within the period from 17 April
1989 to 1 December 1989, plus legal interest (six percent [6%] per annum)
thereon computed from the various dates in 1989 when such amount should
have been paid during the aforementioned period. This Decision shall be
without prejudice to any increase of wages already being enjoyed by
supervisory employees at the time of promulgation hereof.
No pronouncement as to costs.
SO ORDERED.
COCOFED (Kalamansig) and/or CRISPIN ROSETE, petitioner,
vs.
HON. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor
and Employment and HON. MELENCIO Q. BALANAG, Director IV, DOLE,
Regional XII, Cotabato City, respondents.
RESOLUTION
ROMERO, J.:
Philippine Coconut Producers Federation operates petitioner COCOFED
(Kalamansig), a coconut plantation utilized as a demonstration farm for
replanting and/or training area for coconut farmers, located in Kalamansig,
Sultan Kudarat.
On November 15, 1988, a complaint inspection was conducted by the
Department of Labor and Employment, Region XII, Cotabato City in response to
complaints filed by two of petitioner's employees, Alex Edicto and Delia
Pahuwayan. The inspection revealed that petitioner was guilty of underpayment
of wages, emergency cost of living allowance (ECOLA) and 13th month pay.
Accordingly, notice of inspection results were issued: requiring petitioner to
effect restitution or correction within five (5) days from notice.
Summary investigations were conducted. During one of these hearings,
petitioner offered to increase the complainants wages to P45.00 per day but the
latter refused. Hence, the parties agreed to submit their respective position
papers and other documents necessary for the resolution of the case.
Petitioner submitted its position paper claiming that it should be classified as an
establishment with less than 30 employees and with a paid-up capital of
P500,000.00 or less as evidenced by the assessment of the municipal treasurer.
Moreover, complainants worked for less than eight hours, a minimum of four
and maximum of six. Hence, petitioner was justified in paying an amount less
than the statutory minimum wage.
Complainants manifested that since 1984, they were not receiving the statutory
minimum wage. They also averred that petitioner should not be categorized as
an establishment with paid-up capital of P50,000.00 or less inasmuch as it
erroneously based its claim on the value of its declared real property and not its
paid-up capital.
On November 13, 1989, petitioner filed a motion to conduct a time and motion
study to determine the fair and reasonable wage rates to be paid to
complainants.
On March 22, 1990, Director Melencio Q. Balanag of the DOLE Regional Office in
Cotabato City, issued a Compliance Order 1 ruling:
On the manifestation made by the respondent that workers were paid by results
and the former has complied with the minimum wage, we have noticed in the
payrolls for the period January 1985 to February 1988 submitted by the former
during summary investigation that said workers were not paid all the time on a
piece rate basis during paydays for three (3) years. Further, they showed that
the latter were paid on a weekly basis through a weekly payroll prepared
indicating therein the workers paid by results, the daily paid workers and a
monthly paid worker. It is noteworthy to mention that the respondent has no
permanent mode of payment to all its workers as evidenced by the payrolls and
other documents submitted during the hearing. This is contradictory to their
allegations that they are paying their workers on a piece rate basis since 1985.
Moreover, said documents confirmed the manifestation by the counsel of
complainants that the workers paid on a daily and monthly basis are receiving
below the statutory minimum wage.
xxx xxx xxx
WHEREFORE, premises considered, respondent COCOFED (Kalamansig) and/or
manager with address at Kalamansig, Sultan Kudarat, is ordered to pay the
Twenty One (21) workers their entitlements for underpayment of wages,
underpayment of ECOLA, and underpayment of 13th month pay in the total
amount of ONE HUNDRED TWENTY THREE THOUSAND FOUR HUNDRED SIXTEEN
AND 14/100 (P123,416.14), Philippine Currency, respectively indicated in Annex
"A" hereof within ten (10) days from receipt hereof. 2
Petitioner filed a motion for reconsideration claiming that serious errors were
committed in the findings of fact which would cause it grave and irreparable
damage or injury. This was denied for lack of merit in an Order 3 dated June 29,
1990 which, in part, said:
. . . A three (3) year actual payrolls from March 1985 to February 1989 showing
the daily actual payment made by the respondent to involved workers are
substantial evidence against the mere memorandum issued by the respondents
on the matter. Further, such payrolls submitted by respondents are not mere
summaries of daily efforts of workers but these are daily records showing
workers actual daily rate. 4
On July 30, 1990, petitioner appealed to the Secretary of Labor and
Employment. This was denied in the Order 5dated April 15, 1991 of public
respondent Undersecretary Cresenciano B. Trajano, holding that:
On the basis of the payrolls submitted by the respondent, we find that Regional
Director was correct in ruling that the complainants are daily paid workers.
While respondent claims the in 1985 these workers were paid on piece rate
basis still the payrolls show that from March 1985 to February 1989, the
complainants were paid on a daily basis. Granting that these workers were
indeed converted to piece-rate workers, said conversion is an outright violation
of the Labor Code. An employer cannot unilaterally decrease the salary being
given to the employees pursuant to Art. 100 of the Labor Code. What it has
voluntarily given cannot be unilaterally withdrawn. Besides, the implementing
rules are explicit to the effect that nothinzg therein shall justify an employer
from withdrawing or reducing benefits or supplements provided in existing
individual or collective agreement or employer practice or policy. (Oceanic
Phamacal Employees Union v. Hon. A. Inciong, G.R. No. L-50568, November 7,
1979)
Lastly, we find that respondent's claim that it falls within the category of
establishments with paid-up capital of P500,000.00 remains a bare allegation
without a scintilla of evidence to stand on. Obviously, the same is bereft of
merit.
WHEREFORE, the appeal filed by the respondent is hereby DENIED for lack of
merit. The Orders of the Director, Regional Office No. XII, dated June 29, 1990
and March 22, 1990 are AFFIRMED. 6
Hence, this petition.
On May 13, 1991, the Court issued a Temporary Restraining Order enjoining
respondents from implementing the Order dated April 15, 1981, March 22,
1990, and June 29, 1990, and June 29, 1990 in RO XII Case No. SK-C1-02088-06.
The Court further required petitioner to file a bond in the amount of
P10,000.00. 7
Petitioner alleges that public respondents committed grave abuse of discretion
in not categorizing it as an establishment with less than 30 employees and with
a paid up capital of P500,000.00 or less and in not finding that complainants are
piece rate workers or paid by results.
We find no grave abuse of discretion on the part of public respondent.
Petitioner alleges that it is an establishment with less than 30 employees. and a
paid-up Capital of P500,000.00 or less. There is no question that it employs only
twenty-one employees. Petitioner argues that to have a paid-up capital of
P500,000.00, it should have a subscribed capital of at least P2,000,000.00 and
authorized capital stock of P8,000,000.00. Petitioners total capital asset based
on an assessment from the Municipal Treasurer of Kalamansig and the receipts
of payment of its realty taxes is only P1,365,430.00. If categorized as such,
petitioner should pay the following wages:
Per W.O. No. 6
Effective
1 Nov. 1 May 1 Oct. 1 Jan.
1984 1987 1987 1988
b. Agriculture
Plantation 32.00 35.00 38.50 44.00
instead of the following rates used by public respondents:
Per W.O. No. 6
Effective
1 Nov. 1 May 1 Oct.
1984 1987 1987
b. Agriculture
Plantation 32.00 38.50 44.00 8
We are unable to agree with petitioner's submission. As correctly pointed out by
the Office of the Solicitor General:
The allegation of petitioner that it has capital assets of P1,365,430.00 to support
its position that it has a paid-up capitalization of less than P500,000.00 is totally
without basis. It is a basic accounting principle that the assets of a corporation
do not necessarily reflect its capitalization. In fact, in times of financial difficulty,
the assets of a corporation may be completely dissipated although its paid-up
capitalization may remain intact. The best evidence of its paid-up capitalization
would be its articles of incorporation together with the Treasurer's Affidavit
which petitioner seems to have conveniently overlooked. Consequently,
respondent Undersecretary correctly found said claim to be "a bare allegation
without a scintilla of evidence to stand on." 9
Petitioner likewise alleges that its employees are paid by result or are; piece rate
workers who work for less than eight hours, that is, a minimum of four and a
maximum of six. Thus, they should be paid a proportionate amount of the
applicable statutory minimum wage, thus: 10
Effective
1 Nov. 1 May 1 Oct. 1 Jan.
1984 1987 1987 1988
For 4 hours 16.00 17.50 19.35 22.00
For 6 hours 24.00 26.26 28.92 33.00 11
Petitioner would have us overturn the factual finding of public respondents that
its employees are daily paid workers. This we are unable to do for the payrolls
submitted by it support the latters' position. Findings of administrative agencies
which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but finality. 12 Moreover, there
is absolutely nothing in the records which show that petitioner's employees
worked for less than eight hours. Finally, there would have been no need for
petitioner to make an offer increasing the wage to P45.00 per day if
complainants were indeed piece rate workers, as it claimed and if their wages
were not underpaid, as found by public respondents.
WHEREFORE, the petition is DISMISSED and the Temporary Restraining Order
issued on May 13, 1991 is LIFTED.
SO ORDERED.
ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
HON. DIONISIO C. DELA SERNA, IN HIS CAPACITY AS UNDERSECRETARY OF
LABOR AND EMPLOYMENT; HON. LUNA C. PIEZAS IN HIS CAPACITY AS
DIRECTOR, NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND
EMPLOYMENT; and, ABOITIZ SHIPPING EMPLOYEES
ASSOCIATION, respondents.
Alejandro B. Cinco for petitioner.
Rogelio B. De Guzman for private respondent.
PADILLA, J.:
The principal issue in this special civil action for certiorari is whether the
respondent Regional Director, National Capital Region, Department of Labor and
Employment (Regional Director, for short) correctly assumed jurisdiction over
the money claims filed with him by the complainants (members of herein
private respondent).
Assailed specifically in this petition is the Order dated 9 February 1989 of the
respondent Undersecretary of Labor and Employment affirming the Order dated
13 October 1988 of the Regional Director, ordering petitioner company to pay
the seven hundred seventeen (717) complainants a total amount of
P1,350,828.00., or P1,884.00 each, representing underpayment of an allowance
of P2.00 per day, reckoned from 16 February 1982 to 15 February 1985.
The facts of the case, as found by respondent Undersecretary, are as follows:
. . . a complaint was filed by the Aboitiz Shipping Employees Association against
Aboitiz Shipping Corporation for non-compliance of the mandated minimum
wage rates and allowances pursuant to P.D. Nos. 1713, 1751, Wage Order Nos.
1, 2, 3, 4, 5 and 6. Accordingly, the Labor Regulation Officers of the Regional
Office a quo inspected the respondent's employment records.
On the other hand, the respondent filed a Motion to Dismiss contending that
the complainant-union has no legal capacity to sue because a representation
issue is still pending with Med-Arbiter Edgardo Cruz in LRD CASE NO. M-001-85.
Series of hearings were conducted whereby the Office a quo repeatedly directed
the respondent to present and submit all its pertinent papers/employment
records covered by the investigation. However, on several occasions, the
respondent failed to appear. Likewise, despite repeated notices, the respondent
failed to present any of the documents due for inspection evidencing correct
payments of salaries and allowances.
On December 28, 1987, the hearing officer submitted his report and
recommended for the payment to the union's members amounting to an
aggregate sum of P16,200,877.47.
On January 20, 1988, the Office a quo formally issued subpoena duces
tecum, requiring the presentation by the respondent of its employees' payrolls
and vouchers covering the period from February 16, 1982 to December 31,
1985. This, the respondent ignored. In lieu thereof, it filed a second Motion to
Dismiss alleging that on July 24, 1986, the parties entered into a compromise
agreement whereby they agreed that all cases filed against and by respondent
would be dropped and/or dismissed, including the above entitled case; that
pursuant to and by virtue of the compromise agreement, cases filed against the
Aboitiz Shipping Corporation and its officers were dropped and/or withdrawn
and/or dismissed; and that similarly, cases filed by Aboitiz Shipping Corporation
and its officers against the union and its officers were dropped, withdrawn
and/or dismissed.
In the subsequent hearing of February 16, 1988 however, the parties agreed
that on March 4, 1988, the respondent shall submit to the Office a quo the
required payrolls/vouchers for wages and salaries covering the period from
February 16, 1982 to December 31, 1985. On that date, the respondent again
failed to make good its commitment. Nevertheless, it agreed to submit the
payrolls of its Manila-based employees for the period from January 1982 to
December 1982. Together with the submission of the photocopies of the
payrolls of the Manila-based employees, the respondent also filed a
Manifestation of Compliance stating that the following should be taken into
consideration:
Annex 1. Which is a BWF/ISM Form No. 5 an advance notice dated October 1987
issued by the DOLE Regional Office No. 7 notifying respondent of their intent to
check payrolls etc. . . .
Annex 2. Which is the notice of inspection results no. 05598 dated October 23,
1987 stating that the respondent (company-wide payrolls, etc.) has no violation
insofar as wages, salaries, etc. are concerned as well as the benefits. Its
indicated in the CBA. . . .
Annex 3. Which is the certification of the ASEA Union President based in Cebu
City and the Union Vice President that company records inspected coveting the
period 1984-1987 were true correct and in order, and in compliance with the
Labor and Standard Laws;
Annex 4. Which is the existing CBA between the respondent and complainant
ASEA employees Union;
Annex 5. Which is the letter of Bureau of Working Conditions dated July 17,
1987 signed by Director Augusto Sanchez sustaining and validating respondent's
use of 314 as divisor in the computation of wages and COLA for land based
employees of respondent.
Again, on July 5, 1988, the respondent filed a supplemental Motion to Dismiss,
questioning this time the jurisdiction of the Office a quo. The motion alleged
that ". . . considering the complaint involves money claims, the original and
exclusive jurisdiction rests not before the Honorable Director but before the
labor Arbiter . . ."
xxx xxx xxx
Another hearing was conducted on August 17, 1988, whereby the respondent
was required to submit its payrolls for the year 1984. The respondent
manifested however, that its Motion to Dismiss be resolved first by the Office a
quo. Further, the respondent averred that the payroll for 1984 need not be
submitted, and thus moved for the resolution of this case based on the available
records and motions submitted.1
Subsequently, respondent Regional Director issued the now assailed Order
dated 13 October 1988, the dispositive portion of which reads:
WHEREFORE, premises considered, the Aboitiz Shipping Corporation is hereby
Ordered to pay the herein listed complainants the total amount of ONE MILLION
THREE HUNDRED FIFTY THOUSAND EIGHT HUNDRED TWENTY EIGHT and 00/100
PESOS (P1,350,828.00.) representing underpayment of daily allowance of TWO
(P2.00) PESOS per day reckoned from 16 February 1982 to 15 February 1985.
FURTHER, the Aboitiz Shipping Corporation is hereby Ordered to pay each and
every one of its employees the deficiency in allowance of two (P2.00) PESOS per
day from 16 February 1985 onward until this Order is fully complied with.2
On appeal to the Office of the Secretary of Labor and Employment, in which
petitioner questioned, among others, the jurisdiction of respondent Regional
Director over the instant claims, respondent Undersecretary issued the Order
dated 9 February 1989 dismissing petitioner's appeal and affirming the Order
dated 13 October 1988 of the respondent Director. The motion for
reconsideration of the order dated 9 February 1989 having been denied by
respondent Undersecretary in the Order dated 2 June 1989, petitioner
interposed this present petition.
Petitioner contends that it is the Labor Arbiter, not the Regional Director who
has jurisdiction over money claims, citing Article 217 of the Labor Code, and
invoking this Court's ruling in Zambales Base Metals, Inc. vs. Minister of Labor.3
We rule against petitioner's contention.
Pertinent to the issue at bar are Articles 129 and 217 of the Labor Code, as
amended by Sections 2 and 9 of Republic Act 6715 approved on 2 March 1989
which read as follows:
Article 129. Recovery of wages, simple money claims and other benefits. Upon
complaint of any interested party, the Regional Director of the Department of
Labor and Employment or any of the duly authorized hearing officers of the
Department is empowered, through summary proceeding and other monetary
claims and benefits, including legal interest, owing to an employee or person
employed in domestic or household service or househelper under this Code,
arising from employer-employee relations:Provided, that such complaint does
not include a claim for reinstatement: Provided, further That the aggregate
money claims of each employee of househelper do not exceed five thousand
pesos (P5,000.00). The Regional Director hearing officer shall decide to resolve
the complaint within thirty (30) calendar days from the date of the filing of the
same. Any sum thus recovered on behalf of any employee or househelper
pursuant to this Article shall be held in a special deposit account, and shall be
paid, on order of the Secretary of Labor and Employment or the Regional
Director directly to the employee or househelper concerned. Any such sum not
paid to the employee or househelper, because he cannot be located after
diligent and reasonable effort to locate him within a period of three (3) years,
shall be held as a special fund of the Department of Labor and Employment to
be used exclusively for the amelioration and benefit of workers.
Any decision or resolution of the Regional Director or hearing officer pursuant to
this provision may be appealed on the same grounds provided in Article 223 of
this Code, within five (5) calendar days from receipt of a copy of said decision or
resolution, to the National Labor Relations Commission which shall resolve the
appeal within ten (10) calendar days from the submission of the last pleading
required or allowed under its rules.
The Secretary of Labor and Employment or his duly authorized representative
may supervise the payment of unpaid wages and other monetary claims and
benefits, including legal interest, found owing to any employee or househelper
under this Code.
xxx xxx xxx
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after
the submission of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;
(5) Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
(6) Except claims for employees compensation, social security, medicare and
maternity benefits, all other claims arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00) whether or not accompanies
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
It should be pointed out that, following the ruling in Briad Agro vs. Dela Cerna,
and L.M. Camus Engineering vs.Secretary of Labor, 4 the above-cited
amendments, being curative in nature, have retroactive effect and, thus, find
application in the instant case.
Under the foregoing provisions of Articles 129 and 217 of the Labor Code, as
amended, the Regional Director is empowered, through summary proceeding
and after due notice, to hear and decide cases involving recovery of wages and
other monetary claims and benefits, including legal interest, provided the
following requisites are present, 5 to wit:
1) the claim is presented by an employee or person employed in domestic or
household service, or househelper;
2) the claim arises from employer-employee relations;
3) the claimant does not seek reinstatement; and
4) the aggregate money claim of each employee or househelper does not
exceed P5,000.00 (Art. 129, Labor Code, as amended by R.A. 6715).
In the absence of any of the requisites above enumerated, it is the Labor Arbiter
who shall have exclusive original jurisdiction over claims arising from employer-
employee relations, except claims for employees' compensation, social security,
medicare and maternity benefits, all these pursuant to Article 217 of the Labor
Code, particularly paragraph six (6) thereof.
This power of the Regional Directors qualified under R.A. 6715 is recognized in
the modificatory resolution dated 9 November 1989 in said Briad Agro vs. Dela
Cerna which modified the earlier decision therein dated 29 June 1989.6
In view of the enactment of R.A. 6715, and the modificatory resolution in
the Briad Agro case, the ruling inZambales Base Metals, Inc. vs. Minister of
Labor, supra, is no longer applicable.
In the case at bar, it is noted that in the Order dated 13 October 1988 of the
Regional Director, the latter foundeach of the seven hundred seventeen (717)
complainants entitled to a uniform amount of P1,884.00. (Rollo, pp. 11 7-131,).
All the other requisites for the exercise of the power of the Regional Director
under Article 129 of the Labor Code, as amended by R.A. 6715, are present. It
follows that the respondent Regional Director properly took cognizance of the
claims, subject of this petition.
To the petitioner's contention that it was denied due process of law as it was
not afforded time and opportunity to present its evidence, the records show
that on several occasions despite due notice, petitioner failed to either appear
at the scheduled hearings, or to present its employees' payrolls and vouchers
for wages and salaries, particularly, those covering the period from 16 February
1982 to 31 December 1985. Therefore, petitioner was not denied due process of
law.
We also do not agree with the petitioner's allegation that it was improper for
the respondent Regional Director to order in the questioned Order dated 13
October 1988, compliance with P.D. 1678 7 as the issue on the said decree was
never raised by private respondent in its complaint filed before the Regional
Director. While it may be true that P.D. 1678 is not one of the laws where non-
compliance therewith was complained of, still, the Regional Director correctly
acted in ordering petitioner to comply therewith, as he (Regional Director) has
such power under his visitorial and enforcement authority provided under
Article 128(a) of the Labor Code, which provides:
Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his
duly authorized representatives, including labor regulation officers, shall have
access to employers' records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or matter which may
be necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations issued
pursuant thereto.
Petitioner also claims that the complaint filed against it should have been
dismissed outright, considering the compromise agreement dated 24 July 1986,
which purportedly contains the agreement of the parties therein to dismiss the
cases filed by one against the other. 8
We find no merit in said contention, in the light of the Regional Director's
finding that the said agreement can not bind the complainant-union vis-a-vis the
instant claims, for the reason that it was entered into by one Mr. Elizardo
Manuel 9 in his personal capacity, one Luis M. Moro, Jr. representing Aboitiz
Shipping Corporation, and Atty. Luis D. Flores in his capacity as legal counsel of
ASEA-CLO, 10 which finding is supported by the records of the case before us.
Such records show that the compromise agreement primarily binds only the said
Mr. Manuel, and that, therefore, it has nothing to do with the rest of the other
complainant-union members.1wphi1 The said agreement 11reads:
COMPROMISE AGREEMENT
This Agreement, entered into by and among Mr. ELIZARDO MANUEL in his
personal capacity, LUIS M. MORO, JR. representing Aboitiz Shipping Corporation
and Atty. LUIS D. FLORES in his capacity as Legal Counsel of ASEA-CLO.
Based on a compromise agreement Mr. Elizardo Manuel is requesting Aboitiz
Shipping Corporation for payment of P70,000.00 in full settlement of all
monetary claims for back wages and benefits he has, including the settlement
decided by the NLRC which presently is under appeal.
For and in consideration of the above stated amount Mr. Elizardo Manuel and
Aboitiz Shipping Corporation mutually agree that:
Mr. Elizardo Manuel is deemed resigned from Aboitiz Shipping Corporation
upon payment of the above stated amount;
xxx xxx xxx
Aboitiz Shipping Corporation will furnish Mr. E. Manuel a certificate of good
moral character;
All pending cases as attested by our Legal Counsel that are related on filed by
E. Manuel against the Officers of Aboitiz Shipping Corporation and Aboitiz
Shipping Corporation itself will be immediately dropped;
Aboitiz Shipping Corporation also agrees to drop all pending cases related to
and filed against Mr. E. Manuel and Officers of the Union.
Done this 24th day of July, 1986 in Metro Manila, Philippines.
(SGD) (SGD)
ELIZARDO MANUEL LUIS M. MORO, JR.
(SGD)
ATTY. LUIS D, FLORES
Considering the terms of the said compromise agreement, we rule that said Mr.
Manuel shall be excluded from the list of complainants who shall receive money
awards from the petitioner.
Finally, petitioner Avers: that the award of P1,350,828.00. is without factual and
legal basis; that petitioner did not commit any labor standards violation
pursuant to the DOLE inspection results and the union certification to that
effect; and that 291 of the 717 complainants are non-employees of petitioner,
and that the other 136 of the said 717 commenced employment only after
February 1982. hence, not entitled to receive money awards. The foregoing
contentions being evidentiary in nature, we have to respect the factual findings
of public respondents regarding the above-cited petitioner's averments, the
long-settled rule being that factual findings of labor officials are, generally,
conclusive and binding on this Court when supported by substantial evidence. 12
WHEREFORE, the assailed Order dated 9 February 1989 of the respondent
Undersecretary of Labor and Employment affirming the Order dated 13 October
1988 of the Regional Director is hereby AFFIRMED, with the modification that
Mr. Elizardo Manuel shall be excluded from the list of complainants at bar who
are entitled to money awards of P1,884.00. each. Petition is DISMISSED.
SO ORDERED.
BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner,
vs.
THE HONORABLE MINISTER OF LABOR & EMPLOYMENT AND BROKENSHIRE
MEMORIAL HOSPITAL EMPLOYEES AND WORKER'S UNION-FFW Represented
by EDUARDO A. AFUAN, respondents.
Renato B. Pagatpatan for petitioner.
PARAS, J.:
This petition for review by certiorari seeks the annulment or modification of the
Order of public respondent Minister of Labor dated December 9, 1985 in a case
for non-compliance with Wage Order Nos. 5 and 6 docketed as ROXI-LSED Case
No. 14-85 which 1) denied petitioner's Motion for Reconsideration dated
February 3, 1986 and 2) affirmed the Order of Regional Director Eugenio I.
Sagmit, Jr., Regional Office No. XI Davao City, dated April 12, 1985, the
dispositive portion of which reads as follows:
WHEREFORE, premises considered, respondent Brokenshire Memorial Hospital,
Incorporated is hereby ordered to pay the above-named workers, through this
Office, within fifteen (15) days from receipt hereof, the total sum of TWO
HUNDRED EIGHTY- FOUR THOUSAND SIX HUNDRED TWENTY FIVE (P284,625.00)
PESOS representing their living allowance under Wage Order No. 5 covering the
period from October 16, 1984 to February 28, 1985 and under Wage Order No.
6 effective November 1, 1984 to February 28, 1985. Respondent is further
ordered to pay the employees who are likewise entitled to the claims here
presented, but whose names were inadvertently omitted in the list and
computation. (Rollo, p. 7)
Petitioner contends that the respondent Minister of Labor and Employment
acted without, or in excess of his jurisdiction or with grave abuse of discretion in
failing to hold:
A) That the Regional Director committed grave abuse of discretion in asserting
exclusive jurisdiction and in not certifying this case to the Arbitration Branch of
the National Labor Relations Commission for a full-blown hearing on the merits;
B) That the Regional Director erred in not ruling on the counterclaim raised by
the respondent (in the labor case, and now petitioner in this case);
C) That the Regional Director erred -in skirting the constitutional and legal issues
raised. (Rollo, p. 4)
This case originated from a complaint filed by private respondents against
petitioner on September 21, 1984 with the Regional Office of the MOLE, Region
XI, Davao City for non-compliance with the provisions of Wage Order No. 5.
After due healing the Regional Director rendered a decision dated November 16,
1984 in favor of private respondents. Judgment having become final and
executory, the Regional Director issued a Writ of Execution whereby some
movable properties of the hospital (petitioner herein) were levied upon and its
operating expenses kept with the bank were garnished. The levy and
garnishment were lifted when petitioner hospital paid the claim of the private
respondents (281 hospital employees) directly, in the total amount of
P163,047.50 covering the period from June 16 to October 15, 1984.
After making said payment, petitioner hospital failed to continue to comply with
Wage Order No. 5 and likewise, failed to comply with the new Wage Order No. 6
which took effect on November 1, 1984, prompting private respondents to file
against petitioner another complaint docketed as ROXI-LSED-14-85, which is
now the case at bar.
In its answer, petitioner raised the following affirmative defenses:
1) That the Regional Office of the Ministry of Labor did not acquire jurisdiction
over it for want of allegation that it has the capacity to be sued and
2) That Wage Order Nos. 5 and 6 are non-constitutional and therefore void.
Significantly petitioner never averred any counterclaim in its Answer.
After the complainants had filed their reply, petitioner filed a Motion for the
Certification of the case to the National Labor Relations Commission for a full-
blown hearing on the matter, including the counterclaim interposed that the
complainants had unpaid obligations with the Hospital which might be offset
with the latter's alleged obligation to the former.
Issues having been joined, the Regional Director rendered a decision on April 12,
1985 in favor of the complainants (private respondents herein) declaring that
petitioner (respondent therein) is estopped from questioning the acquisition of
jurisdiction because its appearance in the hearing is in itself submission to
jurisdiction and that this case is merely a continuance of a previous case where
the hospital already willingly paid its obligations to the workers on orders of the
Regional Office. On the matter of the constitutionality of the Wage Order Nos. 5
and 6, the Regional Director declared that only the court can declare a law or
order unconstitutional and until so declared by the court, the Office of the
Regional Director is duly bound to enforce the law or order.
Aggrieved, petitioner appealed to the Office of the Minister of Labor, which
dismissed the appeal for lack of merit. A motion for reconsideration was
likewise denied by said Office, giving rise to the instant petition reiterating the
issues earlier mentioned.
The crucial issue We are tasked to resolve is whether or not the Regional
Director has jurisdiction over money claims of workers concurrent with the
Labor Arbiter.
It is worthy of note that the instant case was deliberated upon by this Court at
the same time that Briad Agro Development Corporation v. de la Cerna, G.R. No.
82805 and L.M. Camus Engineering Corporation v. Hon. Secretary of Labor, et al.
G.R. No. 83225, promulgated on June 29,1989 and Maternity Children's Hospital
vs. Hon. Secretary of Labor, et al., G.R. No. 78909, promulgated 30 June 1989,
where deliberated upon; for all three (3) cases raised the same issue of
jurisdiction of the Regional Director of the Department of Labor to pass upon
money claims of employees. Hence, we will be referring to these cases, most
especially the case of Briad Agro which, as will be seen later, was reconsidered
by the court.
Contrary to the claim of petitioners that the original and exclusive jurisdiction
over said money claims is properly lodged in the Labor Arbiter (relying on the
case of Zambales Base Metals Inc. v. Minister of Labor, 146 SCRA 50) and the
Regional Director has no jurisdiction over workers' money claims, the Court in
the three (3) cases above-mentioned ruled that in view of the promulgation of
Executive Order No. 111, the ruling in the earlier case of Zambales Base Metals
is already abandoned. In accordance with the rulings in Briad Agro, L.M. Camus,
and Maternity Children's Hospital, the Regional Director exercises concurrent
jurisdiction with the Labor Arbiter over money claims. Thus,
. . . . Executive Order No. 111 is in the character of a curative law, that is to say,
it was intended to remedy a defect that, in the opinion of the legislative (the
incumbent Chief Executive in this case, in the exercise of her lawmaking power
under the Freedom Constitution) had attached to the provision subject of the
amendment. This is clear from the proviso: "The provisions of Article 217 to the
contrary notwithstanding . . ." Plainly, the amendment was meant to make both
the Secretary of Labor (or the various Regional Directors) and the Labor Arbiter
share jurisdiction. (Briad Agro Dev. Corp. v. Sec. of Labor, supra).
Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to
adj udicate money claims, provided there stillexists an employer-employee
relationship, and the findings of the regional office is not contested by the
employer concerned. (Maternity Children's Hospital v. Sec. of Labor, supra).
However, it is very significant to note, at this point, that the decision in the
consolidated cases of Briad Agro Development Corp. and L.M. Camus
Engineering Corp. was reconsidered and set aside by this Court in a Resolution
promulgated on November 9,1989. In view of the enactment of Republic Act No.
6715, approved on March 2, 1989, the Court found that reconsideration was
proper.
RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read as follows:
ART. 129. Recovery of wages, simple money claims and other benefits.Upon
complaint of any interested party, the Regional Director of the Department of
Labor and Employment or any of the duly authorized hearing officers of the
Department is empowered, through summary proceeding and after due notice,
to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits, including legal interest, owing to an employee or
person employed in domestic or household service or househelper under this
code, arising from employer-employee relations, Provided, That such complaint
does not include a claim for reinstatement; Provided, further, That the
aggregate money claims of each employee or househelper do not exceed five
thousand pesos (P5,000.00). The Regional Director or hearing officer shall
decide or resolve the complaint within thirty (30) calendar days from the date of
the filing of the same . . .
Any decision or resolution of the Regional Director or hearing officer pursuant to
this provision may be appealed on the same grounds provided in Article 223 of
this Code, within five (5) calendar days from 11 receipt of a copy of said decision
or resolution, to the National Labor Relations Commission which shall resolve
the appeal within ten (10) calendar days from the submission of the last
pleading required or allowed under its rules.
ART. 217. Jurisdiction of Labor Arbiters and the Commission. Except as
otherwise provided under this code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after
the submission of the case by the parties for decision without extension, even in
the absence of steno graphic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim of reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relation;
(5) Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
(6) Except claims for employees compensation, social security, medicare and
maternity benefits, all other claims arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount not exceeding five thousand pesos (P5,000.00), whether or not
accompanied with a claim for reinstatement.
It will be observed that what in fact conferred upon Regional Directors and
other hearing officers of the Department of Labor (aside from the Labor
Arbiters) adjudicative powers, i.e., the power to try and decide, or hear and
determine any claim brought before them for recovery of wages, simple money
claims, and other benefits, is Republic Act 6715, provided that the following
requisites concur, to wit:
1) The claim is presented by an employee or person employed in domestic or
household service, or househelper under the code;
2) The claimant, no longer being employed, does not seek reinstatement; and
3) The aggregate money claim of the employee or househelper does not exceed
five thousand pesos (P5,000.00).
In the absence of any of the three (3) requisites, the Labor Arbiters have
exclusive original jurisdiction over all claims arising from employer-employee
relations, other than claims for employee's compensation, social security,
medicare and maternity benefits.
We hereby adopt the view taken by Mr. Justice Andres Narvasa in his Separate
Opinion in the case of Briad Agro Dev. Corp., as reconsidered, a portion of which
reads:
In the resolution, therefore, of any question of jurisdiction over a money claim
arising from employer-employee relations, the first inquiry should be into
whether the employment relation does indeed still exist between the claimant
and the respondent.
If the relation no longer exists, and the claimant does not seek reinstatement,
the case is cognizable by the Labor Arbiter, not by the Regional Director. On the
other hand, if the employment relation still exists, or reinstatement is sought,
the next inquiry should be into the amount involved.
If the amount involved does not exceed P5,000.00, the Regional Director
undeniably has jurisdiction. But even if the amount of the claim exceeds
P5,000.00, the claim is not on that account necessary removed from the
Regional Director's competence. In respect thereof, he may still exercise the
visitorial and enforcement powers vested in him by Article 128 of the Labor
Code, as amended, supra; that is to say, he may still direct his labor regulations
officers or industrial safety engineers to inspect the employer's premises and
examine his records; and if the officers should find that there have been
violations of labor standards provisions, the Regional Director may, after due
notice and hearing, order compliance by the employer therewith and issue a
writ of execution to the appropriate authority for the enforcement thereof.
However, this power may not, to repeat, be exercised by him where the
employer contests the labor regulation officers' findings and raises issues which
cannot be resolved without considering evidentiary matters not verifiable in the
normal course of inspection. In such an event, the case will have to be referred
to the corresponding Labor Arbiter for adjudication, since it falls within the
latter's exclusive original jurisdiction.
Anent the other issue involved in the instant case, petitioner's contention that
the constitutionality of Wage Order Nos. 5 and 6 should be passed upon by the
National Labor Relations Commission, lacks merit. The Supreme Court is vested
by the Constitution with the power to ultimately declare a law unconstitutional.
Without such declaration, the assailed legislation remains operative and can be
the source of rights and duties especially so in the case at bar when petitioner
complied with Wage Order No. 5 by paying the claimants the total amount of
P163,047.50, representing the latter's minimum wage increases up to October
16, 1984, instead of questioning immediately at that stage before paying the
amount due, the validity of the order on grounds of constitutionality. The
Regional Director is plainly ,without the authority to declare an order or law
unconstitutional and his duty is merely to enforce the law which stands valid,
unless otherwise declared by this Tribunal to be unconstitutional. On our part,
We hereby declare the assailed Wage Orders as constitutional, there being no
provision of the 1973 Constitution (or even of both the Freedom Constitution
and the 1987 Constitution) violated by said Wage Orders, which Orders are
without doubt for the benefit of labor.
Based on the foregoing considerations, it is our shared view that the findings of
the labor regulations officers may not be deemed uncontested as to bring the
case at bar within the competence of the Regional Director, as duly authorized
representative of the Secretary of Labor, pursuant to Article 128 of the Labor
Code, as amended. Considering further that the aggregate claims involve an
amount in excess of P5,000.00, We find it more appropriate that the issue of
petitioner hospital's liability therefor, including the proposal of petitioner that
the obligation of private respondents to the former in the aggregate amount of
P507,237.57 be used to offset its obligations to them, be ventilated and
resolved, not in a summary proceeding before the Regional Director under
Article 128 of the Labor Code, as amended, but in accordance With the more
formal and extensive proceeding before the Labor Arbiter. Nevertheless, it
should be emphasized that the amount of the employer's liability is not quite a
factor in determining the jurisdiction of the Regional Director. However, the
power to order compliance with labor standards provisions may not be
exercised where the employer contends or questions the findings of the labor
regulation officers and raises issues which cannot be determined without taking
into account evidentiary matters not verifiable in the normal course of
inspection, as in the case at bar.
Viewed in the light of RA 6715 and read in consonance with the case of Briad
Agro Development Corp., as reconsidered, We hold that the instant case falls
under the exclusive original jurisdiction of the Labor Arbiter RA 6715 is in the
nature of a curative statute. Curative statutes have long been considered valid
in our jurisdiction, as long as they do not affect vested rights. In this case, We do
not see any vested right that will be impaired by the application of RA 6715.
Inasmuch as petitioner had already paid the claims of private respondents in the
amount of P163,047.50 pursuant to the decision rendered in the first complaint,
the only claim that should be deliberated upon by the Labor Arbiter should be
limited to the second amount given by the Regional Director in the second
complaint together with the proposal to offset the obligations.
WHEREFORE, the assailed decision of the Regional Director dated April 12, 1985,
is SET ASIDE. The case is REFERRED, if the respondents are so minded, to the
Labor Arbiter for proper proceedings.
SO ORDERED.
ODIN SECURITY AGENCY, petitioner,
vs.
HON. DIONISIO C. DE LA SERNA, in his capacity as Undersecretary, Department
of Labor and Employment, HON. LUNA C. PIEZAS, in his capacity as Regional
Director (DOLE), National Capital Region and SERGIO APILADO, MAMERTO
GENER, ARMANDO YUMUL, HERMINIGILDO BARGAS, MARCIANO BOLOCON,
WILLIAM ADAMI, ANTONIO PUBLICO, LEOPOLDO SAAVEDRA, WARLITO ILAGA,
JOVANY SERATO, DANIEL MINGLANA, JOSE MIRANDA, JR., ANASTACIO
SANTILLAN, ROLANDO FERNANDEZ, NICANOR FEREAS, FRANCISCO VERZOSA,
PLARIDEL ELORIA, APSIN PAGAYAO, JAIME DORADO, GUILLERMO ELLARES,
ARTURO FACTOR, DANIEL FERUISH, CRISOSTOMO FONSECA, JERRY GA,
FRANCISCO GUINSATAO, SIXTO LIPER, ALLAN MANALLA, GEORGE ORQUESTA,
WILFREDO QUIROZ, BENJAMIN UY, EDWIN ORDONA and DEMETRIO
TORRES, respondents.
Ramon Encarnacion and Honesto D. Noche for petitioner.
Luis Sementilla, Jr. for private respondents.
GRIO-AQUINO, J.:
This petition for certiorari and prohibition with prayer for a restraining order
and/or preliminary injunction seeks to annul and set aside the order dated
March 20, 1987, issued by public respondent Luna C. Piezas in his capacity as the
Regional Director, National Capital Region, Department of Labor and
Employment, and the orders dated March 23, 1988 and March 13, 1989, issued
by public respondent Dionisio C. De la Serna as Undersecretary of the
Department of Labor and Employment, and to enjoin the public respondents
and the Department of Labor and Employment (DOLE) from executing said
orders.
On July 8, 1986, a complaint was filed by Sergio Apilado and fifty-five (55) others
charging the petitioner Odin Security Agency (hereafter "OSA"), underpayment
of wages, illegal deductions, non-payment of night shift differential, overtime
pay, premium pay for holiday work, rest days and Sundays, service incentive
leaves, vacation and sick leaves, and 13th-month pay. When conciliation efforts
failed, the parties were required to submit their position papers.
Private respondents alleged in their position paper that their latest monthly
salary was P1,600; that from this amount, petitioner deducted P100 as
administrative cost and P20 as bond; that they were not paid their premium pay
and overtime pay for working on the eleven (11) legal holidays per year; and,
that since private respondents were relieved or constructively dismissed, they
must also be paid backwages.
Petitioner, on the other hand, contended that on July 21, 1986, some 48
security guards threatened mass action against it. Alarmed by a possible
abandonment of post by the guards and mindful of its contractual obligations to
its clients/principals, petitioner relieved and re-assigned the complaining guards
to other posts in Metro Manila. Those relieved were ordered to report to the
agency's main office for reassignment. Only few complied, so those who failed
to comply were placed on "AWOL" status. Petitioner claimed it complied with
the Labor Code provisions, and in support thereof, it submitted the "Quitclaim
and Waiver" of thirty-four (34) complainants. It further alleged that
complainants who rendered over-time work as shown by their time sheets were
paid accordingly; that service incentive leaves not availed of, night shift WHEREFORE, the Order dated March 20, 1987 is hereby affirmed subject to the
differential, rest days, and holidays were paid in cash. following modifications, to wit:

On November 18, 1986, petitioner filed an ex parte manifestation alleging that
nineteen (19) complainants had withdrawn their complaints.
On January 1, 1987, petitioner again filed a supplemental ex parte manifestation
alleging that Luis San Francisco also withdrew his complaint.
Earlier, on October 21, 1986, seventeen (17) complainants repudiated their
quitclaim and waiver. They alleged that management pressured them to sign
documents which they were not allowed to read and that if such waiver existed,
they did not have any intention of waiving their rights under the law.
1. The complaints of the sixteen (16) complainants above set forth are hereby
reinstated and their names added to those listed by the Regional Director in his
Order;
2. The monetary awards is [sic] hereby extended to three years from the time of
the filing of the instant complaint without any qualification; and
3. Respondent is hereby directed to reinstate all the above active complainants
to their former positions without loss of seniority rights plus backwages from
the time of their relief from work until their actual reinstatement. (p. 69, Rollo.)

Petitioner in its reply argued that complainants were estopped from denying The sixteen (16) complainants mentioned in the body of the decision are:
their quitclaims on the ground of equity; that being high school graduates,
complainants fully understood the document they signed; and that
1. Pagayo, Apsin
complainant's allegation of coercion or threat was a mere afterthought.

2. Dorado, Jaime
Later, six (6) of the seventeen (17) complainants who repudiated their
quitclaims again executed quitclaims and waivers.
3. Ellares, Guillermo
On March 20, 1987, public respondent Luna C. Piezas issued an order, the
dispositive portion of which reads: 4. Factor, Arturo

WHEREFORE, premises considered, Order of Compliance is hereby issued 5. Feruish, Daniel

directing respondent to pay complainants the amounts opposite their names, to
wit: 6. Fonseca, Crisostomo

1. Mamerto Gener Pl,989.05 7. Ga, Jerry

2. Armando Yumul 1,989.05 8. Guinsatao, Francisco

3. Herminigildo Bargas 1,989.05 9. Liper, Sixto

4. Marciano Bolocon 1,989.05 10. Manalla, Allan

5. William Adami 1,989.05 11. Orquesta, George

6. Antonio Publico 1,989.05 12. Pardeno, Joseph

7. Leopoldo Saavedra 1,989.05 13. Quiroz, Wilfredo

8. Warlito Ilaga 1,989.05 14. Uy, Benjamin

9. Jovany Serate 1,989.05 15. Ordona, Edwin

10. Daniel Minglana. 1,989.05 16. Torres, Deuretiro

11. Jose Miranda, Jr. 1,989.05 Petitioner filed a motion for reconsideration.

12. Anastacio Santillan 1,989.05 On March 13, 1989, public respondent Undersecretary modified his order of
March 23, 1988 as follows:
13. Rolando Fernandez 1,989.05
WHEREFORE, the Order of this Office dated 23 March 1988 is hereby modified
14. Nicanor Fereras 1,776.95 to read as follows, to wit:

15. Francisco Verzosa 1,015.40 1. The complaint of the fifteen (15) complainants above set forth are hereby
reinstated and their names added to those listed by the Regional Director in his
order;
16. Plaridel Eloria 253.95

2. The monetary awards is [sic] hereby limited to the past three years from the
within 15 days from receipt hereof. (p. 51, Rollo.)
time of the filing of the complaint without any qualification subject to
computation at the Regional Office. (p. 105, Rollo.)
The complaining guards filed a motion for reconsideration which was treated as
an appeal by respondent Undersecretary Dionisio C. De la Serna.
The reason for the reduction to fifteen (15) of the original list of sixteen (16)
complainants was because the Undersecretary found that Joseph Pardeno was
On March 23, 1988, the Undersecretary affirmed the order of the Regional never relieved from his post but continued to work for petitioner.
Director with modifications. The dispositive portion of his order reads as
follows:
In this petition for certiorari, the petitioner alleges:
1. that it was deprived of due process of law, both substantive and procedural;
2. that the Order dated March 20, 1987 is contrary to law and that respondent
Luna C. Piezas acted with grave abuse of discretion amounting to lack or excess
of jurisdiction; and
3. that the Orders dated March 23, 1988 and March 13, 1989, affirming and
modifying the Order dated March 20, 1987 are contrary to law and that
respondent Dionisio C. De la Serna acted with grave abuse of discretion
amounting to lack or excess of jurisdiction.
On April 17, 1989, as prayed for in the petition, the Court issued a temporary
restraining order upon a bond of P50,000 enjoining the respondents from
enforcing or executing the orders dated March 20, 1987, March 23, 1988 and
March 13, 1989 of the Department of Labor and Employment.
The petition has no merit.
labor standards (Art. 128[b], Labor Code). Only later did the guards ask for
backwages on account of their alleged constructive dismissal (p. 32, Rollo). Once
vested, that jurisdiction continued until the entire controversy was decided (Lee
vs. MTC, 145 SCRA 408; Abadilla vs. Ramos, 156 SCRA 92; and Pucan vs.
Bengzon, 155 SCRA 692).
The jurisdiction of public respondents over the complaints is clear from a
reading of Article 128(b) of the Labor Code, as amended by Executive Order No.
111, thus:
(b) The provisions of Article 217 of this Code to the contrary notwithstanding
and in cases where the relationship of employer-employee still exists, the
Minister of Labor and Employment or his duly authorized representatives shall
have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code and other labor
legislation based on the findings of labor regulation officers or industrial safety
engineers made in the course of inspection, and to issue writs of execution to
the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor regulation officer and
raises issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection.

The petitioner was not denied due process for several hearings were in fact
conducted by the hearing officer of the Regional Office of the DOLE and the In Briad Agro Development Corp. vs. Hon. Dionisio De la Serna, G.R. No. 82805,
parties submitted position papers upon which the Regional Director based his June 29, 1989, we clarified the amendment when we ruled, thus:
decision in the case. There is abundant jurisprudence to the effect that the
requirements of due process are satisfied when the parties are given an To recapitulate under EO 111, the Regional Directors, in representation of the
opportunity to submit position papers (Coca-Cola Bottlers, Phil., Inc. vs. NLRC, Secretary of Labor and notwithstanding the grant of exclusive original
G.R. No. 78787, December 18, 1989; Asiaworld Publishing House vs. Ople, 152 jurisdiction to Labor Arbiters by Article 217 of the Labor Code, as amended
SCRA 224; Manila Doctors Hospital vs. NLRC, 135 SCRA 262). What the have power to hear cases involving violations of labor standards provisions of
fundamental law abhors is not the absence of previous notice but rather the the Labor Code or other legislation discovered in the course of normal
absolute lack of opportunity to be heard (Antipolo Realty Corp. vs. National inspection, and order compliance therewith, provided that:
Housing Authority, 153 SCRA 399). There is no denial of due process where a
party is given an opportunity to be heard and present his case (Ong, Sr. vs. Parel,
l) the alleged violations of the employer involve persons who are still his
156 SCRA 768; Adamson & Adamson, Inc. vs. Amores, 152 SCRA 237). Since
employees, i.e., not dismissed, and
petitioner herein participated in the hearings, submitted a position paper, and
filed a motion for reconsideration of the March 23, 1988 decision of the Labor
Undersecretary, it was not denied due process. 2) the employer does not contest the findings of the labor regulations officer or
raise issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection (p. 9, Concurring
The petitioner is estopped from questioning the alleged lack of jurisdiction of
Opinion, J. Narvasa.)
the Regional Director over the private respondents' claims. Petitioner submitted
to the jurisdiction of the Regional Director by taking part in the hearings before
him and by submitting a position paper. When the Regional Director issued his The ruling in Briad Agro was reiterated in Maternity Children's Hospital vs.
March 20, 1987 order requiring petitioner to pay the private respondents the Secretary of Labor, G.R. No. 78909, June 30, 1989:
benefits they were claiming, petitioner was silent. Only the private respondents
filed a motion for reconsideration. It was only after the Undersecretary modified
... Under the present rules, a Regional Director exercises both visitorial and
the order of the Regional Director on March 23, 1988 that the petitioner moved
enforcement power over labor standards cases, and is therefore empowered to
for reconsideration and questioned the jurisdiction of the public respondents to
adjudicate money claims, provided there still exists an employer-employee
hear and decide the case. The principle of jurisdiction by estoppel bars it from
relationship, and the findings of the regional office is not contested by the
doing this. In Tijam vs. Sibonghanoy, 23 SCRA 29, 35-36, we held:
employer concerned. (p. 5, Decision.)

It has been held that a party can not invoke the jurisdiction of a court to secure
WHEREFORE, the petition is dismissed and the orders dated March 23, 1988 and
affirmative relief against his opponent and, after obtaining or failing to obtain
March 13, 1989 of the Undersecretary of Labor are hereby affirmed. The
such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or.
temporary restraining order earlier issued by this Court is lifted. No costs.
694, 86 A.L.R. 79). In the case just cited, by way of explaining the rules, it was
further said that the question whether the court had jurisdiction either of the
subject-matter of the action or of the parties was not important in such cases SO ORDERED
because the party is barred from such conduct not because the judgment or
order of the court is valid and conclusive as an adjudication, but for the reason ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
that such a practice can not be tolerated obviously for reasons of public vs.
policy. NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN
TALUSAN and SAN MIGUEL CORPORATION, respondents.
Furthermore, it has also been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is too late for the loser to Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
question the jurisdiction or power of the court (Pease vs. Rathbunjones, etc., Jardeleza Law Offices for private respondents.
243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127,
35 L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo, 58, the Court said that it is
not right for a party who has affirmed and invoked the jurisdiction of a court in a
particular matter to secure an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.
NARVASA, J.:
Sibonghanoy was reiterated in Crisostomo vs. C.A., 32 SCRA 54; Libudan vs. Gil,
45 SCRA 17; Capilitan vs. De la Cruz, 55 SCRA 706; and PNB vs. IAC, 143 SCRA The controversy at bar had its origin in the "wage distortions" affecting the
299. employees of respondent San Miguel Corporation allegedly caused by Republic
Act No. 6727, otherwise known as the Wage Rationalization Act.
The fact is, the Regional Director and the Undersecretary did have jurisdiction
over the private respondents' complaint which was originally for violation of
Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at
Buklod Ng Manggagawa (IBM)" said to represent 4,500 employees of San
Miguel Corporation, more or less, "working at the various plants, offices, and
warehouses located at the National Capital Region" presented to the
company a "demand" for correction of the "significant distortion in . . . (the
workers') wages." In that "demand," the Union explicitly invoked Section 4 (d) of
RA 6727 which reads as follows:
xxx xxx xxx
(d) . . .
Where the application of the increases in the wage rates under this Section
results in distortions as defined under existing laws in the wage structure within
an establishment and gives rise to a dispute therein, such dispute shall first be
settled voluntarily between the parties and in the event of a deadlock, the same
shall be finally resolved through compulsory arbitration by the regional
branches of the National Labor Relations Commission (NLRC) having jurisdiction
over the workplace.
It shall be mandatory for the NLRC to conduct continuous hearings and decide
any dispute arising under this Section within twenty (20) calendar days from the
time said dispute is formally submitted to it for arbitration. The pendency of a
dispute arising from a wage distortion shall not in any way delay the
applicability of the increase in the wage rates prescribed under this Section.
But the Union claims that "demand was ignored:1
The . . . COMPANY ignored said demand by offering a measly across-the-board
wage increase of P7.00 per day, per employee, as against the proposal of the
UNION of P25.00 per day, per employee. Later, the UNION reduced its proposal
to P15.00 per day, per employee by way of amicable settlement.
When the . . . COMPANY rejected the reduced proposal of the UNION the
members thereof, on their own accord, refused to render overtime services,
most especially at the Beer Bottling Plants at Polo, starting October 16, 1989.
In this connection, the workers involved issues a joint notice reading as follows:2
SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO
BREWERY PAWANG KASAPI NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY
NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT
PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG
TAMANG WAGE DISTORTION.
The Union's position (set out in the petition subsequently filed in this
Court, infra) was that the workers' refuse "to work beyond eight (8) hours
everyday starting October 16, 1989" as a legitimate means of compelling SMC to
correct "the distortion in their wages brought about by the implementation of
the said laws (R.A. 6640 and R.A. 6727) to newly-hired employees.3 That
decision to observe the "eight hours work shift" was implemented on October
16, 1989 by "some 800 daily-paid workers at the Polo Plant's production line (of
San Miguel Corporation [hereafter, simply SMC]) joined by others at statistical
quality control and warehouse, all members of . . . IBM . . . " 4There ensued
thereby a change in the work schedule which had been observed by daily-paid
workers at the Polo Plant for the past five (5) years, i.e., "ten (10) hours for the
first shift and ten (10) to fourteen (14) hours for the second shift, from Mondays
to Fridays . . ; (and on) Saturdays, . . eight (8) hours for both shifts" a work
schedule which, SMC says, the workers had "welcomed, and encouraged"
because the automatic overtime built into the schedule "gave them a steady
source of extra-income," and pursuant to which it (SMC) "planned its production
targets and budgets.5
This abandonment of the long-standing schedule of work and the reversion to
the eight-hour shift apparently caused substantial losses to SMC. Its claim is that
there ensued "from 16 October 1989 to 30 November 1989 alone . . work
disruption and lower efficiency . . (resulting in turn, in) lost production of
2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost P174,657,598 in
sales and P48,904,311 in revenues . . (and the) Government lost excise tax
revenue of P42 million, computed at the rate of P21 per case collectible at the
plant.6 These losses occurred despite such measures taken by SMC as organizing
"a third shift composed of regular employees and some contractuals," and
appeals "to the Union members, through letters and memoranda and dialogues
with their plant delegates and shop stewards," to adhere to the existing work
schedule.
Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the
National Labor Relations Commission a complaint against the Union and its
members "to declare the strike or slowdown illegal" and to terminate the
employment of the union officers and shop stewards. The complaint was
docketed as NLRC-NCR Case No. 00-10-04917.7
Then on December 8, 1989, on the claim that its action in the Arbitration Branch
had as yet "yielded no relief," SMC filed another complaint against the Union
and members thereof, this time directly with the National labor Relations
Commission, "to enjoin and restrain illegal slowdown and for damages, with
prayer for the issuance of a cease-and-desist and temporary restraining
order.8 Before acting on the application for restraining order, the NLRC's First
Division first directed SMC to present evidence in support of the application
before a commissioner, Labor Arbiter Carmen Talusan. On December 19, 1989,
said First Division promulgated a Resolution on the basis of "the allegations of
the petitioner (SMC) and the evidence adduced ex parte in support of their
petition." The Resolution
1) authorized the issuance of "a Temporary Restraining Order for a period of
twenty (20) days . . upon . . a cash or surety bond in the amount of P50,000.00 .
. . DIRECTING the respondents to CEASE and DESIST from further committing the
acts complained about particularly their not complying with the work schedule
established and implemented by the company through the years or at the least
since 1984, which schedule appears to have been adhered to by the
respondents until October 16, 1989 . . .;
2) set the incident on injunction for hearing before Labor Arbiter Carmen
Talusan on 27 December 1989 . . .
The Labor Arbiter accordingly scheduled the incident for hearing on various
dates: December 27 and 29,1989, January 8, 11, 16, and 19, 1990. The first two
settings were cancelled on account of the unavailability of the Union's counsel.
The hearing on January 8, 1990 was postponed also at the instance of said
counsel who declared that the Union refused to recognize the NLRC's
jurisdiction. The hearings set on January 11, 16 and 19, 1990 were taken up with
the cross-examination of SMC's witness on the basis of his affidavit and
supplemental affidavits. The Union thereafter asked the Hearing Officer to
schedule other hearings. SMC objected. The Hearing Officer announced she
would submit a report to the Commission relative to the extension of the
temporary restraining order of December 9, 1989, supra, prayed for by SMC.
Here the matter rested until February 14, 1990, when the Union filed the
petition which commenced the special civil action of certiorari and prohibition
at bar.9
In its petition, the Union asserted that:
1) the "central issue . . is the application of the Eight-Hour Labor Law . . . (i.e.)
(m)ay an employer force an employee to work everyday beyond eight hours a
day?
2) although the work schedule adopted by SMC with built-in automatic
overtime,10 "tremendously increased its production of beer at lesser cost," SMC
had been paying its workers "wages far below the productivity per employee,"
and turning a deaf ear to the Union's demands for wage increases;
3) the NLRC had issued the temporary restraining order of December 19, 1989
"with indecent haste, based on ex parte evidence of SMC and such an order had
the effect of "forcing the workers to work beyond eight (8) hours a day,
everyday!!
4) the members of the NLRC had no authority to act as Commissioners because
their appointments had not been confirmed by the Commission on
Appointment; and
5) even assuming the contrary, the NLRC, as an essentially appellate body, had
no jurisdiction to act on the plea for injunction in the first instance.
The petition thus prayed:
1) for judgment (a) annulling the Resolution of December 19, 1990; (b) declaring
mandatory the confirmation by the Commission on Appointments of the
appointments of National Labor Relations Commissioners; and (c) ordering the
removal "from the 201 files of employees any and all memoranda or disciplinary
action issued/imposed to the latter by reason of their refusal to render overtime
work;" and
2) pending such judgment restraining(a) the NLR Commissioners "from
discharging their power and authority under R.A. 6715 prior to their re-
appointment and/or confirmation;" as well as (b) Arbiter Talusan and the
Commission from acting on the matter or rendering a decision or issuing a
permanent injunction therein, or otherwise implementing said Resolution of
December 19, 1989.
In traverse of the petition, SMC filed a pleading entitled "Comment with Motion
to Admit Comment as Counter-Petition," in which it contended that:
1) the workers' abandonment of the regular work schedule and their deliberate
and wilful reduction of the Polo plant's production efficiency is a slowdown,
which is an illegal and unprotected concerted activity;
2) against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in
the first instance;
3) indeed, the NLRC has "the positive legal duty and statutory obligation to
enjoin the slowdown complained of and to compel the parties to arbitrate . .,
(and) to effectuate the important national policy of peaceful settlement of labor
disputes through arbitration;" accordingly, said NLRC "had no legal choice but to
issue injunction to enforce the reciprocal no lockout-no slowdown and
mandatory arbitration agreement of the parties;" and
4) the NLRC "gravely abused its discretion when it refused to decide the
application for injunction within the twenty day period of its temporary
restraining order, in violation of its own rules and the repeated decisions of this
. . . Court.
It is SMC's submittal that the coordinated reduction by the Union's members of
the work time theretofore willingly and consistently observed by them, thereby
causing financial losses to the employer in order to compel it to yield to the
demand for correction of "wage distortions," is an illegal and "unprotected"
activity. It is, SMC argues, contrary to the law and to the collective bargaining
agreement between it and the Union. The argument is correct and will be
sustained.
Among the rights guaranteed to employees by the Labor Code is that of
engaging in concerted activities in order to attain their legitimate objectives.
Article 263 of the Labor Code, as amended, declares that in line with "the policy
of the State to encourage free trade unionism and free collective bargaining, . .
(w)orkers shall have the right to engage in concerted activities for purposes of
collective bargaining or for their mutual benefit and protection." A similar right
to engage in concerted activities for mutual benefit and protection is tacitly and
traditionally recognized in respect of employers.
The more common of these concerted activities as far as employees are
concerned are: strikes the temporary stoppage of work as a result of an
industrial or labor dispute; picketing the marching to and fro at the
employer's premises, usually accompanied by the display of placards and other
signs making known the facts involved in a labor dispute; and boycotts the
concerted refusal to patronize an employer's goods or services and to persuade
others to a like refusal. On the other hand, the counterpart activity that
management may licitly undertake is the lockout the temporary refusal to
furnish work on account of a labor dispute, In this connection, the same Article
263 provides that the "right of legitimate labor organizations to strike and picket
and of employer to lockout, consistent with the national interest, shall continue
to be recognized and respected." The legality of these activities is usually
dependent on the legality of the purposes sought to be attained and the means
employed therefor.
It goes without saying that these joint or coordinated activities may be
forbidden or restricted by law or contract. In the particular instance of
"distortions of the wage structure within an establishment" resulting from "the
application of any prescribed wage increase by virtue of a law or wage order,"
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly
excluding strikes or lockouts or other concerted activities as modes of
settlement of the issue. The provision11 states that
. . . the employer and the union shall negotiate to correct the distort-ions. Any
dispute arising from wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreementand, if it remains
unresolved, through voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the voluntary arbitrator or
panel of voluntary arbitrators within ten (10) calendar days from the time said
dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions,
the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation and
Mediation Board and, if it remains unresolved after ten (10) calendar days of
conciliation, shall be referred to the appropriate branch of the National Labor
Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute within twenty (20) calendar days
from the time said dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pursuant to the
provisions of law or Wage Order.
xxx xxx xxx
The legislative intent that solution of the problem of wage distortions shall be
sought by voluntary negotiation or abitration, and not by strikes, lockouts, or
other concerted activities of the employees or management, is made clear in
the rules implementing RA 6727 issued by the Secretary of Labor and
Employment12 pursuant to the authority granted by Section 13 of the
Act.13 Section 16, Chapter I of these implementing rules, after reiterating the
policy that wage distortions be first settled voluntarily by the parties and
eventually by compulsory arbitration, declares that, "Any issue involving wage
distortion shall not be a ground for a strike/lockout."
Moreover, the collective bargaining agreement between the SMC and the
Union, relevant provisions of which are quoted by the former without the
latter's demurring to the accuracy of the quotation,14 also prescribes a similar
eschewal of strikes or other similar or related concerted activities as a mode of
resolving disputes or controversies, generally, said agreement clearly stating
that settlement of "all disputes, disagreements or controversies of any kind"
should be achieved by the stipulated grievance procedure and ultimately by
arbitration. The provisions are as follows:
Section 1. Any and all disputes, disagreements and controversies of any kind
between the COMPANY and the UNION and/or the workers involving or relating
to wages, hours of work, conditions of employment and/or employer-employee
relations arising during the effectivity of this Agreement or any renewal thereof,
shall be settled by arbitration in accordance with the procedure set out in this
Article. No dispute, disagreement or controversy which may be submitted to the
grievance procedure in Article IX shall be presented for arbitration unless all the
steps of the grievance procedure are exhausted (Article V Arbitration).
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage
or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general
strikes, or any other interference with any of the operations of the COMPANY
during the terms of this agreement (Article VI).
The Union was thus prohibited to declare and hold a strike or otherwise engage
in non-peaceful concerted activities for the settlement of its controversy with
SMC in respect of wage distortions, or for that matter; any other issue "involving
or relating to wages, hours of work, conditions of employment and/or
employer-employee relations." The partial strike or concerted refusal by the
Union members to follow the five-year-old work schedule which they had
therefore been observing, resorted to as a means of coercing correction of
"wage distortions," was therefore forbidden by law and contract and, on this
account, illegal.
Awareness by the Union of the proscribed character of its members' collective
activities, is clearly connoted by its attempt to justify those activities as a means
of protesting and obtaining redress against said members working overtime
every day from Monday to Friday (on an average of 12 hours), and every
Saturday (on 8 hour shifts),15rather than as a measure to bring about
rectification of the wage distortions caused by RA 6727 which was the real
cause of its differences with SMC. By concealing the real cause of their dispute
with management (alleged failure of correction of wage distortion), and trying
to make it appear that the controversy involved application of the eight-hour
labor law, they obviously hoped to remove their case from the operation of the
rules implementing RA 6727 that "Any issue involving wage distortion shall not
be a ground for a strike/lockout." The stratagem cannot succeed.
In the first place, that it was indeed the wage distortion issue that principally
motivated the Union's partial or limited strike is clear from the facts, The work
schedule (with "built-in overtime") had not been forced upon the workers; it
had been agreed upon between SMC and its workers at the Polo Plant and
indeed, had been religiously followed with mutually beneficial results for the
past five (5) years. Hence, it could not be considered a matter of such great
prejudice to the workers as to give rise to a controversy between them and
management. Furthermore, the workers never asked, nor were there ever any
negotiations at their instance, for a change in that work schedule prior to the
strike. What really bothered them, and was in fact the subject of talks between
their representatives and management, was the "wage distortion" question, a
fact made even more apparent by the joint notice circulated by them prior to
the strike, i.e., that they would adopt the eight-hour work shift in the meantime
pending correction by management of the wage distortion (IPATUPAD MUNA
ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI
IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION).
In the second place, even if there were no such legal prohibition, and even
assuming the controversy really did not involve the wage distortions caused by
RA 6727, the concerted activity in question would still be illicit because contrary
to the workers' explicit contractual commitment "that there shall be no strikes,
walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal
to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic
or general strikes, or any other interference with any of the operations of the
COMPANY during the term of . . . (their collective bargaining) agreement.16
What has just been said makes unnecessary resolution of SMC's argument that
the workers' concerted refusal to adhere to the work schedule in force for the
last several years, is a slowdown, an inherently illegal activity essentially illegal
even in the absence of a no-strike clause in a collective bargaining contract, or
statute or rule. The Court is in substantial agreement with the petitioner's
concept of a slowdown as a "strike on the installment plan;" as a wilfull
reduction in the rate of work by concerted action of workers for the purpose of
restricting the output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel management
to grant their demands.17 The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the
employees "continue to work and remain at their positions and accept the
wages paid to them," they at the same time "select what part of their allotted
tasks they care to perform of their own volition or refuse openly or secretly, to
the employer's damage, to do other work;" in other words, they "work on their
own terms.18 But whether or not the workers' activity in question their
concerted adoption of a different work schedule than that prescribed by
management and adhered to for several years constitutes a slowdown need
not, as already stated, be gone into. Suffice it to say that activity is contrary to
the law, RA 6727, and the parties' collective bargaining agreement.
The Union's claim that the restraining order is void because issued by
Commissioners whose appointments had not been duly confirmed by the
Commission on Appointments should be as it is hereby given short shift, for, as
the Solicitor General points out, it is an admitted fact that the members of the
respondent Commission were actually appointed by the President of the
Philippines on November 18, 1989; there is no evidence whatever in support of
the Union's bare allegation that the appointments of said members had not
been confirmed; and the familiar presumption of regularity in appointment and
in performance of official duty exists in their favor.19
Also untenable is the Union's other argument that the respondent NLRC Division
had no jurisdiction to issue the temporary restraining order or otherwise grant
the preliminary injunction prayed for by SMC and that, even assuming the
contrary, the restraining order had been improperly issued. The Court finds that
the respondent Commission had acted entirely in accord with applicable
provisions of the Labor Code.
Article 254 of the Code provides that "No temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be
issued by any court or other entity, except as otherwise provided in Articles 218
and 264 . . ." Article 264 lists down specific "prohibited activities" which may be
forbidden or stopped by a restraining order or injunction. Article 218 inter
alia enumerates the powers of the National Labor Relations Commission and
lays down the conditions under which a restraining order or preliminary
injunction may issue, and the procedure to be followed in issuing the same.
Among the powers expressly conferred on the Commission by Article 218 is the
power to "enjoin or restrain any actual or threatened commission of any or all
prohibited or unlawful acts or to require the performance of a particular act in
any labor dispute which, if not restrained or performed forthwith, may cause
grave or irreparable damage to any party or render ineffectual any decision in
favor of such party . . ."
As a rule such restraining orders or injunctions do not issue ex parte, but only
after compliance with the following requisites, to wit:
a) a hearing held "after due and personal notice thereof has been served, in
such manner as the Commission shall direct, to all known persons against whom
relief is sought, and also to the Chief Executive and other public officials of the
province or city within which the unlawful acts have been threatened or
committed charged with the duty to protect complainant's property;"
b) reception at the hearing of "testimony of witnesses, with opportunity for
cross-examination, in support of the allegations of a complaint made under
oath," as well as "testimony in opposition thereto, if offered . . .;
c) a finding of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be
committed and will be continued unless restrained, but no injunction or
temporary restraining order shall be issued on account of any threat, prohibited
or unlawful act, except against the person or persons, association or
organization making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof;
(2) That substantial and irreparable injury to complainant's property will follow;
(3) That as to each item of relief to be granted, greater injury will be inflicted
upon complainant by the denial of relief than will be inflicted upon defendants
by the granting of relief;
(4) That complainant has no adequate remedy at law; and
(5) That the public officers charged with the duty to protect complainant's
property are unable or unwilling to furnish adequate protection.
However, a temporary restraining order may be issued ex parte under the
following conditions:
a) the complainant "shall also allege that, unless a temporary restraining order
shall be issued without notice, a substantial and irreparable injury to
complainant's property will be unavoidable;
b) there is "testimony under oath, sufficient, if sustained, to justify the
Commission in issuing a temporary injunction upon hearing after notice;"
c) the "complainant shall first file an undertaking with adequate security in an
amount to be fixed by the Commission sufficient to recompense those enjoined
for any loss, expense or damage caused by the improvident or erroneous
issuance of such order or injunction, including all reasonable costs, together
with a reasonable attorney's fee, and expense of defense against the order or
against the granting of any injunctive relief sought in the same proceeding and
subsequently denied by the Commission;" and
d) the "temporary restraining order shall be effective for no longer than twenty
(20) days and shall become void at the expiration of said twenty (20) days.
The reception of evidence "for the application of a writ of injunction may be
delegated by the Commission to any of its Labor Arbiters who shall conduct such
hearings in such places as he may determine to be accessible to the parties and
their witnesses and shall submit thereafter his recommendation to the
Commission."
The record reveals that the Commission exercised the power directly and plainly
granted to it by sub-paragraph (e) Article 217 in relation to Article 254 of the
Code, and that it faithfully observed the procedure and complied with the
conditions for the exercise of that power prescribed in said sub-paragraph (e) It
acted on SMC's application for immediate issuance of a temporary restraining
order ex parte on the ground that substantial and irreparable injury to its
property would transpire before the matter could be heard on notice; it,
however, first direct SMC Labor Arbiter Carmen Talusan to receive SMC's
testimonial evidence in support of the application and thereafter submit her
recommendation thereon; it found SMC's evidence adequate and issued the
temporary restraining order upon bond.1wphi1 No irregularity may thus be
imputed to the respondent Commission in the issuance of that order.
In any event, the temporary restraining order had a lifetime of only twenty (20)
days and became void ipso facto at the expired ration of that period.
In view of the foregoing factual and legal considerations, all irresistibly leading
to the basic conclusion that the concerted acts of the members of petitioner
Union in question are violative of the law and their formal agreement with the
employer, the latter's submittal, in its counter-petition that there was, in the
premises, a "legal duty and obligation" on the part of the respondent
Commission "to enjoin the unlawful and prohibited acts and omissions of
petitioner IBM and the workers complained of,20 a proposition with which, it
must be said, the Office of the Solicitor General concurs, asserting that the
"failure of the respondent commission to resolve the application for a writ of
injunction is an abuse of discretion especially in the light of the fact that the
restraining order it earlier issued had already expired"21 must perforce be
conceded.
WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the
case is REMANDED to the respondent Commission (First Division) with
instructions to immediately take such action thereon as is indicated by and is
otherwise in accord with, the findings and conclusions herein set forth. Costs
against petitioner.
IT IS SO ORDERED.
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN, respondents.
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine
Telegraph and Telephone Company (hereafter, PT & T) invokes the alleged
concealment of civil status and defalcation of company funds as grounds to
terminate the services of an employee. That employee, herein private
respondent Grace de Guzman, contrarily argues that what really motivated PT &
T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus
claims that she was discriminated against in gross violation of law, such a
proscription by an employer being outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a
"Supernumerary Project Worker," for a fixed period from November 21, 1990
until April 20, 1991 vice one C.F. Tenorio who went on maternity leave.1 Under
the Reliever Agreement which she signed with petitioner company, her
employment was to be immediately terminated upon expiration of the agreed
period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to
August 8, 1991, private respondent's services as reliever were again engaged by
petitioner, this time in replacement of one Erlinda F. Dizon who went on leave
during both periods. 2 After August 8, 1991, and pursuant to their Reliever
Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join
petitioner company as a probationary employee, the probationary period to
cover 150 days. In the job application form that was furnished her to be filled up
for the purpose, she indicated in the portion for civil status therein that she was
single although she had contracted marriage a few months earlier, that is, on
May 26, 1991. 3
It now appears that private respondent had made the same representation in
the two successive reliever agreements which she signed on June 10, 1991 and
July 8, 1991. When petitioner supposedly learned about the same later, its
branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a
memorandum dated January 15, 1992 requiring her to explain the discrepancy.
In that memorandum, she was reminded about the company's policy of not
accepting married women for employment. 4
In her reply letter dated January 17, 1992, private respondent stated that she
was not aware of PT&T's policy regarding married women at the time, and that
all along she had not deliberately hidden her true civil status. 5Petitioner
nonetheless remained unconvinced by her explanations. Private respondent was
dismissed from the company effective January 29, 1992, 6 which she readily
contested by initiating a complaint for illegal dismissal, coupled with a claim for
non-payment of cost of living allowances (COLA), before the Regional
Arbitration Branch of the National Labor Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private
respondent volunteered the information, and this was incorporated in the
stipulation of facts between the parties, that she had failed to remit the amount
of P2,380.75 of her collections. She then executed a promissory note for that
amount in favor of petitioner 7. All of these took place in a formal proceeding
and with the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the status of
a regular employee, was illegally dismissed by petitioner. Her reinstatement,
plus payment of the corresponding back wages and COLA, was correspondingly
ordered, the labor arbiter being of the firmly expressed view that the ground
relied upon by petitioner in dismissing private respondent was clearly
insufficient, and that it was apparent that she had been discriminated against on
account of her having contracted marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it
ruled that private respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT & T. However, the decision of the
labor arbiter was modified with the qualification that Grace de Guzman
deserved to be suspended for three months in view of the dishonest nature of
her acts which should not be condoned. In all other respects, the NLRC affirmed
the decision of the labor arbiter, including the order for the reinstatement of
private respondent in her employment with PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by
respondent NLRC in its resolution of November 9, 1994, hence this special civil
action assailing the aforestated decisions of the labor arbiter and respondent
NLRC, as well as the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be
regarded with love and respect but, through the ages, men have responded to
that injunction with indifference, on the hubristic conceit that women constitute
the inferior sex. Nowhere has that prejudice against womankind been so
pervasive as in the field of labor, especially on the matter of equal employment
opportunities and standards. In the Philippine setting, women have traditionally
been considered as falling within the vulnerable groups or types of workers who
must be safeguarded with preventive and remedial social legislation against
discriminatory and exploitative practices in hiring, training, benefits, promotion
and retention.
The Constitution, cognizant of the disparity in rights between men and women
in almost all phases of social and political life, provides a gamut of protective
provisions. To cite a few of the primordial ones, Section 14, Article II 8on the
Declaration of Principles and State Policies, expressly recognizes the role of
women in nation-building and commands the State to ensure, at all times, the
fundamental equality before the law of women and men. Corollary thereto,
Section 3 of Article XIII 9 (the progenitor whereof dates back to both the 1935
and 1973 Constitution) pointedly requires the State to afford full protection to
labor and to promote full employment and equality of employment
opportunities for all, including an assurance of entitlement to tenurial security
of all workers. Similarly, Section 14 of Article XIII 10 mandates that the State shall
protect working women through provisions for opportunities that would enable
them to reach their full potential.
2. Corrective labor and social laws on gender inequality have emerged with
more frequency in the years since the Labor Code was enacted on May 1, 1974
as Presidential Decree No. 442, largely due to our country's commitment as a
signatory to the United Nations Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12 which explicitly
prohibits discrimination against women with respect to terms and conditions of
employment, promotion, and training opportunities; Republic Act No.
6955 13 which bans the "mail-order-bride" practice for a fee and the export of
female labor to countries that cannot guarantee protection to the rights of
women workers; Republic Act No. 7192 14 also known as the "Women in termination of employment, it should not be simulated. 24 It must rest on an
Development and Nation Building Act," which affords women equal actual breach of duty committed by the employee and not on the employer's
opportunities with men to act and to enter into contracts, and for appointment, caprices. 25 Furthermore, it should never be used as a subterfuge for causes
admission, training, graduation, and commissioning in all military or similar which are improper, illegal, or unjustified. 26
schools of the Armed Forces of the Philippines and the Philippine National
Police; Republic Act No. 7322 15 increasing the maternity benefits granted to
In the present controversy, petitioner's expostulations that it dismissed private
women in the private sector; Republic Act No. 7877 16 which outlaws and
respondent, not because the latter got married but because she concealed that
punishes sexual harassment in the workplace and in the education and training
fact, does have a hollow ring. Her concealment, so it is claimed, bespeaks
environment; and Republic Act No. 8042, 17 or the "Migrant Workers and
dishonesty hence the consequent loss of confidence in her which justified her
Overseas Filipinos Act of 1995," which prescribes as a matter of policy, inter alia,
dismissal.
the deployment of migrant workers, with emphasis on women, only in countries
where their rights are secure. Likewise, it would not be amiss to point out that in
the Family Code, 18 women's rights in the field of civil law have been greatly Petitioner would asseverate, therefore, that while it has nothing against
enhanced and expanded. marriage, it nonetheless takes umbrage over the concealment of that fact. This
improbable reasoning, with interstitial distinctions, perturbs the Court since
private respondent may well be minded to claim that the imputation of
In the Labor Code, provisions governing the rights of women workers are found
dishonesty should be the other way around.
in Articles 130 to 138 thereof. Article 130 involves the right against particular
kinds of night work while Article 132 ensures the right of women to be provided
with facilities and standards which the Secretary of Labor may establish to Petitioner would have the Court believe that although private respondent
ensure their health and safety. For purposes of labor and social legislation, a defied its policy against its female employees contracting marriage, what could
woman working in a nightclub, cocktail lounge, massage clinic, bar or other be an act of insubordination was inconsequential. What it submits as
similar establishments shall be considered as an employee under Article 138. unforgivable is her concealment of that marriage yet, at the same time,
Article 135, on the other hand, recognizes a woman's right against declaring that marriage as a trivial matter to which it supposedly has no
discrimination with respect to terms and conditions of employment on account objection. In other words, PT & T says it gives its blessings to its female
simply of sex. Finally, and this brings us to the issue at hand, Article 136 employees contracting marriage, despite the maternity leaves and other
explicitly prohibits discrimination merely by reason of the marriage of a female benefits it would consequently respond for and which obviously it would have
employee. wanted to avoid. If that employee confesses such fact of marriage, there will be
no sanction; but if such employee conceals the same instead of proceeding to
the confessional, she will be dismissed. This line of reasoning does not impress
3. Acknowledged as paramount in the due process scheme is the constitutional
us as reflecting its true management policy or that we are being regaled with
guarantee of protection to labor and security of tenure. Thus, an employer is
responsible advocacy.
required, as a condition sine qua non prior to severance of the employment ties
of an individual under his employ, to convincingly establish, through substantial
evidence, the existence of a valid and just cause in dispensing with the services This Court should be spared the ennui of strained reasoning and the tedium of
of such employee, one's labor being regarded as constitutionally protected propositions which confuse through less than candid arguments. Indeed,
property. petitioner glosses over the fact that it was its unlawful policy against married
women, both on the aspects of qualification and retention, which compelled
private respondent to conceal her supervenient marriage. It was, however, that
On the other hand, it is recognized that regulation of manpower by the
very policy alone which was the cause of private respondent's secretive conduct
company falls within the so-called management prerogatives, which
now complained of. It is then apropos to recall the familiar saying that he who is
prescriptions encompass the matter of hiring, supervision of workers, work
the cause of the cause is the cause of the evil caused.
assignments, working methods and assignments, as well as regulations on the
transfer of employees, lay-off of workers, and the discipline, dismissal, and
recall of employees. 19 As put in a case, an employer is free to regulate, Finally, petitioner's collateral insistence on the admission of private respondent
according to his discretion and best business judgment, all aspects of that she supposedly misappropriated company funds, as an additional ground to
employment, "from hiring to firing," except in cases of unlawful discrimination dismiss her from employment, is somewhat insincere and self-serving.
or those which may be provided by law. 20 Concededly, private respondent admitted in the course of the proceedings that
she failed to remit some of her collections, but that is an altogether different
story. The fact is that she was dismissed solely because of her concealment of
In the case at bar, petitioner's policy of not accepting or considering as
her marital status, and not on the basis of that supposed defalcation of
disqualified from work any woman worker who contracts marriage runs afoul of
company funds. That the labor arbiter would thus consider petitioner's
the test of, and the right against, discrimination, afforded all women workers by
submissions on this supposed dishonesty as a mere afterthought, just to bolster
our labor laws and by no less than the Constitution. Contrary to petitioner's
its case for dismissal, is a perceptive conclusion born of experience in labor
assertion that it dismissed private respondent from employment on account of
cases. For, there was no showing that private respondent deliberately
her dishonesty, the record discloses clearly that her ties with the company were
misappropriated the amount or whether her failure to remit the same was
dissolved principally because of the company's policy that married women are
through negligence and, if so, whether the negligence was in nature simple or
not qualified for employment in PT & T, and not merely because of her
grave. In fact, it was merely agreed that private respondent execute a
supposed acts of dishonesty.
promissory note to refund the same, which she did, and the matter was deemed
settled as a peripheral issue in the labor case.
That it was so can easily be seen from the memorandum sent to private
respondent by Delia M. Oficial, the branch supervisor of the company, with the
Private respondent, it must be observed, had gained regular status at the time
reminder, in the words of the latter, that "you're fully aware that the company is
of her dismissal. When she was served her walking papers on January 29, 1992,
not accepting married women employee (sic), as it was verbally instructed to
she was about to complete the probationary period of 150 days as she was
you." 21 Again, in the termination notice sent to her by the same branch
contracted as a probationary employee on September 2, 1991. That her
supervisor, private respondent was made to understand that her severance
dismissal would be effected just when her probationary period was winding
from the service was not only by reason of her concealment of her married
down clearly raises the plausible conclusion that it was done in order to prevent
status but, over and on top of that, was her violation of the company's policy
her from earning security of tenure. 27 On the other hand, her earlier stints with
against marriage ("and even told you that married women employees are not
the company as reliever were undoubtedly those of a regular employee, even if
applicable [sic] or accepted in our company.") 22 Parenthetically, this seems to
the same were for fixed periods, as she performed activities which were
be the curious reason why it was made to appear in the initiatory pleadings that
essential or necessary in the usual trade and business of PT & T. 28 The primary
petitioner was represented in this case only by its said supervisor and not by its
standard of determining regular employment is the reasonable connection
highest ranking officers who would otherwise be solidarily liable with the
between the activity performed by the employee in relation to the business or
corporation. 23
trade of the employer. 29

Verily, private respondent's act of concealing the true nature of her status from
As an employee who had therefore gained regular status, and as she had been
PT & T could not be properly characterized as willful or in bad faith as she was
dismissed without just cause, she is entitled to reinstatement without loss of
moved to act the way she did mainly because she wanted to retain a permanent
seniority rights and other privileges and to full back wages, inclusive of
job in a stable company. In other words, she was practically forced by that very
allowances and other benefits or their monetary equivalent. 30 However, as she
same illegal company policy into misrepresenting her civil status for fear of
had undeniably committed an act of dishonesty in concealing her status, albeit
being disqualified from work. While loss of confidence is a just cause for
under the compulsion of an unlawful imposition of petitioner, the three-month
suspension imposed by respondent NLRC must be upheld to obviate the
impression or inference that such act should be condoned. It would be unfair to
the employer if she were to return to its fold without any sanction whatsoever
for her act which was not totally justified. Thus, her entitlement to back wages,
which shall be computed from the time her compensation was withheld up to
the time of her actual reinstatement, shall be reduced by deducting therefrom
the amount corresponding to her three months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of
that adopted by petitioner PT & T. The Labor Code state, in no uncertain terms,
as follows:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a
woman shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of
Presidential Decree No. 148, 31better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No.
679, 32 entitled "An Act to Regulate the Employment of Women and Children, to
Provide Penalties for Violations Thereof, and for Other Purposes." The
forerunner to Republic Act No. 679, on the other hand, was Act No. 3071 which
became law on March 16, 1923 and which regulated the employment of women
and children in shops, factories, industrial, agricultural, and mercantile
establishments and other places of labor in the then Philippine Islands.
It would be worthwhile to reflect upon and adopt here the rationalization
in Zialcita, et al. vs. Philippine Air Lines, 33a decision that emanated from the
Office of the President. There, a policy of Philippine Air Lines requiring that
prospective flight attendants must be single and that they will be automatically
separated from the service once they marry was declared void, it being violative
of the clear mandate in Article 136 of the Labor Code with regard to
discrimination against married women. Thus:
Of first impression is the incompatibility of the respondent's policy or regulation
with the codal provision of law. Respondent is resolute in its contention that
Article 136 of the Labor Code applies only to women employed in ordinary
occupations and that the prohibition against marriage of women engaged in
extraordinary occupations, like flight attendants, is fair and reasonable,
considering the pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along,
it knew that the controverted policy has already met its doom as early as March
13, 1973 when Presidential Decree No. 148, otherwise known as the Women
and Child Labor Law, was promulgated. But for the timidity of those affected or
their labor unions in challenging the validity of the policy, the same was able to
obtain a momentary reprieve. A close look at Section 8 of said decree, which
amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is
exactly the same provision reproduced verbatim in Article 136 of the Labor
Code, which was promulgated on May 1, 1974 to take effect six (6) months
later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new
Labor Code, all policies and acts against it are deemed illegal and therefore
abrogated. True, Article 132 enjoins the Secretary of Labor to establish
standards that will ensure the safety and health of women employees and in
appropriate cases shall by regulation require employers to determine
appropriate minimum standards for termination in special occupations, such as
those of flight attendants, but that is precisely the factor that militates against
the policy of respondent. The standards have not yet been established as set
forth in the first paragraph, nor has the Secretary of Labor issued any regulation
affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations
which are as yet to be established, the policy of respondent against marriage is
patently illegal. This finds support in Section 9 of the New Constitution, which
provides:
Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex,
race, or creed, and regulate the relations between workers and employees. The
State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work . . . .
Moreover, we cannot agree to the respondent's proposition that termination
from employment of flight attendants on account of marriage is a fair and
reasonable standard designed for their own health, safety, protection and
welfare, as no basis has been laid therefor. Actually, respondent claims that its
concern is not so much against the continued employment of the flight
attendant merely by reason of marriage as observed by the Secretary of Labor,
but rather on the consequence of marriage-pregnancy. Respondent discussed at
length in the instant appeal the supposed ill effects of pregnancy on flight
attendants in the course of their employment. We feel that this needs no
further discussion as it had been adequately explained by the Secretary of Labor
in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as
invoking the provisions of Articles 52 and 216 of the New Civil Code on the
preservation of marriage as an inviolable social institution and the family as a
basic social institution, respectively, as bases for its policy of non-marriage. In
both instances, respondent predicates absence of a flight attendant from her
home for long periods of time as contributory to an unhappy married life. This is
pure conjecture not based on actual conditions, considering that, in this modern
world, sophisticated technology has narrowed the distance from one place to
another. Moreover, respondent overlooked the fact that married flight
attendants can program their lives to adapt to prevailing circumstances and
events.
Article 136 is not intended to apply only to women employed in ordinary
occupations, or it should have categorically expressed so. The sweeping
intendment of the law, be it on special or ordinary occupations, is reflected in
the whole text and supported by Article 135 that speaks of non-discrimination
on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining
& Industrial Corporation 34considered as void a policy of the same nature. In said
case, respondent, in dismissing from the service the complainant, invoked a
policy of the firm to consider female employees in the project it was
undertaking as separated the moment they get married due to lack of facilities
for married women. Respondent further claimed that complainant was
employed in the project with an oral understanding that her services would be
terminated when she gets married. Branding the policy of the employer as an
example of "discriminatory chauvinism" tantamount to denying equal
employment opportunities to women simply on account of their sex, the
appellate court struck down said employer policy as unlawful in view of its
repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish employer
preference or conditions relating to the marital status of an employee are
categorized as a "sex-plus" discrimination where it is imposed on one sex and
not on the other. Further, the same should be evenly applied and must not
inflict adverse effects on a racial or sexual group which is protected by federal
job discrimination laws. Employment rules that forbid or restrict the
employment of married women, but do not apply to married men, have been
held to violate Title VII of the United States Civil Rights Act of 1964, the main
federal statute prohibiting job discrimination against employees and applicants
on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just
against married women. And, where the employer discriminates against married
women, but not against married men, the variable is sex and the discrimination
is unlawful. 36 Upon the other hand, a requirement that a woman employee
must remain unmarried could be justified as a "bona fide occupational
qualification," or BFOQ, where the particular requirements of the job would
justify the same, but not on the ground of a general principle, such as the
desirability of spreading work in the workplace. A requirement of that nature
would be valid provided it reflects an inherent quality reasonably necessary for
satisfactory job performance. Thus, in one case, a no-marriage rule applicable to
both male and female flight attendants, was regarded as unlawful since the
restriction was not related to the job performance of the flight attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136 of
the Labor Code on the right of a woman to be free from any kind of stipulation
against marriage in connection with her employment, but it likewise assaults
good morals and public policy, tending as it does to deprive a woman of the
freedom to choose her status, a privilege that by all accounts inheres in the
individual as an intangible and inalienable right. 38 Hence, while it is true that the
parties to a contract may establish any agreements, terms, and conditions that
they may deem convenient, the same should not be contrary to law, morals,
good customs, public order, or public policy. 39 Carried to its logical
consequences, it may even be said that petitioner's policy against legitimate
marital bonds would encourage illicit or common-law relations and subvert the On March 11, 1988, private respondent filed a request for assistance with the
sacrament of marriage. Department of Labor and Employment. After the parties submitted their
position papers as required by the labor arbiter assigned to the case on August
24, 1988 the latter rendered a decision, the dispositive part of which reads as
Parenthetically, the Civil Code provisions on the contract of labor state that the
follows:
relations between the parties, that is, of capital and labor, are not merely
contractual, impressed as they are with so much public interest that the same
should yield to the common good. 40 It goes on to intone that neither capital nor WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered
labor should visit acts of oppression against the other, nor impair the interest or ordering the respondent, Apex Mining Company, Inc., Masara, Davao del Norte,
convenience of the public. 41 In the final reckoning, the danger of just such a to pay the complainant, to wit:
policy against marriage followed by petitioner PT & T is that it strikes at the very
essence, ideals and purpose of marriage as an inviolable social institution and,
1 Salary
ultimately, of the family as the foundation of the nation. 42 That it must be
effectively interdicted here in all its indirect, disguised or dissembled forms as
discriminatory conduct derogatory of the laws of the land is not only in order Differential P16,289.20
but imperatively required.
2. Emergency Living
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and
Telephone Company is hereby DISMISSED for lack of merit, with double costs Allowance 12,430.00
against petitioner.

3. 13th Month Pay

SO ORDERED.

Differential 1,322.32
(Gualberto vs Marinduque is a Court of Appeals Case and cannot be found in
the net, the discussion regarding this case can be found in PT&T vs NLRC)
4. Separation Pay
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining
& Industrial Corporation[34] considered as void a policy of the same nature. In (One-month for
said case, respondent, in dismissing from the service the complainant, invoked a
policy of the firm to consider female employees in the project it was every year of
undertaking as separated the moment they get married due to lack of facilities
for married women. Respondent further claimed that complainant was service [1973-19881) 25,119.30
employed in the project with an oral understanding that her services would be
terminated when she gets married.Branding the policy of the employer as an or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND
example of discriminatory chauvinism tantamount to denying equal 42/100 (P55,161.42).
employment opportunities to women simply on account of their sex, the
appellate court struck down said employer policy as unlawful in view of its SO ORDERED.1
repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Not satisfied therewith, petitioner appealed to the public respondent National
Labor Relations Commission (NLRC), wherein in due course a decision was
APEX MINING COMPANY, INC., petitioner,
rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal for
vs.
lack of merit and affirming the appealed decision. A motion for reconsideration
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
thereof was denied in a resolution of the NLRC dated June 29, 1990.
CANDIDO, respondents.

Hence, the herein petition for review by certiorari, which appopriately should be
Bernabe B. Alabastro for petitioner.
a special civil action for certiorari, and which in the interest of justice, is hereby
Angel Fernandez for private respondent.
treated as such.2 The main thrust of the petition is that private respondent
should be treated as a mere househelper or domestic servant and not as a
regular employee of petitioner.

The petition is devoid of merit.

GANCAYCO, J.:
Is the househelper in the staff houses of an industrial company a domestic
helper or a regular employee of the said firm? This is the novel issue raised in
this petition.
Private respondent Sinclita Candida was employed by petitioner Apex Mining
Company, Inc. on May 18, 1973 to perform laundry services at its staff house
located at Masara, Maco, Davao del Norte. In the beginning, she was paid on a
piece rate basis. However, on January 17, 1982, she was paid on a monthly basis
at P250.00 a month which was ultimately increased to P575.00 a month.
On December 18, 1987, while she was attending to her assigned task and she
was hanging her laundry, she accidentally slipped and hit her back on a stone.
She reported the accident to her immediate supervisor Mila de la Rosa and to
the personnel officer, Florendo D. Asirit. As a result of the accident she was not
able to continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her job, but she
refused the offer and preferred to return to work. Petitioner did not allow her to
return to work and dismissed her on February 4, 1988.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the term "domestic
servant" and shall refer to any person, whether male or female, who renders
services in and about the employer's home and which services are usually
necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the employer's
family.3
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employer's home to minister exclusively to the
personal comfort and enjoyment of the employer's family. Such definition
covers family drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like petitioner who attends to the needs of
the company's guest and other persons availing of said facilities. By the same
token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They may
not be considered as within the meaning of a "househelper" or "domestic
servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the nature of
the work of a househelper, domestic servant or laundrywoman in a home or in a
company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family
while in the latter case, whether it is a corporation or a single proprietorship
engaged in business or industry or any other agricultural or similar pursuit,
service is being rendered in the staffhouses or within the premises of the
business of the employer. In such instance, they are employees of the company
or employer in the business concerned entitled to the privileges of a regular
employee.
Petitioner contends that it is only when the househelper or domestic servant is
assigned to certain aspects of the business of the employer that such
househelper or domestic servant may be considered as such as employee. The
Court finds no merit in making any such distinction. The mere fact that the
househelper or domestic servant is working within the premises of the business
of the employer and in relation to or in connection with its business, as in its
staffhouses for its guest or even for its officers and employees, warrants the
conclusion that such househelper or domestic servant is and should be
considered as a regular employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book
3 of the Labor Code, as amended.
Petitioner denies having illegally dismissed private respondent and maintains
that respondent abandoned her work.1wphi1 This argument notwithstanding,
there is enough evidence to show that because of an accident which took place
while private respondent was performing her laundry services, she was not able
to work and was ultimately separated from the service. She is, therefore,
entitled to appropriate relief as a regular employee of petitioner. Inasmuch as
private respondent appears not to be interested in returning to her work for
valid reasons, the payment of separation pay to her is in order.
WHEREFORE, the petition is DISMISSED and the appealed decision and
resolution of public respondent NLRC are hereby AFFIRMED. No pronouncement
as to costs.
SO ORDERED.
CARLOS C. LIBRES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL STEEL CORPORATION,
OSMUNDO G. WAGA, JR., ANTONIE D. SEVA, PETER J. LOQUILLANO,
SATURNINO P. MEJORADA and ISIDRO F. HYNSON, JR., respondent.
Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial
position with National Steel Corporation (NSC) as Assistant Manager. On 3
August 1993 he received a Notice of Investigation from Assistant Vice president
Isidro F. Hynson Jr., his immediate superior, requesting him to submit a written
explanation relative to the charge of sexual harassment made by Susan D.
Capiral, Hynson's secretary, allegedly committed by Libres sometime in May
1992, and subsequently to answer clarificatory questions on the matter. The
notice also warned him that failure to file his written explanation would be
construed as a waiver of his right to be heard. On 14 August 1993 petitioner
submitted his written explanation denying the accusation against him and
offering to submit himself for clarificatory interrogation.
Subsequently, Hynson Jr. conducted an internal investigation to which Libres
and Capiral were invited to ventilate their respective sides of the issue. They
readily responded. Thereafter, Hynson Jr. submitted his report to the
Management Evaluation Committee (MEC).
The MEC, after deliberation concluded that the charges against petitioner
constituted a violation of Item 2, Table V, of the Plant's Rules and
Regulations. 1 It opined that "touching a female subordinate's hand and
shoulder, caressing her nape and telling other people that Capiral was the one
who hugged and kissed or that she responded to the sexual advances are
unauthorized acts that damaged her honor". 2 Referring to the Manual of the
Philippine Daily Inquirer in defining sexual harassment, 3 the MEC finally
concluded that petitioner's acts clearly constituted sexual harassment as
charged and recommended petitioner's suspension for thirty (30) days without
pay.
On 5 January 1994 petitioner wrote Melchor Q. Villamor, Vice President for
Manufacturing requesting reconsideration of his suspension, but the same was
denied. On 12 February 1994 the suspension order was finally implemented.
Seeking to reverse his misfortune, Libres filed a complaint for illegal suspension
and unjust discrimination against respondent NSC and its officers, private
respondents herein, before the Labor Arbiter. Citing the failure of the MEC to
grant him audience despite his offer to answer clarificatory questions, petitioner
claimed denial of due process. Labor Arbiter Nicodemus G. Palangan however
ruled that due process was properly observed and that there was a positive
finding of sexual harassment to justify petitioner's suspension. He pointed out
that there was no substantial inconsistency between the narration of
complainant Capiral and petitioner regarding the incident in the evening of May
1992. The Labor Arbiter found that aside from a few facts which were
controverted by Capiral in her complaint-affidavit, petitioner's admissions
approximated the truth; consequently, he ruled that the MEC was correct in
concluding that sexual harassment had indeed transpired. The Labor Arbiter
observed that petitioner should welcome that his penalty was only for
suspension of thirty (30) days as opposed to termination imposed
in Villarama v. NLRC and Golden Donuts. 4
In this recourse petitioner maintains that public respondent grievously erred
amounting to lack or excess of jurisdiction in finding that he committed sexual
harassment justifying his suspension, and in concluding that he was afforded
due process.
Petitioner argues that the issue of sexual harassment was not adequately
considered as he noted that the finding of the NLRC was made without proper
basis in fact and in law. He maintains that the NLRC merely adopted the
conclusions of the Labor Arbiter which in turn were simply derived from the
report of the MEC. Petitioner primarily disputes the failure of the NLRC to apply
RA No. 7877, "An Act Declaring Sexual Harassment Unlawful in the Employment,
Education or Training Environment and for Other Purposes," in determining
whether he actually committed sexual harassment. He asserts that his acts did
not fall within the definition and criteria of sexual harassment as laid down in
Sec. 3 of the law. 5 Specifically, he cites public respondent's failure to show that
his acts of fondling the hand and massaging the shoulders of Capiral
"discriminated against her continued employment," "impaired her rights and
privileges under the Labor Code," or "created a hostile, intimidating or offensive
environment." 6
Petitioner also contends that public respondent's reliance on Villarama v. NLRC
and Golden Donuts 7 was misplaced. He draws attention to victim Divina
Gonzaga's immediate filing of her letter of resignation in the Villarama case as
opposed to the one-year delay of Capiral in filing her complaint against him. He
now surmises that the filing of the case against him was merely an afterthought
and not borne out of a valid complaint, hence, the Villarama case should have
no bearing on the instant case.
As regards his assertion that he was not afforded due process, petitioner would
point to his demand for personal confrontation which was brushed aside by the
MEC. He argues strongly that in rejecting his plea, the MEC clearly denied him
an opportunity to be heard and present his side.
The issues raised in this petition require this Court to delve into the findings of
fact by the public respondent. We have ruled in a litany of cases that resort to
judicial review of the decisions of the NLRC under Rule 65 of the Rules of Court
is confined only to issues of want or excess of jurisdiction and grave abuse of
discretion on the part of the tribunal rending them. It does not include an
inquiry on the correctness of the evaluation of evidence, which served as basis
for the labor official in determining his conclusion. Findings of fact of
administrative officers are generally given finality. 8 Nonetheless, the Court shall
discuss the matter if only to emphasize that the contentions of petitioner are
definitely without merit.
Petitioner assails the failure of the NLRC to strictly apply RA No. 7877 to the
instant case. We note however that petitioner never raised the applicability of
the law in his appeal to the NLRC nor in his motion for reconsideration. Issues or
arguments must chiefly be raised before the court or agency concerned so as to
allow it to pass upon and correct its mistakes without the intervention of a
higher court. Having failed to indicate his effort along this line, petitioner cannot
now belatedly raise its application in this petition.
Republic Act No. 7877 was not yet in effect at the time of the occurrence of the
act complained of. It was still being deliberated upon in Congress when
petitioner's case was decided by the Labor Arbiter. As a rule, laws shall have no
retroactive effect unless otherwise provided, or except in a criminal case when
their application will favor the accused. 9 Hence, the Labor Arbiter have to rely
on the MEC report and the common connotation of sexual harassment as it is
generally as understood by the public. Faced with the same predicament, the
NLRC had to agree with the Labor Arbiter. In so doing, the NLRC did not commit
any abuse of discretion in affirming the decision of the Labor Arbiter.
Petitioner next trains his gun on the reliance by the NLRC on Villarama and
claims it was erroneous. We rule otherwise and hold that it was both fitting and
appropriate since it singularly addressed the issue of a managerial employee
committing sexual harassment on a subordinate. The disparity in the periods of
filing the complaints in the two (2) cases did not in any way reduce this case into
insignificance. On the contrary, it even invited the attention of the Court to
focus on sexual harassment as a just and valid cause for termination. Whereas
petitioner Libres was only meted a 30-day suspension by the NLRC, Villarama in
the other case was penalized with termination. As Mr. Justice Puno elucidated,
"As a managerial employee, petitioner is bound by more exacting work ethics.
He failed to live up to his higher standard of responsibility when he succumbed
to his moral perversity. And when such moral perversity is perpetrated against
his subordinate, he provides a justifiable ground for his dismissal for lack of trust
and confidence. It is the right, nay, the duty of every employer to protect its
employees from oversexed superiors." 10 Public respondent therefore is correct
in its observation that the Labor Arbiter was in fact lenient in his application of
the law and jurisprudence for which petitioner must be grateful and not gripe
against.
Petitioner further claims that the delay in instituting the complaint shows that it
was only an afterthought. We disagree. As pointed out by the Solicitor General,
it could be expected since Libres was Capiral's immediate superior. Fear of
retaliation and backlash, not to forget the social humiliation and embarrassment
that victims of this human frailty usually suffer, are all realities that Capiral had
to contend with. Moreover, the delay did not detract from the truth derived
from the facts. Petitioner Libres never questioned the veracity of Capiral's
allegations. In fact his narration even corroborated the latter's assertion in
several material points. He only raised issue on the complaint's protracted filing.
On the question of due process, we find that the requirements thereof were
sufficiently complied with. Due process as a constitutional precept does not
always and in all situations require a trial type proceeding. Due process is
satisfied when a person is notified of the charge against him and given an
opportunity to explain or defend himself. The essence of due process is simply
to be heard, or as applied to administrative proceedings, an opportunity to
explain one's side, or an opportunity to seek a reconsideration of the action or
ruling complained of. 11 It is undeniable that petitioner was given a Notice of
Investigation informing him of the charge of sexual harassment as well as
advising him to submit a written explanation regarding the matter; that he
submitted his written explanation to his superior, Isidro F. Hyson Jr.; that
Hynson Jr. further allowed him to air his grievance in a private session; and, that
upon release of the suspension order made by the MEC petitioner requested its
reconsideration but was denied. From the foregoing it can be gleaned that
petitioner was given more than adequate opportunity to explain his side and air
his grievances.
The personal confrontation with the MEC officers, which he requested, was not
necessary. The parties had already exhaustively presented their claims and
defenses in different fora. As stated in Howevers Savings and Loan Association
v. NLRC,litigants may be heard through pleadings, written explanations, position
papers, memoranda or oral arguments. 12 Petitioner has been afforded all of the
above means to air his side. Due process was therefore properly observed.
WHEREFORE, the petition is DISMISSED, no grave abuse of discretion having
been committed by public respondent National Labor Relations Commission in
upholding the suspension of petitioner Carlos G. Libres as justified and in
accordance with due process. Consequently, its decision of 28 August 1995 as
well as its resolution of 31 October 1995 is AFFIRMED.1wphi1.nt
SO ORDERED.
LUCITA E. BIBOSO, complainant,
vs.
JUDGE OSMUNDO M. VILLANUEVA, Presiding Judge of the Fourth Municipal
Circuit Trial Court, Bagumbayan-Esperanza, Sultan Kudarat
Province, respondent.
MENDOZA, J.:
This is an administrative complaint for sexual harassment against respondent
Judge Osmundo Villanueva of the Fourth Municipal Circuit Trial Court,
Bagumbayan-Esperanza, Sultan Kudarat.
Complainant Lucita E. Biboso, 33, claimed that at around 11 oclock in the
morning of August 20, 1996, she went to see respondent at the MCTC in
Esperanza, Sultan Kudarat to "follow up" her case (Civil Case No. 71).
Complainant made the following account of how she was allegedly molested by
respondent:
. . . [Judge Osmundo M. Villanueva] invited me to get inside his chamber for
personal conference. When we were already inside his office, he locked the
room. To my surprise he immediately embraced and kissed me, hugged me and
hurriedly removed my blouse he took advantage of caressing my breasts and
began unzipping my pants. Shocked and helpless during that time, I cried and
cried and cannot resist from his sexual advances . . . being weak against [his]
male strength. So what I did was to evade his sexual advances and immediately
run outside of his chamber and went home.1
Complainant said that she was again molested by respondent on September 4,
1996 inside the latters chamber in Esperanza, Sultan Kudarat. According to
complainant, she went to see respondent because he allegedly told her that she
had to sign some papers in "connection with the issuance of a warrant of
arrest."2
In his Answer3 to the complaint, respondent denied having made any sexual
advances against complainant at any time. He claimed that complainant and her
father-in-law, Cipriano Biboso, trumped up charges against him because he had
dismissed two cases (Civil Case No. 71 entitled "Lucita Biboso v. Haide4 Navarra"
and Criminal Case No. 1662-B entitled "Cipriano Biboso v. Heide Navarra") filed
by complainant and her father-in-law. He contended that he could not have
sexually molested complainant on August 20, 1996 in Esperanza because he was
in Lebak, Sultan Kudarat from August 19-23, 1996, discharging his duties as
Acting Presiding Judge of the First Municipal Circuit Trial Court for Lebak-
Kalamansig, Sultan Kudarat.
To support his alibi, respondent submitted several documents, namely: copies
of the transcript of stenographic notes, dated August 20, 1996, of the
preliminary investigation of complainant in Criminal Case No. 2033-L, conducted
in Lebak (Exh. 8); the complaints in Criminal Case Nos. 2033-L and 2034-L, both
entitled "People v. Eric Camporedondo and Christopher Camporedondo,"
received and notarized by him on August 20, 1996, also in Lebak (Exhs. 10 and
11); the itinerary of his travels and the corresponding disbursement voucher
prepared by the Clerk of Court of the MCTC of Lebak-Kalamansig showing that
he was in Lebak from August 19-23, 1996 (Exhs. 5 and 6); and a certification,
dated May 25, 1998, by the Clerk of Court of the MCTC of Lebak-Kalamansig
stating therein that respondent judge was in Lebak from August 19-23, 1996
(Exh. 7). As to the second incident of sexual harassment which allegedly took
place on September 4, 1996, respondent stated that such could not have been
committed as there was no session in Esperanza on that date.
The case was referred to the Executive Judge of the Regional Trial Court, Isulan,
Sultan Kudarat for investigation, report, and recommendation. During the
investigation, complainant and her sister-in-law, Lorna Biboso, testified, while
respondent, in addition to himself, presented as his witnesses SPO4 Rogelio
Venus, Romeo Chiva, process server of MCTC, Bagumbayan-Esperanza, and
Virginia Dumaguing, Clerk of Court, MCTC, Lebak-Kalamansig.
In his report, dated February 5, 2001, Executive Judge German M. Malcampo
found complainants claim of sexual harassment to be unsubstantiated due to
material inconsistencies between complainants affidavit-complaint and her
testimony during the investigation of the case. Nevertheless, in view of his
finding that respondent gave assistance to complainants father-in-law in filing a
case in his sala, Judge Malcampo recommended that respondent be
reprimanded and ordered to pay a fine in the amount of P20,000.00.
The recommendation is well taken. Indeed, the evidence presented during the
investigation of the case fails to show that respondent sexually harassed
complainant. Contrary to her statement in her affidavit-complaint that
respondent judge sexually molested her on August 20, 1996 inside his chamber
in Esperanza, Sultan Kudarat, complainant testified during the investigation of
this case that their meeting actually took place on August 27, 1996 in the
courthouse in Bagumbayan, Sultan Kudarat, during which respondent merely
shook her hand, thus:
ATTY. JABIDO, JR.
[Counsel for complainant]
Q Mrs. Biboso, your complaint is for sexual harassment allegedly committed
upon you by respondent Judge Osmundo Villanueva. To begin with, when did
this incident of sexual harassment occur?
A August 27.
Q What year?
A 1996, sir.
Q Where did the incident occur?
A At Bagumbayan.
Q Are you referring to Bagumbayan in Sultan Kudarat province?
A Yes, sir.
Q Will you please describe to us how the incident occurred?
A In the Municipal Trial Court of Bagumbayan Judge Villanueva called me in
his office. When I entered in his office he asked me why my appearance is
always "nakasimangot."
....
Q Did you make any answer to that question of Judge Villanueva?
A Yes, sir.
Q What did you tell Judge Villanueva, if any?
A I told Judge Villanueva that, "Sir, I have a problem."
Q Please continue your narration Mrs. Biboso.
A I told him that I have a problem in connection with my land. He told me,
"Tell me your problem and I am willing to help you."
Q What else? Was there anything else that happened?
A Then he held my hand.
....
Q Which hand did he hold?
A It was my left hand that was held by him, sir.
Q Can you demonstrate to us, you yourself as Judge Villanueva and myself
to take your place?
ATTY. JABIDO:
Your Honor, the witness is demonstrating that with her right hand, she held my
left hand with her four (4) fingers pressing my palm and the thumb on the upper
part of my hand.
....
Q Did anything else happen after that?
A I went back to my chair and sat down.
....
Q From that point, Mrs. Biboso, did anything else happen?
A No more, sir.
Q So, what did you do after that?
A I went out.
....
[ATTY. CORDERO]
Q How did Judge Villanueva [take] hold of your hand when you were facing
each other in between the table?
A He stretched his hand and shook my hand.
Q And that was all?
A And then, he said, "I will help you with your problem."5
When confronted with the inconsistency between what she stated in her
affidavit and her testimony during the investigation, complainant admitted that
what she had stated in her affidavit regarding the incident on August 20, 1996
was not true. She claimed that the discrepancy was due to the fact that she was
confused ("hindi pa naka-isip") at the time she executed the affidavit. She
insisted, however, that the alleged incident on September 4, 1996 did take
place.6
We find her explanation to be inadequate. Considering the nature of the
alteration involved, pertaining as it does to the time, place, and manner of
commission of the alleged first incident of sexual harassment, it is more likely
that, confronted with the numerous and unimpeachable documentary evidence
presented by respondent which showed that he was not in Esperanza, Sultan
Kudarat on August 20, 1996, where the alleged first incident of sexual
harassment took place, complainant was forced to change her story. In any
event, the incident which she said allegedly took place on August 27, 1996
between her and respondent in the municipal courthouse in Bagumbayan,
Sultan Kudarat does not constitute sexual harassment for, as she herself stated,
respondent merely shook her hand.
As for their September 4, 1996 meeting, it appears that complainant went to
see respondent not at the latters initiative but because she wanted to seek
advice in filing an estafa case against Heidi Navarra. As respondent testified:
ATTY. CORDERO, JR.:
[Counsel for respondent]
Q Going back to the second part of the complaint, that on September 4,
1996, you sexually molested or sexually harassed the complainant in the same
manner as what have been done to her allegedly on August 20, 1996. What can
you say to that?
A That is not true. I have not molested her.
Q What is the truth?
A On September 4, she came in the office and asked me about the filing of
that case of estafa against Navarra.
Q Meaning, she was legally consulting the court or seeking advice on that
proposed criminal case that was filed?
A She asked me on what to do.
Q Who was interested in the filing of the estafa case?
A She was the one together with the father-in-law.
Q What was your advice on September 4, 1996, on that consultation? Q When the aforesaid criminal complaint was presented to you for filing,
who were the persons who delivered or filed the same in your court at
Esperanza?
A I told her that it is the father-in-law who should be the one to file the
complaint.
A Mr. Cipriano Biboso was there, Lucita Biboso and together with SPO4
Rogelio Venus, the PNP member of Bagumbayan.7
Q Did she do that?

It is noteworthy that complainant confirmed respondents claim. Complainant

A On the following day, she returned together with the father-in-law.
said:

Q And what was the conversation between you and her father-in-law?
ATTY. CORDERO:

A Well, if that property is registered [in his name], he should be the party to
Q Now, you mentioned of having been again molested by Judge Villanueva
file the case and he told me that although that land belongs to his daughter-in-
on September 4, 1996. What day was September 4, 1996?
law, he is still the registered owner.

A Wednesday, sir.
Q As you said it was rather Lucita Biboso [who] claims the land but the title
is not registered in her name so you advised her that it was her father-in-law
who should do the filing? Q And at what time did you arrive at the court on September 4, 1996?

A Yes, sir. A About 9:30 oclock, sir.

INVESTIGATING JUDGE: ....

Q And that was the reason why she appeared on the following day, Q By the way, why were you there on that particular day on September 4,
September 5, 1996, together with her father-in-law, Cipriano Biboso? 1996?

A They appeared in Court and they requested that I will help them execute A We will file [a complaint for] estafa, sir.
the affidavit so that they will not be investigated anymore.
Q Against whom?
Q That was September 5, 1996?
A Heidi Navarra.
A Yes, sir.
Q Who was filing the estafa case?
Q Was the affidavit prepared?
A My father-in-law.
A Yes.
....
Q Who prepared the affidavit?
Q When you went there on September 4, 1996, was the estafa case already
A I dictated it to my clerk. filed?

Q That was duly signed by the complainant? A Not yet, sir. It was filed on September 5.

A Yes, sir. ....

Q In your presence? Q Where was it filed, in Bagumbayan or in Esperanza?

A Yes. A In Esperanza, sir.8

Q And it was you who ratified the document? Respondents testimony was likewise corroborated by SPO4 Rogelio Venus of
the Philippine National Police, Bagumbayan, Sultan Kudarat, who testified:
A Yes, sir.
[ATTY. CORDERO]
Q After the execution of the said affidavit, did you advice them further on
what to do? Q On September 5, 1996, can you recall whether Lucita Biboso and her
father-in-law went to your police station at Bagumbayan?
A Well, after Cipriano Biboso signed the document, I adviced them [to] . . .
just give this document to the PNP Bagumbayan for the proper filing of the A Yes, sir.
criminal complaint.
Q What time was that?
Q With the complaint of Cipriano Biboso, was a criminal complaint finally
prepared?
A That was 3:00 oclock in the afternoon, sir.

A Yes.
Q Do you know what was the purpose of both of them in going to the police
station of Bagumbayan?
Q When?
A They wanted to file a case against Haydee Navarra.
A I think, the document will show that it is stated September.
.... Q In connection with the criminal complaint?

ATTY. CORDERO: A Yes, sir.

Q Did any one of them present a document to support the filing of [an] Q Did you receive that warrant of arrest?
estafa case?
A After the filing, I received a copy of the warrant of arrest.9
A They were bringing with them an affidavit to support the criminal
complaint.
Complainants behavior during the actual filing of the case on September 6,
1996, as observed by SPO4 Rogelio Venus, belies her allegation that she had
Q You have seen that affidavit? been subjected to sexual abuse by respondent two days before, thus:

A Yes, sir. [INVESTIGATING JUDGE]

Q Whose affidavit was that? Q You entered the chamber of the MCTC Judge Villanueva in the Municipal
Court of Esperanza, Sultan Kudarat?
A Affidavit of Cipriano Biboso.
A Yes, your Honor.
....
....
Q Now, based on this affidavit, did the police station prepare the criminal
complaint? Q How long did you stay inside the chamber of the Judge?

A During that time, sir, considering that it [was] already late in the A If I remember it right, 20 minutes.
afternoon, we adviced them to go back the following day.
Q Who was talking with the Judge as soon as you entered his chamber?
....
A We were four (4) in the office, Your Honor. The complainant is talking
Q Now, on the next day, you said that they were adviced to come back. with the Judge.
That was already September 6, 1996. Did they come back to the PNP station [of]
Bagumbayan?
Q To whom are you referring?

A Yes, sir.
A The complainant Mr. Biboso and his companion, his daughter-in-law
Lucita Biboso.
Q And what did you do with the prepared criminal complaint?
Q You were just [listening]?
A I was instructed by our Chief of Police to go with them [to] Esperanza to
file the case.
A Yes, Your Honor.

Q Did you go with them?

Q How was the conversation between the respondent Judge and the
complainant, Cipriano Biboso, as well as his daughter-in-law?
A Yes, sir.
A Normal, Your Honor.
Q What time did you arrive at Esperanza?
Q In other words, the complainant, Cipriano Biboso, and his daughter-in-
A More or less, 10:00 oclock in the morning law, were satisfied that the complaint for estafa was finally filed and accepted
by the MCTC Judge?
....
A Yes, Your Honor.
Q When you arrived at Esperanza, the three of you went directly to the
Court? ....

A Yes, sir. Q On your way out of the courthouse in Esperanza, Sultan Kudarat, what if
any did the complainant, Cipriano Biboso, tell you considering that you were
now in possession of the warrant of arrest?
Q Was the Judge present that time when you arrived thereat?

A He told me to effect the arrest immediately.

A Yes, sir.

Q How about his daughter-in-law, Lucita Biboso, what did she tell you if
Q And you presented that criminal complaint?
any?

A Yes, sir.
A The same, sir, [to serve] the warrant of arrest.

....
Q Did you notice [the] action [on] their faces that they were happy because
of the issuance of a warrant of arrest against the accused, Haydee Navarra?
Q Was there a warrant of arrest issued on that same day?

A Yes, sir.
A Of course, sir, naturally they were happy because we are holding the
warrant of arrest and then they told me to facilitate the immediate arrest of the
accused.
....
Q Since you were with Cipriano Biboso and Lucita Biboso, did not Lucita
Biboso tell you of anything in connection with this case and in connection with
the respondent Judge?
A None, Your Honor.
Q Did she not tell you that a day or two earlier, she was allegedly harassed
or molested by the respondent Judge?
A None, sir.
Q Are you very sure of that?
A Yes, Your Honor.10
Complainant thus failed to prove her charges against respondent. The
inconsistencies between her testimony and complaint-affidavit, in contrast to
the credible testimonial and documentary evidence presented by respondent,
put in serious doubt the veracity of her claims. Indeed, it appears, as respondent
judge claims, that this case was filed to punish him for having dismissed the
cases filed by complainant and her father-in-law, especially as the filing of this
case came on the heels of the dismissal of the latter. There could no other
reason for complainant to turn against respondent when the latter had
previously helped complainant in her legal problems to the extent of preparing
her father-in-laws complaint-affidavit for estafa against Navarra and even
issuing a writ of execution in one case (Civil Case No. 71) and a warrant of arrest
in another (Criminal Case No. 1662-B). Furthermore, it took complainant more
than a year after the commission of the alleged sexual harassment on
September 4, 1996 to file the instant administrative complaint. Even
complainant's explanation as to why she executed her affidavit-complaint only
on October 16, 1997 was conflicting. She initially stated that she was only able
to execute her complaint-affidavit for this case on said late date because rumors
had spread by that time that she was respondents lover (kabit).11 During her
cross-examination, however, she stated that she had to defer the execution of
her complaint because she had to wait for her husband to come back from
Manila.12
The foregoing notwithstanding, as found by the investigating judge, respondent
should be held liable for his conduct in relation to Criminal Case No. 1662-B.
Respondent acted as a lawyer for complainant and her father-in-law when he
drafted complainants affidavit which became the basis of a complaint for estafa
filed against Heidi Navarra. By acting as counsel for complainant and the latters
father-in-law in a case filed in his court, respondent compromised his neutrality
and independence. How could he then be expected to decide with objectivity
and fairness the cases in which he has acted as a lawyer for the plaintiff or
complainant? Respondents misconduct in this case is further compounded by
the fact that he rendered the legal services in question using government
facilities during office hours.
WHEREFORE, respondent Judge Osmundo M. Villanueva, Fourth Municipal
Circuit Trial Court, Bagumbayan-Esperanza, Sultan Kudarat, is found GUILTY of
misconduct and is hereby ORDERED to pay a FINE in the amount of P20,000.00
with warning that commission of similar and other misconduct will be dealt with
more severely.
SO ORDERED.
DR. RICO S. JACUTIN, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
VITUG, J.:
In an accusatory Information, dated 22 July 1996, petitioner, City Health Officer
Rico Jacutin of Cagayan de Oro City, was charged before the Sandiganbayan,
Fourth Division, with the crime of Sexual Harassment, thusly:
"That sometime on or about 01 December 1995, in Cagayan de Oro City, and
within the jurisdiction of this Honorable Court pursuant to the provisions of RA
7975, the accused, a public officer, being then the City Health Officer of Cagayan
de Oro City with salary grade 26 but a high ranking official by express provision
of RA 7975, committing the offense in relation to his official functions and taking
advantage of his position, did there and then, willfully, unlawfully and criminally,
demand, solicit, request sexual favors from Ms. Juliet Q. Yee, a young 22 year-
old woman, single and fresh graduate in Bachelor of Science in Nursing who was
seeking employment in the office of the accused, namely: by demanding from
Ms. Yee that she should, expose her body and allow her private parts to be
mashed and stimulated by the accused, which sexual favor was made as a
condition for the employment of Ms. Yee in the Family Program of the Office of
the accused, thus constituting sexual harassment."1
Upon his arraignment, petitioner pled not guilty to the offense charged; hence,
trial proceeded.
Juliet Q. Yee, then a 22-year old fresh graduate of nursing, averred that on 28
November 1995 her father accompanied her to the office of petitioner at the
City Health Office to seek employment. Juliets father and petitioner were
childhood friends. Juliet was informed by the doctor that the City Health Office
had just then filled up the vacant positions for nurses but that he would still see
if he might be able to help her.
The following day, 29 November 1995, Juliet and her father returned to the City
Health Office, and they were informed by petitioner that a medical group from
Texas, U.S.A., was coming to town in December to look into putting up a clinic in
Lapasan, Cagayan de Oro, where she might be considered. On 01 December
1995, around nine oclock in the morning, she and her father went back to the
office of petitioner. The latter informed her that there was a vacancy in a family
planning project for the city and that, if she were interested, he could interview
her for the job. Petitioner then started putting up to her a number of questions.
When asked at one point whether or not she already had a boyfriend, she said
"no." Petitioner suggested that perhaps if her father were not around, she could
afford to be honest in her answers to the doctor. The father, taking the cue,
decided to leave. Petitioner then inquired whether she was still a virgin,
explaining to her his theory on the various aspects of virginity. He
"hypothetically" asked whether she would tell her family or friends if a male
friend happened to intimately touch her. Petitioner later offered her the job
where she would be the subject of a "research" program. She was requested to
be back after lunch.
Before proceeding to petitioners office that afternoon, Juliet dropped by at the
nearby church to seek divine guidance as she felt so "confused." When she got
to the office, petitioner made several telephone calls to some hospitals to
inquire whether there was any available opening for her. Not finding any,
petitioner again offered her a job in the family planning research undertaking.
She expressed hesitation if a physical examination would include "hugging" her
but petitioner assured her that he was only kidding about it. Petitioner then
invited her to go bowling. Petitioner told her to meet him at Borja Street so that
people would not see them on board the same car together. Soon, at the
designated place, a white car driven by petitioner stopped. She got in. Petitioner
held her pulse and told her not to be scared. After dropping by at his house to
put on his bowling attire, petitioner got back to the car.
While driving, petitioner casually asked her if she already took her bath, and she
said she was so in a hurry that she did not find time for it. Petitioner then
inquired whether she had varicose veins, and she said "no." Petitioner told her
to raise her foot and lower her pants so that he might confirm it. She felt
assured that it was all part of the research. Petitioner still pushed her pants
down to her knees and held her thigh. He put his hands inside her panty until he
reached her pubic hair. Surprised, she exclaimed "hala ka!" and instinctively
pulled her pants up. Petitioner then touched her abdomen with his right hand
saying words of endearment and letting the back of his palm touch her
forehead. He told her to raise her shirt to check whether she had nodes or
lumps. She hesitated for a while but, eventually, raised it up to her navel.
Petitioner then fondled her breast. Shocked at what petitioner did, she lowered
her shirt and embraced her bag to cover herself, telling him angrily that she was
through with the research. He begged her not to tell anybody about what had
just happened. Before she alighted from the car, petitioner urged her to
reconsider her decision to quit. He then handed over to her P300.00 for her
expenses.
Arriving home, she told her mother about her meeting with Dr. Jacutin and the
money he gave her but she did not give the rest of the story. Her mother
scolded her for accepting the money and instructed her to return it. In the
morning of 04 December 1994, Juliet repaired to the clinic to return the money
to petitioner but she was not able to see him until about one oclock in the
afternoon. She tried to give back the money but petitioner refused to accept it.
A week later, Juliet told her sister about the incident. On 16 December 1995, she
attempted to slash her wrist with a fastener right after relating the incident to
her mother. Noticing that Juliet was suffering from some psychological problem,
the family referred her to Dr. Merlita Adaza for counseling. Dr. Adaza would
later testify that Juliet, together with her sister, came to see her on 21
December 1995, and that Juliet appeared to be emotionally disturbed, blaming
herself for being so stupid as to allow Dr. Jacutin to molest her. Dr. Adaza
concluded that Juliets frustration was due to post trauma stress.
Petitioner contradicted the testimony of Juliet Yee. He claimed that on 28
November 1995 he had a couple of people who went to see him in his office,
among them, Juliet and her father, Pat. Justin Yee, who was a boyhood friend.
When it was their turn to talk to petitioner, Pat. Yee introduced his daughter
Juliet who expressed her wish to join the City Health Office. Petitioner replied
that there was no vacancy in his office, adding that only the City Mayor really
had the power to appoint city personnel. On 01 December 1995, the afternoon
when the alleged incident happened, he was in a meeting with the Committee
on Awards in the Office of the City Mayor. On 04 December 1995, when Juliet
said she went to his office to return the P300.00, he did not report to the office
for he was scheduled to leave for Davao at 2:35 p.m. to attend a hearing before
the Office of the Ombudsman for Mindanao. He submitted in evidence a
photocopy of his plane ticket. He asserted that the complaint for sexual
harassment, as well as all the other cases filed against him by Vivian Yu, Iryn
Salcedo, Mellie Villanueva and Pamela Rodis, were but forms of political
harassment directed at him.
The Sandiganbayan, through its Fourth Division, rendered its decision, dated 05
November 1999, penned by Mr. Justice Rodolfo G. Palattao, finding the accused,
Dr. Rico Jacutin, guilty of the crime of Sexual Harassment under Republic Act No.
7877. The Sandiganbayan concluded:
"WHEREFORE, judgment is hereby rendered, convicting the accused RICO
JACUTIN Y SALCEDO of the crime of Sexual Harassment, defined and punished
under R.A. No. 7877, particularly Secs. 3 and 7 of the same Act, properly known
as the Anti-Sexual Harassment Act of 1995, and is hereby sentenced to suffer
the penalty of imprisonment of six (6) months and to pay a fine of Twenty
Thousand (P20,000.00) Pesos, with subsidiary imprisonment in case of
insolvency. Accused is further ordered to indemnify the offended party in the
amount of Three Hundred Thousand (P300,000.00) Pesos, by way of moral
damages; Two Hundred Thousand (P200,000.00) Pesos, by way of Exemplary
damages and to pay the cost of suit."2
In the instant recourse, it is contended that -
"I. Petitioner cannot be convicted of the crime of sexual harassment in view of
the inapplicability of Republic Act No. 7877 to the case at bar.
"II. Petitioner [has been] denied x x x his constitutional right to due process of
law and presumption of innocence on account of the insufficiency of the
prosecution evidence to sustain his conviction."3
The above contentions of petitioner are not meritorious. Section 3 of Republic
Act 7877 provides:
"SEC. 3. Work, Education or Training-related Sexual Harassment Defined.
Work, education or training-related sexual harassment is committed by an
employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from
the other, regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.
"(a) In a work-related or employment environment, sexual harassment is
committed when:
"(1) The sexual favor is made as a condition in the hiring or in the employment,
re-employment or continued employment of said individual, or in granting said
individual favorable compensation, terms, conditions, promotions, or privileges;
or the refusal to grant the sexual favor results in limiting, segregating or
classifying the employee which in any way would discriminate, deprive or
diminish employment opportunities or otherwise adversely affect said
employee."
Petitioner was the City Health Officer of Cagayan de Oro City, a position he held
when complainant, a newly graduated nurse, saw him to enlist his help in her
desire to gain employment. He did try to show an interest in her plight, her
father being a boyhood friend, but finding no opening suitable for her in his
office, he asked her about accepting a job in a family planning research project.
It all started from there; the Sandiganbayan recited the rest of the story:
"x x x. Succeeding in convincing the complainant that her physical examination
would be a part of a research, accused asked complainant if she would agree
that her private parts (bolts) would be seen. Accused assured her that with her
cooperation in the research, she would gain knowledge from it. As complainant
looked upon the accused with utmost reverence, respect, and paternal
guidance, she agreed to undergo the physical examination. At this juncture,
accused abruptly stopped the interview and told the complainant to go home
and be back at 2:00 oclock in the afternoon of the same day, December 1, 1995.
Complainant returned at 2:00 oclock in the afternoon, but did not proceed
immediately to the office of the accused, as she dropped by a nearby church to
ask divine guidance, as she was confused and at a loss on how to resolve her
present predicament. At 3:00 oclock in the afternoon, she went back to the
office of the accused. And once inside, accused called up a certain Madonna,
inquiring if there was a vacancy, but he was told that she would only accept a
registered nurse. Complainant was about to leave the office of the accused
when the latter prevailed upon her to stay because he would call one more
hospital. In her presence, a call was made. But again accused told her that there
was no vacancy. As all efforts to look for a job in other hospitals failed, accused
renewed the offer to the complainant to be a part of the research in the Family
Planning Program where there would be physical examination. Thereafter,
accused motioned his two (2) secretaries to go out of the room. Upon moving
closer to the complainant, accused asked her if she would agree to the offer.
Complainant told him she would not agree because the research included
hugging. He then assured her that he was just kidding and that a pre-schooler
and high schooler have already been subjected to such examination. With
assurance given, complainant changed her mind and agreed to the research, for
she is now convinced that she would be of help to the research and would gain
knowledge from it. At this point, accused asked her if she was a tomboy, she
answered in the negative. He then instructed her to go with him but he would
first play bowling, and later proceed with the research (physical examination).
On the understanding of the complainant that they will proceed to the clinic
where the research will be conducted, she agreed to go with the accused. But
accused instructed her to proceed to Borja St. where she will just wait for him,
as it was not good for people to see them riding in a car together. She walked
from the office of the accused and proceeded to Borja St. as instructed. And
after a while, a white car arrived. The door was opened to her and she was
instructed by the accused to come inside. Inside the car, he called her attention
why she was in a pensive mood. She retorted she was not. As they were seated
side by side, the accused held her pulse and told her not to be scared. He
informed her that he would go home for a while to put on his bowling attire.
After a short while, he came back inside the car and asked her if she has taken a
bath. She explained that she was not able to do so because she left the house
hurriedly. Still while inside the car, accused directed her to raise her foot so he
could see whether she has varicose veins on her legs. Thinking that it was part of
the research, she did as instructed. He told her to raise it higher, but she
protested. He then instructed her to lower her pants instead. She did lower her
pants, exposing half of her legs. But then the accused pushed it forward down to
her knees and grabbed her legs. He told her to raise her shirt. Feeling as if she
had lost control of the situation, she raised her shirt as instructed. Shocked, she
exclaimed, hala ka! because he tried to insert his hand into her panty. Accused
then held her abdomen, saying, you are like my daughter, Day! (Visayan word
of endearment), and let the back of his palm touch her forehead, indicating the
traditional way of making the young respect their elders. He again told her to
raise her shirt. Feeling embarrassed and uncomfortable, yet unsure whether she
was entertaining malice, she raised her shirt up to her breast. He then fondled
her breast. Reacting, she impulsively lower her shirt and embraced her bar while
silently asking God what was happening to her and asking the courage to resist
accuseds physical advances. After a short while, she asked him if there could be
a right place for physical examination where there would be many doctors. He
just exclaimed, so you like that there are many doctors! Then he asked her if
she has tooth decay. Thinking that he was planning to kiss her, she answered
that she has lots of decayed teeth. He advised her then to have them treated.
Finally, she informed him that she would not continue with the research. The
accused retorted that complainant was entertaining malice and reminded her of
what she earlier agreed; that she would not tell anybody about what happened.
He then promised to give her P15,000.00 so that she could take the
examination. She was about to open the door of the car when he suddenly
grabbed her thigh, but this time, complainant instantly parried his hand with her
bag."4
While the City Mayor had the exclusive prerogative in appointing city personnel,
it should stand to reason, nevertheless, that a recommendation from petitioner
in the appointment of personnel in the municipal health office could carry good
weight. Indeed, petitioner himself would appear to have conveyed, by his words
and actions, an impression that he could facilitate Juliets employment. Indeed,
petitioner would not have been able to take undue liberalities on the person of
Juliet had it not been for his high position in the City Health Office of Cagayan de
Oro City. The findings of the Sandiganbayan were bolstered by the testimony of
Vivian Yu, petitioners secretary between 1979 to 1994, of Iryn Lago Salcedo,
Public Health Nurse II, and of Farah Dongallo y Alkuino, a city health nurse, all of
whom were said to have likewise been victims of perverse behavior by
petitioner.

The Sandiganbayan rightly rejected the defense of alibi proffered by petitioner,

i.e., that he was at a meeting of the Committee on Awards; the court a quo said:

"There are some observations which the Court would like to point out on the
evidence adduced by the defense, particularly in the Minutes of the meeting of
the Awards Committee, as testified to by witness Myrna Maagad on September
8, 1998.

"First, admitted, Teresita I. Rozabal was the immediate supervisor of witness

Myrna Maagad. The Notices to hold the meeting (Exh. 3-A and 3-B) were
signed by Teresita Rozabal. But the Minutes of the meeting, Exh. 5, was signed
by Myrna Maagad and not by Teresita Rozabal. The documents, Exhs. 3-A and
3-B certify that the officially designated secretary of the Awards Committee
was Teresita Rozabal.

"Second, why was Myrna Maagad in possession of the attendance logbook and
how was she able to personally bring the same in court when she testified on
September 8, 1998, when in fact, she admitted during her testimony that she
retired from the government service on December 1, 1997? Surely, Myrna
Maagad could not still be the custodian of the logbook when she testified.

"And finally, in the logbook, under the sub-heading, Others Present, the
attendance of those who attended was individually handwritten by the persons
concerned who wrote and signed their names. But in the case of Dr. Tiro and Dr.
Rico Jacutin, their names were handwritten by clerk Sylvia Tan-Nerry, not by Dr.
Tiro and Dr. Jacutin. However, Myrna Maagad testified that the logbook was
passed around to attending individuals inside the conference room."5

Most importantly, the Supreme Court is not a trier of facts, and the factual
findings of the Sandiganbayan must be respected by, if not indeed conclusive
upon, the tribunal,6 no cogent reasons having been sufficiently shown to now
hold otherwise. The assessment on the credibility of witnesses is a matter best
left to the trial court because of its unique position of being able to observe that
elusive and incommunicable evidence on the deportment of witnesses at the
stand, an opportunity that is denied the appellate court.7

Conformably with prevailing jurisprudence, the grant of moral and exemplary

damages by the Sandiganbayan must be tempered to reasonable levels. Moral
damages are not intended to enrich a complainant but are awarded only to
enable an injured party obtain some means that would help obviate the
sufferings sustained on account of the culpable action of an offender. Its award
must not appear to be the result of passion or undue prejudice, 8 and it must
always reasonably approximate the extent of injury and be proportional to the
wrong committed. Indeed, Juliet should be recompensed for her mental
anguish. Dr. Merlita F. Adaza, a psychological counseling expert, has found Juliet
to be emotionally and psychologically disturbed and suffering from post trauma
stress following her unpleasant experience with petitioner. The Court finds it
fitting to award in favor of Juliet Yee P30,000.00 moral damages. In addition, she
should be entitled to P20,000.00 exemplary damages to serve as a deterrent
against, or as a negative incentive to curb, socially deleterious actions.9

WHEREFORE, the questioned decision of the Sandiganbayan in Criminal Case

No. 23799, finding Dr. Rico Jacutin y Salcedo GUILTY of the crime of Sexual
Harassment defined and punished under Republic Act No. 7877, particularly
Sections 3 and 7 thereof, and penalizing him with imprisonment of six (6)
months and to pay a fine of Twenty Thousand (P20,000.00) Pesos, with
subsidiary imprisonment in case of insolvency, is AFFIRMED. The
Sandiganbayans award of moral and exemplary damages are MODIFIED;
instead, petitioner is ordered to indemnify the offended party, Juliet Yee, in the
amount of P30,000.00 and P20,000.00 by way of, respectively, moral damages
and exemplary damages. Costs against petitioner.

SO ORDERED.