SECOND DIVISION DECISION

ARCO METAL PRODUCTS, CO., G.R. No. 170734 TINGA, J.:

INC., and MRS. SALVADOR UY,

Petitioners, Present:

This treats of the Petition for Review[1] of the Resolution[2] and Decision[3]
of the Court of Appeals dated 9 December 2005 and 29 September
QUISUMBING, J., 2005, respectively in CA-G.R. SP No. 85089 entitled
Chairperson,

- versus - TINGA,

VELASCO, and

BRION, JJ. Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU) v.

SAMAHAN NG MGA MANGGAGAWA
SA ARCO METAL-NAFLU (SAMARM-
NAFLU),
Arco Metal Products Co., Inc. and/or Mr. Salvador Uy/Accredited Voluntary
Arbitrator Apron M. Mangabat,[4] which ruled that the 13th month pay,
vacation leave and sick leave conversion to cash shall be paid in full to the
employees of petitioner regardless of the actual service they rendered
within a year.
Promulgated:

Respondent.
Petitioner is a company engaged in the manufacture of metal products,
May 14, 2008 whereas respondent is the labor union of petitioner’s rank and file
employees. Sometime in December 2003, petitioner paid the 13th month
pay, bonus, and leave encashment of three union members in amounts
proportional to the service they actually rendered in a year, which is less
x---------------------------------------------------------------------------x
than a full twelve (12) months. The employees were:

1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004

2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003
3. Rodelio Collantes Sickness August 2003 to February 2004
Respondent protested the prorated scheme, claiming that on several
occasions petitioner did not prorate the payment of the same benefits to
seven (7) employees who had not served for the full 12 months. The
payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004.
According to respondent, the prorated payment violates the rule against
diminution of benefits under Article 100 of the Labor Code. Thus, they filed
a complaint before the National Conciliation and Mediation Board (NCMB).
The parties submitted the case for voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of
petitioner and found that the giving of the contested benefits in full,
irrespective of the actual service rendered within one year has not ripened
into a practice. He noted the affidavit of Joselito Baingan, manufacturing
group head of petitioner, which states that the giving in full of the benefit
was a mere error. He also interpreted the phrase “for each year of service”
found in the pertinent CBA provisions to mean that an employee must have
rendered one year of service in order to be entitled to the full benefits
provided in the CBA.[5]
Unsatisfied, respondent filed a Petition for Review[6] under Rule 43
before the Court of Appeals, imputing serious error to Mangabat’s
conclusion. The Court of Appeals ruled that the CBA did not intend to
foreclose the application of prorated payments of leave benefits to covered
employees. The appellate court found that petitioner, however, had an
existing voluntary practice of paying the aforesaid benefits in full to its
employees, thereby rejecting the claim that petitioner erred in paying
full benefits to its seven
employees. The appellate court noted that aside from the affidavit of
petitioner’s officer, it has not presented any evidence in support of its
position that it has no voluntary practice of granting the contested benefits
in full and without regard to the service actually rendered within the year.
It also questioned why it took petitioner eleven (11) years before it was able
to discover the alleged error. The dispositive portion of the court’s decision
reads:
WHEREFORE, premises considered, the instant petition is hereby
GRANTED and the Decision of Accredited Voluntary Arbiter Apron M.
Mangabat in NCMB-NCR Case No. PM-12-345-03, dated June 18, 2004 is
hereby AFFIRMED WITH MODIFICATION in that the 13th month pay, bonus,
vacation leave and sick leave conversions to cash shall be paid to the
employees in full, irrespective of the actual service rendered within a
year.[7]
Petitioner moved for the reconsideration of the decision but its
motion was denied, hence this petition.
Petitioner submits that the Court of Appeals erred when it ruled that
the grant of 13th month pay, bonus, and leave encashment in full
regardless of actual service rendered constitutes voluntary employer
practice and, consequently, the prorated payment of the said benefits does
not constitute diminution of benefits under Article 100 of the Labor
Code.[8]
 Section 2. In case of resignation or retirement of an employee, his vacation
leave shall be paid proportionately to his days of service rendered during
the year.

The petition ultimately fails.

ARTICLE XV-SICK LEAVE

First, we determine whether the intent of the CBA provisions is to
grant full benefits regardless of service actually rendered by an employee to
the company. According to petitioner, there is a one-year cutoff in the Section 1. Employees/workers covered by this agreement who have
entitlement to the benefits provided in the CBA which is evident from the rendered at least one (1) year of service shall be entitled to sixteen (16)
wording of its pertinent provisions as well as of the existing law. days of sick leave with pay for each year of service. Unused sick leave shall
not be cumulative but shall be converted into its cash equivalent and shall
become due and payable every 1st Saturday of December of each year.
We agree with petitioner on the first issue. The applicable CBA provisions
read:

ARTICLE XIV-VACATION LEAVE

Section 1. Employees/workers covered by this agreement who have

rendered at least one (1) year of service shall be entitled to sixteen (16) Section 2. Sick Leave will only be granted to actual sickness duly
days vacation leave with pay for each year of service. Unused leaves shall certified by the Company physician or by a licensed physician.
not be cumulative but shall be converted into its cash equivalent and shall
become due and payable every 1st Saturday of December of each year.
Section 3. All commutable earned leaves will be paid proportionately
upon retirement or separation.
However, if the 1st Saturday of December falls in December 1, November 30
(Friday) being a holiday, the management will give the cash conversion of
leaves in November 29. ARTICLE XVI – EMERGENCY LEAVE, ETC.

Section 1. The Company shall grant six (6) days emergency leave to
employees covered by this agreement and if unused shall be converted into
cash and become due and payable on the 1st Saturday of December each
year.
Section 2. Employees/workers covered by this agreement who have
rendered at least one (1) year of service shall be entitled to seven (7) days of
Paternity Leave with pay in case the married employee’s legitimate spouse
gave birth. Said benefit shall be non-cumulative and non-commutative and
shall be deemed in compliance with the law on the same.
Section 3. Maternity leaves for married female employees shall be in
accordance with the SSS Law plus a cash grant of P1,500.00 per month.
xxx
ARTICLE XVIII- 13TH MONTH PAY & BONUS
Section 1. The Company shall grant 13th Month Pay to all employees
covered by this agreement. The basis of computing such pay shall be the
basic salary per day of the employee multiplied by 30 and shall become due
and payable every 1st Saturday of December.
Section 2. The Company shall grant a bonus to all employees as
practiced which shall be distributed on the 2nd Saturday of December.
Section 3. That the Company further grants the amount of Two
Thousand Five Hundred Pesos (P2,500.00) as signing bonus plus a free CBA
Booklet.[9] (Underscoring ours)
There is no doubt that in order to be entitled to the full monetization of
sixteen (16) days of vacation and sick leave, one must have rendered at
least one year of service. The clear wording of the provisions does not allow
any other interpretation. Anent the 13th month pay and bonus, we agree
with the findings of Mangabat that the CBA provisions did not give any
meaning different from that given by the law, thus it should be computed
at 1/12 of the total compensation which an employee receives for the
whole calendar year. The bonus is also equivalent to the amount of the
13th month pay given, or in proportion to the actual service rendered by an
employee within the year.
On the second issue, however, petitioner founders.
As a general rule, in petitions for review under Rule 45, the Court, not
being a trier of facts, does not normally embark on a re-examination of the
evidence presented by the contending parties during the trial of the case
considering that the findings of facts of the Court of Appeals are conclusive
and binding on the Court.[10] The rule, however, admits of several by implementing the pro-rata payment of benefits pursuant to law and their
exceptions, one of which is when the findings of the Court of Appeals are existing CBA.”[12] It adds that the seven earlier cases of full payment of
contrary to that of the lower tribunals. Such is the case here, as the factual benefits went unnoticed considering the proportion of one employee
conclusions of the Court of Appeals differ from that of the voluntary
arbitrator.
concerned (per year) vis à vis the 170 employees of the company.
Petitioner describes the situation as a “clear oversight” which should not be
Petitioner granted, in several instances, full benefits to employees who have taken against it.[13] To further bolster its case, petitioner argues that for a
not served a full year, thus: grant of a benefit to be considered a practice, it should have been practiced
over a long period of time and must be shown to be consistent, deliberate
and intentional, which is not what happened in this case. Petitioner tries to
Name Reason Duration make a case out of the fact that the CBA has not been modified to
incorporate the giving of full benefits regardless of the length of service,
1. Percival Bernas Sickness July 1992 to November 1992 proof that the grant has not ripened into company practice.

2. Cezar Montero Sickness 21 Dec. 1992 to February 1993

3. Wilson Sayod Sickness May 1994 to July 1994 We disagree.

4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996

5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999 Any benefit and supplement being enjoyed by employees cannot be
reduced, diminished, discontinued or eliminated by the employer.[14] The
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003
principle of non-diminution of benefits is founded on the Constitutional
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003[11] mandate to "protect the rights of workers and promote their welfare,”[15]
and “to afford labor full protection.”[16] Said mandate in turn is the basis of
Article 4 of the Labor Code which states that “all doubts in the
implementation and interpretation of this Code, including its implementing
rules and regulations shall be rendered in favor of labor.” Jurisprudence is
Petitioner claims that its full payment of benefits regardless of the length of replete with cases which recognize the right of employees to benefits which
service to the company does not constitute voluntary employer practice. It were voluntarily given by the employer and which ripened into company
points out that the payments had been erroneously made and they practice. Thus in Davao Fruits Corporation v. Associated Labor Unions, et
occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and al.[17] where an employer had freely and continuously included in the
2003. According to petitioner, it was only in 2003 that the accounting computation of the 13th month pay those items that were expressly
department discovered the error “when there were already three (3) excluded by the law, we held that the act which was favorable to the
employees involved with prolonged absences and the error was corrected employees though not conforming to law had thus ripened into a practice
and could not be withdrawn, reduced, diminished, discontinued or for a period less than one (1) year or twelve (12) months in accordance with
eliminated. In Sevilla Trading Company v. Semana,[18] we ruled that the the CBA provision relative thereto.
employer’s act of including non-basic benefits in the computation of the
13th month pay was a voluntary act and had ripened into a company
practice which cannot be peremptorily withdrawn. Meanwhile in Davao 6. It was never the intention much less the policy of the management to
Integrated Port Stevedoring Services v. Abarquez,[19] the Court ordered grant the aforesaid benefits to the employees in full regardless of whether
the payment of the cash equivalent of the unenjoyed sick leave benefits to or not the employee has rendered services to the company for the entire
its intermittent workers after finding that said workers had received these year, otherwise, it would be unjust and inequitable not only to the company
benefits for almost four years until the grant was stopped due to a different but to other employees as well.[24]
interpretation of the CBA provisions. We held that the employer cannot
unilaterally withdraw the existing privilege of commutation or conversion
to cash given to said workers, and as also noted that the employer had in
In cases involving money claims of employees, the employer has the
fact granted and paid said cash equivalent of the unenjoyed portion of the
burden of proving that the employees did receive the wages and
sick leave benefits to some intermittent workers.
benefits and that the same were paid in accordance with law.[25]

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted
Indeed, if petitioner wants to prove that it merely erred in giving full
a policy of freely, voluntarily and consistently granting full benefits to its
benefits, it could have easily presented other proofs, such as the names of
employees regardless of the length of service rendered. True, there were
other employees who did not fully serve for one year and thus were given
only a total of seven employees who benefited from such a practice, but it
prorated benefits. Experientially, a perfect attendance in the workplace is
was an established practice nonetheless. Jurisprudence has not laid down
always the goal but it is seldom achieved. There must have been other
any rule specifying a minimum number of years within which a company
employees who had reported for work less than a full year and who, as a
practice must be exercised in order to constitute voluntary company
consequence received only prorated benefits. This could have easily
practice.[20] Thus, it can be six (6) years,[21] three (3) years,[22] or even as
bolstered petitioner’s theory of mistake/error, but sadly, no evidence to
short as two (2) years.[23] Petitioner cannot shirk away from its
that effect was presented.
responsibility by merely claiming that it was a mistake or an error,
supported only by an affidavit of its manufacturing group head portions of
which read:
IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 85089 dated 29 September 2005 is and its
Resolution dated 9 December 2005 are hereby AFFIRMED.
5. 13th month pay, bonus, and cash conversion of unused/earned vacation
leave, sick leave and emergency leave are computed and paid in full to
employees who rendered services to the company for the entire year and
proportionately to those employees who rendered service to the company SO ORDERED.
SPECIAL FIRST DIVISION
[G.R. No. 127598. February 22, 2000]
MANILA ELECTRIC COMPANY, petitioner, vs. Hon. Secretary of Labor
Leonardo Quisumbing and Meralco Employees and Workers Association
(MEWA), respondents.
RESOLUTION
YNARES_SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court disposed of the
case as follows:
"WHEREFORE, the petition is granted and the orders of public respondent
Secretary of Labor dated August 19, 1996 and December 28, 1996 are set
aside to the extent set forth above. The parties are directed to execute a
Collective Bargaining Agreement incorporating the terms and conditions
contained in the unaffected portions of the Secretary of Labors orders of
August 19, 1996 and December 28, 1996, and the modifications set forth
above. The retirement fund issue is remanded to the Secretary of Labor for
reception of evidence and determination of the legal personality of the
Meralco retirement fund."[1]
The modifications of the public respondents resolutions include the
following:
January 27, 1999 decision Secretarys resolution
Wages -P1,900.00 for 1995-96 P2,200.00
Xmas bonus -modified to one month 2 months
Retirees -remanded to the Secretary granted
Loan to coops -denied granted
GHSIP, HMP
and Housing loans -granted up to P60,000.00 granted
Signing bonus -denied granted
Union leave -40 days (typo error) 30 days
High voltage/pole -not apply to those who are members of a team
not exposed to the risk
Collectors -no need for cash bond, no
need to reduce quota and MAPL
CBU -exclude confidential employees include
Union security -maintenance of membership closed shop
Contracting out -no need to consult union consult first
All benefits -existing terms and conditions all terms
Retroactivity -Dec 28, 1996-Dec 27, 199(9) from Dec 1, 1995
Dissatisfied with the Decision, some alleged members of private respondent
union (Union for brevity) filed a motion for intervention and a motion for
reconsideration of the said Decision. A separate intervention was likewise
made by the supervisors union (FLAMES[2]) of petitioner corporation alleging
that it has bona fide legal interest in the outcome of the case.[3] The Court
required the "proper parties" to file a comment to the three motions for
reconsideration but the Solicitor-General asked that he be excused from
filing the comment because the "petition filed in the instant case was
granted" by the Court.[4] Consequently, petitioner filed its own consolidated
comment. An "Appeal Seeking Immediate Reconsideration" was also filed by
the alleged newly elected president of the Union.[5] Other subsequent
pleadings were filed by the parties and intervenors.
The issues raised in the motions for reconsideration had already been
passed upon by the Court in the January 27, 1999 decision. No new
arguments were presented for consideration of the Court. Nonetheless,
certain matters will be considered herein, particularly those involving the
amount of wages and the retroactivity of the Collective Bargaining
Agreement (CBA) arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per month as
ordered by the Secretary is allowed, it would simply pass the cost covering
such increase to the consumers through an increase in the rate of
electricity. This is a non sequitur. The Court cannot be threatened with such
a misleading argument. An increase in the prices of electric current needs
the approval of the appropriate regulatory government agency and does
not automatically result from a mere increase in the wages of petitioners
employees. Besides, this argument presupposes that petitioner is capable of
meeting a wage increase. The All Asia Capital report upon which the Union
relies to support its position regarding the wage issue can not be an
accurate basis and conclusive determinant of the rate of wage increase.
Section 45 of Rule 130 Rules of Evidence provides:
"Commercial lists and the like. - Evidence of statements of matters of
interest to persons engaged in an occupation contained in a list, register,
periodical, or other published compilation is admissible as tending to prove
the truth of any relevant matter so stated if that compilation is published
for use by persons engaged in that occupation and is generally used and
relied upon by them therein."
Under the afore-quoted rule, statement of matters contained in a periodical
may be admitted only "if that compilation is published for use by persons
engaged in that occupation and is generally used and relied upon by them
therein." As correctly held in our Decision dated January 27, 1999, the cited
report is a mere newspaper account and not even a commercial list. At
most, it is but an analysis or opinion which carries no persuasive weight for
purposes of this case as no sufficient figures to support it were presented.
Neither did anybody testify to its accuracy. It cannot be said that
businessmen generally rely on news items such as this in their occupation.
Besides, no evidence was presented that the publication was regularly
prepared by a person in touch with the market and that it is generally
regarded as trustworthy and reliable. Absent extrinsic proof of their
accuracy, these reports are not admissible.[6] In the same manner,
newspapers containing stock quotations are not admissible in evidence
when the source of the reports is available.[7] With more reason, mere
analyses or projections of such reports cannot be admitted. In particular,
the source of the report in this case can be easily made available
considering that the same is necessary for compliance with certain
governmental requirements.
Nonetheless, by petitioners own allegations, its actual total net income for
1996 was P5.1 billion.[8] An estimate by the All Asia financial analyst stated
that petitioners net operating income for the same year was about P5.7
billion, a figure which the Union relies on to support its claim. Assuming
without admitting the truth thereof, the figure is higher than the P4.171
billion allegedly suggested by petitioner as its projected net operating
income. The P5.7 billion which was the Secretarys basis for granting the
P2,200.00 is higher than the actual net income of P5.1 billion admitted by
petitioner. It would be proper then to increase this Courts award of
P1,900.00 to P2,000.00 for the two years of the CBA award. For 1992, the
agreed CBA wage increase for rank-and-file was P1,400.00 and was reduced
to P1,350.00, for 1993; further reduced to P1,150.00 for 1994. For
supervisory employees, the agreed wage increase for the years 1992-1994
are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the
foregoing figures, the P2,000.00 increase for the two-year period awarded
to the rank-and-file is much higher than the highest increase granted to
supervisory employees.[9] As mentioned in the January 27, 1999 Decision,
the Court does "not seek to enumerate in this decision the factors that
should affect wage determination" because collective bargaining disputes
particularly those affecting the national interest and public service "requires
due consideration and proper balancing of the interests of the parties to the
dispute and of those who might be affected by the dispute."[10] The Court
takes judicial notice that the new amounts granted herein are significantly
higher than the weighted average salary currently enjoyed by other rank-
and-file employees within the community. It should be noted that the
relations between labor and capital is impressed with public interest which
must yield to the common good.[11] Neither party should act oppressively
against the other or impair the interest or convenience of the
public.[12] Besides, matters of salary increases are part of management
prerogative.[13]
On the retroactivity of the CBA arbitral award, it is well to recall that this
petition had its origin in the renegotiation of the parties 1992-1997 CBA
insofar as the last two-year period thereof is concerned. When the
Secretary of Labor assumed jurisdiction and granted the arbitral awards,
there was no question that these arbitral awards were to be given
retroactive effect. However, the parties dispute the reckoning period when
retroaction shall commence. Petitioner claims that the award should
retroact only from such time that the Secretary of Labor rendered the
award, invoking the 1995 decision in Pier 8 case[14] where the Court,
citing Union of Filipino Employees v. NLRC,[15] said:
"The assailed resolution which incorporated the CBA to be signed by the
parties was promulgated on June 5, 1989, the expiry date of the past CBA.
Based on the provision of Section 253-A, its retroactivity should be agreed
upon by the parties. But since no agreement to that effect was made, public
respondent did not abuse its discretion in giving the said CBA a prospective
effect. The action of the public respondent is within the ambit of its
authority vested by existing law."
On the other hand, the Union argues that the award should retroact to such
time granted by the Secretary, citing the 1993 decision of St Lukes.[16]
"Finally, the effectivity of the Order of January 28, 1991, must retroact to
the date of the expiration of the previous CBA, contrary to the position of
petitioner. Under the circumstances of the case, Article 253-A cannot be
properly applied to herein case. As correctly stated by public respondent in
his assailed Order of April 12, 1991 dismissing petitioners Motion for
Reconsideration---
Anent the alleged lack of basis for the retroactivity provisions awarded, we
would stress that the provision of law invoked by the Hospital, Article 253-A
of the Labor Code, speaks of agreements by and between the parties, and
not arbitral awards . . .
"Therefore, in the absence of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards issued by the Secretary of
Labor pursuant to Article 263(g) of the Labor Code, such as herein involved,
public respondent is deemed vested with plenary and discretionary powers
to determine the effectivity thereof."
In the 1997 case of Mindanao Terminal,[17] the Court applied the St.
Lukes doctrine and ruled that:
"In St. Lukes Medical Center v. Torres, a deadlock also developed during the
CBA negotiations between management and the union. The Secretary of
Labor assumed jurisdiction and ordered the retroaction of the CBA to the
date of expiration of the previous CBA. As in this case, it was alleged that
the Secretary of Labor gravely abused its discretion in making his award
retroactive. In dismissing this contention this Court held:
"Therefore, in the absence of a specific provision of law prohibiting
retroactive of the effectivity of arbitral awards issued by the Secretary of
Labor pursuant to Article 263(g) of the Labor Code, such as herein involved,
public respondent is deemed vested with plenary and discretionary powers
to determine the effectivity thereof."
The Court in the January 27, 1999 Decision, stated that the CBA shall be
"effective for a period of 2 years counted from December 28, 1996 up to
December 27, 1999." Parenthetically, this actually covers a three-year
period. Labor laws are silent as to when an arbitral award in a labor dispute
where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of
the Labor Code shall retroact. In general, a CBA negotiated within six
months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity
depends on the agreement of the parties.[18] On the other hand, the law is
silent as to the retroactivity of a CBA arbitral award or that granted not by
virtue of the mutual agreement of the parties but by intervention of the
government. Despite the silence of the law, the Court rules herein that CBA
arbitral awards granted after six months from the expiration of the last CBA
shall retroact to such time agreed upon by both employer and the
employees or their union. Absent such an agreement as to retroactivity, the
award shall retroact to the first day after the six-month period following the
expiration of the last day of the CBA should there be one. In the absence of
a CBA, the Secretarys determination of the date of retroactivity as part of
his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as an
agreement voluntarily entered into by the parties because it requires the
interference and imposing power of the State thru the Secretary of Labor
when he assumes jurisdiction. However, the arbitral award can be
considered as an approximation of a collective bargaining agreement which
would otherwise have been entered into by the parties.[19] The terms or
periods set forth in Article 253-A pertains explicitly to a CBA. But there is
nothing that would prevent its application by analogy to an arbitral award
by the Secretary considering the absence of an applicable law. Under Article
253-A: "(I)f any such agreement is entered into beyond six months, the
parties shal! agree on the duration of retroactivity thereof." In other words,
the law contemplates retroactivity whether the agreement be entered into
before or after the said six-month period. The agreement of the parties
need not be categorically stated for their acts may be considered in
determining the duration of retroactivity. In this connection, the Court
considers the letter of petitioners Chairman of the Board and its President
addressed to their stockholders, which states that the CBA "for the rank-
and-file employees covering the period December 1, 1995 to November 30,
1997 is still with the Supreme Court,"[20] as indicative of petitioners
recognition that the CBA award covers the said period. Earlier, petitioners
negotiating panel transmitted to the Union a copy of its proposed CBA
covering the same period inclusive.[21] In addition, petitioner does not
dispute the allegation that in the past CBA arbitral awards, the Secretary
granted retroactivity commencing from the period immediately following
the last day of the expired CBA. Thus, by petitioners own actions, the Court
sees no reason to retroact the subject CBA awards to a different date. The
period is herein set at two (2) years from December 1, 1995 to November
30, 1997.
On the allegation concerning the grant of loan to a cooperative, there is no
merit in the unions claim that it is no different from housing loans granted
by the employer. The award of loans for housing is justified because it
pertains to a basic necessity of life. It is part of a privilege recognized by the
employer and allowed by law. In contrast, providing seed money for the
establishment of the employees cooperative is a matter in which the
employer has no business interest or legal obligation. Courts should not be
utilized as a tool to compel any person to grant loans to another nor to
force parties to undertake an obligation without justification. On the
contrary, it is the government that has the obligation to render financial
assistance to cooperatives and the Cooperative Code does not make it an
obligation of the employer or any private individual.[22]
Anent the 40-day union leave, the Court finds that the same is a
typographical error. In order to avoid any confusion, it is herein declared
that the union leave is only thirty (30) days as granted by the Secretary of
Labor and affirmed in the Decision of this Court.
The added requirement of consultation imposed by the Secretary in cases of
contracting out for six (6) months or more has been rejected by the Court.
Suffice it to say that the employer is allowed to contract out services for six
months or more. However, a line must be drawn between management
prerogatives regarding business operations per se and those which affect
the rights of employees, and in treating the latter, the employer should see
to it that its employees are at least properly informed of its decision or
modes of action in order to attain a harmonious labor-management
relationship and enlighten the workers concerning their rights.[23] Hiring of
workers is within the employers inherent freedom to regulate and is a valid
exercise of its management prerogative subject only to special laws and
agreements on the matter and the fair standards of justice.[24] The
management cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its operation. It
has the ultimate determination of whether services should be performed by
its personnel or contracted to outside agencies. While there should be
mutual consultation, eventually deference is to be paid to what
management decides.[25] Contracting out of services is an exercise of
business judgment or management prerogative.[26] Absent proof that
management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.[27] As mentioned in
the January 27, 1999 Decision, the law already sufficiently regulates this
matter.[28] Jurisprudence also provides adequate limitations, such that the
employer must be motivated by good faith and the contracting out should
not be resorted to circumvent the law or must not have been the result of
malicious or arbitrary actions.[29]These are matters that may be categorically
determined only when an actual suit on the matter arises.
WHEREFORE, the motion for reconsideration is partially granted and the
assailed Decision is modified as follows: (1) the arbitral award shall retroact
from December 1, 1995 to November 30, 1997; and (2) the award of wage is
increased from the original amount of One Thousand Nine Hundred Pesos
(P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and
1996. This Resolution is subject to the monetary advances granted by
petitioner to its rank-and-file employees during the pendency of this case
assuming such advances had actually been distributed to them. The assailed
Decision is AFFIRMED in all other respects.
SO ORDERED.
THIRD DIVISION
[G.R. No. 116593. September 24, 1997]
PULP AND PAPER, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION AND EPIFANIA ANTONIO, respondents.
DECISION
PANGANIBAN, J.:
In the absence of wage rates specially prescribed for piece-rate workers,
how should the separation pay and salary differential of such workers be
computed?
Statement of the Case
This is the main question raised in the instant petition for certiorari, filed
under Rule 65 of the Rules of Court, to set aside and annul National Labor
Relations Commissions[1] Decision[2] promulgated on September 24, 1993
and Resolution[3] dated December 16, 1993 in NLRC NCR CA No. 004041-
92.[4] Public respondents assailed Decision affirmed in toto Labor Arbiter
Eduardo J. Carpios decision[5] dated October 6, 1992, which disposed
thus:[6]
IN VIEW OF ALL THE FOREGOING, judgement [sic] is hereby rendered:
1. dismissing the complaint for illegal dismissal for lack of merit;

2. ordering respondent Pulp and Papers Distributors Inc. to pay complainant
Efipania (sic) Antonio the sum of P49.088.00 representing her separation
pay; and
3. ordering respondent to pay the complainant the sum of P31,149.56
representing the underpayment of wages.
4. dismissing all other issues for lack of merit.
The assailed Resolution denied petitioners motion for reconsideration for
lack of merit.
The Facts
The facts as found by the labor arbiter are as follows:[7]
A case of illegal dismissal and underpayment of wages [was] filed by MS.
EPIFANIA ANTONIO [private respondent herein] against PULP AND PAPER
DISTRIBUTORS INC., [petitioner herein] x x x.
In filing the present complaint, complainant in her position paper alleges
that she was a regular employee of the x x x corporation having served
thereat as Wrapper sometime in September 1975. On November 29, 1991,
for unknown reasons, she was advised verbally of her termination and was
given a prepared form of Quitclaim and Release which she refused to sign.
Instead she brought the present complaint for illegal dismissal.
In charging the [herein petitioner] of underpayment of wages, complainant
in the same position paper alleges that, rarely during her employment with
the respondent she received her salary, a salary which was in accordance
with the minimum wage law. She was not paid overtime pay, holiday pay
and five-day service incentive leave pay, hence she is claiming for payments
thereof by instituting the present case.
Respondent on the otherhand [sic] denied having terminated the services of
the complainant and alleges inter alia that starting 1989 the orders from
customers became fewer and dwindled to the point that it is no longer
practical to maintain the present number of packer/wrappers. Maintaining
the same number of packers/wrappers would mean less pay because the
work allocation is no longer the same as it was. Such being the case, the
respondent has to reduce temporarily the number of packers/wrappers.
Complainant was among those who were temporarily laid-off from work.
Complainant last worked with the company on June 29, 1991.
As regards complainants allegation that on November 29, 1991, she was
forced to sign a quitclaim and release by the respondent, the latter clarified
that considering that five months from the time the complainant last
worked with the company, the management decided to release the
complainant and give her a chance to look for another job in the meantime
that no job is available for her with the company. In other words,
complainant was given the option and considering that she did not sign the
documents referred to as the Quitclaim and Release, the respondent did not
insist, and did not terminate the services of the complainant. It was just
surprise [sic] to receive the present complaint. In fact, respondent added
that the reason why the complainant was called on November 29, 1991 was
not to work but to receive her 13th month pay of P636.70 as shown by the
voucher she signed (Annex-A, Respondent).
As regards the claim of the complainant for underpayment, respondent did
not actually denied (sic) the same but give [sic] the reservation that should
the same be determined by this Office it is willing to settle the same
considering the fact that complainant herein being paid by results, it is not
in a proper position to determine whether the complainant was underpaid
or not.
The Issues
Petitioner couched the main issue in this wise:[8]
Did the Public Respondent NLRC act correctly in affirming in toto the
decision rendered by the labor arbitration branch a quo in NLRC NCR Case
no. 00-01-00494-92?
While it expressly admits that private respondent is entitled to separation
pay, petitioner raises nonetheless the following queries: (a) Are the factors
in determining the amount of separation pay for a piece-rate worker the
same as that of a time-worker? (b) Is a worker, who was terminated for lack
of work, entitled to separation pay at the rate of one-months pay for every
year of service?[9] The petition is based on the following grounds:
I of work, shutdown for repairs, business reverses, and the like. Always,
Public Respondent NLRC committed grave abuse of discretion and serious
reversible error when it affirmed in toto the award of separation pay in
favor of private respondent, without bases in fact and in law.
II
Public Respondent NLRC committed grave abuse of discretion and serious
reversible error when it affirmed in toto the award of underpayment in
favor of private respondent, without bases in fact and in law.
The Public Respondents Ruling
In dismissing the appeal of petitioner, public respondent reasoned:[10]
It is true that all the above circumstances cited by the [herein petitioner] are
not present in the case at bar, hence, separation pay based on those
circumstances is not owing to the [herein private respondent]. However, it
is quite obvious that [petitioner] missed the legal and factual basis why
separation pay was awarded by the Labor Arbiter. In the first place, the
[petitioner] admits that the complainant-appellee was temporarily laid off
on June 29, 1991. This means that there was a temporary suspension of
employer-employee relationship between the appellant and the appellee.
Lay-off is a temporary termination initiated by the employer, but without
prejudice to the reinstatement or recall of the workers who have been
temporarily separated. The reasons for laying off employees are varied: lack
however, there is the expectation that the employees who have been laid
off will be recalled or rehired. This situation is governed by Rule I, Section
12, of Book VI of the Implementing Rules and Regulations of the Labor Code,
which provides:
Sec. 12. Suspension of Relationship. -- The employer-employee relationship
shall be deemed suspended in case of suspension of operation of the
business or undertaking of the employer for a period not exceeding six (6)
months x x x.
From June 29, 1991 up to the time the complainant-appellee filed her
complaint on January 21, 1992, there was more than six (6) months that
already elapse (sic) and yet, the appellant failed to recall the appellee to let
her resume working. If the appellant was not yet in a possession to recall or
reinstate the appellee after six (6) months, up to when shall appellant let
her keep in waiting. Of course, she cannot be allowed to wait interminably.
That is the reason why the law imposes a period of six (6) months within
which the resumption of employer-employee relationship must be resumed
in temporary lay-offs. Otherwise, any employer can, in the guise of a
temporary lay-off, close its doors to an employee for more than six months
and their claim that the lay-off has ripened into termination and try to get
away from any liability. The award of separation pay is hereby declared in
order.
On the second issue raised by the (petitioner) on appeal, We are also for the
Labor Arbiters ruling upholding the appellees right to salary differential in
the amount computed.
The argument interposed by the [petitioner] based on Art. 101 of the Labor
Code, in relation to Rule VII, Section (8), Book III of the Omnibus
Implementing Rule and Regulations, will not lie in the case at bar. In the first
place, pursuant to the provision of law cited by the [petitioner], all time and
motion studies, or any other schemes or devices to determine whether the
employees paid by results are being compensated in accordance with the
minimum wage requirements, shall only be approved on petition of the
interested employer. Thus, it is the fault of the [petitioner] on whose
initiative, a time and motion study or any other similar scheme is not yet
available in its establishment.
The Courts Ruling
The appeal is not meritorious.
First Issue: Computation of Minimum Wage
Petitioner argues that private respondent was a piece-rate worker and not a
time-worker. Since private respondents employment as (p)acker/(w)rapper
in 1975 until her separation on June 29, 1991, (h)er salary depended upon
the number of reams of bond paper she packed per day. Petitioner
contends that private respondents work depended upon the number and
availability of purchase orders from customers. Petitioner adds that,
oftentimes, packers/wrappers only work three to four hours a day. Thus,
her separation pay must be based on her latest actual compensation per
piece or on the minimum wage per piece as determined by Article 101 of
the Labor Code, whichever is higher, and not on the daily minimum wage
applicable to time-workers.[11]
Compensation of Pieceworkers
In the absence of wage rates based on time and motion studies determined
by the labor secretary or submitted by the employer to the labor secretary
for his approval, wage rates of piece-rate workers must be based on the
applicable daily minimum wage determined by the Regional Tripartite
Wages and Productivity Commission. To ensure the payment of fair and
reasonable wage rates, Article 101[12] of the Labor Code provides that the
Secretary of Labor shall regulate the payment of wages by results, including
pakyao, piecework and other nontime work. The same statutory provision
also states that the wage rates should be based, preferably, on time and
motion studies, or those arrived at in consultation with representatives of
workers and employers organizations. In the absence of such prescribed
wage rates for piece-rate workers, the ordinary minimum wage rates
prescribed by the Regional Tripartite Wages and Productivity Boards should
apply. This is in compliance with Section 8 of the Rules Implementing Wage
Order Nos. NCR-02 and NCR-02-A -- the prevailing wage order at the time of
dismissal of private respondent, viz.:[13]
SEC. 8. Workers Paid by Results. -- a) All workers paid by results including
those who are paid on piece work, takay, pakyaw, or task basis, shall receive
not less than the applicable minimum wage rates prescribed under the
Order for the normal working hours which shall not exceed eight (8) hours
work a day, or a proportion thereof for work of less than the normal
working hours.
The adjusted minimum wage rates for workers paid by results shall be
computed in accordance with the following steps:
1) Amount of increase in AMW x 100 = % increase
Previous AMW
2) Existing rate/piece x % increase = increase in rate/piece;
3) Existing rate/piece + increase in rate/piece = adjusted rate/piece.
b) The wage rates of workers who are paid by results shall continue to be
established in accordance with Art. 101 of the Labor Code, as amended and
its implementing regulations. (Underscoring supplied.)
On November 29, 1991, private respondent was orally informed of the
termination of her employment. Wage Order No. NCR-02, in effect at the
time, set the minimum daily wage for non-agricultural workers like private
respondent at P118.00.[14] This was the rate used by the labor arbiter in
computing the separation pay of private respondent. We cannot find any
abuse of discretion, let alone grave abuse, in the order of the labor arbiter
which was later affirmed by the NLRC.
Moreover, since petitioner employed piece-rate workers, it should have
inquired from the secretary of labor about their prescribed specific wage
rates. In any event, there being no such prescribed rates, petitioner, after
consultation with its workers, should have submitted for the labor
secretarys approval time and motion studies as basis for the wage rates of
its employees. This responsibility of the employer is clear under Section 8,
Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:

Section 8. Payment by result. (a) On petition of any interested party, or
upon its initiative, the Department of Labor shall use all available devices,
including the use of time and motion studies and consultations with
representatives of employers and workers organizations, to determine
whether the employees in any industry or enterprise are being
compensated in accordance with the minimum wage requirements of this
Rule.
(b) The basis for the establishment of rates for piece, output or contract
work shall be the performance of an ordinary worker of minimum skill or
ability.
(c) An ordinary worker of minimum skill or ability is the average worker of
the lowest producing group representing 50% of the total number of
employees engaged in similar employment in a particular establishment,
excluding learners, apprentices and handicapped workers employed
therein.
(d) Where the output rates established by the employer do not conform
with the standards prescribed herein, or with the rates prescribed by the
Department of Labor in an appropriate order, the employees shall be
entitled to the difference between the amount to which they are entitled to
receive under such prescribed standards or rates and that actually paid
them by employer.
In the present case, petitioner as the employer unquestionably failed to
discharge the foregoing responsibility. Petitioner did not submit to the
secretary of labor a proposed wage rate -- based on time and motion
studies and reached after consultation with the representatives from both
workers and employers organization -- which would have applied to its
piece-rate workers. Without those submissions, the labor arbiter had the
duty to use the daily minimum wage rate for non-agricultural workers
prevailing at the time of private respondents dismissal, as prescribed by the
Regional Tripartite Wages and Productivity Boards. Put differently,
petitioner did not take the initiative of proposing an appropriate wage rate
for its piece-rate workers. In the absence of such wage rate, the labor
arbiter cannot be faulted for applying the prescribed minimum wage rate in
the computation of private respondents separation pay. In fact, it acted and
ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour
working day is the basis for the computation of the separation pay of piece-
rate workers like private respondent. The computed daily wage should not
be reduced on the basis of unsubstantiated claims that her daily working
hours were less than eight. Aside from its bare assertion, petitioner
presented no clear proof that private respondents regular working day was
less than eight hours. Thus, the labor arbiter correctly used the full amount
of P118.00 per day in computing private respondents separation pay. We
agree with the following computation:[15]
Considering therefore that complainant had been laid-off for more than six
(6) months now, we strongly feel that it is already reasonable for the
respondent to pay the complainant her separation pay of one month for
every year of service, a fraction of six (6) months to be considered as one
whole year. Separation pay should be computed based on her minimum
salary as will be determined hereunder.
Separation pay 1 month = 16 years
P118.00 x 26 x 16 years = P49,088.00
The amount P118.00 represents the applicable daily minimum wage per
Wage Order Nos. NCR-02 and NCR-02-A; 26, the number of working days in
a month after excluding the four Sundays which are deemed rest days; 16,
the total number of years spent by private respondent in the employ of
petitioner.
Second Issue: Computation of Separation Pay
Petitioner questions not only the basis for computing private respondents
monthly wage; it also contends that private respondents separation pay
should not have been computed at one months pay for every year of
service. Because private respondent should be considered retrenched, the
separation pay should be one months pay or at least one/half (1/2) month
pay for every year of service, whichever is higher, and not one (1) months
pay for every year of service as public respondent had ruled.[16]
rights if he indicates his desire to resume his work not later that one (1)
month from his resumption of operations of his employer or from his relief
from the military or civic duty.
Petitioner failed to discern that public respondent, in finding that the
services of private respondent were terminated, merely adopted by analogy
the rule on constructive dismissal. Since private respondent was not
reemployed within six (6) months from the suspension of her employment,
she is deemed to have been constructively dismissed.[17] Otherwise,
private respondent will remain in a perpetual floating status. Because
petitioner had not shown by competent evidence any just cause for the
dismissal of private respondent, she is entitled to reinstatement[18] or, if
this is not feasible, to separation pay equivalent to one (1) month salary for
every year of service. Private respondent, however, neither asked for
reinstatement[19] nor appealed from the labor arbiters finding that she was
not illegally dismissed; she merely prayed for the grant of her monetary
claims. Thus, we sustain the award of separation pay made by public
respondent,[20] for employees constructively dismissed are entitled to
separation pay. Because she did not ask for more, we cannot give her more.
We repeat: she appealed neither the decision of the labor arbiter nor that of
the NLRC. Hence, she is not entitled to any affirmative relief.

Petitioner misapprehended the ground relied upon by public respondent for

awarding separation pay. In this case, public respondent held that private
Furthermore, we cannot sustain petitioners claim that private respondent
respondent was constructively dismissed, pursuant to Article 286 of the
was retrenched. For retrenchment to be considered a ground for
Labor Code which reads:
termination, the employer must serve a written notice on the workers and
the Department of Labor and Employment at least one month before the
intended date thereof.[21] Petitioner did not comply with this requirement.
ART. 286. When employment not deemed terminated. -- The bonafide
suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the employee of a military or
Third Issue: Determination of Salary Differential
civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority
In light of the foregoing discussion, we must also dismiss petitioners FIRST DIVISION
challenge to the computation of salary differential. As earlier observed,
private respondent is entitled to the minimum wage prevailing at the time
of the termination of her employment. The same rate of minimum wage, [G.R. No. 128003. July 26, 2000]
P118.00, should be used in computing her salary differential resulting from
petitioners underpayment of her wages. Thus, the labor arbiter correctly
deducted private respondents actually received wage of P60 a day from the
RUBBERWORLD [PHILS.], INC., and JULIE YAO ONG, petitioner, vs. NATIONAL
prescribed daily minimum wage of P118.00, and multiplied the difference by
LABOR RELATIONS COMMISSION, AQUINO MAGSALIN, PEDRO MAIBO,
26 working days, and subsequently by 16 years, equivalent to her length of
RICARDO BORJA, ALICIA M. SAN PEDRO AND FELOMENA B. TOLIN,
service with petitioner. Thus, the amount of P31,149.56 as salary
respondents.
differential.[22]

DECISION
Petitioner argues that the work of the private respondent is seasonal, being
dependent upon the availability of job-orders and not twenty-six (26) days a
month.[23] Further, petitioner contends that private respondent herself
admitted she was a piece worker whose work [was] seasonal.[24] PARDO, J.:

Contrary to the assertion of petitioner, neither the assailed Decision nor the
pleadings of private respondent show that private respondents work was
What is before the Court for resolution is a petition to annul the resolution
seasonal. More important, petitioner utterly failed to substantiate its
of the National Labor Relations Commission (NLRC),[1] affirming the labor-
allegation that private respondents work was seasonal. We observe that the
arbiter's award but deleting the moral and exemplary damages.
labor arbiter based the computation of the salary differential on a 26-day
month on the presumption that private respondents work was continuous.
In view of the failure of petitioner to support its claim, we must sustain the
correctness of this computation. The facts are as follows:

WHEREFORE, premises considered, the petition is DISMISSED and the

assailed Decision is AFFIRMED. Costs against petitioner.
Petitioner Rubberworld (Phils.), Inc. [hereinafter Rubberworld], a
corporation established in 1965, was engaged in manufacturing footwear,
bags and garments.
SO ORDERED
Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia
M. San Pedro, and Felomena Tolin were employed as dispatcher,
warehouseman, issue monitor, foreman, jacks cementer and outer sole
attacher, respectively.
On August 26, 1994, Rubberworld filed with the Department of Labor and
Employment a notice of temporary shutdown of operations to take effect
on September 26, 1994. Before the effectivity date, however, Rubberworld
was forced to prematurely shutdown its operations.
On November 11, 1994, private respondents filed with the National Labor
Relations Commission a complaint[2] against petitioner for illegal dismissal
and non-payment of separation pay.
On November 22, 1994, Rubberworld filed with the Securities and Exchange
Commission (SEC) a petition for declaration of suspension of payments with
a proposed rehabilitation plan.[3]
On December 28, 1994, SEC issued the following order:
"Accordingly, with the creation of the Management Committee, all actions
for claims against Rubberworld Philippines, Inc. pending before any court,
tribunal, office, board, body, Commission or sheriff are hereby deemed
SUSPENDED.
"Consequently, all pending incidents for preliminary injunctions, writ or
attachments, foreclosures and the like are hereby rendered moot and
academic.
"SO ORDERED."[4]
On January 24, 1995, petitioners submitted to the labor arbiter a motion to
suspend the proceedings invoking the SEC order dated December 28, 1994.
The labor arbiter did not act on the motion and ordered the parties to
submit their respective position papers.
On December 10, 1995, the labor arbiter rendered a decision, which
provides:
"In the light of the foregoing, respondents are hereby declared guilty of
ILLEGAL SHUTDOWN and that respondents are ordered to pay complainants
their separation pay equivalent to one (1) month pay for every year of
service.
Considering the malicious act of closing the business precipitately without
due regard to the rights of complainants, moral damages and exemplary
damage in the sum of P 50,000.00 and P 30,000.00 respectively is hereby
awarded for each of the complainants.
Finally 10 % of all sums owing to complainants is hereby adjudged as
attorney's fees.

SO ORDERED."[5]
On February 5, 1996, petitioners appealed to the National Labor Relations
Commission (NLRC) alleging abuse of discretion and serious errors in the
findings of facts of the labor arbiter.
On August 30, 1996, NLRC issued a resolution, the dispositive portion of
which reads:
"PREMISES CONSIDERED, the decision appealed from is hereby, AFFIRMED
with MODIFICATION in that the award of moral and exemplary damages is
hereby, DELETED.
SO ORDERED."[6]
On November 20, 1996, NLRC denied petitioners' motion for
reconsideration.
Hence, this petition.[7]
The issue is whether or not the Department of Labor and Employment, the
Labor Arbiter and the National Labor Relations Commission may legally act
on the claims of respondents despite the order of the Securities and
Exchange Commission suspending all actions against a company under
rehabilitation by a management committee created by the Securities and
Exchange Commission.
Presidential Decree No. 902-A is clear that "all actions for claims against
corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be
suspended accordingly." The law did not make any exception in favor of
labor claims.[8]
"The justification for the automatic stay of all pending actions for claims is
to enable the management committee or the rehabilitation receiver to
effectively exercise its/his powers free from any judicial or extra judicial
interference that might unduly hinder or prevent the 'rescue' of the debtor
company. To allow such other actions to continue would only add to the
burden of the management committee or rehabilitation receiver, whose
time, effort and resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring and
rehabilitation."[9]
Thus, the labor case would defeat the purpose of an automatic stay. To rule
otherwise would open the floodgates to numerous claims and would defeat
the rescue efforts of the management committee.
Besides, even if an award is given to private respondents, the ruling could
not be enforced as long as petitioner is under management committee.[10]
This finds ratiocination in that the power to hear and decide labor disputes
is deemed suspended when the Securities and Exchange Commission puts
the corporation under rehabilitation.
Thus, when NLRC proceeded to decide the case despite the SEC suspension
order, the NLRC acted without or in excess of its jurisdiction to hear and
decide cases. As a consequence, any resolution, decision or order that it
rendered or issued without jurisdiction is a nullity.
WHEREFORE, the petition is hereby GRANTED. The decision of the labor
arbiter dated December 10, 1995 and the NLRC resolution dated August 30,
1996, are SET ASIDE.
No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 148372. June 27, 2005]
CLARION PRINTING HOUSE, INC., and EULOGIO YUTINGCO, petitioners, vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (Third
Division) and MICHELLE MICLAT, respondents.
DECISION
CARPIO-MORALES, J.:
Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a
probationary basis as marketing assistant with a monthly salary of
P6,500.00 by petitioner Clarion Printing House (CLARION) owned by its co-
petitioner Eulogio Yutingco. At the time of her employment, she was not
informed of the standards that would qualify her as a regular employee.
On September 16, 1997, the EYCO Group of Companies of which CLARION
formed part filed with the Securities and Exchange Commission (SEC) a
Petition for the Declaration of Suspension of Payment, Formation and
Appointment of Rehabilitation Receiver/ Committee, Approval of
Rehabilitation Plan with Alternative Prayer for Liquidation and Dissolution of
Corporation[1] the pertinent allegations of which read:
xxx
5. The situation was that since all these companies were sister companies
and were operating under a unified and centralized management team, the
financial requirements of one company would normally be backed up or b) The economic interplay consisting of the inflation and the erratic changes
supported by one of the available fundings from the other companies. in the peso-dollar exchange rate which precipitated a soaring banking
interest.

6. The expansion exhausted the cash availability of Nikon, NKI, and 2000
because those fundings were absorbed by the requirements of NPI and c) Labor problems that has precipitated adverse company effect on the
EYCO Properties, Inc. which were placed on real estate investments. media and in the financial circuit.
However, at the time that those investments and expansions were made,
there was no cause for alarm because the market situation was very bright
and very promising, hence, the decision of the management to implement d) Liberalization of the industry (GATT) which has resulted in flooding the
the expansion. market with imported goods;

7. The situation resulted in the cash position being spread thin. However, e) Other related adverse matters.
despite the thin cash positioning, the management still was very positive
and saw a very viable proposition since the expansion and the additional
investments would result in a bigger real estate base which would be very
9. The inability of the EYCO Group of Companies to meet the obligations as
credible collateral for further expansions. It was envisioned that in the end,
they fall due on the schedule agreed with the bank has now become a stark
there would be bigger cash procurement which would result in greater
reality. The situation therefore is that since the obligations would not be
volume of production, profitability and other good results based on the
met within the scheduled due date, complications and problems would
expectations and projections of the team itself.
definitely arise that would impair and affect the operations of the entire
conglomerate comprising the EYCO Group of Companies.

8. Unfortunately, factors beyond the control and anticipation of the

management came into play which caught the petitioners flat-footed, such
xxx
as:

12. By virtue of this development, there is a need for suspension of all

a) The glut in the real estate market which has resulted in the bubble
accounts o[r] obligations incurred by the petitioners in their separate and
economy for the real estate demand which right now has resulted in a
combined capacities in the meantime that they are working for the
severe slow down in the sales of properties;
rehabilitation of the companies that would eventually redound to the
benefit of these creditors.

13. The foregoing notwithstanding, however, the present combined
financial condition of the petitioners clearly indicates that their assets are
more than enough to pay off the credits.
x x x (Emphasis and underscoring supplied)[2]
On September 19, 1997, the SEC issued an Order[3] the pertinent portions
of which read:
xxx
It appearing that the petition is sufficient in form and substance, the
corporate petitioners prayer for the creation of management or
receivership committee and creditors approval of the proposed
Rehabilitation Plan is hereby set for hearing on October 22, 1997 at 2:00
oclock in the afternoon at the SICD, SEC Bldg., EDSA, Greenhills,
Mandaluyong City.
xxx
Finally, the petitioners are hereby enjoined from disposing any and all of
their properties in any manner, whatsoever, except in the ordinary course
of business and from making any payment outside of the legitimate
business expenses during the pendency of the proceedings and as a
consequence of the filing of the Petition, all actions, claims and proceedings
against herein petitioners pending before any court, tribunal, office board
and/or commission are deemed SUSPENDED until further orders from this
Hearing Panel pursuant to the rulings of the Supreme Court in the cases of
RCBC v. IAC et al., 213 SCRA 830 and BPI v. CA, 229 SCRA 223. (Underscoring
supplied)
And on September 30, 1997, the SEC issued an Order[4] approving the
creation of an interim receiver for the EYCO Group of Companies.
On October 10, 1997, the EYCO Group of Companies issued to its employees
the following Memorandum:[5]
This is to formally announce the entry of the Interim Receiver Group
represented by SGV from today until October 22, 1997 or until further
formal notice from the SEC.
This interim receiver groups function is to make sure that all assets of the
company are secured and accounted for both for the protection of us and
our creditors.
Their function will involve familiarization with the different processes and
controls in our organization & keeping physical track of our assets like
inventories and machineries.
Anything that would be required from you would need to be in writing and
duly approved by the top management in order for us to maintain a clear
line.
 of the Philippines, we are constrained to go on a temporary partial
shutdown of some operations of the Company.
We trust that this temporary inconvenience will benefit all of us in the spirit
of goodwill. Lets extend our full cooperation to them.

To implement this measure, please submit to my office through your local

HRAD the list of those whom you will require to report for work and their
Thank you. (Underscoring supplied) specific schedules. Upon revalidation and approval of this list, all those not
in the list will not receive any pay nor will it be credited against their VL.

On October 22, 1997, the Assistant Personnel Manager of CLARION

informed Miclat by telephone that her employment contract had been Please submit the listing no later than the morning of Friday, January 09,
terminated effective October 23, 1997. No reason was given for the
1998.
termination.

Shutdown shall commence on January 12, 1998 up to February 28, 1998,

The following day or on October 23, 1997, on reporting for work, Miclat was
unless otherwise recalled at an earlier date.
informed by the General Sales Manager that her termination was part of
CLARIONs cost-cutting measures.

Implementation of th[ese] directives will be done through your HRAD

departments. (Underscoring supplied)
On November 17, 1997, Miclat filed a complaint[6] for illegal dismissal
against CLARION and Yutingco (petitioners) before the National Labor
Relations Commission (NLRC).
In her Position Paper[8] dated March 3, 1998 filed before the labor arbiter,
Miclat claimed that she was never informed of the standards which would
qualify her as a regular employee. She asserted, however, that she qualified
In the meantime, or on January 7, 1998, the EYCO Group of Companies as a regular employee since her immediate supervisor even submitted a
issued a Memorandum[7] addressed to company managers advising them written recommendation in her favor before she was terminated without
of a temporary partial shutdown of some operations of the Company
just or authorized cause.
commencing on January 12, 1998 up to February 28, 1998:

Respecting the alleged financial losses cited by petitioners as basis for her
In view of the numerous external factors such as slowdown in business and termination, Miclat disputed the same, she contending that as marketing
consumer demand and consistent with Art. 286 of the Revised Labor Code assistant tasked to receive sales calls, produce sales reports and conduct
market surveys, a credible assessment on production and sales showed By Decision[9] of November 23, 1998, the labor arbiter found that Miclat
otherwise. was illegally dismissed and directed her reinstatement. The dispositive
portion of the decision reads:

In any event, Miclat claimed that assuming that her termination was
necessary, the manner in which it was carried out was illegal, no written
notice thereof having been served on her, and she merely learned of it only
a day before it became effective.
Additionally, Miclat claimed that she did not receive separation pay, 13th
month pay and salaries for October 21, 22 and 23, 1997.
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered ordering the respondent to reinstate complainant to her former or
equivalent position without loss of seniority rights and benefits and to pay
her backwages, from the time of dismissal to actual reinstatement,
proportionate 13th month pay and two (2) days salary computed as follows:
a.1) Backwages 10/23/97 to 11/30/98

P6,500.00 x 13.25 months = P86,125.00

On the other hand, petitioners claimed that they could not be faulted for
retrenching some of its employees including Miclat, they drawing attention a.2) Proportionate 13th month pay
to the EYCO Group of Companies being placed under receivership, notice of
which was sent to its supervisors and rank and file employees via a 1/12 of P86,125 = 7,177.08
Memorandum of July 21, 1997; that in the same memorandum, the EYCO b) 13th month pay - 1997
Group of Companies advised them of a scheme for voluntary separation
from employment with payment of severance pay; and that CLARION was =P6,500 x 9.75 months/12 = 5,281.25
only adopting the LAST IN, FIRST OUT PRINCIPLE when it terminated Miclat
c) Two days salary
who was relatively new in the company.
=P6,500/26 x 2 days = 500.00

TOTAL P 99,083.33
Contending that Miclats termination was made with due process,
petitioners referred to the EYCO Group of Companies abovesaid July 21,
1997 Memorandum which, so they claimed, substantially complied with the
notice requirement, it having been issued more than one month before (Emphasis and underscoring supplied).
Miclat was terminated on October 23, 1997.

Before the National Labor Relations Commission (NLRC) to which petitioners

appealed, they argued that:[10]

1. [CLARION] was placed under receivership thereby evidencing the fact that
it sustained business losses to warrant the termination of [Miclat] from her
employment.
2. The dismissal of [Miclat] from her employment having been effected in
accordance with the law and in good faith, [Miclat] does not deserve to be
reinstated and paid backwages, 13th month pay and two (2) days salary.
And petitioners pointed out that CLARION had expressed its decision to
shutdown its operations by Memorandum[11] of January 7, 1998 to its
company managers.
Appended to petitioners appeal before the NLRC were photocopies of their
balance sheets from 1997 to November 1998 which they claimed to
unanimously show that x x x [petitioner] company experienced business
reverses which were made the basis x x x in retrenching x x x.[12]
By Resolution[13] of June 17, 1999, the NLRC affirmed the labor arbiters
decision. The pertinent portion of the NLRC Resolution reads:
There are three (3) valid requisites for valid retrenchment: (1) the
retrenchment is necessary to prevent losses and such losses are proven; (2)
written notices to the employees and to the Department of Labor and
Employment at least one (1) month prior to the intended date of
retrenchment; and (3) payment of separation pay equivalent to one (1)
month pay or at least month pay for every year of service, whichever is
higher. The two notices are mandatory. If the notice to the workers is later
than the notices sent to DOLE, the date of termination should be at least
one month from the date of notice to the workers.
In Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor
Union Association (PLUA-NACUSIP) and National Labor Relations
Commission, the Supreme Court had the occasion to set forth four
standards which would justify retrenchment, being, firstly, - the losses
expected should be substantial and not merely de minimis in extent. If the
loss purportedly sought to be forestalled by retrenchment is clearly shown
to be insubstantial and inconsequential in character, the bona fide nature of
the retrenchment would appear to be seriously in question; secondly, - the
substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and in good faith by the employer.
There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic course with serious consequences
for the livelihood of the employees retired or otherwise laid-off; thirdly, -
because of the consequential nature of retrenchment, it must be reasonably
necessary and likely to effectively prevent the expected losses. The
employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other cost than labor costs; and
lastly, - the alleged losses if already realized and the expected imminent
losses sought to be forestalled, must be proven by sufficient and convincing
evidence.
The records show that these requirements were not substantially complied
with. And proofs presented by respondents-appellants were short of being
sufficient and convincing to justify valid retrenchment. Their position must
therefore fail. The reason is simple. Evidences on record presented fall short
of the requirement of substantial, sufficient and convincing evidence to
persuade this Commission to declare the validity of retrenchment espoused
by respondents-appellants. The petition before the Securit[ies] and
Exchange Commission for suspension of payment does not prove anything
to come within the bounds of justifying retrenchment. In fact, the petition
itself lends credence to the fact that retrenchment was not actually
reinstated under the circumstances prevailing when it stated, The foregoing
notwithstanding, however, the present combined financial condition of the
petitioners clearly indicates that their assets are more than enough to pay
off the credits. Verily, reading further into the petition, We are not ready to
disregard the fact that the petition merely seeks to suspend payments of
their obligation from creditor banks and other financing institutions, and not
because of imminent substantial financial loss. On this account, We take
note of paragraph 7 of the petition which stated: The situation resulted in
cash position being spread thin. However, despite the thin cash positioning,
the management was very positive and saw a very viable proposition since
the expansion and the additional investments would result in a bigger real
estate base which would be a very credible collateral for further expansions.
It was envisioned that in the end, there would a bigger cash procurement
which would result in greater volume of production, profitability and other
good results based on the expectations and projections of the team itself.
Admittedly, this does not create a picture of retrenchable business
atmosphere pursuant to Article 283 of the Labor Code.
We cannot disregard the fact that respondent-appellants failed in almost all
of the criteria set by law and jurisprudence in justifying valid retrenchment.
The two (2) mandatory notices were violated. The supposed notice to the
DOLE (Annex 4, List of Employees on Shutdown) is of no moment, the same
having no bearing in this case. Herein complainant-appellee was not even
listed therein and the date of receipt by DOLE, that is, January 18, 1999, was
way out of time in relation to this case. And no proof was adduced to
evidence cost cutting measures, to say the least. Nor was there proof shown
that separation pay had been awarded to complainant-appellee.
WHEREFORE, premises considered, and finding no grave abuse of discretion
on the findings of Labor Arbiter Nieves V. De Castro, the appeal is DENIED
for lack of merit.
The decision appealed from is AFFIRMED in toto. (Italics in the original;
underscoring supplied; citations omitted)
Petitioners Motion for Reconsideration of the NLRC resolution having been
denied by Resolution[14] of July 29, 1999, petitioners filed a petition for
certiorari[15] before the Court of Appeals (CA) raising the following
arguments:
1. PETITIONER CLARION WAS PLACED UNDER RECEIVERSHIP THEREBY
EVIDENCING THE FACT THAT IT SUSTAINED BUSINESS LOSSES TO WARRANT
THE TERMINATION OF PRIVATE RESPONDENT MICLAT FROM HER
EMPLOYMENT.
2. THE DISMISSAL OF PRIVATE RESPONDENT MICLAT FROM HER
EMPLOYMENT HAVING BEEN EFFECTED IN ACCORDANCE WITH THE LAW
AND IN GOOD FAITH, PRIVATE RESPONDENT DOES NOT DESERVE TO BE
REINSTATED AND PAID BACKWAGES, 13TH MONTH PAY AND TWO (2) DAYS
SALARY. (Underscoring supplied)
By Decision[16] of November 24, 2000, the CA sustained the resolutions of
the NLRC in this wise:
In the instant case, Clarion failed to prove its ground for retrenchment as
well as compliance with the mandated procedure of furnishing the
employee and the Department of Labor and Employment (hereafter, DOLE)
with one (1) month written notice and payment of separation pay to the
employee. Clarions failure to discharge its burden of proof is evident from
the following instances:
First, Clarion presented no evidence whatsoever before the Labor Arbiter.
To prove serious business losses, Clarion presented its 1997 and 1998
financial statements and the SEC Order for the Creation of an Interim
Receiver, for the first time on appeal before the NLRC. The Supreme Court
has consistently disallowed such practice unless the party making the
belated submission of evidence had satisfactorily explained the delay. In the
instant case, said financial statements are not admissible in evidence due to
Clarions failure to explain the delay.
Second, even if such financial statements were admitted in evidence, they
would not alter the outcome of the case as statements have weak probative
value. The required method of proof in such case is the presentation of
financial statements prepared by independent auditors and not merely by
company accountants. Again, petitioner failed in this regard.
Third, even audited financial statements are not enough. The employer
must present the statement for the year immediately preceding the year
the employee was retrenched, which Clarion failed to do in the instant case,
to prove not only the fact of business losses but more importantly, the fact
that such losses were substantial, continuing and without immediate
prospect of abatement. Hence, neither the NLRC nor the courts must blindly
accept such audited financial statements. They must examine and make
inferences from the data presented to establish business losses.
Furthermore, they must be cautioned by the fact that sliding incomes or
decreasing gross revenues alone are not necessarily business losses within
the meaning of Art. 283 since in the nature of things, the possibility of
incurring losses is constantly present in business operations.
Last, even if business losses were indeed sufficiently proven, the employer
must still prove that retrenchment was resorted to only after less drastic
measures such as the reduction of both management and rank-and-file
bonuses and salaries, going on reduced time, improving manufacturing
efficiency, reduction of marketing and advertising costs, faster collection of
customer accounts, reduction of raw materials investment and others, have
been tried and found wanting. Again, petitioner failed to prove the
exhaustion of less drastic measures short of retrenchment as it had failed
with the other requisites.
It is interesting to note that Miclat started as a probationary employee on
21 April 1997. There being no stipulation to the contrary, her probation
period had a duration of six (6) months from her date of employment. Thus,
after the end of the probation period on 22 October 1997, she became a
regular employee as of 23 October 1997 since she was allowed to work after
the end of said period. It is also clear that her probationary employment
was not terminated at the end of the probation period on the ground that
the employee failed to qualify in accordance with reasonable standards
made known to her at the time of engagement.
However, 23 October 1997 was also the day of Miclats termination from
employment on the ground of retrenchment. Thus, we have a bizarre
situation when the first day of an employees regular employment was also
the day of her termination. However, this is entirely possible, as had in fact
happened in the instant case, where the employers basis for termination is
Art. 288, instead of Art. 281 of the Labor Code. If petitioner terminated
Miclat with Art. 281 in mind, it would have been too late to present such
theory at this stage and it would have been equally devastating for
petitioner had it done so because no evidence exists to show that Miclat
failed to qualify with petitioners standards for regularization. Failure to
discharge its burden of proof would still be petitioners undoing.
Whichever way We examine the case, the conclusion is the same Miclat was
illegally dismissed. Consequently, reinstatement without loss of seniority
rights and full backwages from date of dismissal on 23 October 1997 until
actual reinstatement is in order.
WHEREFORE, the instant petition is hereby DISMISSED and the 29 July 1999
and 7 June 1999 resolutions of the NLRC are SUSTAINED. (Emphasis and
underscoring supplied)
By Resolution[17] of May 23, 2001, the CA denied petitioners motion for
reconsideration of the decision.
Hence, the present petition for review on certiorari, petitioners contending
that:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN SUSTAINING THE ASSAILED DECISIONS OF HONORABLE PUBLIC
RESPONDENT COMMISSION:
A. HOLDING THAT PRIVATE RESPONDENT MICLAT WAS ILLEGALLY
DISMISSED; and
B. ORDERING THE REINSTATEMENT OF PRIVATE RESPONDENT MICLAT TO
HER FORMER OR EQUIVALENT POSITION WITHOUT LOSS OF SENIORITY
RIGHTS AND BENEFITS AND PAYMENT OF BACKWAGES, 1[3]TH MONTH PAY
AND TWO (2) DAYS SALARY.[18]
Petitioners argue that the conclusion of the CA that no sufficient proof of
financial losses on the part of CLARION was adduced is patently erroneous,
given the serious business reverses it had gravely suffered as reflected in its
financial statements/balance sheets, thereby leaving as its only option the
retrenchment of its employees including Miclat.[19]
Petitioners further argue that when a company is under receivership and a
receiver is appointed to take control of its management and corporate
affairs, one of the evident reasons is to prevent further losses of said
company and protect its remaining assets from being dissipated; and that
the submission of financial reports/statements prepared by independent
auditors had been rendered moot and academic, the company having
shutdown its operations and having been placed under receivership by the
SEC due to its inability to pay or comply with its obligations.[20]
Respecting the CAs holding that the financial statements CLARION
submitted for the first time on appeal before the NLRC are inadmissible in
evidence due to its failure to explain the delay in the submission thereof,
petitioners lament the CAs failure to consider that technical rules on
evidence prevailing in the courts are not controlling in proceedings before
the NLRC which may consider evidence such as documents and affidavits
submitted by the parties for the first time on appeal.[21]
As to the CAs holding that CLARION failed to prove the exhaustion of less
drastic measures short of retrenching, petitioners advance that prior to the
termination of Miclat, CLARION, together with the other companies under
the EYCO Group of Companies, was placed under receivership during which
drastic measures to continue business operations of the company and
eventually rehabilitate itself were implemented.[22]
Denying Miclats entitlement to backwages, petitioners proffer that her
dismissal rested upon a valid and authorized cause. And petitioners assail as
grossly erroneous the award of 13th month pay to Miclat, she not having
sought it and, therefore, there was no jurisdiction to award the same.[23]
The petition is partly meritorious.
Contrary to the CAs ruling, petitioners could present evidence for the first
time on appeal to the NLRC. It is well-settled that the NLRC is not precluded
from receiving evidence, even for the first time on appeal, because technical
rules of procedure are not binding in labor cases.
The settled rule is that the NLRC is not precluded from receiving evidence
on appeal as technical rules of evidence are not binding in labor cases. In
fact, labor officials are mandated by the Labor Code to use every and all
reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the
interest of due process. Thus, in Lawin Security Services v. NLRC, and Bristol
Laboratories Employees Association-DFA v. NLRC, we held that even if the
evidence was not submitted to the labor arbiter, the fact that it was duly
introduced on appeal to the NLRC is enough basis for the latter to be more
judicious in admitting the same, instead of falling back on the mere
technicality that said evidence can no longer be considered on appeal.
Certainly, the first course of action would be more consistent with equity
and the basic notions of fairness. (Italics in the original; citations
omitted)[24]
It is likewise well-settled that for retrenchment to be justified, any claim of
actual or potential business losses must satisfy the following standards: (1)
the losses are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is
likely to be effective in preventing expected losses; and (4) the alleged
losses, if already incurred, or the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence.[25] And it is
the employer who has the onus of proving the presence of these standards.
Sections 5 and 6 of Presidential Decree No. 902-A (P.D. 902-A)
(REORGANIZATION OF THE SECURITIES AND EXCHANGE COMMISSION WITH
ADDITIONAL POWERS AND PLACING SAID AGENCY UNDER THE
ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE PRESIDENT),[26] as
amended, read:
SEC. 5 In addition to the regulatory and adjudicative functions of THE
SECURITIES AND EXCHANGE COMMISSION over corporations, partnerships
and other forms of associations registered with it as expressly granted
under existing laws and decrees, it shall have original and exclusive
jurisdiction to hear and decide cases involving:
xxx
(d) Petitions of corporations, partnerships or associations declared in the
state of suspension of payments in cases where the corporation,
partnership or association possesses sufficient property to cover all debts
but foresees the impossibility of meeting them when they respectively fall
due or in cases where the corporation, partnership, association has no
sufficient assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this
Decree.
SEC. 6. In order to effectively exercise such jurisdiction, the Commission
shall possess the following powers:
xxx
(c) To appoint one or more receivers of the property, real and personal,
which is the subject of the action pending before the Commission in
accordance with the provisions of the Rules of Court in such other cases
whenever necessary in order to preserve the rights of the parties-litigants
and/or protect the interest of the investing public and creditors: Provided,
however, That the Commission may in appropriate cases, appoint a
rehabilitation receiver of corporations, partnerships or other associations
not supervised or regulated by other government agencies who shall have,
in addition to powers of the regular receiver under the provisions of the
Rules of Court, such functions and powers as are provided for in the
succeeding paragraph (d) hereof: x x x
(d) To create and appoint a management committee, board or body upon
petition or motu propio to undertake the management of corporations,
partnership or other associations not supervised or regulated by other
government agencies in appropriate cases when there is imminent danger
of dissipation, loss, wastage or destruction of assets or other properties or
paralization of business operations of such corporations or entities which
may be prejudicial to the interest of minority stockholders, parties-litigants
of the general public: x x x (Emphasis and underscoring supplied).
From the above-quoted provisions of P.D. No. 902-A, as amended, the
appointment of a receiver or management committee by the SEC
presupposes a finding that, inter alia, a company possesses sufficient
property to cover all its debts but foresees the impossibility of meeting
them when they respectively fall due and there is imminent danger of
dissipation, loss, wastage or destruction of assets of other properties or
paralization of business operations.
That the SEC, mandated by law to have regulatory functions over
corporations, partnerships or associations,[27] appointed an interim
receiver for the EYCO Group of Companies on its petition in light of, as
quoted above, the therein enumerated factors beyond the control and
anticipation of the management rendering it unable to meet its obligation
as they fall due, and thus resulting to complications and problems . . . to
arise that would impair and affect [its] operations . . . shows that CLARION,
together with the other member-companies of the EYCO Group of
Companies, was suffering business reverses justifying, among other things,
the retrenchment of its employees.
This Court in fact takes judicial notice of the Decision[28] of the Court of
Appeals dated June 11, 2000 in CA-G.R. SP No. 55208, Nikon Industrial
Corp., Nikolite Industrial Corp., et al. [including CLARION], otherwise known
as the EYCO Group of Companies v. Philippine National Bank, Solidbank
Corporation, et al., collectively known and referred as the Consortium of
Creditor Banks, which was elevated to this Court via Petition for Certiorari
and docketed as G.R. No. 145977, but which petition this Court dismissed by
Resolution dated May 3, 2005:
Considering the joint manifestation and motion to dismiss of petitioners and
respondents dated February 24, 2003, stating that the parties have reached
a final and comprehensive settlement of all the claims and counterclaims
subject matter of the case and accordingly, agreed to the dismissal of the
petition for certiorari, the Court Resolved to DISMISS the petition for
certiorari (Underscoring supplied).
The parties in G.R. No. 145977 having sought, and this Court having granted,
the dismissal of the appeal of the therein petitioners including CLARION, the
CA decision which affirmed in toto the September 14, 1999 Order of the
SEC, the dispositive portion of which SEC Order reads:
WHEREFORE, premises considered, the appeal is as it is hereby, granted and
the Order dated 18 December 1998 is set aside. The Petition to be Declared
in State of Suspension of payments is hereby disapproved and the SAC Plan
terminated. Consequently, all committee, conservator/ receivers created
pursuant to said Order are dissolved and discharged and all acts and orders
issued therein are vacated.
The Commission, likewise, orders the liquidation and dissolution of the
appellee corporations. The case is hereby remanded to the hearing panel
below for that purpose.
x x x (Emphasis and underscoring supplied),
has now become final and executory. Ergo, the SECs disapproval of the
EYCO Group of Companies Petition for the Declaration of Suspension of
Payment . . . and the order for the liquidation and dissolution of these
companies including CLARION, must be deemed to have been unassailed.
That judicial notice can be taken of the above-said case of Nikon Industrial
Corp. et al. v. PNB et al., there should be no doubt.
As provided in Section 1, Rule 129 of the Rules of Court:
SECTION 1. Judicial notice, when mandatory. A court shall take judicial
notice, without the introduction of evidence, of the existence and territorial
extent of states, their political history, forms of government and symbols of
nationality, the law of nations, the admiralty and maritime courts of the
world and their seals, the political constitution and history of the
Philippines, the official acts of the legislative, executive and judicial
departments of the Philippines, the laws of nature, the measure of time,
and the geographical divisions. (Emphasis and underscoring supplied)
which Mr. Justice Edgardo L. Paras interpreted as follows:
A court will take judicial notice of its own acts and records in the same case,
of facts established in prior proceedings in the same case, of the
authenticity of its own records of another case between the same parties, of
the files of related cases in the same court, and of public records on file in
the same court. In addition judicial notice will be taken of the record,
pleadings or judgment of a case in another court between the same parties
or involving one of the same parties, as well as of the record of another case
between different parties in the same court. Judicial notice will also be
taken of court personnel. (Emphasis and underscoring supplied)[29]
In fine, CLARIONs claim that at the time it terminated Miclat it was
experiencing business reverses gains more light from the SECs disapproval
of the EYCO Group of Companies petition to be declared in state of
suspension of payment, filed before Miclats termination, and of the SECs
consequent order for the group of companies dissolution and liquidation.
This Courts finding that Miclats termination was justified notwithstanding,
since at the time she was hired on probationary basis she was not informed
of the standards that would qualify her as a regular employee, under
Section 6, Rule I of the Implementing Rules of Book VI of the Labor Code
which reads:
SEC. 6. Probationary employment. There is probationary employment where
the employee, upon his engagement, is made to undergo a trial period
during which the employer determines his fitness to qualify for regular
employment, based on reasonable standards made known to him at the
time of engagement.
Probationary employment shall be governed by the following rules:
xxx
(d) In all cases of probationary employment, the employer shall make
known to the employee the standards under which he will qualify as a
regular employee at the time of his engagement. Where no standards are
made known to the employee at that time, he shall be deemed a regular
employee (Emphasis and underscoring supplied),
she was deemed to have been hired from day one as a regular
employee.[30]
CLARION, however, failed to comply with the notice requirement provided
for in Article 283 of the Labor Code, to wit:
ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL.
The employer may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the worker and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. x x x (Emphasis and underscoring supplied)
This Court thus deems it proper to award the amount equivalent to Miclats
one (1) month salary of P6,500.00 as nominal damages to deter employers
from future violations of the statutory due process rights of employees.[31]
Since Article 283 of the Labor Code also provides that [i]n case of
retrenchment to prevent losses, . . . the separation pay shall be equivalent
to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. . . , [a] fraction of at least six (6) months [being]
considered one (1) whole year, this Court holds that Miclat is entitled to
separation pay equivalent to one (1) month salary.
As to Miclats entitlement to 13th month pay, paragraph 6 of the Revised
Guidelines on the 13th Month Pay Law provides:
6. 13th Month Pay of Resigned or Separated Employee
An employee x x x whose services were terminated any time before the
time for payment of the 13th month pay is entitled to this monetary benefit
in proportion to the length of time he worked during the calendar year up
to the time of his resignation or termination from the service. Thus if he
worked only from January up to September his proportionate 13th month
pay shall be equivalent to 1/12 of his total basic salary he earned during that
period.
xxx
Having worked at CLARION for six months, Miclats 13th month pay should
be computed as follows:
(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay
(P6,500.00 x 6) / 12 = P3,250.00
With the appointment of a management receiver in September 1997,
however, all claims and proceedings against CLARION, including labor
claims,[32] were deemed suspended during the existence of the
receivership.[33] The labor arbiter, the NLRC, as well as the CA should not
have proceeded to resolve respondents complaint for illegal dismissal and
should instead have directed respondent to lodge her claim before the then
duly-appointed receiver of CLARION. To still require respondent, however,
at this time to refile her labor claim against CLARION under the peculiar
circumstances of the case that 8 years have lapsed since her termination
and that all the arguments and defenses of both parties were already
ventilated before the labor arbiter, NLRC and the CA; and that CLARION is
already in the course of liquidation this Court deems it most expedient and
advantageous for both parties that CLARIONs liability be determined with
finality, instead of still requiring respondent to lodge her claim at this time
before the liquidators of CLARION which would just entail a mere reiteration
of what has been already argued and pleaded. Furthermore, it would be in
the best interest of the other creditors of CLARION that claims against the
company be finally settled and determined so as to further expedite the
liquidation proceedings. For the lesser number of claims to be proved, the
sooner the claims of all creditors of CLARION are processed and settled.
WHEREFORE, the Court of Appeals November 24, 2000 Decision, together
with its May 23, 2001 Resolution, is SET ASIDE and another rendered
declaring the legality of the dismissal of respondent, Michelle Miclat.
Petitioners are ORDERED, however, to PAY her the following in accordance
with the foregoing discussions:
1) P6,500.00 as nominal damages for non-compliance with statutory due
process;
2) P6,500.00 as separation pay; and FIRST DIVISION

3) P3,250.00 as 13th month pay. LINGKOD MANGGAGAWA SA RUBBERWORLD, ADIDAS-ANGLO, its officers
and members as represented by SONIA ESPERANZA,

Petitioners,
Let a copy of this Decision be furnished the SEC Hearing Panel charged with
the liquidation and dissolution of petitioner corporation for inclusion, in the
list of claims of its creditors, respondent Michelle Miclats claims, to be
satisfied in accordance with Article 110 of the Labor Code in relation to the
Civil Code provisions on Concurrence and Preference of Credits. - versus -

Costs against petitioners.

RUBBERWORLD (PHILS.) INC. and ANTONIO YANG, LAYA MANANGHAYA

SO ORDERED. SALGADO & CO., CPAs (In its capacity as liquidator of Rubberworld (Phils.,
Inc.),

Respondents.

G.R. No. 153882

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and
GARCIA, JJ.
Promulgated:
January 29, 2007
x------------------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review under Rule 45
of the Rules of Court is the Decision[1] dated January 18, 2002 of the Court
of Appeals (CA) in CA-G.R. SP No. 53356, as reiterated in its Resolution[2] of
June 5, 2002, denying the petitioners motion for reconsideration. The
assailed CA decision annulled and set aside an earlier decision of the Labor
Arbiter, as well as the resolution/order and writ of execution issued by the
National Labor Relations Commission (NLRC) in a labor dispute between the
petitioners and the respondents over which a suspension order had been
issued by the Securities and Exchange Commission (SEC).
Petitioner Lingkod Manggagawa sa Rubberworld, Adidas-Anglo is a
legitimate labor union whose members were employees of the principal
respondent, Rubberworld Philippines, Inc.(Rubberworld, for short), a
domestic corporation engaged in the manufacture of footwear, bags and
garments.
The facts:
On August 26, 1994, Rubberworld filed with the Department of Labor and
Employment (DOLE) a Notice of Temporary Partial Shutdown due to severe
financial crisis, therein announcing the formal actual company shutdown to
take effect on September 26, 1994. A copy of said notice was served on the
recognized labor union of Rubberworld, the Bisig Pagkakaisa-NAFLU, the
union with which the corporation had a collective bargaining agreement.
On September 1, 1994, Bisig Pagkakaisa-NAFLU staged a strike. It set up a
picket line in front of the premises of Rubberworld and even welded its
gate. As a result, Rubberworld's premises closed prematurely even before
the date set for the start of its temporary partial shutdown.
On September 9, 1994, herein petitioner union, the Lingkod Manggagawa
Sa Rubberworld, Adidas-Anglo (Lingkod, for brevity), represented by its
President, Sonia Esperanza, filed a complaint against Rubberworld and its
Vice Chairperson, Mr. Antonio Yang, for unfair labor practice (ULP), illegal
shutdown, and non-payment of salaries and separation pay. In its
complaint, docketed as NLRC-NCR-Case No. 00-09-06637 (hereinafter
referred to as ULP Case, for brevity), petitioner union alleged that it had
filed a petition for certification election during the freedom period, which
petition was granted by the DOLE Regional Director. In the same complaint,
petitioner union claimed that the strike staged by Bisig Pagkakaisa-NAFLU
was company-instigated/supported. The said complaint was referred to
Labor Arbiter Ernesto Dinopol for appropriate action.

On November 22, 1994, while the aforementioned complaint was pending
with Labor Arbiter Dinopol, Rubberworld filed with the SEC a Petition for
Declaration of a State of Suspension of Payments with Proposed
Rehabilitation Plan. The petition, docketed as SEC Case No. 11-94-4920, was
granted by the SEC in its Order[3] dated December 28, 1994, to wit:
Accordingly, with the creation of the Management Committee, all actions
for claims against Rubberworld Philippines, Inc. pending before any court,
tribunal, office, board, body, Commission or sheriff are hereby deemed
SUSPENDED.
Consequently, all pending incidents for preliminary injunctions, writ of
attachments, foreclosures and the like are hereby rendered moot and
academic.
SO ORDERED.
Notwithstanding the SEC's aforementioned suspension order and despite
Rubberworld's submission on January 10, 1995 of a Motion to Suspend
Proceedings,[4] Labor Arbiter Dinopol went ahead with the ULP case and
rendered his decision[5] thereon on August 16, 1995, saying in part, thus:
x x x [I]t is crystal clear that the SEC Order notwithstanding, Labor Arbiters
and the National Labor Relations Commission should not abdicate the
jurisdiction which Article 217 of the Labor Code has conferred upon them
subject to the condition that awards, if any, should be presented to the
Management Committee for processing and payment,
and disposing as follows:
WHEREFORE, decision is hereby rendered:
1) denying respondents motion to suspend proceedings;
2) declaring respondent Rubberworld Phils., Inc. to have
committed unfair labor practice;
3) declaring the temporary shutdown to have been officially ended
as of March 26, 1995;
4) ordering respondent Rubberworld Phils., Inc. to reinstate
complainant-Union's members who indicate their intention to be so
reinstated within one month from the receipt of this decision by
complainants' counsel;
5) ordering respondent Rubberworld Phils., Inc. to pay the
members of the complainant-Union their backwages computed from April
26, 1995 and separation pay if reinstatement is no longer possible plus 10%
of the total award of attorney's.
For purposes of quantifying the backwages and separation pay, and
identifying the recipients thereof, Mr. Ricardo Atienza of the Research and
Information Unit of this Commission is hereby directed to proceed to the
office of the respondent Rubberworld whose responsible officers are
ordered to allow Mr. Atienza or his representative access to such records as
may be necessary and render a report thereon within 30 days from his
receipt of this Decision.
For purposes of any appeal, the appeal bond is tentatively set at
P500,000.00.
SO ORDERED.
On September 21, 1995, Rubberworld went on appeal to the NLRC, posting
therefor a temporary appeal bond in the amount of P500,000.00 as
tentatively fixed by the Labor Arbiter. Meanwhile, on October 10, 1995,
Ricardo Atienza of the NLRCs Research and Information Unit submitted his
report on the computation of the monetary awards, as ordered by the Labor
Arbiter. He came out with the total amount of Twenty Seven Million Five
Hundred Six Thousand and Two Hundred Fifty-Five Pesos and 70/100
(P27,506,255.70). Despite Rubberworlds vigorous opposition, the First
Division of the NLRC, in its Order[6] of January 22, 1996, required the
corporation to post an appeal bond in an amount equivalent to Mr. Atienzas
computation, with a warning that failure to do so shall result in the dismissal
of its appeal for non-perfection, thus:
Accordingly, respondents-appellants are hereby directed to upgrade or
complete their Appeal Bond in the amount equivalent to Twenty Seven
Million Five Hundred Six Thousand Two Hundred Fifty-Five Pesos and
70/100 (P27,506,255.70) pursuant to the award as computed by Ricardo O.
Atienza within ten (10) days from receipt of this Order.
Failure of the respondents-appellants to comply with this directive will give
this Commission no choice but to dismiss their appeal for non-perfection
thereof.
Its motion for reconsideration of the same Order having been denied by the
NLRC in its Resolution[7] of March 29, 1996, Rubberworld directly went to
this Court on a Petition for Certiorari,[8] interposing the sole issue of
whether or not the NLRC acted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction in
requiring the corporation to post the upgraded appeal bond of
P27,506,255.70 based on the computation of Mr. Atienza.
Meanwhile, on account of Rubberworlds failure to upgrade or complete its
appeal bond as indicated in the NLRCs January 22, 1996 Order, the
Commission, in a decision[9] dated June 28, 1996, did dismiss Rubberworlds
appeal. Owing to this development, Rubberworld filed with the Court a
Supplemental Petition for Certiorari,[10] therein incorporating its challenge
to the said dismissal order of the NLRC, contending that the labor tribunal
acted without or in excess of jurisdiction.
On April 22, 1998, the SEC issued an Order[11] declaring Rubberworld as
dissolved and lifting its earlier suspension order, to wit:
Finding that the continuance in business [of Rubberworld] would neither be
feasible/profitable nor work to the best of interest of the stockholders,
parties-litigants, creditors, or the general public, xxx Rubberworld
Philippines, Inc. is hereby DISSOLVED under Section 6(d) of P.D. 902-A.
Accordingly, the suspension Order is LIFTED.
The Laya Mananghaya Salgado & Co., CPAs is hereby appointed as liquidator
to effect the dissolution of the petitioner.
SO ORDERED.
On August 18, 1995, a writ of execution[12] was issued by the NLRC in favor
of the petitioner union with a copy thereof served on the respondent
corporation. Faced with this dilemma, Rubberworld filed with the Court an
Urgent Omnibus Motion to declare null and void the execution/garnishment
made pursuant to the same writ. The motion, however, was denied by the
Court in its Resolution of November 18, 1998.
On February 8, 1999, Rubberworld filed with the Court a Motion to Admit its
Amended Petition for Certiorari[13] and its Supplement,[14] alleging therein
that pursuant to the SEC Order dated December 28, 1994, supra, the
proceedings before the Labor Arbiter should have been suspended. Hence,
since the Labor Arbiter disregarded the SECs suspension order, the
subsequent proceedings before it were null and void.
Consistent with its ruling in St. Martin Funeral Homes v. NLRC,[15] the
Court, in its Resolution of February 29, 1999, referred Rubberworlds
amended petition for certiorari and its supplement to the CA for
appropriate action, whereat it was docketed as CA- G.R. SP No. 53356.
For its part, the CA, in its Resolution[16] of May 11, 2000, over the
vehement opposition of the petitioner union, resolved to admit
Rubberworlds aforementioned amended petition and the supplement
thereto in the interest of justice.
Eventually, in the herein assailed Decision[17] dated January 18, 2002, the
CA granted Rubberworlds petition in CAG.R. SP. No. 53356 on the finding
that the Labor Arbiter had indeed committed grave abuse of discretion
when it proceeded with the ULP case despite the SECs suspension order of
December 28, 1994, and accordingly declared the proceedings before it,
including the subsequent orders by the NLRC dismissing Rubberworlds
appeal and the writ of execution, null and void.
With their motion for reconsideration having been denied in the CA in its
Resolution[18] of June 5, 2002, petitioners are now with the Court via the
instant recourse, raising the following issues:
1) Whether the CA had committed grave abuse of discretion amounting to
lack of jurisdiction or an excess in the exercise thereof when it gave due
course to the petition filed by Rubberworld (Phils.), Inc. and annulled and
set aside the decisions rendered by the labor arbiter a quo and the NLRC,
when the said decisions had become final and executory warranting the
outright dismissal of the aforesaid petition;
2) Whether the CA had committed grave abuse of discretion and reversible
error when it applied Section 5(d) and Section 6 (c) of P.D. No. 902-A, as
amended, to the case at bar;
3) Whether the CA had committed reversible error when it adopted and
applied the rulings in the cases of Rubberworld (Phils.), Inc., or Julie Yap Ong
v. NLRC, Marilyn F. Arellano, et. al.[19] and Rubberworld (Phils.), Inc. and
Julie Y. Ong v. NLRC, Aquino Magsalin, et. al.[20] to the case at bar.
We DENY.
It is the petitioners submission that the decision of the Labor Arbiter, the
affirmatory decision of the NLRC and the latters dismissal of Rubberworlds
appeal, as well the writ of execution subsequently issued, can no longer be
annulled and set aside, the same having all become final and executory.
Additionally, petitioners argue that no appeal from the decision of the Labor
Arbiter was ever perfected due to Rubberworld's failure to upgrade or post
additional bond as ordered by the NLRC. Hence, they submit that the CA
acted in grave abuse of discretion in even giving due course to
Rubberworlds petition in CA-G.R. SP No. 53356, let alone rendering a
decision thereon annulling and setting aside the proceedings before the
Labor Arbiter and the NLRCs dismissal of Rubberworlds appeal and the writ
of execution issued following the dismissal of said appeal.
The Court disagrees.
While posting an appeal bond is indeed a requirement for the perfection of
an appeal from the decision of the Labor Arbiter to the NLRC, Rubberworlds
failure to upgrade its appeal bond cannot bar, in this particular instance, the
review by the CA of the lower court proceedings.
Given the factual milieu obtaining in this case, it cannot be said that the
decision of the Labor Arbiter, or the decision/dismissal order and writ of
execution issued by the NLRC, could ever attain final and executory status.
The Labor Arbiter completely disregarded and violated Section 6(c) of
Presidential Decree 902-A, as amended, which categorically mandates the
suspension of all actions for claims against a corporation placed under a
management committee by the SEC. Thus, the proceedings before the Labor
Arbiter and the order and writ subsequently issued by the NLRC are all null
and void for having been undertaken or issued in violation of the SEC
suspension Order dated December 28, 1994. As such, the Labor Arbiters
decision, including the dismissal by the NLRC of Rubberworls appeal, could
not have achieved a final and executory status.
Acts executed against the provisions of mandatory or prohibitory laws shall
be void, except when the law itself authorizes their validity.[21] The Labor
Arbiter's decision in this case is void ab initio, and therefore, non-
existent.[22] A void judgment is in effect no judgment at all. No rights are
divested by it nor obtained from it. Being worthless in itself, all proceedings
upon which the judgment is founded are equally worthless. It neither binds
nor bars anyone. All acts performed under it and all claims flowing out of it
are void.[23] In other words, a void judgment is regarded as a nullity, and
the situation is the same as it would be if there were no judgment. It
accordingly leaves the party-litigants in the same position they were in
before the trial.[24]
In fact, it is immaterial whether an appeal from the Labor Arbiter's decision
was perfected or not, since a judgment void ab initio is non-existent and
cannot acquire finality.[25] The judgment is vulnerable to attack even when
no appeal has been taken. Hence, such judgment does not become final in
the sense of depriving a party of his right to question its validity.[26] Hence,
no grave abuse of discretion attended the CA's taking cognizance of the
petition in CA-G.R. SP No. 53356.
Besides, the Labor Arbiter, by simultaneously ruling in his decision of August
16, 1995 on both the merits of the ULP case and the motion of Rubberworld
to suspend the proceedings thereon, effectively required the respondent
corporation to post a surety bond before the same respondent could have
questioned the arbiters action in not suspending the proceedings before
him.
A bond is only mandatory from an appeal of the decision itself on the merits
of the laborers' money claims to ensure payment thereof. Had the Labor
Arbiter taken heed of Rubberworlds motion to suspend proceedings when
that motion was filed, and ruled upon it separately, no bond would have
been required for a review of his resolution thereon. As it were, the Labor
Arbiter chose to continue to decide the main case, then to incorporate in his
decision the denial of Rubberworlds motion to suspend proceedings,
thereby effectively requiring a bond on a question which would not have
ordinarily required one.
We shall now address the more substantial issue in this case, namely, the
applicability of the provisions of Section 5 (d) and Section 6 (c) of P.D. No.
902-A, as amended, reorganizing the SEC, vesting it with additional powers
and placing it under the Office of the President, which respectively read:
Section 5. In addition to the regulatory adjudicative functions of the
Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
xxx xxx xxx
d) Petitions of corporations, partnerships or associations to be declared in
the state of suspension of payments in cases where the corporation,
partnership or association possesses sufficient property to cover all its debts
but foresees the impossibility of meeting them when they respectively fall
due or in cases where the corporation, partnership or association has no
sufficient assets to cover its liabilities, but is under the management of a
rehabilitation receiver or management committee created pursuant to this
Decree.
Section 6. In order to effectively exercise such jurisdiction, the Commission
shall possess the following powers:
xxx xxx xxx
c) To appoint one or more receivers of the property, real or personal, which
is the subject of the action pending before the Commission in accordance
with the pertinent provisions of the Rules of Court in such other cases
whenever necessary in order to preserve the rights of the parties-litigants
and/or protect the interest of the investing public and creditors: x x x
Provided, finally, That upon appointment of a management committee, the
rehabilitation receiver, board or body, pursuant to this Decree, all actions
for claims against corporations, partnerships, or associations under
management or receivership pending before any court, tribunal, board or
body shall be suspended accordingly. [Emphasis supplied]
As correctly ruled by the CA, the issue of applicability in labor cases of the
aforequoted provisions of PD 902-A, as amended, had already been
resolved by this Court in its earlier decisions in Rubberworld (Phils.), Inc., or
Julie Yap Ong v. NLRC, Marilyn F. Arellano, et. al.[27] and Rubberworld
(Phils.), Inc. and Julie Y. Ong v. NLRC, Aquino, Magsalin, et. al,[28] supra.
In the first Rubberworld case, the Court upheld the applicability of PD 902-A
to labor cases pursuant to Section 5(d) and Section 6(c) thereof, with the
following pronouncements:
It is plain from the foregoing provisions of the law that upon the
appointment [by the SEC] of a management committee or a rehabilitation
receiver, all actions for claims against the corporation pending before any
court, tribunal or board shall ipso jure be suspended. The justification for
the automatic stay of all pending actions for claims is to enable the
management committee or the rehabilitation receiver to effectively exercise
its/his powers free from any judicial or extra-judicial interference that might
unduly hinder or prevent the rescue of the debtor company. To allow such
other actions to continue would only add to the burden of the management
committee or rehabilitation receiver, whose time, effort and resources
would be wasted in defending claims against the corporation instead of
being directed toward its restructuring and rehabilitation.[29]
xxx xxx xxx
x x x The law is clear: upon the creation of a management committee or the
appointment of a rehabilitation receiver, all claims for actions shall be
suspended accordingly. No exception in favor of labor claims is mentioned
in the law. Since the law makes no distinction or exemptions, neither should
this Court. Ubi lex non distinguit nec nos distinguere debemos. Allowing
labor cases to proceed clearly defeats the purpose of the automatic stay
and severely encumbers the management committee's time and resources.
The said committee would need to defend against these suits, to the
detriment of its primary and urgent duty to work towards rehabilitating the
corporation and making it viable again. To rule otherwise would open the
floodgates to other similarly situated claimants and forestall if not defeat
the rescue efforts. Besides, even if the NLRC awards the claims of private
respondents, its ruling could not be enforced as long as the petitioner is
under the management committee.[30]
In Chua v. National Labor Relations Commission, we ruled that labor claims
cannot proceed independently of a bankruptcy liquidation proceeding, since
these claims would spawn needless controversy, delays, and confusion.[31]
With more reason, allowing labor claims to continue in spite of a SEC
suspension order in a rehabilitation case would merely lead to such results.
xxx xxx xxx
Article 217 of the Labor Code should be construed not in isolation but in
harmony with PD 902-A, according to the basic rule in statutory
construction that implied repeals are not favored.[32] Indeed, it is axiomatic
that each and every statute must be construed in a way that would avoid
conflict with existing laws. True, the NLRC has the power to hear and decide
labor disputes, but such authority is deemed suspended when PD 902-A is
put into effect by the Securities and Exchange Commission. [Emphasis
supplied]
The second Rubberworld case reiterates the above pronouncements of the
Court:
Presidential Decree No. 902-A is clear that all actions for claims against
corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be
suspended accordingly. The law did not make any exception in favor of
labor claims.
xxx xxx xxx
Thus, when NLRC proceeded to decide the case despite the SEC suspension
order, the NLRC acted without or in excess of its jurisdiction to hear and
decide cases. As a consequence, any resolution, decision or order that it
rendered or issued without jurisdiction is a nullity. [Emphasis supplied]
Petitioners argue, however, that the doctrines laid down in the two
aforecited cases cannot be made to apply to the instant controversy
because the SEC order therein only mandates that all pending cases against
Rubberworld Philippines, Inc. should be deemed suspended. Petitioners
contend that the decision of the Labor Arbiter in the present case, as well
the order of dismissal and writ of execution issued by NLRC, have become
final and executory by reason of Rubberworlds failure to perfect its appeal
by not upgrading or completing the required cash or surety bond as
ordained by the NLRC. Petitioners thus conclude that the doctrine of stare
decisis cannot apply to the instant case.
Petitioners are in error.
It is incontrovertible that the denial of Rubberworlds motion to suspend
proceedings in the principal case was incorporated in the decision of the
Labor Arbiter. Obviously, then, the Labor Arbiters decision of August 16,
1995 was rendered at a time when Lingkods complaint against Rubberworld
in NLRC-NCR-Case No. 00-09-06637-94 ought to have been suspended.
In short, at the time the SEC issued its suspension Order of December 28,
1994, the proceedings before the Labor Arbiter were still very much
pending. As such, no final and executory decision could have validly
emanated therefrom. Like the CA, we do not see any reason why the
doctrine of stare decisis will not apply to this case.
For being well-grounded in fact and law, the assailed CA decision and
resolution in CA-G.R. SP No. 53356 cannot be said to have been tainted with
grave abuse of discretion or issued in excess or want of jurisdiction. We find
no reason to overturn such rulings.
WHEREFORE, the instant petition is DENIED and the assailed decision and
resolution of the CA are AFFIRMED.
Costs against the petitioner.
SO ORDERED.
SECOND DIVISION
[G.R. No. 125298. February 11, 1999]
CMP FEDERAL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER CRESENCIANO R. INIEGO, and
FERNANDO CARANTO, RESTY REMITTERE, REYNALDO ROSALES, ANTONIO
TAPAR, NARCISO CLARO, SIONY MANOS, BALDO VIODOR and DAWAY
WAHAB, respondents.
DECISION
BELLOSILLO, J.:
CMP FEDERAL SECURITY AGENCY INC. seeks in this petition for certiorari to
annul, for having been rendered with grave abuse of discretion amounting
to lack or excess of jurisdiction, the 26 October 1995 Decision of the
National Labor Relations Commission in NLRC NCR CA 007480-94, Fernando
Caranto, et al. v. CMP Federal Security Agency, Inc., et al.,[1] affirming with
modifications the decision of the Labor Arbiter and ordering herein
petitioner to pay private respondents wage differentials, 13th month pay,
holiday pay and service incentive leave pay; and, its Resolution of 29
November 1995 denying reconsideration.
CMP Federal Security Agency Inc. (CMP hereon) is in the business of
providing detective and security services. Among its employees were herein
private respondent security guards Fernando Caranto, Resty Remittere,
Reynaldo Rosales, Antonio Tapar, Narciso Claro, Siony Manos, Baldo Viodor
and Daway Wahab,[2] all assigned at the Maalikaya Health Complex in
Quezon City.
On 10 March 1994 private respondents filed complaints for illegal
deduction, underpayment and/or non-payment of wages, premium pay for
holiday, rest day and night shift differential pay, 13th month pay, service
incentive leave pay, separation pay, allowance and unfair labor practice
against CMP,[3] Carolina Mabanta Piao and Ponciano Mabanta Sr. Private
respondent Fernando Caranto later amended his complaint to include illegal
dismissal[4] after he was relieved from his post at the Maalikaya Health
Complex by CMP, allegedly upon request of the client.
The case was initially set for mandatory conference or conciliation on 29
March 1994. It was reset to 11 April 1994 by agreement of the parties to
give them adequate time to explore the possibility of amicable settlement.
Thereafter the hearing was reset several times with Labor Arbiter Cresencio
R. Iniego directing the parties each time to submit their respective position
papers and other documentary evidence. Efforts at settlement failed.
When the case was finally called for hearing on 23 May 1994 private
respondents filed their position paper and other documentary evidence in
compliance with the Labor Arbiters orders. On the other hand, CMP moved
for another postponement which the Labor Arbiter denied. Thereafter, the
case was deemed submitted for decision. It was only on 13 June 1994 that
CMP presented its position paper.
On 22 July 1994 the Labor Arbiter rendered a decision in favor of private
respondents ordering CMP to reinstate Fernando Caranto with full back
wages, pay salary differentials to all private respondents, plus attorneys
fees.
Both parties appealed to the NLRC. Private respondents, in their Partial Holiday Pay - P1,760.00
Appeal, alleged that the Labor Arbiter erred in excluding the awards for
service incentive leave pay, holiday pay, overtime pay and illegal
deductions. CMP for its part argued that the Labor Arbiter erred in holding Service Incentive Leave Pay - P 590.00
that CMP did not submit any position paper despite his repeated orders; in
ruling that the non-filing of the position paper amounted to an admission of
liability by CMP; and, in deciding the case solely on the basis of the position
P6,142.75
paper and evidence submitted by complainants.

RESTY REMITTERE
In its assailed Decision of 26 October 1995 the NLRC denied CMPs appeal,
granted private respondents Partial Appeal and modified the decision of the
Labor Arbiter by including in the computation of monetary awards holiday
pay, service incentive leave pay, 13th month pay, overtime pay and 13th Month Pay - P 9,195.49
reimbursement for illegal deductions. The dispositive portion reads -

Holiday Pay - P 3,318.00

WHEREFORE xxx the appealed decision is xxx modified. Respondent CMP
Federal Security Agency is xxx directed to pay complainants the following:
Service Incentive Leave Pay - P 1,770.00

1. Pay all complainants wage differential(s) in the amount of One Hundred

Twenty Eight Thousand Nine Hundred Eighty Nine and 70/100 (P128,989.70) P14,283.49
as well as holiday pay, 13th month pay and service incentive leave pay, as
follows:

REYNALDO ROSALES

FERNANDO CARANTO

13th Month Pay - P11,280.17

13th Month Pay - P3,792.75

Holiday Pay - P 4,026.00

 Service Incentive Leave Pay - P 1,180.00

Service Incentive Leave Pay - P 1,770.00

P 9,504.50

P17,076.17

SIONY MANOS

ANTONIO TAPAR

13th Month Pay - P 4,101.83

13th Month Pay - P10,253.91

Holiday Pay - P 1,666.00

Holiday Pay - P 3,355.00

Service Incentive Leave Pay - P 1,770.00

Service Incentive Leave Pay - P 1,770.00

P 7,537.83

P17,076.17

BALDO VIODOR

CLARO NARCISO

13th Month Pay - P11,280.16

13th Month Pay - P 6,186.50

Holiday Pay - P 4,026.00

Holiday Pay - P 2,138.00

Service Incentive Leave Pay - P 1,770.00


P17,076.16
DAWAY WAHAB
13th Month Pay - P 362.50
Holiday Pay - P 430.00
P 797.50
GRAND TOTAL - - - - - - - - - - - - - - - - - - - - - - - - - - - - - P87,797.31
2. The individual respondents Carolina Mabanta Piad and Ponciano Mabanta
are held liable in their official capacity.
3. The other findings stand affirmed.
Its motion for reconsideration having been denied by the NLRC through its
Resolution of 29 November 1995, petitioner CMP now comes to us through
the present petition imputing grave abuse of discretion on the NLRC: (a) in
holding that private respondent Caranto was illegally dismissed, basing its
findings solely on surmises and baseless conclusion that petitioner resorted
to retaliatory acts; and, (b) in granting the money claims of private
respondents on the unfounded presumption that since petitioner failed to
submit its position paper it is deemed to have admitted the charges in the
complaint.
The issues are: (a) whether the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in holding that private
respondent Fernando Caranto was illegally dismissed by CMP; and, (b)
whether in granting all the money claims of private respondents CMP was
denied due process.
Well-settled is the rule that the findings of the NLRC, except when there is
grave abuse of discretion, are practically conclusive on this Court. It is only
when the NLRCs findings are bereft of any substantial support from the
records that the Court may step in and proceed to make its own
independent evaluation of the facts.[5] We see no cogent reason to deviate
from this rule.
On the legality of Carantos dismissal, the NLRC held -
On the other hand, respondents [CMP] contention that complainant
Fernando Caranto abandoned his work is without sufficient basis. The plea
of abandonment is inconsistent with his immediate filing of a complaint for
illegal dismissal with prayer for reinstatement. It is illogical for an employee
to abandon his work and then immediately seek reinstatement. (Judric
Canning Corp. v. Inciong, 115 SCRA 887). Moreover, respondents failed to
prove by evidence that Caranto was indeed absent without leave.[6]
CMP insists that Caranto was never really dismissed but was merely relieved
from his post at Maalikaya Health Complex upon request of the Manager,
and transferred by CMP to SM-Feati; that two (2) special orders were
allegedly sent by CMP to Caranto informing him of his relief from guard
duties at Maalikaya and his assignment at SM-Feati but despite receipt of
these orders he failed to report at CMP office; that a follow-up letter was
likewise addressed to him requiring him to show cause why he should not
be dismissed, which he never answered; and, that his refusal to accept a
new assignment and his prolonged absence justify the presumption that he
voluntarily abandoned his job.
In termination cases like the one before us, the burden of proving that the
dismissal of the employee was for a valid or authorized cause rests on the
employer[7] and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal.[8] The same principle was
reiterated by this Court in Golden Donuts Inc. v. NLRC[9] when it ruled that
the employer carries the burden of proof in showing just cause for
terminating the services of an employee.
In the instant case, CMP failed to present evidence to justify Caranto's
dismissal. We have scoured the records but could not find any letter,
memorandum or correspondence between CMP and the management of
Maalikaya Health Complex dealing with the latters alleged request for
Carantos relief from guard duties at Maalikaya Health Complex, nor the two
(2) special orders supposedly sent by CMP to Caranto: the first order,
informing him of his relief from his post at Maalikaya Health Complex, and
the other, reassigning him to SM-Feati; neither the follow-up letter by CMP
requiring Caranto to explain and show cause why his services should not be
terminated. We could not find any evidence, for that matter, which would
clearly and convincingly show that Caranto was absent without any valid
reason and with no intention of returning to work.
Apparently, CMP failed to discharge its burden of proof. Its allegation that
Caranto was merely relieved and reassigned is empty and self-serving, too
insufficient to establish a just and valid cause for his dismissal as employee.
To allow an employer to terminate the employment of his worker based
merely on allegations without proof places the latter in an uncertain
situation. He is at the sole mercy of his employer who, in this case, has
emasculated his right to a security of tenure.
Contrariwise, when Caranto was relieved from his post on 6 May 1994 he
immediately pursued his claim against CMP by amending his complaint six
(6) days after to include illegal dismissal among his charges. This can hardly
be expected from one who has voluntarily "abandoned" his job, as claimed
by CMP. The immediate filing of a complaint for illegal dismissal against the
employer is a clear indication that the employee has not given up on his
work.[10]
As already stated above, CMP failed to justify Carantos dismissal thereby
rendering it illegal. Consequently, no grave abuse of discretion was
committed by the NLRC in upholding the decision of the Labor Arbiter
ordering Carantos reinstatement.
On the second issue, CMP maintains that both the Labor Arbiter and the
NLRC gravely abused their discretion in granting the money claims of private
respondents, alleging that a reading of the Labor Arbiters decision and that
of the NLRC clearly shows that only the pleadings and evidence submitted
by private respondents were taken into consideration while those
presented by CMP were completely ignored, in clear violation of its
constitutional right to due process.

Before resolving the merit of the argument, it may be worth to mention the
nature of the proceedings before labor courts in relation to the
requirements of due process. Under Art. 221 of the Labor Code, technical
rules of evidence prevailing in courts of law or equity are not controlling in
any proceeding before the NLRC or the Labor Arbiter. Both are mandated to
use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process.[11]
While administrative tribunals exercising quasi-judicial powers, like the
NLRC and Labor Arbiters, are free from the rigidity of certain procedural
requirements, they are nonetheless bound by law and practice to observe
the fundamental and essential requirements of due process. The standard
of due process that must be met in administrative tribunals allows a certain
degree of latitude as long as fairness is not ignored.[12] Hence, it is not
legally objectionable, for being violative of due process, for the Labor
Arbiter to resolve a case based solely on the position papers, affidavits or
documentary evidence submitted by the parties. The affidavits of witnesses
in such case may take the place of their direct testimony.[13]
Set against the records of this case, CMP's claim that it was deprived of its
right to be heard readily collapses. The earlier narration of facts clearly
demonstrates that the parties were repeatedly ordered by the Labor Arbiter
to submit their position papers together with the affidavits of their
witnesses and other evidence in support thereof - first on 11 April 1994,
then on 22 April 1994, and finally on 6 May 1994. During the 23 May 1994
conference CMP, instead of complying with the order requiring it to submit
its position paper, moved for another postponement which was denied. It
was only on 13 June 1994, after the case was submitted for resolution, that
CMP finally presented its position paper. Having been given ample
opportunity to put forth its case, CMP has only itself to blame or, better still,
its counsel who was then present, for its failure to do so within the
extended period.
A party before the Labor Arbiter which had a chance to present its side
during a period of more than one (1) month, and despite repeated
extensions of time given to enable it to present its position paper still failed
to meet its final deadline, cannot claim denial of due process[14]if
subsequently the Labor Arbiter disregarded its position paper belatedly
filed.
Moreover, CMP had all the chances to ventilate its arguments in its appeal
to the NLRC where, in fact, it submitted a memorandum, presented its
position paper and supporting documents allegedly ignored by the Labor
Arbiter, as well as a motion for reconsideration - which documents were
considered by that Labor Tribunal in the course of resolving the case.[15]
Consequently, the alleged defect in the proceedings before the Labor
Arbiter, if there be any, was deemed cured.
The fact that the NLRC in its decision made no reference to the position
paper and evidence of petitioner does not mean that they were not
considered. It is simply that the NLRC agreed with the Labor Arbiters
findings and conclusions and found nothing substantial in petitioners
position paper and documentary evidence to warrant a reversal of those
findings and conclusions.
The essence of due process is simply an opportunity to be heard or, as
applied to administrative proceedings, an opportunity to explain ones side
or an opportunity to seek reconsideration of the action or ruling complained
of.[16] Where, as in this case, the party has had ample opportunity to
present its side of the controversy not only before the Labor Arbiter but also
the NLRC on appeal, it cannot thereafter interpose lack of due process for
what the fundamental law abhors is simply the absolute absence of
opportunity to be heard.
Finally, while it may be true that in labor cases stringent rules of procedure
may be dispensed with in the interest of justice, it does not mean that a
party litigant is at liberty to completely disregard or ignore the rules,
particularly those relating to the periods for filing of pleadings. In this
connection, if we are to sustain petitioners argument that it was denied due
process when its position paper and documentary evidence were not
considered by the Labor Arbiter in deciding the case, we will in effect put a
premium on the undesirable practice of filing position papers late and only
after the case has already been submitted for decision.
WHEREFORE, the petition is DISMISSED. The Decision of the National Labor
Relations Commission dated 26 October 1995 affirming with modifications
the Decision of the Labor Arbiter and ordering petitioner CMP FEDERAL
SECURITY AGENCY, INC., to pay private respondents FERNANDO CARANTO,
RESTY REMITTERE, REYNALDO ROSALES, ANTONIO TAPAR, NARCISO CLARO,
SIONY MANOS, BALDO VIODOR and DAWAY WAHAB wage differentials,
13th month pay, holiday pay and service incentive leave pay as earlier
quoted in this Decision, and its Resolution of 29 November 1995 denying
petitioners Motion for Reconsideration, are AFFIRMED. Costs against
petitioner.
SO ORDERED.
FIRST DIVISION
[G.R. No. 116572. December 18, 2000]
D. M. CONSUNJI, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (FOURTH DIVISION), and ALEXANDER AGRAVIADOR,
JOVENCIO MENDREZ, FELIPE BARCELONA, CONCORCIOLASPUA and
ROGELIO DIAZ, respondents.
DECISION
KAPUNAN, J.:
In this special civil action of certiorari, petitioner prays that the decision of
public respondent National Labor Relations Commission be set aside since it
acted with grave abuse of discretion amounting to lack of jurisdiction when
it directed the reinstatement of private respondents to their former
positions with full backwages.
This case arose from the complaint for illegal dismissal with prayer for
reinstatement and payment of full wages filed by the private
respondents. Private respondents were hired by petitioner as project
employees to work on its Cebu Super Block Project in Cebu City. Their
separate but identical contracts state among others:
You are hired/appointed as project employee as ___________ for an
estimated period of employment for _____________________ in the
company's construction project at Cebu Superblock.
THE TERMS AND CONDITIONS OF YOUR EMPLOYMENT ARE AS FOLLOWS:
The period of employment is for an estimated period of one month that is
for ___________________ to _____________________ provided that it
shall not extend beyond the duration of the project, or a particular phase
thereof, for which you are hired; subject to the further condition that your
services may be sooner terminated should the particular phase of work for
which you are hired be completed earlier or should supervisor find your
services unsatisfactory or for any other justifiable cause. Should there be
other construction projects of the company at the time of your layoff for 2. Jovencio Mendrez 5,460.00
completion of phase of work, you may request for employment in such
other project, subject to the availability of job vacancy in such other project 3. Felipe Barcelona 5,460.00
suited to your skills.[1] 4. Consorcio Laspua 5,460.00
Their contracts also provide for the following terms and conditions:[2] 5. Rogelio Diaz 5,460.00
Name Date of Hiring Date of Position Salary GRAND TOTAL P27,300.00[3]
Termination
In ruling that the dismissals were illegal, the Labor Arbiter explained that
Alexander Feb. 9, 1993 March 9, 1993 Carpenter 13.625/hr. while the private respondents voluntarily signed the employment contract
Agraviador which fixed the term of their employment, their dismissal was not actually
based on the expiration of the term of their employment because some of
Jovencio Feb. 8, 1993 March 8, 1993 Laborer 13.125/hr.
them were dismissed before the end of the contract and there were those
Mendrez
dismissed even long after its expiration. The Labor Arbiter, thus, concluded
Felipe Barcelona Nov. 21, 1992 Dec. 21, 1992 Carpenter 13.625/hr. that the contracts of employment of the private respondents should not be
honored because they were made more for breach rather than for
observance.[4]
Consorcio Feb. 17, 1993 March 2, 1993 Laborer 13.125/hr.
Laspuna The NLRC affirmed the decision of the Labor Arbiter. It ruled that the
employment period need not reach six months in order that the private
Rogelio Diaz Dec. 01, 1992 Jan. 01, 1993 Laborer 13.125/hr.
respondents attain the status of regular employees citing Article 280 of the
Labor Code.[5] It agreed with the Labor Arbiter that the private respondents
On March 2, 1993, private respondents services were terminated allegedly could not be considered contract workers because they worked even after
without regard to the date of termination as specified in their contracts of the expiration of their contracts of employment.[6]
employment. Petitioner reported the termination of their services to the
nearest Regional Office of the Department of Labor alleging that the term of Dissatisfied with the decision of the respondent NLRC, petitioner appealed
the contracts of employment had expired. to this Court by way of a special civil action of certiorari under Rule 65 of the
Rules of Court, raising the following issues:
The private respondents then filed their respective complaints for illegal
1. ARE THE PRIVATE RESPONDENTS ENTITLED TO REINSTATEMENT WITH
dismissal. On July 9, 1993, the Labor Arbiter rendered a decision finding the
dismissal of the private respondents without just cause and ordering FULL BACKWAGES THE FACT (sic) THAT THEY WERE HIRED STRICTLY ON
petitioner to reinstate them to their former positions without loss of PROJECT TO PROJECT BASIS?
benefits and seniority rights and to pay them as their backwages, to wit: 2. DID THE RESPONDENT NATIONAL LABOR RELATIONS COMMISSION ACT
WITH GRAVE ABUSE OF DISCRETION WHICH AMOUNTED TO LACK OF
1. Alexander Agraviador P5,460.00
JURISDICTION WHEN IT DIRECTED THE REINSTATEMENT OF THE PRIVATE
RESPONDENTS TO THEIR PREVIOUS POSITION (sic) DESPITE THEIR BEING
PROJECT EMPLOYEES?[7]
In resolving these issues, we shall discuss whether or not the private
respondents were project employees; and if in the affirmative, whether or
not the termination of their employment was illegal.
Petitioner maintains that the private respondents were project employees
since they were hired on a project-to-project basis.[8] Moreover, private
respondents cannot be regular employees because they were all employed
for less than six (6) months such that even assuming that they were not
project employees, they have not attained that status of regular
employment.[9]
On the other hand, private respondents claim that they were dismissed
from their employment on March 2, 1993 even though the construction
project was not yet completed. They also allege that after their services
were terminated, petitioner hired new workers.[10] They argue that their
dismissal was effected without just cause and without due process of law.[11]
The Office of the Solicitor General in its Memorandum recommended that
the decision of the NLRC be reversed and the complaints filed by private
respondents dismissed as they were project employees whose employment
periods were pre-determined at the moment they were hired. As project
employees, private respondents are not entitled to reinstatement and full
backwages.[12]
The petition is impressed with merit.
Project employee is one whose employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the 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.[13] This Court has held that the length of
service of a project employee is not the controlling test of employment
tenure but whether or not the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.[14]
We hold that the private respondents are project employees. Their
contracts of employment readily show that the private respondents were
employed with respect to a specific project.The private respondents in this
case were workers in a construction project of the petitioner. While
employed with respect to a specific project, the contracts of employment
between the private respondents and the petitioner provide that the former
were employed for a term of one (1) month which was the estimated period
for the project to be finished. The private respondents do not even claim to
be regular employees but merely that, as employees at the Cebu Super
Block, they were terminated before the completion of the project without
just cause and due process. As project employees, there is no showing that
they were part of the work pool of the petitioner construction
company. Hence, in their memorandum, private respondents admit that
they are not unaware that as project employees their employment can be
terminated upon the completion of the project.[15]
Examining the standard contracts signed by the private respondents, there
are three ways by which their employment may be terminated: one, the
expiration of the one month period, which was the estimated period for the
completion of the project; two, the completion of the project or phase of
the project for which they were engaged prior to the expiration of the one
month period; and three, upon the finding of unsatisfactory services or
other just cause. The private respondents admitted before the labor arbiter
that they signed their employment contract voluntarily.[16] By this
admission, the private respondents necessarily bound themselves to be
employed for a fixed duration knowingly and voluntarily without any force,
duress or improper pressure. There is no showing that the term fixed was
used to preclude acquisition of tenurial security since private respondents
were admittedly employed with respect to a specific project, the Cebu
Super Block. Inescapably, being a valid contract between the private
respondents and the petitioner, the provisions thereof, specifically with
respect to the one (1) month period of employment, has the force of law employment.[21]Specifically, private respondents Agraviador and Mendrez
between the parties. are entitled to the payment of their salaries equivalent to their salary from
the time of termination until the expiration of their employment period of
At the time of the termination of the private respondents employment on one (1) month, the estimated period the project was to be completed.
March 2, 1993, the respective periods or terms of employment of private
respondents Felipe Barcelona, Consorcio Laspuna and Rogelio Diaz had WHEREFORE, the instant petition is granted. The decision of the National
already expired. The fact that they were allowed to work for weeks after the Labor Relations Commission dated June 28, 1994 is
expiration of their contracts would not necessarily show that petitioner had hereby REVERSED and SET ASIDE. Petitioner is ordered to pay private
dishonored the contracts. Indeed, some phases of the project may not have respondent Alexander Agraviador and Jovencio Mendrez the unexpired
been completed after the estimated one month period and that their portion of their contract.
services were still necessary.
SO ORDERED.
On the other hand, the one month period under the contracts of Alexander
Agraviador and Jovencio Mendrez had not yet expired when their services
were terminated on March 2, 1993 considering that the duration of their
contracts was from February 9 to March 9, 1993 with respect to Agraviador,
and from February 8 to March 8, 1993 with respect to Mendrez. Petitioner
merely claims that all the private respondents were terminated because of
the expiration of the period of the contract.[17] Petitioner has not alleged,
much less established, that the premature termination of the services of
private respondents Agraviador and Mendrez was due to the earlier
completion of the project or any phase or phases thereof to which they
were assigned. Neither has it been shown that the services of Agraviador
and Mendrez were unsatisfactory. In termination cases, the burden of
proving that an employee has been lawfully dismissed lies with the
employer.[18] It is in the interest of justice to require employers to state the
reason for their project employees dismissal and prove this ground once its
veracity is challenged. Employers who hire project employees are mandated
to prove the actual basis of the latters dismissal.[19] The inescapable
conclusion is that Agraviador and Mendrez were terminated prior to the
expiration of the period of their employment without just cause, hence,
their termination was illegal. However, private respondents can not be
reinstated since the project they were assigned to was already completely
finished.[20] What they are entitled to is the payment of their salaries
corresponding to the unexpired portions of their
SECOND DIVISION On January 17, 1989, petitioners filed a complaint against private
respondents for illegal dismissal and sought recovery of overtime pay,
[G.R. No. 111042. October 26, 1999] holiday pay, premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees.

AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, After hearing, Labor Arbiter Jose G. Gutierrez found private respondents
respondents. guilty of illegal dismissal and accordingly ordered them to pay petitioners
DECISION claims. The dispositive portion of the Labor Arbiters decision reads:

MENDOZA, J.:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered
declaring the complainants to have been illegally dismissed and ordering the
This is a petition for certiorari to set aside the decision[1] of the National respondents to pay the complainants the following monetary awards:
Labor Relations Commission (NLRC) which reversed the awards made by the
Labor Arbiter in favor of petitioners, except one for P4,992.00 to each,
representing 13th month pay. AVELINO LAMBO VICENTE BELOCURA

The facts are as follows. I. BACKWAGES P64,896.00 P64,896.00

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors II. OVERTIME PAY 13,447.90 13,447.90
by private respondents J.C. Tailor Shop and/or Johnny Co on September 10,
1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00
p.m. daily, including Sundays and holidays. As in the case of the other 100
employees of private respondents, petitioners were paid on a piece-work III. HOLIDAY PAY 1,399.30 1,399.30
basis, according to the style of suits they made. Regardless of the number of
pieces they finished in a day, they were each given a daily pay of at least
P64.00. IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00


TOTAL P94,719.20 P96,383.20 = P191,102.40
Add: 10% Attorneys Fees 19,110.24
GRAND TOTAL P210,212.64
======
or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO
HUNDRED TWELVE AND 64/100 (P210,212.64).
All other claims are dismissed for lack of merit.
SO ORDERED.[2]
On appeal by private respondents, the NLRC reversed the decision of the
Labor Arbiter. It found that petitioners had not been dismissed from
employment but merely threatened with a closure of the business if they
insisted on their demand for a straight payment of their minimum wage,
after petitioners, on January 17, 1989, walked out of a meeting with private
respondents and other employees. According to the NLRC, during that
meeting, the employees voted to maintain the company policy of paying
them according to the volume of work finished at the rate of P18.00 per
dozen of tailored clothing materials. Only petitioners allegedly insisted that
they be paid the minimum wage and other benefits. The NLRC held
petitioners guilty of abandonment of work and accordingly dismissed their
claims except that for 13th month pay. The dispositive portion of its
decision reads:
WHEREFORE, in view of the foregoing, the appealed decision is hereby
vacated and a new one entered ordering respondents to pay each of the
complainants their 13th month pay in the amount of P4,992.00. All other
monetary awards are hereby deleted.
SO ORDERED.[3]
Petitioners allege that they were dismissed by private respondents as they
were about to file a petition with the Department of Labor and Employment
(DOLE) for the payment of benefits such as Social Security System (SSS)
coverage, sick leave and vacation leave. They deny that they abandoned
their work.
The petition is meritorious.
First. There is no dispute that petitioners were employees of private
respondents although they were paid not on the basis of time spent on the
job but according to the quantity and the quality of work produced by them.
There are two categories of employees paid by results: (1) those whose time
and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is
to be performed. A piece-rate worker belongs to this category especially if
he performs his work in the company premises.); and (2) those whose time
and performance are unsupervised. (Here, the employers control is over the
result of the work. Workers on pakyao and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished. Piece-rate payment
is generally practiced in garment factories where work is done in the
company premises, while payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in sugar plantations where the
work is performed in bulk or in volumes difficult to quantify.[4] Petitioners
belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the
following elements must be considered: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employees conduct.[5] Of these elements, the
most important criterion is whether the employer controls or has reserved
the right to control the employee not only as to the result of the work but
also as to the means and methods by which the result is to be
accomplished.[6]
In this case, private respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the companys premises from
8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact
that they were paid on a piece-rate basis does not negate their status as
regular employees of private respondents. The term wage is broadly defined
in Art. 97 of the Labor Code as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on a time, task,
piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations.[7] Nor does
the fact that petitioners are not covered by the SSS affect the employer-
employee relationship.
Indeed, the following factors show that petitioners, although piece-rate
workers, were regular employees of private respondents: (1) within the
contemplation of Art. 280 of the Labor Code, their work as tailors was
necessary or desirable in the usual business of private respondents, which is
engaged in the tailoring business; (2) petitioners worked for private
respondents throughout the year, their employment not being dependent
on a specific project or season; and, (3) petitioners worked for private
respondents for more than one year.[8]
Second. Private respondents contend, however, that petitioners refused to
report for work after learning that the J.C. Tailoring and Dress Shop
Employees Union had demanded their (petitioners) dismissal for conduct
unbecoming of employees. In support of their claim, private respondents
presented the affidavits[9] of Emmanuel Y. Caballero, president of the
union, and Amado Cabaero, member, that petitioners had not been
dismissed by private respondents but that practically all employees of the
company, including the members of the union had asked management to
terminate the services of petitioners. The employees allegedly said they
were against petitioners request for change of the mode of payment of
their wages, and that when a meeting was called to discuss this issue, a
petition for the dismissal of petitioners was presented, prompting the latter
to walk out of their jobs and instead file a complaint for illegal dismissal
against private respondents on January 17, 1989, even before all employees
could sign the petition and management could act upon the same.
To justify a finding of abandonment of work, there must be proof of a
deliberate and unjustified refusal on the part of an employee to resume his
employment. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue
employment.[10] Mere absence is not sufficient. It must be accompanied by
manifest acts unerringly pointing to the fact that the employee simply does
not want to work anymore.[11]

Private respondents failed to discharge this burden. Other than the self-
serving declarations in the affidavits of their two employees, private
respondents did not adduce proof of overt acts of petitioners showing their
intention to abandon their work. On the contrary, the evidence shows that
petitioners lost no time in filing the case for illegal dismissal against private
respondent. This fact negates any intention on their part to sever their
employment relationship.[12] Abandonment is a matter of intention; it
cannot be inferred or presumed from equivocal acts.[13]
Third. Private respondents invoke the compromise agreement,[14] dated
March 2, 1993, between them and petitioner Avelino Lambo, whereby in
consideration of the sum of P10,000.00, petitioner absolved private
respondents from liability for money claims or any other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But
those (1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person or (2) where the terms of settlement are
unconscionable on their face are invalid. In these cases, the law will step in
to annul the questionable transaction.[15] However, considering that the
Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the
amount of P10,000.00 to cover any and all monetary claims is clearly
unconscionable. As we have held in another case,[16] the subordinate
position of the individual employee vis-a-vis management renders him
especially vulnerable to its blandishments, importunings, and even
intimidations, and results in his improvidently waiving benefits to which he
is clearly entitled. Thus, quitclaims, waivers or releases are looked upon
with disfavor for being contrary to public policy and are ineffective to bar
claims for the full measure of the workers legal rights.[17] An employee who
is merely constrained to accept the wages paid to him is not precluded from
recovering the difference between the amount he actually received and that
amount which he should have received.
Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay,
13th month pay, separation pay and attorneys fees, corresponding to 10%
of the total monetary awards, in favor of petitioners.
As petitioners were illegally dismissed, they are entitled to reinstatement
with backwages. Considering that petitioners were dismissed from the
service on January 17, 1989, i.e., prior to March 21, 1989,[18] the Labor
Arbiter correctly applied the rule in the Mercury Drug case,[19] according to
which the recovery of backwages should be limited to three years without
qualifications or deductions. Any award in excess of three years is null and
void as to the excess.[20]
The Labor Arbiter correctly ordered private respondents to give separation
pay. Considerable time has lapsed since petitioners dismissal, so that
reinstatement would now be impractical and hardly in the best interest of
the parties. In lieu of reinstatement, separation pay should be awarded to
petitioners at the rate of one month salary for every year of service, with a
fraction of at least six (6) months of service being considered as one (1)
year.[21]
The awards for overtime pay, holiday pay and 13th month pay are in
accordance with our finding that petitioners are regular employees,
although paid on a piece-rate basis.[22] These awards are based on the
following computation of the Labor Arbiter:
AVELINO LAMBO

P 32.00/day 8 hrs. =

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

4.00/hr. x 25% =

P 64.00/day x 26 days =

1.00/hr. + P4.00/hr. =

1,664.00/mo. x 36 mos. = P 59,904.00

5.00/hr. x 804 hrs. = P 4,020.00

13th Mo. Pay:

May 1/87-Sept. 30/87 = 4 mos. & 26 days =

P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00

(4 mos. x 26 days + 26 days) = 130 days

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

130 days x 2 hrs./day = 260 hrs.

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

P 41.00/day 8 hrs. =

(15 mos. x 26 days + 12 days) = 402 days

5.12/hr. x 25% =

*2 hours = 25%

1.28/hr. + P5.12/hr. =

402 days x 2 hrs./day = 804 hrs.

6.40/hr. x 260 hrs. = P 1,664.00

P 64.00/day 8 hrs. =

Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =

8.00/hr. x 25% =

(2 mos. x 26 days + 11 days) = 63 days

2.00/hr. + P8.00/hr. =

63 days x 2 hrs./day = 126 hrs.

10.00/hr. x 680 hrs. = P6,800.00 P13,447.90

P 49.00/day 8 hrs. =

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

6.12/hr. x 25% =

Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

1.53/hr. + P6.12/hr. =

P 32.00/day x 200% =

7.65/hr. x 126 hrs. = P963.90

64.00/day x 12 days = P768.00

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =

32.00/day x 12 days = (384.00) P384.00

(13 mos. x 26 days + 2 days) = 340 days

32.00/day x 30% =

340 days x 2 hrs./day = 680 hrs.

9.60/day x 8 days = 76.80 460.80

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 64.00/day x 200% =

P 41.00/day x 200% =

128.00/day x 9 days = P1,152.00

82.00/day x 3 days = P246.00

64.00/day x 9 days = (576.00) P 576.00

41.00/day x 3 days = (123.00) P123.00

64.00/day x 30% =

41.00/day x 30% =

19.20/day x 8 days = 153.60 729.60 1,399.30

12.30/day x 3 days = 36.90 159.90

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

Oct. 1/87 - Dec. 13/87 = 1 RH

P 64.00/day x 26 days =

P 49.00/day x 200% =

1,664.00/yr. x 3 yrs. = 4,992.00

98.00/day x 1 day = P98.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

49.00/day x 1 day = (49.00) 49.00

1,664.00/mo. x 6 yrs. = 9,984.00

Same computation as A. Lambo 4,992.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

======

P1,664.00/mo. x 7 yrs. = 11,648.00

VICENTE BELOCURA

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

=====

Same computation as A. Lambo P64,896.00

SUMMARY

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

AVELINO LAMBO VICENTE BELOCURA

Same computation as A. Lambo 13,447.90

I. BACKWAGES P64,896.00 P64,896.00

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

II. OVERTIME PAY 13,447.90 13,447.90

Same computation as A. Lambo 1,399.30

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89

IV. 13TH MO. PAY 4,992.00 4,992.00 II. OVERTIME PAY 13,447.90 13,447.90

V. SEPARATION PAY 9,984.00 11,648.00 III. HOLIDAY PAY 1,399.30 1,399.30

TOTAL P94,719.20 P96,383.20 IV. 13TH MONTH PAY 4,992.00 4,992.00

= P191,102.40 V. SEPARATION PAY 9,984.00 11,648.00

ADD: 10% Attorneys Fees 19,110.24 P 94,719.20

GRAND TOTAL P 210,212.64 Less 10,000.00

=======

Except for the award of attorneys fees in the amount of P19,110.24, the TOTAL P84,719.20 P96,383.20
above computation is affirmed. The award of attorneys fees should be
disallowed, it appearing that petitioners were represented by the Public
Attorneys Office. With regard to petitioner Avelino Lambo, the amount of GRAND TOTAL P181,102.40
P10,000.00 paid to him under the compromise agreement should be
deducted from the total award of P94,719.20. Consequently, the award to
each petitioner should be as follows:
WHEREFORE, the decision of the National Labor Relations Commission is
SET ASIDE and another one is RENDERED ordering private respondents to
pay petitioners the total amount of One Hundred Eighty-One Thousand One
AVELINO LAMBO VICENTE BELOCURA Hundred Two Pesos and 40/100 (P181,102.40), as computed above.

I. BACKWAGES P64,896.00 P 64,896.00 SO ORDERED.

THIRD DIVISION
[G.R. No. 106518. March 11, 1999]
ABS CBN SUPERVISORS EMPLOYEE UNION MEMBERS, petitioner, vs. ABS
CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY
MUNOZ, CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO ALCAZAR, JAKE
MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ
and RUBEN BARRAMEDA, respondents.
DECISION
PURISIMA, J.:
At bar is a special civil action for Certiorari[1] seeking the reversal of the
Order[2] dated July 31, 1992 of public respondent Department of Labor and
Employment Undersecretary Bienvenido E. Laguesma[3] in Case No. NCR OD
M 90 07 - 037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors Emloyees Union (the
Union), represented by respondent Union Officers, and ABS-CBN
Broadcasting Corporation (the Company) signed and concluded a Collective
Bargaining Agreement with the following check-off provision, to wit:
Article XII The [C]ompany agrees to advance to the Union a sum equivalent
to 10% of the sum total of all the salary increases and signing bonuses
granted to the Supervisors under this collective Bargaining Agreement and
upon signing hereof to cover the Unions incidental expenses, including
attorneys fees and representation expenses for its organization and (sic)
preparation and conduct hereof, and such advance shall be deducted from
the benefits granted herein as they accrue.
On September 19, 1990, Petitioners[4] filed with the Bureau of Labor
Relations, DOLE-NCR, Quezon City, a Complaint against the Union
Officers[5] and ABS-CBN Broadcasting corporation, praying that (1) the
special assessment of ten percent (10%) of the sum total of all salary
increases and signing bonuses granted by respondent Company to the
members of the Union be declared illegal for failure to comply with the
labor Code, as amended, particularly Article 241, paragraphs (g), (n), and
(o); and in utter violation of the Constitution and By-Laws of the ABS-CBN
Supervisors Employees Union; (2) respondent Company be ordered to
suspend further deductions from petitioners salaries for their shares
thereof.
In their Answers, respondent Union Officers and Company prayed for the
dismissal of the Complaint for lack of merit. They argued that the check-off
provision is in accordance with law as majority of the Union members
individually executed a written authorization giving the Union officers and
the Company a blanket authority to deduct subject amount.
On January 21, 1991, Med-Arbiter Rasidali C. Abdula issued the following
Order:[6]
WHEREFORE, premises considered, judgment is hereby rendered:
a) declaring the special assessment of 10% of the sum total of CBA benefits
as illegal;
b) ordering respondents union officers to refund to the complainants and
other union members the amount of five Hundred Thousand Pesos
(P500,000.00) advanced by the respondent Company as part of the 10%
sum total of CBA benefits without unnecessary delay;
c) ordering the respondent company to stop and desist from further making
advances and deductions from the union members salaries their share in
the advances already made to the union;
d) ordering the respondent Company to remit directly to the complainants
and other union members the amount already deducted from the union
members salaries as part of their share in the advances already made to the
union and which it had kept in trust during the pendency of this case; and
e) directing the respondents union officers and respondent Company to
submit report on the compliance thereof.
SO ORDERED.
On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma
handed down a Decision[7] on July 1, 1991, disposing as follows:
WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter
is affirmed en toto.
On July 5, 1991, the aforesaid Decision was received by the respondent
Union Officers and respondent Company. On July 13, 1991, they filed their
Motion for Reconsideration stating, inter alia that the questioned ten
percent (10%) special assessment is valid pursuant to the ruling in Bank of
the Philippine Islands Employee Union ALU vs. NLRC.[8]
On July 31, 1992, Undersecretary B.E. Laguesma issued an Order[9];
resolving, thus:
"WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE. In lieu
thereof, a new one is hereby entered DISMISSING the Complaint/Petition
for lack of merit."
Hence, the present petition seeking to annul and set aside the above-cited
Order of public respondent Undersecretary B.E. Laguesma, for being
allegedly tainted with grave abuse of discretion amounting to lack of
jurisdiction.
Did the public respondent act with grave abuse of discretion in issuing the
challenged Order reversing his own Decision of July 1, 1991? Such is the sole
issue posited,which we resolve in the negative. The petition is
unmeritorious.
Petitioners claim[10] that the Decision of the Secretary of Labor and
Employment dated July 1, 1991, affirming in toto the Order of Med-Arbiter
Rasidali Abdullah dated January 31, 1991, cannot be a subject of a motion
for reconsideration because it is final and unappealable pursuant to Section
8, Rule VIII, Book V of the Omnibus Rule Implementing the Labor Code. It is
further argued that the only remedy of the respondent Union Officers' is to
file a petition for certiorari with this Court.
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor
Code, provides:
"The Secretary shall have fifteen (15) calendar days within which to decide
the appeal from receipt of the records of the case. The decision of the
Secretary shall be final and inappealable." [Underscoring supplied].
(Comment, p. 101)
The aforecited provision cannot be construed to mean that the Decision of
the public respondent cannot be reconsidered since the same is reviewable
by writ of certiorari under Rule 65 of the Rules of Court. As a rule, the law
requires a motion for reconsideration to enable the public respondent to
correct his mistakes, if any. In Pearl S. Buck Foundation, Inc., vs. NLRC,[11]
this Court held:
"Hence, the only way by which a labor case may reach the Supreme Court is
through a petition for certiorari under Rule 65 of the Rules of Court alleging
lack or excess of jurisdiction or grave abuse of discretion. Such petition may
be filed within a reasonable time from receipt of the resolution denying the
motion for reconsideration of the NLRC decision." [Underscoring; supplied].
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court
may be availed of, the filing of a motion for reconsideration is a condition
sine qua non to afford an opportunity for the correction of the error or
mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to
judicial review only through a special civil action of certiorari and, as a rule,
cannot be resorted to without the aggrieved party having exhausted
administrative remedies through a motion for reconsideration, the
aggrieved party, must be allowed to move for a reconsideration of the same
so that he can bring a special civil action for certiorari before the Supreme
Court.[12]
Furthermore, it appears that the petitioners filed with the public
respondent a Motion for Early Resolution[13] dated June 24, 1992. Averring
that private respondents' Motion for Reconsideration did not contain
substantial factual or legal grounds for the reversal of subject decision.
Consequently, petitioners are now estopped from raising the issue sought
for resolution. In Alfredo Marquez vs. Secretary of Labor,[14] the Court said:
"xxx The active participation of the party against whom the action was
brought, coupled with his failure to object to the jurisdiction of the court or
quasi-judicial body where the action is pending, is tantamount to an
invocation of that jurisdiction and a willingness to abide by the resolution of
the case and will bar said party from later on impugning the court or body's
jurisdiction."
What is more, it was only when the public respondents issued the Order
adverse to them that the petitioners raised the question for the first time
before this Court. Obviously, it is a patent afterthought which must be
abhorred.
Petitioners also argued that the check-off provision in question is illegal
because it was never submitted for consideration and approval to "all the
members at a general membership meeting called for the purpose"; and
further alleged that the formalities mandated by Art. 241, paragraphs (n)
and (o) of the Labor Code, as amended, were not complied with.
"A check-off is a process or device whereby the employer, on agreement
with the Union, recognized as the proper bargaining representative, or on
prior authorization from its employees, deducts union dues or agency fees
from the latter's wages and remits them directly to the union."[15] Its
desirability in a labor organization is quite evident. It is assured thereby of
continuous funding. As this Court has acknowledged, the system of check-
off is primarily for the benefit of the Union and only indirectly, for the
individual employees.
The legal basis of check-off is found in statutes or in contracts.[16] The
statutory limitations on check-offs are found in Article 241, Chapter II, Title
IV, Book Five of the Labor Code, which reads:
"Rights and conditions of membership in a labor organization. - The
following are the rights and conditions of membership in a labor
organization:
xxx
(g) No officer, agent, member of a labor organization shall collect any fees,
dues, or other contributions in its behalf or make any disbursement of its
money or funds unless he is duly authorized pursuant to its constitution and
by-laws.
xxx
(n) No special assessment or other extraordinary fees may be levied upon
the members of a labor organization unless authorized by a written
resolution of a majority of all the members of a general membership
meeting duly called for the purpose. The secretary of the organization shall
record the minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and the
recipient of such assessment or fees. The record shall be attested to by the
president.
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary
fees may be checked off from any amount due to an employee with an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deductions. [Underscoring; supplied]
Article 241 of the Labor Code, as amended, must be read in relation to
Article 222, paragraph (b) of the same law, which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising
from collective bargaining negotiations or conclusion of the collective
agreement shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against
union funds in an amount to be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the contrary shall be null and
void." [Underscoring; supplied]
And this court elucidated the object and import of the said provision of law
in Bank of Philippine Islands Employees Union - Association Labor Union
(BPIEU-ALU) vs. National Labor Relations Commission:[17]
"The Court reads the afore-cited provision (Article 222 [b] of the Labor
Code) as prohibiting the payment of attorney's fees only when it is effected
through forced contributions from the workers from their own funds as
distinguished from the union funds. xxx"
Noticeably, Article 241 speaks of three (3) requisites that must be complied
with in order that the special assessment for Union's incidental expenses,
attorney's fees and representation expenses, as stipulated in Article XII of
the CBA, be valid and upheld namely: 1) authorization by a written
resolution of the majority of all the members at the general membership
meeting duly called for the purpose; (2) secretary's record of the minutes of
the meeting; and (3) individual written authorization for check-off duly
signed by the employee concerned.
After a thorough review of the records on hand, we find that the three (3)
requisites for the validity of the ten percent (10%) special assessment for
Union's incidental expenses, attorney's fees and representation expenses
were met.
It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee
Union held its general meeting, whereat it was agreed that a ten percent
(10%) special assessment from the total economic package due to every
member would be checked-off to cover expenses for negotiation, other
miscellaneous expenses and attorney's fees. The minutes of the said
meeting were recorded by the Union's Secretary, Ma. Carminda M. Munoz,
and noted by its President, Herbert Rivera.[18]
On May 24, 1991, said Union held its General Membership Meeting,
wherein majority of the members agreed that "in as much as the Union had
already paid Atty. P. Pascual the amount of P500,000.00, the same must be
shared by all the members until this is fully liquidated."[19]
Eighty-five (85) members of the same Union executed individual written
authorizations for check-off, thus:
"Towards that end, I hereby authorize the Management and/or Cashier of
ABS-CBN BROADCASTING CORPORATION to deduct from my salary the sum
of P30.00 per month as my regular union dues and said Management
and/or Cashier are further authorize (sic) to deduct a sum equivalent to 10%
of all and whatever benefits that will become due to me under the
COLLECTIVE BARGAINING AGREEMENT (CBA) that may be agreed upon by
the UNION and MANAGEMENT and to apply the said sum to the advance
that Management will make to our Union for incidental expenses such as
attorney's fees, representations and other miscellaneous expenses pursuant
to Article XII of the proposed CBA."[20]

Records do not indicate that the aforesaid check-off authorizations were
executed by the eighty-five (85) Union members under the influence of
force or compulsion. There is then, the presumption that such check-off
authorizations were executed voluntarily by the signatories thereto.
Petitioners contention that the amount to be deducted is uncertain[21] is
not persuasive because the check-off authorization clearly stated that the
sum to be deducted is equivalent to ten percent (10%) of all and whatever
benefits may accrue under the CBA. In other words, although the amount is
not fixed, it is determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as
amended, on special assessments, contemplates a general meeting after the
conclusion of the collective bargaining agreement.
Subject Article does not state that the general membership meeting should
be called after the conclusion of a collective bargaining agreement. Even
granting ex gratia argumenti that the general meeting should be held after
the conclusion of the CBA, such requirement was complied with since the
May 24, 1991 General Membership Meeting was held after the conclusion
of the Collective Bargaining Agreement, which was signed and concluded on
December 7, 1989.
Considering that the three requisites afforesaid for the validity of a special
assessment were observed or met, we uphold the validity of the ten percent
(10%) special assessment authorized in Article XII of the CBA.
We also concur in the finding by public respondent that the Bank of the
Philippine Islands Employees Union ALU vs. NLRC[22] is apposite in this case.
In BPIEU-ALU, the petitioners, impugned the Order of the NLRC, holding that
the validity of the five percent (5%) special assessment for attorneys fees is
contrary to Article 222, paragraph (b) of the Labor Code, as amended. The
court ratiocinated, thus:
The Court reads the aforecited provision as prohibiting the payment of
attorneys fees only when it is effected through forced contributions from
the workers from their own funds a distinguished from the union funds. The
purpose of the provision is to prevent imposition on the workers of the duty
to individually contribute their respective shares in the fee to be paid the
attorney for his services on behalf of the union in its negotiations with the
management. xxx [Underscoring supplied]
However, the public respondent overlooked the fact that in the said case,
the deduction of the stipulated five percent (5%) of the total economic
benefits under the new collective bargaining agreement was applied only to
workers who gave their individual signed authorizations. The Court
explained:
xxx And significantly, the authorized deduction affected only the workers
who adopted and signed the resolution and who were the only ones from
whose benefits the deductions were made by BPI. No similar deductions
were taken from the other workers who did not sign the resolution and so
were not bound by it. [Underscoring; supplied]
While the court also finds merit in the finding by the public respondents
that Palacol vs. Ferrer-Calleja[23] is inapropos in the case under scrutiny, it
does not subscribe to public respondents reasoning that Palacol should not
be retroactively applied to the present case in the interest of justice, equity
and fairplay.[24] The inapplicability of Palacol lies in the fact that it has a contributions from the workers; and (2) that no deductions must be taken
different factual milieu from the present case. In Palacol, the check-off from the workers who did not sign the check-off authorization, applies to
authorization was declared invalid because majority of the Union members the case under consideration.
had withdrawn their individual authorizations, to wit:

WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE

Paragraph (o) on the other hand requires an individual written authorization Undersecretary B.E. Laguesma is AFFIRMED except that no deductions shall
duly signed by every employee in order that special assessment maybe be taken from the workers who did not give their individual written check-
validly check-off. Even assuming that the special assessment was validly off authorization. No pronouncement as to costs.
levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no
valid check-off considering that the majority of the Union members had
already withdrawn their individual authorizations. A withdrawal of SO ORDERED.
individual authorization is equivalent to no authorization at all. xxx
[Underscoring; supplied]

In this case, the majority of the Union members gave their individual written
check-off authorizations for the ten percent (10%) special assessment. And
they have never withdraw their individual written authorizations for check-
off.

There is thus cogent reason to uphold the assailed Order, it appearing from
the records of the case that twenty (20)[25] of the forty-two (42) petitioners
executed as Compromise Agreement[26] ratifying the controversial check-
off provision in the CBA.

Premises studiedly considered, we are of the irresistable conclusion and, so

find, that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against
attorneys fees in Article 222, paragraph (b) of the Labor Code applies only
when the payment of attorneys fees is effected through forced