You are on page 1of 238

Republic of the Philippines In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already

SUPREME COURT failed to report for work for unknown reasons. Later, petitioners learned that he was working for
Manila "Mine of Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on
September 6, 1983, he was held up by his armed passenger who took all his money and
SECOND DIVISION thereafter stabbed him. He was hospitalized and after his discharge, he went to his home
province to recuperate.

In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms
G.R. No. 111474 August 22, 1994 and conditions as when he was first employed, but his working schedule was made on an
"alternative basis," that is, he drove only every other day. However, on several occasions, he
failed to report for work during his schedule.
FIVE J TAXI and/or JUAN S. ARMAMENTO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN and GILBERTO On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day.
SABSALON, respondents. Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated
requests of petitioners for him to report for work, he adamantly refused. Afterwards it was
revealed that he was driving a taxi for "Bulaklak Company."
Edgardo G. Fernandez for petitioners.
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash
R E SO L U T I O N
deposits for 2 years, but herein petitioners told him that not a single centavo was left of his
deposits as these were not even enough to cover the amount spent for the repairs of the taxi he
was driving. This was allegedly the practice adopted by petitioners to recoup the expenses
incurred in the repair of their taxicab units. When Maldigan insisted on the refund of his deposit,
REGALADO, J.:
petitioners terminated his services. Sabsalon, on his part, claimed that his termination from
employment was effected when he refused to pay for the washing of his taxi seat covers.
Petitioners Five J Taxi and/or Juan S. Armamento filed this special civil action for certiorari to
annul the decision 1 of respondent National Labor Relations Commission (NLRC) ordering
On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office
petitioners to pay private respondents Domingo Maldigan and Gilberto Sabsalon their
of the National Labor Relations Commission charging petitioners with illegal dismissal and illegal
accumulated deposits and car wash payments, plus interest thereon at the legal rate from the
deductions. That complaint was dismissed, the labor arbiter holding that it took private
date of promulgation of judgment to the date of actual payment, and 10% of the total amount as
respondents two years to file the same and such unreasonable delay was not consistent with the
and for attorney's fees.
natural reaction of a person who claimed to be unjustly treated, hence the filing of the case could
be interpreted as a mere afterthought.
We have given due course to this petition for, while to the cynical the de minimis amounts
involved should not impose upon the valuable time of this Court, we find therein a need to clarify
Respondent NLRC concurred in said findings, with the observation that private respondents
some issues the resolution of which are important to small wage earners such as taxicab drivers.
failed to controvert the evidence showing that Maldigan was employed by "Mine of Gold" Taxi
As we have heretofore repeatedly demonstrated, this Court does not exist only for the rich or the
Company from February 10, 1987 to December 10, 1990; that Sabsalon abandoned his taxicab
powerful, with their reputed monumental cases of national impact. It is also the Court of the poor
on September 1, 1990; and that they voluntarily left their jobs for similar employment with other
or the underprivileged, with the actual quotidian problems that beset their individual lives.
taxi operators. It, accordingly, affirmed the ruling of the labor arbiter that private respondents'
services were not illegally terminated. It, however, modified the decision of the labor arbiter by
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as ordering petitioners to pay private respondents the awards stated at the beginning of this
taxi drivers 2 and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside resolution.
from the daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned
taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00
Petitioners' motion for reconsideration having been denied by the NLRC, this petition is now
deposit to answer for any deficiency in their "boundary," for every actual working day.
before us imputing grave abuse of discretion on the part of said public respondent.
This Court has repeatedly declared that the factual findings of quasi-judicial agencies like the 1991 165.00 2,300.00
NLRC, which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect but, at times, finality if such findings are supported by ———— ———— ————
substantial evidence. 3 Where, however, such conclusions are not supported by the evidence,
they must be struck down for being whimsical and capricious and, therefore, arrived at with P 3,579.00 P 4,327.00 P 2,700.00
grave abuse of discretion. 4
The foregoing accounting shows that from 1987-1991, Sabsalon was able to withdraw his
Respondent NLRC held that the P15.00 daily deposits made by respondents to defray any deposits through vales or he incurred shortages, such that he is even indebted to petitioners in
shortage in their "boundary" is covered by the general prohibition in Article 114 of the Labor the amount of P3,448.00. With respect to Maldigan's deposits, nothing was mentioned
Code against requiring employees to make deposits, and that there is no showing that the questioning the same even in the present petition. We accordingly agree with the
Secretary of Labor has recognized the same as a "practice" in the taxi industry. Consequently, recommendation of the Solicitor General that since the evidence shows that he had not
the deposits made were illegal and the respondents must be refunded therefor. withdrawn the same, he should be reimbursed the amount of his accumulated cash deposits. 5

Article 114 of the Labor Code provides as follows: On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent
the issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry,
Art. 114. Deposits for loss or damage. — No employer shall require his worker to after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same
make deposits from which deductions shall be made for the reimbursement of clean condition when he took it out, and as claimed by the respondents (petitioners in the
loss of or damage to tools, materials, or equipment supplied by the employer, present case), complainant(s) (private respondents herein) were made to shoulder the expenses
except when the employer is engaged in such trades, occupations or business for washing, the amount doled out was paid directly to the person who washed the unit, thus we
where the practice of making deposits is a recognized one, or is necessary or find nothing illegal in this practice, much more (sic) to consider the amount paid by the driver as
desirable as determined by the Secretary of Labor in appropriate rules and illegal deduction in the context of the law." 6 (Words in parentheses added.)
regulations.
Consequently, private respondents are not entitled to the refund of the P20.00 car wash
It can be deduced therefrom that the said article provides the rule on deposits for loss or damage payments they made. It will be noted that there was nothing to prevent private respondents from
to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to cleaning the taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor
or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his General correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is,
"boundary." Also, when private respondents stopped working for petitioners, the alleged purpose in fact, dictated by fair play.
for which petitioners required such unauthorized deposits no longer existed. In other case, any
balance due to private respondents after proper accounting must be returned to them with legal On the last issue of attorney's fees or service fees for private respondents' authorized
interest. representative, Article 222 of the Labor Code, as amended by Section 3 of Presidential Decree
No. 1691, states that non-lawyers may appear before the NLRC or any labor arbiter only (1) if
However, the unrebutted evidence with regard to the claim of Sabsalon is as follows: they represent themselves, or (2) if they represent their organization or the members thereof.
While it may be true that Guillermo H. Pulia was the authorized representative of private
YEAR DEPOSITS SHORTAGES VALES respondents, he was a non-lawyer who did not fall in either of the foregoing categories. Hence,
by clear mandate of the law, he is not entitled to attorney's fees.
1987 P 1,403.00 P 567.00 P 1,000.00
Furthermore, the statutory rule that an attorney shall be entitled to have and recover from his
1988 720.00 760.00 200.00 client a reasonable compensation for his services 7 necessarily imports the existence of an
attorney-client relationship as a condition for the recovery of attorney's fees, and such
1989 686.00 130.00 1,500.00 relationship cannot exist unless the client's representative is a lawyer. 8

1990 605.00 570.00 WHEREFORE, the questioned judgment of respondent National Labor Relations Commission is
hereby MODIFIED by deleting the awards for reimbursement of car wash expenses and
attorney's fees and directing said public respondent to order and effect the computation and
payment by petitioners of the refund for private respondent Domingo Maldigan's deposits, plus
legal interest thereon from the date of finality of this resolution up to the date of actual payment
thereof.

SO ORDERED.
SECOND DIVISION

ARCO METAL PRODUCTS, CO., G.R. No. 170734


INC., and MRS. SALVADOR UY, Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU) v.
Petitioners, Present: 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
QUISUMBING, J., leave and sick leave conversion to cash shall be paid in full to the employees of
Chairperson, petitioner regardless of the actual service they rendered within a year.
- versus - TINGA,
VELASCO, and Petitioner is a company engaged in the manufacture of metal products,
BRION, JJ. whereas respondent is the labor union of petitioner’s rank and file
employees. Sometime in December 2003, petitioner paid the 13th month pay,
SAMAHAN NG MGA MANGGAGAWA bonus, and leave encashment of three union members in amounts proportional to
SA ARCO METAL-NAFLU (SAMARM- the service they actually rendered in a year, which is less than a full twelve (12)
NAFLU), Promulgated: months. The employees were:
Respondent.
May 14, 2008 1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004
2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003
x---------------------------------------------------------------------------x 3. Rodelio Collantes Sickness August 2003 to February 2004

DECISION Respondent protested the prorated scheme, claiming that on several


occasions petitioner did not prorate the payment of the same benefits to seven
TINGA, J.: (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
This treats of the Petition for Review[1] of the Resolution[2] and under Article 100 of the Labor Code. Thus, they filed a complaint before the
Decision[3] of the Court of Appeals dated 9 December 2005 and 29 National Conciliation and Mediation Board (NCMB). The parties submitted the
September 2005, respectively in CA-G.R. SP No. 85089 entitled case for voluntary arbitration.
that the 13th month pay, bonus, vacation leave and sick leave
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner conversions to cash shall be paid to the employees in full, irrespective
of the actual service rendered within a year.[7]
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, Petitioner moved for the reconsideration of the decision but its motion was
which states that the giving in full of the benefit was a mere error. He also denied, hence this petition.
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 Petitioner submits that the Court of Appeals erred when it ruled that
order to be entitled to the full benefits provided in the CBA. [5] the grant of 13th month pay, bonus, and leave encashment in full regardless of
actual service rendered constitutes voluntary employer practice and,
Unsatisfied, respondent filed a Petition for Review[6] under Rule 43 before consequently, the prorated payment of the said benefits does not constitute
the Court of Appeals, imputing serious error to Mangabat’s conclusion. The diminution of benefits under Article 100 of the Labor Code. [8]
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 The petition ultimately fails.

First, we determine whether the intent of the CBA provisions is to grant


employees. The appellate court noted that aside from the affidavit of petitioner’s full benefits regardless of service actually rendered by an employee to the
officer, it has not presented any evidence in support of its position that it has no company. According to petitioner, there is a one-year cutoff in the entitlement to
voluntary practice of granting the contested benefits in full and without regard to the benefits provided in the CBA which is evident from the wording of its
the service actually rendered within the year. It also questioned why it took pertinent provisions as well as of the existing law.
petitioner eleven (11) years before it was able to discover the alleged error. The
We agree with petitioner on the first issue. The applicable CBA provisions
dispositive portion of the court’s decision reads:
read:
WHEREFORE, premises considered, the instant petition is
hereby GRANTED and the Decision of Accredited Voluntary Arbiter ARTICLE XIV-VACATION LEAVE
Apron M. Mangabat in NCMB-NCR Case No. PM-12-345-03, dated
June 18, 2004 is hereby AFFIRMED WITH MODIFICATION in Section 1. Employees/workers covered by this agreement who
have rendered at least one (1) year of service shall be entitled to sixteen
(16) days vacation leave with pay for each year of service. Unused
leaves shall not be cumulative but shall be converted into its cash Section 1. The Company shall grant six (6) days emergency
equivalent and shall become due and payable every 1st Saturday of leave to employees covered by this agreement and if unused shall be
December of each year. converted into cash and become due and payable on the 1st Saturday of
December each year.
However, if the 1st Saturday of December falls in December 1,
November 30 (Friday) being a holiday, the management will give the Section 2. Employees/workers covered by this agreement who
cash conversion of leaves in November 29. 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
Section 2. In case of resignation or retirement of an employee, legitimate spouse gave birth. Said benefit shall be non-cumulative and
his vacation leave shall be paid proportionately to his days of service non-commutative and shall be deemed in compliance with the law on
rendered during the year. the same.

Section 3. Maternity leaves for married female employees shall


ARTICLE XV-SICK LEAVE be in accordance with the SSS Law plus a cash grant of P1,500.00 per
month.
Section 1. Employees/workers covered by this agreement who
have rendered at least one (1) year of service shall be entitled to sixteen xxx
(16) 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 ARTICLE XVIII- 13TH MONTH PAY & BONUS
December of each year.
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. Sick Leave will only be granted to actual sickness Section 2. The Company shall grant a bonus to all employees as
duly certified by the Company physician or by a licensed physician. practiced which shall be distributed on the 2nd Saturday of December.

Section 3. All commutable earned leaves will be paid


proportionately upon retirement or separation.

ARTICLE XVI – EMERGENCY LEAVE, ETC.


Section 3. That the Company further grants the amount of Two 1. Percival Bernas Sickness July 1992 to November 1992
Thousand Five Hundred Pesos (P2,500.00) as signing bonus plus a free 2. Cezar Montero Sickness 21 Dec. 1992 to February 1993
CBA Booklet.[9] (Underscoring ours) 3. Wilson Sayod Sickness May 1994 to July 1994
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996
5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999
There is no doubt that in order to be entitled to the full monetization of 6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003[11]
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
Petitioner claims that its full payment of benefits regardless of the length
of Mangabat that the CBA provisions did not give any meaning different from
of service to the company does not constitute voluntary employer practice. It
that given by the law, thus it should be computed at 1/12 of the total compensation
points out that the payments had been erroneously made and they occurred in
which an employee receives for the whole calendar year. The bonus is also
isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. According to
equivalent to the amount of the 13th month pay given, or in proportion to the
petitioner, it was only in 2003 that the accounting department discovered the error
actual service rendered by an employee within the year.
“when there were already three (3) employees involved with prolonged absences
and the error was corrected by implementing the pro-rata payment of benefits
On the second issue, however, petitioner founders.
pursuant to law and their existing CBA.”[12] It adds that the seven earlier cases of
full payment of benefits went unnoticed considering the proportion of one
As a general rule, in petitions for review under Rule 45, the Court, not
employee
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 exceptions, one of concerned (per year) vis à vis the 170 employees of the company. Petitioner
which is when the findings of the Court of Appeals are contrary to that of the describes the situation as a “clear oversight” which should not be taken against
lower tribunals. Such is the case here, as the factual conclusions of the Court of it.[13] To further bolster its case, petitioner argues that for a grant of a benefit to
Appeals differ from that of the voluntary arbitrator. 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
Petitioner granted, in several instances, full benefits to employees who happened in this case. Petitioner tries to make a case out of the fact that the CBA
have not served a full year, thus: has not been modified to incorporate the giving of full benefits regardless of the
length of service, proof that the grant has not ripened into company practice.
Name Reason Duration
We disagree. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted
a policy of freely, voluntarily and consistently granting full benefits to its
Any benefit and supplement being enjoyed by employees cannot be employees regardless of the length of service rendered. True, there were only a
reduced, diminished, discontinued or eliminated by the employer. [14] The total of seven employees who benefited from such a practice, but it was an
principle of non-diminution of benefits is founded on the Constitutional mandate established practice nonetheless. Jurisprudence has not laid down any rule
to "protect the rights of workers and promote their welfare,”[15] and “to afford specifying a minimum number of years within which a company practice must
labor full protection.”[16] Said mandate in turn is the basis of Article 4 of the Labor be exercised in order to constitute voluntary company practice.[20] Thus, it can be
Code which states that “all doubts in the implementation and interpretation of six (6) years,[21] three (3) years,[22]or even as short as two (2) years.[23] Petitioner
this Code, including its implementing rules and regulations shall be rendered in cannot shirk away from its responsibility by merely claiming that it was a mistake
favor of labor.” Jurisprudence is replete with cases which recognize the right of or an error, supported only by an affidavit of its manufacturing group
employees to benefits which were voluntarily given by the employer and which head portions of which read:
ripened into company practice. Thus in Davao Fruits Corporation v. Associated
Labor Unions, et al.[17] where an employer had freely and continuously included 5. 13th month pay, bonus, and cash conversion of unused/earned
in the computation of the 13th month pay those items that were expressly excluded vacation leave, sick leave and emergency leave are computed and paid
in full to employees who rendered services to the company for the
by the law, we held that the act which was favorable to the employees though
entire year and proportionately to those employees who rendered
not conforming to law had thus ripened into a practice and could not be service to the company for a period less than one (1) year or twelve (12)
withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading months in accordance with the CBA provision relative thereto.
Company v. Semana,[18] we ruled that the employer’s act of including non-basic
benefits in the computation of the 13th month pay was a voluntary act and had 6. It was never the intention much less the policy of the
ripened into a company practice which cannot be peremptorily management to grant the aforesaid benefits to the employees in full
regardless of whether or not the employee has rendered services to the
withdrawn. Meanwhile in Davao Integrated Port Stevedoring Services v.
company for the entire year, otherwise, it would be unjust and
Abarquez,[19] the Court ordered the payment of the cash equivalent of the inequitable not only to the company but to other employees as well.[24]
unenjoyed sick leave benefits to its intermittent workers after finding that said
workers had received these benefits for almost four years until the grant was
stopped due to a different interpretation of the CBA provisions. We held that the In cases involving money claims of employees, the employer has the
employer cannot unilaterally withdraw the existing privilege of burden of proving that the employees did receive the wages and benefits
commutation or conversion to cash given to said workers, and as also noted that and that the same were paid in accordance with law.[25]
the employer had in fact granted and paid said cash equivalent of the unenjoyed
portion of the sick leave benefits to some intermittent workers.
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it
could have easily presented other proofs, such as the names of other employees
who did not fully serve for one year and thus were given prorated
benefits. Experientially, a perfect attendance in the workplace is always the goal
but it is seldom achieved. There must have been other employees who had
reported for work less than a full year and who, as a consequence received
only prorated benefits. This could have easily bolstered petitioner’s theory of
mistake/error, but sadly, no evidence to that effect was presented.

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.

SO ORDERED.
Republic of the Philippines mid-year bonus, and separation pay."13 However, Arlene affixed her signature on the nonrenewal
SUPREME COURT contract with the initials "U.P." for "under protest." 14
Manila
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for
SECOND DIVISION illegal dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the
National Labor Relations Commission. She alleged that she was forced to sign the nonrenewal
G.R. No. 204944-45 December 3, 2014 contract when Fuji came to know of her illness and that Fuji withheld her salaries and other
benefits for March and April 2009 when she refused to sign. 15
FUJI TELEVISION NETWORK, INC., Petitioner,
vs. Arlene claimed that she was left with no other recourse but to sign the non-renewal contract, and
ARLENE S. ESPIRITU, Respondent. it was only upon signing that she was given her salaries and bonuses, in addition to separation
pay equivalent to four (4) years.16
DECISION
In the decision17 dated September 10, 2009, Labor Arbiter Corazon C. Borbolla dismissed
LEONEN, J.: Arlene’s complaint.18Citing Sonza v. ABS-CBN19 and applying the four-fold test, the Labor Arbiter
held that Arlene was not Fuji’s employee but an independent contractor. 20
It is the burden of the employer to prove that a person whose services it pays for is an
independent contractor rather than a regular employee with or without a fixed term. That a Arlene appealed before the National Labor Relations Commission. In its decision dated March 5,
person has a disease does not per se entitle the employer to terminate his or her services. 2010, the National Labor Relations Commission reversed the Labor Arbiter’s decision. 21 It held
Termination is the last resort. At the very least, a competent public health authority must certify that Arlene was a regular employee with respect to the activities for which she was employed
that the disease cannot be cured within six ( 6) months, even with appropriate treatment. since she continuously rendered services that were deemednecessary and desirable to Fuji’s
business.22 The National Labor Relations Commission ordered Fuji to pay Arlene backwages,
computed from the date of her illegal dismissal. 23 The dispositive portion of the decision reads:
We decide this petition for review1 on certiorari filed by Fuji Television Network, Inc., seeking the
reversal of the Court of Appeals’ Decision2 dated June 25, 2012, affirming with modification the
decision3 of the National Labor Relations Commission. WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant
appeal. The Decision of the Labor Arbiter dated 19 September 2009 is hereby REVERSED and
SET ASIDE, and a new one is issued ordering respondents-appellees to pay complainant-
In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") asa
appellant backwages computed from the date of her illegal dismissal until finality of this Decision.
news correspondent/producer4 "tasked to report Philippine news to Fuji through its Manila
Bureau field office."5 Arlene’s employment contract initially provided for a term of one (1) year but
was successively renewed on a yearly basis with salary adjustment upon every SO ORDERED.24
renewal.6 Sometime in January 2009, Arlenewas diagnosed with lung cancer. 7She informed Fuji
about her condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene "that Arlene and Fuji filed separat emotions for reconsideration.25 Both motions were denied by the
the company will have a problem renewing her contract"8 since it would be difficult for her to National Labor Relations Commission for lack of merit in the resolution dated April 26,
perform her job.9 She "insisted that she was still fit to work as certified by her attending 2010.26 From the decision of the National Labor Relations Commission, both parties filed
physician."10 separate petitions for certiorari27 before the Court of Appeals. The Court of Appeals consolidated
the petitions and considered the following issues for resolution:
After several verbal and written communications, 11 Arlene and Fuji signed a non-renewal contract
on May 5, 2009 where it was stipulated that her contract would no longer be renewed after its 1) Whether or not Espirituis a regular employee or a fixed-term contractual employee;
expiration on May 31, 2009. The contract also provided that the parties release each other from
liabilities and responsibilities under the employment contract.12 2) Whether or not Espiritu was illegally dismissed; and

In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of 3) Whether or not Espirituis entitled to damages and attorney’s fees.28
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus,
In the assailed decision, the Court of Appeals affirmed the National Labor Relations 10. Legal interest of twelve percent (12%) per annum of the total monetary awards
Commission with the modification that Fuji immediately reinstate Arlene to her position computed from May 5, 2009, until their full satisfaction.
as News Producer without loss of seniority rights, and pay her backwages, 13th-month
pay, mid-year and year-end bonuses, sick leave and vacation leave with pay until The Labor Arbiter is hereby DIRECTED to make another recomputation of the above monetary
reinstated, moral damages, exemplary damages, attorney’sfees, and legal interest of awards consistent with the above directives.
12% per annum of the total monetary awards.29 The Court of Appeals ruled that:
SO ORDERED.30
WHEREFORE, for lack of merit, the petition of Fuji Television Network, Inc. and Yoshiki Aoki is
DENIED and the petition of Arlene S. Espiritu is GRANTED. Accordingly, the Decision dated In arriving at the decision, the Court of Appeals held that Arlene was a regular employee
March 5, 2010 of the National Labor Relations Commission, 6th Division in NLRC NCR Case No. because she was engaged to perform work that was necessary or desirable in the business of
05-06811-09 and its subsequent Resolution dated April 26, 2010 are hereby AFFIRMED with Fuji,31 and the successive renewals of her fixed-term contract resulted in regular employment. 32
MODIFICATIONS, as follows:
According to the Court of Appeals, Sonzadoes not apply in order to establish that Arlene was an
Fuji Television, Inc. is hereby ORDERED to immediately REINSTATE Arlene S. Espiritu to her independent contractor because she was not contracted on account of any peculiar ability,
position as News Producer without loss of seniority rights and privileges and to pay her the special talent, or skill.33 The fact that everything used by Arlene in her work was owned by Fuji
following: negated the idea of job contracting.34

1. Backwages at the rate of $1,900.00 per month computed from May 5, 2009 (the date The Court of Appeals also held that Arlene was illegally dismissed because Fuji failed to comply
of dismissal), until reinstated; with the requirements of substantive and procedural due process necessary for her dismissal
since she was a regular employee.35
2. 13th Month Pay at the rate of $1,900.00 per annum from the date of dismissal, until
reinstated; The Court of Appeals found that Arlene did not sign the non-renewal contract voluntarily and that
the contract was a mere subterfuge by Fuji to secure its position that it was her choice not to
3. One and a half (1 1/2) months pay or $2,850.00 as midyear bonus per year from the renew her contract. She was left with no choice since Fuji was decided on severing her
date of dismissal, until reinstated; employment.36

4. One and a half (1 1/2) months pay or $2,850.00 as year-end bonus per year from the Fuji filed a motion for reconsideration that was denied in the resolution37 dated December 7, 2012
date of dismissal, until reinstated; for failure to raise new matters.38

5. Sick leave of 30 days with pay or $1,900.00 per year from the date of dismissal, until Aggrieved, Fuji filed this petition for review and argued that the Court of Appeals erred in
reinstated; and affirming with modification the National Labor Relations Commission’s decision, holding that
Arlene was a regular employee and that she was illegally dismissed. Fuji also questioned the
6. Vacation leave with pay equivalent to 14 days or $1,425.00 per annum from date of award of monetary claims, benefits, and damages. 39
dismissal, until reinstated.
Fuji points out that Arlene was hired as a stringer, and it informed her that she would remain
7. The amount of ₱100,000.00 as moral damages; one.40 She was hired as an independent contractor as defined in Sonza.41 Fuji had no control over
her work.42 The employment contracts were executed and renewed annually upon Arlene’s
8. The amount of ₱50,000.00 as exemplary damages; insistence to which Fuji relented because she had skills that distinguished her from ordinary
employees.43 Arlene and Fuji dealt on equal terms when they negotiated and entered into the
9. Attorney’s fees equivalent to 10% of the total monetary awards herein stated; and employment contracts.44 There was no illegal dismissal because she freely agreed not to renew
her fixed-term contract as evidenced by her e-mail correspondences with Yoshiki Aoki.45 In fact,
the signing of the non-renewal contract was not necessary to terminate her employment since
"such employment terminated upon expiration of her contract."46 Finally, Fuji had dealt with II. Whether the Court of Appeals correctly determined that no grave abuse of discretion
Arlene in good faith, thus, she should not have been awarded damages. 47 was committed by the National Labor Relations Commission when it ruled that Arlene
was a regular employee, not an independent contractor, and that she was illegally
Fuji alleges that it did not need a permanent reporter since the news reported by Arlene could dismissed; and
easily be secured from other entities or from the internet. 48 Fuji "never controlled the manner by
which she performed her functions."49It was Arlene who insisted that Fuji execute yearly fixed- III. Whether the Court of Appeals properly modified the National Labor Relations
term contracts so that she could negotiate for annual increases in her pay. 50 Commission’s decision by awarding reinstatement, damages, and attorney’s fees.

Fuji points out that Arlene reported for work for only five (5) days in February 2009, three (3) The petition should be dismissed.
days in March 2009, and one (1) day in April 2009. 51 Despite the provision in her employment
contract that sick leaves in excess of 30 days shall not be paid, Fuji paid Arlene her entire salary I
for the months of March, April, and May; four(4) months of separation pay; and a bonus for two
and a half months for a total of US$18,050.00. 52 Despite having received the amount of Validity of the verification and certification against forum shopping
US$18,050.00, Arlene still filed a case for illegal dismissal.53
In its comment on Arlene’s manifestation, Fuji alleges that Corazon was authorized to sign the
Fuji further argues that the circumstances would show that Arlene was not illegally dismissed. verification and certification of non-forum shopping because Mr. Shuji Yano was empowered
The decision tonot renew her contract was mutually agreed upon by the parties as indicated in under the secretary’s certificate to delegate his authority to sign the necessary pleadings,
Arlene’s e-mail54 dated March 11, 2009 where she consented to the non-renewal of her contract including the verification and certification against forum shopping.69
but refused to sign anything.55 Aoki informed Arlene in an e-mail56 dated March 12, 2009 that she
did not need to sign a resignation letter and that Fuji would pay Arlene’s salary and bonus until
On the other hand, Arlene points outthat the authority given to Mr. Shuji Yano and Mr. Jin Eto in
May 2009 as well as separation pay.57
the secretary’s certificate is only for the petition for certiorari before the Court of Appeals. 70 Fuji
did not attach any board resolution authorizing Corazon orany other person tofile a petition for
Arlene sent an e-mail dated March 18, 2009 with her version of the non-renewal agreement that review on certiorari with this court.71 Shuji Yano and Jin Eto could not re-delegate the power
she agreed to sign this time.58 This attached version contained a provision that Fuji shall re-hire thatwas delegated to them.72 In addition, the special power of attorney executed by Shuji Yano in
her if she was still interested to work for Fuji. 59 For Fuji, Arlene’s e-mail showed that she had the favor of Corazon indicated that she was empowered to sign on behalf of Shuji Yano, and not on
power to bargain.60 behalf of Fuji.73

Fuji then posits that the Court of Appeals erred when it held that the elements of an employer- The Rules of Court requires the
employee relationship are present, particularly that of control; 61 that Arlene’s separation from submission of verification and
employment upon the expiration of her contract constitutes illegal dismissal; 62 that Arlene is certification against forum shopping
entitled to reinstatement;63 and that Fuji is liable to Arlene for damages and attorney’s fees. 64
Rule 7, Section 4 of the 1997 Rules of Civil Procedure provides the requirement of verification,
This petition for review on certiorari under Rule 45 was filed on February 8, 2013. 65 On February while Section 5 of the same rule provides the requirement of certification against forum
27, 2013, Arlene filed a manifestation66 stating that this court may not take jurisdiction over the shopping. These sections state:
case since Fuji failed to authorize Corazon E. Acerden to sign the verification. 67 Fuji filed a
comment on the manifestation68 on March 9, 2013.
SEC. 4. Ver if ica tio n. — Except when otherwise specifically required by law or rule, pleadings
need not be under oath, verified or accompanied by affidavit.
Based on the arguments of the parties, there are procedural and substantive issues for
resolution:
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his knowledge and belief.
I. Whether the petition for review should be dismissed as Corazon E. Acerden, the
signatory of the verification and certification of non forum shopping of the petition, had no
authority to sign the verification and certification on behalf of Fuji;
A pleading required to be verifiedwhich containsa verification based on "information and belief," Shipside Incorporated v. Court of Appeals 77 cited the discussion in Uy and differentiated its effect
or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an from non-compliance with the requirement of certification against forum shopping:
unsigned pleading.
On the other hand, the lack of certification against forum shopping is generally not curable by the
SEC. 5. Certification against forum shopping.— The plaintiff or principal party shall certify under submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997 Rules of Civil
oath in the complaint orother initiatory pleading asserting a claim for relief or in a sworn Procedure provides that the failure of the petitioner tosubmit the required documents that should
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore accompany the petition, including the certification against forum shopping, shall be sufficient
commenced any action or filed any claim involving the same issues in any court, tribunal or ground for the dismissal thereof. The same rule applies to certifications against forum shopping
quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending signed by a person on behalf of a corporation which are unaccompanied by proof that said
therein; (b) if there is such other pending action or claim, a complete statement of the present signatory is authorized to file a petition on behalf of the corporation. 78 (Emphasis supplied)
status thereof; and (c) if he should thereafter learn that the same or similar action or claim has Effects of substantial compliance with the requirement of verification and certification against
been filed or is pending, he shall report that fact within five (5) days therefrom to the court forum shopping
wherein his aforesaid complaint or initiatory pleading has been filed.
Although the general rule is that failure to attach a verification and certification against forum
Failure to comply with the foregoing requirements shall not be curable by mere amendment of shopping isa ground for dismissal, there are cases where this court allowed substantial
the complaint or other initiatory pleading but shall be cause for the dismissal of the case without compliance.
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect In Loyola v. Court of Appeals,79 petitioner Alan Loyola submitted the required certification one
contempt ofcourt, without prejudice to the corresponding administrative and criminalactions. If day after filing his electoral protest.80 This court considered the subsequent filing as substantial
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the compliance since the purpose of filing the certification is to curtail forum shopping. 81
same shall be ground for summary dismissal with prejudice and shall constitute direct contempt,
as well as a cause for administrative sanctions. In LDP Marketing, Inc. v. Monter, 82 Ma. Lourdes Dela Peña signed the verification and
certification against forum shopping but failed to attach the board resolution indicating her
Section 4(e) of Rule 4574 requires that petitions for review should "contain a sworn certification authority to sign.83 In a motion for reconsideration, LDP Marketing attached the secretary’s
against forum shopping as provided in the last paragraph of section 2, Rule 42." Section 5 of the certificate quoting the board resolution that authorized Dela Peña. 84 Citing Shipside, this court
same rule provides that failure to comply with any requirement in Section 4 is sufficient ground to deemed the belated submission as substantial compliance since LDP Marketing complied with
dismiss the petition. the requirement; what it failed to do was to attach proof of Dela Peña’s authority to sign. 85 Havtor
Management Phils., Inc. v. National Labor Relations Commission86 and General Milling
Effects of non-compliance Corporation v. National Labor Relations Commission87 involved petitions that were dismissed for
failure to attach any document showing that the signatory on the verification and certification
Uy v. Landbank75 discussed the effect of non-compliance with regard to verification and stated against forum-shopping was authorized.88 In both cases, the secretary’s certificate was attached
that: to the motion for reconsideration.89 This court considered the subsequent submission of proof
indicating authority to sign as substantial compliance. 90 Altres v. Empleo91 summarized the rules
[t]he requirement regarding verification of a pleading is formal, not jurisdictional. Such on verification and certification against forum shopping in this manner:
requirement is simply a condition affecting the form of pleading, the non-compliance of which
does not necessarily render the pleading fatally defective. Verification is simply intended to For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
secure an assurance that the allegations in the pleading are true and correct and not the product pronouncements . . . respecting non-compliance with the requirement on, or submission of
of the imagination or a matter of speculation, and that the pleading is filed in good faith. The defective, verification and certification against forum shopping:
court may order the correction of the pleading if the verification is lacking or act on the pleading
although it is not verified, if the attending circumstances are such that strict compliance with the 1) A distinction must be made between non-compliance with the requirement on or
rules may be dispensed with inorder that the ends of justice may thereby be served.76 (Citations submission of defective verification, and noncompliance with the requirement on or
omitted) submission of defective certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily Arlene filed the manifestation dated February 27, 2013, arguing that the petition for review
render the pleading fatally defective. The court may order its submission or correction or should be dismissed because Corazon was not duly authorized to sign the verification and
act on the pleading if the attending circumstances are such that strict compliance with certification against forum shopping.
the Rule may be dispensed with in order that the ends of justice may be served thereby.
Fuji filed a comment on Arlene’s manifestation, stating that Corazon was properly authorized to
3) Verification is deemed substantially complied with when one who has ample sign. On the basis of the secretary’s certificate, Shuji Yano was empowered to delegate his
knowledge to swear to the truth of the allegations in the complaint or petition signs the authority.
verification, and when matters alleged in the petition have been made in good faith or are
true and correct. Quoting the board resolution dated May 13, 2010, the secretary's certificate states:

4) As to certification against forum shopping, non-compliance therewith or a defect (a) The Corporation shall file a Petition for Certiorari with the Court of Appeals, against
therein, unlike in verification, is generally not curable by its subsequent submission or Philippines’ National Labor Relations Commission ("NLRC") and Arlene S. Espiritu,
correction thereof, unless there is a need to relax the Rule on the ground of "substantial pertaining to NLRC-NCR Case No. LAC 00-002697-09, RAB No. 05-06811-00 and
compliance" or presence of "special circumstances or compelling reasons." entitled "Arlene S. Espiritu v. Fuji Television Network, Inc./Yoshiki Aoki", and participate
in any other subsequent proceeding that may necessarily arise therefrom, including but
5) The certification against forum shopping must be signed by all the plaintiffs or not limited to the filing of appeals in the appropriate venue;
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs (b) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to verify
or petitioners share a common interest and invoke a common cause of action or defense, and execute the certification against nonforum shopping which may be necessary or
the signature of only one of them inthe certification against forum shopping substantially required to be attached to any pleading to [sic] submitted to the Court of Appeals; and
complies with the Rule. the authority to so verify and certify for the Corporation in favor of the said persons shall
subsist and remain effective until the termination of the said case;
6) Finally, the certification against forum shopping must be executed by the party-
pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the party- ....
pleader is unable to sign, he must execute a Special Power of Attorney designating his
counsel of record to sign on his behalf.92 (d) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to
represent and appear on behalf the [sic] Corporation in all stages of the [sic] this case
There was substantial compliance and in any other proceeding that may necessarily arise thereform [sic], and to act in the
by Fuji Television Network, Inc. Corporation’s name, place and stead to determine, propose, agree, decide, do, and
perform any and all of the following:
Being a corporation, Fuji exercises its power to sue and be sued through its board of directors or
duly authorized officers and agents. Thus, the physical act of signing the verification and 1. The possibility of amicable settlement or of submission to alternative mode of
certification against forum shopping can only be done by natural persons duly authorized either dispute resolution;
by the corporate by-laws or a board resolution.93
2. The simplification of the issue;
In its petition for review on certiorari, Fuji attached Hideaki Ota’s secretary’s
certificate,94 authorizing Shuji Yano and Jin Eto to represent and sign for and on behalf of 3. The necessity or desirability of amendments to the pleadings;
Fuji.95 The secretary’s certificate was duly authenticated96 by Sulpicio Confiado, Consul-General
of the Philippines in Japan. Likewise attached to the petition is the special power of attorney
4. The possibility of obtaining stipulation or admission of facts and documents;
executed by Shuji Yano, authorizing Corazon to sign on his behalf. 97 The verification and
and
certification against forum shopping was signed by Corazon. 98
5. Such other matters as may aid in the prompt disposition of the Considering that the subsequent proceeding that may arise from the petition for certiorari with
action.99 (Emphasis in the original; Italics omitted) the Court of Appeals is the filing of a petition for review with this court, Fuji substantially complied
with the procedural requirement.
Shuji Yano executed a special power of attorney appointing Ms. Ma. Corazon E. Acerden and
Mr. Moises A. Rollera as his attorneys-in-fact.100 The special power of attorney states: On the issue of whether Shuji Yano validly delegated his authority to Corazon, Article 1892 of the
Civil Code of the Philippines states:
That I, SHUJI YANO, of legal age, Japanese national, with office address at 2-4-8 Daiba, Minato-
Ku, Tokyo, 137-8088 Japan, and being the representative of Fuji TV, INc., [sic] (evidenced by ART. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing
the attached Secretary’s Certificate) one of the respondents in NLRC-NCR Case No. 05-06811- so; but he shall be responsible for the acts of the substitute:
00 entitled "Arlene S. Espiritu v. Fuji Television Network, Inc./Yoshiki Aoki", and subsequently
docketed before the Court of Appeals asC.A. G.R. S.P. No. 114867 (Consolidated with SP No. (1) When he was not given the power to appoint one;
114889) do hereby make, constitute and appoint Ms. Ma. Corazon E. Acerden and Mr. Moises
A. Rolleraas my true and lawful attorneys-infact for me and my name, place and stead to act and (2) When he was given such power, but without designating the person, and the person
represent me in the above-mentioned case, with special power to make admission/s and appointed was notoriously incompetent or insolvent. All acts of the substitute appointed
stipulations and/or to make and submit as well as to accept and approve compromise proposals against the prohibition of the principal shall be void.
upon such terms and conditions and under such covenants as my attorney-in-fact may deem fit,
and to engage the services of Villa Judan and Cruz Law Officesas the legal counsel to represent
The secretary’s certificate does not state that Shuji Yano is prohibited from appointing a
the Company in the Supreme Court;
substitute. In fact, heis empowered to do acts that will aid in the resolution of this case.
The said Attorneys-in-Fact are hereby further authorized to make, sign, execute and deliver such
This court has recognized that there are instances when officials or employees of a corporation
papers ordocuments as may be necessary in furtherance of the power thus granted, particularly
can sign the verification and certification against forum shopping without a board resolution. In
to sign and execute the verification and certification of non-forum shopping needed to be
Cagayan Valley Drug Corporation v. CIR,108 it was held that:
filed.101 (Emphasis in the original)
In sum, we have held that the following officials or employees of the company can sign the
In its comment102 on Arlene’s manifestation, Fuji argues that Shuji Yano could further delegate his
verification and certification without need of a board resolution: (1) the Chairperson of the Board
authority because the board resolution empowered him to "act in the Corporation’s name, place
of Directors, (2) the President of a corporation, (3) the General Manager or Acting General
and stead to determine, propose, agree, decided [sic], do and perform any and all of the
Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.
following: . . . such other matters as may aid in the prompt disposition of the action." 103 To clarify,
Fuji attached a verification and certification against forum shopping, but Arlene questions
Corazon’s authority to sign. Arlene argues that the secretary’s certificate empowered Shuji Yano While the above cases109 do not provide a complete listing of authorized signatories to the
to file a petition for certiorari before the Court of Appeals, and not a petition for review before this verification and certification required by the rules, the determination of the sufficiency of the
court, and that since Shuji Yano’s authority was delegated to him, he could not further delegate authority was done on a case to case basis. The rationale applied in the foregoing cases is to
such power. Moreover, Corazon was representing Shuji Yano in his personal capacity, and not in justify the authority of corporate officers or representatives of the corporation to sign the
his capacity as representative of Fuji. verification or certificate against forum shopping, being ‘in a position to verify the truthfulness and
correctness of the allegations in the petition.’ 110
A review of the board resolution quoted in the secretary’s certificate shows that Fuji shall "file a
Petition for Certiorari with the Court of Appeals" 104 and "participate in any other subsequent Corazon’s affidavit111 states that she is the "office manager and resident interpreter of the Manila
proceeding that may necessarily arise therefrom, including but not limited to the filing of appeals Bureau of Fuji Television Network, Inc."112 and that she has "held the position for the last twenty-
in the appropriate venue,"105 and that Shuji Yano and Jin Eto are authorized to represent Fuji "in three years."113
any other proceeding that may necessarily arise thereform [sic]." 106 As pointed out by Fuji, Shuji
Yano and Jin Eto were also authorized to "act in the Corporation’s name, place and stead to As the office manager for 23 years,Corazon can be considered as having knowledge of all
determine, propose, agree, decide, do, and perform anyand all of the following: . . . 5. Such other matters in Fuji’s Manila Bureau Office and is in a position to verify "the truthfulness and the
matters as may aid in the prompt disposition of the action." 107 correctness of the allegations in the Petition." 114
Thus, Fuji substantially complied with the requirements of verification and certification against "acted capriciously and whimsically or in total disregard of evidence material to the
forum shopping. controversy."124

Before resolving the substantive issues in this case, this court will discuss the procedural When a decision of the Court of Appeals under a Rule 65 petition is brought to this court by way
parameters of a Rule 45 petition for review in labor cases. of a petition for review under Rule 45, only questions of law may be decided upon. As held in
Meralco Industrial v. National Labor Relations Commission: 125
II
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court ina
Procedural parameters of petitions for review in labor cases petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to
reviewing only errors of law, not of fact, unless the factual findings complained of are completely
Article 223 of the Labor Code115 does not provide any mode of appeal for decisions of the devoid of support from the evidence on record, or the assailed judgment is based on a gross
National Labor Relations Commission. It merely states that "[t]he decision of the Commission misapprehension of facts. Besides, factual findings of quasi-judicial agencies like the NLRC,
shall be final and executory after ten (10) calendar days from receipt thereof by the parties." when affirmed by the Court of Appeals, are conclusive upon the parties and binding on this
Being final, it is no longer appealable. However, the finality of the National Labor Relations Court.126
Commission’s decisions does not mean that there is no more recourse for the parties.
Career Philippines v. Serna,127 citing Montoya v. Transmed,128 is instructive on the parameters of
In St. Martin Funeral Home v. National Labor Relations Commission, 116 this court cited several judicial review under Rule 45:
cases117 and rejected the notion that this court had no jurisdiction to review decisions of the
National Labor Relations Commission. It stated that this court had the power to review the acts As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed
of the National Labor Relations Commission to see if it kept within its jurisdiction in deciding the particular parameters of a Rule 45 appeal from the CA’s Rule 65 decision on a labor case, as
cases and alsoas a form of check and balance.118 This court then clarified that judicial review of follows:
National Labor Relations Commission decisions shall be by way of a petition for certiorari under
Rule 65. Citing the doctrine of hierarchy of courts, it further ruled that such petitions shall be filed In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
before the Court of Appeals. From the Court of Appeals, an aggrieved party may file a petition for review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to
review on certiorari under Rule 45. the review of questions of law raised against the assailed CA decision. In ruling for legal
correctness, we have to view the CA decision in the same context that the petition for certiorari it
A petition for certiorari under Rule 65 is an original action where the issue is limited to grave ruled upon was presented to it; we have to examine the CA decision from the prism of whether it
abuse of discretion. As an original action, it cannot be considered as a continuation of the correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
proceedings of the labor tribunals. before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In
other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review
On the other hand, a petition for review on certiorari under Rule 45 is a mode of appeal where on appeal, of the NLRC decision challenged before it.129 (Emphasis in the original)
the issue is limited to questions of law. In labor cases, a Rule 45 petition is limited toreviewing
whether the Court of Appeals correctly determined the presence or absence of grave abuse of Justice Brion’s dissenting opinion in Abott Laboratories, PhiIippines v. Aicaraz 130 discussed that in
discretion and deciding other jurisdictional errors of the National Labor Relations Commission. 119 petitions for review under Rule 45, "the Court simply determines whether the legal correctness of
the CA’s finding that the NLRC ruling . . . had basis in fact and in Iaw."131 In this kind of petition,
In Odango v. National Labor Relations Commission, 120 this court explained that a petition for the proper question to be raised is, "Did the CA correctly determine whether the NLRC
certiorari is an extraordinary remedy that is "available only and restrictively in truly exceptional committed grave abuse of discretion in ruling on the case?"132
cases"121 and that its sole office "is the correction of errors of jurisdiction including commission of
grave abuse of discretion amounting to lack or excess of jurisdiction."122 A petition for certiorari Justice Brion’s dissenting opinion also laid down the following guidelines:
does not include a review of findings of fact since the findings of the National Labor Relations
Commission are accorded finality.123 In cases where the aggrieved party assails the National If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, then no
Labor Relations Commission’s findings, he or she must be able to show that the Commission grave abuse of discretion exists and the CA should so declare and, accordingly, dismiss the
petition. If grave abuse of discretion exists, then the CA must grant the petition and nullify the
NLRC ruling, entering at the same time the ruling that isjustified under the evidence and the IV
governing law, rules and jurisprudence. In our Rule 45 review, this Court must denythe petition if
it finds that the CA correctly acted. 133 (Emphasis in the original) Whether the Court of Appeals correctly affirmed the National Labor
Relations Commission’s finding that Arlene was a regular employee
These parameters shall be used in resolving the substantive issues in this petition.
Fuji alleges that Arlene was anindependent contractor, citing Sonza v. ABS-CBN and relying on
III the following facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00,
which is higher than the normal rate; (3) she had the power to bargain with her employer; and (4)
Determination of employment status; burden of proof her contract was for a fixed term. According to Fuji, the Court of Appeals erred when it ruled that
Arlene was forcedto sign the non-renewal agreement, considering that she sent an email with
In this case, there is no question thatArlene rendered services to Fuji. However, Fuji alleges that another version of the non-renewal agreement.140 Further, she is not entitled tomoral damages
Arlene was an independent contractor, while Arlene alleges that she was a regular employee. To and attorney’s fees because she acted in bad faith when she filed a labor complaint against Fuji
resolve this issue, we ascertain whether an employer-employee relationship existed between after receiving US$18,050.00 representing her salary and other benefits. 141 Arlene argues that
Fuji and Arlene. she was a regular employee because Fuji had control and supervision over her work. The news
events that she covered were all based on the instructions of Fuji. 142 She maintains that the
successive renewal of her employment contracts for four (4) years indicates that her work was
This court has often used the four-fold test to determine the existence of an employer-employee
necessary and desirable.143 In addition, Fuji’s payment of separation pay equivalent to one (1)
relationship. Under the four-fold test, the "control test" is the most important. 134 As to how the
month’s pay per year of service indicates that she was a regular employee. 144 To further support
elements in the four-fold test are proven, this court has discussed that:
her argument that she was not an independent contractor, she states that Fuji owns the laptop
computer and mini-camera that she used for work.145 Arlene also argues that Sonza is not
[t]here is no hard and fast rule designed to establish the aforesaid elements. Any competent and applicable because she was a plain reporter for Fuji, unlike Jay Sonza who was a news anchor,
relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, talk show host, and who enjoyed a celebrity status. 146 On her illness, Arlene points outthat it was
social security registration, appointment letters or employment contracts, payrolls, organization not a ground for her dismissal because her attending physician certified that she was fit to
charts, and personnel lists, serve as evidence of employee status. 135 work.147

If the facts of this case vis-à-vis the four-fold test show that an employer-employee relationship Arlene admits that she signed the non-renewal agreement with quitclaim, not because she
existed, we then determine the status of Arlene’s employment, i.e., whether she was a regular agreed to itsterms, but because she was not in a position to reject the non-renewal agreement.
employee. Relative to this, we shall analyze Arlene’s fixed-term contract and determine whether Further, she badly needed the salary withheld for her sustenance and medication. 148 She posits
it supports her argument that she was a regular employee, or the argument of Fuji that she was that her acceptance of separation pay does not bar filing of a complaint for illegal dismissal. 149
an independent contractor. We shall scrutinize whether the nature of Arlene’s work was
necessary and desirable to Fuji’s business or whether Fuji only needed the output of her work. If
Article 280 of the Labor Code provides that:
the circumstances show that Arlene’s work was necessary and desirable to Fuji, then she is
presumed to be a regular employee. The burden of proving that she was an independent
contractor lies with Fuji. Art. 280. Regular and casual employment.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
In labor cases, the quantum of proof required is substantial evidence. 136 "Substantial evidence"
usually necessary or desirable in the usual business or trade of the employer, except where the
has been defined as "such amount of relevant evidence which a reasonable mind might accept
employment has been fixed for a specific project or undertaking the completion or termination of
as adequate to justify a conclusion."137
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
If Arlene was a regular employee, we then determine whether she was illegally dismissed. In season.
complaints for illegal dismissal, the burden of proof is on the employee to prove the fact of
dismissal.138 Once the employee establishes the fact of dismissal, supported by substantial
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;
evidence, the burden of proof shifts tothe employer to show that there was a just or authorized
Provided, That, any employee who has rendered at least one year of service, whether such
cause for the dismissal and that due process was observed.139
service is continuous or broken, shall be considered a regular employee with respect to the These indications, which must be read together, make the Brent doctrine applicable only in a few
activity in which heis employed and his employment shall continue while such activity exist. special cases wherein the employer and employee are on more or less in equal footing in
entering into the contract. The reason for this is evident: whena prospective employee, on
This provision classifies employees into regular, project, seasonal, and casual. It further account of special skills or market forces, is in a position to make demands upon the prospective
classifies regular employees into two kinds: (1) those "engaged to perform activities which are employer, such prospective employee needs less protection than the ordinary worker. Lesser
usually necessary or desirable in the usual business or trade of the employer"; and (2) casual limitations on the parties’ freedom of contract are thus required for the protection of the
employees who have "rendered at least one year of service, whether such service is continuous employee.155(Citations omitted)
or broken."
For as long as the guidelines laid down in Brentare satisfied, this court will recognize the validity
Another classification of employees, i.e., employees with fixed-term contracts, was recognized in of the fixed-term contract.
Brent School, Inc. v. Zamora150 where this court discussed that:
In Labayog v. M.Y. San Biscuits, Inc.,156 this court upheld the fixedterm employment of petitioners
Logically, the decisive determinant in the term employment should not be the activities that the because from the time they were hired, they were informed that their engagement was for a
employee is called upon to perform, but the day certain agreed upon by the parties for the specific period. This court stated that:
commencement and termination of their employment relationship, a day certainbeing understood
to be "that which must necessarily come, although it may not be known when."151 (Emphasis in [s]imply put, petitioners were notregular employees. While their employment as mixers, packers
the original) and machine operators was necessary and desirable in the usual business ofrespondent
company, they were employed temporarily only, during periods when there was heightened
This court further discussed that there are employment contracts where "a fixed term is an demand for production. Consequently, there could have been no illegal dismissal when their
essential and natural appurtenance"152 such as overseas employment contracts and officers in services were terminated on expiration of their contracts. There was even no need for notice of
educational institutions.153 termination because they knew exactly when their contracts would end. Contracts of
employment for a fixed period terminate on their own at the end of such period.
Distinctions among fixed-term
employees, independent contractors, Contracts of employment for a fixed period are not unlawful. What is objectionable is the practice
and regular employees of some scrupulous employers who try to circumvent the law protecting workers from the
capricious termination of employment.157 (Citation omitted)
GMA Network, Inc. v. Pabriga154 expounded the doctrine on fixed term contracts laid down in
Brentin the following manner: Caparoso v. Court of Appeals158 upheld the validity of the fixed-term contract of employment.
Caparoso and Quindipan were hired as delivery men for three (3) months. At the end of the third
Cognizant of the possibility of abuse in the utilization of fixed term employment contracts, we month, they were hired on a monthly basis. In total, they were hired for five (5) months. They
emphasized in Brentthat where from the circumstances it is apparent that the periods have been filed a complaint for illegal dismissal.159 This court ruled that there was no evidence indicating that
imposed to preclude acquisition of tenurial security by the employee, they should be struck down they were pressured into signing the fixed-term contracts. There was likewise no proof that their
as contrary to public policy or morals. We thus laid down indications or criteria under which "term employer was engaged in hiring workers for five (5) months onlyto prevent regularization. In the
employment" cannot be said to be in circumvention of the law on security of tenure, namely: absence of these facts, the fixed-term contracts were upheld as valid.160 On the other hand, an
independent contractor is defined as:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and . . . one who carries on a distinct and independent business and undertakes to perform the job,
absent any other circumstances vitiating his consent; or work, or service on its own account and under one’s own responsibility according to one’s own
manner and method, free from the control and direction of the principal in all matters connected
with the performance of the work except as to the results thereof. 161
2) It satisfactorily appears that the employer and the employee dealt with each other on more or
less equal terms with no moral dominance exercised by the former or the latter.
In view of the "distinct and independent business" of independent contractors, no employer- Jurisprudence has recognized another kind of independent contractor: individuals with unique
employee relationship exists between independent contractors and their principals. Independent skills and talents that set them apart from ordinary employees. There is no trilateral relationship
contractors are recognized under Article 106 of the Labor Code: in this case because the independent contractor himself or herself performs the work for the
principal. In other words, the relationship is bilateral.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the former’s work, the employees of the contractor and of the In Orozco v. Court of Appeals,163 Wilhelmina Orozco was a columnist for the Philippine Daily
latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. Inquirer. This court ruled that she was an independent contractor because of her "talent, skill,
experience, and her unique viewpoint as a feminist advocate."164 In addition, the Philippine Daily
.... Inquirer did not have the power of control over Orozco, and she worked at her own pleasure. 165

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the Semblante v. Court of Appeals166 involved a masiador167 and a sentenciador.168 This court ruled
contracting-out of labor to protect the rights of workers established under this Code. In so that "petitioners performed their functions as masiadorand sentenciador free from the direction
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and control of respondents"169 and that the masiador and sentenciador "relied mainly on their
and job contracting as well as differentiations within these types of contracting and determine ‘expertise that is characteristic of the cockfight gambling.’" 170 Hence, no employer-employee
who among the parties involved shall be considered the employer for purposes of this Code, to relationship existed.
prevent any violation or circumvention of any provision of this Code.
Bernarte v. Philippine Basketball Association171 involved a basketball referee. This court ruled
There is "labor-only" contracting where the person supplying workers to an employer does not that "a referee is an independent contractor, whose special skills and independent judgment are
have substantial capital or investment in the form of tools, equipment, machineries, work required specifically for such position and cannot possibly be controlled by the hiring party." 172
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the In these cases, the workers were found to be independent contractors because of their unique
person or intermediary shall be considered merely as an agent of the employer who shall be skills and talents and the lack of control over the means and methods in the performance of their
responsible to the workers in the same manner and extent as if the latterwere directly employed work.
by him.
In other words, there are different kinds of independent contractors: those engaged in legitimate
In Department Order No. 18-A, Seriesof 2011, of the Department of Labor and Employment, a job contracting and those who have unique skills and talents that set them apart from ordinary
contractor is defined as having: employees.

Section 3. . . . Since no employer-employee relationship exists between independent contractors and their
principals, their contracts are governed by the Civil Code provisions on contracts and other
.... applicable laws.173

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the A contract is defined as "a meeting of minds between two persons whereby one binds himself,
performance or completion of a specific job, work or service within a definite or predetermined with respect to the other, to give something or to render some service."174 Parties are free to
period, regardless of whether such job, work or service is to be performed or completed within stipulate on terms and conditions in contracts as long as these "are not contrary to law, morals,
oroutside the premises of the principal. good customs, public order, or public policy."175 This presupposes that the parties to a contract
are on equal footing. Theycan bargain on terms and conditions until they are able to reach an
This department order also states that there is a trilateral relationship in legitimate job contracting agreement.
and subcontracting arrangements among the principal, contractor, and employees of the
contractor. There is no employer-employee relationship between the contractor and principal On the other hand, contracts of employment are different and have a higher level of regulation
who engages the contractor’s services, but there is an employer-employee relationship between because they are impressed with public interest. Article XIII, Section 3 of the 1987 Constitution
the contractor and workers hired to accomplish the work for the principal. 162 provides full protection to labor:
ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS prospective employee needs less protection than the ordinary worker. Lesser limitations on the
parties’ freedom of contract are thus required for the protection of the employee. 178
....
The level of protection to labor mustbe determined on the basis of the nature of the work,
LABOR qualifications of the employee, and other relevant circumstances.

Section 3. The State shall afford full protection to labor, local and overseas, organized and For example, a prospective employee with a bachelor’s degree cannot be said to be on equal
unorganized, and promote full employment and equality of employment opportunities for all. footing witha grocery bagger with a high school diploma. Employees who qualify for jobs
requiring special qualifications such as "[having] a Master’s degree" or "[having] passed the
It shall guarantee the rights of all workers to self-organization, collective bargaining and licensure exam" are different from employees who qualify for jobs that require "[being a] high
negotiations, and peaceful concerted activities, including the right to strike in accordance with school graduate; withpleasing personality." In these situations, it is clear that those with special
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. qualifications can bargain with the employer on equal footing. Thus, the level of protection
They shall also participate in policy and decision-making processes affecting their rights and afforded to these employees should be different.
benefits as may be provided by law.
Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is
The State shall promote the principle of shared responsibility between workers and employers contradictory. Employees under fixed-term contracts cannot be independent contractors because
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall in fixed-term contracts, an employer-employee relationship exists. The test in this kind of
enforce their mutual compliance therewith to foster industrial peace. contract is not the necessity and desirability of the employee’s activities, "but the day certain
agreed upon by the parties for the commencement and termination of the employment
relationship."179 For regular employees, the necessity and desirability of their work in the usual
The State shall regulate the relations between workers and employers, recognizing the right of
course of the employer’s business are the determining factors. On the other hand, independent
labor to its just share in the fruits of production and the right of enterprises to reasonable returns
contractors do not have employer-employee relationships with their principals. Hence, before the
on investments, and to expansion and growth.
status of employment can be determined, the existence of an employer-employee relationship
must be established.
Apart from the constitutional guarantee of protection to labor, Article 1700 of the Civil Code
states:
The four-fold test180 can be used in determining whether an employeremployee relationship
exists. The elements of the four-fold test are the following: (1) the selection and engagement of
ART. 1700. The relations between capital and labor are not merely contractual. They are so the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control,
impressed with public interest that labor contracts must yield to the common good. Therefore, which is the most important element.181
such contracts are subject to the special laws on labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.
The "power of control" was explained by this court in Corporal, Sr. v. National Labor Relations
Commission:182
In contracts of employment, the employer and the employee are not on equal footing. Thus, it is
subject to regulatory review by the labor tribunals and courts of law. The law serves to equalize
The power to control refers to the existence of the power and not necessarily to the actual
the unequal. The labor force is a special class that is constitutionally protected because of the
exercise thereof, nor is it essential for the employer to actually supervise the performance of
inequality between capital and labor.176 This presupposes that the labor force is weak. However,
duties of the employee. It is enough that the employer has the right to wield that
the level of protection to labor should vary from case to case; otherwise, the state might appear
power.183 (Citation omitted)
to be too paternalistic in affording protection to labor. As stated in GMA Network, Inc. v. Pabriga,
the ruling in Brent applies in cases where it appears that the employer and employee are on
equal footing.177 This recognizes the fact that not all workers are weak. To reiterate the discussion Orozco v. Court of Appeals further elucidated the meaning of "power of control" and stated the
in GMA Network v. Pabriga: following:

The reason for this is evident: when a prospective employee, on account of special skills or Logically, the line should be drawn between rules that merely serve as guidelines towards the
market forces, is in a position to make demands upon the prospective employer, such achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the
party hired to the use of such means. The first, which aim only to promote the result, create no ruling of the National Labor Relations Commission finding that Arlene was a regular employee.
employer-employee relationship unlike the second, which address both the result and the means Arlene was hired by Fuji as a news producer, but there was no showing that she was hired
used to achieve it. . . .184 (Citation omitted) because of unique skills that would distinguish her from ordinary employees. Neither was there
any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00
In Locsin, et al. v. Philippine Long Distance Telephone Company, 185 the "power of control" was appears tobe a substantial sum, especially if compared to her salary whenshe was still
defined as "[the] right to control not only the end to be achieved but also the means to be used in connected with GMA.199 Indeed, wages may indicate whether oneis an independent contractor.
reaching such end."186 Wages may also indicate that an employee is able to bargain with the employer for better pay.
However, wages should not be the conclusive factor in determining whether one is an employee
Here, the Court of Appeals applied Sonza v. ABS-CBN and Dumpit Murillo v. Court of or an independent contractor.
Appeals187 in determining whether Arlene was an independent contractor or a regular employee.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
In deciding Sonza and Dumpit-Murillo, this court used the four-fold test. Both cases involved employment contract.200 Her contract also indicated that Fuji had control over her work because
newscasters and anchors. However, Sonza was held to be an independent contractor, while she was required to work for eight (8) hours from Monday to Friday, although on flexible
Dumpit-Murillo was held to be a regular employee. time.201 Sonza was not required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC
to do both on-air and off-air tasks.
Comparison of the Sonza and
Dumpit-Murillo cases using On the power to control, Arlene alleged that Fuji gave her instructions on what to report. 202 Even
the four-fold test the mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of
her contract states:
Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status not
possessed by ordinary employees."188 His work was for radio and television programs.189 On the 6. During the travel to carry out work, if there is change of place or change of place of work, the
other hand, Dumpit-Murillo was hired by ABC as a newscaster and co-anchor.190 Sonza’s talent train, bus, or public transport shall be used for the trip. If the Employee uses the private car
fee amounted to ₱317,000.00 per month, which this court found to be a substantial amount that during the work and there is an accident the Employer shall not be responsible for the damage,
indicatedhe was an independent contractor rather than a regular employee. 191Meanwhile, Dumpit- which may be caused to the Employee.203
Murillo’s monthly salary was ₱28,000.00, a very low amount compared to what Sonza
received.192 Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of
contract. There was no indication that he could be terminated based on just or authorized causes Having established that an employer-employee relationship existed between Fuji and Arlene, the
under the Labor Code. In addition, ABS-CBN continued to pay his talent fee under their next questions for resolution are the following: Did the Court of Appeals correctly affirm the
agreement, even though his programs were no longer broadcasted.193 Dumpit-Murillo was found National Labor Relations Commission that Arlene had become a regular employee? Was the
to have beenillegally dismissed by her employer when they did not renew her contract on her nature of Arlene’s work necessary and desirable for Fuji’s usual course of business?
fourth year with ABC.194
Arlene was a regular employee
In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he with a fixed-term contract
appeared on television, or how he sounded on radio.195 All that Sonza needed was his
talent.196 Further, "ABS-CBN could not terminate or discipline SONZA even if the means and The test for determining regular employment is whether there is a reasonable connection
methods of performance of his work . . . did not meet ABS-CBN’s approval."197 In Dumpit-Murillo, between the employee’s activities and the usual business of the employer. Article 280 provides
the duties and responsibilities enumerated in her contract was a clear indication that ABC had that the nature of work must be "necessary or desirable in the usual business or trade of the
control over her work.198 employer" as the test for determining regular employment. As stated in ABS-CBN Broadcasting
Corporation v. Nazareno:204
Application of the four-fold test
In determining whether an employment should be considered regular or non-regular, the Fuji is engaged in the business of broadcasting, 209 including news programming.210 It is based in
applicable test is the reasonable connection between the particular activity performed by the Japan211 and has overseas offices to cover international news. 212
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or Based on the record, Fuji’s Manila Bureau Office is a small unit213 and has a few employees.214 As
trade of the employer, a fact that can be assessed by looking into the nature of the services such, Arlene had to do all activities related to news gathering. Although Fuji insists that Arlene
rendered and its relation to the general scheme under which the business or trade is pursued in was a stringer, it alleges that her designation was "News Talent/Reporter/Producer." 215
the usual course. It is distinguished from a specific undertaking that is divorced from the normal
activities required incarrying on the particular business or trade. 205 A news producer "plans and supervises newscast . . . [and] work[s] with reporters in the field
planning and gathering information. . . ." 216 Arlene’s tasks included "[m]onitoring and [g]etting
However, there may be a situation where an employee’s work is necessary but is not always [n]ews [s]tories, [r]eporting interviewing subjects in front of a video camera," 217 "the timely
desirable inthe usual course of business of the employer. In this situation, there is no regular submission of news and current events reports pertaining to the Philippines[,] and traveling [sic]
employment. to [Fuji’s] regional office in Thailand."218 She also had to report for work in Fuji’s office in Manila
from Mondays to Fridays, eight (8) hours per day. 219 She had no equipment and had to use the
In San Miguel Corporation v. National Labor Relations Commission, 206 Francisco de Guzman was facilities of Fuji to accomplish her tasks.
hired to repair furnaces at San Miguel Corporation’s Manila glass plant. He had a separate
contract for every furnace that he repaired. He filed a complaint for illegal dismissal three (3) The Court of Appeals affirmed the finding of the National Labor Relations Commission that the
years after the end of his last contract.207 In ruling that de Guzman did not attain the status of a successive renewals of Arlene’s contract indicated the necessity and desirability of her work in
regular employee, this court explained: the usual course of Fuji’s business. Because of this, Arlene had become a regular employee with
the right to security of tenure.220 The Court of Appeals ruled that:
Note that the plant where private respondent was employed for only seven months is engaged in
the manufacture of glass, an integral component of the packaging and manufacturing business Here, Espiritu was engaged by Fuji as a stinger [sic] or news producer for its Manila Bureau. She
of petitioner. The process of manufacturing glass requires a furnace, which has a limited was hired for the primary purpose of news gathering and reporting to the television network’s
operating life. Petitioner resorted to hiring project or fixed term employees in having said headquarters. Espiritu was not contracted on account of any peculiar ability or special talent and
furnaces repaired since said activity is not regularly performed. Said furnaces are to be repaired skill that she may possess which the network desires to make use of. Parenthetically, ifit were
or overhauled only in case of need and after being used continuously for a varying period of five true that Espiritu is an independent contractor, as claimed by Fuji, the factthat everything that
(5) to ten (10) years. In 1990, one of the furnaces of petitioner required repair and upgrading. she uses to perform her job is owned by the company including the laptop computer and mini
This was an undertaking distinct and separate from petitioner's business of manufacturing glass. camera discounts the idea of job contracting.221
For this purpose, petitioner must hire workers to undertake the said repair and upgrading. . . .
Moreover, the Court of Appeals explained that Fuji’s argument that no employer-employee
.... relationship existed in view of the fixed-term contract does not persuade because fixed-term
contracts of employment are strictly construed. 222 Further, the pieces of equipment Arlene used
Clearly, private respondent was hired for a specific project that was not within the regular were all owned by Fuji, showing that she was a regular employee and not an independent
business of the corporation. For petitioner is not engaged in the business of repairing furnaces. contractor.223
Although the activity was necessary to enable petitioner to continue manufacturing glass, the
necessity therefor arose only when a particular furnace reached the end of its life or operating The Court of Appeals likewise cited Dumpit-Murillo, which involved fixed-term contracts that were
cycle. Or, as in the second undertaking, when a particular furnace required an emergency repair. successively renewed for four (4) years.224 This court held that "[t]his repeated engagement under
In other words, the undertakings where private respondent was hired primarily as contract of hire is indicative of the necessity and desirability of the petitioner’s work in private
helper/bricklayer have specified goals and purposes which are fulfilled once the designated work respondent ABC’s business."225
was completed. Moreover, such undertakings were also identifiably separate and distinct from
the usual, ordinary or regular business operations of petitioner, which is glass manufacturing. With regard to Fuji’s argument that Arlene’s contract was for a fixed term, the Court of Appeals
These undertakings, the duration and scope of which had been determined and made known to cited Philips Semiconductors, Inc. v. Fadriquela226 and held that where an employee’s contract
private respondent at the time of his employment, clearly indicated the nature of his employment "had been continuously extended or renewed to the same position, with the same duties and
as a project employee.208 remained in the employ without any interruption," 227 then such employee is a regular employee.
The continuous renewal is a scheme to prevent regularization. On this basis, the Court of that the Non-Renewal Contract was crafted merely as a subterfuge to secure Fuji’s position that
Appeals ruled in favor of Arlene. it was Espiritu’s choice not to renew her contract.232

As stated in Price, et al. v. Innodata Corp., et al.: 228 As a regular employee, Arlene was entitled to security of tenure and could be dismissed only for
just or authorized causes and after the observance of due process.
The employment status of a person is defined and prescribed by law and not by what the parties
say it should be. Equally important to consider is that a contract of employment is impressed with The right to security of tenureis guaranteed under Article XIII, Section 3 of the 1987 Constitution:
public interest such that labor contracts must yield to the common good. Thus, provisions of ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS
applicable statutes are deemed written into the contract, and the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by ....
simply contracting with each other.229 (Citations omitted)
LABOR
Arlene’s contract indicating a fixed term did not automatically mean that she could never be a
regular employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains ....
as the exception rather than the general rule.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
Further, an employee can be a regular employee with a fixed-term contract. The law does not negotiations, and peaceful concerted activities, including the right to strike in accordance with
preclude the possibility that a regular employee may opt to have a fixed-term contract for valid law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
reasons. This was recognized in Brent: For as long as it was the employee who requested, or They shall also participate in policy and decision-making processes affecting their rights and
bargained, that the contract have a "definite date of termination," or that the fixed-term contract benefits as may be provided by law.
be freely entered into by the employer and the employee, then the validity of the fixed-term
contract will be upheld.230
Article 279 of the Labor Code also provides for the right to security of tenure and states the
following:
V
Art. 279. Security of tenure.In cases of regular employment, the employer shall not terminate the
Whether the Court of Appeals correctly affirmed services of an employee except for a just cause of when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
the National Labor Relations Commission’s finding of illegal dismissal rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld
Fuji argues that the Court of Appeals erred when it held that Arlene was illegally dismissed, in from him up to the time of his actual reinstatement.
view of the non-renewal contract voluntarily executed by the parties. Fuji also argues that
Arlene’s contract merely expired; hence, she was not illegally dismissed. 231 Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just
orauthorized causes and only after compliance with procedural and substantive due process is
Arlene alleges that she had no choice but to sign the non-renewal contract because Fuji conducted.
withheldher salary and benefits.
Even probationary employees are entitled to the right to security of tenure. This was explained in
With regard to this issue, the Court of Appeals held: Philippine Daily Inquirer, Inc. v. Magtibay, Jr.: 233

We cannot subscribe to Fuji’s assertion that Espiritu’s contract merely expired and that she Within the limited legal six-month probationary period, probationary employees are still entitled to
voluntarily agreed not to renew the same. Even a cursory perusal of the subject Non-Renewal security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary
Contract readily shows that the same was signed by Espiritu under protest. What is apparent is employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the treatment, the disease cannot be cured within six (6) months. 237 The burden of proving
employer to the employee at the time of his engagement. 234 (Citation omitted) compliance with these requisites is on the employer. 238 Noncompliance leads to the conclusion
that the dismissal was illegal.239
The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji. The
manner by which Fuji informed Arlene that her contract would no longer be renewed is There is no evidence showing that Arlene was accorded due process. After informing her
tantamount to constructive dismissal. To make matters worse, Arlene was asked to sign a letter employer of her lung cancer, she was not given the chance to present medical certificates. Fuji
of resignation prepared by Fuji.235 The existence of a fixed-term contract should not mean that immediately concluded that Arlene could no longer perform her duties because of chemotherapy.
there can be no illegal dismissal. Due process must still be observed in the pre-termination of It did not ask her how her condition would affect her work. Neither did it suggest for her to take a
fixed-term contracts of employment. leave, even though she was entitled to sick leaves. Worse, it did not present any certificate from
a competent public health authority. What Fuji did was to inform her thather contract would no
In addition, the Court of Appeals and the National Labor Relations Commission found that Arlene longer be renewed, and when she did not agree, her salary was withheld. Thus, the Court of
was dismissed because of her health condition. In the non-renewal agreement executed by Fuji Appeals correctly upheld the finding of the National Labor Relations Commission that for failure
and Arlene, it is stated that: of Fuji to comply with due process, Arlene was illegally dismissed.240

WHEREAS, the SECOND PARTY is undergoing chemotherapy which prevents her from VI
continuing to effectively perform her functions under the said Contract such as the timely
submission of news and current events reports pertaining to the Philippines and travelling [sic] to Whether the Court of Appeals properly modified
the FIRST PARTY’s regional office in Thailand. 236 (Emphasis supplied) the National Labor Relations Commission’s decision
when it awarded reinstatement, damages, and attorney’s fees
Disease as a ground for termination is recognized under Article 284 of the Labor Code:
The National Labor Relations Commission awarded separation pay in lieu of reinstatement, on
Art. 284. Disease as ground for termination. An employer may terminate the services of an the ground that the filing of the complaint for illegal dismissal may have seriously strained
employee who has been found to be suffering from any disease and whose continued relations between the parties. Backwages were also awarded, to be computed from date of
employment is prohibited by law or is prejudicial to his health as well as to the health of his co- dismissal until the finality of the National Labor Relations Commission’s decision. However, only
employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary backwages were included in the dispositive portion because the National Labor Relations
or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at Commission recognized that Arlene had received separation pay in the amount of US$7,600.00.
least six (6) months being considered as one (1) whole year. The Court of Appeals affirmed the National Labor Relations Commission’s decision but modified
it by awarding moral and exemplary damages and attorney’s fees, and all other benefits Arlene
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code provides: was entitled to under her contract with Fuji. The Court of Appeals also ordered reinstatement,
reasoning that the grounds when separation pay was awarded in lieu of reinstatement were not
proven.241
Sec. 8. Disease as a ground for dismissal.– Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his healthor to the health of his
coemployees, the employer shall not terminate his employment unless there is a certification by Article 279 of the Labor Code provides:
a competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
disease or ailment can be cured within the period, the employer shall not terminate the employee services of an employee except for a just cause or when authorized by this Title. An employee
but shall ask the employee to take a leave. The employer shall reinstate such employee to his who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
former position immediately upon the restoration of his normal health. rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld
For dismissal under Article 284 to bevalid, two requirements must be complied with: (1) the from him up to the time of his actual reinstatement. (Emphasis supplied)
employee’s disease cannot be cured within six (6) months and his "continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees"; and (2)
certification issued by a competent public health authority that even with proper medical
The Court of Appeals’ modification of the National Labor Relations Commission’s decision was With regard to the Court of Appeals’ award of moral and exemplary damages and attorney’s
proper because the law itself provides that illegally dismissed employees are entitled to fees, this court has recognized in several cases that moral damages are awarded "when the
reinstatement, backwages including allowances, and all other benefits. dismissal is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in
a manner contrary to good morals, good customs or public policy."250 On the other hand,
On reinstatement, the National Labor Relations Commission ordered payment of separation pay exemplary damages may be awarded when the dismissal was effected "in a wanton, oppressive
in lieu of reinstatement, reasoning "that the filing of the instant suit may have seriously abraded or malevolent manner."251
the relationship of the parties so as to render reinstatement impractical." 242 The Court of Appeals
reversed this and ordered reinstatement on the ground that separation pay in lieu of The Court of Appeals and National Labor Relations Commission found that after Arlene had
reinstatement is allowed only in several instances such as (1) when the employer has ceased informed Fuji of her cancer, she was informed that there would be problems in renewing her
operations; (2) when the employee’s position is no longer available; (3) strained relations; and contract on account of her condition. This information caused Arlene mental anguish, serious
(4) a substantial period has lapsed from date of filing to date of finality. 243 anxiety, and wounded feelings that can be gleaned from the tenor of her email dated March 11,
2009. A portion of her email reads:
On this matter, Quijano v. Mercury Drug Corp.244 is instructive:
I WAS SO SURPRISED . . . that at a time when I am at my lowest, being sick and very weak,
Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a you suddenly came to deliver to me the NEWS that you will no longer renew my contract. I 1awp++i1

matter of right. . . . knew this will come but I never thought that you will be so ‘heartless’ and insensitive to deliver
that news just a month after I informed you that I am sick. I was asking for patience and
To protect labor’s security of tenure, we emphasize that the doctrine of "strained relations" understanding and your response was not to RENEW my contract.252
should be strictly applied so as not to deprive an illegally dismissed employee of his right to
reinstatement. Every labor dispute almost always results in "strained relations" and the phrase Apart from Arlene’s illegal dismissal, the manner of her dismissal was effected in an oppressive
cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can approach withher salary and other benefits being withheld until May 5, 2009, when she had no
never be reinstated.245 (Citations omitted) other choice but to sign the non-renewal contract. Thus, there was legal basis for the Court of
Appeals to modify the National Labor Relations Commission’s decision.
The Court of Appeals reasoned that strained relations are a question of fact that must be
supported by evidence.246No evidence was presented by Fuji to prove that reinstatement was no However, Arlene receivedher salary for May 2009.253 Considering that the date of her illegal
longer feasible. Fuji did not allege that it ceased operations or that Arlene’s position was no dismissal was May 5, 2009,254 this amount may be subtracted from the total monetary award.
longer available. Nothing in the records shows that Arlene’s reinstatement would cause an With regard to the award of attorney’s fees, Article 111 of the Labor Code states that "[i]n cases
atmosphere of antagonism in the workplace. Arlene filed her complaint in 2009. Five (5) years of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent
are not yet a substantial period247 to bar reinstatement. to ten percent of the amount of wages recovered." Likewise, this court has recognized that "in
actions for recovery of wages or where an employee was forced to litigate and, thus, incur
On the award of damages, Fuji argues that Arlene is notentitled to the award of damages and expenses to protect his rights and interest, the award of attorney’s fees is legallyand morally
attorney’s fees because the non-renewal agreement contained a quitclaim, which Arlene signed. justifiable."255 Due to her illegal dismissal, Arlene was forced to litigate.
Quitclaims in labor cases do not bar illegally dismissed employees from filing labor complaints
and money claim. As explained by Arlene, she signed the non-renewal agreement out of In the dispositive portion of its decision, the Court of Appeals awarded legal interest at the rate of
necessity. In Land and Housing Development Corporation v. Esquillo, 248 this court explained: We 12% per annum.256 In view of this court’s ruling in Nacar v. Gallery Frames,257 the legal interest
have heretofore explained that the reason why quitclaims are commonly frowned upon as shall be reducd to a rate of 6% per annum from July 1, 2013 until full satisfaction.
contrary to public policy, and why they are held to be ineffective to bar claims for the full measure
of the workers’ legal rights, is the fact that the employer and the employee obviously do not WHEREFORE, the petition is DENIED. The assailed Court of Appeals decision dated June 25,
stand on the same footing. The employer drove the employee to the wall. The latter must have to 2012 is AFFIRMED with the modification that backwages shall be computed from June 2009.
get holdof money. Because, out of a job, he had to face the harsh necessities of life. He thus Legal interest shall be computed at the rate of 6% per annum of the total monetary award from
found himself in no position to resist money proffered. His, then, is a case of adherence, not of date of finality of this decision until full satisfaction.
choice.249
SO ORDERED.
Republic of the Philippines which denied the petition for certiorari filed by Bay Haven, Inc., Johnny T. Co and
Vivian Te-Fernandez (Te) (petitioners) seeking the annulment of the Resolutions dated
Supreme Court April 18, 2000 and September 19, 2001, issued by Undersecretary Jose M. Espaol, Jr.
Manila (DOLE Undersecretary) and Secretary Patricia Sto. Tomas (DOLE Secretary),
respectively, of the Department of Labor and Employment (DOLE), as well as the
BAY HAVEN, INC., JOHNNY T. CO, G.R. No. 160859 Resolution[2] dated November 5, 2003 of the CA, which denied petitioners' motion for
and VIVIAN TE-FERNANDEZ, reconsideration.
Petitioners, The following are the antecedent facts.

- versus - Present: Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the
exercise of its visitorial, inspection and enforcement powers, through its Regional
FLORENTINO ABUAN, JOSELITO YNARES-SANTIAGO, J. Director for the National Capital Region (NCR), issued an Order dated November 7,
RAZON, JERRY ASENSE, HERCULES Chairperson
1997 commanding petitioners to pay respondents a total of P638,187.15 corresponding
RICAFUENTE, MARIO GURAY, AUSTRIA-MARTINEZ,
ROLANDO NAELGA, JUAN VILLARUZ, CHICO-NAZARIO, to the latter's claims for underpayment as petitioners' workers.[3]
MARIO SANTIAGO, ROGELIO NACHURA, and
MOCORRO, CALPITO MENDOLES, REYES, JJ. The Regional Director based his Order on the results of the inspection conducted on April
RENE CORALES, FRANCISCO 23, 1997 by one of its inspectors who found that petitioner New Bay Haven Restaurant,
ABENTAJADO, BONNIE ESPAOLA, located at the Army and Navy Club, Kalaw St., Manila, under the ownership or
ERNESTO DE JESUS and RODRIGO management of petitioner Te, committed the following violations:
RUZGAL, Promulgated:
Respondents. July 30, 2008 Labor Standards Law:
x----------------------------------------------------------x 1. Underpayment of minimum wage.
2. Underpayment of thirteenth month pay.
3. Underpayment of regular holiday pay.
DECISION 4. Underpayment of special holiday pay.
5. Non-payment of night shift differential pay.
AUSTRIA-MARTINEZ, J.: Occupational Safety and Health Standards.
1. Non-registration of the firm under Rule 1020 of OSHS.[4]
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking a reversal of the Decision[1] of the Court of Appeals (CA) dated July 15, 2003,
On December 18, 1997, New Bay-Haven Restaurant and its co-petitioner Te filed with On December 29, 1998, the DOLE-NCR Regional Director, giving credence to the
the DOLE-NCR Regional Office a Motion for Reconsideration of the November 7, affidavit of the respondents denying the validity of the payroll sheets and quitclaims,
1997 order, alleging that the office had no jurisdiction over the case and that the order issued an Order denying petitioners' motion for reconsideration of the Order
was issued in denial of petitioners' right to due process.[5] They argued that jurisdiction dated November 7, 1997.[12] The Order held petitioners New Bay Haven Restaurant, Bay
over the case was lodged with the National Labor Relations Commission (NLRC), and Haven, Inc., its President Johnny T. Co, and/or Vivian Te as the ones liable as employers
not the DOLE-NCR, due to the amount of the claims involved. They added that their of respondents. However, the liability of petitioners was reduced to P468,444.16.[13]
right to due process was also denied because the order was issued without them being
furnished copies of the complaint and the inspection report and without being notified of On January 18, 1999, petitioners filed a Motion for Reconsideration of the Order
the hearings held in the case.[6] dated December 29, 1998.[14] In the motion, petitioners insisted that their documentary
evidence proved that their obligations to respondents had been discharged and that the
On June 16, 1998, the DOLE-NCR Assistant Regional Director, acting for the Regional DOLE had no jurisdiction over the case.[15]
Director, issued an Order granting petitioners' motion for reconsideration as he found
merit in petitioners' allegation of absence of due process in the issuance of the first Treating the motion for reconsideration as an appeal, the DOLE Undersecretary issued a
order.[7] The order, however, stated that the DOLE had jurisdiction over the case, Resolution dated April 18, 2000, denying the appeal filed by petitioners,[16] upholding the
pursuant to the Labor Code, as amended by Republic Act (R.A.) No. 7730, that intends Regional Director's finding that the quitclaims could not be relied upon to deny
to strengthen the visitorial and enforcement powers of the Secretary of Labor and respondents' claims, and reiterating that the DOLE had jurisdiction to decide the case.[17]
Employment.[8] Consequently, another hearing for the case was set.
On May 12, 2000, petitioners filed a Motion for Reconsideration[18] of the April 18,
During the hearing on September 14, 1998, petitioners submitted their Position Paper 2000 Resolution which was denied by DOLE Secretary Sto. Tomas in a
attaching thereto payroll sheets and waivers and quitclaims allegedly signed by the Resolution[19] dated September 19, 2001.
respondents to prove that petitioner properly paid respondents the amounts due them.[9]
Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of Court
Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz, with the CA, seeking to annul and set aside the April 18, 2000 Resolution and the
Jerry Asense and Joselito Razon, however, outrightly denied the validity of the payroll September 19, 2001 Resolution,[20] docketed as CA-G.R. No. 68397.
sheets and quitclaims. In their Joint Affidavit dated October 29, 1998, respondents On July 15, 2003, the CA rendered its Decision,[21] dismissing the petition, ruling that the
claimed that the actual daily pay they received was much smaller than the amounts stated DOLE had jurisdiction over the labor standards case and that petitioners did not present
in the payroll and they denied having received the cash amount stated in the enough evidence to refute the claims made by respondents.
quitclaims.[10]They added that they were merely forced to sign the payrolls and quitclaims
in blank and in one sitting after they were accepted as applicants for their positions.[11] Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in
its Resolution[22] dated November 5, 2003.
4. THE HONORABLE COURT OF APPEALS COMMITTED
Hence, herein petition assigning the following errors of the CA: SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED
THE AWARD OF OVERTIME PAY DESPITE ABSENCE OF
1. THE HONORABLE COURT OF APPEALS COMMITTED EVIDENCE TO SHOW THAT OVERTIME WORK HAD INDEED
SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE BEEN RENDERED.
JURISDICTION OF THE REGIONAL DIRECTOR FOR THE Respondents did not file a comment on the petition, but instead filed a
NATIONAL CAPITAL REGION OF THE DEPARTMENT OF Memorandum[23] simultaneous with petitioners' filing of their Memorandum.[24]
LABOR AND EMPLOYMENT IN CASE NO. NCR-00-9703-RI-048-
SPL ENTITLED FLORENTINO ABUAN, ET AL., In their Memorandum, respondents aver that the decision of the DOLE-NCR, as upheld
COMPLAINANTS VERSUS NEW BAY HAVEN RESTAURANT,
by the DOLE Secretary, was rendered in the exercise of its jurisdiction, specifically
ET AL., RESPONDENTS; AND THE APPELLATE JURISDICTION
OF THE OFFICE OF THE SECRETARY OF THE DEPARTMENT its visitorial and enforcement powers as conferred by law.[25] They also allege that
OF LABOR AND EMPLOYMENT IN CASE NO. OS-LS-005-019- petitioners were given the opportunity to present evidence to refute respondents' claims,
099. but failed to do so.[26]

2. THE HONORABLE COURT OF APPEALS COMMITTED We summarize the issues as follows: 1) whether the DOLE Secretary and her authorized
SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED representatives have jurisdiction to impose the monetary liability against petitioners; and
THE RULING OF THE REGIONAL DIRECTOR OF DOLE-NCR
AND THE OFFICE OF THE SECRETARY OF THE DOLE WHICH
2) whether the DOLE-NCR, as upheld by the DOLE Secretary and the CA committed
DECLARED THAT RESPONDENTS CALPITO MENDOLES AND an error in awarding the claims of respondents.
RENE CORALES ARE EMPLOYEES OF BAY HAVEN, INC.,
DESPITE LACK OF EVIDENCE TO SUPPORT THE RULING ON We deny the petition.
THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The DOLE Secretary and her authorized representatives such as the DOLE-NCR
3. THE HONORABLE COURT OF APPEALS COMMITTED
Regional Director, have jurisdiction to enforce compliance with labor standards laws
SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE
MONETARY AWARD OF P25,952.83 TO RESPONDENT under the broad visitorial and enforcement powers conferred by Article 128 of
ROLANDO NAELGA WHO WAS NOT ONE OF THOSE WHOSE the Labor Code, and expanded by R.A. No. 7730, to wit:
CLAIMS WAS [sic] MADE THE SUBJECT OF THE FINDINGS OF
THE LABOR AND [sic] EMPLOYMENT AND ENFORCEMENT Art. 128. Visitorial and Enforcement Power. -
OFFICER OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT. (a) The Secretary of Labor and Employment or his duly authorized
representatives, including labor regulation officers, shall have access to
employer's records and premises at any time of the day or night whenever
work is being undertaken therein, and the right to copy therefrom, to question Secretary. Under the former rule, the DOLE Secretary had jurisdiction only in cases
any employee and investigate any fact, condition or matter which may be where the amount of the claim does not exceed P5,000.00.
necessary to determine violations or which may aid in the enforcement of this
Code and of any labor law, wage order or rules and regulations issued
pursuant thereto. Petitioners argue, however, that DOLE-NCR should not have taken jurisdiction of the
case, because in respondent Abuan's complaint, one of the entries reads as follows:
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer- Is there anything that the Department of Labor and Employment can do to be
employee still exists, the Secretary of Labor and Employment or his duly of further assistance to you?
authorized representatives shall have the power to issue compliance [Answer:] Illegal dismissal, no overtime, no holiday pay.[28]
orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and Petitioners contend that the complaint's own allegation of illegal dismissal meant that no
enforcement officers or industrial safety engineers made in the course of more employer-employee relationship existed between petitioners and respondents,
inspection. The Secretary or his duly authorized representatives shall issue
depriving DOLE-NCR and the Secretary of Labor and Employment of jurisdiction to
writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of entertain the complaint.[29] This allegedly is a requirement under Art. 128(b) of
the labor employment and enforcement officer and raises issues supported by the Labor Code, hereinbefore quoted.
documentary proofs which were not considered in the course of inspection.
Petitioners' contentions are untenable. While it may be true that as far as
An order issued by the duly authorized representative of the Secretary respondent Abuan is concerned, his allegation of illegal dismissal had deprived the
of Labor and Employment under this article may be appealed to the latter. In DOLE of jurisdiction as per Art. 217 of the Labor Code,[30] the same does not hold for
case said order involves a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a the rest of the respondents, who do not claim to have been illegally dismissed. For one,
reputable bonding company duly accredited by the Secretary of Labor and petitioners failed to raise this matter with the Regional Director or even the DOLE
Employment and Employment in the amount equivalent to the monetary Secretary, thus, preventing the issue from being clarified.
award in the order appealed from. (Emphasis supplied)
The records also clearly indicate that the Regional Director and the DOLE Secretary
The Court has held that the visitorial and enforcement powers of the Secretary, exercised resolved the case based only on the following violations found by the labor inspection
through his representatives, encompass compliance with all labor standards laws and officer, which do not include illegal dismissal, thus:
other labor legislation, regardless of the amount of the claims filed by workers.[27] This
has been the rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 1. Underpayment of minimum wage.
128(b) of the Labor Code, to expand the visitorial and enforcement powers of the DOLE 2. Underpayment of thirteenth month pay.
3. Underpayment of regular holiday pay.
4. Underpayment of special holiday pay.
5. Non-payment of night shift differential pay. Position Paper[34] dated September 14, 1998, depriving the concerned officer, that is,
6. Non-registration of the firm under Rule 1020 of OSHS. the labor inspector, of the chance to deny or refute such serious allegations.

The above-mentioned violations are within the jurisdiction of the DOLE Secretary and Petitioners themselves cannot deny that due process was afforded them after the
his representatives to address. The questioned Orders dated December 29, 1998, April inspection. For one thing, their motion for reconsideration of the Order dated November
18, 2000 and September 19, 2001 did not mention illegal dismissal, and properly so, 7, 1997 was granted, which resulted in the re-opening of the proceedings and the holding
because there was no such finding in the inspector's report.[31] Being in the nature of of subsequent hearings. In these hearings, petitioners were given the chance to air their
compliance orders, said orders, under Art. 128(b) of the Labor Code, are strictly based side. Petitioners also submitted their position paper, in which they summarized all their
on the findings of labor employment and enforcement officers x x x made in the course arguments and presented their documentary evidence, such as a contract of lease, payroll
of inspection, and not on any complaint filed. Though a complaint may initiate the case sheets and quitclaims, to refute the respondents' claims, as well as the inspector's
or an inspection, its allegations may not necessarily be upheld by the labor inspector or findings. In the petition now before us, petitioners themselves claim that they seasonably
the Regional Director. contested the findings of the labor inspector.[35] Taking all these into consideration, the
ineluctable conclusion is that the demands of due process were satisfied, as petitioners
Moreover, Abuan's allegation of illegal dismissal was his personal accusation, and did had been given all the opportunity to be heard. It has been held that
not necessarily apply to all the other employees. The records also do not support a where opportunity to be heard, either through oral arguments or pleadings, is accorded,
contrary finding. But Abuan's other allegations of underpayment and other potential there is no denial of due process.[36]
violations of labor laws and regulations were within the obligation of the Regional
Director to investigate, especially insofar as they affect Abuan's remaining co- Next, petitioners argue that the regional director was divested of jurisdiction because
workers. Under Art. 128, the Regional Director can conduct inspections and petitioners contested the findings of the labor inspection officer. This, allegedly, is in
check all violations of labor laws, and enforce compliance measures for the benefit accordance with Art. 128(b) of the Labor Code, which states:
of all employees, without being compelled to rely on a complaint that has been filed or
its allegations. In fact, the article is silent on whether the filing of a complaint is even Art. 128. Visitorial and Enforcement Power. -
required to initiate the exercise of the inspection and enforcement powers. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still
Petitioners also insinuate that they were effectively denied due process at the earlier exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect
stages of the controversy, as they claim that during the inspection, the inspector did not to the labor standards provisions of this Code and other labor legislation based
even bother to talk to any them.[32] Again, petitioners are raising serious, factual on the findings of labor employment and enforcement officers or industrial
allegations in this late stage of their appeal. They never mentioned this alleged infraction safety engineers made in the course of inspection. The Secretary or his duly
in the very first motion they filed or in their Motion for Reconsideration[33] of the authorized representatives shall issue writs of execution to the appropriate
Regional Director's Order dated November 7, 1997. Neither did they raise it in their authority for the enforcement of their orders, except in cases where the
employer contests the findings of the laboremployment and enforcement inspection results. It was only in its supplemental motion for reconsideration
officer and raises issues supported by documentary proofs which were before the Regional Director that EBVSAI questioned the findings of
not considered in the course of inspection. the labor regulations officer and presented documentary evidence to
controvert the claims of private respondents. But even if this was the case,
x x x x (Emphasis supplied) the Regional Director and the Secretary of Labor still looked into and
considered EBVSAIs documentary evidence and found that such did not
Again, petitioners fail to persuade. The mere disagreement by the employer with the warrant the reversal of the Regional Directors order. The Secretary
of Labor also doubted the veracity and authenticity
findings of the labor officer, or the simple act of presenting controverting evidence, does
of EBVSAIs documentary evidence. Moreover, the pieces of evidence
not automatically divest the DOLE Secretary or any of his authorized representatives presented by EBVSAI were verifiable in the normal course of
such as the regional directors, of jurisdiction to exercise their visitorial and enforcement inspection because all employment records of the employees should be kept
powers under the Labor Code. and maintained in or about the premises of the workplace, which in this case
is in Ambuklao Plant, the establishment where private respondents were
Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of regularly assigned.[40] (Emphasis supplied)
the Labor Code has the following elements, which must all concur to divest the regional
director of jurisdiction over workers' claims: Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the course of
(a) that the employer contests the findings of the labor regulations inspection. Where the evidence presented was verifiable in the normal course of
officer and raises issues thereon; inspection, even if presented belatedly by the employer, the Regional Director, and later
(b) that in order to resolve such issues, there is a need to examine the DOLE Secretary, may still examine them; and these officers are not divested of
evidentiary matters; and
jurisdiction to decide the case.
(c) that such matters are not verifiable in the normal course of
inspection.[37]
In the present case, petitioners' pieces of evidence of the alleged contract of lease,
Thus, in SSK Parts Corporation v. Camas,[38] in which the employer contested the payroll sheets, and quitclaims were all verifiable in the normal course of inspection and,
Regional Director's finding of violations of labor standards, but such issue was resolved granting that they were not examined by the labor inspector, they have nevertheless been
by an examination of evidentiary matters which were verifiable in the ordinary course of thoroughly examined by the Regional Director and the DOLE Secretary. For these
inspection, it was held that there was no more need to indorse the case to the arbitration reasons, the exclusion clause of Art. 128(b) does not apply.
branch of the NLRC. In Ex-Bataan Veterans Security Agency, Inc. v. Secretary
of Labor,[39] the Court held: In addition, the findings of the said officers on the invalidity or low probative value of
these documents are findings of a factual nature which this Court will accord with great
The Court notes that EBVSAI did not contest the findings of respect.[41]
the labor regulations officer during the hearing or after receipt of the notice of
Anent the second issue, petitioners contend that the Regional Director and the DOLE
As to the quitclaims, we need only to reiterate the policy laid down in AFP Mutual Secretary committed error in their award of the various claims of respondents,
Benefit Association, Inc. v. AFP-MBAI-EU,[42] which states: specifically citing the award to certain respondents whom they deny having worked as
their employees.
In labor jurisprudence, it is well established that quitclaims and/or complete
releases executed by the employees do not estop them from pursuing their
Here, there is merit in petitioners' contentions. Although the basic rule is that questions
claims arising from the unfair labor practice of the employer. The basic reason
for this is that such quitclaims and/or complete releases are against public of facts like this may not be addressed in a petition for review, there are certain
policy and, therefore, null and void. The acceptance of termination pay does exceptions, such as when the judgment is based on a misapprehension of facts.[45] At the
not divest a laborer of the right to prosecute his employer for earliest possible opportunity, that is, as early as the position paper filed on September 14,
unfair labor practice acts. (Cario vs. ACCFA, L-19808, September 29, 1966, 1998, petitioners already denied being the employers of the
18 SCRA 163; Philippine Sugar Institute vs. CIR, L-13475, September 29, respondents Calpito Mendolesand Rene Corales. Later, in their Motion for
1960, 109 Phil. 452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 Reconsideration[46] dated January 8, 2004, petitioners also disclaimed liability
SCRA 694, 704)
to Rolando Naelga, who was not in the labor inspector's and Regional Director's original
In the Cario case, supra, the Supreme Court, speaking thru Justice Sanchez, list of petitioners' workers and against whom petitioners were not afforded the chance to
said: present countervailing evidence. Since then, petitioners have consistently denied liability
as employers of these respondents. These respondents, however, not only failed to
Acceptance of those benefits would not amount to estoppel. The reason is
plain. Employer and employee, obviously, do not stand on the same footing. The
controvert this denial by petitioners, they also did not participate in the proceedings of the
employer drove the employee to the wall. The latter must have to get hold of case, as shown by the records. Thus, there was a failure to prove the existence of an
money. Because, out of job, he had to face the harsh necessities of life. He thus found
himself in no position to resist money proffered. His, then, is a case of adherence, not of employer-employee relationship between petitioners and these particular
choice. One thing sure, however, is that petitioners did not relent their claim. They respondents. Respondents could have easily proven their relationship by presenting any
pressed it.They are deemed not to have waived any of their
rights. Renuntiatio non praesumitur. of the following: their appointment letters or employment contracts, payrolls,
organization charts, Social Security System registration, personnel list, as well as the
The principle enunciated above, however, should benefit only the respondents in the testimonies of co-employees to confirm their status,[47] but failed to do so. We can only
present case who outrightly denied the quitclaims' validity, because it may be supposed conclude, therefore, that there is no substantial evidence to prove petitioners' obligations
that those who did not protest petitioners' presentation of the quitclaims in evidence have to these respondents.
admitted the same by their silence.[43] In such instance, only respondents
Francisco Abentajado, Mario Guray, Juan Villaruz, Jerry Asense and Joselito Razon are However, we do not sustain petitioners' allegation that the Regional Director and the
deemed to have blocked the quitclaims' applicability against them.[44] DOLE Secretary erroneously awarded overtime pay to the respondents, despite the lack
of proof that overtime work had been rendered. Suffice it to state that petitioners' own
evidence, which are the payroll sheets they submitted to the Regional Director,[48] show
that respondents indeed rendered overtime work. This amounts to an admission by
petitioners, which may be used in evidence against them.[49] Aptly, this then became one
of the bases of the Regional Director's award of overtime pay to respondents.

In summary, we hold that only the awards granted to the following respondents be
affirmed:

1. Juan Villaruz
2. Francisco Abentajado
3. Jerry Asense
4. Mario Guray
5. Joselito Razon

The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal is
within the original and exclusive jurisdiction of the Labor Arbiter, and outside of the
jurisdiction of the DOLE Secretary and the Regional Director. The awards granted to the
rest of the respondents are likewise deleted for lack of evidence to prove petitioners'
liability as to them.

WHEREFORE, the decision appealed from is AFFIRMED, with


the MODIFICATION that only respondents Juan Villaruz, Francisco Abentajado,
Jerry Asense, Mario Guray, and Joselito Razon be GRANTED their monetary awards
while the awards given to the rest of the respondents are DELETED.

No costs.

SO ORDERED.
The Antecedent Facts
FIRST DIVISION

The facts, as found by Respondent NLRC, are as follows:


[G.R. No. 128290. November 24, 1998] Records disclose that complainant was a sales supervisor of respondent
Unilab who was assigned to cover the Bicol Region accounts of respondent
company. As such, he reported to and was under the direct supervision of
ELISEO B. TAN, petitioner, vs. NATIONAL LABOR RELATIONS Julio Sison, the Area Sales Manager and one of the respondents in this
COMMISSION, UNITED LABORATORIES INC., JULIO SISON, case. Records further disclose that in July 1990, complainant Tan upon
FRANCISCO PAMINTUAN, TAN WAN LIAN and DELFIN recommendation of respondent Sison, was chosen to attend a six-month
SAMSON, respondents. management training course which respondent Unilab sponsored for
selected employees. The said training course was held in Manila, and since
DECISION complainant would be away for some time, his covered route of
PANGANIBAN, J.: assignment (Bicol Region) was assigned to other salesmen then stationed
in Bicol.
The employer has the prerogative to transfer an employee when the interest of the business Six (6) months thereafter, and complainant having completed the aforesaid
so requires. When the transfer is not unreasonable, discriminatory or attended by a demotion
in rank or a diminution in pay, such transfer cannot be deemed a constructive
management training course, he returned to Bicol and reported for work. It
dismissal. Furthermore, sanctions must be imposed upon an employer for failure to observe would appear, however, that Unilabs salesman assigned in Sorsogon, Ely
the requirements of due process in effecting a lawful dismissal. Ruiz went on AWOL and Bert Agripa the other salesman designated to
take over the Sorsogon account could not cope with such additional work
causing the sales in Sorsogon to plunge. Hence, complainant, fresh from
Statement of the Case
his management training course, was temporarily assigned in Sorsogon,
presumably to arrest its deteriorating sales and revitalize its unfavorable
These principles are applied by this Court in resolving this petition for certiorari under market condition in the province.
Rule 65 of the Rules of Court assailing the October 8, 1996 Decision [1] of the National Labor Complainant accepted the assignment and proceeded to Sorsogon to
Relations Commission[2] (NLRC) in NLRC Case Nos. RAB-05-00063-91 and RAB 05-00474-
92, which disposed as follows:
service the companys accounts. However, after a while, he complained that
his temporary assignment thereat did not match his experience, training
WHEREFORE, the decision appealed from is hereby AFFIRMED. Let the and capabilities. Shortly thereafter, complainant went on leave of absence
instant appeal be, as it is, hereby DISMISSED for lack of merit.[3] for several days for the month of February and March 1991 and then
Petitioner also challenges the NLRC Resolution dated November 29, 1996 denying starting 16 March 1991, stopped reporting for work
reconsideration. The assailed Decision and Resolution affirmed Executive Labor Arbiter Vito altogether. Complainant instead, filed the instant complaint for
C. Boses March 29, 1996 Decision,[4] which dismissed the complaint for lack of merit. constructive dismissal alleging, in the main, that his Sorsogon assignment
resulted in the removal of his usual duties and responsibilities as sales
supervisor. He charged that his assignment to the province of Sorsogon and
the corresponding withdrawal of his supervisory functions were the complainant. But we cannot give credence to the charge. In the first
handiwork of respondent Julio Sison, whom complainant claimed, had place, it was not only complainant who signed the aforesaid
suspected him of spearheading a protest letter against Sison. letter. Almost all of the Bicol salesmen were involved therein hence,
there is no palpable reason for respondent Sison to focus his ire on
A similar complaint was later filed by herein complainant before this
complainant alone, if revenge was indeed in respondent Sisons
Commission. This time however, one charging respondent Unilab in the
mind. In the second place, respondent Sison himself had
main of illegal dismissal. Both cases were consolidated and xxx heard by
recommended complainant to undergo the UMDP training in
the Executive Labor Arbiter a quo, who, after hearing the case on its
Manila, a coveted privilege he would have not logically conferred
merits, rendered a decision in this case in favor of herein respondent
upon the alleged subject of his wrath. Thirdly, Unilab had already
company.
expressed its willingness to discuss with complainant the possibility
On appeal, complainant insists that the Executive Labor Arbiter below of assignment in another area, a concession it would not have
committed serious errors in his findings of facts and abused his discretion extended to an employee it intended to harass. Lastly, and more
in rendering the appealed decision. In essence, he reiterates that his importantly, we noted that during the whole period of almost one
Sorsogon assignment resulted in the removal of his usual duties and year that complainant refused to report for work and to service
responsibilities as Sales Supervisor as well as his contention that his Sorsogon as directed, Unilab religiously paid him his monthly salary
assignment to the province of Sorsogon and the corresponding withdrawal and allowed complainant to retain possession of the company
of his supervisory functions were all part of a grand scheme plotted against vehicle, a very unlikely situation if Unilab had truly intended to
him by individual respondents, more particularly Julio Sison, due to his harass complainant. Surely, all of the foregoing circumstances
union activities in forming and strengthening their ranks and that of negated very strongly complainants claim of harassment.
Unilabs rank and file employees.
We have observed that at the first instance when complainant
It should be stated at the outset that this case had been heard below in an requested for a reconsideration of the decision to assign him
open and extensive trial on its merits. Certainly, under these circumstances, temporarily to Sorsogon, he did not even mention the allegation that
the findings of the Labor Arbiter cannot be simply disregarded in the the same diminished his functions and responsibilities. Instead he
absence of a clear and convincing evidence that he abused his discretion lengthily dwelt on his own impression that such assignment did not
and seriously erred in the appreciation of the evidence presented before match my experience, training, and capabilities, as he was allegedly
him during the proceedings. On the contrary, the same carry great weight used to handling big accounts. To us, this indicated that
and respect if found supported by facts and law. complainants principal reason for refusing his Sorsogon assignment
The Executive Labor Arbiter below, in rejecting complainants accusations was that the same, in his mind, appeared too small for his stature and
in this case traversed: that the fact that the company nonetheless fielded him to such small
assignment might have hurt his ego. However, this does not appeal
We are not unaware of complainants accusation that the Sorsogon to us as a valid consideration especially so that the company
assignment was respondent Sisons way of humiliating and harassing precisely needed his experience, training, and capabilities to
complainant out of vengeance for the letter-complaint against rehabilitate its flagging market in Sorsogon. We believe that when
respondent Sison which was allegedly masterminded by the survival of a part of the company is at stake, its welfare should
take precedence over personal interest. As a senior salesman, well as in this appeal. On the contrary, the records show that the protest
complainant should have been the first to understand the letter referred to by complainant Tan took place in May 1990, and which
predicament of the company instead of bicker over the smallness of admittedly were patched up as Julio Sison had already shaken hands in
the accounts. Moreover, the Sorsogon assignment was only peace with the employees involved. On the other hand, the fact that it was
temporary, a remedial measure that was to be implemented pending Sison himself who recommended him for a six-month management
the hiring and training of a new salesman to be assigned to said training course in Manila and even assisted him in the preparation of his
province. Being just a temporary arrangement, and considering the theses, belie his bare assertions. But what particularly convinced us
financial boost complainants experience and service [could] lend to regarding the unreasonableness of complainants accusation of harassment
the company insofar as Sorsogon was concerned, we really cannot and grand plot was the way Unilab accommodated him during the time he
see any acceptable reason why complainant should intensely oppose refused to report for work, as directed, to Sorsogon. Certainly, with the
the assignment. stubborn and unjustified refusal of complainant to comply with respondent
Unilabs instruction to report for work in Sorsogon, he had catered the
What is evident from the above is that complainants assignment to
justification for his termination. Yet, Unilab did not grab this opportunity
Sorsogon did not take away from him any of his previous
as it would have, had it been true that the company had so maneuvered and
responsibilities. He retained his rank, and was designated to perform
plotted to ease complainant out of his job. Instead, Unilab, for about a year
in Sorsogon the same functions as he always had while assigned in
that complainant failed to work, tolerantly and generously continued to
Naga. Neither can it be argued that he suffered a diminution in pay
pay him his monthly salary. Not only did complainant receive his regular
because his incentives, as before, were based on the sales
pay without rendering work, Unilab even allowed him to keep the
performance of the whole Bicol region and not mainly on his
company vehicle otherwise intended for work-related purposes only. On
Sorsogon accounts. Upon the other hand, it has been satisfactorily
top of it all, as additional concession, Unilab even offered to discuss with
established herein that Unilab needed complainant in Sorsogon to
complainant the possibility of assigning him to another area if he really did
recover its lost accounts in the area. This appeared to us to be a
not want to work in Sorsogon (Exhibit 7).The foregoing obviously are
perfectly lawful and valid reason for complainants temporary
simply inconsistent with complainants claim of harassment and a plot to
transfer to that province. Consequently, we cannot be persuaded to
ease him out his employment. To us, there is nothing illegal in his
think that complainants Sorsogon assignment constituted
temporary transfer to Sorsogon. Unilab was encountering problems in the
constructive dismissal.[5]
said province because the salesman handling it went on
AWOL. Complaint appeared to be the most logical and appropriate choice
Public Respondents Ruling to service Sorsogon and with his newly acquired management training
skills he was expected to resuscitate Unilabs sales in the province. Such,
we find, is a valid exercise of management prerogative in furtherance of
The NLRC, in affirming the labor arbiters Decision, ruled as follows:
the companys business interests.
The above findings find support from the records and law in issue. There
Along this same vein, we cannot agree with complainants claim that
is no cogent reason for us to disturb the same. Complainant failed to
simultaneously with his transfer to Sorsogon, he was stripped of his
sufficiently establish his accusations during the arbitral proceedings as
supervisory functions, i.e., to receive and evaluate weekly and monthly
reports of the Bicol salesmen; to approve the latters expense reports, as Petitioner raises the following issues:
well as their entertainment and traveling expenses; to audit their "I. W[h]ether or not the transfer of assignment of petitioner from Naga
accountabilities; and to plan, assign and review their territorial City to Sorsogon without his consent is tantamount to
assignments. There is simply no evidence on the records to support these constructive dismissal.
claims of complainant. The records are bereft of competent evidence to
prove that complainant actually performed and exercised the functions he II. Whether or not the termination of employment of petitioner is
mentioned. On the contrary, the disclaimers of two (2) Bicol Salesmen, illegal.
namely Carlito Santos and Rudy Yumul, attesting that they submit[ted] all III. Whether or not petitioner is entitled to the reliefs prayed for in his
their reports such as weekly coverages, collections, expenses and two (2) complaints.[9]
competitive activities directly to Mr. Sison, who in turn, evaluate[d] my
performance (Exhs. 54 and 55), negate complainants assertions. Moreover,
the letter to the herein complainant from three Bicol salesmen (Joaquin The Courts Ruling

Vallejo, Jose Zozobrado, and Rudy Yumul, Exh. 27) questioning his
authority to ask them to submit to him their reports as entirely new to us The petition is partly meritorious. We affirm the ruling of the NLRC that the dismissal of
simply is too thick to be brushed aside. Thus, between complainants petitioner was for a valid cause, but we hold that his dismissal was effected without due process
unsupported averments against the aforesaid statements of his colleagues, for which the employer must be sanctioned in accordance with prevailing jurisprudence.
surely the latter, considering their preponderance and weight, there being
nothing on records to even hint or suggest that they have been motivated
Preliminary Matter: Scope of Review under Rule 65
by ill feelings towards complainant, must be given weight on its face
value. x x x
xxxxxxxxx At the outset, we emphasize that the jurisdiction of the Court in reviewing decisions of the
NLRC under Rule 65 of the Rules of Court is limited to the issue of grave abuse of
The position of complainant as Sales Supervisor is unmistakably infused discretion.[10] A decision of the NLRC may be deemed tainted with grave abuse of discretion
with [a] certain degree of trust and confidence and unlike ordinary rank when said tribunal renders the same in a capricious, whimsical, arbitrary or despotic
and file employees, there is [a] more strict code of conduct required of manner.[11] It is settled that the Court is not duty-bound to delve into the accuracy of the NLRCs
him, such that a single act reflecting breach thereof is enough reason to factual findings in the absence of a clear showing that it is arbitrary and bereft of any rational
terminate his employment. Complainant in this case was guilty, not of one basis.[12] The Court is not a trier of facts and, as a rule, it is not required to reevaluate the
probative value of the evidence that was the basis for the decision on appeal. [13]
but of a litany of offenses each of which is descriptive of the incongruity
of his attitude with the demands of his fiduciary functions. x x x[6] Since quasi-judicial agencies, such as the labor arbiter and the NLRC, have acquired
expertise in the exercise of their highly specialized jurisdiction, their factual findings are
Undaunted, petitioner filed a Motion for Reconsideration, which was denied for lack of generally accorded respect and even finality when supported by substantial evidence.[14] Thus,
merit by the public respondent in its Resolution dated November 29, 1996. [7] Hence, this [t]he NLRCs decision, so long as it is not bereft of support from the records, deserves respect
petition.[8] from the Court.[15]

The Issues
First Issue: No Constructive Dismissal
that such transfer was only a temporary measure adopted by Unilab to augment its sales
operation in Sorsogon, which had been adversely affected by the absence without leave of Cely
Ruiz, the representative of the company in said province. To ensure the viability and
The Court has held that constructive dismissal is an involuntary resignation resorted to profitability of its Sorsogon sales operation, the respondent company unmistakably had the
when continued employment is rendered impossible, unreasonable or unlikely; when there is
prerogative to tap petitioners skills, which were evident from his long years of service, as well
a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or as his attendance of several management seminars.
disdain by an employer becomes unbearable to the employee. [16] On the other hand, we have
also held that the transfer of an employee from one area of operation to another is a Petitioner cannot complain of constructive dismissal, just because his temporary transfer
management prerogative and is not constitutive of constructive dismissal,[17] when the transfer to Sorsogon was against his wishes and, in his view, not commensurate to his self-worth or
is based on sound business judgment, unattended by a demotion in rank or a diminution of pay personal qualifications. Certainly, the Court cannot accept the proposition that when an
or bad faith. Thus, in Philippine Japan Active Carbon Corp. v. NLRC,[18] the Court ruled: employee opposes his employers decision to transfer him to another work place, there being
no bad faith or underhanded motives on the part of either party, it is the employees wishes that
It is the employers prerogative, based on its assessment and perception of should be made to prevail.[26] We reiterate that on the basis of the qualifications, training and
its employees qualifications, aptitudes, and competence, to move them performance of the employee, the prerogative to determine the place or station where he or she
around in the various areas of its business operations in order to ascertain is best qualified to serve the interests of the company belongs to the employer.
where they will function with maximum benefit to the company. An Unsubstantiated is petitioners claim that his transfer to Sorsogon diminished his rank as
employees right to security of tenure does not give him such a vested right sales supervisor, as well as its corresponding pay. The labor arbiter noted:
in his position as would deprive the company of its prerogative to change
his assignment or transfer him where he will be most useful. When his What is evident from the above is that complainants assignment to
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and Sorsogon did not take away from him any of his previous
it does not involve a demotion in rank or a diminution of his salaries, responsibilities. He retained his rank, and was designated to perform in
benefits, and other privileges, the employee may not complain that it Sorsogon the same functions as he always had while assigned in
amounts to a constructive dismissal. Naga. Neither can it be argued that he suffered a diminution in pay
because his incentives, as before, were based on the sales performance of
In the case at bar, the claim of petitioner that he was constructively dismissed was based the whole Bicol region and not mainly on his Sorsogon accounts. Upon the
mainly on his allegations that, upon his transfer from the Bicol to the Sorsogon region of
operation of respondent company,[19] he was (1) demoted from sales supervisor to sales
other hand, it has been satisfactorily established herein that Unilab needed
representative, (2) made to suffer a diminution in pay, [20] and (3) harassed and complainant in Sorsogon to recover its lost accounts in the area. This
humiliated.[21] Petitioner further maintains that such transfer was neither necessary[22] nor appeared to us to be a perfectly lawful and valid reason for complainants
temporary.[23] temporary transfer to that province. Consequently, we cannot be persuaded
After careful scrutiny, the Court notes that the labor arbiter and then the NLRC have
to think that complainants Sorsogon assignment constituted constructive
already ruled upon the foregoing factual contentions; and that their findings, which concur, are dismissal.[27]
not tainted with arbitrariness or grave abuse of discretion, but are supported by substantial Undoubtedly, Unilab cannot be deemed to have effected constructive dismissal in this
evidence -- that amount of relevant evidence which a reasonable mind might accept to be case.
adequate in justifying a conclusion.[24]
Petitioner has not pointed to evidence on record -- and neither have we found any -- to Second Issue: Validity of Dismissal
substantiate his claim that his reassignment to Sorsogon was prompted by the malevolence or
ill will of management. Indeed, the minutes of the sales meeting dated January 5, 1991, [25] show
Petitioner insists that no valid cause attended his dismissal, arguing that the alleged serious dtre for his position was the generation of sales. His conduct was antithetical to his position,
misconduct or OFFENSES upheld by public respondents are nothing but vague, insubstantial for he acted like a rogue with an ax to grind against his immediate superiors and in the process
and arbitrary charges xxx.[28] We disagree. created confusion within the ranks of the Bicol salesmen. Indeed, an employer has the right to
dismiss an employee whose continuance in the service is inimical to the employers
The Court has held that as regards cashiers, managers, supervisors, salesmen, or other
interest.[32] The solicitor general aptly notes:
personnel occupying positions of responsibility, the requirement that an employee should
enjoy the trust and confidence of his employer may justify their termination.[29] Petitioner The events leading to the private respondent companys loss of trust and
Eliseo Tan was not a mere rank-and-file employee; he was a senior salesman with the rank of confidence with petitioner were duly substantiated by sufficient
sales supervisor. In the respondent companys business of manufacturing and marketing evidence. These can be traced partly to the petitioners leaves of absence
pharmaceutical products, selling is a highly sensitive and important activity, because the
from his temporary work assignment in Sorsogon and his refusal to report
companys profitability and survival as a going concern depend on it. In this light, petitioner
undeniably occupied a sensitive position which required the employers utmost trust and for work starting March 16, 1991 until his recall to Naga City, despite the
confidence. delicate task entrusted to him to revitalize the sales in Sorsogon. Worse,
petitioner displayed a belligerent attitude even after respondent company
In the instant case, petitioner was dismissed because of loss of trust and
had acceded to his request for recall from his work assignment in Naga
confidence. Specifically, the respondent company found him guilty of usurpation of authority,
undermining the authority of a superior, illegal use of a concealed tape recorder in a meeting, City. In Naga City itself, petitioner pursued his grievances not in
failure to regularly report to the company depot, not following the rule on the wearing of accordance with [the] established company grievance procedure but in a
uniform, and non-submission of periodic reports. The salient portion of the Notice of confrontational manner disruptive of company operations, thus fostering
Termination reads: an adversarial atmosphere in the company.
In addition, although the Company, in a gesture of goodwill and good xxxxxxxxx
faith, allowed you to resume your usual duties and functions at Naga City, The barrage of complaints, protests, accusations, and threats which
after you ha[d] stayed away from work for a year[,] and [to] continue to petitioner had set loose not only against the private respondents Sison,
receive your pay, you have responded by continuously displaying a hostile [and] Tan Wan Lian but also against the Bicol salesmen negates
and combative work attitude towards your superiors, your co-employees petitioners claim that his employment in the company is not inimical to the
and the company in general. latters interest. Their relations had become [so] adversarial that team work
Needless to state, your actuations have led the company to lose its trust as an essential element of an effective and harmonious working relation
and confidence in you as a supervisor performing sensitive was no longer feasible.[33]
functions. Corollarily, your continued employment in the company is no
longer feasible and clearly disruptive of normal operations, leaving the Third Issue: Denial of Due Process
management no other alternative under the circumstances but to terminate
your services.[30]
The Court takes this occasion to emphasize anew that for a dismissal to be validly effected,
The Court sees no reason to reverse the NLRCs finding that petitioner was guilty, not of
the twin requirements of due process notice and hearing -- must be observed. It was for this
one but of a litany of offenses each of which is descriptive of the incongruity of his attitude
reason that we gave due course to this petition. In dismissing an employee, an employer has
with the demands of his fiduciary functions.[31]Petitioners position as sales supervisor in the
the burden of proving that the former worker has been served two notices: (1) one to apprise
respondent company demanded that he enjoy the trust and confidence of his employer, which
him of the particular acts or omissions for which his dismissal is sought and (2) the other to
he personally represented in dealing with clients. In addition, it must be stressed that the raison
inform him of his employers decision to dismiss him. As to the requirement of a hearing, the like this, the prevailing rule is that the employer should be required to indemnify the employee
essence of due process lies simply in an opportunity to be heard, and not always and in the amount of P5,000 as indemnity.[42]
indispensably in an actual hearing.[34]
WHEREFORE, the petition is DISMISSED and the assailed
In the case before us, the respondent companys memoranda addressed to Petitioner Eliseo Resolution AFFIRMED, with the MODIFICATION that Respondent United Laboratories, Inc.
Tan dated June 11, 1992,[35] June 15, 1992[36] and June 25, 1992[37] fell short of the required is hereby ORDERED to pay Petitioner Eliseo Tan indemnity in the amount of P5,000.
notice. None of these three memoranda indicated that petitioners dismissal was being sought
SO ORDERED.
for the actions charged therein.
Furthermore, in dismissing petitioner, the respondent company disregarded its own rules
for administrative disciplinary proceedings,[38] particularly the requirement that all cases
involving the dismissal of an employee shall be subject to automatic review by the companys
Employee Regulations Board (ERB) and ultimately to final action by its president. [39] The
relevant part of the company rule reads:
The Board shall conduct the necessary fact-finding investigation of the
charge/charges in coordination with the Human Resource Administrative
Group. The employee concerned shall be given the opportunity to explain
his side. The investigations, hearings and final decisions shall be properly
documented and announced within a maximum period of one (1) month
from the date the case is elevated to the Board and endorsed for final
action by the Office of the President. It shall be the responsibility of the
Chairman of the Employees Council to inform the Council body on the
progress and decisions made by the Board on [an] individual case.[40]
In terminating petitioners employment, however, the respondent company merely relied
on the charges contained in the aforementioned memoranda, thus ignoring its own rule
requiring a fact-finding investigation, as well as the letters petitioner had sent to explain
himself. Moreover, the Notice of Termination given to petitioner was signed only by
Respondent Francisco Pamintuan, a regional vice president who did not even refer the
dismissal to the ERB for automatic review or to the company president for final action.
It should be stressed that the respondent company is bound to observe its own procedural
rules, which were put in place to protect the right of its employees to due process. Its failure to
comply with such rules was indeed unfair and arbitrary. Although an employer may dismiss
an employee for a just or valid cause, the constitutional right to due process remains sacrosanct.
Since petitioners dismissal was for a just cause, which was sufficiently proven,
jurisprudence requires that the dismissal shall be upheld but the employer must be sanctioned
for non-compliance with the requirements of or for failure to observe due process. [41] In cases
Republic of the Philippines
Supreme Court DECISION
Manila

MENDOZA, J.:
THIRD DIVISION

This is a petition under Rule 45 of the Rules of Civil Procedure assailing


BITOY JAVIER G.R. No. 192558 the March 18, 2010 Decision[1] of the Court of Appeals (CA) and its June 7, 2010
(DANILO P. JAVIER), Resolution,[2] in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Petitioner, Present: Decision[3] of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo,[4] holding that petitioner Bitoy
Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
CARPIO, J.,
Corporation (Fly Ace) to pay backwages and separation pay in lieu of
PERALTA, Acting Chairperson,
reinstatement.
ABAD,
- versus - PEREZ,*** and
MENDOZA, JJ. Antecedent Facts

FLY ACE CORPORATION/ Promulgated: On May 23, 2008, Javier filed a complaint before the NLRC for
FLORDELYN CASTILLO, underpayment of salaries and other labor standard benefits. He alleged that he
Respondents. February 15, 2012
was an employee of Fly Ace since September 2007, performing various tasks at
the respondents warehouse such as cleaning and arranging the canned items
before their delivery to certain locations, except in instances when he would be
x ----------------------------------------------------------------------------------------x ordered to accompany the companys delivery vehicles, as pahinante; that he
reported for work from Monday to Saturday from 7:00 oclock in the morning to the vehicle of its contracted hauler, Milmar Hauling Services, was not
5:00 oclock in the afternoon; that during his employment, he was not issued an available. On April 30, 2008, Fly Ace no longer needed the services of
identification card and payslips by the company; that on May 6, 2008, he reported Javier. Denying that he was their employee, Fly Ace insisted that there was no
for work but he was no longer allowed to enter the company premises by the illegal dismissal.[8] Fly Ace submitted a copy of its agreement with Milmar
security guard upon the instruction of Ruben Ong (Mr. Ong), his superior;[5] that Hauling Services and copies of acknowledgment receipts evidencing payment to
after several minutes of begging to the guard to allow him to enter, he saw Ong Javier for his contracted services bearing the words, daily
whom he approached and asked why he was being barred from entering the manpower (pakyaw/piece rate pay) and the latters signatures/initials.
premises; that Ong replied by saying, Tanungin mo anak mo; [6] that he then went
home and discussed the matter with his family; that he discovered that Ong had Ruling of the Labor Arbiter
been courting his daughter Annalyn after the two met at a fiesta celebration in
Malabon City; that Annalyn tried to talk to Ong and convince him to spare her On November 28, 2008, the LA dismissed the complaint for lack of merit
father from trouble but he refused to accede; that thereafter, Javier was terminated on the ground that Javier failed to present proof that he was a regular employee
of Fly Ace. He wrote:
from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.

Complainant has no employee ID showing his employment with


To support his allegations, Javier presented an affidavit of one Bengie the Respondent nor any document showing that he received the benefits
Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from accorded to regular employees of the Respondents. His contention that
Respondent failed to give him said ID and payslips implies that indeed
September 2007 to January 2008. The said affidavit was subscribed before the he was not a regular employee of Fly Ace considering that complainant
Labor Arbiter (LA).[7] was a helper and that Respondent company has contracted a regular
trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Since there is a regular hauler to
importation and sales of groceries. Sometime in December 2007, Javier was deliver its products, we give credence to Respondents claim that
complainant was contracted on pakiao basis.
contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an
As to the claim for underpayment of salaries, the payroll
agreed rate of ₱300.00 per trip, which was later increased to ₱325.00 in January presented by the Respondents showing salaries of workers on pakiao
2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month whenever basis has evidentiary weight because although the signature of the
complainant appearing thereon are not uniform, they appeared to be his Finding Javier to be a regular employee, the NLRC ruled that he was
true signature. entitled to a security of tenure. For failing to present proof of a valid cause for his
xxxx termination, Fly Ace was found to be liable for illegal dismissal of Javier who
was likewise entitled to backwages and separation pay in lieu of reinstatement.
Hence, as complainant received the rightful salary as shown by
the above described payrolls, Respondents are not liable for salary
The NLRC thus ordered:
differentials. [9] WHEREFORE, premises considered, complainants appeal is
partially GRANTED. The assailed Decision of the labor arbiter is
Ruling of the NLRC VACATED and a new one is hereby entered holding respondent FLY
ACE CORPORATION guilty of illegal dismissal and non-payment of
13th month pay. Consequently, it is hereby ordered to pay complainant
DANILO Bitoy JAVIER the following:
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted
the argument of Javier and immediately concluded that he was not a regular
employee simply because he failed to present proof. It was of the view that
1. Backwages -₱45,770.83
a pakyaw-basis arrangement did not preclude the existence of employer-
employee relationship. Payment by result x x x is a method of compensation and 2. Separation pay, in lieu of reinstatement - 8,450.00
does not define the essence of the relation. It is a mere method of computing 3. Unpaid 13th month pay (proportionate) - 5,633.33
compensation, not a basis for determining the existence or absence of an
employer-employee relationship.[10] The NLRC further averred that it did not TOTAL -₱59,854.16
follow that a worker was a job contractor and not an employee, just because the
work he was doing was not directly related to the employers trade or business or All other claims are dismissed for lack of merit.
the work may be considered as extra helper as in this case; and that the
relationship of an employer and an employee was determined by law and the
same would prevail whatever the parties may call it. In this case, the NLRC held SO ORDERED.[11]
that substantial evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the particular activity
Ruling of the Court of Appeals
performed by the employee (as a pahinante) in relation to the usual business or
trade of the employer (importation, sales and delivery of groceries). He may not
On March 18, 2010, the CA annulled the NLRC findings that Javier was
be considered as an independent contractor because he could not exercise any
indeed a former employee of Fly Ace and reinstated the dismissal of Javiers
judgment in the delivery of company products. He was only engaged as a helper.
complaint as ordered by the LA. The CA exercised its authority to make its own
factual determination anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:
service to the company, the same being co-terminous with the trip only.[13] Since
xxx no substantial evidence was presented to establish an employer-employee
relationship, the case for illegal dismissal could not prosper.
In an illegal dismissal case the onus probandi rests on the
employer to prove that its dismissal was for a valid cause. However,
before a case for illegal dismissal can prosper, an employer-employee The petitioners moved for reconsideration, but to no avail.
relationship must first be established. x x x it is incumbent upon private
respondent to prove the employee-employer relationship by substantial
evidence. Hence, this appeal anchored on the following grounds:

I.
xxx
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER WAS NOT A REGULAR
It is incumbent upon private respondent to prove, by substantial EMPLOYEE OF FLY ACE.
evidence, that he is an employee of petitioners, but he failed to discharge
II.
his burden. The non-issuance of a company-issued identification card
to private respondent supports petitioners contention that private WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
respondent was not its employee.[12] HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS.[14]

The CA likewise added that Javiers failure to present salary vouchers, payslips,
or other pieces of evidence to bolster his contention, pointed to the inescapable The petitioner contends that other than its bare allegations and self-serving
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers affidavits of the other employees, Fly Ace has nothing to substantiate its claim
work was not necessary and desirable to the business or trade of the company, that Javier was engaged on a pakyawbasis. Assuming that Javier was indeed hired
as it was only when there were scheduled deliveries, which a regular hauling on a pakyaw basis, it does not preclude his regular employment with the
service could not deliver, that Fly Ace would contract the services of Javier as company. Even the acknowledgment receipts bearing his signature and the
an extra helper. Lastly, the CA declared that the facts alleged by Javier did not confirming receipt of his salaries will not show the true nature of his employment
pass the control test. as they do not reflect the necessary details of the commissioned task. Besides,
Javiers tasks as pahinante are related, necessary and desirable to the line of
business by Fly Ace which is engaged in the importation and sale of grocery
items. On days when there were no scheduled deliveries, he worked in petitioners
He contracted work outside the company premises; he was not required to
warehouse, arranging and cleaning the stored cans for delivery to clients. [15] More
observe definite hours of work; he was not required to report daily; and he was
importantly, Javier was subject to the control and supervision of the company, as
free to accept other work elsewhere as there was no exclusivity of his contracted
he was made to report to the office from Monday to Saturday, from 7:00 oclock in
the morning until 5:00 oclock in the afternoon. The list of deliverable goods, on how to deliver, time to deliver, where and [when] to start, and manner of
together with the corresponding clients and their respective purchases and delivering the products.[20]
addresses, would necessarily have been prepared by Fly Ace. Clearly, he was
subjected to compliance with company rules and regulations as regards working Fly Ace dismisses Javiers claims of employment as baseless assertions.
hours, delivery schedule and output, and his other duties in the warehouse.[16] Aside from his bare allegations, he presented nothing to substantiate his status as
an employee. It is a basic rule of evidence that each party must prove his
The petitioner chiefly relied on Chavez v. NLRC,[17] where the Court ruled affirmative allegation. If he claims a right granted by law, he must prove his claim
that payment to a worker on a per trip basis is not significant because this is by competent evidence, relying on the strength of his own evidence and not upon
merely a method of computing compensation and not a basis for determining the the weakness of his opponent.[21] Invoking the case of Lopez v. Bodega
existence of employer-employee relationship. Javier likewise invokes the rule City,[22] Fly Ace insists that in an illegal dismissal case, the burden of proof is
that, in controversies between a laborer and his master, x x x doubts reasonably upon the complainant who claims to be an employee. It is essential that an
arising from the evidence should be resolved in the formers favour. The policy is employer-employee relationship be proved by substantial evidence. Thus, it cites:
reflected is no less than the Constitution, Labor Code and Civil Code. [18]

Claiming to be an employee of Fly Ace, petitioner asserts that he was


illegally dismissed by the latters failure to observe substantive and procedural In an illegal dismissal case, the onus probandi rests on the
due process. Since his dismissal was not based on any of the causes recognized employer to prove that its dismissal of an employee was for a valid
by law, and was implemented without notice, Javier is entitled to separation pay cause. However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established.
and backwages.
Fly Ace points out that Javier merely offers factual assertions that he was
In its Comment,[19] Fly Ace insists that there was no substantial evidence an employee of Fly Ace, which are unfortunately not supported by proof,
to prove employer-employee relationship. Having a service contract with Milmar documentary or otherwise.[23] Javier simply assumed that he was an employee of
Hauling Services for the purpose of transporting and delivering company Fly Ace, absent any competent or relevant evidence to support it. He performed
products to customers, Fly Ace contracted Javier as an extra helper his contracted work outside the premises of the respondent; he was not even
or pahinante on a mere per trip basis. Javier, who was actually a loiterer in the required to report to work at regular hours; he was not made to register his time
area, only accompanied and assisted the company driver when Milmar could not in and time out every time he was contracted to work; he was not subjected to any
deliver or when the exigency of extra deliveries arises for roughly five to six disciplinary sanction imposed to other employees for company violations; he was
times a month. Before making a delivery, Fly Ace would turn over to the driver not issued a company I.D.; he was not accorded the same benefits given to other
and Javier the delivery vehicle with its loaded company products. With the employees; he was not registered with the Social Security System (SSS) as
vehicle and products in their custody, the driver and Javier would leave the petitioners employee; and, he was free to leave, accept and engage in other means
company premises using their own means, method, best judgment and discretion of livelihood as there is no exclusivity of his contracted services with the
petitioner, his services being co-terminus with the trip only. All these lead to the
conclusion that petitioner is not an employee of the respondents. [24]
Moreover, Fly Ace claims that it had no right to control the result, means, agree. Although Section 10, Rule VII of the New Rules of Procedure of the
manner and methods by which Javier would perform his work or by which the NLRC[28] allows a relaxation of the rules of procedure and evidence in labor
same is to be accomplished.[25] In other words, Javier and the company driver cases, this rule of liberality does not mean a complete dispensation of
were given a free hand as to how they would perform their contracted services proof. Labor officials are enjoined to use reasonable means to ascertain the facts
and neither were they subjected to definite hours or condition of work. speedily and objectively with little regard to technicalities or formalities but
nowhere in the rules are they provided a license to completely discount evidence,
or the lack of it. The quantum of proof required, however, must still be satisfied.
Hence, when confronted with conflicting versions on factual matters, it is for
Fly Ace likewise claims that Javiers function as a pahinante was not them in the exercise of discretion to determine which party deserves credence on
directly related or necessary to its principal business of importation and sales of the basis of evidence received, subject only to the requirement that their decision
groceries. Even without Javier, the business could operate its usual course as it must be supported by substantial evidence.[29] Accordingly, the petitioner needs
did not involve the business of inland transportation. Lastly, the acknowledgment to show by substantial evidence that he was indeed an employee of the company
receipts bearing Javiers signature and words pakiao rate, referring to his earned against which he claims illegal dismissal.
salaries on a per trip basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an employee of the Expectedly, opposing parties would stand poles apart and proffer
company. allegations as different as chalk and cheese. It is, therefore, incumbent upon the
Court to determine whether the party on whom the burden to prove lies was able
The Court affirms the assailed CA decision. to hurdle the same. No particular form of evidence is required to prove the
existence of such employer-employee relationship. Any competent and relevant
It must be noted that the issue of Javiers alleged illegal dismissal is evidence to prove the relationship may be admitted. Hence, while no particular
anchored on the existence of an employer-employee relationship between him form of evidence is required, a finding that such relationship exists must still rest
and Fly Ace. This is essentially a question of fact. Generally, the Court does not on some substantial evidence. Moreover, the substantiality of the evidence
review errors that raise factual questions. However, when there is conflict among depends on its quantitative as well as its qualitative aspects.[30] Although
the factual findings of the antecedent deciding bodies like the LA, the NLRC and substantial evidence is not a function of quantity but rather of quality, the x x x
the CA, it is proper, in the exercise of Our equity jurisdiction, to review and re- circumstances of the instant case demand that something more should have been
evaluate the factual issues and to look into the records of the case and re-examine proffered. Had there been other proofs of employment, such as x x x inclusion in
the questioned findings.[26] In dealing with factual issues in labor cases, petitioners payroll, or a clear exercise of control, the Court would have affirmed
substantial evidence that amount of relevant evidence which a reasonable mind the finding of employer-employee relationship.[31]
might accept as adequate to justify a conclusion is sufficient. [27]
In sum, the rule of thumb remains: the onus probandi falls on petitioner to
As the records bear out, the LA and the CA found Javiers claim of establish or substantiate such claim by the requisite quantum of
employment with Fly Ace as wanting and deficient. The Court is constrained to evidence.[32] Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto x x x.[33] Sadly, Javier failed to adduce substantial as to the result of the work but also as to the means and methods by which the
evidence as basis for the grant of relief. result is to be accomplished.[35]

In this case, the LA and the CA both concluded that Javier failed to In this case, Javier was not able to persuade the Court that the above
establish his employment with Fly Ace. By way of evidence on this point, all that elements exist in his case. He could not submit competent proof that Fly Ace
Javier presented were his self-serving statements purportedly showing his engaged his services as a regular employee; that Fly Ace paid his wages as an
activities as an employee of Fly Ace. Clearly, Javier failed to pass the employee, or that Fly Ace could dictate what his conduct should be while at work.
substantiality requirement to support his claim. Hence, the Court sees no reason In other words, Javiers allegations did not establish that his relationship with Fly
to depart from the findings of the CA. Ace had the attributes of an employer-employee relationship on the basis of the
above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces
While Javier remains firm in his position that as an employed stevedore of assertion that it had an agreement with a hauling company to undertake the
Fly Ace, he was made to work in the company premises during weekdays delivery of its goods. It was also baffling to realize that Javier did not dispute Fly
arranging and cleaning grocery items for delivery to clients, no other proof was Aces denial of his services exclusivity to the company. In short, all that Javier
submitted to fortify his claim. The lone affidavit executed by one Bengie laid down were bare allegations without corroborative proof.
Valenzuela was unsuccessful in strengthening Javiers cause. In said document,
all Valenzuela attested to was that he would frequently see Javier at the workplace
where the latter was also hired as stevedore.[34] Certainly, in gauging the evidence Fly Ace does not dispute having contracted Javier and paid him on a per
presented by Javier, the Court cannot ignore the inescapable conclusion that his trip rate as a stevedore, albeit on a pakyaw basis. The Court cannot fail to note
mere presence at the workplace falls short in proving employment therein. The that Fly Ace presented documentary proof that Javier was indeed paid on
supporting affidavit could have, to an extent, bolstered Javiers claim of being a pakyaw basis per the acknowledgment receipts admitted as competent evidence
tasked to clean grocery items when there were no scheduled delivery trips, but no by the LA. Unfortunately for Javier, his mere denial of the signatures affixed
information was offered in this subject simply because the witness had no therein cannot automatically sway us to ignore the documents because forgery
personal knowledge of Javiers employment status in the company. Verily, the cannot be presumed and must be proved by clear, positive and convincing
Court cannot accept Javiers statements, hook, line and sinker. evidence and the burden of proof lies on the party alleging forgery. [36]

The Court is of the considerable view that on Javier lies the burden to pass Considering the above findings, the Court does not see the necessity to
the well-settled tests to determine the existence of an employer-employee resolve the second issue presented.
relationship, viz: (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 One final note. The Courts decision does not contradict the settled rule that
employees conduct. Of these elements, the most important criterion is whether payment by the piece is just a method of compensation and does not define the
the employer controls or has reserved the right to control the employee not only essence of the relation.[37] Payment on a piece-rate basis does not negate regular
employment. The term wage is broadly defined in Article 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. Nor does the fact that the petitioner is not covered by the SSS affect
the employer-employee relationship. However, in determining whether the
relationship is that of employer and employee or one of an independent
contractor, each case must be determined on its own facts and all the features of
the relationship are to be considered.[38] Unfortunately for Javier, the attendant
facts and circumstances of the instant case do not provide the Court with
sufficient reason to uphold his claimed status as employee of Fly Ace.

While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute
will be automatically decided in favor of labor. Management also has its rights
which are entitled to respect and enforcement in the interest of simple fair play.
Out of its concern for the less privileged in life, the Court has inclined, more often
than not, toward the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine. [39]

WHEREFORE, the petition is DENIED. The March 18, 2010 Decision


of the Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No.
109975, are hereby AFFIRMED.
SO ORDERED.
THIRD DIVISION
TINGA, J.:
CAINTA CATHOLIC SCHOOL G.R. No. 151021
and MSGR. MARIANO The main issue for resolution hinges on the validity of a stipulation in a Collective
T. BALBAGO, Bargaining Agreement (CBA) that allows management to retire an employee in
its employ for a predetermined lengthy period but who has not yet reached the
Petitioners, Present:
minimum compulsory retirement age provided in the Labor Code. Jurisprudence
has answered the question in the affirmative a number of times and our duty
QUISUMBING, J., calls for the application of the principle of stare decisis. As a consequence, we
grant the petition and reverse the Court of Appeals.
Chairperson,
- versus - CARPIO,
Before us is a petition for review on certiorari under Rule 45 of the Rules
CARPIO-MORALES, of Court, assailing the Decision[1] dated 20 August 2001 of the Court of Appeals
TINGA, and in CA-G.R. SP No. 50851, which reversed the Resolutions dated 31 January
1997,[2] and 30 April 1997[3] of the National Labor Relations Commission (NLRC),
VELASCO, JR., JJ.
Third Division in NLRC NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as
CAINTA CATHOLIC SCHOOL well as the Resolution[4] dated 6 December 2001.
EMPLOYEES UNION Promulgated:
(CCSEU), The antecedent facts follow:
Respondent. May 4, 2006
x------------------------------------------------------------------------------------x On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into
between Cainta Catholic School (School) and the Cainta Catholic School
Employees Union (Union) effective 1 January 1986 to 31 May 1989. This CBA
provided, among others, that:
DECISION
ARTICLE IX
DURATION OF AGREEMENT On 15 October 1993, the School retired Llagas and Javier, who had rendered
more than twenty (20) years of continuous service, pursuant to Section 2, Article
X of the CBA, to wit:
This Collective Bargaining Agreement shall become effective
and binding upon the parties from January 1, 1986 up to May 31,
1989. At least sixty (60) days before the expiration of this Agreement,
the parties hereto shall submit written proposals which shall be made
An employee may be retired, either upon application by the
the basis of negotiations for the execution of a new agreement.
employee himself or by the decision of the Director of the School,
upon reaching the age of sixty (60) or after having rendered at
If no new agreement is reached by the parties at the expiration
of this agreement, all the provisions of this Agreement shall remain
full force and in effect, up to the time a new Agreement shall be
executed.[5]

least twenty (20) years of service to the School the last three (3) years
of which must be continuous.[7]
Msgr. Mariano Balbago (Balbago) was appointed School Director in April
1987. From this time, the Union became inactive.

Three (3) days later, the Union filed a notice of strike with the National
It was only in 10 September 1993 that the Union held an election of officers, Conciliation and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-
with Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier (Javier), 93.
Vice-President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos),
Secretary. Llagas was then the Dean of the Student Affairs while Villegas
and Santos were Year-Level Chairmen. The other elected officers were Rizalina On 8 November 1993, the Union struck and picketed the Schools entrances.
Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange
and Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued
and Danilo Amigo and Arturo Guevarra, business managers.[6] an Order certifying the labor dispute to the National Labor Relations
Commission (NLRC). The dispositive portion reads:
On 20 December 1993, the School filed a petition directly with the NLRC
WHEREFORE, PREMISES CONSIDERED, this Office hereby to declare the strike illegal.
certifies the labor dispute at the Cainta Catholic School to the
National Labor Relations Commission for compulsory arbitration,
On 27 July 1994, the Union filed a complaint[9] for unfair labor practice
pursuant to Article 263(g) of the Labor Code as amended.
before the NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled,
Cainta Catholic School Employees Union v. Cainta Catholic School, et. al., before
Accordingly, all striking teachers and employees are directed Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered
to return to work within 24 hours from receipt of this Order and the the consolidation of this unfair labor practice case with the above-certified case.
School Administrator to accept all returning employees under the
same terms and conditions prevailing prior to the strike. On 31 January 1997, the NLRC rendered a Resolution favoring the School.

Furthermore, the effects of the termination of Ms. Rosalinda Three (3) issues were passed upon by the NLRC, namely: (1) whether the
Llagas and Paz A. Javier are hereby suspended. In line with this Order, retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair
the School Administration is ordered to reinstate them to their labor practice; and (3) whether the strike is legal.
former positions without loss of seniority rights and privileges
pending determination of the validity of their dismissal.
The NLRC ruled that the retirement of Llagas and Javier is legal as the
School was merely exercising an option given to it under the CBA. [10] The NLRC
dismissed the unfair labor practice charge against the School for insufficiency of
Both parties are further directed to cease and desist from evidence. Furthermore, it was found that the strike declared by the Union from
committing any acts that might aggravate the situation. 8 to 12 November 1993 is illegal, thereby declaring all union officers to have lost
their employment status.[11]

SO ORDERED.[8]
The Union moved for reconsideration but it was denied in a Resolution
dated 30 April 1997.
Hence, on 9 July 1997, the Union filed a petition for certiorari before this Paz Javier, Gilda Galange and Ester Amigo, to their former positions
Court docketed as G.R. No. 129548. The Court issued a temporary restraining without loss of seniority rights and other privileges with full
order (TRO) against the enforcement of the subject resolutions effective as of 23 backwages, inclusive of allowances and other benefits or their
July 1997. The School, however, filed a motion for clarification considering that monetary equivalent from 9 June 1997 up to the time of their actual
it had already enforced the 31 January 1997 NLRC Resolution. reinstatement; 2) to pay Rosalinda Llagas: a) separation pay
equivalent to one (1) month pay for every year of service, in lieu of
reinstatement, with full backwages, inclusive of allowances and other
On 28 July 1997, ten (10) regular teachers, who were declared to have benefits or their monetary equivalent from 9 June 1997 up to the
lost their employment status under the aforesaid NLRC Resolution reported time of the finality of this decision; b) moral and exemplary damages
back to work but the School refused to accept them by reason of its pending in the amount of ten thousand pesos (P10,000.00) and five thousand
motion for clarification. This prompted the Union to file a petition for contempt (P5,000.00), respectively; 3) to pay Paz Javier, or her heirs: a) unpaid
against Balbago and his agents before this Court, docketed as G.R. No. 130004, salaries, inclusive of allowances and other benefits, including death
which was later on consolidated with G.R. No. 129548. benefits, or their monetary equivalent from the time her
compensation was withheld from her up to the time of her death; b)
Pursuant to the ruling of this Court in St. Martin Funeral Homes v. separation pay equivalent to one (1) months salary for every year of
[12]
NLRC, the case was referred to the Court of Appeals and re-docketed as CA- service; and c) moral and exemplary damages in the amount of ten
G.R. SP No. 50851. thousand pesos (P10,000.00) and five thousand pesos (P5,000.00),
respectively.

On 20 August 2001, the Court of Appeals rendered a decision giving due


course and granting the petition to annul and set aside the 31 January 1997 and Private respondents are also ordered to pay petitioner union
30 April 1997 Resolutions of the NLRC; while dismissing the petition for attorneys fees equivalent to five percent (5%) of the total judgment
contempt for lack of merit. The decretal portion of the decision reads: award.

WHEREFORE, premises considered, the petition to annul and The petition for contempt, however, is DISMISSED for lack of
set aside the 31 January 1997 and the 30 April 1997 resolutions of merit.
the National Labor Relations Commission is GRANTED. Judgment is
hereby RENDERED directing private respondents: 1)
No pronouncement as to costs.
to REINSTATE the terminated union officers, except Rosalinda Llagas,
SO ORDERED.[13] xxxx
In reversing the decision of the NLRC, the Court of Appeals construed the
retirement of Llagas and Javier as an act amounting to unfair labor practice It is not difficult to see the anti-union bias of the school. One
when viewed against the backdrop of the relevant circumstances obtaining in of the first acts of private respondent Msgr. Balbago immediately
the case. The appellate court pointed out, thus: after his assumption of office as school director was to ask for a
moratorium on all union activities. With the union in inactive status,
the school felt secure and comfortable but when the union
reactivated, the school became apprehensive and reacted by retiring
The two happened to be the most vocal, dynamic and the unions two topmost officers by invoking the provisions of the
influential of all union officers and members and they held CBA. When the union furnished the school, through counsel, a copy
considerable suasion over the other employees. Rosalinda Llagas of a proposed CBA on 3 November 1993, the school in a cavalier
objected to the signing of the prepared form distributed by the fashion ignored it on the pretext that the union no longer enjoyed the
school, as a consequence of which, no one accomplished the form, majority status among the employees x x x[14]
and opposed the formation of the high school faculty club as the
teachers already had sufficient representation through the union. Paz
Javier, on the other hand, demanded that she be given the floor
during the faculty club organizational meeting and went on to win the
The appellate court concluded that the retirement of the two (2) union
presidency of the faculty club, conclusively showing that she enjoyed
officers was clearly to bust the reactivated union.
the support of the high school teachers. They were therefore a new
and different breed of union leaders assertive, militant and Having established that the School committed unfair labor practice, the Court
independent the exact opposite of former union president Victor of Appeals declared that the no-strike, no-lockout clause in the CBA was not
Javier who seemed to be passive, cooperative and pacific. The school violated when the union members staged a strike from 8 to 12 November
saw the two as threats which it could not control, and faced with a 1993.[15] It further held that minor disorders or isolated incidents of perceived
very uncomfortable situation of having to contend with an aggressive coercion attending the strike do not categorize it as illegal:
union which just dominated the high school faculty club (except for
Joel Javeniar, all of the faculty clubs officers were union members; We studied carefully the available records and found that the
Rollo, p. 418), the school decided to nip in the bud the reactivated existence of force during the strike was certainly not pervasive and
union by retiring its most prominent leaders.
widespread, or consistently and deliberately resorted to as a matter The Union, relying on the findings made by the Court of
of policy, so as to stamp the strike with illegality, or to cause the loss Appeals,[21] argues that the retirement of the two union officers is a mere
of employment of the guilty party x x x [16] subterfuge to bust the union.[22]

The NLRC, however, gave another justification to sustain the validity of the two
union officers forcible retirement, viz:
The motion for reconsideration subsequently filed by the School was denied in
a Resolution dated 6 December 2001, save in case of some union officers where
the appellate court modified its ruling granting them separation pay instead of
reinstatement because of their retirement or death.[17]
The retirement of Rosalinda Llagas has become inevitable
because, being a managerial employee by reason of her position as
Thereafter, petitioners filed this petition for review on certiorari raising three Dean of Student Affairs, she accepted the Union presidency. She lost
main issues, summarized as: (1) whether the Schools decision to retire Llagas the trust and confidence on her by the SCHOOL as she occupied a
and Javier constitutes unfair labor practice; (2) whether the strike was legal; and managerial position as Dean of Student Affairs. . . Being also the union
(3) whether some union officers ordered dismissed are entitled to president, she has allowed her loyalties to be divided between the
backwages.[18] administration and the union.

The School avers that the retirement of Llagas and Javier was clearly in
accordance with a specific right granted under the CBA. The School justifies its As to Paz Javier, her retirement was decided upon after an
actions by invoking our rulings in Pantranco North Express, Inc. v. evaluation shows that she was not performing well as her students
NLRC[19] and Bulletin Publishing Corporation v. Sanchez[20] that no unfair labor were complaining about her brusque attitude and bad language,
practice is committed by management if the retirement was made in accord aside from being habitually absent and late. [23]
with management prerogative or in case of voluntary retirement, upon approval
of management.

At the outset, only questions of law are entertained by this Court through a
petition for review on certiorari. There are, however, well-recognized
exceptions such as in this case when the factual findings of the NLRC and the
Court of Appeals are contradictory.[24] A re-evaluation of the records of this case
is necessary for its proper resolution. Article 287 of the Labor Code, as amended, governs retirement of
employees, stating:
The key issue remains whether the forced retirement of Llagas and Javier was a
valid exercise of management prerogative. Undoubtedly, the retirement of the ART. 287. Retirement.
two (2) union officers triggered the declaration of strike by the Union, and the
ruling on whether the strike was legal is highly dependent on whether the
retirement was valid. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other
applicable employment contract.
We are impelled to reverse the Court of Appeals and affirm the validity of the
termination of employment of Llagas and Javier, arising as it did from a
management prerogative granted by the mutually-negotiated CBA between the In case of retirement, the employee shall be entitled to receive
School and the Union. such retirement benefits as he may have earned under existing laws
and any collective bargaining agreement and other agreements:
Provided, however, That an employees retirement benefits under any
Pursuant to the existing CBA,[25] the School has the option to retire an collective bargaining agreement and other agreements shall not be
employee upon reaching the age limit of sixty (60) or after having rendered at less than those provided herein.
least twenty (20) years of service to the School, the last three (3) years of which
must be continuous. Retirement is a different specie of termination of
employment from dismissal for just or authorized causes under Articles 282 and In the absence of a retirement plan or agreement providing for
283 of the Labor Code. While in all three cases, the employee to be terminated retirement benefits of employees in the establishment, an employee
may be unwilling to part from service, there are eminently higher standards to upon reaching the age of sixty (60) years or more, but not beyond
be met by the employer validly exercising the prerogative to dismiss for just or sixty-five (65) years which is hereby declared the compulsory
authorized causes. In those two instances, it is indispensable that the employer retirement age, who has served at least five (5) years in the said
establish the existence of just or authorized causes for dismissal as spelled out establishment, may retire and shall be entitled to retirement pay
in the Labor Code. Retirement, on the other hand, is the result of a bilateral act equivalent to at least one-half (1/2) month salary for every year of
of the parties, a voluntary agreement between the employer and the employee service, a fraction of at least six (6) months being considered as one
whereby the latter after reaching a certain age agrees and/or consents to sever whole year.
his employment with the former.[26]
A similar set of facts informed our decision in Progressive Development
Corporation v. NLRC.[28] The CBA therein stipulated that an employee with [20]
years of service, regardless of age, may be retired at his option or at the option
The CBA in the case at bar established 60 as the compulsory retirement of the company. The stipulation was used by management to compulsorily
age. However, it is not alleged that either Javier or Llagas had reached the retire two employees with more than 20 years of service, at the ages of 45 and
compulsory retirement age of 60 years, but instead that they had rendered at 38. The Court affirmed the validity of the stipulation on retirement as consistent
least 20 years of service in the School, the last three (3) years continuous. with Article 287 of the Labor Code.
Clearly, the CBA provision allows the employee to be retired by the School even
before reaching the age of 60, provided that he/she had rendered 20 years of
service. Would such a stipulation be valid? Jurisprudence affirms the position of Philippine Airlines, Inc. v. Airline Pilots Association of the Phils.[29] further
the School. bolsters the Schools position. At contention therein was a provision of the PAL-
ALPAP Retirement Plan, the Plan having subsequently been misquoted in the
CBA mutually negotiated by the parties. The Plan authorized PAL to exercise the
Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct option of retirement over pilots who had chosen not to retire after completing
application in this case. The CBA involved in Pantranco allowed the employee to 20 years of service or logging over 20,000 hours for PAL. After PAL exercised
be compulsorily retired upon reaching the age of 60 or upon completing [25] such option over a pilot, ALPAP charged PAL with illegal dismissal and union-
years of service to [Pantranco]. On the basis of the CBA, private respondent was busting. While the Secretary of Labor upheld the unilateral retirement, it
compulsorily retired by Pantranco at the age of 52, after 25 years of service. nonetheless ruled that PAL should first consult with the pilot to be retired before
Interpreting Article 287, the Court ruled that the Labor Code permitted it could exercise such option. The Court struck down that proviso, ruling that the
employers and employees to fix the applicable retirement age at below 60 years requirement to consult the pilots prior to their retirement defeats the exercise
of age. Moreover, the Court also held that there was no illegal dismissal since it by management of its option to retire the said employees, [giving] the pilot
was the CBA itself that incorporated the agreement reached between the concerned an undue prerogative to assail the decision of management.
employer and the bargaining agent with respect to the terms and conditions of
employment; hence, when the private respondent ratified the CBA with his
union, he concurrently agreed to conform to and abide by its provisions. Thus, By their acceptance of the CBA, the Union and its members are obliged to
the Court asserted, [p]roviding in a CBA for compulsory retirement of employees abide by the commitments and limitations they had agreed to cede to
after twenty-five (25) years of service is legal and enforceable so long as the management. The questioned retirement provisions cannot be deemed as an
parties agree to be governed by such CBA.[27] imposition foisted on the Union, which very well had the right to have refused
to agree to allowing management to retire retire employees with at least 20
years of service.
even if such agreement allows for retirement at an age lower than the optional
It should not be taken to mean that retirement provisions agreed upon in retirement age or the compulsory retirement age. The Court of Appeals gravely
the CBA are absolutely beyond the ambit of judicial review and nullification. A erred in refusing to consider this case from the perspective of Pantranco, or
CBA, as a labor contract, is not merely contractual in nature but impressed with from the settled doctrine enunciated therein.
public interest. If the retirement provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well be voided. Certainly, a What the Court of Appeals did instead was to favorably consider the claim
CBA provision or employment contract that would allow management to of the Union that the real purpose behind the retirement of Llagas and Javier
subvert security of tenure and allow it to unilaterally retire employees after one was to bust the union, they being its president and vice-president, respectively.
month of service cannot be upheld. Neither will the Court sustain a retirement To that end, the appellate court favorably adopted the citation by the Union of
clause that entitles the retiring employee to benefits less than what is the American
guaranteed under Article 287 of the Labor Code, pursuant to the provisions
express proviso thereto in the provision.

case of NLRB v. Ace Comb, Co.,[31] which in turn was taken from a popular local
Yet the CBA in the case at bar contains no such infirmities which must be labor law textbook. The citation stated that [f]or the purpose of determining
stricken down. There is no essential difference between the CBA provision in whether or not a discharge is discriminatory, it is necessary that the underlying
this case and those we affirmed in Pantranco and Progressive. Twenty years is a reason for the discharge be established. The fact that a lawful cause for
more than ideal length of service an employee can render to one employer. discharge is available is not a defense where the employee is actually discharged
Under ordinary contemplation, a CBA provision entitling an employee to retire because of his union activities.[32]
after 20 years of service and accordingly collect retirement benefits is reward
for services rendered since it enables an employee to reap the fruits of his labor
particularly retirement benefits, whether lump-sum or otherwise at an earlier Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did
age, when said employee, in presumably better physical and mental condition, not involve an employee sought to be retired, but one who cited for termination
can enjoy them better and longer.[30] from employment for cause, particularly for violating Section 8(a)(3) of the
National Labor Relations Act, or for insubordination. Moreover, the United
States Court of Appeals Eighth Circuit, which decided the case, ultimately
We affirm the continued validity of Pantranco and its kindred cases, and concluded that here the evidence abounds that there was a justifiable cause for
thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord [the employees] discharge,[33] his union activities notwithstanding. Certainly,
management the prerogative to optionally retire an employee under the terms the Union and the Court of Appeals would have been better off citing a case
and conditions mutually agreed upon by management and the bargaining union, wherein the decision actually concluded that the employee was invalidly
dismissed for union activities despite the ostensible existence of a valid cause On the other hand, the exercise by management of its retirement
for termination. prerogative is less susceptible to dubitability as to the question whether an
employee could be validly retired. The only factual matter to consider then is
whether the employee concerned had attained the requisite age or number of
Nonetheless, the premise warrants considering whether management years in service pursuant to the CBA or employment agreement, or if none,
may be precluded from retiring an employee whom it is entitled to retire pursuant to Article 287 of the Labor Code. In fact, the question of the amount
upon a determination that the true cause for compulsory retirement is the of retirement benefits is more likely to be questioned than the retirement itself.
employees union activities. Evidently, it more clearly emerges in the case of retirement that management
would anyway have the right to retire an employee, no matter the degree of
involvement of said employee in union activities.
The law and this Court frowns upon unfair labor practices by
management, including so-called union-busting. Such illegal practices will not
be sustained by the Court, even if guised under ostensibly legal premises. But There is another point that militates against the Union. A ruling in its favor
with respect to an active unionized employee who claims having lost his/her job is tantamount to a concession that a validly drawn management prerogative to
for union activities, there are different considerations presented if the retire its employees can be judicially interfered on a showing that the employee
termination is justified under just or authorized cause under the Labor Code; in question is highly valuable to the union. Such a rule would be a source of
and if separation from service is effected through the exercise of a duly accorded mischief, even if narrowly carved out by the Court, for it would imply that an
management prerogative to retire an employee. There is perhaps a greater active union member or officer may be, by reason of his/her importance to the
imperative to recognize the management prerogative on retirement than the union, somehow exempted from the normal standards of retirement applicable
prerogative to dismiss employees for just or authorized causes. For one, there to the other, perhaps less vital members of the union. Indeed, our laws
is a greater subjectivity, not to mention factual dispute, attached to the protection of the right to organize labor does not translate into perpetual job
concepts of just or authorized cause than retirement which normally security for union leaders by reason of their leadership role alone. Should we
contemplates merely the attainment of a certain age or a certain number of entertain such a notion, the detriment is ultimately to the union itself,
years in the service. It would be easier for management desirous to eliminate promoting as it would a stagnating entrenched leadership.
pesky union members to abuse the prerogative of termination for such purpose
since the determination of just or authorized cause is rarely a simplistic
question, but involves facts highly prone to dispute and subjective We can thus can comfortably uphold the principle, as reiterated
interpretation. in Philippine Airlines,[34] that the exercise by the employer of a valid and duly
established prerogative to retire an employee does not constitute unfair labor
practice.
xxxx

There are other arguments raised by petitioners. We need to discuss g. Plans with the Guidance Counselors student leadership
them only in brief, as they are no longer central to the resolution of this case. training programs to encourage dynamic and responsible leadership
among the students and submits the same for the approval of the
Principal/Director.
The School insisted that Llagas and Javier were actually managerial
employees, and it was illegal for the Union to have called a strike on behalf of
two employees who were not legally qualified to be members of the Union in xxxx
the first place.[35] The Union, on the other hand, maintains that they are rank-
and-file employees.
i. Studies proposals on extra-curricular or co-curricular
activities and projects proposed by teachers and students and
Article 212(m) of the Labor Code defines a managerial employee as "one recommends to the Principal/Director the necessary approval.
who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or to effectively recommend such managerial j. Implements and supervises activities and projects approved
actions." The functions of the Dean of Student Affairs, as occupied by Llagas, are by the Principal/Director so that the activities and projects follow
enumerated in the Faculty Manual. The salient portions are hereby faithfully the conditions set forth by the Principal/Director in the
enumerated: approval.

a. Manages the High School Department with the Registrar k. Assists in the planning, supervising and evaluating of
and Guidance Counselors (acting as a COLLEGIAL BODY) in the programs of co-curricular activities in line with the philosophy and
absence of the Director or Principal. objectives of the School for the total development of the students.

b. Enforces the school rules and regulations governing l. Recommends to the Principal policies and rules to serve as
students to maintain discipline. guides to effective implementation of the student activity program.[36]
xxxx

Supervisory employees, as defined in Article 212(m) are those who, in the


interest of the employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but
It is fairly obvious from a perusal of the list that the Dean of Student Affairs requires the use of independent judgment.
exercises managerial functions, thereby classifying Llagas as a managerial
employee.
In the same vein, a reading of the above functions leads us to conclude
that Javier was a supervisory employee. Verily, Javier made recommendations
Javier was occupying the position of Subject Area Coordinator. Her duties and as to what actions to take in hiring, termination, disciplinary actions, and
responsibilities include: management policies, among others.

1. Recommends to the principals consideration the


We can concede, as the Court of Appeals noted, that such job descriptions
appointment of faculty members in the department, their promotion,
or appellations are meaningless should it be established that the actual duties
discipline and even termination;
performed by the employees concerned are neither managerial nor supervisory
in nature. Yet on this point, we defer to the factual finding of the NLRC, the
2. Recommends advisory responsibilities of faculty proximate trier of facts, that Llagas and Javier were indeed managerial and
members; supervisory employees, respectively.

3. Recommends to the principal curricular changes, Having established that Llagas is a managerial employee, she is proscribed
purchase the books and periodicals, supplies and equipment for the from joining a labor union,[38] more so being elected as union officer. In the case
growth of the school; of Javier, a supervisory employee, she may join a labor union composed only of
supervisory employees.[39] Finding both union officers to be employees not
belonging to the rank-and-file, their membership in the Union has become
4. Recommends his/her colleagues and serves as channel questionable, rendering the Union inutile to represent their cause.
between teachers in the department the principal and/or director.[37]
Since the strike has been declared as illegal based on the foregoing
discussion, we need not dwell on its legality with respect to the means
employed by the Union.

Finally, there is neither legal nor factual justification in awarding


backwages to some union officers who have lost their employment status, in
light of our finding that the strike is illegal. The ruling of the NLRC is thus upheld
on this point. We are also satisfied with the disposition of the NLRC that
mandates that Llagas and Javier (or her heirs) receive their retirement benefits.

WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of


the National Labor Relations Commission in NLRC NCR CC No. L-000028-93 is
REINSTATED.

SO ORDERED.
FIRST DIVISION In this capacity, your principal responsibility is to organize, develop, manage, and
maintain a sales division and a full complement of agencies and Health
Consultants (HealthCons) and to submit such number of enrollments and revenue
[G.R. No. 145443. March 18, 2005] attainments as may be required of your position in accordance with pertinent
Company policies and guidelines. In pursuit of this objective, you are hereby
tasked with the responsibilities of recruiting, training and directing your
Supervising Associates (SAs) and the Health Consultants under their respective
RAQUEL P. CONSULTA, petitioner, vs. COURT OF APPEALS, agencies, for the purpose of promoting our corporate Love Mission.
PAMANA PHILIPPINES, INC., RAZUL Z. REQUESTO, and
ALETA TOLENTINO, respondents. In the performance of such duties, you are expected to uphold and promote the
Companys interests and good image and to abide by its principles and established
DECISION norms of conduct necessary and appropriate in the discharge of your functions.
CARPIO, J.: The authority as MA likewise vests upon you command responsibility for the
actions of your SAs and HealthCons; the Company therefore reserves the right to
debit your account for any accountabilities/financial obligations arising therefrom.
The Case
By your acceptance of this appointment, it is understood that you must represent
This is a petition for review assailing the Decision of 28 April 2000 and
[1]
the Company on an exclusive basis, and must not engage directly or indirectly in
Resolution of 9 October 2000 promulgated by the Court of Appeals activities, nor become affiliated in official or unofficial capacity with companies or
(appellate court) in CA-G.R. SP No. 50462. The appellate court reversed
[2]
organizations which compete or have the same business as Pamana. It is further
the Resolution of the National Labor Relations Commission (NLRC) which understood that his [sic] self-inhibition shall be effective for a period of one year
in turn affirmed the Labor Arbiters Decision. from date of official termination with the Company arising from any cause
whatsoever.

The Antecedent Facts In consideration of your undertaking the assignment and the accompanying duties
and responsibilities, you shall be entitled to compensation computed as follows:

Pamana Philippines, Inc. (Pamana) is engaged in health care business. On Initial Membership Fee Entrance Fee 5%
Raquel P. Consulta (Consulta) was a Managing Associate of Pamana.
Consultas appointment dated 1 December 1987 states: Medical Fee 6%

We are pleased to formally confirm your appointment and confer upon you the On Subsequent Membership Fee 6%
authority as MANAGING ASSOCIATE (MA) effective on December 1, 1987 up
to January 2, 1988. Your area of operation shall be within Metro Manila. You are likewise entitled to participate in sales contests and such other incentives
that may be implemented by the Company.
This appointment is on a non-employer-employee relationship basis, and shall be ACCORDINGLY, respondent is hereby ordered to pay complainant her unpaid
in accordance with the Company Guidelines on Appointment, Reclassification and commission to be computed as against actual transactions between respondent
Transfer of Sales Associates. [3]
PAMANA and the contracting Department of U.S. Naval Supply Depot upon
presentation of pertinent document.
Sometime in 1987, Consulta negotiated with the Federation of Filipino
Civilian Employees Association (FFCEA) working at the United States Subic Respondent is further ordered to pay ten (10%) percent attorneys fees.
Naval Base for a Health Care Plan for the FFCEA members. Pamana issued
Consulta a Certification dated 23 November 1987, as follows:
[4] SO ORDERED. [6]

This certifies that the Emerald Group under Ms. Raquel P. Consulta, as Managing Pamana, Requesto and Tolentino (Pamana et al.) appealed the Decision
Consultant, is duly authorized to negotiate for and in behalf of PAMANA with the of the Labor Arbiter.
Federation of Filipino Civilian Employees Association covering all U.S. facilities In a Resolution promulgated on 22 July 1994, the NLRC dismissed the
[7]

in the Philippines, the coverage of FFCEA members under the Pamana Golden appeal and affirmed the Decision of the Labor Arbiter. In its Order
Care Health Plans. promulgated on 3 October 1994, the NLRC denied the motion for
reconsideration of Pamana et al.
Upon such negotiation and eventual execution of the contract agreements,
entitlements of all benefits due the Emerald Group in its [sic] entirely including its Pamana et al. filed a petition for certiorari before this Court. In
[sic] Supervising Consultants and Health Consultants, by of commissions, over- compliance with this Courts resolution dated 6 February 1995, the Office of
rides and other package of benefits is hereby affirmed, obligated and confirmed as the Solicitor General submitted a Manifestation in Lieu of Comment praying
long as the contracts negotiated and executed are in full force and effect, including to grant the petition on the ground that Consulta was not an employee of
any and all renewals made. And provided further that the herein authorized Pamana. On 23 November 1998, this Court referred the case to the appellate
consultants remain in active status with the Pamana Golden Care sales group. [5] court pursuant to St. Martin Funeral Home v. NLRC. [8]

On 4 March 1988, Pamana and the U.S. Naval Supply Depot signed the
FFCEA account. Consulta, claiming that Pamana did not pay her The Decision of the Appellate Court
commission for the FFCEA account, filed a complaint for unpaid wages or
commission against Pamana, its President Razul Z. Requesto (Requesto), In its Decision promulgated on 28 April 2000, the appellate court
and its Executive Vice-President Aleta Tolentino (Tolentino). reversed the NLRC Decision. The appellate court ruled that Consulta was a
commission agent, not an employee of Pamana. The appellate court also
ruled that Consulta should have litigated her claim for unpaid commission in
The Rulings of the Labor Arbiter and the NLRC an ordinary civil action.
Hence, Consultas recourse to this Court.
In a Decision promulgated on 23 June 1993, Labor Arbiter Alex Arcadio
Lopez ruled, as follows:
The Issues Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means
The issues are: or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The
1. Whether Consulta was an employee of Pamana. first, which aim only to promote the result, create no employer-employee
2. Whether the Labor Arbiter had jurisdiction over Consultas claim for unpaid relationship unlike the second, which address both the result and the means used to
commission. achieve it.

In the present case, the power to control is missing. Pamana tasked


The Ruling of the Court Consulta to organize, develop, manage, and maintain a sales division,
submit a number of enrollments and revenue attainments in accordance with
We affirm the Decision of the appellate court. Consulta was an company policies and guidelines, and to recruit, train and direct her
independent agent and not an employee of Pamana. Supervising Associates and Health Consultants. However, the manner in
[12]

which Consulta was to pursue these activities was not subject to the control
of Pamana. Consulta failed to show that she had to report for work at definite
The Four-Fold Test hours. The amount of time she devoted to soliciting clients was left entirely
to her discretion. The means and methods of recruiting and training her sales
In Viaa v. Al-Lagadan, the Court first laid down the four-fold test to
[9] associates, as well as the development, management and maintenance of
determine the existence of an employer-employee relationship. The four her sales division, were left to her sound judgment.
elements of an employer-employee relationship, which have since been Consulta claims that the documents she submitted show that Pamana
adopted in subsequent jurisprudence, are (1) the power to hire; (2) the
[10]
had control on the conduct of her work and the means and methods to
payment of wages; (3) the power to dismiss; and (4) the power to control. accomplish the work. However, the documents only prove the absence of
The power to control is the most important of the four elements. the power to control. The Minutes of the meeting on 31 May 1988 of the
In Insular Life Assurance Co., Ltd. v. NLRC, the Court explained the
[11]
Managing Associates with Fely Whitfield, Vice-President for Sales of
scope of the power to control, thus: Pamana, reflect the following:

x x x It should, however, be obvious that not every form of control that the hiring At this point Mrs. Whitfield gave some pointers on recruitment and selling
party reserves to himself over the conduct of the party hired in relation to the techniques and reminded the group that the success of an agency is still people.
services rendered may be accorded the effect of establishing an employer- The more recruits you have the better is your chance to achieve your quota.
employee relationship between them in the legal or technical sense of the term. A
She also announced June be made a recruitment month, and told the MAs to
line must be drawn somewhere, if the recognized distinction between an employee
remind their associates that if you cannot sell to a prospect then recruit him or her.
and an individual contractor is not to vanish altogether. Realistically, it would be a
rare contract of service that gives untrammelled freedom to the party hired and
eschews any intervention whatsoever in his performance of the engagement.
She also discussed extensively the survey method of selling and recruitment and Clearly, the Managing Associates only received suggestions from
that the sales associates should be more aggressive in their day to day sales Pamana on how to go about their recruitment and sales activities. They could
activity. She reminded the MAs to fill up their recruitment requirements to be adopt the suggestions but the suggestions were not binding on them. They
able to participate in the monthly and quarterly contest. could adopt other methods that they deemed more effective.

xxx Further, the Managing Associates had to ask the Management of


Pamana to shoulder half of the advertisement cost for their recruitment
4. Recruitment Campaign campaign. They shelled out their own resources to bolster their recruitment.
They shared in the payment of the salaries of their secretaries. They gave
In connection with the Recruitment Campaign for June, Mr. R. Canon requested
[13] cash incentives to their sales associates from their own pocket. These
for Management support. He suggested that a recruitment Advertisement be placed circumstances show that the Managing Associates were independent
in a leading Metropolitan daily Newspaper. The cost of which was unanimously contractors, not employees, of Pamana.
suggested by MAs that Management should share at least 50%. Finally, Pamana paid Consulta not for labor she performed but only for
the results of her labor. Without results, Consultas labor was her own
[16]

5. MAs agreed to pay in advance their share for the salary of the MAs burden and loss. Her right to compensation, or to commission, depended on
Secretary. (Emphasis supplied)
[14]
the tangible results of her work - whether she brought in paying recruits.
[17]

Consultas appointment paper provides:


The Minutes of the 7 June 1988 meeting reflect the following:
III. PRODUCTION & RECRUITMENT INCENTIVES In consideration of your undertaking the assignment and the accompanying duties
and responsibilities, you shall be entitled to compensation computed as follows:
To help the MAs in their recruitment drive Mrs. Whitfield suggested some
incentives to be undertaken by the MAs like (1) cash incentives for associates that On Initial Membership Fee Entrance Fee 5%
bring in a recruit, (2) cash incentives based on production brought in by these new
recruits. Medical Fee 6%

She said that MAs, as businessm[e]n should invest time, effort & money to their On Subsequent Membership Fee 6%
work, because it will redown [sic] to their own good anyway, that the success of
their agency should not depend solely on what management could give as You are likewise entitled to participation in sales contests and such other
incentives but also on incentives of MAs within their agencies. It should be a incentives that may be implemented by the Company. [18]

concerted effort.
The Guidelines on Appointment of Associates show that a Managing
After a thorough discussion on the pros & cons of the suggestions it was agreed Associate received the following commissions and bonuses:
that a P10.00 per recruit be given to the associate that will recruit and an additional
3. Compensation Package of Regular MAs
cash prize based on production of these new recruits. [15]
Regular MAs shall be entitled to the following compensation and benefits: must not engage directly or indirectly in activities of other companies that
compete with the business of Pamana. However, the fact that the
3.1 Compensation appointment required Consulta to solicit business exclusively for Pamana
did not mean that Pamana exercised control over the means and methods
a) Personal Production of Consultas work as the term control is understood in labor
jurisprudence. Neither did it make Consulta an employee of Pamana.
[20]

Individual/Family Institutional Acct. Pamana did not prohibit Consulta from engaging in any other business, or
from being connected with any other company, for as long as the business
commission 30% 30% or company did not compete with Pamanas business.
bonus 40% - The prohibition applied for one year after the termination of the contract
with Pamana. In one of their meetings, one of the Managing Associates
b) Group Production reported that he was transferring his sales force and account from another
company to Pamana. The exclusivity provision was a reasonable restriction
[21]

overriding commission 6% 6% designed to prevent similar acts prejudicial to Pamanas business interest.
Article 1306 of the Civil Code provides that [t]he contracting parties may
bonus 5% - establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs,
3.2 Benefits public order, or public policy.
Participation in all sales contests corresponding to the MA position plus
any such other benefits as may be provided for the MA on regular status. [19]
Jurisdiction over Claim for Unpaid Commission
Aside from commissions, bonuses and other benefits that depended
solely on actual sales, Pamana did not pay Consulta any compensation for There being no employer-employee relationship between Pamana and
managing her sales division, or for recruiting and training her sales Consulta, the Labor Arbiter and the NLRC had no jurisdiction to entertain
consultants. As a Managing Associate, she was only entitled to and rule on Consultas money claim.
commissions, bonuses and other benefits, which depended solely on her Article 217 of the Labor Code provides:
sales and on the sales of her group.
ART. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as
otherwise provided under this Code the Labor Arbiters shall have original and
The Exclusivity Provision exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
Consultas appointment had an exclusivity provision. The appointment absence of stenographic notes, the following cases involving all workers, whether
provided that Consulta must represent Pamana on an exclusive basis. She agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective


bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements.

Consulta filed her action under Article 217(a)(6) of the Labor Code.
However, since there was no employer-employee relationship between
Pamana and Consulta, the Labor Arbiter should have dismissed Consultas
claim for unpaid commission. Consultas remedy is to file an ordinary civil
action to litigate her claim.
WHEREFORE, the petition is DISMISSED and the Decision of the Court
of Appeals in CA-G.R. SP No. 50462 is AFFIRMED in toto.
SO ORDERED.
SECOND DIVISION respondent in G.R. No. 115755 and petitioner in G.R. No. 116101. He is the owner of
Manila Glass Supply.
The factual background of this case as summarized by the labor arbiter is as
[G.R. No. 115755. December 4, 2000] follows:

That she [Damasco] was employed by respondents [Manila Glass Supply


and Bonifacio K. Sia] as Sales Clerk on January 30, 1992, receiving lately
IMELDA B. DAMASCO, petitioner, vs. NATIONAL LABOR a daily wage of P140.00; that as sales clerk, she was ordered to do almost
RELATIONS COMMISSION, MANILA GLASS SUPPLY and all the works related to the glass business of respondents including the
BONIFACIO K. SIA, respondents. cutting, sales and delivery of glass as well as balancing, accounting and
checking of capital and profits every end of the month; that she was made
to work from 8:30 in the morning up to 9:30 in the evening continuously
[G.R. No. 116101. December 4, 2000] from Monday to Sunday without having been paid overtime pay, rest day
pay and holiday pay; that during the period of her employment, she was not
paid any 13th month pay as well as five (5) days service incentive leave
pay; that on August 28, 1992 at around 7:00 oclock in the evening, while
BONIFACIO K. SIA and MANILA GLASS SUPPLY, petitioners, she was working, respondent Bonifacio Sia called her up and told her to
vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR finish all her works that night, but she told respondent that she would not
ARBITER DOMINADOR B. SALUDARES, DEPUTY SHERIFF be able to finish them all because it was already late; that she then left
ANTONIO T. DATU and IMELDA B. DAMASCO, respondents. respondents room but respondent called her again and asked her why she
could not finish what she was told to do, to which complainant [Damasco]
DECISION answered that it was already late and there were still a lot of things to do;
QUISUMBING, J.: that respondent asked her what she was doing since he (respondent) left
for Manila, to which complainant told him that she was attending to the
These two petitions for certiorari seek to annul the decision promulgated by public sales, to the field and to other things relative to the business of respondent,
respondent National Labor Relations Commission (NLRC) on March 21, 1994 in to which respondent got mad at her; that respondent asked complainant
NLRC CA No. L-001159, and its resolution dated May 11, 1994, which denied why she was not teaching her two (2) other co-workers on what to do, and
petitioners respective motions for reconsideration.
she answered she would not do it anymore because if the other co-workers
Ms. Imelda Damasco is the petitioner in G.R. No. 115755 and private respondent should commit mistakes in accounting, she was the first one to be
in G.R. No. 116101. She was a regular sales clerk in Manila Glass Supply in Olongapo lambasted by respondent and even required to share in paying the
City. shortages; that when respondent heard this, he picked up and swiped an
Manila Glass Supply is private respondent in G.R. No. 115755 and petitioner in ashtray in front of complainant and it broke, after which, he threw some
G.R. No. 116101. It is a sole proprietorship engaged in the sale of glass with main notebooks at complainant who began to tremble in fear and her whole body
store in Olongapo City and branch in Metro Manila. Bonifacio K. Sia is private shook; respondent ordered her to go out of the room, lambasted her again
and told her that he (respondent)does not want to see her face anymore illegal dismissal and non-payment of overtime pay.[2] However, in her complaint
(ayaw ko nang makita ang pagmumukha mo rito); that after respondent affidavit and position paper filed later before the labor arbiter, Damasco additionally
had left, complainant again trembled and she could not prevent herself charged her employer with non-payment of 13th month pay, service incentive leave
pay, holiday pay and night shift differential. [3]
from crying, her co-workers applied alcohol on her because her body was
cold, given water to drink and after about an hour, complainant decided not On September 2, 1993, the labor arbiter rendered judgment in favor of Ms.
to finish her work anymore because she felt weak; that one of his co- Damasco. The labor official declared that Sia has not shown any just or authorized
workers, Alma, brought her home and since then, she did not report for cause in terminating the services of Damasco, except for wild, generalized and self-
serving statements that Damasco committed serious misconduct or willful
work anymore because she developed a phobia of respondent
disobedience of the lawful orders in connection with her work. The labor arbiter also
ruled that Damasco is entitled to 13th month pay, service incentive leave pay, holiday
Disputing the claim of complainant, respondents maintain as follows: That pay, overtime pay, and disposed of the case, thus:
sometime in the late part of August 1992, complainant was instructed by
respondent to report for work in their store in Metro Manila as there is a WHEREFORE, premises considered, judgment is hereby entered in favor
necessity for her detail thereat for reasons that the employees there are of the complainant and against respondents, ordering the latter, as follows:
new and do not have the experience and know-how in running the store
specifically with regards (sic) to the sale of glass; that complainant 1.To pay the total sum of P112,570.32 representing unpaid 13th month
manifested her objection to such detail for reasons that her husband is pay, holiday pay, overtime and premiums pay, five (5) days service
working in Olongapo City and she does not want to work in Manila; that incentive leave pay, backwages and separation pay of complainant;
thereafter, complainant did not report for work in the respondents store in
Olongapo City, so respondent sent some of his employees to the house of 2.To pay attorneys fees in the sum of P11,257.00 which is ten (10%)
complainant but were told that she is sick and cannot report for work; that percent of the award; and
sometime in the first week of January 1993, respondent received a copy of
the instant complaint filed by complainant; that immediately, respondent 3.All other claims or issues, for want of substantial evidence, are hereby
thru counsel sent a letter to complainant directing her to report for work on DISMISSED.
January 13, 1993 at its store in Olongapo City; that complainant ignored
the letter despite receipt thereof, hence, on January 15, 1993, respondent SO DECIDED. [4]

again sent complainant another letter directing her to report for work on
January 22, 1993 but just the same, complainant failed and refused to On appeal, the NLRC upheld the labor arbiters finding that Damasco was illegally
dismissed but modified the labor officials judgment, thus:
report for work; that it is not true as claimed by complainant that
respondent shouted at her and swiped an ashtray from the table and threw
PREMISES CONSIDERED, the Decision of September 2, 1993, is hereby
at her some notebooks. [1]
MODIFIED. Respondents are directed to pay complainant the following:
On December 7, 1992, Damasco filed before the NLRC Regional Arbitration
Branch in San Fernando, Pampanga, a complaint against Bonifacio Sia and Manila I. Backwages .. P43,680.00
Glass Supply (jointly referred hereafter as Sia for easy reference). In the one-page
complaint form of the NLRC, Damasco indicated that she is suing her employer for II. Separation Pay 36,400.00
III. 13th month pay . 10,920.00 DISRCRETION, AMOUNTING TO LACK OR EXCESS OF
JURISDICTION
IV. Service Incentive Leave Pay 2,100.00
B
V. Holiday Pay .. 4,200.00
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED
VI. Attorneys fees .. 1,722.00 GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR
EXCESS OF JURISDICTION, IN AFFIRMING, ALBEIT WITH
-------------- MODIFICATIONS, THE LABOR ARBITERS PATENTLY NULL AND
VOID DECISION. [8]

T O T A L ----- P99,022.00
In our view, the crucial issue for resolution is whether or not the NLRC committed
SO ORDERED. [5] grave abuse of discretion in affirming the decision of the labor arbiter which held that
Damasco was illegally dismissed from her job.
Both parties filed motions for reconsideration which were denied. On August 1, 1994, we decided to consolidate the two petitions inasmuch as they
On July 4, 1994, the NLRC issued an entry of judgment stating that the aforesaid involve the same parties and intertwined issues. Likewise, we issued a temporary
judgment of the labor tribunal has become final and executory. restraining order, effective immediately and continuing until further orders from this
Court, enjoining the parties concerned from implementing the subject writ of execution
On July 7, 1994, the labor arbiter, upon motion of Damasco, issued a writ of and notice of garnishment dated July 7 and 8, 1994, which were respectively issued
execution. In compliance therewith, public respondent deputy sheriff issued the next by the labor arbiter and deputy sheriff of NLRC Regional Arbitration Branch III, San
day a notice of garnishment addressed to Far East Bank and Trust Company, Fernando, Pampanga.[9]
Olongapo City, against all credits and deposits of Bonifacio Sia and/or Manila Glass
Supply maintained in said bank, sufficient to cover the monetary award in favor of We note that both petitioners did not comply with the rule on certification against
Damasco.[6] forum shopping. The certifications in their respective petitions were executed by their
lawyers, which is not correct.[10] The certification of non-forum shopping must be by the
In her petition, Damasco alleged that the NLRC committed grave abuse of petitioner or a principal party and not the attorney. This procedural lapse on the part
discretion: of petitioners could have warranted the outright dismissal of their actions.[11]

IN DELETING THE AWARD FOR OVERTIME PAY AND REDUCING THE But, the Court recognizes the need to resolve these two petitions on their merits
as a matter of social justice involving labor and capital. After all, technicality should
ATTORNEYS FEES IN FAVOR OF PETITIONER. [7]

not be allowed to stand in the way of equitably and completely resolving herein the
rights and obligations of these parties.[12] Moreover, we must stress that technical rules
In his memorandum, Sia raised the following issues for resolution, thus:
of procedure in labor cases are not to be strictly applied if the result would be
A detrimental to the working woman.[13]
Sia contends that he was deprived of his right to due process as the labor arbiter
WHETHER OR NOT PUBLIC RESPONDENT LABOR ARBITER
failed to conduct a hearing for the reception of evidence. He also claims that the labor
SALUDARES DEPRIVED PETITIONERS OF THEIR RIGHT TO DUE arbiters finding that Damasco was illegally dismissed is not supported by substantial
PROCESS AND THUS COMMITTED GRAVE ABUSE OF
evidence. On the contrary, Sia insists, Damasco abandoned her work as she refused decision of the NLRC which raise factual issues because findings of agencies
to be detailed at her employers store in Metro Manila. exercising quasi-judicial functions are accorded not only respect but even finality aside
from the consideration that this Court is not a trier of facts. [22] In any case, in our view,
Sias contentions are bereft of merit. His words cannot hide the oppressive acts
the labor arbiter used every reasonable means to ascertain the facts by giving the
obviously directed to deprive Ms. Damasco of her employment and erode her dignity
parties ample opportunity to present evidence. It is worth stressing that in
as a worker.
controversies between a worker and her employer doubts reasonably arising from
It is now axiomatic that the essence of due process in administrative proceedings evidence or in the interpretation of agreements should be resolved in the formers
is simply an opportunity to explain ones side or an opportunity to seek reconsideration favor.[23] Thus, the labor arbiter had reasonable ground to sustain the version of Ms.
of the action or ruling complained of.[14]A formal or trial-type hearing is not at all times Damasco on how she was unceremoniously dismissed from her job. Furthermore, Sia
and in all instances essential to due process, the requirements of which is satisfied did not quite succeed to convince the NLRC to rule otherwise. Finally, the mere fact
where parties are afforded fair and reasonable opportunity to explain their side of the that the worker seeks reinstatement and backpay directly rebuts the employers bare
controversy at hand.[15] claim of abandonment by the worker of his employment.
As noted by the Solicitor General and petitioner Damasco, the labor arbiter set the Thus, going now to the specific issue of abandonment, we find no merit in Sias
case several times for preliminary conference but the parties failed to reached an allegation that Ms. Damasco abandoned her job. To constitute abandonment, two
amicable settlement.[16] The labor arbiter then ordered the parties to submit their elements must concur: (1) the failure to report for work or absence without valid or
position papers. In compliance therewith, the parties submitted position papers where justifiable reason, and (2) a clear intention to sever the employer-employee
they set out and argued the factual as well as the legal bases of their position. relationship, with the second element as the more determinative factor when
Damasco filed her position paper, computation of money claims and affidavit. For his manifested by some overt acts.[24] Abandoning ones job means the deliberate,
part, Sia filed his position paper and affidavit. Damasco, in turn, filed her affidavit in unjustified refusal of the employee to resume his employment and the burden of proof
reply to the affidavit of Sia. After both parties had filed their replies, the case was is on the employer to show a clear and deliberate intent on the part of the employee
deemed submitted for resolution as the labor arbiter did not find it necessary to to discontinue employment.
conduct a trial-type hearing. Note that the filing of position papers and supporting
In this case, there are no overt acts established by Sia from which we can infer
documents fulfills the requirements of due process.[17] Further, it is within the discretion
the clear intention of Damasco to desist from employment. Sias letters dated January
of the labor arbiter to determine if there is a need for a hearing. [18] Thus, we cannot
7 and 15, 1993, for Damasco to report for work deserve scant consideration. Note that
subscribe to Sias posturing that the labor arbiter gravely abused its discretion when
those orders were made four months after Damasco was told not to show herself again
he dispensed with the hearing to receive further evidence. [19]
in the store, and after Sia had received a copy of Damascos complaint for illegal
Moreover, Sia was given additional opportunity to argue his case on appeal before dismissal. It is indeed highly incredible for an employer to require his employee without
the NLRC in a memorandum and motion for reconsideration which pleadings were an approved leave to report to work only after four months of absence. If at all, the
likewise considered by that labor agency in the course of resolving the case. Sia charge of abandonment is disingenuous to say the least. Moreover, as noted by the
cannot thereafter interpose lack of due process since he was given sufficient time and NLRC, it was unlikely that Damasco had abandoned her job for no reason at all
ample chances to be heard in the present case. Consequently, the alleged defect in considering the hardship of the times. In addition, if Damasco had truly forsaken her
the proceedings in the labor arbiter, if there be any, should be deemed cured.[20] All job, she would not have bothered to file a complaint for illegal dismissal against her
told, Sias due process argument must fail. employer and prayed for reinstatement. An employee who forthwith took steps to
protect her layoff could not by any logic be said to have abandoned her work.[25]
On Sias assertion that the labor arbiters finding is not supported by ample
evidence, suffice it to state that judicial review of labor cases does not go as far as to As to Sias allegation that Ms. Damasco committed serious misconduct or willful
evaluate the sufficiency of evidence upon which the labor arbiter and NLRC based disobedience of lawful order in connection with her work, we find no tenable
their determinations.[21] Moreover, this Court does not review supposed errors in the support. Even if Sia directed her to be assigned at his store in Metro Manila, her act
of refusing to be detailed in Metro Manila could hardly be characterized a willful or Still, even assuming that Damasco received a wage which is higher than the
intentional disobedience of her employers order. It was Sias order that appears to us minimum provided by law, it does not follow that any additional compensation due her
whimsical if not vindictive. Reassignment to Metro Manila is prejudicial to Ms. can be offset by her pay in excess of the minimum, in the absence of an express
Damasco, as she and her family are residing in Olongapo City. This would entail agreement to that effect. Moreover, such arrangement, if there be any, must appear
separation from her family and additional expenses on her part for transportation and in the manner required by law on how overtime compensation must be determined.
food. Damascos reassignment order was unreasonable, considering the attendant For it is necessary to have a clear and definite delineation between an employees
circumstances.[26] regular and overtime compensation to thwart violation of the labor standards provision
of the Labor Code.[31]
In sum, we conclude there is no valid and just cause to terminate the employment
of Ms. Damasco. The NLRC did not gravely abuse its discretion in upholding the With regard to the award of attorneys fees the ten percent (10%) attorneys fees is
finding of the labor arbiter that Ms. Damascos dismissal was not for cause. provided for in Article 111 of the Labor Code. Considering the circumstances of this
case, said award is in order.
An employee who is unjustly dismissed from work is entitled to reinstatement
without loss of seniority rights and other privileges as well as to his full backwages, WHEREFORE, in G.R. No. 115755, the petition is GRANTED. The judgment of
inclusive of allowances, and to other benefits or their monetary equivalent computed the Labor Arbiter in favor of petitioner Imelda B. Damasco dated September 2, 1993
from the time his compensation was withheld from him up to the time of his actual is REINSTATED in full. In G.R. No. 116101, the petition of Bonifacio K. Sia and Manila
reinstatement.[27] Glass Supply is DISSMISSED for lack of merit. Costs against petitioners Bonifacio K.
Sia and Manila Glass Supply.
However, in our view, the circumstances obtaining in this case do not warrant the
reinstatement of Ms. Damasco. Antagonism caused a severe strain in the relationship SO ORDERED.
between her and her employer. A more equitable disposition would be an award of
separation pay equivalent to one (1) months pay for every year of service with the
employer.[28]
Now, as regards Ms. Damascos contention that public respondent gravely abused
its discretion in deleting the award for overtime pay for lack of factual basis, we find
the same impressed with merit. We note that Sia has admitted in his pleadings that
Damascos work starts at 8:30 in the morning and ends up at 6:30 in the evening daily,
except holidays and Sundays. However, Sia claims that Damascos basic salary of
P140.00 a day is more than enough to cover the one hour excess work which is the
compensation they allegedly agreed upon.[29]
Judicial admissions made by parties in the pleadings, or in the course of the trial
or other proceedings in the same case are conclusive, no further evidence being
required to prove the same, and cannot be contradicted unless previously shown to
have been made through palpable mistake or that no such admission was made.[30] In
view of Sias formal admission that Ms. Damasco worked beyond eight hours daily, the
latter is entitled to overtime compensation. No further proof is required. Sia already
admitted she worked an extra hour daily. Thus, public respondent gravely erred in
deleting the award of overtime pay to Ms. Damasco on the pretext that the claim has
no factual basis.
SECOND DIVISION She supervised the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
G.R. No. 162994 September 17, 2004
Even before they got married, Tecson received several reminders from his District Manager
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
vs. prevailed, and Tecson married Bettsy in September 1998.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a
RESOLUTION conflict of interest. Tecson’s superiors reminded him that he and Bettsy should decide which one
of them would resign from their jobs, although they told him that they wanted to retain him as
TINGA, J.: much as possible because he was performing his job well.

Confronting the Court in this petition is a novel question, with constitutional overtones, involving Tecson requested for time to comply with the company policy against entering into a relationship
the validity of the policy of a pharmaceutical company prohibiting its employees from marrying with an employee of a competitor company. He explained that Astra, Bettsy’s employer, was
employees of any competitor company. planning to merge with Zeneca, another drug company; and Bettsy was planning to avail of the
redundancy package to be offered by Astra. With Bettsy’s separation from her company, the
potential conflict of interest would be eliminated. At the same time, they would be able to avail of
This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and
the attractive redundancy package from Astra.
the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2
In August 1999, Tecson again requested for more time resolve the problem. In September 1999,
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not have a milk
(Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training
division, the potential conflict of interest would be eliminated. His application was denied in view
and orientation.
of Glaxo’s "least-movement-possible" policy.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
agrees to study and abide by existing company rules; to disclose to management any existing or
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship poses a possible conflict of
interest, to resign from the company. Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to Glaxo’s
Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until
February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
inform management of any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies. If management perceives a conflict of
interest or a potential conflict between such relationship and the employee’s employment with During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
the company, the management and the employee will explore the possibility of a "transfer to issued samples of products which were competing with similar products manufactured by Astra.
another department in a non-counterchecking position" or preparation for employment outside He was also not included in product conferences regarding such products.
the company after six months.
Because the parties failed to resolve the issue at the grievance machinery level, they submitted
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half (½) month
sales area. pay for every year of service, or a total of ₱50,000.00 but he declined the offer. On November
15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring
as valid Glaxo’s policy on relationships between its employees and persons employed with
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.
Pharmaceuticals3(Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or
NCMB Decision. future relationships with employees of competitor companies, and is therefore not violative of the
equal protection clause. It maintains that considering the nature of its business, the prohibition is
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for based on valid grounds.11
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxo’s policy prohibiting its employees from having personal relationships with According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and
employees of competitor companies is a valid exercise of its management prerogatives. 4 potential conflict of interest. Astra’s products were in direct competition with 67% of the products
sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in Tecson’s case was a valid
Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion was exercise of its management prerogatives.12 In any case, Tecson was given several months to
denied by the appellate court in its Resolution dated March 26, 2004.5 remedy the situation, and was even encouraged not to resign but to ask his wife to resign form
Astra instead.13
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming
the NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying an employee Glaxo also points out that Tecson can no longer question the assailed company policy because
of a competitor company is valid; and (ii) the Court of Appeals also erred in not finding that when he signed his contract of employment, he was aware that such policy was stipulated
Tecson was constructively dismissed when he was transferred to a new sales territory, and therein. In said contract, he also agreed to resign from respondent if the management finds that
deprived of the opportunity to attend products seminars and training sessions. 6 his relationship with an employee of a competitor company would be detrimental to the interests
of Glaxo.14
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from
distinctions among employees on account only of marriage. They claim that the policy restricts seminars regarding respondent’s new products did not amount to constructive dismissal.
the employees’ right to marry.7
It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-
They also argue that Tecson was constructively dismissed as shown by the following Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area.
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area to Glaxo asserts that in effecting the reassignment, it also considered the welfare of Tecson’s
the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded family. Since Tecson’s hometown was in Agusan del Sur and his wife traces her roots to Butuan
from attending seminars and training sessions for medical representatives, and (4) he was City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would
prohibited from promoting respondent’s products which were competing with Astra’s products. 8 be favorable to him and his family as he would be relocating to a familiar territory and minimizing
his travel expenses.15
In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees
from having a relationship with and/or marrying an employee of a competitor company is a valid In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-
exercise of its management prerogatives and does not violate the equal protection clause; and asthma drug was due to the fact that said product was in direct competition with a drug which
that Tecson’s reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him.
City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal. 9 Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, sales area instead of Naga City because the supplier thought he already transferred to Butuan). 16
it has a genuine interest in ensuring that its employees avoid any activity, relationship or interest
that may conflict with their responsibilities to the company. Thus, it expects its employees to The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
avoid having personal or family interests in any competitor company which may influence their ruling that Glaxo’s policy against its employees marrying employees from competitor companies
actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also is valid, and in not holding that said policy violates the equal protection clause of the
aimed at preventing a competitor company from gaining access to its secrets, procedures and Constitution; (2) Whether Tecson was constructively dismissed.
policies.10
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners the Management. If management perceives a conflict or potential conflict of interest,
provides: every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-counter
… checking position, or by career preparation toward outside employment after Glaxo
Wellcome. Employees must be prepared for possible resignation within six (6) months, if
10. You agree to disclose to management any existing or future relationship you may no other solution is feasible.19
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management discretion, No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
you agree to resign voluntarily from the Company as a matter of Company policy. prohibiting an employee from having a relationship with an employee of a competitor company is
a valid exercise of management prerogative.
…17
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
The same contract also stipulates that Tescon agrees to abide by the existing company rules of other confidential programs and information from competitors, especially so that it and Astra are
Glaxo, and to study and become acquainted with such policies. 18 In this regard, the Employee rival companies in the highly competitive pharmaceutical industry.
Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest:
The prohibition against personal or marital relationships with employees of competitor
1. Conflict of Interest companies upon Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests against the possibility that a
Employees should avoid any activity, investment relationship, or interest that may run
competitor company will gain access to its secrets and procedures.
counter to the responsibilities which they owe Glaxo Wellcome.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
Specifically, this means that employees are expected:
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to expansion and growth. 20 Indeed, while our
a. To avoid having personal or family interest, financial or otherwise, in any laws endeavor to give life to the constitutional policy on social justice and the protection of labor,
competitor supplier or other businesses which may consciously or unconsciously it does not mean that every labor dispute will be decided in favor of the workers. The law also
influence their actions or decisions and thus deprive Glaxo Wellcome of recognizes that management has rights which are also entitled to respect and enforcement in the
legitimate profit. interest of fair play.21

b. To refrain from using their position in Glaxo Wellcome or knowledge of As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
Company plans to advance their outside personal interests, that of their relatives, confidentiality and protect a competitive position by even-handedly disqualifying from jobs male
friends and other businesses. and female applicants or employees who are married to a competitor. Consequently, the court
ruled than an employer that discharged an employee who was married to an employee of an
c. To avoid outside employment or other interests for income which would impair active competitor did not violate Title VII of the Civil Rights Act of 1964. 23 The Court pointed out
their effective job performance. that the policy was applied to men and women equally, and noted that the employer’s business
was highly competitive and that gaining inside information would constitute a competitive
d. To consult with Management on such activities or relationships that may lead advantage.
to conflict of interest.
The challenged company policy does not violate the equal protection clause of the Constitution
1.1. Employee Relationships as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its
Employees with existing or future relationships either by consanguinity or affinity with co- authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
employees of competing drug companies are expected to disclose such relationship to equal protection clause erects no shield against merely private conduct, however, discriminatory
or wrongful.25 The only exception occurs when the state29 in any of its manifestations or actions Coordinator in her employer-company which requires her to work in close coordination
has been found to have become entwined or involved in the wrongful private with District Managers and Medical Representatives. Her duties include monitoring sales
conduct.27 Obviously, however, the exception is not present in this case. Significantly, the of Astra products, conducting sales drives, establishing and furthering relationship with
company actually enforced the policy after repeated requests to the employee to comply with the customers, collection, monitoring and managing Astra’s inventory…she therefore takes
policy. Indeed, the application of the policy was made in an impartial and even-handed manner, an active participation in the market war characterized as it is by stiff competition among
with due regard for the lot of the employee. pharmaceutical companies. Moreover, and this is significant, petitioner’s sales territory
covers Camarines Sur and Camarines Norte while his wife is supervising a branch of her
In any event, from the wordings of the contractual provision and the policy in its employee employer in Albay. The proximity of their areas of responsibility, all in the same Bicol
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships Region, renders the conflict of interest not only possible, but actual, as learning by one
between its employees and those of competitor companies. Its employees are free to cultivate spouse of the other’s market strategies in the region would be inevitable.
relationships with and marry persons of their own choosing. What the company merely seeks to [Management’s] appreciation of a conflict of interest is therefore not merely illusory and
avoid is a conflict of interest between the employee and the company that may arise out of such wanting in factual basis…31
relationships. As succinctly explained by the appellate court, thus:
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a
The policy being questioned is not a policy against marriage. An employee of the complaint filed by a medical representative against his employer drug company for illegal
company remains free to marry anyone of his or her choosing. The policy is not aimed at dismissal for allegedly terminating his employment when he refused to accept his reassignment
restricting a personal prerogative that belongs only to the individual. However, an to a new area, the Court upheld the right of the drug company to transfer or reassign its
employee’s personal decision does not detract the employer from exercising employee in accordance with its operational demands and requirements. The ruling of the Court
management prerogatives to ensure maximum profit and business success. . . 28 therein, quoted hereunder, also finds application in the instant case:

The Court of Appeals also correctly noted that the assailed company policy which forms part of By the very nature of his employment, a drug salesman or medical representative is
respondent’s Employee Code of Conduct and of its contracts with its employees, such as that expected to travel. He should anticipate reassignment according to the demands of their
signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was business. It would be a poor drug corporation which cannot even assign its
aware of that restriction when he signed his employment contract and when he entered into a representatives or detail men to new markets calling for opening or expansion or to areas
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of where the need for pushing its products is great. More so if such reassignments are part
employment with Glaxo, the stipulations therein have the force of law between them and, thus, of the employment contract.33
should be complied with in good faith."29 He is therefore estopped from questioning said policy.
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan Tecson several chances to eliminate the conflict of interest brought about by his relationship with
City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo
company’s seminar on new products which were directly competing with similar products constantly reminded him about its effects on his employment with the company and on the
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation company’s interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by
resorted to when continued employment becomes impossible, unreasonable, or unlikely; when either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed
there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or its desire to retain Tecson in its employ because of his satisfactory performance and suggested
disdain by an employer becomes unbearable to the employee. 30 None of these conditions are that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated
present in the instant case. The record does not show that Tescon was demoted or unduly requests for more time to resolve the conflict of interest. When the problem could not be resolved
discriminated upon by reason of such transfer. As found by the appellate court, Glaxo properly after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different
exercised its management prerogative in reassigning Tecson to the Butuan City sales area: from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from
employment but only reassigned him to another area where his home province, Agusan del Sur,
. . . In this case, petitioner’s transfer to another place of assignment was merely in was included. In effecting Tecson’s transfer, Glaxo even considered the welfare of Tecson’s
keeping with the policy of the company in avoidance of conflict of interest, and thus family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of
valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch Glaxo.34
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.
Republic of the Philippines deliberation, and inorder to settle the condition of the relevant case law, accepted G.R. No.
SUPREME COURT 110068 as a banc case.
Manila
Deliberating upon the arguments contained in petitioner's Second Motion for Reconsideration, as
EN BANC well as its Motion for Leave to Admit the Second Motion for Reconsideration, and after review of
the doctrines embodied, respectively, in Duplicators and Boie-Takeda, we consider that these
Motions must fail.

G.R. No. 110068 February 15, 1995 The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare
decisis. The Boie-Takeda decision was promulgated a month after this Court, (through its Third
PHILIPPINE DUPLICATORS, INC., petitioner, Division), had rendered the decision in the instant case. Also, the petitioner's (first) Motion for
vs. Reconsideration of the decision dated 10 November 1993 had already been denied, with finality,
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS on 15 December 1993, i.e.; before the Boie-Takeda decision became final on 5 January 1994.
EMPLOYEES UNION-TUPAS, respondents.
Preliminarily, we note that petitioner Duplicators did not put in issue the validity of the Revised
RESOLUTION Guidelines on the Implementary on of the 13th Month Pay Law, issued on November 16, 1987,
by then Labor Secretary Franklin M. Drilon, either in its Petition for Certiorari or in its (First)
Motion for Reconsideration. In fact, petitioner's counsel relied upon these Guidelines and
FELICIANO, J.:
asserted their validity in opposing the decision rendered by public respondent NLRC. Any
attempted change in petitioner's theory, at this late stage of the proceedings, cannot be allowed.
On 11 November 1993, this Court, through its Third Division, rendered a decision dismissing the
Petition for Certiorari filed by petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No.
More importantly, we do not agree with petitioner that the decision in Boie-Takeda is "directly
110068. The Court upheld the decision of public respondent National Labor Relations
opposite or contrary to" the decision in the present (Philippine Duplicators). To the contrary, the
Commission (NLRC), which affirmed the order of Labor Arbiter Felipe T. Garduque II directing
doctrines enunciated in these two (2) cases in fact co-exist one with the other. The two (2) cases
petitioner to pay 13th month pay to private respondent employees computed on the basis of their
present quite different factual situations (although the same word "commissions" was used or
fixed wages plus sales commissions. The Third Division also denied with finality on 15
invoked) the legal characterizations of which must accordingly differ.
December 1993 the Motion for Reconsideration filed (on 12 December 1993) by petitioner.
The Third Division in Durplicators found that:
On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion
for Reconsideration and (b) a Second Motion for Reconsideration. This time, petitioner invoked
the decision handed down by this Court, through its Second Division, on 10 December 1993 in In the instant case, there is no question that the sales commission earned by the
the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la salesmen who make or close a sale of duplicating machines distributed by
Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in G.R. Nos. 92174 and petitioner corporation, constitute part of the compensation or remuneration paid
102552, respectively. In its decision, the Second Division inter alia declared null and void the to salesmen for serving as salesmen, and hence as part of the "wage" or salary
second paragraph of Section 5 (a)1 of the Revised Guidelines issued by then Secretary of Labor of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a
Drilon. Petitioner submits that the decision in the Duplicators case should now be considered as small fixed or guaranteed wage; the greater part of the salesmen's wages or
having been abandoned or reversed by the Boie-Takeda decision, considering that the latter salaries being composed of the sales or incentive commissions earned on actual
went "directly opposite and contrary to" the conclusion reached in the former. Petitioner prays sales closed by them. No doubt this particular galary structure was intended for
that the decision rendered in Duplicators be set aside and another be entered directing the the benefit of the petitioner corporation, on the apparent assumption that thereby
dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union. its salesmen would be moved to greater enterprise and diligence and close more
sales in the expectation of increasing their sales commissions. This, however,
does not detract from the character of such commissions as part of the salary or
In view of the nature of the issues raised, the Third Division of this Court referred the petitioner's
wage paid to each of its salesmen for rendering services to petitioner corporation.
Second Motion for Reconsideration, and its Motion for Leave to Admit the Second Motion for
Reconsideration, to the Court en banc en consulta. The Court en banc, after preliminary
In other words, the sales commissions received for every duplicating machine sold constituted Garcia, 93,753.75 1,294.00 15,528.00
part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for Delfin
doing their job. The portion of the salary structure representing commissions simply comprised
an automatic increment to the monetary value initially assigned to each unit of work rendered by Navarro, 98,618.71 1,266.00 15,192.00
a salesman. Especially significant here also is the fact that the fixed or guaranteed portion of the Ma. Teresa
wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an employee's
total earnings in a year. We note the following facts on record: Ochosa, 66,275.65 1,406.00 16,872.00
Rolano
Salesmen's Total Earnings and 13th Month Pay
For the Year 19862 Quisumbing, 101,065.75 1,406.00 16,872.00
Teofilo
Name of Total Amount Paid Montly Fixed
Salesman Earnings as 13th Month Pay Wages x 123 Rubina, 42,209.73 1,266.00 15,192.00
Emma
Baylon, P76,610.30 P1,350.00 P16,200.00
Benedicto Salazar, 64,643.65 1,238.00 14,856.00
Celso
Bautista 90,780.85 1,182.00 14,184.00
Salvador Sopelario, 52,622.27 1,350.00 16,200.00
Ludivico
Brito, 64,382.75 1,238.00 14,856.00
Tomas Tan, 30,127.50 1,238.00 14,856.00
Leynard
Bunagan, 89,287.75 1,266.00 15,192.00
Jorge Talampas, 146,510.25 1,434.00 17,208.00
Pedro
Canilan, 74,678.17 1,350.00 16,200.00
Rogelio Villarin, 41,888.10 1,434.00 17,208.00
Constancio
Dasig, 54,625.16 1,378,00 16,536.00
Jeordan Carrasco, 50,201.20 403.75*
Cicero
Centeno, 51,854.15 1,266.04 15,192.00
Melecio, Jr. Punzalan, 24,351.89 1,266.00 15,192.00
Reynaldo
De los Santos 73,551.39 1,322.00 15,864.00
Ricardo Poblador, 25,516.75 323.00*
Alberto
del Mundo, 108,230.35 1,406.00 16,872.00
Wilfredo Cruz, 32,950.45 323.00*
Danilo
Baltazar, 15,681.35 323.00* amount of productivity achieved, it cannot be considered part of wages. . . . It is
Carlito also paid on the basis of actual or actual work accomplished. If the desired goal
of production is not obtained, or the amount of actual work accomplished, the
Considering the above circumstances, the Third Division held, correctly, that the sales bonus does not accrue. . . . 8 (Emphasis supplied)
commissions were an integral part of the basic salary structure of Philippine Duplicators'
employees salesmen. These commissions are not overtime payments, nor profit-sharing More recently, the non-demandable character of a bonus was stressed by the Court in Traders
payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre- Royal Bank v.National Labor Relations Commission:9
determined percent of the selling price of the goods sold by each salesman, were properly
included in the term "basic salary" for purposes of computing their 13th month pay. A bonus is a "gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right." (Aragon v. Cebu Portland Cement Co., 61
In Boie-Takeda the so-called commissions "paid to or received by medical representatives of O.G. 4567). "It is something given in addition to what is ordinarily received by or
Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.," were strictly due the recipient." The granting of a bonus is basically a management
excluded from the term "basic salary" because these were paid to the medical representatives prerogative which cannot be forced upon the employer "who may not be obliged
and rank-and-file employees as "productivity bonuses." 4 The Second Division characterized to assume the onerous burden of granting bonuses or other benefits aside from
these payments as additional monetary benefits not properly included in the term "basic salary" the employee's basic salaries or wages . . ." (Kamaya Point Hotel v. NLRC, 177
in computing their 13th month pay. We note that productivity bonuses are generally tied to the SCRA 160 [1989]). 10 (Emphasis supplied)
productivity, or capacity for revenue production, of a corporation; such bonuses closely resemble
profit-sharing payments and have no clear director necessary relation to the amount of work If an employer cannot be compelled to pay a productivity bonus to his employees, it should
actually done by each individual employee. More generally, a bonus is an amount granted and follow that such productivity bonus, when given, should not be deemed to fall within the "basic
paid ex gratia to the employee; its payment constitutes an act of enlightened generosity and self- salary" of employees when the time comes to compute their 13th month pay.
interest on the part of the employer, rather than as a demandable or enforceable obligation.
In Philippine Education Co. Inc. (PECO) v. Court of Industrial Relations,5 the Court explained the It is also important to note that the purported "commissions" paid by the Boie-Takeda Company
nature of a bonus in the following general terms: to its medical representatives could not have been "sales commissions" in the same sense that
Philippine Duplicators paid its salesmen Sales commissions. Medical representatives
As a rule a bonus is an amount granted and paid to an employee for his industry are not salesmen; they do not effect any sale of any article at all. In common commercial
loyalty which contributed to the success of the employer's business and made practice, in the Philippines and elsewhere, of which we take judicial notice, medical
possible the realization of profits. It is an act of generosity of the employer for representatives are employees engaged in the promotion of pharmaceutical products or medical
which the employee ought to be thankful and grateful. It is also granted by an devices manufactured by their employer. They promote such products by visiting identified
enlightened employer to spur the employee to greater efforts for the success of physicians and inform much physicians, orally and with the aid of printed brochures, of the
the business and realization of bigger profits. . . . . From the legal point of view a existence and chemical composition and virtues of particular products of their company. They
bonus is not and mandable and enforceable obligation. It is so when It is made commonly leave medical samples with each physician visited; but those samples are not "sold"
part of the wage or salary or compensation. In such a case the latter would be a to the physician and the physician is, as a matter of professional ethics, prohibited from selling
fixed amount and the former would be a contingent one dependent upon the such samples to their patients. Thus, the additional payments made to Boie-Takeda's medical
realization of profits. . . .6 (Emphasis supplied) representatives were not in fact sales commissions but rather partook of the nature of profit-
sharing bonuses.
In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association,7 the Court
amplified: The doctrine set out in the decision of the Second Division is, accordingly, that additional
payments made to employees, to the extent they partake of the nature of profit-sharing
. . . . Whether or not [a] bonus forms part of waqes depends upon the payments, are properly excluded from the ambit of the term "basic salary" for purposes of
circumstances or conditions for its payment. If it is an additional compensation computing the 13th month pay due to employees. Such additional payments
which the employer promised and agreed to give without any conditions imposed are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the
for its payment, such as success of business or greater production or output, Revised Guidelines Implementing 13th Month Pay.
then it is part of the wage. But if it is paid only if profits are realized or a certain
The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued by ACCORDINGLY, the Motions for (a) Leave to File a Second Motion for Reconsideration and the
former Labor Minister Ople sought to clarify the scope of items excluded in the computation of (b) aforesaid Second Reconsideration are DENIED for lack of merit. No further pleadings will be
the 13th month pay; viz.: entertained.

Sec. 4. Overtime pay, earnings and other remunerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.

We observe that the third item excluded from the term "basic salary" is cast in open ended and
apparently circular terms: "other remunerations which are not part of the basic salary." However,
what particular types of earnings and remuneration are or are not properly included or integrated
in the basic salary are questions to be resolved on a case to case basis, in the light of the
specific and detailed facts of each case. In principle, where these earnings and remuneration are
closely akin to fringe benefits, overtime pay or profit-sharing payments, they are
properly excludedin computing the 13th month pay. However, sales commissions which are
effectively an integral portion of the basic salary structure of an employee, shall be included in
determining his 13th month pay.

We recognize that both productivity bonuses and sales commissions may have an incentive
effect. But there is reason to distinguish one from the other here. Productivity bonuses are
generally tied to the productivity or profit generation of the employer corporation. Productivity
bonuses are not directly dependent on the extent an individual employee exerts himself. A
productivity bonus is something extra for which no specific additional services are rendered by
any particular employee and hence not legally demandable, absent a contractual undertaking to
pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately
related to or directly proportional to the extent or energy of an employee's endeavors.
Commissions are paid upon the specific results achieved by a salesman-employee. It is a
percentage of the sales closed by a salesman and operates as an integral part of such
salesman's basic pay.

Finally, the statement of the Second Division in Boie-Takeda declaring null and void the second
paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by
former Labor Secretary Drilon, is properly understood as holding that that second paragraph
provides no legal basis for including within the term "commission" there used additional
payments to employees which are, as a matter of fact, in the nature of profit-sharing payments or
bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must
be regarded as invalid as having been issued in excess of the statutory authority of the Secretary
of Labor. That same second paragraph however, correctly recognizes that commissions, like
those paid in Duplicators, may constitute part of the basic salary structure of salesmen and
hence should be included in determining the 13th month pay; to this extent, the second
paragraph is and remains valid.
Republic of the Philippines
Supreme Court Promulgated:
Manila

February 8, 2012
THIRD DIVISION x ----------------------------------------------------------------------------------------x

DECISION
EASTERN G.R. No. 185665
TELECOMMUNICATIONS MENDOZA, J.:
PHILIPPINES, INC.,
Petitioner, Present:

Before the Court is a petition for review on certiorari seeking modification of the
June 25, 2008 Decision[1] of the Court of Appeals (CA) and its December 12, 2008
VELASCO, JR., J., Chairperson, Resolution,[2] in CA-G.R. SP No. 91974, annulling the April 28, 2005
Resolution[3] of the National Labor Relations Commission (NLRC) in NLRC-NCR-
- versus - BERSAMIN,
CC-000273-04 entitled In the Matter of the Labor Dispute in Eastern
ABAD, Telecommunications, Philippines, Inc.

MENDOZA, and
The Facts
EASTERN TELECOMS PERLAS-BERNABE, JJ.
EMPLOYEES UNION, As synthesized by the NLRC, the facts of the case are as follows, viz:
Respondent.
Eastern Telecommunications Phils., Inc. (ETPI) is a 16th month bonuses (other than 13th month pay) are
corporation engaged in the business of providing granted.
telecommunications facilities, particularly leasing international
date lines or circuits, regular landlines, internet and data
services, employing approximately 400 employees. The union strongly opposed the deferment in payment of the
bonuses by filing a preventive mediation complaint with the
NCMB on July 3, 2003, the purpose of which complaint is to
Eastern Telecoms Employees Union (ETEU) is the determine the date when the bonus should be paid.
certified exclusive bargaining agent of the companys rank and
file employees with a strong following of 147 regular members.
It has an existing collecti[ve] bargaining agreement with the In the conference held at the NCMB, ETPI reiterated its
company to expire in the year 2004 with a Side Agreement stand that payment of the bonuses would only be made in April
signed on September 3, 2001. 2004 to which date of payment, the union agreed. Thus,
considering the agreement forged between the parties, the said
agreement was reduced to a Memorandum of Agreement. The
In essence, the labor dispute was a spin-off of the union requested that the President of the company should be
companys plan to defer payment of the 2003 14th, 15th and made a signatory to the agreement, however, the latter refused
16th month bonuses sometime in April 2004. The companys to sign. In addition to such a refusal, the company made a
main ground in postponing the payment of bonuses is due to sudden turnaround in its position by declaring that they will no
allege continuing deterioration of companys financial position longer pay the bonuses until the issue is resolved through
which started in the year 2000. However, ETPI while compulsory arbitration.
postponing payment of bonuses sometime in April 2004, such
payment would also be subject to availability of funds.

The companys change in position was contained in a letter


Invoking the Side Agreement of the existing Collective dated April 14, 2004 written to the union by Mr. Sonny Javier,
Bargaining Agreement for the period 2001-2004 between ETPI Vice-President for Human Resources and Administration,
and ETEU which stated as follows: stating that the deferred release of bonuses had been superseded
and voided due to the unions filing of the issue to the NCMB
4. Employment Related Bonuses. The on July 18, 2003. He declared that until the matter is resolved
Company confirms that the 14th, 15th and in a compulsory arbitration, the company cannot and will not
pay any bonuses to any and all union members.
each year (subject bonuses) to its employees from 1975 to 2002, even when it
Thus, on April 26, 2004, ETEU filed a Notice of Strike on did not realize any net profits. ETEU posited that by reason of its long and regular
the ground of unfair labor practice for failure of ETPI to pay the concession, the payment of these monetary benefits had ripened into a
bonuses in gross violation of the economic provision of the company practice which could no longer be unilaterally withdrawn by ETPI.
existing CBA. ETEU added that this long-standing company practice had been expressly
confirmed in the Side Agreements of the 1998-2001 and 2001-2004 Collective
Bargaining Agreements (CBA) which provided for the continuous grant of these
On May 19, 2004, the Secretary of Labor and
bonuses in no uncertain terms. ETEU theorized that the grant of the subject
Employment, finding that the company is engaged in an
bonuses is not only a company practice but also a contractual obligation of ETPI
industry considered vital to the economy and any work
disruption thereat will adversely affect not only its operation but to the union members.
also that of the other business relying on its services, certified
the labor dispute for compulsory arbitration pursuant to Article
ETEU contended that the unjustified and malicious refusal of the
263 (q) of the Labor Code as amended.
company to pay the subject bonuses was a clear violation of the economic
provision of the CBA and constitutes unfair labor practice (ULP). According to
Acting on the certified labor dispute, a hearing was called ETEU, such refusal was nothing but a ploy to spite the union for bringing the
on July 16, 2004 wherein the parties have submitted that the matter of delay in the payment of the subject bonuses to the National
issues for resolution are (1) unfair labor practice and (2) the Conciliation and Mediation Board (NCMB). It prayed for the award of moral and
grant of 14th, 15th and 16th month bonuses for 2003, and exemplary damages as well as attorneys fees for the unfair labor practice
14th month bonus for 2004. Thereafter, they were directed to allegedly committed by the company.
submit their respective position papers and evidence in support
thereof after which submission, they agreed to have the case
considered submitted for decision.[4] On the other hand, ETPI in its position paper,[6] questioned the authority
of the NLRC to take cognizance of the case contending that it had no jurisdiction
over the issue which merely involved the interpretation of the economic
provision of the 2001-2004 CBA Side Agreement. Nonetheless, it maintained
In its position paper,[5] the Eastern Telecoms Employees that the complaint for nonpayment of 14th, 15th and 16th month bonuses for
Union (ETEU) claimed that Eastern Telecommunications Philippines, 2003 and 14th month bonus for 2004 was bereft of any legal and factual basis. It
Inc. (ETPI) had consistently and voluntarily been giving out 14thmonth bonus averred that the subject bonuses were not part of the legally demandable wage
during the month of April, and 15th and 16th month bonuses every December of and the grant thereof to its employees was an act of pure gratuity and
generosity on its part, involving the exercise of management prerogative and compensations in view of the substantial decline in its financial condition.
always dependent on the financial performance and realization of profits. It Likewise, the NLRC found that ETPI was not guilty of the ULP charge elaborating
posited that it resorted to the discontinuance of payment of the bonuses due to that no sufficient and substantial evidence was adduced to attribute malice to
the unabated huge losses that the company had continuously experienced. It the company for its refusal to pay the subject bonuses. The dispositive portion
claimed that it had been suffering serious business losses since 2000 and to of the resolution reads:
require the company to pay the subject bonuses during its dire financial straits
would in effect penalize it for its past generosity. It alleged that the non-
WHEREFORE, premises considered, the instant
payment of the subject bonuses was neither flagrant nor malicious and, hence,
complaint is hereby DISMISSED for lack of merit.
would not amount to unfair labor practice.
SO ORDERED.[7]

Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side
Agreement was a mere affirmation that the distribution of bonuses was Respondent ETEU moved for reconsideration but the motion was denied
discretionary to the company, premised and conditioned on the success of the by the NLRC in its Resolution dated August 31, 2005.
business and availability of cash. It submitted that said bonus provision partook
of the nature of a one-time grant which the employees may demand only during
the year when the Side Agreement was executed and was never intended to Aggrieved, ETEU filed a petition for certiorari[8] before the CA ascribing
cover the entire term of the CBA. Finally, ETPI emphasized that even if it had an grave abuse of discretion on the NLRC for disregarding its evidence which
unconditional obligation to grant bonuses to its employees, the drastic decline allegedly would prove that the subject bonuses were part of the union members
in its financial condition had already legally released it therefrom pursuant to wages, salaries or compensations. In addition, ETEU asserted that the NLRC
Article 1267 of the Civil Code. committed grave abuse of discretion when it ruled that ETPI is not contractually
bound to give said bonuses to the union members.

On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs
complaint and held that ETPI could not be forced to pay the union members the In its assailed June 25, 2008 Decision, the CA declared that the Side
14th, 15th and 16th month bonuses for the year 2003 and the 14th month bonus Agreements of the 1998 and 2001 CBA created a contractual obligation on ETPI
for the year 2004 inasmuch as the payment of these additional benefits was to confer the subject bonuses to its employees without qualification or
basically a management prerogative, being an act of generosity and munificence condition. It also found that the grant of said bonuses has already ripened into
on the part of the company and contingent upon the realization of profits. The a company practice and their denial would amount to diminution of the
NLRC pronounced that ETPI may not be obliged to pay these extra employees benefits. It held that ETPI could not seek refuge under Article 1267
of the Civil Code because this provision would apply only when the difficulty in DISREGARDING THE WELL SETTLED RULE THAT A WRIT OF
fulfilling the contractual obligation was manifestly beyond the contemplation of CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF
the parties, which was not the case therein. The CA, however, sustained the ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION
NLRC finding that the allegation of ULP was devoid of merit. The dispositive AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
portion of the questioned decision reads:

II.
WHEREFORE, premises considered, the instant petition
is GRANTED and the resolution of the National Labor Relations
Commission dated April 28, 2005 is hereby ANNULLED and THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN
SET ASIDE. Respondent Eastern Telecommunications IT DISREGARDED THE RULE THAT FINDINGS OF FACTS OF QUASI-
Philippines, Inc. is ordered to pay the members of petitioner JUDICIAL BODIES ARE ACCORDED FINALITY IF THEY ARE SUPPORTED
their 14th, 15th and 16th month bonuses for the year 2003 and BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE CONCLUSIONS
14th month for the year 2004. The complaint for unfair labor OF THE NLRC WERE BASED ON SUBSTANTIAL AND OVERWHELMING
practice against said respondent is DISMISSED. EVIDENCE AND UNDISPUTED FACTS.
SO ORDERED.[9]

III.

IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO


ISSUES CONSIDER THAT THE BONUS GIVEN BY EASTERN
COMMUNICATIONS TO ITS EMPLOYEES IS NOT DEPENDENT ON THE
REALIZATION OF PROFITS.
Dissatisfied, ETPI now comes to this Court via Rule 45, raising the
following errors allegedly committed by the CA, to wit:
IV.

I.
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW
IT ANNULLED AND SET ASIDE THE RESOLUTIONS OF THE NLRC WHEN IT DISREGARDED THE UNDISPUTED FACT THAT EASTERN
COMMUNICATIONS IS SUFFERING FROM TREMENDOUS FINANCIAL their grant is conditional based on successful business performance and the
LOSSES, AND ORDERED EASTERN COMMUNICATIONS TO GRANT availability of company profits from which to source the same. To thwart ETEUs
THE BONUSES REGARDLESS OF THE FINANCIAL DISTRESS OF monetary claims, it insists that the distribution of the subject bonuses falls well
EASTERN COMMUNICATIONS. within the companys prerogative, being an act of pure gratuity and generosity
on its part. Thus, it can withhold the grant thereof especially since it is currently
plagued with economic difficulties and financial losses. It alleges that the
V. companys fiscal situation greatly declined due to tremendous and extraordinary
losses it sustained beginning the year 2000. It claims that it cannot be compelled
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW to act liberally and confer upon its employees additional benefits over and
WHEN IT ARRIVED AT THE CONCLUSION THAT THE GRANT OF above those mandated by law when it cannot afford to do so. It posits that so
BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES long as the giving of bonuses will result in the financial ruin of an already
HAS RIPENED INTO A COMPANY PRACTICE.[10] distressed company, the employer cannot be forced to grant the same.

ETPI further avers that the act of giving the subject bonuses did not ripen
into a company practice arguing that it has always been a contingent one
A careful perusal of the voluminous pleadings filed by the parties leads dependent on the realization of profits and, hence, the workers are not entitled
the Court to conclude that this case revolves around the following core issues: to bonuses if the company does not make profits for a given year. It asseverates
1. Whether or not petitioner ETPI is liable to pay 14th, 15th and that the 1998 and 2001 CBA Side Agreements did not contractually afford ETEU
16th month bonuses for the year 2003 and 14th month bonus for the a vested property right to a perennial payment of the bonuses. It opines that
year 2004 to the members of respondent union; and the bonus provision in the Side Agreement allows the giving of benefits only at
the time of its execution. For this reason, it cannot be said that the grant has
ripened into a company practice. In addition, it argues that even if such
2. Whether or not the CA erred in not dismissing outright ETEUs traditional company practice exists, the CA should have applied Article 1267 of
petition for certiorari. the Civil Code which releases the obligor from the performance of an obligation
when it has become so difficult to fulfill the same.

ETPI insists that it is under no legal compulsion to pay 14th, 15th and
It is the petitioners stance that the CA should have dismissed outright the
16th month bonuses for the year 2003 and 14th month bonus for the year 2004
respondent unions petition for certiorari alleging that no question of jurisdiction
contending that they are not part of the demandable wage or salary and that
whatsoever was raised therein but, instead, what was being sought was a From a legal point of view, a bonus is a gratuity or act of liberality of the
judicial re-evaluation of the adequacy or inadequacy of the evidence on record. giver which the recipient has no right to demand as a matter of right. [12] The
It claims that the CA erred in disregarding the findings of the NLRC which were grant of a bonus is basically a management prerogative which cannot be forced
based on substantial and overwhelming evidence as well as on undisputed facts. upon the employer who may not be obliged to assume the onerous burden of
ETPI added that the CA court should have refrained from tackling issues of fact granting bonuses or other benefits aside from the employees basic salaries or
and, instead, limited itself on issues of jurisdiction and grave abuse of wages.[13]
jurisdiction amounting to lack or excess of it.

A bonus, however, becomes a demandable or enforceable obligation


The Courts Ruling when it is made part of the wage or salary or compensation of the
As a general rule, in petitions for review under Rule 45, the Court, not employee.[14] Particularly instructive is the ruling of the Court in Metro Transit
being a trier of facts, does not normally embark on a re-examination of the Organization, Inc. v. National Labor Relations Commission,[15] where it was
evidence presented by the contending parties during the trial of the case written:
considering that the findings of facts of the CA are conclusive and binding on the
Court. The rule, however, admits of several exceptions, one of which is when Whether or not a bonus forms part of wages depends upon
the findings of the appellate court are contrary to those of the trial court or the the circumstances and conditions for its payment. If it is
lower administrative body, as the case may be.[11] Considering the incongruent additional compensation which the employer promised and
factual conclusions of the CA and the NLRC, this Court finds Itself obliged to agreed to give without any conditions imposed for its payment,
resolve it. such as success of business or greater production or output, then
it is part of the wage. But if it is paid only if profits are realized
or if a certain level of productivity is achieved, it cannot be
The pivotal question determinative of this controversy is whether the considered part of the wage. Where it is not payable to all but
members of ETEU are entitled to the payment of 14th, 15th and 16th month only to some employees and only when their labor becomes
bonuses for the year 2003 and 14th month bonus for year 2004. more efficient or more productive, it is only an inducement for
efficiency, a prize therefore, not a part of the wage.

After an assiduous assessment of the record, the Court finds no merit in


the petition.
The consequential question that needs to be settled, therefore, is
whether the subject bonuses are demandable or not. Stated differently, can
these bonuses be considered part of the wage, salary or compensation making
them enforceable obligations? The records are also bereft of any showing that the ETPI made it clear
before or during the execution of the Side Agreements that the bonuses shall
The Court believes so. be subject to any condition. Indeed, if ETPI and ETEU intended that the subject
bonuses would be dependent on the company earnings, such intention should
have been expressly declared in the Side Agreements or the bonus provision
In the case at bench, it is indubitable that ETPI and ETEU agreed on the should have been deleted altogether. In the absence of any proof that ETPIs
inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the consent was vitiated by fraud, mistake or duress, it is presumed that it entered
1998-2001 CBA Side Agreement,[16] as well as in the 2001-2004 CBA Side into the Side Agreements voluntarily, that it had full knowledge of the contents
Agreement,[17] which was signed on September 3, 2001. The provision, which thereof and that it was aware of its commitment under the contract. Verily, by
was similarly worded, states: virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and
16th month bonuses has become more than just an act of generosity on the part
of ETPI but a contractual obligation it has undertaken. Moreover, the
Employment-Related Bonuses continuous conferment of bonuses by ETPI to the union members from 1998 to
The Company confirms that the 14th, 15th and 16th month 2002 by virtue of the Side Agreements evidently negates its argument that the
bonuses (other than the 13th month pay) are granted. giving of the subject bonuses is a management prerogative.

A reading of the above provision reveals that the same provides for the From the foregoing, ETPI cannot insist on business losses as a basis for
giving of 14th, 15th and 16th month bonuses without qualification. The wording disregarding its undertaking. It is manifestly clear that although it incurred
of the provision does not allow any other interpretation. There were no business losses of ₱149,068,063.00 in the year 2000, it continued to
conditions specified in the CBA Side Agreements for the grant of the benefits distribute 14th, 15th and 16th month bonuses for said year. Notwithstanding such
contrary to the claim of ETPI that the same is justified only when there are huge losses, ETPI entered into the 2001-2004 CBA Side Agreement
profits earned by the company. Terse and clear, the said provision does not state on September 3, 2001whereby it contracted to grant the subject bonuses to
that the subject bonuses shall be made to depend on the ETPIs financial standing ETEU in no uncertain terms. ETPI continued to sustain losses for the succeeding
or that their payment was contingent upon the realization of profits. Neither years of 2001 and 2002 in the amounts of ₱348,783,013.00 and
does it state that if the company derives no profits, no bonuses are to be given ₱315,474,444.00, respectively. Still and all, this did not deter it from honoring
to the employees. In fine, the payment of these bonuses was not related to the the bonus provision in the Side Agreement as it continued to give the subject
profitability of business operations. bonuses to each of the union members in 2001 and 2002 despite its alleged
precarious financial condition. Parenthetically, it must be emphasized that ETPI
even agreed to the payment of the 14th, 15th and 16th month bonuses for 2003
although it opted to defer the actual grant in April 2004. All given, business Article 1267. When the service has become so difficult as
losses could not be cited as grounds for ETPI to repudiate its obligation under to be manifestly beyond the contemplation of the parties, the
the 2001-2004 CBA Side Agreement. obligor may also be released therefrom, in whole or in part.

The Court finds no merit in ETPIs contention that the bonus provision
confirms the grant of the subject bonuses only on a single instance because if
this is so, the parties should have included such limitation in the agreement.
Nowhere in the Side Agreement does it say that the subject bonuses shall be The Court is not persuaded.
conferred once during the year the Side Agreement was signed. The Court
quotes with approval the observation of the CA in this regard:
The parties to the contract must be presumed to have assumed the risks
of unfavorable developments. It is, therefore, only in absolutely exceptional
ETPI argues that assuming the bonus provision in the Side changes of circumstances that equity demands assistance for the debtor. [19] In
Agreement of the 2001-2004 CBA entitles the union members the case at bench, the Court determines that ETPIs claimed depressed financial
to the subject bonuses, it is merely in the nature of a one-time state will not release it from the binding effect of the 2001-2004 CBA Side
grant and not intended to cover the entire term of the CBA. The Agreement.
contention is untenable. The bonus provision in question is
exactly the same as that contained in the Side Agreement of the
1998-2001 CBA and there is no denying that from 1998 to 2001, ETPI appears to be well aware of its deteriorating financial condition
ETPI granted the subject bonuses for each of those years. Thus, when it entered into the 2001-2004 CBA Side Agreement with ETEU and obliged
ETPI may not now claim that the bonus provision in the Side itself to pay bonuses to the members of ETEU. Considering that ETPI had been
Agreement of the 2001-2004 CBA is only a one-time grant.[18] continuously suffering huge losses from 2000 to 2002, its business losses in the
year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot
be said that the difficulty in complying with its obligation under the Side
ETPI then argues that even if it is contractually bound to distribute the Agreement was manifestly beyond the contemplation of the parties. Besides, as
subject bonuses to ETEU members under the Side Agreements, its current held in Central Bank of the Philippines v. Court of Appeals,[20] mere pecuniary
financial difficulties should have released it from the obligatory force of said inability to fulfill an engagement does not discharge a contractual obligation.
contract invoking Article 1267 of the Civil Code. Said provision declares: Contracts, once perfected, are binding between the contracting parties.
Obligations arising therefrom have the force of law and should be complied with
in good faith. ETPI cannot renege from the obligation it has freely assumed when payments made by ETPI pursuant thereto ripened into benefits enjoyed by the
it signed the 2001-2004 CBA Side Agreement. employees.

Granting arguendo that the CBA Side Agreement does not contractually The giving of the subject bonuses cannot be peremptorily withdrawn by
bind petitioner ETPI to give the subject bonuses, nevertheless, the Court finds ETPI without violating Article 100 of the Labor Code:
that its act of granting the same has become an established company practice
such that it has virtually become part of the employees salary or wage. A bonus
may be granted on equitable consideration when the giving of such bonus has Art. 100. Prohibition against elimination or diminution of
been the companys long and regular practice. In Philippine Appliance benefits. Nothing in this Book shall be construed to eliminate or
Corporation v. Court of Appeals,[21] it was pronounced: in any way diminish supplements, or other employee benefits
being enjoyed at the time of promulgation of this Code.

To be considered a regular practice, however, the giving of


the bonus should have been done over a long period of time, and The rule is settled that any benefit and supplement being enjoyed by the
must be shown to have been consistent and deliberate. The test employees cannot be reduced, diminished, discontinued or eliminated by the
or rationale of this rule on long practice requires an indubitable employer. The principle of non-diminution of benefits is founded on the
showing that the employer agreed to continue giving the benefits
constitutional mandate to protect the rights of workers and to promote their
knowing fully well that said employees are not covered by the
welfare and to afford labor full protection.[22]
law requiring payment thereof.

Interestingly, ETPI never presented countervailing evidence to refute


The records show that ETPI, aside from complying with the regular 13th ETEUs claim that the company has been continuously paying bonuses since 1975
month bonus, has been further giving its employees 14th month bonus every up to 2002 regardless of its financial state. Its failure to controvert the
April as well as 15th and 16th month bonuses every December of the year, allegation, when it had the opportunity and resources to do so, works in favor
without fail, from 1975 to 2002 or for 27 years whether it earned profits or of ETEU. Time and again, it has been held that should doubts exist between the
not. The considerable length of time ETPI has been giving the special grants to evidence presented by the employer and the employee, the scales of justice
its employees indicates a unilateral and voluntary act on its part to continue must be tilted in favor of the latter.[23]
giving said benefits knowing that such act was not required by law. Accordingly,
a company practice in favor of the employees has been established and the
WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of the
Court of Appeals and its December 12, 2008 Resolution are AFFIRMED.

SO ORDERED.
SECOND DIVISION DECISION

FUNCTIONAL, INC. G.R. No. 176377 PEREZ, J.:


Petitioner,

Present: Assailed in this petition for review[1] filed under Rule 45 of the 1997 Rules
of Civil Procedure is the Decision dated 22 November 2006 rendered by the then
Tenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 94851,[2] the
CARPIO, J.,
dispositive portion of which states:
Chairperson,
- versus - BRION,
PEREZ, WHEREFORE, premises considered, the petition is GRANTED. The
SERENO, and Resolution dated April 20, 2005 and the order dated January 26, 2006
of public respondent NLRC, First Division in NLRC NCR Case No. 09-
REYES, JJ.
07126-02 NLRC NCR CA No. 035887-03 sustaining the findings of the
Labor Arbiter are hereby REVERSED and SET ASIDE. Private
respondent Functional, Inc. is hereby ORDERED to reinstate petitioner
Granfil without loss of seniority rights and other privileges, and to pay
Promulgated:
the latter his full backwages, inclusive of allowances and other
SAMUEL C. GRANFIL, benefits, from July 31, 2002 up to the time of his actual reinstatement.
Respondent. November 16, 2011
SO ORDERED.[3]
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

The Facts
(Dizon), for illegal dismissal, unpaid 13th month pay, moral and exemplary
damages and attorneys fees. In support of his complaint which was docketed as
Sometime in 1992, respondent Samuel C. Granfil was hired as key operator by NLRC NCR Case No. 09-07126-2002 before the arbitral level of the National
petitioner Functional, Inc. (FI), a domestic corporation engaged in the business Labor Relations Commission (NLRC),[6] Granfil alleged, among other matters,
of sale and rental of various business equipments, including photocopying that the money which Dechavez saw him receive from Cavaldeja was a P200 tip
machines. As Key Operator, Granfil was tasked to operate the photocopying said customer gave him in appreciation of his assistance in xeroxing and
machine rented by the National Bookstore (NBS) at its SM Megamall organizing the batches of voluminous materials he asked to be photocopied;
Branch. There is no dispute regarding the fact that, in the evening of 30 July that payment for the materials was, however, already paid per batch by
2002, Granfil attended to a customer by the name of Cosme Cavaldeja Cavaldejas wife who, by that time, had already left the premises; and, that
(Cavaldeja) who, together with his wife, asked to have their flyers rather than listening to his explanation and simply verifying the meter of the
photocopied. It appears that Bonnel Dechavez, the security guard assigned at photocopy machine as well as the paper allotted to it, Dechavez submitted his
said establishment, saw Cavaldeja handing money to Granfil after the incident report which, in turn, caused Tenorio to tell him, Mr. Granfil,
transaction was finished.[4] After investigating the matter, Dechavez submitted magpahinga ka muna. Mabuti pa, pumirma ka nalang ng resignation letter para
the following incident report to NBS Branch Manager Lucy Genegaban may makuha ka pa.[7]
(Genegaban), to wit:

At around 1940 on July 30, 2002 at NBS SM Megamall Dona


Julia Vargas Ave., Mandaluyong City, I checked one customer and Granfil further asseverated that, with said incident report having been telefaxed
asked if he already paid for his xerox[ed] items (sic) and he said to FIs head office, he was asked to report thereat in the morning of 31 July 2002;
yes. Upon asking for a receipt, he pointed to Sammy the Xerox that instead of allowing him to explain, however, Ballesteros peremptorily
operator [to] whom he g[a]ve payment, instead of paying to the ordered his termination from employment; that wishing to explain his side, he
cashier. Sammy came and it was only then that he brought the sought out Dizon who merely ignored and tersely advised him, Magpahinga ka
customer to the counter 09 for payment [of] the amount of [the] na lang; that refused entry when he tried to report for work on 1 August 2002,
xerox[ed] items (sic) is P250.[5] he subsequently sought out Cavaldeja whose corroboration of his version of the
incident also fell on deaf ears; that having been terminated without just cause
and observance of due process, he was constrained to file the 3 September 2002
complaint from which the instant suit originated; that aside from the
On 3 September 2002, Granfil filed a complaint against FI, its President, Romeo reinstatement to which he is clearly entitled as an illegally dismissed employee,
Bautista (Bautista), its Marketing Manager, Freddie Tenorio (Tenorio), its Office he should be paid full backwages and 13th month pay for the year 2002; and,
Supervisor, Julius Ballesteros (Ballesteros), and its Area Supervisor, Joel Dizon that in view of the malice and bad faith which characterized his dismissal from
employment, Bautista, Tenorio, Ballesteros and Dizon should be held jointly and 2005 Resolution issued by the NLRC[11] and the subsequent denial of his motion
severally liable with FI for the payment of said indemnities as well as his claims seeking the reconsideration of said decision,[12] Granfil elevated the case
for moral and exemplary damages and attorneys fees.[8] through the Rule 65 petition for certiorari docketed before the CA as CA-G.R. SP
No. 94851. On 22 November 2006, the CA rendered the herein assailed 22
November 2006 Decision, reversing the NLRCs 20 April 2005 Resolution on the
ground that FI failed to satisfactorily prove Granfils supposed abandonment of
In their position paper, FI and its corporate officers, in turn, averred that having
his employment which, by itself, was negated by his filing of a case for illegal
been apprised of the incident, Genegaban requested for Granfils relief as Key
employment. Ordering FI to reinstate Granfil and to pay his full backwages,
Operator of the photocopying machine installed at the NBS SM Megamall
allowances and other benefits from 31 July 2002 until his actual reinstatement,
Branch; that for the good of all concerned, FI informed Granfil that he was going
the CA denied said employees claims for moral and exemplary damages as well
to be transferred to a different assignment, without demotion in rank or
as attorneys fees for lack of factual basis.[13]
diminution of his salaries, benefits and other privileges; that required to report
to FIs main office to act as emergency reliever to other Key Operators while
waiting for his new assignment, Granfil misconstrued his transfer as a
punishment for his guilt and refused to heed said directive which was within the FIs motion for reconsideration of the CAs 22 November 2006 decision was
managements prerogative to issue; that an employees right to security of denied for lack of merit in said courts 22 January 2007 resolution,[14] hence, this
tenure does not give him such vested right to his position as would deprive his petition.
employer of its prerogative to change his assignment or transfer him where he
will be most useful; and, that aside from being guilty of insubordination, Granfil
clearly abandoned his employment rather than illegally dismissed therefrom. [9]
The Issues

On 29 April 2003, Labor Arbiter Eduardo Carpio rendered a decision discounting


Granfils illegal dismissal from employment in view of his failure to prove with FI prays for the reversal and setting aside of the assailed decision on the
substantial evidence overt acts of termination on the part of FI and its following grounds, to wit:
officers. Simply awarded the sum of P3,966.65 as proportionate 13th month pay
A.
for services rendered from January to July 2002,[10] Granfil perfected the appeal
which was docketed before the First Division of the NLRC as NLRC NCR CA No.
035887-03. With the affirmance of the Labor Arbiters decision in the 20 April
The Honorable Court erred in holding that [Granfil] was illegally otherwise.[20] Failure of the employer to discharge the foregoing onus would
dismissed by FI. mean that the dismissal is not justified and therefore illegal.[21]

B.
Denying the charge of illegal dismissal, FI insists that Granfil abandoned his
employment after he was transferred from his assignment at the NBS Megamall
The Honorable Court erred in not giving credence to the factual Branch as a consequence of the latters request for his relief. [22] In the same
findings of both the NLRC and Labor Arbiter before wh[om] the manner that it cannot be said to have discharged the above-discussed burden
case was tried.[15] by merely alleging that it did not dismiss the employee, it has been ruled that
an employer cannot expediently escape liability for illegal dismissal by claiming
that the former abandoned his work.[23] This applies to FI which adduced no
evidence to prove Granfils supposed abandonment beyond submitting copies of
The Courts Ruling NBS 31 July 2002 request for said employees transfer[24] and its 1 August 2002
written acquiescence thereto.[25] While these documents may have buttressed
the claim that Granfil was indeed recalled from his assignment, however, we
find that the CA correctly discounted their probative value insofar as FIs theory
We find the petition bereft of merit. of abandonment is concerned.

The rule is long and well settled that, in illegal dismissal cases like the one at Being a matter of intention, moreover, abandonment cannot be inferred or
bench, the burden of proof is upon the employer to show that the employees presumed from equivocal acts.[26] As a just and valid ground for dismissal, it
termination from service is for a just and valid cause. [16] The employers case requires the deliberate, unjustified refusal of the employee to resume his
succeeds or fails on the strength of its evidence and not the weakness of that employment,[27] without any intention of returning.[28] Two elements must
adduced by the employee,[17] in keeping with the principle that the scales of concur: (1) failure to report for work or absence without valid or justifiable
justice should be tilted in favor of the latter in case of doubt in the evidence reason, and (2) a clear intention to sever the employer-employee relationship,
presented by them.[18] Often described as more than a mere scintilla,[19] the with the second element as the more determinative factor and being manifested
quantum of proof is substantial evidence which is understood as such relevant by some overt acts.[29] The burden of proving abandonment is once again upon
evidence as a reasonable mind might accept as adequate to support a the employer[30] who, whether pleading the same as a ground for dismissing an
conclusion, even if other equally reasonable minds might conceivably opine
employee or as a mere defense, additionally has the legal duty to observe due of such nature as to compel a contrary conclusion, this court had not hesitated to
process.[31] Settled is the rule that mere absence or failure to report to work is not reverse their factual findings.[37] Indeed, said rule does not apply when, as here,
tantamount to abandonment of work.[32] it is clear that a palpable mistake was committed by the quasi-judicial tribunal
which needs rectification.[38]

Viewed in the light of the foregoing principles, we find that the CA correctly WHEREFORE, premises considered, the petition is DENIED for lack of merit
ruled out FIs position that Granfil had abandoned his employment. Aside from and the assailed Decision dated 22 November 2006 is,
the fact that Bautista, Tenorio, Ballesteros and Dizon did not even execute sworn accordingly, AFFIRMED in toto.
statements to refute the overt acts of dismissal imputed against them, the record
is wholly bereft of any showing that FI required Granfil to report to its main office SO ORDERED.
or, for that matter, to explain his supposed unauthorized absences. Absence must
be accompanied by overt acts unerringly pointing to the fact that the employee
simply does not want to work anymore.[33] Even then, FIs theory of abandonment
was likewise negated by Granfils filing the complaint for illegal
dismissal[34] which evinced his desire to return to work. In vigorously pursuing
his action against FI before the Labor Arbiter, the NLRC and the CA, Granfil
clearly manifested that he has no intention of relinquishing his employment. In
any case, the fact that Granfil prayed for his reinstatement speaks against any
intent to sever the employer-employee relationship[35] with FI.

FI next faults the CA for not giving credence to the factual findings of Labor
Arbiter Eduardo Carpio which was affirmed in the NLRCs 20 April 2005
resolution.[36] As may be gleaned from the above disquisition, however, both the
Labor Arbiter and the NLRC clearly erred in directing the dismissal of the
complaint by unduly shifting the burden of proving the illegality of his dismissal
to Granfil. While administrative findings of fact are, concededly, accorded great
respect, and even finality when supported by substantial evidence, nevertheless,
when it can be shown that administrative bodies grossly misappreciated evidence
Republic of the Philippines certiorari against filed with the Court of Appeals a petition for certiorari against said order of
SUPREME COURT November 7, 1975.
Manila
On March 30, 1976, the Court of Appeals dismissed the petition for certiorari. In dismissing the
FIRST DIVISION petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under
Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory
G.R. No. L-44169 December 3, 1985 position like that of petitioner, but only to those "laborers occupying the lower strata." It also held
that the term "wages" means the pay given" as hire or reward to artisans, mechanics, domestics
ROSARIO A. GAA, petitioner, or menial servants, and laborers employed in manufactories, agriculture, mines, and other
vs. manual occupation and usually employed to distinguish the sums paid to persons hired to
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
CESAR R. ROXAS, Deputy Sheriff of Manila, respondents. month, or season," citing 67 C.J. 285, which is the ordinary acceptation of the said term, and that
"wages" in Spanish is "jornal" and one who receives a wage is a "jornalero."
Federico C. Alikpala and Federico Y. Alikpala, Jr. for petitioner.
In the present petition for review on certiorari of the aforesaid decision of the Court of Appeals,
petitioner questions the correctness of the interpretation of the then Court of Appeals of Article
Borbe and Palma for private respondent.
1708 of the New Civil Code which reads as follows:

ART. 1708. The laborer's wage shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance.
PATAJO, J.:
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly
This is a petition for review on certiorari of the decision of the Court of Appeals promulgated on place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and
March 30, 1976, affirming the decision of the Court of First Instance of Manila. coordinating the activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the
cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in the surroundings of the hotel. Considering the importance of petitioner's function in El Grande
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or
building administrator. On December 12, 1973, Europhil Industries commenced an action (Civil supervisory position.
Case No. 92744) in the Court of First Instance of Manila for damages against petitioner "for
having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or
namely, cutting of its electricity, and removing its name from the building directory and gate physical labor, but as commonly and customarily used and understood, it only applies to one
passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court rendered engaged in some form of manual or physical labor. That is the sense in which the courts
judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the generally apply the term as applied in exemption acts, since persons of that class usually look to
sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary the reward of a day's labor for immediate or present support and so are more in need of the
damages and to pay the costs. exemption than are other. (22 Am. Jur. 22 citing Briscoe vs. Montgomery, 93 Ga 602, 20 SE
40; Miller vs. Dugas, 77 Ga 4 Am St Rep 192; State ex rel I.X.L. Grocery vs. Land, 108 La 512,
The said decision having become final and executory, a writ of garnishment was issued pursuant 32 So 433; Wildner vs. Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep.
to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon 84.
El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in determining whether a
garnishment on the ground that her "salaries, commission and, or remuneration are exempted particular laborer or employee is really a "laborer," the character of the word he does must be
from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower taken into consideration. He must be classified not according to the arbitrary designation given to
Court in an order dated November 7, 1975. A motion for reconsideration of said order was his calling, but with reference to the character of the service required of him by his employer.
likewise denied, and on January 26, 1976 petitioner filed with the Court of Appeals a petition for
In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held that all men who earn The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co. (Tex.
compensation by labor or work of any kind, whether of the head or hands, including judges, Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired person
laywers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring for service, and the same is true of 'salary'. The words seem to be synonymous, convertible
men." But they are not "laboring men" in the popular sense of the term, when used to refer to a terms, though we believe that use and general acceptation have given to the word 'salary' a
must presume, the legislature used the term. The Court further held in said case: significance somewhat different from the word 'wages' in this: that the former is understood to
relate to position of office, to be the compensation given for official or other service, as
There are many cases holding that contractors, consulting or assistant engineers, distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95.
agents, superintendents, secretaries of corporations and livery stable keepers, do
not come within the meaning of the term. (Powell v. Eldred, 39 Mich, 554, Atkin v. We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code
Wasson, 25 N.Y. 482; Short v. Medberry, 29 Hun. 39; Dean v. De Wolf, 16 Hun. to operate in favor of any but those who are laboring men or women in the sense that their work
186; Krausen v. Buckel, 17 Hun. 463; Ericson v. Brown, 39 Barb. 390; Coffin v. is manual. Persons belonging to this class usually look to the reward of a day's labor for
Reynolds, 37 N.Y. 640; Brusie v. Griffith, 34 Cal. 306; Dave v. Nunan, 62 Cal. immediate or present support, and such persons are more in need of the exemption than any
400). others. Petitioner Rosario A. Gaa is definitely not within that class.

Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held that a traveling salesman, We find, therefore, and so hold that the Trial Court did not err in denying in its order of November
selling by sample, did not come within the meaning of a constitutional provision making 7, 1975 the motion of petitioner to lift the notice of garnishment against her salaries, commission
stockholders of a corporation liable for "labor debts" of the corporation. and other remuneration from El Grande Hotel since said salaries, Commission and other
remuneration due her from the El Grande Hotel do not constitute wages due a laborer which,
In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon Hardware Co., supra, it under Article 1708 of the Civil Code, are not subject to execution or attachment.
was held that a laborer, within the statute exempting from garnishment the wages of a "laborer,"
is one whose work depends on mere physical power to perform ordinary manual labor, and not IN VIEW OF THE FOREGOING, We find the present petition to be without merit and hereby
one engaged in services consisting mainly of work requiring mental skill or business capacity, AFFIRM the decision of the Court of Appeals, with costs against petitioner.
and involving the exercise of intellectual faculties.
SO ORDERED.
So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing an act making
stockholders in a corporation liable for debts due "laborers, servants and apprentices" for
services performed for the corporation, held that a "laborer" is one who performs menial or
manual services and usually looks to the reward of a day's labor or services for immediate or
present support. And in Weymouth vs. Sanborn, 43 N.H. 173, 80 Am. Dec. 144, it was held that
"laborer" is a term ordinarily employed to denote one who subsists by physical toil in
contradistinction to those who subsists by professional skill. And in Consolidated Tank Line Co.
vs. Hunt, 83 Iowa, 6, 32 Am. St. Rep. 285, 43 N.W. 1057, 12 L.R.A. 476, it was stated that
"laborers" are those persons who earn a livelihood by their own manual labor.

Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what
are to be exempted from attachment and execution. The term "wages" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur.
496).
Republic of the Philippines On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled
SUPREME COURT case, granting petitioner's complaint for payment of holiday pay. Pertinent portions of the
Manila decision read:têñ.£îhqwâ£

SECOND DIVISION xxx xxx xxx

G.R. No. L-52415 October 23, 1984 The records disclosed that employees of respondent bank were not paid their
wages on unworked regular holidays as mandated by the Code, particularly
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner, Article 208, to wit:
têñ.£îhqwâ£

vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF Art. 208. Right to holiday pay.
ASIA AND AMERICA, respondents.
(a) Every worker shall be paid his regular daily wage during
Sisenando R. Villaluz, Jr. for petitioner. regular holidays, except in retail and service establishments
regularly employing less than 10 workers.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
(b) The term "holiday" as used in this chapter, shall include: New
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip, Year's Day, Maundy Thursday, Good Friday, the ninth of April the
Salazar, Feliciano & Hernandez Law Office for respondents. first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and the thirtieth of December and the
day designated by law for holding a general election.

MAKASIAR, J.: ñé+.£ªwph!1


xxx xxx xxx

This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent This conclusion is deduced from the fact that the daily rate of pay of the bank
Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular employees was computed in the past with the unworked regular holidays as
Bank of Asia and America Employees' Union (complainant-appellee), vs. Insular Bank of Asia excluded for purposes of determining the deductible amount for absences
and America" (respondent-appellant), the dispositive portion of which reads as follows: têñ.£îhqwâ£
incurred Thus, if the employer uses the factor 303 days as a divisor in
determining the daily rate of monthly paid employee, this gives rise to a
presumption that the monthly rate does not include payments for unworked
xxx xxx xxx
regular holidays. The use of the factor 303 indicates the number of ordinary
working days in a year (which normally has 365 calendar days), excluding the 52
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of Sundays and the 10 regular holidays. The use of 251 as a factor (365 calendar
the National Labor Relations Commission dated 20 June 1978 be, as it is hereby, days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise
set aside and a new judgment. promulgated dismissing the instant case for lack to the same presumption that the unworked Saturdays, Sundays and regular
of merit (p. 109 rec.). holidays are unpaid. This being the case, it is not amiss to state with certainty
that the instant claim for wages on regular unworked holidays is found to be
The antecedent facts culled from the records are as follows: tenable and meritorious.

On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of WHEREFORE, judgment is hereby rendered:
holiday pay before the then Department of Labor, National Labor Relations Commission,
Regional Office No. IV in Manila. Conciliation having failed, and upon the request of both parties, (a) xxx xxxx xxx
the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.
(b) Ordering respondent to pay wages to all its employees for all regular h(olidays Under the rules implementing P.D. 850, this policy has been fully clarified to
since November 1, 1974 (pp. 97-99, rec., underscoring supplied). eliminate controversies on the entitlement of monthly paid employees, The new
determining rule is this: If the monthly paid employee is receiving not less than
Respondent bank did not appeal from the said decision. Instead, it complied with the order of P240, the maximum monthly minimum wage, and his monthly pay is uniform from
Arbiter Ricarte T. Soriano by paying their holiday pay up to and including January, 1976. January to December, he is presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his monthly salary on account of
On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among holidays in months where they occur, then he is still entitled to the ten (10) paid
others, the provisions of the Labor Code on the right to holiday pay to read as follows: têñ.£îhqwâ£
legal holidays. ..." (emphasis supplied).

Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article
wages during regular holidays, except in retail and service establishments 94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of holiday pay to an
regularly employing less than ten (10) workers; its employees.

(b) The employer may require an employee to work on any holiday but such On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's
employee shall be paid a compensation equivalent to twice his regular rate and decision of August 25, 1975, whereby the respondent bank was ordered to pay its employees
their daily wage for the unworked regular holidays.
(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of On September 10, 1975, respondent bank filed an opposition to the motion for a writ of execution
July, the thirtieth of November, the twenty-fifth and the thirtieth of December, and alleging, among others, that: (a) its refusal to pay the corresponding unworked holiday pay in
the day designated by law for holding a general election. accordance with the award of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, is based
on and justified by Policy Instruction No. 9 which interpreted the rules implementing P. D. 850;
and (b) that the said award is already repealed by P.D. 850 which took effect on December 16,
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department of
1975, and by said Policy Instruction No. 9 of the Department of Labor, considering that its
Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation of
monthly paid employees are not receiving less than P240.00 and their monthly pay is uniform
holidays with pay. The controversial section thereof reads:
from January to December, and that no deductions are made from the monthly salaries of its
têñ.£îhqwâ£

employees on account of holidays in months where they occur (pp. 64-65, NLRC rec.).
Sec. 2. Status of employees paid by the month. — Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution,
salary of not less than the statutory or established minimum wage shall be
issued an order enjoining the respondent bank to continue paying its employees their regular
presumed to be paid for all days in the month whether worked or not.
holiday pay on the following grounds: (a) that the judgment is already final and the findings which
is found in the body of the decision as well as the dispositive portion thereof is res judicata or is
For this purpose, the monthly minimum wage shall not be less than the statutory the law of the case between the parties; and (b) that since the decision had been partially
minimum wage multiplied by 365 days divided by twelve" (italics supplied). implemented by the respondent bank, appeal from the said decision is no longer available (pp.
100-103, rec.).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now
Minister) interpreting the above-quoted rule, pertinent portions of which read: têñ.£îhqwâ£

On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter
Soriano to the National Labor Relations Commission, reiterating therein its contentions averred
xxx xxx xxx in its opposition to the motion for writ of execution. Respondent bank further alleged for the first
time that the questioned order is not supported by evidence insofar as it finds that respondent
The ten (10) paid legal holidays law, to start with, is intended to benefit principally bank discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC rec.).
daily employees. In the case of monthly, only those whose monthly salary did not
yet include payment for the ten (10) paid legal holidays are entitled to the benefit. On June 20, 1978, the National Labor Relations Commission promulgated its resolution en
banc dismissing respondent bank's appeal, the dispositive portion of which reads as follows: têñ.£îhqwâ£
In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss, Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of
respondent's appeal; to set aside Labor Arbiter Ricarte T. Soriano's order of 18 discretion amounting to lack or excess of jurisdiction.
October 1976 and, as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.). The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of
regular holiday pay can still be set aside on appeal by the Deputy Minister of Labor even though
Copies of the above resolution were served on the petitioner only on February 9, 1979 or almost it has already become final and had been partially executed, the finality of which was affirmed by
eight. (8) months after it was promulgated, while copies were served on the respondent bank on the National Labor Relations Commission sitting en banc, on the basis of an Implementing Rule
February 13, 1979. and Policy Instruction promulgated by the Ministry of Labor long after the said decision had
become final and executory.
On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion for
reconsideration/appeal with urgent prayer to stay execution, alleging therein the following: (a) WE find for the petitioner.
that there is prima facie evidence of grave abuse of discretion, amounting to lack of jurisdiction
on the part of the National Labor Relations Commission, in dismissing the respondent's appeal I
on pure technicalities without passing upon the merits of the appeal and (b) that the resolution
appealed from is contrary to the law and jurisprudence (pp. 260-274, NLRC rec.). WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in
On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them
the following grounds: (a) that the office of the Minister of Labor has no jurisdiction to entertain by enlarging the scope of their exclusion (p. 1 1, rec.).
the instant appeal pursuant to the provisions of P. D. 1391; (b) that the labor arbiter's decision
being final, executory and unappealable, execution is a matter of right for the petitioner; and (c) Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£

that the decision of the labor arbiter dated August 25, 1975 is supported by the law and the
evidence in the case (p. 364, NLRC rec.).
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments
On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a regularly employing less than ten (10) workers. ...
writ of execution be issued by the National Labor Relations Commission pending appeal of the
case with the Office of the Minister of Labor. Respondent bank filed its opposition thereto on
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out
August 8, 1979.
under Article 82 thereof which reads: têñ.£îhqwâ£

On August 13, 1979, the National Labor Relations Commission issued an order which states:
Art. 82. Coverage. — The provision of this Title shall apply to employees in all
têñ.£îhqwâ£

establishments and undertakings, whether for profit or not, but not to government
The Chief, Research and Information Division of this Commission is hereby employees, managerial employees, field personnel members of the family of the
directed to designate a Socio-Economic Analyst to compute the holiday pay of employer who are dependent on him for support domestic helpers, persons in the
the employees of the Insular Bank of Asia and America from April 1976 to the personal service of another, and workers who are paid by results as determined
present, in accordance with the Decision of the Labor Arbiter dated August 25, by the Secretary of Labor in appropriate regulations.
1975" (p. 80, rec.).
... (emphasis supplied).
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G.
Inciong, issued an order, the dispositive portion of which states:
From the above-cited provisions, it is clear that monthly paid employees are not excluded from
têñ.£îhqwâ£

the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of then Secretary of Labor excludes monthly paid employees from the said benefits by inserting,
the National Labor Relations Commission dated 20 June 1978 be, as it is hereby, under Rule IV, Book Ill of the implementing rules, Section 2, which provides that: "employees
set aside and a new judgment promulgated dismissing the instant case for lack of who are uniformly paid by the month, irrespective of the number of working days therein, with a
merit (p. 436, NLRC rec.).
salary of not less than the statutory or established minimum wage shall be presumed to be paid While it is true that the contemporaneous construction placed upon a statute by executive
for all days in the month whether worked or not. " officers whose duty is to enforce it should be given great weight by the courts, still if such
construction is so erroneous, as in the instant case, the same must be declared as null and void.
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction No. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or
9 were issued to clarify the policy in the implementation of the ten (10) paid legal holidays. As statutory) interpretation, in the context of the interactions of the three branches of the
interpreted, 'unworked' legal holidays are deemed paid insofar as monthly paid employees are government, almost always in situations where some agency of the State has engaged in action
concerned if (a) they are receiving not less than the statutory minimum wage, (b) their monthly that stems ultimately from some legitimate area of governmental power (The Supreme Court in
pay is uniform from January to December, and (c) no deduction is made from their monthly Modern Role, C. B. Swisher 1958, p. 36).
salary on account of holidays in months where they occur. As explained in Policy Instruction No,
9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily paid Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
employees. In case of monthly, only those whose monthly salary did not yet include payment for Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged the scope of
the ten (10) paid legal holidays are entitled to the benefit' " (pp. 340-341, rec.). This contention is exemption from the coverage of a Presidential Decree granting increase in emergency
untenable. allowance, this Court ruled that:
têñ.£îhqwâ£

It is elementary in the rules of statutory construction that when the language of the law is clear ... the Secretary of Labor has exceeded his authority when he included
and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the paragraph (k) in Section 1 of the Rules implementing P. D. 1 1 23.
provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and
explicit - it provides for both the coverage of and exclusion from the benefits. In Policy Instruction xxx xxx xxx
No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law clearly states that every worker shall Clearly, the inclusion of paragraph k contravenes the statutory authority granted
be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 to the Secretary of Labor, and the same is therefore void, as ruled by this Court
of the Labor Code, which states that "All doubts in the implementation and interpretation of the in a long line of cases . . . ..
têñ.£îhqwâ£

provisions of this Code, including its implementing rules and regulations, shall be resolved in
favor of labor." Moreover, it shall always be presumed that the legislature intended to enact a
The recognition of the power of administrative officials to
valid and permanent statute which would have the most beneficial effect that its language
promulgate rules in the administration of the statute, necessarily
permits (Orlosky vs. Haskell, 155 A. 112.)
limited to what is provided for in the legislative enactment, may be
found in the early case of United States vs. Barrios decided in
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by 1908. Then came in a 1914 decision, United States vs. Tupasi
Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules and Molina (29 Phil. 119) delineation of the scope of such
regulations. competence. Thus: "Of course the regulations adopted under
legislative authority by a particular department must be in
Public respondent vehemently argues that the intent and spirit of the holiday pay law, as harmony with the provisions of the law, and for the sole purpose
expressed by the Secretary of Labor in the case of Chartered Bank Employees Association v. of carrying into effect its general provisions. By such regulations,
The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct the of course, the law itself cannot be extended. So long, however, as
disadvantages inherent in the daily compensation system of employment — holiday pay is the regulations relate solely to carrying into effect the provisions
primarily intended to benefit the daily paid workers whose employment and income are of the law, they are valid." In 1936, in People vs. Santos, this
circumscribed by the principle of "no work, no pay." This argument may sound meritorious; but, Court expressed its disapproval of an administrative order that
until the provisions of the Labor Code on holiday pay is amended by another law, monthly paid would amount to an excess of the regulatory power vested in an
employees are definitely included in the benefits of regular holiday pay. As earlier stated, the administrative official We reaffirmed such a doctrine in a 1951
presumption is always in favor of law, negatively put, the Labor Code is always strictly construed decision, where we again made clear that where an
against management. administrative order betrays inconsistency or repugnancy to the
provisions of the Act, 'the mandate of the Act must prevail and
must be followed. Justice Barrera, speaking for the Court in
Victorias Milling inc. vs. Social Security Commission, citing Parker It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975,
as well as Davis did tersely sum up the matter thus: "A rule is had already become final, and was, in fact, partially executed by the respondent bank.
binding on the Courts so long as the procedure fixed for its
promulgation is followed and its scope is within the statutory However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA
authority granted by the legislature, even if the courts are not in 49, November 13, 1974, he can annul the final decision of Labor Arbiter Soriano since the
agreement with the policy stated therein or its innate wisdom. ensuing promulgation of the integrated implementing rules of the Labor Code pursuant to P.D.
... On the other hand, administrative interpretation of the law is at 850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the
best merely advisory, for it is the courts that finally determine chat then Secretary of Labor are facts and circumstances that transpired subsequent to the
the law means." promulgation of the decision of the labor arbiter, which renders the execution of the said decision
impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).
"It cannot be otherwise as the Constitution limits the authority of
the President, in whom all executive power resides, to take care This contention is untenable.
that the laws be faithfully executed. No lesser administrative
executive office or agency then can, contrary to the express To start with, unlike the instant case, the case of De Luna relied upon by the public respondent is
language of the Constitution assert for itself a more extensive not a labor case wherein the express mandate of the Constitution on the protection to labor is
prerogative. Necessarily, it is bound to observe the constitutional applied. Thus Article 4 of the Labor Code provides that, "All doubts in the implementation and
mandate. There must be strict compliance with the legislative interpretation of the provisions of this Code, including its implementing rules and regulations,
enactment. Its terms must be followed the statute requires shall be resolved in favor of labor and Article 1702 of the Civil Code provides that, " In case of
adherence to, not departure from its provisions. No deviation is doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
allowable. In the terse language of the present Chief Justice, an decent living for the laborer.
administrative agency "cannot amend an act of Congress."
Respondents can be sustained, therefore, only if it could be
Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the
shown that the rules and regulations promulgated by them were
members of petitioner union of their vested right acquired by virtue of a final judgment on the
in accordance with what the Veterans Bill of Rights provides"
basis of a labor statute promulgated following the acquisition of the "right".
(Phil. Apparel Workers Union vs. National Labor Relations
Commission, supra, 463, 464, citing Teozon vs. Members of the
Board of Administrators, PVA 33 SCRA 585; see also Santos vs. On the question of whether or not a law or statute can annul or modify a judicial order issued
Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal prior to its promulgation, this Court, through Associate Justice Claro M. Recto, said:têñ.£îhqwâ£

Revenue, 100 Phil. 295; Sy Man vs. Jacinto & Fabros, 93 Phil.
1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43 Phil. 259). xxx xxx xxx

This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers We are decidedly of the opinion that they did not. Said order, being
Union (TUPAS) vs. The National Labor Relations Commission and American Wire & Cable Co., unappealable, became final on the date of its issuance and the parties who
Inc., G.R. No. 53337, promulgated on June 29, 1984. acquired rights thereunder cannot be deprived thereof by a constitutional
provision enacted or promulgated subsequent thereto. Neither the Constitution
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code nor the statutes, except penal laws favorable to the accused, have retroactive
and Policy instruction No. 9 issued by the then Secretary of Labor must be declared null and effect in the sense of annulling or modifying vested rights, or altering contractual
void. Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had no basis at obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63
all to deny the members of petitioner union their regular holiday pay as directed by the Labor Phil. 324, emphasis supplied).
Code.
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a
II court renders a decision or promulgates a resolution or order on the basis of and in accordance
with a certain law or rule then in force, the subsequent amendment or even repeal of said law or
rule may not affect the final decision, order, or resolution already promulgated, in the sense of
revoking or rendering it void and of no effect." Thus, the amendatory rule (Rule IV, Book III of the xxx xxx xxx
Rules to Implement the Labor Code) cannot be given retroactive effect as to modify final
judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al., Ibid). The lower court was thus aware of the fact that it was thereby altering or
modifying its order of January 8, 1959. Regardless of the excellence of the
Furthermore, the facts of the case relied upon by the public respondent are not analogous to that motive for acting as it did, we are constrained to hold however, that the lower
of the case at bar. The case of De Luna speaks of final and executory judgment, while iii the court had no authorities to make said alteration or modification. ...
instant case, the final judgment is partially executed. just as the court is ousted of its jurisdiction
to annul or modify a judgment the moment it becomes final, the court also loses its jurisdiction to xxx xxx xxx
annul or modify a writ of execution upon its service or execution; for, otherwise, we will have a
situation wherein a final and executed judgment can still be annulled or modified by the court The equitable considerations that led the lower court to take the action
upon mere motion of a panty This would certainly result in endless litigations thereby rendering complained of cannot offset the dem ands of public policy and public interest —
inutile the rule of law. which are also responsive to the tenets of equity — requiring that an issues
passed upon in decisions or final orders that have become executory, be deemed
Respondent bank counters with the argument that its partial compliance was involuntary conclusively disposed of and definitely closed for, otherwise, there would be no
because it did so under pain of levy and execution of its assets (p. 138, rec.). WE find no merit in end to litigations, thus setting at naught the main role of courts of justice, which is
this argument. Respondent bank clearly manifested its voluntariness in complying with the to assist in the enforcement of the rule of law and the maintenance of peace and
decision of the labor arbiter by not appealing to the National Labor Relations Commission as order, by settling justiciable controversies with finality.
provided for under the Labor Code under Article 223. A party who waives his right to appeal is
deemed to have accepted the judgment, adverse or not, as correct, especially if such party xxx xxx xxx
readily acquiesced in the judgment by starting to execute said judgment even before a writ of
execution was issued, as in this case. Under these circumstances, to permit a party to appeal
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court
from the said partially executed final judgment would make a mockery of the doctrine of finality of
said:
judgments long enshrined in this jurisdiction.
têñ.£îhqwâ£

xxx xxx xxx


Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a
matter of right upon the expiration of the period to appeal ... or if no appeal has been duly
perfected." This rule applies to decisions or orders of labor arbiters who are exercising quasi- In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule
judicial functions since "... the rule of execution of judgments under the rules should govern all is absolute that after a judgment becomes final by the expiration of the period
kinds of execution of judgment, unless it is otherwise provided in other laws" Sagucio vs. Bulos 5 provided by the rules within which it so becomes, no further amendment or
SCRA 803) and Article 223 of the Labor Code provides that "... decisions, awards, or orders of correction can be made by the court except for clerical errors or mistakes. And
the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the such final judgment is conclusive not only as to every matter which was offered
Commission by any or both of the parties within ten (10) days from receipt of such awards, and received to sustain or defeat the claim or demand but as to any other
orders, or decisions. ..." admissible matter which must have been offered for that purpose (L-7044, 96
Phil. 526). In the earlier case of Contreras and Ginco vs. Felix and China Banking
Corp., Inc. (44 O.G. 4306), it was stated that the rule must be adhered to
Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of jurisdiction
regardless of any possible injustice in a particular case for (W)e have to
to alter the final judgment and the judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA
subordinate the equity of a particular situation to the over-mastering need of
143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC,
certainty and immutability of judicial pronouncements
77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs.
Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
xxx xxx xxx
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961,
where the lower court modified a final order, this Court ruled thus: têñ.£îhqwâ£
III
The despotic manner by which public respondent Amado G. Inciong divested the members of
the petitioner union of their rights acquired by virtue of a final judgment is tantamount to a
deprivation of property without due process of law Public respondent completely ignored the
rights of the petitioner union's members in dismissing their complaint since he knew for a fact
that the judgment of the labor arbiter had long become final and was even partially executed by
the respondent bank.

A final judgment vests in the prevailing party a right recognized and protected by law under the
due process clause of the Constitution (China Ins. & Surety Co. vs. Judge of First Instance of
Manila, 63 Phil. 324). A final judgment is "a vested interest which it is right and equitable that the
government should recognize and protect, and of which the individual could no. be deprived
arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).

lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy
language of then Justice, later Chief Justice, Concepcion "... acts of Congress, as well as those
of the Executive, can deny due process only under pain of nullity, and judicial proceedings
suffering from the same flaw are subject to the same sanction, any statutory provision to the
contrary notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis
supplied), And "(I)t has been likewise established that a violation of a constitutional right divested
the court of jurisdiction; and as a consequence its judgment is null and void and confers no
rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA
211, June 5, 1973).

Tested by and pitted against this broad concept of the constitutional guarantee of due process,
the action of public respondent Amado G. Inciong is a clear example of deprivation of property
without due process of law and constituted grave abuse of discretion, amounting to lack or
excess of jurisdiction in issuing the order dated November 10, 1979.

WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC


RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR ARBITER RICARTE T.
SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.

COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA

SO ORDERED. 1äwphï1.ñët
Republic of the Philippines backwages.10 On appeal, however, the NLRC reversed the labor arbiter’s decision and dismissed
SUPREME COURT the complaint for lack of merit.11 The NLRC likewise denied petitioner’s motion for
Manila reconsideration.12 In the assailed decision and resolution, the CA affirmed the NLRC.

FIRST DIVISION Hence, this petition.

G.R. No. 156934 March 16, 2007 The issues for our consideration are:

ALPHA C. JACULBE, Petitioner, 1) did respondent’s retirement plan imposing automatic retirement after 35 years of
vs. service contravene the security of tenure clause in the 1987 Constitution and the Labor
SILLIMAN UNIVERSITY,Respondent. Code?

DECISION 2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such
provision in its retirement plan?
CORONA, J.:
Retirement plans allowing employers to retire employees who are less than the compulsory
Petitioner comes to us via this petition for review on certiorari1 to challenge a decision2 of the retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure.
Court of Appeals (CA) and the resolution3 affirming it. Article 287 of the Labor Code provides:

Sometime in 1958, petitioner began working for respondent’s university medical center as a ART. 287. Retirement - Any employee may be retired upon reaching the retirement age
nurse.4 established in the collective bargaining agreement or other applicable employment contract. xxx

In a letter dated December 3, 1992,5 respondent, through its Human Resources Development By its express language, the Labor Code permits employers and employees to fix the applicable
Office, informed petitioner that she was approaching her 35th year of service with the university retirement age at below 60 years.13
and was due for automatic retirement on November 18, 1993, at which time she would be 57
years old. This was pursuant to respondent’s retirement plan for its employees which provided However, after reviewing the assailed decision together with the rules and regulations of
that its members could be automatically retired "upon reaching the age of 65 or after 35 years of respondent’s retirement plan, we find that the plan runs afoul of the constitutional guaranty of
uninterrupted service to the university." 6 Respondent required certain documents in connection security of tenure contained in Article XIII, also known as the provision on Social Justice and
with petitioner’s impending retirement. Human Rights.

A brief exchange of letters7 between petitioner and respondent followed. Petitioner emphatically The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her
insisted that the compulsory retirement under the plan was tantamount to a dismissal and voluntary participation therein:
pleaded with respondent to be allowed to work until the age of 60 because this was the minimum
age at which she could qualify for SSS8 pension. But respondent stood pat on its decision to The petitioner in this case may, however, argue that the Pantranco case is not applicable in the
retire her, citing "company policy." case at bar as the controversy in the said case involves a compulsory retirement on the basis of
the length of service rendered by the employee as agreed in an existing CBA, whereas in the
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission present case, the private respondent compulsorily retired the petitioner not based on a CBA but
(NLRC) for "termination of service with preliminary injunction and/or restraining order." 9 On on the retirement scheme provided for in the private respondent’s retirement plan. Nonetheless,
November 18, 1993, respondent compulsorily retired petitioner. this argument must fail. The contract fixing for retirement age as allowed under Article 287 of the
Labor Code does not exclusively refer to CBA which provides for an agreed retirement age. The
After the parties submitted their position papers, the labor arbiter rendered a decision finding said provision explicitly allows, as well, other applicable employment contract to fix retirement
respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full age.
The records disclose that the private respondent’s Retirement Plan has been in effect for more the date of his reinstatement. Provided[,] further that if a member has no sufficient source of
than 30 years. The said plan is deemed integrated into the employment contract between private income while on leave may pay within six months after his reinstatement.16
respondent and its employees as evidenced by the latter’s voluntary contribution through
monthly salary deductions. Previous retirees have already enjoyed the benefits of the From the language of the foregoing retirement plan rules, the compulsory nature of both
retirement plan, and ever since the said plan was effected, no questions or disagreement have membership in and contribution to the plan debunked the CA’s theory that petitioner’s "voluntary
been raised, until the same was made to apply to the petitioner. xxx 14 (emphasis ours) contributions" were evidence of her willing participation therein. It was through no voluntary act of
her own that petitioner became a member of the plan. In fact, the only way she could have
The problem with this line of reasoning is that a perusal of the rules and regulations of the plan ceased to be a member thereof was if she stopped working for respondent altogether.
shows that participation therein was not voluntary at all. Furthermore, in the rule on contributions, the repeated use of the word "shall" ineluctably pointed
to the conclusion that employees had no choice but to contribute to the plan (even when they
Rule III of the plan, on membership, stated: were on leave).

SECTION 1 – MEMBERSHIP According to the assailed decision, respondent’s retirement plan "ha(d) been in effect for more
than 30 years."17What was not pointed out, however, was that the retirement plan came into
All full-time Filipino employees of the University will automatically become members of the being in 197018 or 12 years after petitioner started working for respondent. In short, it was not
Plan, provided, however, that those who have retired from the University, even if rehired, are no part of the terms of employment to which petitioner agreed when she started working for
longer eligible for membership in the Plan. A member who continues to serve the University respondent. Neither did it become part of those terms shortly thereafter, as the CA would have
cannot withdraw from the Plan. us believe.

xxx xxx xxx Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age agrees to sever his
or her employment with the former.19In Pantranco North Express, Inc. v. NLRC,20 to which both
SECTION 2 – EFFECTIVITY OF MEMBERSHIP
the CA and respondent refer, the imposition of a retirement age below the compulsory age of 65
was deemed acceptable because this was part of the CBA between the employer and the
Membership in the Plan starts on the day a person is hired on a full-time basis by the University. employees. The consent of the employees, as represented by their bargaining unit, to be retired
even before the statutory retirement age of 65 was laid out clearly in black and white and was
SECTION 3 – TERMINATION OF MEMBERSHIP therefore in accord with Article 287.

Termination of membership in the Plan shall be upon the death of the member, resignation In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to
or termination of employee’s contract by the University, or retirement from the justify the latter’s imposition of the early retirement age in its retirement plan, opting instead to
University.15 (emphasis ours). harp on petitioner’s alleged "voluntary" contributions to the plan, which was simply untrue. The
truth was that petitioner had no choice but to participate in the plan, given that the only way she
Rule IV, on contributions, stated: could refrain from doing so was to resign or lose her job. It is axiomatic that employer and
employee do not stand on equal footing,21 a situation which often causes an employee to act out
The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the of need instead of any genuine acquiescence to the employer. This was clearly just such an
basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic instance.
salaries of the faculty and staff.
Not only was petitioner still a good eight years away from the compulsory retirement age but she
A member on leave with the University approval shall continue paying, based on his pay while on was also still fully capable of discharging her duties as shown by the fact that respondent’s board
leave, his leave without pay should pay his contributions to the Plan. However, a member, who of trustees seriously considered rehiring her after the effectivity of her "compulsory retirement." 22
has been on leave without pay should pay his contributions based on his salary plus the
University’s contributions while on leave or the full amount within one month immediately after As already stated, an employer is free to impose a retirement age less than 65 for as long as it
has the employees’ consent. Stated conversely, employees are free to accept the employer’s
offer to lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a provision
of a retirement plan which was not freely assented to by her, respondent was guilty of illegal
dismissal.

At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore
1awphi1.nét

well over the statutory compulsory retirement age. For this reason, we grant her separation pay
in lieu of reinstatement. It is also for this reason that we modify the award of backwages in her
favor, to be computed from the time of her illegal dismissal on November 18, 1993 up to her
compulsory retirement age.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-
G.R. SP No. 50445 is REVERSED and SET ASIDE. The October 25, 1994 decision of the labor
arbiter finding respondent guilty of illegal dismissal is REINSTATED, with
the MODIFICATION that, in lieu of reinstatement, petitioner is awarded separation pay, the
award of backwages to be computed from the time of her illegal dismissal up to her compulsory
retirement age.

SO ORDERED.
FIRST DIVISION 1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No.
416 Magsaysay Ave., Baguio City;

2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
[G.R. No. 118506. April 18, 1997]
3. That we are all (8) employees in the hotel and assigned in each respective shifts;

NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS 4. That we have no complaints against the management of the Hotel Supreme as
COMMISSION, PETER NG/HOTEL SUPREME, respondents. we are paid accordingly and that we are treated well.

DECISION 5. That we are executing this affidavit voluntarily without any force or intimidation
KAPUNAN, J.:
and for the purpose of informing the authorities concerned and to dispute the
alleged report of the Labor Inspector of the Department of Labor and Employment
This petition seeking the nullification of a resolution of public respondent conducted on the said establishment on February 2, 1991.
National Labor Relations Commission dated April 28, 1994 vividly illustrates
why courts should be ever vigilant in the preservation of the constitutionally IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of
enshrined rights of the working class. Without the protection accorded by our May, 1991 at Baguio City, Philippines.
laws and the tempering of courts, the natural and historical inclination of (Sgd.) (Sgd.) (Sgd.)
capital to ride roughshod over the rights of labor would run unabated. SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
The facts of the case at bar, culled from the conflicting versions of (Sgd) (Sgd.) (Sgd.)
petitioner and private respondent, are illustrative. MACARIA JUGUETA ADELAIDA NONOG NORMA
Petitioner Norma Mabeza contends that around the first week of May, MABEZA
1991, she and her co-employees at the Hotel Supreme in Baguio City were (Sgd) (Sgd.)
asked by the hotel's management to sign an instrument attesting to the JONATHAN PICART JOSE DIZON
latter's compliance with minimum wage and other labor standard provisions
of law. The instrument provides:
[1] [2]
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at
Baguio City, Philippines.
JOINT AFFIDAVIT
Asst. City Prosecutor
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY,
MACARIA JUGUETA, ADELAIDA NONOG, NORMA MABEZA, Petitioner signed the affidavit but refused to go to the City Prosecutor's
JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos Office to swear to the veracity and contents of the affidavit as instructed by
and residents of Baguio City, under oath, depose and say: management. The affidavit was nevertheless submitted on the same day to
the Regional Office of the Department of Labor and Employment in Baguio the original complaint for illegal dismissal was filed, private respondent
City. raised a new ground, loss of confidence, which was supported by a criminal
complaint for Qualified Theft he filed before the prosecutor's office of the City
As gleaned from the affidavit, the same was drawn by management for
of Baguio against petitioner on July 4, 1991. [8]

the sole purpose of refuting findings of the Labor Inspector of DOLE (in an
inspection of respondent's establishment on February 2, 1991) apparently On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing
adverse to the private respondent. [3]
petitioner's complaint on the ground of loss of confidence. His disquisitions
in support of his conclusion read as follows:
After she refused to proceed to the City Prosecutor's Office - on the same
day the affidavit was submitted to the Cordillera Regional Office of DOLE - It appears from the evidence of respondent that complainant carted away or
petitioner avers that she was ordered by the hotel management to turn over stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel
the keys to her living quarters and to remove her belongings from the hotel (Exhibits '9', '9-A,' '9-B,' '9-C' and '10' pages 12-14 TSN, December 1,
premises. According to her, respondent strongly chided her for refusing to
[4]
1992).
proceed to the City Prosecutor's Office to attest to the affidavit. She [5]

In fact, this was the reason why respondent Peter Ng lodged a criminal
thereafter reluctantly filed a leave of absence from her job which was denied
complaint against complainant for qualified theft and perjury. The fiscal's
by management. When she attempted to return to work on May 10, 1991,
office finding a prima facie evidence that complainant committed the crime
the hotel's cashier, Margarita Choy, informed her that she should not report
of qualified theft issued a resolution for its filing in court but dismissing
to work and, instead, continue with her unofficial leave of
the charge of perjury (Exhibit '4' for respondent and Exhibit 'B-7' for
absence. Consequently, on May 13, 1991, three days after her attempt to
complainant). As a consequence, complainant was charged in court for the
return to work, petitioner filed a complaint for illegal dismissal before the
said crime (Exhibit '5' for respondent and Exhibit 'B-6' for the
Arbitration Branch of the National Labor Relations Commission - CAR
complainant).
Baguio City. In addition to her complaint for illegal dismissal, she alleged
underpayment of wages, non-payment of holiday pay, service incentive With these pieces of evidence, complainant committed serious misconduct
leave pay, 13th month pay, night differential and other benefits. The against her employer which is one of the just and valid grounds for an
complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and employer to terminate an employee (Article 282 of the Labor Code as
assigned to Labor Arbiter Felipe P. Pati. amended). [9]

Responding to the allegations made in support of petitioner's complaint On April 28, 1994, respondent NLRC promulgated its assailed
for illegal dismissal, private respondent Peter Ng alleged before Labor Resolution affirming the Labor Arbiter's decision. The resolution
[10]

Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the substantially incorporated the findings of the Labor Arbiter. Unsatisfied,
[11]

management" and that she actually abandoned her work. He maintained


[6] petitioner instituted the instant special civil action for certiorari under Rule 65
that there was no basis for the money claims for underpayment and other of the Rules of Court on the following grounds: [12]

benefits as these were paid in the form of facilities to petitioner and the 1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL
hotel's other employees. Pointing to the Affidavit of May 7, 1991, the private
[7]
LABOR RELATIONS COMMISSION COMMITTED A
respondent asserted that his employees actually have no problems with PATENT AND PALPABLE ERROR AMOUNTING TO
management. In a supplemental answer submitted eleven (11) months after GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO
CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE In the case at bar, the private respondent initially claimed that petitioner
IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE abandoned her job when she failed to return to work on May 8,
PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, 1991. Additionally, in order to strengthen his contention that there existed
ALBEIT ILLEGALLY, THE DISMISSAL OF THE sufficient cause for the termination of petitioner, he belatedly included a
COMPLAINANT FROM HER EMPLOYMENT; complaint for loss of confidence, supporting this with charges that petitioner
had stolen a blanket, a bedsheet and two towels from the hotel. Appended
[15]

2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL


to his last complaint was a suit for qualified theft filed with the Baguio City
LABOR RELATIONS COMMISSION COMMITTED A
prosecutor's office.
PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ADOPTING THE From the evidence on record, it is crystal clear that the circumstances
RULING OF THE LABOR ARBITER THAT THERE WAS NO upon which private respondent anchored his claim that petitioner
UNDERPAYMENT OF WAGES AND BENEFITS ON THE "abandoned" her job were not enough to constitute just cause to sanction
BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF the termination of her services under Article 283 of the Labor Code. For
COMPUTATION PREPARED BY ALLEGEDLY BY abandonment to arise, there must be concurrence of two things: 1) lack of
RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS intention to work; and 2) the presence of overt acts signifying the
[16]

TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE employee's intention not to work. [17]

PAYMENT OF WAGES AND BENEFITS;


In the instant case, respondent does not dispute the fact that petitioner
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL tried to file a leave of absence when she learned that the hotel management
LABOR RELATIONS COMMISSION COMMITTED A was displeased with her refusal to attest to the affidavit. The fact that she
PATENT AND PALPABLE ERROR AMOUNTING TO made this attempt clearly indicates not an intention to abandon but an
GRAVE ABUSE OF DISCRETION IN FAILING TO intention to return to work after the period of her leave of absence, had it
CONSIDER THE EVIDENCE ADDUCED BEFORE THE been granted, shall have expired.
LABOR ARBITER AS CONSTITUTING UNFAIR LABOR
Furthermore, while absence from work for a prolonged period may
PRACTICE COMMITTED BY THE RESPONDENT.
suggest abandonment in certain instances, mere absence of one or two days
The Solicitor General, in a Manifestation in lieu of Comment dated would not be enough to sustain such a claim. The overt act (absence) ought
August 8, 1995 rejects private respondent's principal claims and defenses to unerringly point to the fact that the employee has no intention to return to
and urges this Court to set aside the public respondent's assailed work, which is patently not the case here. In fact, several days after she
[18]

resolution.
[13]
had been advised to take an informal leave, petitioner tried to resume
working with the hotel, to no avail. It was only after she had been repeatedly
We agree.
rebuffed that she filed a case for illegal dismissal. These acts militate against
It is settled that in termination cases the employer bears the burden of the private respondent's claim that petitioner abandoned her job. As the
proof to show that the dismissal is for just cause, the failure of which would Solicitor General in his manifestation observed:
mean that the dismissal is not justified and the employee is entitled to
reinstatement. [14]
Petitioner's absence on that day should not be construed as abandonment of distrusts. Indeed, even the lowly janitor must enjoy that trust and
her job. She did not report because the cashier told her not to report confidence in some measure if only because he is the one who opens the
anymore, and that private respondent Ng did not want to see her in the office in the morning and closes it at night and in this sense is entrusted
hotel premises. But two days later or on the 10th of May, after realizing with the care or protection of the employer's property. The keys he holds
that she had to clarify her employment status, she again reported for are the symbol of that trust and confidence.
work. However, she was prevented from working by private respondents. [19]

By the same token, the security guard must also be considered as enjoying
We now come to the second cause raised by private respondent to the trust and confidence of his employer, whose property he is
support his contention that petitioner was validly dismissed from her job. safeguarding. Like the janitor, he has access to this property. He too, is
charged with its care and protection.
Loss of confidence as a just cause for dismissal was never intended to
provide employers with a blank check for terminating their employees. Such Notably, however, and like the janitor again, he is entrusted only with
a vague, all-encompassing pretext as loss of confidence, if unqualifiedly the physical task of protecting that property. The employer's trust and
given the seal of approval by this Court, could readily reduce to barren form confidence in him is limited to that ministerial function. He is not
the words of the constitutional guarantee of security of tenure. Having this in entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and
mind, loss of confidence should ideally apply only to cases involving safeguarding company policies, management instructions, and company
employees occupying positions of trust and confidence or to those situations secrets such as operation devices.' He is not privy to these confidential
where the employee is routinely charged with the care and custody of the matters, which are shared only in the higher echelons of management. It is
employer's money or property. To the first class belong managerial the persons on such levels who, because they discharge these sensitive
employees, i.e., those vested with the powers or prerogatives to lay down duties, may be considered holding positions of trust and confidence. The
management policies and/or to hire, transfer, suspend, lay-off, recall, security guard does not belong in such category. [21]

discharge, assign or discipline employees or effectively recommend such


More importantly, we have repeatedly held that loss of confidence should
managerial actions; and to the second class belong cashiers, auditors,
not be simulated in order to justify what would otherwise be, under the
property custodians, etc., or those who, in the normal and routine exercise
provisions of law, an illegal dismissal. "It should not be used as a subterfuge
of their functions, regularly handle significant amounts of money or
for causes which are illegal, improper and unjustified. It must be genuine,
property. Evidently, an ordinary chambermaid who has to sign out for linen
not a mere afterthought to justify an earlier action taken in bad faith." [22]

and other hotel property from the property custodian each day and who has
to account for each and every towel or bedsheet utilized by the hotel's guests In the case at bar, the suspicious delay in private respondent's filing of
at the end of her shift would not fall under any of these two classes of qualified theft charges against petitioner long after the latter exposed the
employees for which loss of confidence, if ably supported by evidence, would hotel's scheme (to avoid its obligations as employer under the Labor Code)
normally apply. Illustrating this distinction, this Court, in Marina Port by her act of filing illegal dismissal charges against the private respondent
Services, Inc. vs. NLRC, has stated that:
[20] would hardly warrant serious consideration of loss of confidence as a valid
ground for dismissal. Notably, the Solicitor General has himself taken a
To be sure, every employee must enjoy some degree of trust and
position opposite the public respondent and has observed that:
confidence from the employer as that is one reason why he was employed
in the first place. One certainly does not employ a person he
If petitioner had really committed the acts charged against her by private practice "to dismiss, discharge or otherwise prejudice or discriminate against
respondents (stealing supplies of respondent hotel), private respondents an employee for having given or being about to give testimony" under the
[25]

should have confronted her before dismissing her on that ground. Private Labor Code. For in not giving positive testimony in favor of her employer,
respondents did not do so. In fact, private respondent Ng did not raise the petitioner had reserved not only her right to dispute the claim and proffer
matter when petitioner went to see him on May 9, 1991, and handed him evidence in support thereof but also to work for better terms and conditions
her application for leave. It took private respondents 52 days or up to July of employment.
4, 1991 before finally deciding to file a criminal complaint against
For refusing to cooperate with the private respondent's scheme,
petitioner, in an obvious attempt to build a case against her.
petitioner was obviously held up as an example to all of the hotel's
The manipulations of private respondents should not be countenanced. [23]
employees, that they could only cause trouble to management at great
personal inconvenience. Implicit in the act of petitioner's termination and the
Clearly, the efforts to justify petitioner's dismissal - on top of the private
subsequent filing of charges against her was the warning that they would not
respondent's scheme of inducing his employees to sign an affidavit
only be deprived of their means of livelihood, but also possibly, their personal
absolving him from possible violations of the Labor Code - taints with evident
liberty.
bad faith and deliberate malice petitioner's summary termination from
employment. This Court does not normally overturn findings and conclusions of quasi-
judicial agencies when the same are ably supported by the evidence on
Having said this, we turn to the important question of whether or not the
record. However, where such conclusions are based on a misperception of
dismissal by the private respondent of petitioner constitutes an unfair labor
facts or where they patently fly in the face of reason and logic, we will not
practice.
hesitate to set aside those conclusions. Going into the issue of petitioner's
The answer in this case must inevitably be in the affirmative. money claims, we find one more salient reason in this case to set things
The pivotal question in any case where unfair labor practice on the part right: the labor arbiter's evaluation of the money claims in this case incredibly
of the employer is alleged is whether or not the employer has exerted ignores existing law and jurisprudence on the matter. Its blatant one-
pressure, in the form of restraint, interference or coercion, against his sidedness simply raises the suspicion that something more than the facts,
employee's right to institute concerted action for better terms and conditions the law and jurisprudence may have influenced the decision at the level of
of employment. Without doubt, the act of compelling employees to sign an the Arbiter.
instrument indicating that the employer observed labor standards provisions Labor Arbiter Pati accepted hook, line and sinker the private
of law when he might have not, together with the act of terminating or respondent's bare claim that the reason the monetary benefits received by
coercing those who refuse to cooperate with the employer's scheme petitioner between 1981 to 1987 were less than minimum wage was
constitutes unfair labor practice. The first act clearly preempts the right of the because petitioner did not factor in the meals, lodging, electric consumption
hotel's workers to seek better terms and conditions of employment through and water she received during the period in her computations. Granting[26]

concerted action. that meals and lodging were provided and indeed constituted facilities, such
We agree with the Solicitor General's observation in his manifestation facilities could not be deducted without the employer complying first with
that "[t]his actuation... is analogous to the situation envisaged in paragraph certain legal requirements. Without satisfying these requirements, the
(f) of Article 248 of the Labor Code" which distinctly makes it an unfair labor
[24]
employer simply cannot deduct the value from the employee's wages. First,
proof must be shown that such facilities are customarily furnished by the has never been able to adduce proof that petitioner was paid the aforestated
trade. Second, the provision of deductible facilities must be voluntarily benefits.
accepted in writing by the employee.Finally, facilities must be charged at fair
However, the claims covering the period of October 1987 up to the time
and reasonable value. [27]

of filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as
These requirements were not met in the instant case. Private respondent amended) and its implementing rules limit all money claims arising out of
"failed to present any company policy or guideline to show that the meal and employer-employee relationship to three (3) years from the time the cause
lodging . . . (are) part of the salary;" he failed to provide proof of the
[28]
of action accrues. [32]

employee's written authorization; and, he failed to show how he arrived at


We depart from the settled rule that an employee who is unjustly
the valuations.[29]

dismissed from work normally should be reinstated without loss of seniority


Curiously, in the case at bench, the only valuations relied upon by the rights and other privileges. Owing to the strained relations between petitioner
labor arbiter in his decision were figures furnished by the private and private respondent, allowing the former to return to her job would only
respondent's own accountant, without corroborative evidence. On the subject her to possible harassment and future embarrassment. In the instant
pretext that records prior to the July 16, 1990 earthquake were lost or case, separation pay equivalent to one month's salary for every year of
destroyed, respondent failed to produce payroll records, receipts and other continuous service with the private respondent would be proper, starting with
relevant documents, where he could have, as has been pointed out in the her job at the Belfront Hotel.
Solicitor General's manifestation, "secured certified copies thereof from the
In addition to separation pay, backwages are in order. Pursuant to R.A.
nearest regional office of the Department of Labor, the SSS or the BIR." [30]

6715 and our decision in Osmalik Bustamante, et al. vs. National Labor
More significantly, the food and lodging, or the electricity and water Relations Commission, petitioner is entitled to full backwages from the time
[33]

consumed by the petitioner were not facilities but supplements. A benefit or of her illegal dismissal up to the date of promulgation of this decision without
privilege granted to an employee for the convenience of the employer is not qualification or deduction.
a facility. The criterion in making a distinction between the two not so much
Finally, in dismissal cases, the law requires that the employer must
lies in the kind (food, lodging) but the purpose. Considering, therefore, that
[31]

furnish the employee sought to be terminated from employment with two


hotel workers are required to work different shifts and are expected to be
written notices before the same may be legally effected. The first is a written
available at various odd hours, their ready availability is a necessary matter
notice containing a statement of the cause(s) for dismissal; the second is a
in the operations of a small hotel, such as the private respondent's hotel.
notice informing the employee of the employer's decision to terminate him
It is therefore evident that petitioner is entitled to the payment of the stating the basis of the dismissal. During the process leading to the second
deficiency in her wages equivalent to the full wage applicable from May 13, notice, the employer must give the employee ample opportunity to be heard
1988 up to the date of her illegal dismissal. and defend himself, with the assistance of counsel if he so desires.
Additionally, petitioner is entitled to payment of service incentive leave Given the seriousness of the second cause (qualified theft) of the
pay, emergency cost of living allowance, night differential pay, and 13th petitioner's dismissal, it is noteworthy that the private respondent never even
month pay for the periods alleged by the petitioner as the private respondent bothered to inform petitioner of the charges against her. Neither was
petitioner given the opportunity to explain the loss of the articles. It was only
almost two months after petitioner had filed a complaint for illegal dismissal,
as an afterthought, that the loss was reported to the police and added as a
supplemental answer to petitioner's complaint. Clearly, the dismissal of
petitioner without the benefit of notice and hearing prior to her termination
violated her constitutional right to due process. Under the circumstances, an
award of One Thousand Pesos (P1,000.00) on top of payment of the
deficiency in wages and benefits for the period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National
Labor Relations Commission dated April 24, 1994 is REVERSED and SET
ASIDE, with costs. For clarity, the economic benefits due the petitioner are
hereby summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to
the date of petitioner's illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay
for the same period;
3) Separation pay equal to one month's salary for every year of petitioner's
continuous service with the private respondent starting with her job at the
Belfront Hotel;
4) Full backwages, without qualification or deduction, from the date of
petitioner's illegal dismissal up to the date of promulgation of this decision
pursuant to our ruling in Bustamante vs. NLRC. [34]

5) P1.000.00.
SO ORDERED.
SECOND DIVISION 3. The UNION acknowledges that in view of the serious business losses the Company has
been experiencing as seen in their audited financial statements, employees ARE NOT
G.R. No. 202961, February 04, 2015 granted separation benefits under the law.

4. The COMPANY, by way of goodwill and in the spirit of generosity agrees to grant
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO
financial assistance less accountabilities to members of the Union based on length
MATUNDAN, NORA MENDOZA, ET AL., Petitioners, v. NATIONAL LABOR RELATIONS
of service to be computed as follows: (Italics in this paragraph supplied)
COMMISSION, SOLID MILLS, INC., AND/OR PHILIP ANG, Respondents.
Number of days - 12.625 for every year of service
DECISION
5. In view of the above, the members of the UNION will receive such financial assistance
LEONEN, J.: on an equal monthly installments basis based on the following schedule: chanRoblesvirtualLawl ibrary

First Check due on January 5, 2004 and every 5th of the month thereafter until
An employer is allowed to withhold terminal pay and benefits pending the employee’s return of its
December 5, 2004.
properties.

Petitioners are respondent Solid Mills, Inc.’s (Solid Mills) employees.1 They are represented by the 6. The COMPANY commits to pay any accrued benefits the Union members are entitled
National Federation of Labor Unions (NAFLU), their collective bargaining agent.2 to, specifically those arising from sick and vacation leave benefits and 13th month pay,
less accountabilities based on the following schedule:
chanroblesvirtuallawli brary

chanRoblesvirtualLawlibrary

As Solid Mills’ employees, petitioners and their families were allowed to occupy SMI Village, a property
owned by Solid Mills.3 According to Solid Mills, this was “[o]ut of liberality and for the convenience of its One Time Cash Payment to be distributed anywhere from. . . .
employees . . . [and] on the condition that the employees . . . would vacate the premises anytime the
Company deems fit.”4 chanroblesvirtuallawli brary
....

In September 2003, petitioners were informed that effective October 10, 2003, Solid Mills would cease 7. The foregoing agreement is entered into with full knowledge by the parties of their
its operations due to serious business losses.5 NAFLU recognized Solid Mills’ closure due to serious rights under the law and they hereby bind themselves not to conduct any concerted
business losses in the memorandum of agreement dated September 1, 2003. 6 The memorandum of action of whatsoever kind, otherwise the grant of financial assistance as discussed
agreement provided for Solid Mills’ grant of separation pay less accountabilities, accrued sick leave above will be withheld.8 (Emphasis in the original)
benefits, vacation leave benefits, and 13th month pay to the employees. 7 Pertinent portions of the
agreement provide: chanRoblesvirtualLawli brary

Solid Mills filed its Department of Labor and Employment termination report on September 2, 2003. 9 chanroblesvirtuallawlib rary

WHEREAS, the COMPANY has incurred substantial financial losses and is currently experiencing further
severe financial losses; chanrobleslaw
Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual notices to vacate SMI
Village.10 chanroblesvirtuallaw libra ry

WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its operations on
October 10, 2003; chanrobleslaw
Petitioners were no longer allowed to report for work by October 10, 2003.11 They were required to sign
a memorandum of agreement with release and quitclaim before their vacation and sick leave benefits,
WHEREAS, all employees of the COMPANY on account of irreversible financial losses, will be dismissed 13th month pay, and separation pay would be released.12 Employees who signed the memorandum of
from employment effective October 10, 2003; chanrobleslaw
agreement were considered to have agreed to vacate SMI Village, and to the demolition of the
constructed houses inside as condition for the release of their termination benefits and separation
In view thereof, the parties agree as follows: chanRoblesvirtualLawli brary
pay.13 Petitioners refused to sign the documents and demanded to be paid their benefits and separation
pay.14chanroblesvirtuallaw library

1. That UNION acknowledges that the COMPANY is experiencing severe financial losses
and as a consequence of which, management is constrained to cease the company’s Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of separation pay,
operations. accrued sick and vacation leaves, and 13th month pay.15 They argued that their accrued benefits and
separation pay should not be withheld because their payment is based on company policy and
practice.16 Moreover, the 13th month pay is based on law, specifically, Presidential Decree No.
2. The UNION acknowledges that under Article 283 of the Labor Code, separation pay is
851.17 Their possession of Solid Mills property is not an accountability that is subject to clearance
granted to employees who are dismissed due to closures or cessation of operations NOT
procedures.18 They had already turned over to Solid Mills their uniforms and equipment when Solid Mills
DUE to serious business losses.
ceased operations.19 chanroblesvirtuallaw libra ry
On the other hand, Solid Mills argued that petitioners’ complaint was premature because they had not Ronaldo David, Bonifacio Matundan, Nora Mendoza, Myrna Igcas, Raul De Las Alas, Renato Estolano,
vacated its property.20chanroblesvirtuallawlib rary Rex S. Dimaf[e]lix, Maura Milan, Jessica Baybayon, Alfredo Mendoza, Roberto Igcas, Cleopatra Zacarias
and Jerry L. Sesma’s monetary claims in the form of separation pay, accrued 13th month pay for 2003,
The Labor Arbiter ruled in favor of petitioners.21 According to the Labor Arbiter, Solid Mills illegally accrued vacation and sick leave pays are held in abeyance pending compliance of their accountabilities
withheld petitioners’ benefits and separation pay.22 Petitioners’ right to the payment of their benefits to respondent company by turning over the subject lots they respectively occupy at SMI Village Sucat
and separation pay was vested by law and contract.23 The memorandum of agreement dated Muntinlupa City, Metro Manila to herein respondent company.31
September 1, 2003 stated no condition to the effect that petitioners must vacate Solid Mills’ property
before their benefits could be given to them.24 Petitioners’ possession should not be construed as
The National Labor Relations Commission noted that complainants Marilou Linga, Renato Linga, Ismael
petitioners’ “accountabilities” that must be cleared first before the release of benefits. 25 Their
Mata, and Carlito Damian were already paid their respective separation pays and benefits.32 Meanwhile,
possession “is not by virtue of any employer-employee relationship.”26 It is a civil issue, which is
Teodora Mahilom already retired long before Solid Mills’ closure.33 She was already given her retirement
outside the jurisdiction of the Labor Arbiter.27
benefits.34
chanroblesvirtualla wlibrary

chanroblesvirtuallawlib rary

The dispositive portion of the Labor Arbiter’s decision reads:


The National Labor Relations Commission ruled that because of petitioners’ failure to vacate Solid Mills’
chanRoblesvirtualLawlib rary

property, Solid Mills was justified in withholding their benefits and separation pay.35 Solid Mills granted
WHEREFORE, premises considered, judgment is entered ORDERING respondents SOLID MILLS, the petitioners the privilege to occupy its property on account of petitioners’ employment. 36 It had the
INC. and/or PHILIP ANG (President), in solido to pay the remaining 21 complainants: chanRoblesvirtualLawlib rary

prerogative to terminate such privilege.37 The termination of Solid Mills and petitioners’ employer-
employee relationship made it incumbent upon petitioners to turn over the property to Solid Mills.38
1) 19 of which, namely EMER MILAN, RAMON MASANGKAY, ALFREDO JAVIER, RONALDO DAVID,
chanroblesvirtualla wlib rary

BONIFACIO MATUNDAN, NORA MENDOZA, MYRNA IGCAS, RAUL DE LAS ALAS, RENATO ESTOLANO, REX Petitioners filed a motion for partial reconsideration on October 18, 2010,39 but this was denied in the
S. DIMAFELIX, MAURA MILAN, JESSICA BAYBAYON, ALFREDO MENDOZA, ROBERTO IGCAS, ISMAEL November 30, 2010 resolution.40
MATA, CARLITO DAMIAN, TEODORA MAHILOM, MARILOU LINGA, RENATO LINGA their separation pay of
chanroblesvirtuallawl ibrary

12.625 days’ pay per year of service, pro-rated 13th month pay for 2003 and accrued vacation and sick Petitioners, thus, filed a petition for certiorari41 before the Court of Appeals to assail the National Labor
leaves, plus 12% interest p.a. from date of filing of the lead case/judicial demand on 12/08/03 until Relations Commission decision of August 31, 2010 and resolution of November 30, 2010.42
actual payment and/or finality;
chanroblesvirtuallaw library

chanrobleslaw

On January 31, 2012, the Court of Appeals issued a decision dismissing petitioners’ petition,43 thus:
2) the remaining 2 of which, complainants CLEOPATRA ZACARIAS, as she already received on 12/19/03
chanRoblesvirtualLawlibrary

her accrued 13th month pay for 2003, accrued VL/SL total amount of P15,435.16, likewise, complainant
WHEREFORE, the petition is hereby ordered DISMISSED.44
Jerry L. Sesma as he already received his accrued 13th month pay for 2003, SL/VL in the total amount
of P10,974.97, shall be paid only their separation pay of 12.625 days’ pay per year of service but also
with 12% interest p.a. from date of filing of the lead case/judicial demand on 12/08/03 until actual The Court of Appeals ruled that Solid Mills’ act of allowing its employees to make temporary dwellings in
payment and/or finality, which computation as of date, amount to as shown in the attached computation its property was a liberality on its part. It may be revoked any time at its discretion.45 As a
sheet. consequence of Solid Mills’ closure and the resulting termination of petitioners, the employer-employee
relationship between them ceased to exist. There was no more reason for them to stay in Solid Mills’
3) Nine (9) individual complaints viz., of Maria Agojo, Joey Suarez, Ronaldo Vergara, Ronnie Vergara, property.46 Moreover, the memorandum of agreement between Solid Mills and the union representing
Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P. Durano, Sr., Elizabeth Duarte and Purificacion petitioners provided that Solid Mills’ payment of employees’ benefits should be “less
Malabanan are DISMISSED WITH PREJUDICE due to amicable settlement, whereas, that of [RONIE accountabilities.”47 chanroblesvirtuallawlib rary

ARANAS], [EMILITO NAVARRO], [NONILON PASCO], [GENOVEVA PASCO], [OLIMPIO A. PASCO]


are DISMISSED WITHOUT PREJUDICE, for lack of interest and/or failure to prosecute. On petitioners’ claim that there was no evidence that Teodora Mahilom already received her retirement
pay, the Court of Appeals ruled that her complaint filed before the Labor Arbiter did not include a claim
for retirement pay. The issue was also raised for the first time on appeal, which is not allowed.48 In any
The Computation and Examination unit is directed to cause the computation of the award in Pars. 2 and
case, she already retired before Solid Mills ceased its operations.49
3 above.28 (Emphasis in the original)
chanroblesvirtuallawl ibrary

The Court of Appeals agreed with the National Labor Relations Commission’s deletion of interest since it
Solid Mills appealed to the National Labor Relations Commission.29 It prayed for, among others, the
found that Solid Mills’ act of withholding payment of benefits and separation pay was
dismissal of the complaints against it and the reversal of the Labor Arbiter’s decision.30
proper. Petitioners’ terminal benefits and pay were withheld because of petitioners’ failure to vacate
chanroblesvirtuallaw libra ry

Solid Mills’ property.50


The National Labor Relations Commission affirmed paragraph 3 of the Labor Arbiter’s dispositive portion,
chanroblesvirtuallaw library

but reversed paragraphs 1 and 2. Thus:


Finally, the Court of Appeals noted that Carlito Damian already received his separation pay and
chanRoblesvirtualLaw library

benefits.51 Hence, he should no longer be awarded these claims.52


WHEREFORE, the Decision of Labor Arbiter Renaldo O. Hernandez dated 10/17/05 is AFFIRMED in so far
chanroblesvirtuallawl ibrary

as par. 3 thereof is concerned but modified in that paragraphs 1 and 2 thereof are REVERSED and SET In the resolution promulgated on July 16, 2012, the Court of Appeals denied petitioners’ motion for
ASIDE. Accordingly, the following complainants, namely: Emir Milan, Ramon Masangkay, Alfredo Javier, reconsideration.53 chanroblesvirtuallawli brary
Respondents Solid Mills and Philip Ang, in their joint comment, argue that petitioners’ failure to turn
Petitioners raise in this petition the following errors: chanRoblesvirtualLawl ibrary over respondent Solid Mills’ property “constituted an unsatisfied accountability” for which reason
“petitioners’ benefits could rightfully be withheld.”65 The term “accountability” should be given its
I natural and ordinary meaning.66 Thus, it should be interpreted as “a state of being liable or
responsible,” or “obligation.”67 Petitioners’ differentiation between accountabilities incurred while
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT performing jobs at the worksite and accountabilities incurred outside the worksite is baseless because
RULED THAT PAYMENT OF THE MONETARY CLAIMS OF PETITIONERS SHOULD BE HELD IN ABEYANCE the agreement with NAFLU merely stated “accountabilities,” without qualification.68 chanroblesvirtuallaw libra ry

PENDING COMPLIANCE OF THEIR ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING


OVER THE SUBJECT LOTS THEY RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT, MUNTINLUPA CITY. On the removal of the award of 12% interest per annum, respondents argue that such removal was
proper since respondent Solid Mills was justified in withholding the monetary claims. 69 chanroblesvirtuallawl ibrary

II
Respondents argue that Teodora Mahilom had no more cause of action for retirement benefits
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT claim.70 She had already retired more than a decade before Solid Mills’ closure. She also already
UPHELD THE RULING OF THE NLRC DELETING THE INTEREST OF 12% PER ANNUM IMPOSED BY THE received her retirement benefits in 1991.71 Teodora Mahilom’s claim was also not included in the
HONORABLE LABOR ARBITER HERNANDEZ ON THE AMOUNT DUE FROM THE DATE OF FILING OF THE complaint filed before the Labor Arbiter. It was improper to raise this claim for the first time on
LEAD CASE/JUDICIAL DEMAND ON DECEMBER 8, 2003 UNTIL ACTUAL PAYMENT AND/OR FINALITY. appeal. In any case, Teodora Mahilom’s claim was asserted long after the three-year prescriptive period
provided in Article 291 of the Labor Code.72 chanroblesvirtuallawl ibrary

III
Lastly, according to respondents, it would be unjust if Carlito Damian would be allowed to receive
monetary benefits again, which he, admittedly, already received from Solid Mills. 73
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT
chanroblesvirtuallawl ibrary

UPHELD THE RULING OF THE NLRC DENYING THE CLAIM OF TEODORA MAHILOM FOR PAYMENT OF
RETIREMENT BENEFITS DESPITE LACK OF ANY EVIDENCE THAT SHE RECEIVED THE SAME. I

IV
The National Labor Relations
Commission may preliminarily
WHETHER OR NOT PETITIONER CARLITO DAMIAN IS ENTITLED TO HIS MONETARY BENEFITS FROM
determine issues related to rights
RESPONDENT SOLID MILLS.54
arising from an employer-employee
relationship
Petitioners argue that respondent Solid Mills and NAFLU’s memorandum of agreement has no provision
stating that benefits shall be paid only upon return of the possession of respondent Solid Mills’ The National Labor Relations Commission has jurisdiction to determine, preliminarily, the parties’ rights
property.55 It only provides that the benefits shall be “less accountabilities,” which should not be over a property, when it is necessary to determine an issue related to rights or claims arising from an
interpreted to include such possession.56 The fact that majority of NAFLU’s members were not employer-employee relationship.
occupants of respondent Solid Mills’ property is evidence that possession of the property was not
contemplated in the agreement.57 “Accountabilities” should be interpreted to refer only to Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the National Labor
accountabilities that were incurred by petitioners while they were performing their duties as employees Relations Commission, in its appellate jurisdiction, may determine issues involving claims arising from
at the worksite.58 Moreover, applicable laws, company practice, or policies do not provide that 13th employer-employee relations. Thus: chanRoblesvirtualLawl ibrary

month pay, and sick and vacation leave pay benefits, may be withheld pending satisfaction of liabilities
by the employee.59 chanroblesvirtuallawl ibrary

ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. – (1) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and
Petitioners also point out that the National Labor Relations Commission and the Court of Appeals have decide within thirty (30) calendar days after the submission of the case by the parties for decision
no jurisdiction to declare that petitioners’ act of withholding possession of respondent Solid Mills’ without extension, even in the absence of stenographic notes, the following cases involving workers,
property is illegal.60 The regular courts have jurisdiction over this issue.61 It is independent from the whether agricultural or non-agricultural: chanRoblesvirtualLawlibrary

issue of payment of petitioners’ monetary benefits.62 chanroblesvirtuallawlib rary

1. Unfair labor practice cases;


For these reasons, and because, according to petitioners, the amount of monetary award is no longer in
2. Termination disputes;
question, petitioners are entitled to 12% interest per annum.63
3. If accompanied with a claim for reinstatement, those cases that workers may file
chanroblesvirtuallaw library

involving wages, rates of pay, hours of work and other terms and conditions of
Petitioners also argue that Teodora Mahilom and Carlito Damian are entitled to their claims. They insist
employment;
that Teodora Mahilom did not receive her retirement benefits and that Carlito Damian did not receive his
4. Claims for actual, moral, exemplary and other forms of damages arising from the
separation benefits.64
employer-employee relations;
chanroblesvirtuallawli brary
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and Institution of clearance procedures
6. Except claims for Employees Compensation, Social Security, Medicare and maternity has legal bases
benefits, all other claims, arising from employer-employee relations including those of
persons in domestic or household service, involving an amount exceeding five thousand Requiring clearance before the release of last payments to the employee is a standard procedure among
pesos (P5,000.00), regardless of whether accompanied with a claim for reinstatement. employers, whether public or private. Clearance procedures are instituted to ensure that the properties,
real or personal, belonging to the employer but are in the possession of the separated employee, are
(2) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. returned to the employer before the employee’s departure.
(Emphasis supplied)
As a general rule, employers are prohibited from withholding wages from employees. The Labor Code
provides:chanRoblesvirtualLawl ibrary

Petitioners’ claim that they have the right to the immediate release of their benefits as employees
separated from respondent Solid Mills is a question arising from the employer-employee relationship Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person,
between the parties. directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the
Claims arising from an employer-employee relationship are not limited to claims by an worker’s consent.
employee. Employers may also have claims against the employee, which arise from the same
relationship.
The Labor Code also prohibits the elimination or diminution of benefits. Thus: chanRoblesvirtualLawlibra ry

In Bañez v. Valdevilla,74 this court ruled that Article 217 of the Labor Code also applies to employers’
claim for damages, which arises from or is connected with the labor issue. Thus: chanRoblesvirtualLawlib rary Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to the time of promulgation of this Code.
claims for damages filed by employees, we hold that by the designating clause “arising from the
employer-employee relations” Article 217 should apply with equal force to the claim of an employer for However, our law supports the employers’ institution of clearance procedures before the release of
actual damages against its dismissed employee, where the basis for the claim arises from or is wages. As an exception to the general rule that wages may not be withheld and benefits may not be
necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal diminished, the Labor Code provides:
dismissal case.75
chanRoblesvirtualLawlibra ry

Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any
Bañez was cited in Domondon v. National Labor Relations Commission.76 One of the issues in deduction from the wages of his employees, except: chanRoblesvirtualLawlibrary

Domondon is whether the Labor Arbiter has jurisdiction to decide an issue on the transfer of ownership
of a vehicle assigned to the employee. It was argued that only regular courts have jurisdiction to decide 1. In cases where the worker is insured with his consent by the employer, and the deduction is to
the issue.77
chanroblesvirtuallawl ibrary recompense the employer for the amount paid by him as premium on the insurance; chanrobleslaw

This court ruled that since the transfer of ownership of the vehicle to the employee was connected to his 2. For union dues, in cases where the right of the worker or his union to check-off has been recognized
separation from the employer and arose from the employer-employee relationship of the parties, the by the employer or authorized in writing by the individual worker concerned; and
employer’s claim fell within the Labor Arbiter’s jurisdiction. 78 chanroblesvirtuallawl ibrary

3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue raised and Employment. (Emphasis supplied)
must arise from an employer-employee relationship for the labor tribunals to have jurisdiction.
The Civil Code provides that the employer is authorized to withhold wages for debts due:
In this case, respondent Solid Mills claims that its properties are in petitioners’ possession by virtue of
chanRoblesvirtualLawl ibrary

their status as its employees. Respondent Solid Mills allowed petitioners to use its property as an act of
liberality. Put in other words, it would not have allowed petitioners to use its property had they not Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer. cralawred

been its employees. The return of its properties in petitioners’ possession by virtue of their status as
employees is an issue that must be resolved to determine whether benefits can be released “Debt” in this case refers to any obligation due from the employee to the employer. It includes any
immediately. The issue raised by the employer is, therefore, connected to petitioners’ claim for benefits accountability that the employee may have to the employer. There is no reason to limit its scope to
and is sufficiently intertwined with the parties’ employer-employee relationship. Thus, it is properly uniforms and equipment, as petitioners would argue.
within the labor tribunals’ jurisdiction.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the
II release of petitioners’ benefits shall be “less accountabilities.”
entitled to the benefits claimed
“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning of the term
“accountability” does not limit the definition of accountability to those incurred in the worksite. As long Teodora Mahilom is not entitled to separation benefits.
as the debt or obligation was incurred by virtue of the employer-employee relationship, generally, it
shall be included in the employee’s accountabilities that are subject to clearance procedures. Both the National Labor Relations Commission and the Court of Appeals found that Teodora Mahilom
already retired long before respondent Solid Mills’ closure. They found that she already received her
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’ retirement benefits. We have no reason to disturb this finding. This court is not a trier of
property. However, this alone does not imply that this privilege when enjoyed was not a result of the facts. Findings of the National Labor Relations Commission, especially when affirmed by the Court of
employer-employee relationship. Those who did avail of the privilege were employees of respondent Appeals, are binding upon this court.83 chanroblesvirtuallawlib rary

Solid Mills. Petitioners’ possession should, therefore, be included in the term “accountability.”
Moreover, Teodora Mahilom’s claim for retirement benefits was not included in her complaint filed before
Accountabilities of employees are personal. They need not be uniform among all employees in order to the Labor Arbiter. Hence, it may not be raised in the appeal.
be included in accountabilities incurred by virtue of an employer-employee relationship.
Similarly, the National Labor Relations Commission and the Court of Appeals found that Carlito Damian
Petitioners do not categorically deny respondent Solid Mills’ ownership of the property, and they do not already received his terminal benefits. Hence, he may no longer claim terminal benefits.
claim superior right to it. What can be gathered from the findings of the Labor Arbiter, National Labor
Relations Commission, and the Court of Appeals is that respondent Solid Mills allowed the use of its The fact that respondent Solid Mills has not yet demolished Carlito Damian’s house in SMI Village is not
property for the benefit of petitioners as its employees. Petitioners were merely allowed to possess and evidence that he did not receive his benefits. Both the National Labor Relations Commission and the
use it out of respondent Solid Mills’ liberality. The employer may, therefore, demand the property at Court of Appeals found that he executed an affidavit stating that he already received the benefits.
will.79
chanroblesvirtuallawl ibrary

Absent any showing that the National Labor Relations Commission and the Court of Appeals
The return of the property’s possession became an obligation or liability on the part of the employees misconstrued these facts, we will not reverse these findings.
when the employer-employee relationship ceased. Thus, respondent Solid Mills has the right to withhold
petitioners’ wages and benefits because of this existing debt or liability. In Solas v. Power and Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power of
Telephone Supply Phils., Inc., et al., this court recognized this right of the employer when it ruled that those with capital when they are left to negotiate with their workers without the standards and
the employee in that case was not constructively dismissed.80 Thus: chanRoblesvirtualLawlib rary protection of law. In cases such as these, the collective bargaining unit of workers are able to get more
benefits and in exchange, the owners are able to continue with the program of cutting their losses or
There was valid reason for respondents’ withholding of petitioner’s salary for the month of February wind down their operations due to serious business losses. The company in this case did all that was
2000. Petitioner does not deny that he is indebted to his employer in the amount of around P95,000.00. required by law.
Respondents explained that petitioner’s salary for the period of February 1-15, 2000 was applied as
partial payment for his debt and for withholding taxes on his income; while for the period of February The preferential treatment given by our law to labor, however, is not a license for abuse. 84 It is not a
15-28, 2000, petitioner was already on absence without leave, hence, was not entitled to any pay.81 signal to commit acts of unfairness that will unreasonably infringe on the property rights of the
company. Both labor and employer have social utility, and the law is not so biased that it does not find
a middle ground to give each their due.
The law does not sanction a situation where employees who do not even assert any claim over the
employer’s property are allowed to take all the benefits out of their employment while they Clearly, in this case, it is for the workers to return their housing in exchange for the release of their
simultaneously withhold possession of their employer’s property for no rightful reason. benefits. This is what they agreed upon. It is what is fair in the premises.
Withholding of payment by the employer does not mean that the employer may renege on its obligation WHEREFORE, the petition is DENIED. The Court of Appeals’ decision is AFFIRMED.
to pay employees their wages, termination payments, and due benefits. The employees’ benefits are
also not being reduced. It is only subjected to the condition that the employees return properties
properly belonging to the employer. This is only consistent with the equitable principle that “no one
shall be unjustly enriched or benefited at the expense of another.”82 chanroblesvirtuallawl ibrary

For these reasons, we cannot hold that petitioners are entitled to interest of their withheld separation
benefits. These benefits were properly withheld by respondent Solid Mills because of their refusal to
return its property.

III

Mahilom and Damian are not


Republic of the Philippines x----------------------------------------------------------------------------------------x

Supreme Court
Manila DECISION

REYES, J.:

SECOND DIVISION
The Case

NIA JEWELRY MANUFACTURING G.R. No. 188169


Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
OF METAL ARTS, INC. (otherwise Court assailing the January 9, 2009 Decision[2] and the May 26, 2009
Present:
known as NIA MANUFACTURING Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 01755. The
AND METAL ARTS, INC.) and dispositive portion of the assailed Decision reads:
CARPIO, J.,
ELISEA B. ABELLA,
Chairperson, WHEREFORE, the Decision dated August 31, 2005
Petitioners,
BRION, and Resolution dated October 28, 2005 of the National Labor
Relations Commission (NLRC), Fourth Division, Cebu City, in NLRC
PEREZ,
Case No. V-000363-2005 are REVERSED and SET ASIDE, and a new
ARANAL-SERENO, and one rendered ordering Nia Jewelry Manufacturing:
- versus -
REYES, JJ.
(1) to reinstate petitioners to their respective
MADELINE C. MONTECILLO and positions as goldsmiths without loss of
Promulgated:
LIZA M. TRINIDAD, seniority rights and other privileges; and
Respondents.
November 28, 2011
(2) to pay petitioners their full backwages
inclusive of allowances and other benefits
or their monetary equivalent computed
from the time their compensation was
On August 13, 2004, Nia Jewelry imposed a policy for goldsmiths requiring
withheld up to their actual reinstatement.
them to post cash bonds or deposits in varying amounts but in no case exceeding
15% of the latter's salaries per week. The deposits were intended to answer for
The case is REMANDED to the Labor Arbiter for any loss or damage which Nia Jewelry may sustain by reason of the goldsmiths'
the RECOMPUTATION of the total monetary award due to fault or negligence in handling the gold entrusted to them. The deposits shall be
petitioners in accord with this decision. The Labor Arbiter returned upon completion of the goldsmiths' work and after an accounting of
is ORDERED to submit his compliance within thirty (30) days from the gold received.
notice of this decision, with copies furnished to the
parties.[4] (citations omitted) Nia Jewelry alleged that the goldsmiths were given the option not to post
deposits, but to sign authorizations allowing the former to deduct from the
latter's salaries amounts not exceeding 15% of their take home pay should it be
found that they lost the gold entrusted to them. The respondents claimed
The assailed Resolution denied the petitioners' Motion for otherwise insisting that Nia Jewelry left the goldsmiths with no option but to
Reconsideration.[5] post the deposits. The respondents alleged that they were constructively
dismissed by Nia Jewelry as their continued employments were made
dependent on their readiness to post the required deposits.
The Factual Antecedents

Nia Jewelry averred that on August 14, 2004, the respondents no longer
Madeline Montecillo (Madeline) and Liza Trinidad (Liza), hereinafter
reported for work and signified their defiance against the new policy which at
referred to collectively as the respondents, were first employed as goldsmiths
that point had not even been implemented yet.
by the petitioner Nia Jewelry Manufacturing of Metal Arts, Inc. (Nia Jewelry) in
1996 and 1994, respectively. Madeline's weekly rate was P1,500.00 while Liza's
was P2,500.00. Petitioner Elisea Abella (Elisea) is Nia Jewelry's president and On September 7, 2004, the respondents filed against Nia Jewelry
general manager. complaints[6] for illegal dismissal and for the award of separation pay.

There were incidents of theft involving goldsmiths in Nia Jewelry's


employ.
On September 20, 2004, the respondents filed their amended her due to his or her fault or negligence. The complainants did not like
complaints[7] which excluded their earlier prayer for separation pay but sought to post a deposit, or sign an authorization. They instead told their
reinstatement and payment of backwages, attorney's fees and 13th month pay. fellow goldsmiths that they will bring the matter to the Labor
Commission. Complainants did not anymore report for work and did
not anymore perform their tasks. The fact of complainants not being
Labor Arbiter Jose Gutierrez (LA Gutierrez) dismissed the respondents' dismissed from employment was duly attested to by his co-workers
complaints for lack of merit but ordered Nia Jewelry to pay Madeline the sum who executed their Joint Affidavit under oath, Annex '4'.
of P3,750.00, and Liza, P6,250.00, representing their proportionate
entitlements to 13th month pay for the year 2004. LA Gutierrez ratiocinated
that: As further evidence to prove that they were dismissed, complainants
presented the minutes of [the] Sept. 7, 2004 conference.

Their [respondents] claim is self-serving. As evidence to (sic) their


claims that they were made to sign blank trust receipts, complainants We examined the statements therein, we find that there is no
presented Annexes 'A'[,] 'B' and 'C'. Our examination, however, shows admission on the part of the respondents that they terminate[d] the
that they are not blank trust receipts but rather they are filled up trust complainants from employment. Respondents only inform[ed] the
receipts. complainants to put up the appropriate cash bond before they could
be allowed to return back to work which they previously refused to
perform, as a sign of their protest to the requirement to post cash
The undisputed facts show that complainants were piece
bond or to sign an authorization.
workers of the respondent who are engaged in the processing of gold
into various jewelry pieces. Because of the nature of its business,
respondent was plagued with too many incidents of theft from its xxxx
piece workers. x x x This deposit [not exceeding 15% of the salary for
the week of the piece worker] is released back upon completion of
work and after accounting of the gold received by him or her. There x x x It is clearly shown that complainants were paid with their
is an alternative, however, the piece worker may opt not to give a 13th month pay for the year 2001, 2002 and 2003. However, for the
deposit, instead sign an authorization to allow the respondent to year 2004, considering that complainants have worked until the
deduct from the salary an amount not to exceed 15% of his take home month of August, we rule to grant them the proportionate 13th month
pay, should it be found out that he lost the gold [entrusted] to him or pay as there is no showing that they were already paid. The other
money claims are denied for lack of merit. x x x.[8]
Madeline Montecillo has still on account payable of P1,368.63 while
Liza Montecillo is still indebted of P1,713.71. This principle of
offsetting of credit should be allowed to preclude unjust enrichment
The respondents filed an appeal before the NLRC which affirmed LA at the expense of the respondents.[9]
Gutierrez's dismissal of the amended complaints but deleted the award of
13th month pay based on findings that the former had contracted unpaid
individual loans from Nia Jewelry. The NLRC found that:
The respondents filed a Petition for Certiorari[10] before the CA ascribing
x x x [I]t was complainants who refused to work with the respondents patent errors in the appreciation of facts and application of jurisprudence on
when they were required to post cash bond or sign an authorization the part of the NLRC when it ruled that what occurred was not a case of illegal
for deduction for the gold material they received and to be dismissal but of abandonment of work.
manufactured into various jewelries. x x x We find it logically sound
for the latter [Nia Jewelry] to innovate certain policy or rule to protect
On January 9, 2009, the CA rendered the now assailed
its own business. To deprive them of such prerogative [management
Decision[11] reversing the findings of the LA and the NLRC. The CA ruled:
prerogative] will be likened to 'killing the goose that lays the golden
eggs.'
According to [the] private respondents, they required a deposit or
cash bond from [the] petitioners in order to secure their interest
x x x [C]omplainants failed to prove their affirmative allegations in the against gold thefts committed by some of their employees. If the
respective complaints that they were indeed dismissed. On the employee fails to make the required deposit, he will not be given gold
contrary, respondents have convincingly shown that if (sic) were to work on. Further, [the] private respondents admitted during the
complainants who voluntarily abandoned from (sic) their work by conciliation proceedings before Executive Labor Arbiter Violeta Ortiz-
refusing to abide with the newly adopted company policy of putting Bantug that [the] petitioners would only be allowed back to work
up a cash bond or signing an authorization for deduction for the gold after they had posted the proportionate cash bond.
materials entrusted to them in case of loss or pilferage.

The Labor Code of the Philippines provides:


x x x [B]oth complainants are still indebted with (sic) the respondents
in the amounts of P5,118.63 in the case of Madeline Montecillo
and P7,963.11 in the case of Liza Montecillo. Such being the case[,]
ART. 113. Wage Deduction. No employer, in his own necessary or desirable as determined by the Secretary
behalf or in behalf of any person, shall make any of Labor in appropriate rules and regulations.
deduction from the wages of his employees, except:

Applying these provisions to the case at bar, before [the] petitioners


(a) In cases where the worker is insured may be required to deposit cash or agree to a salary deduction
with his consent by the employer, and the proportionate to the value of gold delivered to them, the employer
deduction is to recompense the employer must comply with the relevant conditions imposed by law. Hence, the
for the amount paid by him as premium on latter must prove that there is an existing law or regulation
the insurance; authorizing it to impose such burden on its employees. And, in case
of deposit, that it is engaged in a trade, occupation or business where
such requirement is a recognized practice. Nia Jewelry obviously
(b) For union dues, in cases where the right failed in this respect. Surely,
of the worker or his union to check-off has mere invocation of management prerogative cannot exempt it from
been recognized by the employer or compliance with the strict requirements of law. Accordingly, [w]e
authorized in writing by the individual hold that Nia Jewelry's unilateral imposition of cash deposit or salary
worker concerned; and deduction on [the] petitioners is illegal. For that matter, when Ni[]a
Jewelry refused to give assignment to [the] petitioners or to admit
(c) In cases where the employer is them back to work because they failed to give cash deposit or agree
authorized by law or regulations to a salary deduction, it was deemed to have constructively dismissed
issued by the Secretary of Labor. [the] petitioners. Obviously, such deposit or salary deduction was
imposed as a condition for [the] petitioners' continuing employment.
Non-compliance indubitably meant termination of [the] petitioners'
Article 114. Deposits for loss or damage. No employer employment. Suldao vs. Cimech System Construction,
shall require his worker to make deposits from which Inc.[12] enunciated:
deductions shall be made for the reimbursement of loss
of or damage to tools, materials, or equipment supplied
by the employer, except when the employer is engaged Constructive dismissal or a constructive discharge has
in such trades, occupations or business where the been defined as quitting because continued
practice of making deposits is a recognized one, or is employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a in the honest belief that it was the best way to protect their interest
diminution in pay. There is constructive dismissal when against gold theft in the company. x x x.[15] (some citations omitted)
the continued employment is rendered impossible so as
to foreclose any choice on the employee's part except to
resign from such employment.
The Issues

The fact that [the] petitioners lost no time in filing the complaint for
illegal dismissal lucidly negates [the] private respondents' claim that The following are to be resolved in the instant Petition for Review:[16]
the former had abandoned their work. A contrary notion would not
only be illogical but also absurd.[13] Indeed, prompt filing of a case for
illegal dismissal, on one hand, is anathema to the concept of I.
abandonment, on the other.
WHETHER OR NOT THE COURT OF APPEALS GROSSLY ERRED IN
GIVING DUE COURSE TO THE PETITION [under Rule 65 of the Rules of
Finally, under Article 279 of the Labor Code, an illegally dismissed
employee is entitled to reinstatement without loss of seniority rights Court], IN EFFECT, FINDING GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF
and other privileges; full backwages, inclusive of allowances; and
THE NLRC, DESPITE THE FACT THAT THE SUBJECT DECISION AND
other benefits or their monetary equivalent computed from the time
RESOLUTION THEREIN ARE IN PERFECT ACCORD WITH THE EVIDENCE
his compensation was withheld from him up to the time of his actual
reinstatement.[14] x x x. ON RECORD AND APPLICABLE LAWS.

II.
As for damages, it is a rule that moral damages may be recovered
where the dismissal of the employee was attended by bad faith or
fraud or constituted an act oppressive to labor, or was done in a WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
manner contrary to morals, good customs or public policy. x x x [w]e FINDING THAT THERE WAS CONSTRUCTIVE DISMISSAL IN THE
find that private respondents did not act with oppression, bad faith PRESENT CASE AND ORDERING RESPONDENTS' REINSTATEMENT AS
or fraud. They imposed a cash bond or deposit on herein petitioners WELL AS THE PAYMENT OF THEIR BACKWAGES AND OTHER
MONETARY BENEFITS WITHOUT FACTUAL OR LEGAL BASES.[17]
relative to working methods, procedures to be followed and working
regulations.[20]

The petitioners now argue that the CA should have outrightly dismissed
the petition filed before it as the respondents had resorted to an erroneous The petitioners stress that they did not transgress the respondents' rights.
mode of appeal. The arguments raised in the petition were the same ones The respondents, who expressed to their co-workers their lack of fear to have
already passed upon by the LA and the NLRC. What the respondents sought was their employment severed, are motivated by their greed to extract money from
the CA's re-evaluation of the facts and evidence. The petition was thus based the petitioners.
on purported errors of judgment which are beyond the province of a petition
for certiorari.
The petitioners conclude that the CA should have accorded respect to the
findings of the LA and the NLRC especially since they were not arrived at
The petitioners likewise insist that the respondents abandoned their arbitrarily or in disregard of the evidence on record.
work without due notice and to the prejudice of the former. The respondents'
co-workers attested to the foregoing circumstance.[18] The respondents are
goldsmiths whose skills are indispensable to a jewelry manufacturing business, In the respondents' Comment,[21] they reiterate the arguments they had
thus, it is not in accord with both logic and experience for the petitioners to just presented in the proceedings below. The respondents emphasize that when
fire them only to train new workers. Moreover, in the complaints and amended they pleaded for reinstatement during the conference with the petitioners on
complaints, the respondents did not claim for reinstatement, hence, implying September 7, 2004, the latter openly admitted without reservation that the
their admission that they were not terminated. former will only be allowed to return to work if they will post the required cash
bond.

Further, under Articles 114 and 115[19] of the Labor Code, an employer
may require a worker to post a deposit even before a loss or damage has Further, the respondents claim that there was no plausible reason for
occurred, provided that deductions from the deposit can be made only upon them to abandon their employment considering the length of their service and
proof that the worker is liable for the loss or damage. In case no loss or damage the fact that they were being paid rates above the minimum
is incurred, the deposit shall be returned to the worker after the conduct of an wage. Citing Hantex Trading Co. Inc. v. Court of Appeals,[22] the respondents
accounting which was what happened in the case at bar. This is a valid exercise argue that no employee in his right mind would recklessly abandon his job to
of management prerogative the scope of which includes the setting of policies join the ranks of the unemployed and choose to unduly expose his family to
hunger and untold hardship.
Besides, in Anflo Management & Investment Corp. v. Rodolfo In the petitioners' Reply,[27] they averred that the day after Nia Jewelry
Bolanio,[23] this Court had the occasion to state that the filing of a complaint for required from its employees the posting of deposits and even before the policy
illegal dismissal is inconsistent with a charge of abandonment, for an employee was actually implemented, the respondents promptly stopped reporting for
who takes steps to protest his lay off cannot by any logic be said to have work despite Elisea's attempt to get in touch with them. The petitioners
abandoned his work. convened the employees to discuss the propriety of imposing the
new policy and to afford them ample opportunity to air their concerns. The
respondents' acts contravene Article 19 of the New Civil Code (NCC) which
The respondents also claim that the petitioners misrepresented to this requires every person to act with justice, give everyone his due and observe
Court that the former did not pray for reinstatement as the dorsal portions of honesty and good faith.
the amended complaints indicate otherwise.

Further, it is clear in the Minutes of the Conciliation Proceedings[28] before


Moreover, the petitioners failed to prove their authority granted by either the LA that the respondents were not willing to be reinstated and preferred
the law, or regulations issued by the Secretary of Labor, allowing them to instead the payment of separation pay. Hence, no prayer for reinstatement was
require their workers to post deposits. The petitioners also failed to establish indicated in the original complaints filed by them. As an afterthought, however,
that Nia Jewelry is engaged in a trade, occupation or business they amended their complaints to reflect that they were likewise seeking for
where the practice of making deposits is a recognized one or is considered as reinstatement.
necessary or desirable by the Secretary of Labor.

[24] [25] [26]


The petitioners also point out that the doctrines in Hantex[29] and Anflo
Citing Sections 12, 13 and 14, Book III, Rule VIII of the Omnibus Management[30] cited by the respondents find no application in the case at bar.
Rules Implementing the Labor Code (Omnibus Rules), the respondents posit that In Hantex, the employer presented mere cash vouchers to prove abandonment
salary deductions made prior to the occurrence of loss or damage are illegal and by the employee. In the case before us, sufficient evidence show that the
constitute as undue interferences in the workers' disposal of their respondents abandoned their work. In Anflo Management, the employer
wages. Further, the workers must first be given the opportunity to show cause expressly uttered words terminating the employee who in turn filed a complaint
why deductions should not be made. If to be made, deductions should be fair, the day right after the incident. In the case now under our consideration, the
reasonable and should not exceed the actual loss or damage. In the case at bar, respondents merely made a bare claim of illegal dismissal. Rightly so in Abad v.
the respondents were required to post cash bonds even when there is no proof Roselle Cinema,[31] it was ruled that an employer's claim of not having
yet of their fault or negligence. terminated an employee, when supported by substantial evidence, should not
be outrightly overcome by the argument that an employee would not have filed
a complaint for illegal dismissal if he were not really dismissed. The The Court's Ruling
circumstances surrounding the separation from employment should be taken
into account.
The instant petition is partially meritorious.

Under Article 114 of the Labor Code, the Secretary of Labor is conferred The petitioners raise the procedural issue of whether or not the CA validly
the authority to promulgate rules determining the circumstances when the gave due course to the petition for certiorari filed before it under Rule 65 of the
making of deposits is deemed recognized, necessary or desirable. However, Rules of Court. As the substantive issue of whether or not the
Section 14,[32] Book III, Rule VIII of the Omnibus Rules does not define those petitioners constructively dismissed the respondents is closely-intertwined with
circumstances. What is defined is the circumstances when deductions can be the procedural question raised, they will be resolved jointly.
made. It can thus be inferred that the intention is for the courts to determine
on a case to case basis what should be considered as recognized, necessary or Yolanda Mercado, et al. v. AMA Computer College-Paraaque City,
desirable especially in the light of the existence of myriads of businesses which Inc.[33] is instructive as to the nature of a petition for review on certiorari under
are practically impossible to enumerate in modern society. The petitioners Rule 45, and a petition for certiorari under Rule 65, viz:
hence argue that the validity of requiring cash deposits should be scrutinized
with due consideration of its reasonableness and necessity. Further, Article x x x [R]ule 45 limits us to the review of questions of law raised
1306 of the NCC allows contracting parties to establish stipulations, clauses, against the assailed CA decision. In ruling for legal correctness, we
terms and conditions which they may deem convenient provided they do not have to view the CA decision in the same context that the petition
for certiorari it ruled upon was presented to it; we have to examine
contravene the law, morals, good customs, public order or public policy. In the the CA decision from the prism of whether it correctly determined
case at bar, the policy adopted by the petitioners was neither unreasonable nor the presence or absence of grave abuse of discretion in the NLRC
oppressive. It was intended to benefit all the contracting parties. decision before it, not on the basis of whether the NLRC decision
on the merits of the case was correct. In other words, we have to be
keenly aware that the CA undertook a Rule 65 review, not a review on
Lastly, while the respondents raise the issue of the illegality of deductions, appeal, of the NLRC decision challenged before it. This is the approach
the petitioners stress that it is academic because no deduction was actually that should be basic in a Rule 45 review of a CA ruling in a labor
made yet. case. In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion
in ruling on the case?[34]
It is thus settled that this Court is bound by the CA's factual findings. The In the case at bench, in the petition for certiorari under Rule 65 filed by
rule, however, admits of exceptions, among which is when the CA's findings are the respondents before the CA, the following issues were presented for
contrary to those of the trial court or administrative body exercising quasi-judicial resolution:
functions from which the action originated.[35] The case before us falls under the
aforementioned exception.
I.
The petitioners argue that the respondents resorted to an erroneous
mode of appeal as the issues raised in the petition lodged before the CA WHETHER OR NOT PUBLIC RESPONDENT [NLRC] committed patent
essentially sought a re-evaluation of facts and evidence, hence, based on errors in the appreciation of facts and application of pertinent
purported errors of judgment which are outside the ambit of actions which can jurisprudence amounting to grave abuse of discretion or lack or in
be aptly filed under Rule 65. excess of jurisdiction WHEN IT HELD THAT PRIVATE RESPONDENTS
[herein petitioners] ARE NOT GUILTY OF ILLEGAL DISMISSAL BECAUSE
We agree. IT WAS THE PETITIONERS [herein private respondents] WHO
ABANDONED THEIR JOB AND REFUSED TO WORK WITH
RESPONDENTS WHEN THEY WERE REQUIRED TO PUT UP CASH BOND
Again in Mercado,[36] we ruled that: OR SIGN AN AUTHORIZATION FOR DEDUCTION.

x x x [I]n certiorari proceedings under Rule 65 of the Rules of Court, II.


the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their
conclusion. The query in this proceeding is limited to the WHETHER OR NOT PUBLIC RESPONDENT committed patent errors in
determination of whether or not the NLRC acted without or in excess the appreciation of facts and application of pertinent jurisprudence
of its jurisdiction or with grave abuse of discretion in rendering its amounting to grave abuse of discretion or lack or in excess of
decision. However, as an exception, the appellate court may jurisdiction WHEN IT DID NOT ORDER THE REINSTATEMENT OF
examine and measure the factual findings of the NLRC if the same HEREIN PETITIONERS AND DELETED THE AWARD OF 13th MONTH PAY
are not supported by substantial evidence. x x x.[37] AND DENIED THE CLAIMS OF ATTORNEY'S FEES, DAMAGES AND FULL
BACKWAGES.[38]
executive jurisdiction can only be set aside on proof of gross abuse of
discretion, fraud, or error of law. These principles negate the
Essentially, the issues raised by the respondents for resolution by the CA
power of the reviewing court to re-examine the sufficiency of the
were anchored on an alleged misappreciation of facts and evidence by the NLRC
evidence in an administrative case as if originally instituted therein,
and the LA when they both ruled that abandonment of work and not
and do not authorize the court to receive additional evidence that was
constructive dismissal occurred.
not submitted to the administrative agency concerned. [40] (citations
omitted)
We agree with the petitioners that what the respondents sought was a
re-evaluation of evidence, which as a general rule cannot be properly done in a
petition for certiorari under Rule 65, save in cases where substantial evidence
to support the NLRC's findings are wanting. We find the factual findings of the LA and the NLRC that the respondents
were not dismissed are supported by substantial evidence.

In Honorable Ombudsman Simeon Marcelo v. Leopoldo


[39]
Bungubung, the Court defined substantial evidence and laid down guidelines In the Joint Affidavit[41] executed by Generoso Fortunaba, Erdie Pilares and
relative to the conduct of judicial review of decisions rendered by administrative Crisanto Ignacio, all goldsmiths under Nia Jewelry's employ, they expressly
agencies in the exercise of their quasi-judicial power, viz: stated that they have personal knowledge of the fact that the respondents were
not terminated from employment. Crisanto Ignacio likewise expressed that
after Elisea returned from the United States in the first week of September of
x x x Substantial evidence is more than a mere scintilla of evidence. It
2004, the latter even called to inquire from him why the respondents were not
means such relevant evidence as a reasonable mind might accept as
reporting for work. We observe that the respondents had neither ascribed any
adequate to support a conclusion, even if other minds equally
ill-motive on the part of their fellow goldsmiths nor offered any explanation as
reasonable might conceivably opine otherwise. Second, in reviewing
to why the latter made declarations adverse to their cause. Hence, the
administrative decisions of the executive branch of the government,
statements of the respondents' fellow goldsmiths deserve credence. This is
the findings of facts made therein are to be respected so long as they
especially true in the light of the respondents' failure to present any notice of
are supported by substantialevidence. Hence, it is not for the
termination issued by the petitioners. It is settled that there can be dismissal
reviewing court to weigh the conflicting evidence, determine the
even in the absence of a termination notice.[42] However, in the case at bench,
credibility of witnesses, or otherwise substitute its judgment for that
we find that the acts of the petitioners towards the respondents do not at all
of the administrative agency with respect to the sufficiency of
amount to constructive dismissal.
evidence. Third, administrative decisions in matters within the
intended to merely curb the incidences of gold theft in the work place. The new
Constructive dismissal occurs when there is cessation of work because policy can hardly be said to be disdainful or insensible to the workers as to
continued employment is rendered impossible, unreasonable or unlikely; when render their continued employment unreasonable, unlikely or impossible.
there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes On September 7, 2004, or more or less three weeks after the imposition
unbearable to the employee.[43] of the new policy, the respondents filed their complaints for illegal dismissal
which include their prayer for the payment of separation pay. On September 20,
In the case now under our consideration, the petitioners did not 2004, they filed amended complaints seeking for reinstatement instead.
whimsically or arbitrarily impose the policy to post cash bonds or make
deductions from the workers' salaries. As attested to by the respondents' fellow The CA favored the respondents' argument that the latter could not have
goldsmiths in their Joint Affidavit, the workers were convened and informed of abandoned their work as it can be presumed that they would not have filed
the reason behind the implementation of the new policy. Instead of airing their complaints for illegal dismissal had they not been really terminated and had they
concerns, the respondents just promptly stopped reporting for work. not intended themselves to be reinstated. We find that the presumption relied
upon by the CA pales in comparison to the substantial evidence offered by the
Although the propriety of requiring cash bonds seems doubtful for petitioners that it was the respondents who stopped reporting for work and
reasons to be discussed hereunder, we find no grounds to hold that the were not dismissed at all.
respondents were dismissed expressly or even constructively by the petitioners.
It was the respondents who merely stopped reporting for work. While it is In sum, we agree with the petitioners that substantial evidence support
conceded that the new policy will impose an additional burden on the part of the LA's and the NLRC's findings that no dismissal occurred. Hence, the CA
the respondents, it was not intended to result in their demotion. Neither is a should not have given due course to and granted the petition
diminution in pay intended because as long as the workers observe due for certiorari under Rule 65 filed by the respondents before it.
diligence in the performance of their tasks, no loss or damage shall result from
their handling of the gold entrusted to them, hence, all the amounts due to the
goldsmiths shall still be paid in full. Further, the imposition of the new policy In view of our disquisition above that the findings of the LA and the NLRC
cannot be viewed as an act tantamount to discrimination, insensibility or disdain that no constructive dismissal occurred are supported by substantial evidence,
against the respondents. For one, the policy was intended to be implemented the CA thus erred in giving due course to and granting the petition filed before
upon all the goldsmiths in Nia Jewelry's employ and not solely upon the it. Hence, it is not even necessary anymore to resolve the issue of whether or
respondents. Besides, as stressed by the petitioners, the new policy was not the policy of posting cash bonds or making deductions from the goldsmiths'
salaries is proper. However, considering that there are other goldsmiths in Nia employer's policy of requiring deposits on the bases of its reasonableness and
Jewelry's employ upon whom the policy challenged by the respondents remain necessity.
to be enforced, in the interest of justice and to put things to rest, we shall
resolve the issue.
We are not persuaded.

Article 113 of the Labor Code is clear that there are only three exceptions
to the general rule that no deductions from the employees' Articles 113 and 114 of the Labor Code are clear as to what are the
salaries can be made. The exception which finds application in the instant exceptions to the general prohibition against requiring deposits and effecting
petition is in cases where the employer is authorized by law or regulations deductions from the employees' salaries. Hence, a statutory construction of the
issued by the Secretary of Labor to effect the deductions. On the other hand, aforecited provisions is not called for. Even if we were however called upon to
Article 114 states that generally, deposits for loss or damages are not allowed interpret the provisions, our inclination would still be to strictly construe the
except in cases where the employer is engaged in such trades, occupations or same against the employer because evidently, the posting of
business where the practice of making deposits is a recognized one, or is cash bonds and the making of deductions from the wages would inarguably
necessary or desirable as determined by the Secretary of Labor in appropriate impose an additional burden upon the employees.
rules or regulations.
While the petitioners are not absolutely precluded from imposing the
While employers should generally be given leeways in their exercise of new policy, they can only do so upon compliance with the requirements of the
management prerogatives, we agree with the respondents and the CA that in law.[44] In other words, the petitioners should first establish that the making of
the case at bar, the petitioners had failed to prove that their imposition of the deductions from the salaries is authorized by law, or regulations issued by the
new policy upon the goldsmiths under Nia Jewelry's employ falls under the Secretary of Labor. Further, the posting of cash bonds should be proven as a
exceptions specified in Articles 113 and 114 of the Labor Code. recognized practice in the jewelry manufacturing business, or alternatively, the
petitioners should seek for the determination by the Secretary of Labor through
the issuance of appropriate rules and regulations that the policy the former
The petitioners point out that Section 14, Book III, Rule VIII of the seeks to implement is necessary or desirable in the conduct of business. The
Omnibus Rules does not define the circumstances when the making of deposits petitioners failed in this respect. It bears stressing that without proofs that
is deemed recognized, necessary or desirable. The petitioners then argue that requiring deposits and effecting deductions are recognized practices, or without
the intention of the law is for the courts to determine on a case to case basis securing the Secretary of Labor's determination of the necessity or desirability
what should be regarded as recognized, necessary or desirable and to test an of the same, the imposition of new policies relative to deductions and deposits
can be made subject to abuse by the employers. This is not what the law intends.
In view of the foregoing, we hold that no dismissal, constructive or
otherwise, occurred. The findings of the NLRC and the LA that it was the
respondents who stopped reporting for work are supported by substantial
evidence. Hence, the CA erred when it re-evaluated the parties' respective
evidence and granted the petition filed before it. However, we agree with the
CA that it is baseless for Nia Jewelry to impose its new policy upon the
goldsmiths under its employ without first complying with the strict
requirements of the law.

WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed


Decision and Resolution of the CA dated January 9, 2009 and May 26, 2009,
respectively, are REVERSED only in so far as they declared that the respondents
were constructively dismissed and entitled to reinstatement and payment of
backwages, allowances and benefits. However, the CA's ruling that the
petitioners' imposition of its new policy upon the respondents lacks legal basis,
stands.

SO ORDERED.
FIRST DIVISION employees. On 10 September 1989, the DOLE directed ANTECO to pay its
employees wage differentials amounting to P1,427,412.75. ANTECO failed
to pay.
[G.R. No. 147420. June 10, 2004] Thus, on various dates in 1995, thirty-three (33) monthly-paid employees
filed complaints with the NLRC Sub-Regional Branch VI, Iloilo City, praying
for payment of wage differentials, damages and attorneys fees. Labor Arbiter
CEZAR ODANGO in his behalf and in behalf of 32 Rodolfo G. Lagoc (Labor Arbiter) heard the consolidated complaints.
complainants, petitioners, vs. NATIONAL LABOR RELATIONS On 29 November 1996, the Labor Arbiter rendered a Decision in favor of
COMMISSION and ANTIQUE ELECTRIC COOPERATIVE, petitioners granting them wage differentials amounting
INC., respondents. to P1,017,507.73 and attorneys fees of 10%. Florentino Tongson, whose
case the Labor Arbiter dismissed, was the sole exception.
DECISION
ANTECO appealed the Decision to the NLRC on 24 December 1996.
CARPIO, J.:
On 27 November 1997, the NLRC reversed the Labor Arbiters Decision. The
NLRC denied petitioners motion for reconsideration in its Resolution
dated 30 April 1998. Petitioners then elevated the case to this Court through
The Case
a petition for certiorari, which the Court dismissed for petitioners failure to
comply with Section 11, Rule 13 of the Rules of Court. On petitioners motion
Before the Court is a petition for review assailing the Court of Appeals
[1]
for reconsideration, the Court on 13 January 1999 set aside the dismissal.
Resolutions of 27 September 2000 and 7 February 2001 in CA-G.R. SP
[2]
Following the doctrine in St. Martin Funeral Home v. NLRC, the Court
[4]

No. 51519. The Court of Appeals upheld the Decision dated 27 November
[3]
referred the case to the Court of Appeals.
1997 and the Resolution dated 30 April 1998 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-0048-97. The NLRC reversed the On 27 September 2000, the Court of Appeals issued a Resolution
Labor Arbiters Decision of 29 November 1996, which found respondent dismissing the petition for failure to comply with Section 3, Rule 46 of the
Antique Electric Cooperative (ANTECO) liable for petitioners wage Rules of Court. The Court of Appeals explained that petitioners failed to
differentials amounting to P1,017,507.73 plus attorneys fees of 10%. allege the specific instances where the NLRC abused its discretion. The
appellate court denied petitioners motion for reconsideration on 7 February
2001.
Antecedent Facts Hence, this petition.

Petitioners are monthly-paid employees of ANTECO whose workdays


are from Monday to Friday and half of Saturday. After a routine inspection, The Labor Arbiters Ruling
the Regional Branch of the Department of Labor and Employment (DOLE)
found ANTECO liable for underpayment of the monthly salaries of its
The Labor Arbiter reasoned that ANTECO failed to refute petitioners The Ruling of the Court of Appeals
argument that monthly-paid employees are considered paid for all the days
in a month under Section 2, Rule IV of Book 3 of the Implementing Rules of The Court of Appeals held that the petition was insufficient in form and
the Labor Code (Section 2). Petitioners claim that this includes not only the
[5]
substance since it does not allege the essential requirements of the extra-
10 legal holidays, but also their un-worked half of Saturdays and all of ordinary special action of certiorari. The Court of Appeals faulted petitioners
Sundays. for failing to recite where and in what specific instance public respondent
The Labor Arbiter gave credence to petitioners arguments on the abused its discretion. The appellate court characterized the allegations in
computation of their wages based on the 304 divisor used by ANTECO in the petition as sweeping and clearly falling short of the requirement of
converting the leave credits of its employees. The Labor Arbiter agreed with Section 3, Rule 46 of the Rules of Court.
petitioners that ANTECOs use of 304 as divisor is an admission that it is
paying its employees for only 304 days a year instead of the 365 days as
specified in Section 2. The Labor Arbiter concluded that ANTECO owed its The Issues
employees the wages for 61 days, the difference between 365 and 304, for
every year. Petitioners raise the following issues:
I
The NLRCs Ruling WHETHER THE COURT OF APPEALS IS CORRECT IN DISMISSING THE
CASE.
II
On appeal, the NLRC reversed the Labor Arbiters ruling that ANTECO
underpaid its employees. The NLRC pointed out that the Labor Arbiters own WHETHER PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIM.[6]
computation showed that the daily wage rates of ANTECOs employees were
above the minimum daily wage of P124. The lowest paid employee of
ANTECO was then receiving a monthly wage of P3,788. The NLRC applied The Ruling of the Court
the formula in Section 2 [(Daily Wage Rate = (Wage x 12)/365)] to the
monthly wage of P3,788 to arrive at a daily wage rate of P124.54, an amount The petition has no merit.
clearly above the minimum wage.
The NLRC noted that while the reasoning in the body of the Labor
On the sufficiency of the petition
Arbiters decision supported the view that ANTECO did not underpay, the
conclusion arrived at was the opposite. Finally, the NLRC ruled that the use
of 304 as a divisor in converting leave credits is more favorable to the Petitioners argue that the Court of Appeals erred in dismissing their
employees since a lower divisor yields a higher rate of pay. petition because this Court had already ruled that their petition is sufficient
in form and substance. They argue that this precludes any judgment to the
contrary by the Court of Appeals. Petitioners cite this Courts Resolution
dated 13 January 1999 as their basis. This Resolution granted petitioners 12. This Honorable court can readily see from the facts and circumstances of this
motion for reconsideration and set aside the dismissal of their petition for case, the petitioners were denied of their rights to be paid of 4 hours of each
review. Saturday, 51 rest days and 10 legal holidays of every year since they started
working with respondent ANTECO.
Petitioners reliance on our 16 September 1998 Resolution is
misplaced. In our Resolution, we dismissed petitioners case for failure to 13. The respondent NLRC while with open eyes knew that the petitioners are
comply with Section 11, Rule 13 of the Rules of Court. The petition lacked
[7]
entitled to salary differentials consisting of 4 hours pay on Saturdays, 51 rest days
a written explanation on why service was made through registered mail and and 10 legal holidays plus 10% attorneys fees as awarded by the Labor Arbiter in
not personally. the above-mentioned decision, still contrary to law, contrary to existing
The error petitioners committed before the Court of Appeals is different. jurisprudence issued arbitrary, without jurisdiction and in excess of jurisdiction the
The appellate court dismissed their petition for failure to comply with the first decision vacating and setting aside the said decision of the Labor Arbiter, to the
paragraph of Section 3 of Rule 46 in relation to Rule 65 of the Rules of
[8] irreparable damage and prejudice of the petitioners.
Court, outlining the necessary contents of a petition for certiorari. This is an
entirely different ground. The previous dismissal was due to petitioners 14. That the respondent NLRC in grave abuse of discretion in the exercise of its
failure to explain why they resorted to service by registered mail. This time function, by way of evasion of positive duty in accordance with existing labor
the content of the petition itself is deficient. Petitioners failed to allege in their laws, illegally refused to reconsider its decision dismissing the petitioners
petition the specific instances where the actions of the NLRC amounted to complaints.
grave abuse of discretion.
15. That there is no appeal, nor plain, speedy and adequate remedy in law from the
There is nothing in this Courts Resolution dated 13 January 1999 that above-mentioned decision and resolution of respondent NLRC except this petition
remotely supports petitioners argument. What we resolved then was to for certiorari. [9]

reconsider the dismissal of the petition due to a procedural defect and


to refer the case to the Court of Appeals for its proper disposition. We did These four paragraphs comprise the petitioners entire argument. In
not in any way rule that the petition is sufficient in form and substance. these four paragraphs petitioners ask that a writ of certiorari be issued in
Petitioners also argue that their petition is clear and specific in its their favor. We find that the Court of Appeals did not err in dismissing the
allegation of grave abuse of discretion. They maintain that they have petition outright. Section 3, Rule 46 of the Rules of Court requires that a
sufficiently complied with the requirement in Section 3, Rule 46 of the Rules petition for certiorari must state the grounds relied on for the relief sought. A
of Court. simple perusal of the petition readily shows that petitioners failed to meet
this requirement.
Again, petitioners are mistaken.
The appellate courts jurisdiction to review a decision of the NLRC in a
We quote the relevant part of their petition: petition for certiorari is confined to issues of jurisdiction or grave abuse of
discretion. An extraordinary remedy, a petition for certiorari is available only
[10]

REASONS RELIED UPON FOR ALLOWANCE OF PETITION and restrictively in truly exceptional cases. The sole office of the writ of
certiorari is the correction of errors of jurisdiction including the commission
of grave abuse of discretion amounting to lack or excess of jurisdiction. It
[11]
They argue that since in the computation of leave credits, ANTECO uses a
does not include correction of the NLRCs evaluation of the evidence or of its divisor of 304, ANTECO is not paying them 61 days every year.
factual findings. Such findings are generally accorded not only respect but
also finality. A party assailing such findings bears the burden of showing
[12]

that the tribunal acted capriciously and whimsically or in total disregard of Petitioners claim is without basis
evidence material to the controversy, in order that the extraordinary writ of
certiorari will lie.
[13]
We have long ago declared void Section 2, Rule IV of Book III of the
We agree with the Court of Appeals that nowhere in the petition is there Omnibus Rules Implementing the Labor Code. In Insular Bank of Asia v.
any acceptable demonstration that the NLRC acted either with grave abuse Inciong, we ruled as follows:
[14]

of discretion or without or in excess of its jurisdiction.Petitioners merely


stated generalizations and conclusions of law. Rather than discussing how Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions
the NLRC acted capriciously, petitioners resorted to a litany of No. 9 issued by the Secretary (then Minister) of Labor are null and void since in
generalizations. the guise of clarifying the Labor Codes provisions on holiday pay, they in effect
amended them by enlarging the scope of their exclusion.
Petitions that fail to comply with procedural requisites, or are
unintelligible or clearly without legal basis, deserve scant consideration. The Labor Code is clear that monthly-paid employees are not excluded from the
Section 6, Rule 65 of the Rules of Court requires that every petition be benefits of holiday pay. However, the implementing rules on holiday pay
sufficient in form and substance before a court may take further action. promulgated by the then Secretary of Labor excludes monthly-paid employees
Lacking such sufficiency, the court may dismiss the petition outright. from the said benefits by inserting, under Rule IV, Book III of the implementing
The insufficiency in substance of this petition provides enough reason to rules, Section 2 which provides that monthly-paid employees are presumed to be
end our discussion here. However, we shall discuss the issues raised not so paid for all days in the month whether worked or not.
much to address the merit of the petition, for there is none, but to illustrate
Thus, Section 2 cannot serve as basis of any right or claim. Absent any
the extent by which petitioners have haphazardly pursued their claim.
other legal basis, petitioners claim for wage differentials must fail.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners
On the right of the petitioners to wage differentials claim will still fail. The basic rule in this jurisdiction is no work, no pay. The
right to be paid for un-worked days is generally limited to the ten legal
Petitioners claim that the Court of Appeals gravely erred in denying their holidays in a year. Petitioners claim is based on a mistaken notion that
[15]

claim for wage differentials. Petitioners base their claim on Section 2, Rule Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked
IV of Book III of the Omnibus Rules Implementing the Labor Code. days beyond the ten legal holidays. In effect, petitioners demand that
Petitioners argue that under this provision monthly-paid employees are ANTECO should pay them on Sundays, the un-worked half of Saturdays and
considered paid for all days of the month including un-worked days. other days that they do not work at all. Petitioners line of reasoning is not
Petitioners assert that they should be paid for all the 365 days in a year. only a violation of the no work, no pay principle, it also gives rise to an
invidious classification, a violation of the equal protection clause. Sustaining
petitioners argument will make monthly-paid employees a privileged class WHEREFORE, the petition is DENIED. The Resoution of the Court of
who are paid even if they do not work. Appeals DISMISSING CA-G.R. SP No. 51519 is AFFIRMED.
The use of a divisor less than 365 days cannot make ANTECO SO ORDERED.
automatically liable for underpayment. The facts show that petitioners are
required to work only from Monday to Friday and half of Saturday. Thus, the
minimum allowable divisor is 287, which is the result of 365 days, less 52
Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below
287 days means that ANTECOs workers are deprived of their holiday pay
for some or all of the ten legal holidays. The 304 days divisor used by
ANTECO is clearly above the minimum of 287 days.
Finally, petitioners cite Chartered Bank Employees Association v.
Ople as an analogous situation. Petitioners have misread this case.
[16]

In Chartered Bank, the workers sought payment for un-


worked legal holidays as a right guaranteed by a valid law. In this case,
petitioners seek payment of wages for un-worked non-legal holidays citing
as basis a void implementing rule. The circumstances are also markedly
different. In Chartered Bank, there was a collective bargaining agreement
that prescribed the divisor. No CBA exists in this case. In Chartered Bank,
the employer was liable for underpayment because the divisor it used was
251 days, a figure that clearly fails to account for the ten legal holidays the
law requires to be paid. Here, the divisor ANTECO uses is 304 days. This
figure does not deprive petitioners of their right to be paid on legal holidays.
A final note. ANTECOs defense is likewise based on Section 2, Rule IV
of Book III of the Omnibus Rules Implementing the Labor Code although
ANTECOs interpretation of this provision is opposite that of petitioners. It is
deplorable that both parties premised their arguments on an implementing
rule that the Court had declared void twenty years ago in Insular Bank. This
case is cited prominently in basic commentaries. And yet, counsel for both
[17]

parties failed to consider this. This does not speak well of the quality of
representation they rendered to their clients. This controversy should have
ended long ago had either counsel first checked the validity of the
implementing rule on which they based their contentions.
Republic of the Philippines petitioner’s column failed to improve, continued to be superficially and poorly written, and failed to
SUPREME COURT meet the high standards of the newspaper. Hence, they decided to terminate petitioner’s column.8
Manila
Aggrieved by the newspaper’s action, petitioner filed a complaint for illegal dismissal, backwages,
THIRD DIVISION moral and exemplary damages, and other money claims before the NLRC.

G.R. No. 155207 August 13, 2008 On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of
petitioner, the dispositive portion of which reads:
WILHELMINA S. OROZCO, petitioner,
vs. WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of
THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY respondent company; ordering respondent company to reinstate her to her former or
INQUIRER, and LETICIA JIMENEZ MAGSANOC, respondents. equivalent position, with backwages.

DECISION Respondent company is also ordered to pay her 13 th month pay and service incentive leave
pay.
NACHURA, J.:
Other claims are hereby dismissed for lack of merit.
The case before this Court raises a novel question never before decided in our jurisdiction – whether
a newspaper columnist is an employee of the newspaper which publishes the column. SO ORDERED.9

In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner The Labor Arbiter found that:
Wilhelmina S. Orozco assails the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 50970
dated June 11, 2002 and its Resolution2 dated September 11, 2002 denying her Motion for [R]espondent company exercised full and complete control over the means and method by
Reconsideration. The CA reversed and set aside the Decision 3 of the National Labor Relations which complainant’s work – that of a regular columnist – had to be accomplished. This control
Commission (NLRC), which in turn had affirmed the Decision4 of the Labor Arbiter finding that Orozco might not be found in an instruction, verbal or oral, given to complainant defining the means
was an employee of private respondent Philippine Daily Inquirer (PDI) and was illegally dismissed as and method she should write her column. Rather, this control is manifested and certained
columnist of said newspaper. (sic) in respondents’ admitted prerogative to reject any article submitted by complainant for
publication.
In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle
section. She religiously submitted her articles every week, except for a six-month stint in New York By virtue of this power, complainant was helplessly constrained to adopt her subjects and
City when she, nonetheless, sent several articles through mail. She received compensation style of writing to suit the editorial taste of her editor. Otherwise, off to the trash can went her
of P250.00 – later increased to P300.00 – for every column published.5 articles.

On November 7, 1992, petitioner’s column appeared in the PDI for the last time. Petitioner claims that Moreover, this control is already manifested in column title, "Feminist Reflection" allotted
her then editor, Ms. Lita T. Logarta,6 told her that respondent Leticia Jimenez Magsanoc, PDI Editor complainant. Under this title, complainant’s writing was controlled and limited to a woman’s
in Chief, wanted to stop publishing her column for no reason at all and advised petitioner to talk to perspective on matters of feminine interests. That respondent had no control over the subject
Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that matter written by complainant is strongly belied by this observation. Even the length of
it was PDI Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in complainant’s articles were set by respondents.
a telephone conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the
Lifestyle section already had many columnists.7
Inevitably, respondents would have no control over when or where complainant wrote her
articles as she was a columnist who could produce an article in thirty (3) (sic) months or three
On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to (3) days, depending on her mood or the amount of research required for an article but her
discuss how to improve said section. They agreed to cut down the number of columnists by keeping actions were controlled by her obligation to produce an article a week. If complainant did not
only those whose columns were well-written, with regular feedback and following. In their judgment, have to report for work eight (8) hours a day, six (6) days a week, it is because her task was
mainly mental. Lastly, the fact that her articles were (sic) published weekly for three (3) years considered limitations, the topics of the articles submitted by private respondent were all her
show that she was respondents’ regular employee, not a once-in-a-blue-moon contributor choices. Thus, the petitioner PDI in deciding to publish private respondent’s articles only
who was not under any pressure or obligation to produce regular articles and who wrote at controls the result of the work and not the means by which said articles were written.
his own whim and leisure.10
As such, the above facts failed to measure up to the control test necessary for an employer-
PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second employee relationship to exist.15
Division dismissed the appeal thereby affirming the Labor Arbiter’s Decision. The NLRC initially noted
that PDI failed to perfect its appeal, under Article 223 of the Labor Code, due to non-filing of a cash or Petitioner’s Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She
surety bond. The NLRC said that the reason proffered by PDI for not filing the bond – that it was then filed the present Petition for Review.
difficult or impossible to determine the amount of the bond since the Labor Arbiter did not specify the
amount of the judgment award – was not persuasive. It said that all PDI had to do was compute In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the
based on the amount it was paying petitioner, counting the number of weeks from November 7, 1992 Labor Arbiter to clarify the amount of the award due petitioner and, thereafter, ordered PDI to post the
up to promulgation of the Labor Arbiter’s decision.11 requisite bond. Upon compliance therewith, the petition would be given due course. Labor Arbiter
Amansec clarified that the award under the Decision amounted to P15,350.00. Thus, PDI posted the
The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiter’s findings of requisite bond on January 25, 2007.16
fact and law. It sustained the Labor Arbiter’s reasoning that respondent PDI exercised control over
petitioner’s work. We shall initially dispose of the procedural issue raised in the Petition.

PDI then filed a Petition for Review12 before this Court seeking the reversal of the NLRC Decision. Petitioner argues that the CA erred in not dismissing outright PDI’s Petition for Certiorari for PDI’s
However, in a Resolution13 dated December 2, 1998, this Court referred the case to the Court of failure to post a cash or surety bond in violation of Article 223 of the Labor Code.
Appeals, pursuant to our ruling in St. Martin Funeral Homes v. National Labor Relations
Commission.14
This issue was settled by this Court in its Resolution dated April 29, 2005. 17 There, the Court held:
The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and
dismissed petitioner’s Complaint. It held that the NLRC misappreciated the facts and rendered a But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non
ruling wanting in substantial evidence. The CA said: to the perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional
instances wherein the Court relaxed the bond requirement as a condition for posting the
appeal.
The Court does not agree with public respondent NLRC’s conclusion. First, private
respondent admitted that she was and [had] never been considered by petitioner PDI as its
employee. Second, it is not disputed that private respondent had no employment contract xxxx
with petitioner PDI. In fact, her engagement to contribute articles for publication was based on
a verbal agreement between her and the petitioner’s Lifestyle Section Editor. Moreover, it In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of
was evident that private respondent was not required to report to the office eight (8) hours a the Labor Arbiter concerned did not contain a computation of the monetary award due the
day. Further, it is not disputed that she stayed in New York for six (6) months without employees, a circumstance which is likewise present in this case. In said case, the Court
petitioner’s permission as to her leave of absence nor was she given any disciplinary action stated,
for the same. These undisputed facts negate private respondent’s claim that she is an
employee of petitioner. As a rule, compliance with the requirements for the perfection of an appeal within the
reglamentary (sic) period is mandatory and jurisdictional. However, in National
Moreover, with regards (sic) to the control test, the public respondent NLRC’s ruling that the Federation of Labor Unions v. Ladrido as well as in several other cases, this Court
guidelines given by petitioner PDI for private respondent to follow, e.g. in terms of space relaxed the requirement of the posting of an appeal bond within the reglementary
allocation and length of article, is not the form of control envisioned by the guidelines set by period as a condition for perfecting the appeal. This is in line with the principle that
the Supreme Court. The length of the article is obviously limited so that all the articles to be substantial justice is better served by allowing the appeal to be resolved on the merits
featured in the paper can be accommodated. As to the topic of the article to be published, it is rather than dismissing it based on a technicality.
but logical that private respondent should not write morbid topics such as death because she
is contributing to the lifestyle section. Other than said given limitations, if the same could be
The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to This Court has constantly adhered to the "four-fold test" to determine whether there exists an
backwages, 13th month pay and service incentive leave pay without however including a employer-employee relationship between parties.24 The four elements of an employment relationship
computation of the alleged amounts. are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee’s conduct. 25
xxxx
Of these four elements, it is the power of control which is the most crucial 26 and most determinative
In the case of NFLU v. Ladrido III, this Court postulated that "private respondents cannot be factor,27 so important, in fact, that the other elements may even be disregarded. 28 As this Court has
expected to post such appeal bond equivalent to the amount of the monetary award when the previously held:
amount thereof was not included in the decision of the labor arbiter." The computation of the
amount awarded to petitioner not having been clearly stated in the decision of the labor the significant factor in determining the relationship of the parties is the presence or absence
arbiter, private respondents had no basis for determining the amount of the bond to be of supervisory authority to control the method and the details of performance of the service
posted. being rendered, and the degree to which the principal may intervene to exercise such
control.29
Thus, while the requirements for perfecting an appeal must be strictly followed as they are
considered indispensable interdictions against needless delays and for orderly discharge of In other words, the test is whether the employer controls or has reserved the right to control the
judicial business, the law does admit of exceptions when warranted by the circumstances. employee, not only as to the work done, but also as to the means and methods by which the same is
Technicality should not be allowed to stand in the way of equitably and completely resolving accomplished.30
the rights and obligations of the parties. But while this Court may relax the observance of
reglementary periods and technical rules to achieve substantial justice, it is not prepared to Petitioner argues that several factors exist to prove that respondents exercised control over her and
give due course to this petition and make a pronouncement on the weighty issue obtaining in her work, namely:
this case until the law has been duly complied with and the requisite appeal bond duly paid by
private respondents.18 a. As to the Contents of her Column – The PETITIONER had to insure that the contents of
her column hewed closely to the objectives of its Lifestyle Section and the over-all principles
Records show that PDI has complied with the Court’s directive for the posting of the bond; 19 thus, that that the newspaper projects itself to stand for. As admitted, she wanted to write about death
issue has been laid to rest. in relation to All Souls Day but was advised not to.

We now proceed to rule on the merits of this case. b. As to Time Control – The PETITIONER, as a columnist, had to observe the deadlines of
the newspaper for her articles to be published. These deadlines were usually that time period
The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in when the Section Editor has to "close the pages" of the Lifestyle Section where the column in
the affirmative, whether she was illegally dismissed. located. "To close the pages" means to prepare them for printing and publication.

We rule for the respondents. As a columnist, the PETITIONER’s writings had a definite day on which it was going to
appear. So she submitted her articles two days before the designated day on which the
The existence of an employer-employee relationship is essentially a question of fact. 20 Factual column would come out.
findings of quasi-judicial agencies like the NLRC are generally accorded respect and finality if
supported by substantial evidence.21 This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers’
obligations to the readers with regard to timeliness and freshness of ideas.
Considering, however, that the CA’s findings are in direct conflict with those of the Labor Arbiter and
NLRC, this Court must now make its own examination and evaluation of the facts of this case. c. As to Control of Space – The PETITIONER was told to submit only two or three pages of
article for the column, (sic) "Feminist Reflections" per week. To go beyond that, the Lifestyle
It is true that petitioner herself admitted that she "was not, and [had] never been considered editor would already chop off the article and publish the rest for the next week. This shows
respondent’s employee because the terms of works were arbitrarily decided upon by the that PRIVATE RESPONDENTS had control over the space that the PETITIONER was
respondent."22 However, the employment status of a person is defined and prescribed by law and not assigned to fill.
by what the parties say it should be.23
d. As to Discipline – Over time, the newspaper readers’ eyes are trained or habituated to look Petitioner believes that respondents’ acts are meant to control how she executes her work. We do not
for and read the works of their favorite regular writers and columnists. They are conditioned, agree. A careful examination reveals that the factors enumerated by the petitioner are inherent
based on their daily purchase of the newspaper, to look for specific spaces in the newspapers conditions in running a newspaper. In other words, the so-called control as to time, space, and
for their favorite write-ups/or opinions on matters relevant and significant issues aside from discipline are dictated by the very nature of the newspaper business itself.
not being late or amiss in the responsibility of timely submission of their articles.
We agree with the observations of the Office of the Solicitor General that:
The PETITIONER was disciplined to submit her articles on highly relevant and significant
issues on time by the PRIVATE RESPONDENTS who have a say on whether the topics The Inquirer is the publisher of a newspaper of general circulation which is widely read
belong to those considered as highly relevant and significant, through the Lifestyle Section throughout the country. As such, public interest dictates that every article appearing in the
Editor. The PETITIONER had to discuss the topics first and submit the articles two days newspaper should subscribe to the standards set by the Inquirer, with its thousands of
before publication date to keep her column in the newspaper space regularly as expected or readers in mind. It is not, therefore, unusual for the Inquirer to control what would be
without miss by its readers.31 published in the newspaper. What is important is the fact that such control pertains only to the
end result, i.e., the submitted articles. The Inquirer has no control over [petitioner] as to the
Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor means or method used by her in the preparation of her articles. The articles are done by
laws contemplate such as to establish an employer-employee relationship between petitioner and [petitioner] herself without any intervention from the Inquirer. 34
respondent PDI?
Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce
It is not. her articles each week. Aside from the constraints presented by the space allocation of her column,
there were no restraints on her creativity; petitioner was free to write her column in the manner and
Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC. style she was accustomed to and to use whatever research method she deemed suitable for her
purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle
section did not translate to control, but was simply a logical consequence of the fact that her column
Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of
appeared in that section and therefore had to cater to the preference of the readers of that section.
the former. Rules which serve as general guidelines towards the achievement of the mutually desired
result are not indicative of the power of control. 32 Thus, this Court has explained:
The perceived constraint on petitioner’s column was dictated by her own choice of her column’s
perspective. The column title "Feminist Reflections" was of her own choosing, as she herself
It should, however, be obvious that not every form of control that the hiring party reserves to
admitted, since she had been known as a feminist writer. 35Thus, respondent PDI, as well as her
himself over the conduct of the party hired in relation to the services rendered may be
readers, could reasonably expect her columns to speak from such perspective.
accorded the effect of establishing an employer-employee relationship between them in the
legal or technical sense of the term. A line must be drawn somewhere, if the recognized
distinction between an employee and an individual contractor is not to vanish altogether. Contrary to petitioner’s protestations, it does not appear that there was any actual restraint or
Realistically, it would be a rare contract of service that gives untrammelled freedom to the limitation on the subject matter – within the Lifestyle section – that she could write about. Respondent
party hired and eschews any intervention whatsoever in his performance of the engagement. PDI did not dictate how she wrote or what she wrote in her column. Neither did PDI’s guidelines
dictate the kind of research, time, and effort she put into each column. In fact, petitioner herself said
that she received "no comments on her articles…except for her to shorten them to fit into the box
Logically, the line should be drawn between rules that merely serve as guidelines towards the
allotted to her column." Therefore, the control that PDI exercised over petitioner was only as to the
achievement of the mutually desired result without dictating the means or methods to be
finished product of her efforts, i.e., the column itself, by way of either shortening or outright rejection
employed in attaining it, and those that control or fix the methodology and bind or restrict the
of the column.
party hired to the use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both the result and the
means used to achieve it. x x x.33 The newspaper’s power to approve or reject publication of any specific article she wrote for her
column cannot be the control contemplated in the "control test," as it is but logical that one who
commissions another to do a piece of work should have the right to accept or reject the product. The
The main determinant therefore is whether the rules set by the employer are meant to control not just
important factor to consider in the "control test" is still the element of control over how the work itself
the results of the work but also the means and method to be used by the hired party in order to
is done, not just the end result thereof.
achieve such results. Thus, in this case, we are to examine the factors enumerated by petitioner to
see if these are merely guidelines or if they indeed fulfill the requirements of the control test.
In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We and direction of the principal in all matters connected with the performance of the work except as to
note the common practice in the newspaper business of assigning its regular reporters to cover the results thereof.45
specific subjects, geographical locations, government agencies, or areas of concern, more commonly
referred to as "beats." A reporter must produce stories within his or her particular beat and cannot On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening. In that case, the Court
switch to another beat without permission from the editor. In most newspapers also, a reporter must found, using the four-fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but
inform the editor about the story that he or she is working on for the day. The story or article must also an independent contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and
be submitted to the editor at a specified time. Moreover, the editor can easily pull out a reporter from celebrity status not possessed by ordinary employees," a circumstance that, the Court said, was
one beat and ask him or her to cover another beat, if the need arises. indicative, though not conclusive, of an independent contractual relationship. Independent contractors
often present themselves to possess unique skills, expertise or talent to distinguish them from
This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not ordinary employees.47 The Court also found that, as to payment of wages, Sonza’s talent fees were
precluded from submitting her column ahead of time or from submitting columns to be published at a the result of negotiations between him and ABS-CBN.48 As to the power of dismissal, the Court found
later time. More importantly, respondents did not dictate upon petitioner the subject matter of her that the terms of Sonza’s engagement were dictated by the contract he entered into with ABS-CBN,
columns, but only imposed the general guideline that the article should conform to the standards of and the same contract provided that either party may terminate the contract in case of breach by the
the newspaper and the general tone of the particular section. other of the terms thereof.49 However, the Court held that the foregoing are not determinative of an
employer-employee relationship. Instead, it is still the power of control that is most important.
Where a person who works for another performs his job more or less at his own pleasure, in the
manner he sees fit, not subject to definite hours or conditions of work, and is compensated according On the power of control, the Court found that in performing his work, Sonza only needed his skills and
to the result of his efforts and not the amount thereof, no employer-employee relationship exists.36 talent – how he delivered his lines, appeared on television, and sounded on radio were outside ABS-
CBN’s control.50 Thus:
Aside from the control test, this Court has also used the economic reality test. The economic realities
prevailing within the activity or between the parties are examined, taking into consideration the totality We find that ABS-CBN was not involved in the actual performance that produced the finished
of circumstances surrounding the true nature of the relationship between the parties. 37 This is product of SONZA’s work. ABS-CBN did not instruct SONZA how to perform his job. ABS-
especially appropriate when, as in this case, there is no written agreement or contract on which to CBN merely reserved the right to modify the program format and airtime schedule "for more
base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible effective programming." ABS-CBN’s sole concern was the quality of the shows and their
employment relationships for purposes of applying the Labor Code ought to be the economic standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and
dependence of the worker on his employer. 38 methods of performance of SONZA’s work.

Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power
working in various women’s organizations.39 Likewise, she herself admits that she also contributes over the means and methods of the performance of his work. Although ABS-CBN did have
articles to other publications.40 Thus, it cannot be said that petitioner was dependent on respondent the option not to broadcast SONZA’s show, ABS-CBN was still obligated to pay SONZA’s
PDI for her continued employment in respondent’s line of business. 41 talent fees... Thus, even if ABS-CBN was completely dissatisfied with the means and
methods of SONZA’s performance of his work, or even with the quality or product of his work,
The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to
contractor, engaged to do independent work. broadcast SONZA’s show but ABS-CBN must still pay his talent fees in full.

There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the
the characterization of the relationship must be made based on the particular circumstances of each obligation to continue paying in full SONZA’s talent fees, did not amount to control over the
case.42 There are several factors43 that may be considered by the courts, but as we already said, the means and methods of the performance of SONZA’s work. ABS-CBN could not terminate or
right to control is the dominant factor in determining whether one is an employee or an independent discipline SONZA even if the means and methods of performance of his work - how he
contractor.44 delivered his lines and appeared on television - did not meet ABS-CBN’s approval. This
proves that ABS-CBN’s control was limited only to the result of SONZA’s work, whether to
broadcast the final product or not. In either case, ABS-CBN must still pay SONZA’s talent
In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct
fees in full until the expiry of the Agreement.
and independent business and undertakes to perform the job, work, or service on one’s own account
and under one’s own responsibility according to one’s own manner and method, free from the control
In Vaughan, et al. v. Warner, et al., the United States Circuit Court of Appeals ruled that
vaudeville performers were independent contractors although the management reserved the
right to delete objectionable features in their shows. Since the management did not have
control over the manner of performance of the skills of the artists, it could only control the
result of the work by deleting objectionable features.

SONZA further contends that ABS-CBN exercised control over his work by supplying all
equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed
to broadcast the "Mel & Jay" programs. However, the equipment, crew and airtime are not the
"tools and instrumentalities" SONZA needed to perform his job. What SONZA principally
needed were his talent or skills and the costumes necessary for his appearance. Even though
ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA
was still an independent contractor since ABS-CBN did not supervise and control his work.
ABS-CBN’s sole concern was for SONZA to display his talent during the airing of the
programs.

A radio broadcast specialist who works under minimal supervision is an independent


contractor. SONZA’s work as television and radio program host required special skills and
talent, which SONZA admittedly possesses. The records do not show that ABS-CBN
exercised any supervision and control over how SONZA utilized his skills and talent in his
shows.51

The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent,
skill, experience, and her unique viewpoint as a feminist advocate. How she utilized all these in
writing her column was not subject to dictation by respondent. As in Sonza, respondent PDI was not
involved in the actual performance that produced the finished product. It only reserved the right to
shorten petitioner’s articles based on the newspaper’s capacity to accommodate the same. This fact,
we note, was not unique to petitioner’s column. It is a reality in the newspaper business that space
constraints often dictate the length of articles and columns, even those that regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed
to perform her work. Petitioner only needed her talent and skill to come up with a column every week.
As such, she had all the tools she needed to perform her work.

Considering that respondent PDI was not petitioner’s employer, it cannot be held guilty of illegal
dismissal.

WHEREFORE, the foregoing premises considered, the Petition is DISMISSED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 50970 are hereby AFFIRMED.

SO ORDERED.
SECOND DIVISION periods. After August 8, 1991, and pursuant to their Reliever Agreement,
[2]

her services were terminated.


On September 2, 1991, private respondent was once more asked to join
[G.R. No. 118978. May 23, 1997] petitioner company as a probationary employee, the probationary period to
cover 150 days. In the job application form that was furnished her to be filled
up for the purpose, she indicated in the portion for civil status therein that
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner, * she was single although she had contracted marriage a few months earlier,
vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE that is, on May 26, 1991. [3]

DE GUZMAN, respondents. It now appears that private respondent had made the same
representation in the two successive reliever agreements which she signed
DECISION on June 10, 1991 and July 8, 1991. When petitioner supposedly learned
REGALADO, J.: about the same later, its branch supervisor in Baguio City, Delia M. Oficial,
sent to private respondent a memorandum dated January 15, 1992 requiring
Seeking relief through the extraordinary writ of certiorari, petitioner her to explain the discrepancy. In that memorandum, she was reminded
Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes about the companys policy of not accepting married women for
the alleged concealment of civil status and defalcation of company funds as employment. [4]

grounds to terminate the services of an employee. That employee, herein


In her reply letter dated January 17, 1992, private respondent stated that
private respondent Grace de Guzman, contrarily argues that what really
she was not aware of PT&Ts policy regarding married women at the time,
motivated PT&T to terminate her services was her having contracted
and that all along she had not deliberately hidden her true civil
marriage during her employment, which is prohibited by petitioner in its
status. Petitioner
[5]
nonetheless remained unconvinced by her
company policies. She thus claims that she was discriminated against in
explanations. Private respondent was dismissed from the company effective
gross violation of law, such a proscription by an employer being outlawed by
January 29, 1992, which she readily contested by initiating a complaint for
[6]

Article 136 of the Labor Code.


illegal dismissal, coupled with a claim for non-payment of cost of living
Grace de Guzman was initially hired by petitioner as a reliever, allowances (COLA), before the Regional Arbitration Branch of the National
specifically as a Supernumerary Project Worker, for a fixed period from Labor Relations Commission in Baguio City.
November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on
At the preliminary conference conducted in connection therewith, private
maternity leave. Under the Reliever Agreement which she signed with
[1]

respondent volunteered the information, and this was incorporated in the


petitioner company, her employment was to be immediately terminated upon
stipulation of facts between the parties, that she had failed to remit the
expiration of the agreed period. Thereafter, from June 10, 1991 to July 1,
amount of P2,380.75 of her collections. She then executed a promissory
1991, and from July 19, 1991 to August 8, 1991, private respondents
note for that amount in favor of petitioner. All of these took place in a formal
[7]

services as reliever were again engaged by petitioner, this time in


proceeding and with the agreement of the parties and/or their counsel.
replacement of one Erlinda F. Dizon who went on leave during both
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed The Constitution, cognizant of the disparity in rights between men and
down a decision declaring that private respondent, who had already gained women in almost all phases of social and political life, provides a gamut of
the status of a regular employee, was illegally dismissed by petitioner. Her protective provisions. To cite a few of the primordial ones, Section 14, Article
reinstatement, plus payment of the corresponding back wages and COLA, II on the Declaration of Principles and State Policies, expressly recognizes
[8]

was correspondingly ordered, the labor arbiter being of the firmly expressed the role of women in nation-building and commands the State to ensure, at
view that the ground relied upon by petitioner in dismissing private all times, the fundamental equality before the law of women and
respondent was clearly insufficient, and that it was apparent that she had men. Corollary thereto, Section 3 of Article XIII (the progenitor whereof
[9]

been discriminated against on account of her having contracted marriage in dates back to both the 1935 and 1973 Constitution) pointedly requires the
violation of company rules. State to afford full protection to labor and to promote full employment and
equality of employment opportunities for all, including an assurance of
On appeal to the National Labor Relations Commission (NLRC), said
entitlement to tenurial security of all workers. Similarly, Section 14 of Article
public respondent upheld the labor arbiter and, in its decision dated April 29,
XIII mandates that the State shall protect working women through
[10]

1994, it ruled that private respondent had indeed been the subject of an
provisions for opportunities that would enable them to reach their full
unjust and unlawful discrimination by her employer, PT&T. However, the
potential.
decision of the labor arbiter was modified with the qualification that Grace de
Guzman deserved to be suspended for three months in view of the dishonest 2. Corrective labor and social laws on gender inequality have emerged
nature of her acts which should not be condoned. In all other respects, the with more frequency in the years since the Labor Code was enacted on May
NLRC affirmed the decision of the labor arbiter, including the order for the 1, 1974 as Presidential Decree No. 442, largely due to our countrys
reinstatement of private respondent in her employment with PT&T. commitment as a signatory to the United Nations Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). [11]

The subsequent motion for reconsideration filed by petitioner was


rebuffed by respondent NLRC in its resolution of November 9, 1994, hence Principal among these laws are Republic Act No. 6727 which explicitly
[12]

this special civil action assailing the aforestated decisions of the labor arbiter prohibits discrimination against women with respect to terms and conditions
and respondent NLRC, as well as the denial resolution of the latter. of employment, promotion, and training opportunities; Republic Act No.
6955 which bans the mail-order-bride practice for a fee and the export of
[13]

1. Decreed in the Bible itself is the universal norm that women should be
female labor to countries that cannot guarantee protection to the rights of
regarded with love and respect but, through the ages, men have responded
women workers; Republic Act No. 7192, also known as the Women in
[14]

to that injunction with indifference, on the hubristic conceit that women


Development and Nation Building Act, which affords women equal
constitute the inferior sex. Nowhere has that prejudice against womankind
opportunities with men to act and to enter into contracts, and for
been so pervasive as in the field of labor, especially on the matter of equal
appointment, admission, training, graduation, and commissioning in all
employment opportunities and standards. In the Philippine setting, women
military or similar schools of the Armed Forces of the Philippines and the
have traditionally been considered as falling within the vulnerable groups or
Philippine National Police; Republic Act No. 7322 increasing the maternity
[15]

types of workers who must be safeguarded with preventive and remedial


benefits granted to women in the private sector; Republic Act No.
social legislation against discriminatory and exploitative practices in hiring,
7877 which outlaws and punishes sexual harassment in the workplace and
[16]

training, benefits, promotion and retention.


in the education and training environment; and Republic Act No. 8042, or [17]
the Migrant Workers and Overseas Filipinos Act of 1995, which prescribes employment, from hiring to firing, except in cases of unlawful discrimination
as a matter of policy, inter alia, the deployment of migrant workers, with or those which may be provided by law. [20]

emphasis on women, only in countries where their rights are


In the case at bar, petitioners policy of not accepting or considering as
secure. Likewise, it would not be amiss to point out that in the Family
disqualified from work any woman worker who contracts marriage runs afoul
Code, womens rights in the field of civil law have been greatly enhanced
[18]

of the test of, and the right against, discrimination, afforded all women
and expanded.
workers by our labor laws and by no less than the Constitution. Contrary to
In the Labor Code, provisions governing the rights of women workers are petitioners assertion that it dismissed private respondent from employment
found in Articles 130 to 138 thereof. Article 130 involves the right against on account of her dishonesty, the record discloses clearly that her ties with
particular kinds of night work while Article 132 ensures the right of women to the company were dissolved principally because of the companys policy that
be provided with facilities and standards which the Secretary of Labor may married women are not qualified for employment in PT&T, and not merely
establish to ensure their health and safety. For purposes of labor and social because of her supposed acts of dishonesty.
legislation, a woman working in a nightclub, cocktail lounge, massage clinic,
That it was so can easily be seen from the memorandum sent to private
bar or other similar establishments shall be considered as an employee
respondent by Delia M. Oficial, the branch supervisor of the company, with
under Article 138. Article 135, on the other hand, recognizes a womans right
the reminder, in the words of the latter, that youre fully aware that the
against discrimination with respect to terms and conditions of employment
company is not accepting married women employee (sic), as it was verbally
on account simply of sex. Finally, and this brings us to the issue at hand,
instructed to you. Again, in the termination notice sent to her by the same
[21]

Article 136 explicitly prohibits discrimination merely by reason of the


branch supervisor, private respondent was made to understand that her
marriage of a female employee.
severance from the service was not only by reason of her concealment of
3. Acknowledged as paramount in the due process scheme is the her married status but, over and on top of that, was her violation of the
constitutional guarantee of protection to labor and security of tenure. Thus, companys policy against marriage (and even told you that married women
an employer is required, as a condition sine qua non prior to severance of employees are not applicable [sic] or accepted in our
the employment ties of an individual under his employ, to convincingly company.) Parenthetically, this seems to be the curious reason why it was
[22]

establish, through substantial evidence, the existence of a valid and just made to appear in the initiatory pleadings that petitioner was represented in
cause in dispensing with the services of such employee, ones labor being this case only by its said supervisor and not by its highest ranking officers
regarded as constitutionally protected property. who would otherwise be solidarily liable with the corporation. [23]

On the other hand, it is recognized that regulation of manpower by the Verily, private respondents act of concealing the true nature of her status
company falls within the so-called management prerogatives, which from PT&T could not be properly characterized as willful or in bad faith as
prescriptions encompass the matter of hiring, supervision of workers, work she was moved to act the way she did mainly because she wanted to retain
assignments, working methods and assignments, as well as regulations on a permanent job in a stable company. In other words, she was practically
the transfer of employees, lay-off of workers, and the discipline, dismissal, forced by that very same illegal company policy into misrepresenting her civil
and recall of employees. As put in a case, an employer is free to regulate,
[19]
status for fear of being disqualified from work. While loss of confidence is a
according to his discretion and best business judgment, all aspects of just cause for termination of employment, it should not be simulated. It must
[24]

rest on an actual breach of duty committed by the employee and not on the
employers caprices. Furthermore, it should never be used as a subterfuge
[25]
Finally, petitioners collateral insistence on the admission of private
for causes which are improper, illegal, or unjustified.
[26]
respondent that she supposedly misappropriated company funds, as an
additional ground to dismiss her from employment, is somewhat insincere
In the present controversy, petitioners expostulations that it dismissed
and self-serving. Concededly, private respondent admitted in the course of
private respondent, not because the latter got married but because she
the proceedings that she failed to remit some of her collections, but that is
concealed that fact, does have a hollow ring. Her concealment, so it is
an altogether different story. The fact is that she was dismissed solely
claimed, bespeaks dishonesty hence the consequent loss of confidence in
because of her concealment of her marital status, and not on the basis of
her which justified her dismissal. Petitioner would asseverate, therefore, that
that supposed defalcation of company funds. That the labor arbiter would
while it has nothing against marriage, it nonetheless takes umbrage over the
thus consider petitioners submissions on this supposed dishonesty as a
concealment of that fact. This improbable reasoning, with interstitial
mere afterthought, just to bolster its case for dismissal, is a perceptive
distinctions, perturbs the Court since private respondent may well be minded
conclusion born of experience in labor cases. For, there was no showing that
to claim that the imputation of dishonesty should be the other way around.
private respondent deliberately misappropriated the amount or whether her
Petitioner would have the Court believe that although private respondent failure to remit the same was through negligence and, if so, whether the
defied its policy against its female employees contracting marriage, what negligence was in nature simple or grave. In fact, it was merely agreed that
could be an act of insubordination was inconsequential. What it submits as private respondent execute a promissory note to refund the same, which she
unforgivable is her concealment of that marriage yet, at the same time, did, and the matter was deemed settled as a peripheral issue in the labor
declaring that marriage as a trivial matter to which it supposedly has no case.
objection. In other words, PT&T says it gives its blessings to its female
Private respondent, it must be observed, had gained regular status at the
employees contracting marriage, despite the maternity leaves and other
time of her dismissal. When she was served her walking papers on January
benefits it would consequently respond for and which obviously it would have
29, 1992, she was about to complete the probationary period of 150 days as
wanted to avoid. If that employee confesses such fact of marriage, there will
she was contracted as a probationary employee on September 2, 1991. That
be no sanction; but if such employee conceals the same instead of
her dismissal would be effected just when her probationary period was
proceeding to the confessional, she will be dismissed. This line of reasoning
winding down clearly raises the plausible conclusion that it was done in order
does not impress us as reflecting its true management policy or that we are
to prevent her from earning security of tenure. On the other hand, her
[27]

being regaled with responsible advocacy.


earlier stints with the company as reliever were undoubtedly those of a
This Court should be spared the ennui of strained reasoning and regular employee, even if the same were for fixed periods, as she performed
the tedium of propositions which confuse through less than candid activities which were essential or necessary in the usual trade and business
arguments. Indeed, petitioner glosses over the fact that it was its unlawful of PT&T. The primary standard of determining regular employment is the
[28]

policy against married women, both on the aspects of qualification and reasonable connection between the activity performed by the employee in
retention, which compelled private respondent to conceal her supervenient relation to the business or trade of the employer.[29]

marriage. It was, however, that very policy alone which was the cause of
As an employee who had therefore gained regular status, and as she
private respondents secretive conduct now complained of. It is
had been dismissed without just cause, she is entitled to reinstatement
then apropos to recall the familiar saying that he who is the cause of the
without loss of seniority rights and other privileges and to full back wages,
cause is the cause of the evil caused.
inclusive of allowances and other benefits or their monetary Office of the President. There, a policy of Philippine Air Lines requiring that
equivalent. However, as she had undeniably committed an act of
[30]
prospective flight attendants must be single and that they will be
dishonesty in concealing her status, albeit under the compulsion of an automatically separated from the service once they marry was declared void,
unlawful imposition of petitioner, the three-month suspension imposed by it being violative of the clear mandate in Article 136 of the Labor Code with
respondent NLRC must be upheld to obviate the impression or inference that regard to discrimination against married women. Thus:
such act should be condoned. It would be unfair to the employer if she were
to return to its fold without any sanction whatsoever for her act which was Of first impression is the incompatibility of the respondents policy or regulation
not totally justified. Thus, her entitlement to back wages, which shall be with the codal provision of law. Respondent is resolute in its contention that
computed from the time her compensation was withheld up to the time of her Article 136 of the Labor Code applies only to women employed in ordinary
actual reinstatement, shall be reduced by deducting therefrom the amount occupations and that the prohibition against marriage of women engaged in
corresponding to her three months suspension. extraordinary occupations, like flight attendants, is fair and reasonable, considering
the pecularities of their chosen profession.
4. The government, to repeat, abhors any stipulation or policy in the
nature of that adopted by petitioner PT&T. The Labor Code states, in no We cannot subscribe to the line of reasoning pursued by respondent. All along, it
uncertain terms, as follows: knew that the controverted policy has already met its doom as early as March 13,
1973 when Presidential Decree No. 148, otherwise known as the Women and
ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to Child Labor Law, was promulgated. But for the timidity of those affected or their
require as a condition of employment or continuation of employment that a woman
labor unions in challenging the validity of the policy, the same was able to obtain a
shall not get married, or to stipulate expressly or tacitly that upon getting married,
momentary reprieve. A close look at Section 8 of said decree, which amended
a woman employee shall be deemed resigned or separated, or to actually dismiss,
paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the
discharge, discriminate or otherwise prejudice a woman employee merely by
same provision reproduced verbatim in Article 136 of the Labor Code, which was
reason of marriage. promulgated on May 1, 1974 to take effect six (6) months later, or on November 1,
1974.
This provision had a studied history for its origin can be traced to Section
8 of Presidential Decree No. 148, better known as the Women and Child
[31]
It cannot be gainsaid that, with the reiteration of the same provision in the new
Labor Law, which amended paragraph (c), Section 12 of Republic Act No. Labor Code, all policies and acts against it are deemed illegal and therefore
679, entitled An Act to Regulate the Employment of Women and Children,
[32]
abrogated. True, Article 132 enjoins the Secretary of Labor to establish standards
to Provide Penalties for Violations Thereof, and for Other Purposes. The that will ensure the safety and health of women employees and in appropriate cases
forerunner to Republic Act No. 679, on the other hand, was Act No. 3071 shall by regulation require employers to determine appropriate minimum standards
which became law on March 16, 1923 and which regulated the employment for termination in special occupations, such as those of flight attendants, but that is
of women and children in shops, factories, industrial, agricultural, and precisely the factor that militates against the policy of respondent. The standards
mercantile establishments and other places of labor in the then Philippine have not yet been established as set forth in the first paragraph, nor has the
Islands. Secretary of Labor issued any regulation affecting flight attendants.
It would be worthwhile to reflect upon and adopt here the rationalization
in Zialcita, et al. vs. Philippine Air Lines, a decision that emanated from the
[33]
It is logical to presume that, in the absence of said standards or regulations which whole text and supported by Article 135 that speaks of non-discrimination on the
are as yet to be established, the policy of respondent against marriage is patently employment of women.
illegal. This finds support in Section 9 of the New Constitution, which provides:
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque
Sec. 9. The State shall afford protection to labor, promote full employment and Mining & Industrial Corporation considered as void a policy of the same
[34]

equality in employment, ensure equal work opportunities regardless of sex, race, or nature. In said case, respondent, in dismissing from the service the
creed, and regulate the relations between workers and employees. The State shall complainant, invoked a policy of the firm to consider female employees in
assure the rights of workers to self-organization, collective bargaining, security of the project it was undertaking as separated the moment they get married
tenure, and just and humane conditions of work x x x. due to lack of facilities for married women.Respondent further claimed that
complainant was employed in the project with an oral understanding that her
Moreover, we cannot agree to the respondents proposition that termination from services would be terminated when she gets married. Branding the policy of
employment of flight attendants on account of marriage is a fair and reasonable the employer as an example of discriminatory chauvinism tantamount to
standard designed for their own health, safety, protection and welfare, as no basis denying equal employment opportunities to women simply on account of
has been laid therefor. Actually, respondent claims that its concern is not so their sex, the appellate court struck down said employer policy as unlawful
much against the continued employment of the flight attendant merely by reason of in view of its repugnance to the Civil Code, Presidential Decree No. 148 and
marriage as observed by the Secretary of Labor, but rather on the consequence of the Constitution.
marriage-pregnancy. Respondent discussed at length in the instant appeal the
supposed ill effects of pregnancy on flight attendants in the course of their Under American jurisprudence, job requirements which establish
employment. We feel that this needs no further discussion as it had been employer preference or conditions relating to the marital status of an
employee are categorized as a sex-plus discrimination where it is imposed
adequately explained by the Secretary of Labor in his decision of May 2, 1976.
on one sex and not on the other. Further, the same should be evenly applied
In a vain attempt to give meaning to its position, respondent went as far as and must not inflict adverse effects on a racial or sexual group which is
invoking the provisions of Articles 52 and 216 of the New Civil Code on the protected by federal job discrimination laws.Employment rules that forbid or
preservation of marriage as an inviolable social institution and the family as a basic restrict the employment of married women, but do not apply to married men,
social institution, respectively, as bases for its policy of non-marriage. In both have been held to violate Title VII of the United States Civil Rights Act of
instances, respondent predicates absence of a flight attendant from her home for 1964, the main federal statute prohibiting job discrimination against
long periods of time as contributory to an unhappy married life. This is pure employees and applicants on the basis of, among other things, sex. [35]

conjecture not based on actual conditions, considering that, in this modern world, Further, it is not relevant that the rule is not directed against all women
sophisticated technology has narrowed the distance from one place to but just against married women. And, where the employer discriminates
another. Moreover, respondent overlooked the fact that married flight attendants against married women, but not against married men, the variable is sex and
can program their lives to adapt to prevailing circumstances and events. the discrimination is unlawful. Upon the other hand, a requirement that a
[36]

woman employee must remain unmarried could be justified as a bona fide


Article 136 is not intended to apply only to women employed in ordinary occupational qualification, or BFOQ, where the particular requirements of
occupations, or it should have categorically expressed so. The sweeping the job would justify the same, but not on the ground of a general principle,
intendment of the law, be it on special or ordinary occupations, is reflected in the
such as the desirability of spreading work in the workplace. A requirement of SO ORDERED.
that nature would be valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance. Thus, in one case, a no-
marriage rule applicable to both male and female flight attendants, was
regarded as unlawful since the restriction was not related to the job
performance of the flight attendants. [37]

5. Petitioners policy is not only in derogation of the provisions of Article


136 of the Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to deprive
a woman of the freedom to choose her status, a privilege that by all accounts
inheres in the individual as an intangible and inalienable right. Hence, while
[38]

it is true that the parties to a contract may establish any agreements, terms,
and conditions that they may deem convenient, the same should not be
contrary to law, morals, good customs, public order, or public
policy. Carried to its logical consequences, it may even be said that
[39]

petitioners policy against legitimate marital bonds would encourage illicit or


common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state
that the relations between the parties, that is, of capital and labor, are not
merely contractual, impressed as they are with so much public interest that
the same should yield to the common good. It goes on to intone that neither
[40]

capital nor labor should visit acts of oppression against the other, nor impair
the interest or convenience of the public. In the final reckoning, the danger
[41]

of just such a policy against marriage followed by petitioner PT&T is that it


strikes at the very essence, ideals and purpose of marriage as an inviolable
social institution and, ultimately, of the family as the foundation of the
nation. That it must be effectively interdicted here in all its indirect,
[42]

disguised or dissembled forms as discriminatory conduct derogatory of the


laws of the land is not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph
and Telephone Company is hereby DISMISSED for lack of merit, with double
costs against petitioner.
employees of Coca-Cola, which was held liable to pay complainants the
underpayment of their 13th month pay, emergency cost of living
allowance (ECOLA), and other claims. As soon as respondents learned of
MENDOZA, J.: the filing of the claims with DOLE, they were dismissed on various dates
At bench is a Petition for Review on Certiorari under Rule 45 of the in January 2004. Their claims were later settled by the respondent
Rules of Court assailing the July 11, 2013 Decision[1] and the December 5, company, but the settlement allegedly did not include the issues on
2013 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. reinstatement and payment of CBA benefits. Thus, on November 10,
115469, which reversed and set aside the March 25, 2010 Decision[3] and 2006, they filed their complaint for illegal dismissal.
the May 28, 2010 Resolution[4] of the National Labor Relations
Commission (NLRC), affirming the August 29, 2008 Decision of the In support of their argument that they were regular employees of Coca-
Labor Arbiter (LA), in a case for illegal dismissal, damages and Cola, the complainants relied on the pronouncement of the Supreme
attorney's fees filed by the petitioners against respondent Coca-Cola Court in the case of CCBPI vs. NOWM, G.R. No. 176024, June 18, 2007,
Bottlers Philippines, Inc. (Coca-Cola). as follows:

The gist of the subject controversy, as narrated by the LA and adopted by "In the case at bar, individual complainants were directly hired by
the NLRC and the CA, is as follows: respondent Coca-Cola as Route Helpers. They assist in the loading and
unloading of softdrinks. As such they were paid by respondent Coca-Cola
Complainants allege that they are former employees directly hired by their respective salaries plus commission. It is of common knowledge in
respondent Coca-Cola on different dates from 1984 up to 2000, assigned the sales of softdrinks that salesmen are not alone in making a truckload
as regular Route Helpers under the direct supervision of the Route Sales of softdrinks for delivery to customers. Salesmen are usually provided
Supervisors. Their duties consist of distributing bottled Coca-Cola with route helpers or utility men who does the loading and unloading.
products to the stores and customers in their assigned areas/routes, and The engagement of the individual complainants to such activity is
they were paid salaries and commissions at the average of P3,000.00 per usually necessary in the usual business of respondent Coca-Cola.
month. After working for quite sometime as directly-hired employees of
Coca-Cola, complainants were allegedly transferred successively as Contrary to the Labor Arbiter's conclusion that respondent Coca-Cola is
agency workers to the following manpower agencies, namely, Lipercon engaged solely in the manufacturing is erroneous as it is also engaged in
Services, Inc., People's Services, Inc., ROMAC, and the latest being the sales of the softdrinks it manufactured.
respondent Interserve Management and Manpower Resources, Inc.
Moreover, having been engaged to perform, such activity for more than a
Further, complainants allege that the Department of Labor and year all the more bolsters individual complainants' status as regular
Employment (DOLE) conducted an inspection of Coca-Cola to employees notwithstanding the contract, oral or written, or even if their
determine whether it is complying with the various mandated labor employment was subsequently relegated to a labor contractor."
standards, and relative thereto, they were declared to be regular
Respondent Coca-Cola denies employer-employee relationship with the effective team to render the most efficient delivery service of CCBPI's
complainants pointing to respondent Interserve with whom it has a products.
service agreement as the complainants' employer. As alleged
independent service contractor of respondent Coca-Cola, respondent "13. Similarly, it is Interserve, through Mr. Sambilay, who takes charge
Interserve "is engaged in the business of rendering substitute or reliever of monitoring the attendance of the route helpers employed by
delivery services to its own clients and for CCBPI in particular, the Interserve. At the start of the working day, Mr. Sambilay would position
delivery of CCBPI's softdrinks and beverage products." It is allegedly free himself at the gate of the CCBPI premises to check the attendance of the
from the control and direction of CCBPI in all matters connected with route helpers. He also maintains a logbook to record the time route
the performance of the work, except as to the results thereof, pursuant to helpers appear for work. In case a route helper is unable to report for
the service agreement. Moreover, respondent Interserve is allegedly duty, Mr. Sambilay reassigns another route helper to take his place."
highly capitalized with a total of P21,658,220.26 and with total assets of On its part, respondent Interserve merely filed its position paper,
P27,509,716.32. pertaining only to complainants Quintanar and Cabili totally ignoring all
the other twenty-eight (28) complainants. It maintains that it is a
Further, respondent Coca-Cola argued that all elements of employer- legitimate job contractor duly registered as such and it undertakes to
employee relationship exist between respondent Interserve and the perform utility, janitorial, packaging, and assist in transporting services
complainants. It was allegedly Interserve which solely selected and by hiring drivers. Complainants Quintanar and Cabili were allegedly
engaged the services of the complainants, which paid the latter their hired as clerks who were assigned to CCBPI Mendiola Office, under the
salaries, which was responsible with respect to the imposition of supervision of Interserve supervisors. Respondent Coca-Cola does not
appropriate disciplinary sanctions against its erring employees, allegedly interfere with the manner and the methods of the
including the complainants, without any participation from Coca-Cola, complainants' performance at work as long as the desired results are
which personally monitors the route helpers' performance of their achieved. While admitting employer-employee relationship with the
delivery services pointing to Noel Sambilay as the Interserve complainants, nonetheless, respondent Interserve avers that
Coordinator. Expounding on the power of control, respondent Coca-Cola complainants are not its regular employees as they were allegedly mere
vigorously argued that: contractual workers whose employment depends on the service
contracts with the clients and the moment the latter sever said contracts,
"12. According to Mr. Sambilay, he designates who among the route respondent has allegedly no choice but to either deploy the complainants
helpers, such as complainants herein, will be assigned for each of the to other principals, and if the latter are unavailable, respondent cannot
delivery trucks. Based on the route helpers' performance and rapport allegedly be compelled to retain them.[5]
with the truck driver and the other route helpers, he groups together a
team of three (3) to five (5) route helpers to undertake the loading and The Decision of the LA
unloading of the softdrink products to the delivery trucks and to their
designated delivery point. It is his exclusive discretion to determine who On August 29, 2008, the LA rendered its decision granting the prayer in
among the route helpers will be grouped together to comprise an the complaint. In its assessment, the LA explained that the documentary
evidence submitted by both parties confirmed the petitioners' allegation
that they had been working for Coca-Cola for quite some time. It also
noted that Coca-Cola never disputed the petitioners' contention that SO ORDERED.[9]
after working for Coca-Cola through the years, they were transferred to The Decision of the NLRC
the various service contractors engaged by it, namely, Interim Services,
Inc. (ISI), Lipercon Services, Inc. (Lipercon), People Services, Inc. (PSI), Similar to the conclusion reached by the LA, the NLRC found that the
ROMAC, and lastly, Interserve Management and Manpower Resources, petitioners were regular employees of Coca-Cola. In its decision, dated
Inc. (Interserve). In view of said facts, the LA concluded that the March 25, 2010, it found that the relationship between the parties in the
petitioners were simply employees of Coca-Cola who were "seconded" to controversy bore a striking similarity with the facts in the cases of Coca-
Interserve.[6] Cola Bottlers Philippines, Inc. v. National Organization of
Workingmen[10] (N.O.W.) and Magsalin v. National Organization of
The LA opined that it was highly inconceivable for the petitioners, who Workingmen (Magsalin).[11] The NLRC, thus, echoed the rulings of the
were already enjoying a stable job at a multi-national company, to leave Court in the said cases which found the employees involved, like the
and become mere agency workers. He dismissed the contention of Coca- petitioners in this case, as regular employees of Coca-Cola. It stated that
Cola that the petitioners were employees of Interserve, stressing that the entities ISI, Lipercon, PSI, ROMAC, and Interserve simply "played to
they enjoyed the constitutional right to security of tenure which Coca- feign that status of an employer so that its alleged principal would be
Cola could not compromise by entering into a service agreement free from any liabilities and responsibilities to its employees."[12] As far
manpower supply contractors, make petitioners sign employment as it is concerned, Coca-Cola failed to provide evidence that would place
contracts with them, and convert their employment status from regular the subject controversy on a different plane
to contractual.[7] from N.O.W and Magsalin as to warrant a deviation from the rulings
made therein.
Ultimately, the LA ordered Coca-Cola to reinstate the petitioners to their
former positions and to pay their full backwages.[8] The dispositive As for the quitclaims executed by the petitioners, the NLRC held that the
portion of the decision reads: same could not be used by Coca-Cola to shield it from liability. The
NLRC noted the Minutes of the National Conciliation and Mediation
WHEREFORE, all the foregoing premises being considered, judgment is Board (NCMB) which stated that the petitioners agreed to settle their
hereby rendered ordering respondent Coca-Cola Bottlers Phils., Inc. to claims with Coca-Cola only with respect to their claims for violation of
reinstate complainants to their former or substantially equivalent labor standards law, and that their claims for illegal dismissal would be
positions, and to pay their full backwages which as of August 29, 2008 submitted to the NLRC for arbitration.[13]
already amounts to P15,319,005.00, without prejudice to recomputation
upon subsequent determination of the applicable salary rates and Coca-Cola sought reconsideration of the NLRC decision but its motion
benefits due a regular route helper or substantially equivalent position was denied.[14]
on the plantilla of respondent CCBPI.
The Decision of the CA
Reversing the findings of the LA and the NLRC, the CA opined that the The CA then went on to conclude that Interserve was a legitimate
petitioners were not employees of Coca-Cola but of Interserve. In its independent contractor. It noted that the said agency was registered
decision, the appellate court agreed with the contention of Coca-Cola with the Department of Labor and Employment (DOLE) as an
that it was Interserve who exercised the power of selection and independent contractor which had provided delivery services for other
engagement over the petitioners considering that the latter applied for beverage products of its clients, and had shown that it had substantial
their jobs and went through the pre-employment processes of capitalization and owned properties and equipment that were used in
Interserve. It noted that the petitioners' contracts of employment and the conduct of its business operations. The CA was, thus, convinced that
personal data sheets, which were filed with Interserve, categorically Interserve ran its own business, separate and distinct from Coca-Cola.[19]
stipulated that Interserve had the sole power to assign them temporarily
as relievers for absent employees of their clients. The CA also noted that The petitioners sought reconsideration, but they were rebuffed.[20]
the petitioners had been working for other agencies before they were
hired by Interserve.[15] Hence, this petition, raising the following

The CA also gave credence to the position of Coca-Cola that it was GROUNDS FOR THE PETITION/ASSIGNMENT OF ERRORS
Interserve who paid the petitioners' salaries. This, coupled with the CA's
finding that Coca-Cola paid Interserve for the services rendered by the THE COURT OF APPEALS IS GUILTY OF GRAVE ABUSE OF
petitioners whenever they substituted for the regular employees of Coca- DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
Cola, led the CA to conclude that it was Interserve who exercised the JURISDICTION IN:
power of paying the petitioners' wages.
I.
The CA then took into consideration Interserve's admission that they
had to sever the petitioners' from their contractual employment because RENDERING A DECISION THAT IS CONTRARY TO LAW AND
its contract with Coca-Cola expired and there was no demand for ESTABLISHED JURISPRUDENCE
relievers from its other clients. The CA equated this with Interserve's
exercise of its power to fire the petitioners.[16] II.

Finally, the CA was of the considered view that it was Interserve which MISAPPRECIATING FACTS WHICH GRAVELY PREJUDICED
exercised the power of control. Citing the Affidavit[17] of Noel F. Sambilay THE RIGHTS OF THE PETITIONERS.[21]
(Sambilay), Coordinator of Interserve, the CA noted that Interserve In their petition for review on certiorari, the petitioners ascribed grave
exercised the power of control, monitoring the petitioners' attendance, abuse of discretion on the part of the CA when it reassessed the evidence
providing them with their assignments to the delivery trucks of Coca- and reversed the findings of fact of the LA and the NLRC that ruled in
Cola, and making sure that they were able to make their deliveries.[18] their favor.[22]
ROMAC, and Interserve are labor-only contractors, making Coca-Cola
The petitioners also claimed that the CA violated the doctrine of stare still liable for their claims. The latter, on the other hand, asserts that the
decisis when it ruled that Interserve was a legitimate job contractor. said agencies are independent job contractors and, thus, liable to the
Citing Coca Cola Bottlers, Philippines, Inc. v. Agito (Agito),[23] the petitioners on their own.
petitioners argued that because the parties therein were the same parties
in the subject controversy, then the appellate court should have followed Procedural Issues
precedent and declared Interserve as a labor-only contractor.[24]
Before the Court proceeds to resolve the case on its merits, it must first
In further support of their claim that Interserve was a labor-only be pointed out that the petitioners erred in resorting to this petition for
contractor and that Coca-Cola, as principal, should be made ultimately review on certiorari under Rule 45 of the Rules of Court and alleging, at
liable for their claims, the petitioners asserted that Interserve had no the same time, that the CA abused its discretion in rendering the assailed
products to manufacture, sell and distribute to customers and did not decision.
perform activities in its own manner and method other than that
dictated by Coca-Cola. They claimed that it was Coca-Cola that owned Well-settled is the rule that grave abuse of discretion or errors of
the softdrinks, the trucks and the equipment used by Interserve and that jurisdiction may be corrected only by the special civil action
Coca-Cola assigned supervisors to ensure that the petitioners perform of certiorariunder Rule 65. Such corrective remedies do not avail in a
their duties.[25] petition for review on certiorari which is confined to correcting errors of
judgment only. Considering that the petitioners have availed of the
Lastly, the petitioners insisted that both Coca-Cola and Interserve remedy under Rule 45, recourse to Rule 65 cannot be allowed either as
should be made liable for moral and exemplary damages, as well as an add-on or as a substitute for appeal.[27]
attorney's fees, for having transgressed the petitioners' right to security
of tenure and due process.[26] Moreover, it is observed that from a perusal of the petitioners'
arguments, it is quite apparent that the petition raises questions of facts,
inasmuch as this Court is being asked to revisit and assess anew the
The Court's Ruling factual findings of the CA and the NLRC. The petitioners fundamentally
assail the findings of the CA that the evidence on record did not support
Essentially, the core issue presented by the foregoing petition is whether their claims for illegal dismissal against Coca-Cola. In effect, they would
the petitioners were illegally dismissed from their employment with have the Court sift through, calibrate and re-examine the credibility and
Coca-Cola. This, in turn, necessitates a determination of the probative value of the evidence on record so as to ultimately decide
characterization of the relationship between route-helpers such as the whether or not there is sufficient basis to hold the respondents
petitioners, and softdrink manufacturers such as Coca-Cola, accountable for their alleged illegal dismissal. This clearly involves a
notwithstanding the participation of entities such as ISI, Lipercon, PSI, factual inquiry, the determination of which is the statutory function of
ROMAC, and Interserve. The petitioners insist that ISI, Lipercon, PSI, the NLRC.[28]
The basic law on the case is Article 280 of the Labor Code. Its pertinent
Basic is the rule that the Court is not a trier of facts and this doctrine provisions read:
applies with greater force in labor cases. Questions of fact are for the
labor tribunals to resolve.[29] Only errors of law are generally reviewed in Art. 280. Regular and Casual Employment. The provisions of written
petitions for review on certiorari under Rule 45 of the Rules of Court. agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
In exceptional cases, however, the Court may be urged to probe and where the employee has been engaged to perform activities which are
resolve factual issues when there is insufficient or insubstantial evidence usually necessary or desirable in the usual business or trade of the
to support the findings of the tribunal or the court below, or when too employer, except where the employment has been fixed for a specific
much is concluded, inferred or deduced from the bare or incomplete project or undertaking the completion or termination of which has been
facts submitted by the parties or, where the LA and the NLRC came up determined at the time of the engagement of the employee or where the
with conflicting positions.[30] In this case, considering the conflicting work or services to be performed is seasonal in nature and the
findings of the LA and the NLRC on one hand, and the CA on the other, employment is for the duration of the season.
the Court is compelled to resolve the factual issues along with the legal
ones. An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
Substantial Issues least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
The Court finds for the petitioners. The reasons are: which he is employed and his employment shall continue while such
activity exists.
First. Contrary to the position taken by Coca-Cola, it cannot be said that Coca-Cola Bottlers Phils., Inc. is one of the leading and largest
route-helpers, such as the petitioners no longer enjoy the employee- manufacturers of softdrinks in the country. Respondent workers have
employer relationship they had with Coca-Cola since they became long been in the service of petitioner company. Respondent workers,
employees of Interserve. A cursory review of the jurisprudence regarding when hired, would go with route salesmen on board delivery trucks and
this matter reveals that the controversy regarding the characterization of undertake the laborious task of loading and unloading softdrink
the relationship between route-helpers and Coca-Cola is no longer a products of petitioner company to its various delivery points.
novel one.
Even while the language of law might have been more definitive, the
As early as May 2003, the Court in Magsalin struck down the defense of clarity of its spirit and intent, i.e., to ensure a "regular" worker's security
Coca-Cola that the complainants therein, who were route-helpers, were of tenure, however, can hardly be doubted. In determining whether an
its "temporary" workers. In the said Decision, the Court explained: employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of
the employer. The standard, supplied by the law itself, is whether the in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term
work undertaken is necessary or desirable in the usual business or trade employment, it has done so, however, with a stern admonition that
of the employer, a fact that can be assessed by looking into the nature of where from the circumstances it is apparent that the period has been
the services rendered and its relation to the general scheme under which imposed to preclude the acquisition of tenurial security by the employee,
the business or trade is pursued in the usual course. It is distinguished then it should be struck down as being contrary to law, morals, good
from a specific undertaking that is divorced from the normal activities customs, public order and public policy. The pernicious practice of
required in carrying on the particular business or trade. But, although having employees, workers and laborers, engaged for a fixed period of
the work to be performed is only for a specific project or seasonal, where few months, short of the normal six-month probationary period of
a person thus engaged has been performing the job for at least one year, employment, and, thereafter, to be hired on a day-to-day basis, mocks
even if the performance is not continuous or is merely intermittent, the the law. Any obvious circumvention of the law cannot be countenanced.
law deems the repeated and continuing need for its performance as The fact that respondent workers have agreed to be employed on such
being sufficient to indicate the necessity or desirability of that activity to basis and to forego the protection given to them on their security of
the business or trade of the employer. The employment of such person is tenure, demonstrate nothing more than the serious problem of
also then deemed to be regular with respect to such activity and while impoverishment of so many of our people and the resulting unevenness
such activity exists. between labor and capital. A contract of employment is impressed with
public interest. The provisions of applicable statutes are deemed written
The argument of petitioner that its usual business or trade is softdrink into the contract, and "the parties are not at liberty to insulate
manufacturing and that the work assigned to respondent workers as themselves and their relationships from the impact of labor laws and
sales route helpers so involves merely "postproduction activities," one regulations by simply contracting with each other."[31]
which is not indispensable in the manufacture of its products, scarcely Shortly thereafter, the Court in Bantolino v. Coca-Cola,[32] among
can be persuasive. If, as so argued by petitioner company, only those others, agreed with the unanimous finding of the LA, the NLRC and the
whose work are directly involved in the production of softdrinks may be CA that the route-helpers therein were not simply employees of
held performing functions necessary and desirable in its usual business Lipercon, Peoples Specialist Services, Inc. or ISI, which, as Coca-Cola
or trade, there would have then been no need for it to even maintain claimed were independent job contractors, but rather, those of Coca-
regular truck sales route helpers. The nature of the work performed must Cola itself. In the said case, the Court sustained the finding of the LA
be viewed from a perspective of the business or trade in its entirety and that the testimonies of the complainants therein were more credible as
not on a confined scope. they sufficiently supplied every detail of their employment, specifically
identifying their salesmen/drivers were and their places of assignment,
The repeated rehiring of respondent workers and the continuing need aside from the dates of their engagement and dismissal.
for their services clearly attest to the necessity or desirability of their
services in the regular conduct of the business or trade of petitioner Then in 2008, in Pacquing v. Coca-Cola Philippines, Inc.
company. The Court of Appeals has found each of respondents to have (Pacquing),[33] the Court applied the ruling in Magsalin under the
worked for at least one year with petitioner company. While this Court, principle of stare decisis et non quieta movere (follow past precedents
and do not disturb what has been settled). It was stressed therein that to submit evidence to establish that the service vehicles and equipment
because the petitioners, as route helpers, were performing the same of Interserve, valued at P510,000.00 and P200,000.00, respectively,
functions as the employees in Magsalin, which were necessary and were sufficient to carry out its service contract with petitioner. Certainly,
desirable in the usual business or trade of Coca- Cola Philippines, Inc., petitioner could have simply provided the courts with records showing
they were considered regular employees of Coca-Cola entitled to security the deliveries that were undertaken by Interserve for the Lagro area, the
of tenure. type and number of equipment necessary for such task, and the
valuation of such equipment. Absent evidence which a legally compliant
A year later, the Court in Agito[34] similarly struck down Coca-Cola's company could have easily provided, the Court will not presume that
contention that the salesmen therein were employees of Interserve, Interserve had sufficient investment in service vehicles and equipment,
notwithstanding the submission by Coca-Cola of their personal data files especially since respondents' allegation that they were using equipment,
from the records of Interserve; their Contract of Temporary such as forklifts and pallets belonging to petitioner, to carry out their
Employment with Interserve; and the payroll records of Interserve. In jobs was uncontroverted.
categorically declaring Interserve as a labor-only contractor,[35] the Court
found that the work of the respondent salesmen therein, constituting In sum, Interserve did not have substantial capital or investment in the
distribution and sale of Coca-Cola products, was clearly indispensable to form of tools, equipment, machineries, and work premises; and
the principal business of petitioner Coca-Cola.[36] respondents, its supposed employees, performed work which was
directly related to the principal business of petitioner. It is, thus, evident
As to the supposed substantial capital and investment required of an that Interserve falls under the definition of a labor-only contractor,
independent job contractor, the Court stated that it "does not set an under Article 106 of the Labor Code; as well as Section 5(1) of the Rules
absolute figure for what it considers substantial capital for an Implementing Articles 106-109 of the Labor Code, as amended.[38]
independent job contractor, but it measures the same against the type of As for the certification issued by the DOLE stating that Interserve was an
work which the contractor is obligated to perform for the independent job contractor, the Court ruled:
principal."[37] The Court reiterated that the contractor, not the employee,
had the burden of proof that it has the substantial capital, investment The certification issued by the DOLE stating that Interserve is an
and tool to engage in job contracting. As applied to Interserve, the Court independent job contractor does not sway this Court to take it at face
ruled: value, since the primary purpose stated in the Articles of Incorporation
of Interserve is misleading. According to its Articles of Incorporation,
The contractor, not the employee, has the burden of proof that it has the the principal business of Interserve is to provide janitorial and allied
substantial capital, investment, and tool to engage in job contracting. services. The delivery and distribution of Coca-Cola products, the work
Although not the contractor itself (since Interserve no longer appealed for which respondents were employed and assigned to petitioner, were
the judgment against it by the Labor Arbiter), said burden of proof in no way allied to janitorial services. While the DOLE may have found
herein falls upon petitioner who is invoking the supposed status of that the capital and/or investments in tools and equipment of Interserve
Interserve as an independent job contractor. Noticeably, petitioner failed were sufficient for an independent contractor for janitorial services, this
does not mean that such capital and/or investments were likewise ART. 8. Judicial decisions applying or interpreting the laws or the
sufficient to maintain an independent contracting business for the Constitution shall form a part of the legal system of the Philippines.
delivery and distribution of Coca-Cola products.[39] And, as explained in Fermin v. People:[47]
Finally, the Court determined the existence of an employer-employee
relationship between the parties therein considering that the contract of The doctrine of stare decisis enjoins adherence to judicial precedents. It
service between Coca-Cola and Interserve showed that the former requires courts in a country to follow the rule established in a
indeed exercised the power of control over the complainants therein.[40] decision of the Supreme Court thereof. That decision becomes a
judicial precedent to be followed in subsequent cases by all courts in the
The Court once more asserted the findings that route-helpers were land. The doctrine of stare decisis is based on the principle that once a
indeed employees of Coca-Cola in Coca-Cola Bottlers Philippines, Inc. v. question of law has been examined and decided, it should be deemed
Dela Cruz[41] and, recently, in Basan v. Coca-Cola Bottlers Philippines, settled and closed to further argument.[48]
Inc.[42] and that the complainants therein were illegally dismissed for
want of just or authorized cause. Similar dispositions by the CA were [Emphasis Supplied]
also upheld by this Court in N.O.W[43] and Ostani,[44] through minute The Court's ruling in Chinese Young Men's Christian Association of the
resolutions. Philippine Islands v. Remington Steel Corporation is also worth
citing, viz:[49]
It bears mentioning that the arguments raised by Coca-Cola in the case
at bench even bear a striking similarity with the arguments it raised Time and again, the court has held that it is a very desirable and
before the CA in N.O.W[45] and Ostani.[46] necessary judicial practice that when a court has laid down a
principle of law as applicable to a certain state of facts, it will adhere to
From all these, a pattern emerges by which Coca-Cola consistently that principle and apply it to all future cases in which the facts are
resorts to various methods in order to deny its route-helpers the benefits substantially the same. Stare decisis et non quieta movere. Stand by the
of regular employment. Despite this, the Court, consistent with sound decisions and disturb not what is settled. Stare decisissimply means
pronouncements above, adopts the rulings made in Pacquing that that for the sake of certainty, a conclusion reached in one case
Interserve was a labor-only contractor and that Coca-Cola should be should be applied to those that follow if the facts are
held liable pursuant to the principle of stare decisis et non quieta substantially the same, even though the parties may be different. It
movere. proceeds from the first principle of justice that, absent any powerful
countervailing considerations, like cases ought to be decided
It should be remembered that the doctrine of stare decisis et non quieta alike. Thus, where the same questions relating to the same event have
movere is embodied in Article 8 of the Civil Code of the Philippines been put forward by the parties similarly situated as in a previous case
which provides: litigated and decided by a competent court, the rule of stare
decisis is a bar to any attempt to relitigate the same issue.[50]
[Emphases Supplied]
Verily, the doctrine has assumed such value in our judicial system that To quote with approval the observations of the LA:
the Court has ruled that "[a]bandonment thereof must be based
only on strong and compelling reasons, otherwise, the becoming x x x The most formidable obstacle against the respondent's theory of
virtue of predictability which is expected from this Court would be lack of employer-employee relationship is that complainants have [been]
immeasurably affected and the public's confidence in the stability of the performing the tasks of route-helpers for several years and that
solemn pronouncements diminished."[51] Thus, only upon showing that practically all of them have been rendering their services as such even
circumstances attendant in a particular case override the great benefits before respondent Interserve entered into a service
derived by our judicial system from the doctrine of stare decisis, can the agreement with Coca-Cola sometime in 1998. Thus, the
courts be justified in setting it aside. complainants in their position paper categorically stated the record of
their service with Coca-Cola as having started on the following dates:
In this case, Coca-Cola has not shown any strong and compelling reason Emmanuel Quintanar - October 15, 1994; Benjamin Durano - November
to convince the Court that the doctrine of stare decisis should not be 16, [1987]; Cecilio Delaving - June 10, 1991; Ricardo Gaborni -
applied. It failed to successfully demonstrate how or why both the LA September 28, 1992; Romel Gerarman - June 20, 1995; Ramilo Gaviola -
and the NLRC committed grave abuse of discretion in sustaining the October 10, 1988; Joel John Aguilar - June 1, 1992; Restituto Agsalud -
pleas of the petitioners that they were its regular employees and not of September 7, 1989; Martin Celis - August 15, 1995; Patricio Arios - June
Interserve. 2, 1989; Michael Bello - February 15, 1992; Lorenzo Quinlog - May 15,
1992; Junne Blaya - September 15, 1997; Santiago Tolentino, Jr. - May
Second. A reading of the decision of the CA and the pleadings submitted 29, 1989; Nestor Magnaye - February 15, 1996; Arnold Polvorido -
by Coca-Cola before this Court reveals that they both lean heavily on the February 8, 1996; Allan Agapito - April 15, 1995; Ariel Baumbad -
service agreement[52] entered into by Coca-Cola and Interserve; the January 15, 1995; Jose Lutiya - February 15, 1995; Edgardo Tapalla -
admission by Interserve that it paid the petitioners' salaries; and the August 15, 1994; Roldan Cadayona - May 14, 1996; Raynaldo Alburo -
affidavit of Sambilay who attested that it was Interserve which exercised September 15, 1996; Rudy Ultra - February 28, 1997; Marcelo Cabili -
the power of control over the petitioners. November 15, 1995; Arnold Asiaten - May 2, 1992; Raymundo
Macaballug - July 31, 1995; Joel Delena - January 15, 1991; Danilo
The service agreements entered into by Coca-Cola and Interserve, the Oquino - September 15, 1990; Greg Caparas - August 15, 1995; and
earliest being that dated January 1998,[53] (another one dated July 11, Romeo Escartin - May 15, 1986.
2006)[54] and the most recent one dated March 21, 2007[55] - all reveal
that they were entered into One, after the petitioners were hired by It should be mentioned that the foregoing allegation of the
Coca-Cola (some of whom were hired as early as 1984); Two, after they complainants' onset of their services with respondent Coca-Cola has
were dismissed from their employment sometime in January 2004; been confirmed by the Bio-Data Sheets submitted in
and Three, after the petitioners filed their complaint for illegal evidence by the said respondent [Coca-Cola]. Thus, in the Bio-
dismissal on November 10, 2006 with the LA. Data Sheet of complainant Quintanar (Annex "4"), he stated therein that
he was in the service of respondent Coca-Cola continuously from 1993 that he had personal knowledge of the circumstances surrounding the
up to 2002. Likewise, complainant Quinlog indicated in his Bio-data hiring of the petitioners following their alleged resignation from Coca-
Sheet submitted to respondent Interserve that he was already in the Cola.
employ of respondent Coca-Cola from 1992 (Annex "12"). Complainant
Edgardo Tapalla also indicated in his Bio-Data Sheet that he was already Third. As to the characterization of Interserve as a contractor, the Court
in the employ of Coca-Cola since 1995 until he was seconded to finds that, contrary to the conclusion reached by the CA, the petitioners
Interserve in 2002 (Annex "20"). were made to suffer under the prohibited practice of labor-only
contracting. Article 106 of the Labor Code provides the definition of
As a matter of fact, complainants' allegation that they were directly hired what constitutes labor-only contracting. Thus:
by respondent Coca-Cola and had been working with the latter for quite
sometime when they were subsequently referred to successive agencies Article 106. Contractor or subcontractor. - x x x
such as Lipercon, ROMAC, People's Services, and most recently,
respondent Interserve, has not been controverted by the There is "labor-only" contracting where the person supplying workers to
respondents. Even when respondent Coca-Cola filed its reply to the an employer does not have substantial capital or investment in the form
complainants' position paper, there is nothing therein which disputed of tools, equipment, machineries, work premises, among others, and the
complainant's statements of their services directly with the respondent workers recruited and placed by such person are performing activities
even before it entered into service agreement with respondent which are directly related to the principal business of such employer. In
Interserve.[56] such cases, the person or intermediary shall be considered merely as an
As to the payment of salaries, although the CA made mention that it was agent of the employer who shall be responsible to me workers in the
Interserve which paid the petitioners' salaries, no reference was made to same manner and extent as if the latter were directly employed by him.
any evidence to support such a conclusion. The Court, on the other hand, Expounding on the concept, the Court in Agito explained:
gives credence to the petitioners' contention that they were employees of
Coca-Cola. Aside from their collective account that it was Coca-Cola's The law clearly establishes an employer-employee relationship between
Route Supervisors who provided their daily schedules for the the principal employer and the contractor's employee upon a finding
distribution of the company's products, the petitioners' payslips,[57] tax that the contractor is engaged in "labor-only" contracting. Article 106 of
records,[58] SSS[59] and Pag-Ibig[60] records more than adequately showed the Labor Code categorically states: "There is labor-only' contracting
that they were being compensated by Coca-Cola. More convincingly, the where the person supplying workers to an employer does not have
petitioners even presented their employee Identification Cards,[61] which substantial capital or investment in the form of tools, equipment,
expressly indicated that they were "[d]irect hire[es]" of Coca-Cola. machineries, work premises, among others, and the workers recruited
and placed by such persons are performing activities which are directly
As for the affidavit of Sambilay, suffice it to say that the same was bereft related to the principal business of such employer." Thus, performing
of evidentiary weight, considering that he failed to attest not only that he activities directly related to the principal business of the
was already with Interserve at the time of the petitioners hiring, but also employer is only one of the two indicators that "labor-only"
contracting exists; the other is lack of substantial capital or show that the petitioners voluntarily resigned from their employment
investment. The Court finds that both indicators exist in the case at with Coca-Cola only to be later hired by Interserve. Other than insisting
bar. that the petitioners were last employed by Interserve, Coca-Cola failed
not only to show by convincing evidence how it severed its employer
[Emphases and Underscoring Supplied] relationship with the petitioners, but also to prove that the termination
In this case, the appellate court considered the evidence of Interserve of its relationship with them was made through any of the grounds
that it was registered with the DOLE as independent contractor and that sanctioned by law.
it had a total capitalization of P27,509,716.32 and machineries and
equipment worth P12,538859.55.[62] As stated above, however, the The rule is long and well-settled that, in illegal dismissal cases such as
possession of substantial capital is only one element. Labor- the one at bench, the burden of proof is upon the employer to show that
only contracting exists when any of the two elements is present.[63] Thus, the employees' termination from service is for a just and valid
even if the Court would indulge Coca-Cola and admit that Interserve had cause.[66] The employer's case succeeds or fails on the strength of its
more than sufficient capital or investment in the form of tools, evidence and not the weakness of that adduced by the employee,[67] in
equipment, machineries, work premises, still, it cannot be denied that keeping with the principle that the scales of justice must be tilted in
the petitioners were performing activities which were directly related to favor of the latter in case doubts exist over the evidence presented by the
the principal business of such employer. Also, it has been ruled that no parties.[68]
absolute figure is set for what is considered 'substantial capital' because
the same is measured against the type of work which the contractor is For failure to overcome this burden, the Court concurs in the
obligated to perform for the principal.[64] observation of the LA that it was highly inconceivable for the petitioners,
who were already enjoying a stable job at a multi-national company, to
More importantly, even if Interserve were to be considered as a leave and become mere agency workers. Indeed, it is contrary to human
legitimate job contractor, Coca-Cola failed to rebut the allegation that experience that one would leave a stable employment in a company like
petitioners were transferred from being its employees to become the Coca-Cola, only to become a worker of an agency like Interserve, and be
employees of ISI, Lipercon, PSI, and ROMAC, which were labor-only assigned back to his original employer — Coca-Cola.
contractors. Well-settled is the rule that "[t]he contractor, not the
employee, has the burden of proof that it has the substantial capital, Although it has been said that among the four (4) tests to determine the
investment, and tool to engage in job contracting."[65] In this case, the existence of any employer-employee relationship, it is the "control test"
said burden of proof lies with Coca-Cola although it was not the that is most persuasive, the courts cannot simply ignore the other
contractor itself, but it was the one invoking the supposed status of these circumstances obtaining in each case in order to determine whether an
entities as independent job contractors. employer-employee relationship exists between the parties.

Fourth. In this connection, even granting that the petitioners were last WHEREFORE, the petition is GRANTED. The July 11, 2013 Decision
employed by Interserve, the record is bereft of any evidence that would and the December 5, 2013 Resolution of the Court of Appeals, in CA-
G.R. SP No. 115469 are REVERSED and SET ASIDE and the August
29, 2008 Decision of the Labor Arbiter in NLRC Case Nos. 12-13956-07
and 12-14277-07, as affirmed in toto by the National Labor Relations
Commission, is hereby REINSTATED.

SO ORDERED.
Republic of the Philippines Employees' Compensation Commission resulted in the Commission's affirming the GSIS
SUPREME COURT decision.
Manila
The following issues are raised in this petition:
EN BANC
1. Whether brain tumor which causes are unknown but contracted during
G.R. No. L-58445 April 27, 1989 employment is compensable under the present compensation laws.

ZAIDA G. RARO, petitioner, 2. Whether the presumption of compensability is absolutely inapplicable under
vs. the present compensation laws when a disease is not listed as occupational
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE disease. (p. 17, Rollo)
SYSTEM (Bureau of Mines and Geo-Sciences), respondents.
The key argument of the petitioner is based on the fact that medical science cannot, as yet,
GUTIERREZ, JR., J.: positively identify the causes of various types of cancer. It is a disease that strikes people in
general. The nature of a person's employment appears to have no relevance. Cancer can strike
Jurisprudence on the compensability of cancer ailments has of late become a source of a lowly paid laborer or a highly paid executive or one who works on land, in water, or in the
confusion among the claimants and the government agencies enforcing the employees' bowels of the earth. It makes the difference whether the victim is employed or unemployed, a
compensation law. The strongly lingering influence of the principles of 94 presumption of white collar employee or a blue collar worker, a housekeeper, an urban dweller or a resident of a
compensability" and "aggravation" found in the defunct Workmen's Compensation Act but rural area.
expressly discarded under the present compensation scheme has led to conflict and
inconsistency in employees' compensation decisions. It is not also correct to say that all cancers are not compensable. The list of occupational
diseases prepared by the Commission includes some cancers as compensable, namely —
The problem is attributable to the inherent difficulty in applying the new principle of "proof of
increased risk." There are two approaches to a solution in cases where it cannot be proved that Occupational Diseases Nature of Employment
the risk of contracting an illness not listed as an occupational disease was increased by the
claimant's working conditions. The one espoused by the petitioner insists that if a claimant xxx xxx xxx xxx
cannot prove the necessary work connection because the causes of the disease are still
unknown, it must be presumed that working conditions increased the risk of contracting the 16. Cancer of stomach and other Woodworkers, wood products lymphatic and
ailment. On the other hand, the respondents state that if there is no proof of the required work blood forming vessels; industry carpenters, nasal cavity and sinuses and
connection, the disease is not compensable because the law says so. employees in pulp and paper mills and plywood mills.

The petitioner states that she was in perfect health when employed as a clerk by the Bureau of 17. Cancer of the lungs, liver Vinyl chloride workers, and brain plastic workers.
Mines and Geo-Sciences at its Daet, Camarines Norte regional office on March 17, 1975. About
four years later, she began suffering from severe and recurrent headaches coupled with blurring
(Annex A, Amended Rules on Employees Compensation)
of vision. Forced to take sick leaves every now and then, she sought medical treatment in
Manila. She was then a Mining Recorder in the Bureau.
The petitioner questions the above listing. We see no arbitrariness in the Commission's allowing
vinyl chloride workers or plastic workers to be compensated for brain cancer. There are certain
The petitioner was diagnosed at the Makati Medical Center to be suffering from brain tumor. By
cancers which are reasonably considered as strongly induced by specific causes. Heavy doses
that time, her memory, sense of time, vision, and reasoning power had been lost.
of radiation as in Chernobyl, USSR, cigarette smoke over a long period for lung cancer, certain
chemicals for specific cancers, and asbestos dust, among others, are generally accepted as
A claim for disability benefits filed by her husband with the Government Service Insurance increasing the risks of contracting specific cancers. What the law requires for others is proof.
System (GSIS) was denied. A motion for reconsideration was similarly denied. An appeal to the
The first thing that stands in the way of the petition is the law itself. To understand why the "Presumption of compensability" together with the host of decisions
interpreting the "arising out of and in the course of employment" provision of the defunct law has
Presidential Decree No. 422, as amended, the Labor Code of the Philippines defines "sickness" been stricken from the present law, one has to go into the distinctions between the old
as follows: workmen's compensation law and the present scheme.

ART. 167. Definition of Terms. — As used in this Title unless the context On January 1, 1975, the Workmen's Compensation Act was replaced by a novel scheme under
indicates otherwise: the new Labor Code. The new law discarded, among others, the concepts of "presumption of
compensability" and "aggravation" and substituted a system based on social security principles.
xxx xxx xxx The present system is also administered by social insurance agencies — the Government
Service Insurance System and Social Security System — under the Employees' Compensation
Commission. The intent was to restore a sensible equilibrium between the employer's obligation
(1) Sickness means any illness definitely accepted as an occupational disease
to pay workmen's compensation and the employee's right to receive reparation for work-
listed by the Commission, or any illness caused by employment subject to proof
connected death or disability. (Sulit v. Employees' Compensation Commission, 98 SCRA 483
by the employee that the risk of contracting the same is by working conditions.
[1980]; Armena v. Employees' Compensation Commission, 122 SCRA 851 [1983]; Erese v.
For this purpose, the Co on is empowered to determine and approve
Employees' Compensation Commission, 138 SCRA 192 [1985]; De Jesus v. Employees'
occupational and work- related illnesses that may be considered compensable
Compensation Commission, 142 SCRA 92 [1986]; Sarmiento v. Employees' Compensation
sable based on hazards of employment. (PD 1368, May 1, 1978).
Commission, et al., GR No. 65680, May 11, 1988).
Section 1 (b), Rule III of the Amended Rules on Employees Compensation clearly defines who
Instead of an adversarial contest by the worker or his family against the employer, we now have
are entitled. It provides:
a social insurance scheme where regular premiums are paid by employers to a trust fund and
claims are paid from the trust fund to those who can prove entitlement.
SECTION 1.
In Sarmiento v. Employees' Compensation Commission (supra), we affirmed the validity of the
xxx xxx xxx new law by explaining the present system as follows:

(b) For the sickness and the resulting disability or death to be compensable, the We cannot give serious consideration to the petitioner's attack against the
sickness must be the result of an occupational disease under Annex A of these constitutionality of the new law on employee's compensation. It must be noted
rules with the conditions set therein satisfied; otherwise, proof must be shown that the petitioner filed his claim under the provisions of this same law. It was only
that the risk of contracting the disease is increase by the working conditions. when his claim was rejected that he now questions the constitutionality of this law
(Emphasis supplied) on appeal by certiorari.

The law, as it now stands requires the claimant to prove a positive thing – the illness was caused The Court has recognized the validity of the present law and has granted and
by employment and the risk of contracting the disease is increased by the working conditions. To rejected claims according to its provisions. We find in it no infringement of the
say that since the proof is not available, therefore, the trust fund has the obligation to pay is worker's constitutional rights.
contrary to the legal requirement that proof must be adduced. The existence of otherwise non-
existent proof cannot be presumed .
xxx xxx xxx
In Navalta v. Government Service Insurance System (G.R. No. 46684, April 27, 1988) this Court
The new law establishes a state insurance fund built up by the contributions of
recognized the fact that cancer is a disease of still unknown origin which strikes; people in all
employers based on the salaries of their employees. The injured worker does not
walks of life, employed or unemployed. Unless it be shown that a particular form of cancer is
have to litigate his right to compensation. No employer opposes his claim There
caused by specific working conditions (e. g. chemical fumes, nuclear radiation, asbestos dust,
is no notice of injury nor requirement of controversion. The sick worker simply
etc.) we cannot conclude that it was the employment which increased the risk of contracting the
files a claim with a new neutral Employees' Compensation Commission which
disease .
then determines on the basis of the employee's supporting papers and medical
evidence whether or not compensation may be paid. The payment of benefits is law. The employer joins its employees in trying to have their claims approved. The employer is
more prompt. The cost of administration is low. The amount of death benefits has spared the problem of proving a negative proposition that the disease was not caused by
also been doubled. employment. It is a government institution which protects the stability and integrity of the State
Insurance Fund against the payment of non-compensable claims. The employee, this time
On the other hand, the employer's duty is only to pay the regular monthly assisted by his employer, is required to prove a positive proposition, that the risk of contracting
premiums to the scheme. It does not look for insurance companies to meet the is increased by working conditions.
sudden demands for compensation payments or set up its own fund to meet
these contingencies. It does not have to defend itself from spuriously The social insurance aspect of the present law is the other important feature which distinguishes
documented or long past claims. it from the old and familiar system.

The new law applies the social security principle in the handling of workmen's Employees' compensation is based on social security principles. All covered employers
compensation. The Commission administers and settles claims from a fired throughout the country are required by law to contribute fixed and regular premiums or
under its exclusive control. The employer does not intervene in the compensation contributions to a trust fund for their employees. Benefits are paid from this trust fund. At the time
process and it has no control, as in the past, over payment of benefits. The open the amount of contributions was being fixed, actuarial studies were undertaken. The actuarially
ended Table of Occupational Diseases requires no proof of causation. A covered determined number of workers who would probably file claims within any given year is important
claimant suffering from an occupational disease is automatically paid benefits. in insuring the stability of the said fund and making certain that the system can pay benefits
when due to all who are entitled and in the increased amounts fixed by law.
Since there is no employer opposing or fighting a claim for compensation, the
rules on presumption of compensability and controversion cease to have We have no actuarial expertise in this Court. If diseases not intended by the law to be
importance. The lopsided situation of an employer versus one employee, which compensated are inadvertently or recklessly included, the integrity of the State Insurance Fund is
called for equalization through the various rules and concepts favoring the endangered. Compassion for the victims of diseases not covered by the law ignores the need
claimant, is now absent. to show a greater concern for the trust fund to winch the tens of millions of workers and their
families look for compensation whenever covered accidents, salary and deaths occur. As earlier
xxx xxx xxx stated, if increased contributions or premiums must be paid in order to give benefits to those who
are now excluded, it is Congress which should amend the law after proper actuarial studies. This
The petitioner's challenge is really against the desirability of the new law. There Court cannot engage in judicial legislation on such a complex subject with such far reaching
is no serious attempt to assail it on constitutional grounds. implications.

The wisdom of the present scheme of workmen's compensation is a matter that We trust that the public respondents and the Social Security System are continually evaluating
should be addressed to the President and Congress, not to this Court. Whether the actuarial soundness of the trust funds they administer. In this way, more types of cancers
or not the former workmen's compensation program with its presumptions, and other excluded diseases may be included in the list of covered occupational diseases. Or
controversions, adversarial procedures, and levels of payment is preferable to legislation may be recommended to Congress either increasing the contribution rates of
the present scheme must be decided by the political departments. The present employers, increasing benefit payments, or making it easier to prove entitlement. We regret that
law was enacted in the belief that it better complies with the mandate on social these are beyond the powers of this Court to accomplish.
justice and is more advantageous to the greater number of working men and
women. Until Congress and the President decide to improve or amend the law, For the guidance of the administrative agencies and practising lawyers concerned, this decision
our duty is to apply it. (at pp. 4, 5, and 6) expressly supersedes the decisions in Panotes v. Employees' Compensation Commission [128
SCRA 473 (1984)]; Mercado v. Employees' Compensation Commission [127 SCRA 664
The non-adversarial nature of employees' compensation proceedings is crucial to an (1984)]; Ovenson v. Employees' Compensation Commission [156 SCRA 21 (1987)]; Nemaria v.
understanding of the present scheme. There is a widespread misconception that the poor Employees' Compensation Commission [155 SCRA 166 (1987)] and other cases with
employee is still arrayed against the might and power of his rich corporate employer. Hence, he conclusions different from those stated above.
must be given all kinds of favorable presumptions. This is fallacious. It is now the trust fund and
not the employer which suffers if benefits are paid to claimants who are not entitled under the
WHEREFORE, the petition is hereby DISMISSED The questioned decision of the public G. Raro for compensation benefits under Presidential Decree No. 626 as amended for her
respondents is AFFIRMED. ailment diagnosed as "brain tumor."

SO ORDERED. Petitioner assigns the following alleged errors:

Fernan , C.J., Narvasa, Melencio-Herrera, Cruz, Feliciano, Gancayco, Padilla, Bidin, Cortes, First
Griño-Aquino, Medialdea and Regalado, JJ., concur.
THE SYSTEM AND THE COMMISSION ERRED IN HOLDING THAT BRAIN
TUMOR IS ALLEGEDLY NOT A LISTED OCCUPATIONAL DISEASE; HENCE,
PETITIONER IS REQUIRED TO PROVE BY SUBSTANTIAL EVIDENCE THAT
Separate Opinions IT WAS CAUSED BY HER EMPLOYMENT.

Second

THE SYSTEM AND THE COMMISSION ERRED IN HOLDING THAT BRAIN


SARMIENTO, J., dissenting:
TUMOR WHICH CAUSE IS UNKNOWN CANNOT BE CAUSED BY THE
NATURE OF PETITIONER'S EMPLOYMENT.
I do not think that the Labor Code intended to do away with the "presumption of compensability"
prevailing under the old Workmen's Compensation Act. It must be noted that as a social
Third
legislation, the Code is fundamentally a measure intended to afford protection unto the working
class. If any protection should be given to labor, it is in workmen's compensation cases that
protection is a felt need. THE SYSTEM AND THE COMMISSION ERRED IN NOT CONSIDERING BRAIN
TUMOR AS A BORDERLINE CASE, HENCE COMPENSABLE.
The primacy that the majority would give to the integrity of the trust fund 'to which the tens of
millions of workers and their families look for compensation whenever covered accidents, Fourth
diseases, and deaths occur is 1 correct but, in my view, hardly the point. In granting the petitioner compensation, I do not
believe we would have dissipated substantially the State Insurance Fund, and considering the fact that the petitioner is a victim herself. THE SYSTEM AND THE COMMISSION DISOBEYED THE STATUTORY
MANDATE THAT ALL DOUBTS SHALL BE RESOLVED IN FAVOR OF LABOR
It must likewise be noted that the petitioner is suffering from cancer (brain tumor), whose cause AND IGNORED THE NATURE OF LABOR LAWS AS SOCIAL LEGISLATIONS.
medical science is yet to unravel. It would then be asking too much to make her prove that her
illness was caused by work or aggravated by it, when experts themselves are ignorant as to The undisputed facts, summarized by the Office of the Solicitor-General, are as follows:
what brings it about.
Petitioner was hired as clerk on March 17, 1975 by the Bureau of Mines and Geo-Sciences at its
I do not believe, finally, that the question in a matter for legislation. Compassion, it is my view, is office in Daet, Camarines Norte.
reason enough.
In the course of her employment, petitioner contracted an ailment which was diagnosed as brain
tumor. Petitioner stopped working because of said ailment.
PARAS, J., dissenting:
On January 7, 1980, petitioner filed with respondent GSIS a claim for disability benefits under
P.D. 626, as amended.
This is a petition for review on certiorari of the decision dated August 27, 1981 of respondent-
Employees' Compensation Commission (ECC) in ECC Case No. 1692 entitled "Zaida G. Raro
vs. Government Service Insurance System (GSIS), which dismissed the claim of petitioner Zaida
On November 24, 1980, respondent GSIS denied petitioner's claim on the ground that brain ... As agents charged by the law to implement social justice guaranteed and
tumor was not an occupational disease. Respondent GSIS also denied petitioner's motion for secured by both 1935 and 1973 Constitutions, respondents should adopt a more
reconsideration. liberal attitude in deciding claims for compensability especially where there is
some basis in the facts for inferring a work connection, (103 SCRA 329, 336).
On appeal, respondent ECC sustained the GSIS decision.
... Where however, the causes of an ailment are unknown to and or
We find this petition impressed with merit. undetermined even by medical science, the requirement of proof of any casual
link between the ailment and the working conditions petitions should be
While "brain tumor" is not expressly or specifically referred to as an occupational disease, and liberalized so that those who have less in life will have more in law ... .
while admittedly its precise causes are still unknown, We may say that the disease is akin to
"cancer of the brain" and should therefore be regarded as either compensable or a ... The point is that it is grossly inequitable to require as a condition for an award
borderline case. At any rate, the precise work of the petitioner at the Bureau of Mines and Geo- of compensation that the claimant demonstrate that his ailment – the cause or
Sciences consisted of the following: origin of which is unknown to and undetermined even by medical science – was
in fact caused or the risk of contracting the same enhanced by his working
As Mining Recorder II, to record and file mining instruments and documents in conditions. Plainly the condition would be an impossible one, specially
the Mining Recorder's Section and to type correspondence and other documents considering that said claimant is most probably not even conversant with the
pertaining to the same action. (See petitioner's Brief, Rollo, p. 13). intricacies of medical science and the claimant invariably bereft of the material
resources to employ medical experts to demonstrate the connection between the
cause and the disease. Considering the liberal character of employment
It will readily be seen that her work required at times mental concentration. Whether this is
compensation schemes, the impossible condition should be deemed as not
specifically causative of brain tumor is of course still unknown but doubts must generally be
having been intended and/or imposed. (139 SCRA, pp. 275-276).
resolved in favor whenever compensation for disease is concerned. It would certainly be absurd
to throw upon petitioner the burden of showing that her work either caused or aggravated the
disease, particularly when both the GSIS and ECC profess ignorance themselves of the causes ... As an employee, he had contributed to the funds of respondent for 34 years
of the disease. until his forced retirement. In turn respondent should comply with its duty to give
him the fullest protection, relief and compensation benefits as guaranteed by law.
(Ibid., p. 277).
Nowhere is this truism more glaring than in cancer, the most dreaded of all diseases mankind
has ever known. Held the Supreme Court in the case of Acosta v. Employees' Compensation
Commission (L-55464, Nov. 12, 1981): "It is generally accepted that the exact origin of practically In the more recent case of Flaviano Nemaria, 1 Petitioner versus Employees' Compensation Commission and
Government Service Insurance System (Ministry of Education and Culture), Respondents, promulgated October 28, 1987 and following
all types of cancer is not yet determined. Scientists and medical experts are still in the process of the rule We enunciated in the Mercado case, We stated:
discovering the most effective cure for the malady. With this backdrop, one should not expect
ordinary persons to prove the real cause of the ailment of the deceased when the experts Thus the requirement that the disease was caused or aggravated by the
themselves are still in the dark." employment or work applies only to an illness where the cause can be
determined or proved. Where cause is unknown or cannot be ascertained, no
In a case like the present one, even medical experts have not determined its cause, and duty to prove the link exist For certainly, the law cannot demand an impossibility.
therefore the duty to prove does not exist for it is absurd for the law to require an impossibility.
Thus in the case of 139 SCRA 270 citing Cristobal v. ECC, 103 SCRA 329, We ruled as follows: PREMISES CONSIDERED, it is my humble opinion that this petition should be GRANTED. The
decision of the respondent Employees Compensation Commission should be SET ASIDE and
While the presumption of compensability and the theory of aggravation espoused another should be rendered ordering the respondents to pay the herein petitioner the full amount
under the Workmen's Compensation Act may have been abandoned under the of compensation under Presidential Decree No. 626 as amended.
New Labor Code (the constitutionality of such abrogation may still be
challenged), it is significant that the liberality of the law in general still subsists.

Separate Opinions
SARMIENTO, J., dissenting: THE SYSTEM AND THE COMMISSION ERRED IN HOLDING THAT BRAIN
TUMOR WHICH CAUSE IS UNKNOWN CANNOT BE CAUSED BY THE
I do not think that the Labor Code intended to do away with the "presumption of compensability" NATURE OF PETITIONER'S EMPLOYMENT.
prevailing under the old Workmen's Compensation Act. It must be noted that as a social
legislation, the Code is fundamentally a measure intended to afford protection unto the working Third
class. If any protection should be given to labor, it is in workmen's compensation cases that
protection is a felt need. THE SYSTEM AND THE COMMISSION ERRED IN NOT CONSIDERING BRAIN
TUMOR AS A BORDERLINE CASE, HENCE COMPENSABLE.
The primacy that the majority would give to the integrity of the trust fund 'to which the tens of
millions of workers and their families look for compensation whenever covered accidents, Fourth
diseases, and deaths occur is 1 correct but, in my view, hardly the point. In granting the petitioner compensation, I do not
believe we would have dissipated substantially the State Insurance Fund, and considering the fact that the petitioner is a victim herself.
THE SYSTEM AND THE COMMISSION DISOBEYED THE STATUTORY
MANDATE THAT ALL DOUBTS SHALL BE RESOLVED IN FAVOR OF LABOR
It must likewise be noted that the petitioner is suffering from cancer (brain tumor), whose cause
AND IGNORED THE NATURE OF LABOR LAWS AS SOCIAL LEGISLATIONS.
medical science is yet to unravel. It would then be asking too much to make her prove that her
illness was caused by work or aggravated by it, when experts themselves are ignorant as to
what brings it about. The undisputed facts, summarized by the Office of the Solicitor-General, are as follows:

I do not believe, finally, that the question in a matter for legislation. Compassion, it is my view, is Petitioner was hired as clerk on March 17, 1975 by the Bureau of Mines and Geo-Sciences at its
reason enough. office in Daet, Camarines Norte.

In the course of her employment, petitioner contracted an ailment which was diagnosed as brain
tumor. Petitioner stopped working because of said ailment.
PARAS, J., dissenting:
On January 7, 1980, petitioner filed with respondent GSIS a claim for disability benefits under
This is a petition for review on certiorari of the decision dated August 27, 1981 of respondent- P.D. 626, as amended.
Employees' Compensation Commission (ECC) in ECC Case No. 1692 entitled "Zaida G. Raro
vs. Government Service Insurance System (GSIS), which dismissed the claim of petitioner Zaida On November 24, 1980, respondent GSIS denied petitioner's claim on the ground that brain
G. Raro for compensation benefits under Presidential Decree No. 626 as amended for her tumor was not an occupational disease. Respondent GSIS also denied petitioner's motion for
ailment diagnosed as "brain tumor." reconsideration.

Petitioner assigns the following alleged errors: On appeal, respondent ECC sustained the GSIS decision.

First We find this petition impressed with merit.

THE SYSTEM AND THE COMMISSION ERRED IN HOLDING THAT BRAIN While "brain tumor" is not expressly or specifically referred to as an occupational disease, and
TUMOR IS ALLEGEDLY NOT A LISTED OCCUPATIONAL DISEASE; HENCE, while admittedly its precise causes are still unknown, We may say that the disease is akin to
PETITIONER IS REQUIRED TO PROVE BY SUBSTANTIAL EVIDENCE THAT "cancer of the brain" and should therefore be regarded as either compensable or a
IT WAS CAUSED BY HER EMPLOYMENT. borderline case. At any rate, the precise work of the petitioner at the Bureau of Mines and Geo-
Sciences consisted of the following:
Second
As Mining Recorder II, to record and file mining instruments and documents in considering that said claimant is most probably not even conversant with the
the Mining Recorder's Section and to type correspondence and other documents intricacies of medical science and the claimant invariably bereft of the material
pertaining to the same action. (See petitioner's Brief, Rollo, p. 13). resources to employ medical experts to demonstrate the connection between the
cause and the disease. Considering the liberal character of employment
It will readily be seen that her work required at times mental concentration. Whether this is compensation schemes, the impossible condition should be deemed as not
specifically causative of brain tumor is of course still unknown but doubts must generally be having been intended and/or imposed. (139 SCRA, pp. 275-276).
resolved in favor whenever compensation for disease is concerned. It would certainly be absurd
to throw upon petitioner the burden of showing that her work either caused or aggravated the ... As an employee, he had contributed to the funds of respondent for 34 years
disease, particularly when both the GSIS and ECC profess ignorance themselves of the causes until his forced retirement. In turn respondent should comply with its duty to give
of the disease. him the fullest protection, relief and compensation benefits as guaranteed by law.
(Ibid., p. 277).
Nowhere is this truism more glaring than in cancer, the most dreaded of all diseases mankind
has ever known. Held the Supreme Court in the case of Acosta v. Employees' Compensation In the more recent case of Flaviano Nemaria, 1 Petitioner versus Employees' Compensation Commission and
Commission (L-55464, Nov. 12, 1981): "It is generally accepted that the exact origin of practically Government Service Insurance System (Ministry of Education and Culture), Respondents, promulgated October 28, 1987 and following
the rule We enunciated in the Mercado case, We stated:
all types of cancer is not yet determined. Scientists and medical experts are still in the process of
discovering the most effective cure for the malady. With this backdrop, one should not expect
ordinary persons to prove the real cause of the ailment of the deceased when the experts Thus the requirement that the disease was caused or aggravated by the
themselves are still in the dark." employment or work applies only to an illness where the cause can be
determined or proved. Where cause is unknown or cannot be ascertained, no
duty to prove the link exist For certainly, the law cannot demand an impossibility.
In a case like the present one, even medical experts have not determined its cause, and
therefore the duty to prove does not exist for it is absurd for the law to require an impossibility.
Thus in the case of 139 SCRA 270 citing Cristobal v. ECC, 103 SCRA 329, We ruled as follows: PREMISES CONSIDERED, it is my humble opinion that this petition should be GRANTED. The
decision of the respondent Employees Compensation Commission should be SET ASIDE and
another should be rendered ordering the respondents to pay the herein petitioner the full amount
While the presumption of compensability and the theory of aggravation espoused of compensation under Presidential Decree No. 626 as amended.
under the Workmen's Compensation Act may have been abandoned under the
New Labor Code (the constitutionality of such abrogation may still be
challenged), it is significant that the liberality of the law in general still subsists. Footnotes

... As agents charged by the law to implement social justice guaranteed and
secured by both 1935 and 1973 Constitutions, respondents should adopt a more
liberal attitude in deciding claims for compensability especially where there is
some basis in the facts for inferring a work connection, (103 SCRA 329, 336).

... Where however, the causes of an ailment are unknown to and or


undetermined even by medical science, the requirement of proof of any casual
link between the ailment and the working conditions petitions should be
liberalized so that those who have less in life will have more in law ... .

... The point is that it is grossly inequitable to require as a condition for an award
of compensation that the claimant demonstrate that his ailment – the cause or
origin of which is unknown to and undetermined even by medical science – was
in fact caused or the risk of contracting the same enhanced by his working
conditions. Plainly the condition would be an impossible one, specially
THIRD DIVISION x-------------------------x
The REPUBLIC OF THE PHILIPPINES,
represented by the OFFICE OF THE PRESIDENT;
MA. LOURDES T. DOMINGO, G.R. No. 155831
and ALBERTO G. ROMULO, in his capacity as G.R. No. 158700
Petitioner, Executive Secretary,
Petitioners, Present:
- versus -

YNARES-SANTIAGO, J.,
ROGELIO I. RAYALA, - versus - Chairperson,
Respondent. G.R. No. 155840 AUSTRIA-MARTINEZ,
x-------------------------x
CORONA,*
ROGELIO I. RAYALA,
NACHURA, and
Petitioner,
REYES, JJ.