Luiz Angelo L.

Villegas
BSME – 5
ME75A – ME LAWS, ETHICS, CODES & STANDARDS
ASSIGNMENT NO. 5

case scenario on the context of ethical issues on:

- Dealing with client and employees
This is a petition for review on certiorari filed by Engineer Felix P. Uy from the decision of the
Court of Appeals dated July 10, 19961 which affirmed from the decision of the Civil Service
Commission.
The facts which gave rise to the instant petition are as follows:
On September 27, 1982, petitioner was promoted by then Governor Valentina G. Plaza as
Supervising Mechanical Engineer, Equipment Pool Division, Provincial Engineering Office of
Agusan del Sur.
On February 26, 1988, then Governor Ceferino Paredes, issued Administrative Order No. 88-
01 scaling down the operations of the Provincial Engineering Office (PEO for brevity) by
reducing the number of its personnel. Sixty-two employees of the PEO, including petitioner
were affected by this order.
On May 11, 1988, petitioner received his notice of termination effective on May 16, 1988
signed by Governor Ceferino Paredes.4 However, private respondent who holds the position
of Mechanical Engineer 5 (a position two (2) steps below that of petitioner) was retained by
Governor Paredes.
Thereafter, petitioner and the sixty-one (61) other dismissed employees, filed a
complaint/petition before the Merit System Protection Board (MSPB for brevity), Civil Service
Commission, assailing the legality of their termination from office.
While the petition was pending before the MSPB, Governor Paredes reorganized the
Equipment Pool Division, PEO and renamed the same as Motor Pool Division, PEO. He
abolished the position of Supervising Mechanical Engineer and upgraded instead the next
ranking position, Senior Mechanical Engineer as the Chief of Division. Thereafter, he
appointed private respondent to the said position while designating another, Engineer Carlito
Capol, to the position of Mechanical Engineer left vacant by private respondent.
On July 1, 1989, Republic Act 6758, otherwise known as the Salary Standardization Law (SSL
for brevity) took effect. The positions at the PEO, Motor Pool Division were reclassified: The
Chief, Motor Pool Division was designated as Head Mechanical Engineer with the equivalent
rank of Engineer IV; Supervising Mechanical Engineer (previously abolished by Governor
Paredes) as Engineer III; and Senior Mechanical Engineer as Engineer II. Private respondent
being the current Chief, Motor Pool Division, was designated by Governor Paredes to the
position of Head Mechanical Engineer. On January 29, 1993, the Merit System Protection
Board, Civil Service Commission, rendered its decision in MSPB Case No. 91-1739 declaring
petitioner's termination from the service including that of the other employees assigned with
the PEO illegal. The dispositive portion thereof reads, to wit;
WHEREFORE, in the light of the foregoing, the board finds the petition of Emmie Hurbada, et
al., meritorious. Accordingly, the Petitioners who were illegally separated are hereby ordered
reinstated.

- Dealing with Labor and community

This is a claim for overtime pay. Miguel Aspera, a mechanical engineer, worked for
Engineering Equipment, Inc. in Saudi Arabia for nearly a year from April 26, 1977 to April 16,
1978 at a monthly salary of P750 (P860) with a six-day work week consisting of ten working
hours. His written contract of employment provides:
1. Work Schedule/Assignment. ... Your workdays shall be on a six-day work week basis, with
a working day consisting of ten (10) working hours. You may be required to work overtime in
excess of ten (10) hours each work day and to work on your restdays and on Saudi Arabian
legal holidays.
2. A monthly salary of P750.00 plus overtime pay for work rendered during restdays/holidays
and/or in excess of ten (10) hours during regular working days.
Aspera worked ten hours daily for 335 working days. He claims that his monthly salary should
correspond to eight hours of daily work and that for the additional two hours daily, he was
entitled to overtime pay at $1.2162 per hour or to $814.85 for 670 hours during 335 working
days. The Director of Employment Services and the National Labor Relations Commission
sustained his claim and awarded him that amount as overtime pay. They declared void the
stipulation for a ten-hour working day because it was contrary to Section 83 of the Labor Code,
formerly Eight-Hour Labor Law, which expressly provides that "the normal hours of work of
any employee shall not exceed eight (8) hours a day" and to section 87 of the same Code
which provides that work performed "beyond eight (8) hours a day" is treated as overtime
work, Hence, this recourse by the petitioner. It contends that Aspera was a managerial
employee exercising supervision and control over its rank-and-file employees with power to
recommend disciplinary action or their dismissal. Section 82 of the Labor Code provides that
managerial employees are not entitled to overtime pay.
It also asserts that Aspera was one of several employees who signed written contracts with a
"built-in" overtime pay in the ten-hour working day and that their basic monthly pay was
adjusted to reflect the higher amount covering the guaranteed two-hour extra time whether
worked or unworked. Moreover, it argues that the contracts were submitted to BES Director
Jonathan M.R.A. de la Cruz, the same director who rendered the questioned decision He
approved the same. Without his approval, the petitioner would not have stipulated the ten-
hour work schedule and would have provided for a lower basic salary for an eight-hour working
day. In addition to his salary Aspera was given free board and lodging while in Saudi Arabia
and free transportation in going to and returning from that country.
We hold that under the particular circumstances of this case the Acting Minister of Labor and
Director De la Cruz committed a grave abuse of discretion amounting to lack of jurisdiction in
awarding overtime pay and in disregarding a contract that De la Cruz himself, who is supposed
to know the Eight-Hour Labor Law, had previously sealed with his imprimatur. Because of that
approval, the petitioner acted in good faith in enforcing the contract.
Furthermore, Aspera had not denied that he was a managerial employee within the meaning
of section 82. As such, he was not entitled to overtime pay. WHEREFORE, the resolution of
the Acting Minister of Labor dated November 16, 1981 is reversed and set aside. Aspera's
complaint is dismissed. No costs.

- Dealing with suppliers and/or contractors

On April 7, 1997 the President of petitioner National Power Corporation (NPC) filed an
administrative action against respondent Rodrigo A. Tanfelix, a Supervising Mechanical
Engineer, for rigging the bidding for the construction of the wind break fence of its thermal
power plant’s coal storage in Calaca, Batangas.
After hearing, the NPC’s Board of Inquiry and Discipline (BID) found Tanfelix guilty of grave
misconduct for rigging the bidding to favor ALC Industries, Inc. (ALC), one of the five pre-
qualified contractors. Two witnesses, the board chairman of one of the losing bidders, Ley
Construction and Development Corp. (LCDC), and the head of the latter’s engineering
department, testified that Tanfelix invited the pre-qualified bidders to a restaurant meeting and
offered ₱1 million each to four of them in exchange for letting ALC win the bidding. He also
built into the successful bid a ₱2 million fee for arranging the rig and for padding NPC’s price
estimate so the winning bid could make it big. Days later, the heads of ALC and LCDC met
and signed in Tanfelix’s presence a memorandum of agreement that embodied the bid-rigging
deal between the two companies. ALC won the bidding. With this finding, the NPC discipline
board ordered Tanfelix dismissed from the service.
On November 9, 1999, acting on Tanfelix’s appeal, the Civil Service Commission rendered a
decision, affirming the NPC-BID ruling. But, on motion for reconsideration, the CSC reversed
itself and exonerated Tanfelix in a resolution dated December 21, 2000. The CSC ruled in the
main that the misconduct which warrants removal must have direct relation to and be
connected with the performance of official duties. As it happened, Tanfelix was neither a
member of the NPC bids committee nor was there any proof that he influenced the members
of that committee.
The NPC appealed to the Court of Appeals (CA) but on October 18, 2001 the latter affirmed
the ultimate ruling of the CSC. The NPC questions the CA decision before this Court. The
issue in this case is whether or not the CA, like the CSC, correctly absolved Tanfelix of any
administrative liability for rigging the bids on an NPC construction contract since he was not a
member of the bids committee that awarded it to a pre-selected bidder.
Tanfelix wrongfully and unlawfully used his station or reputation as NPC Supervising
Mechanical Engineer to rig the bids for an NPC construction project. Although he was not a
member of NPC’s bids committee, he was NPC’s supervising mechanical engineer.
Undoubtedly, Tanfelix misused his position to gain access to information on construction
projects that were up for bidding and to the NPC staffs involved in them. And he misused his
reputation and credibility as ranking NPC officer to bring the pre-qualified bidders together in
a restaurant to hammer out with them a scheme for cheating NPC of a large sum of money,
the result of rigged bids.
It is of course true, as the CSC suggested, that the evidence fails to show that Tanfelix tried
to influence the members of the bids committee. But there was really no need to influence
them since Tanfelix already succeeded in rigging the bids among the pre-qualified bidders,
leaving the bids committee no choice but to award the contract to ALC.
Grave misconduct, of which Tanfelix has been charged, consists in a government official’s
deliberate violation of a rule of law or standard of behavior. It is regarded as grave when the
elements of corruption, clear intent to violate the law, or flagrant disregard of established rules
are present. In particular, corruption as an element of grave misconduct consists in the
official’s unlawful and wrongful use of his station or character [reputation]2 to procure some
benefit for himself or for another person, contrary to duty and the rights of others. Rigging by
a public official at a bidding in the organization where he belongs is a specie of corruption.
ACCORDINGLY, the Court SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP
62642 dated October 18, 2001 as well as Civil Service Commission Resolution 002816 dated
December 21, 2000, ADJUDGES respondent Rodrigo A. Tanfelix guilty of grave misconduct,
and IMPOSES on him the penalty of dismissal with the accessory penalties of forfeiture of
retirement benefits, cancellation of eligibility, and perpetual disqualification from re-
employment in the government service, including government-owned or controlled
corporation.

- Dealing with other or fellow engineers

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the Decision of the Court of Appeals in CA–G.R. SP No. 60223, entitled "Mateo
Agustin Jr. v. National Labor Relations Commission (First Division), Aberdeen Court, Inc. and
Ricardo Ng," dated January 31, 2001, and the Resolution of August 10, 2001 denying the
motion for reconsideration therein.
Mateo C. Agustin was employed by Aberdeen Court, Inc. for the purpose of trouble shooting
electrical problems. Agustin was engaged on a six-month probationary basis. On January 12
and 13, 1997 the personnel of Centigrade Industries, Inc. performed a reading of the exhaust
air balancing at the fifth and sixth floors of Aberdeen’s premises. The company claims that
Engr. Agustin was in charge of the undertaking but Engr. Agustin claims that he was requested
by Engr. Abad who is a mechanical Engineer to accompany personnel of the Centigrade
Industries. There were also 3 other mechanical engineers on duty in the premises. The
company found out that parts of the report are incorrectly done and claims that Engr. Agustin
accepted and signed the report done by Centigrade Industries, Inc. without verifying its
correctness. Engr. Agustin states that after the report was done, he forwarded the report to
Engr. Abad and was told to sign it to verify that he was present when the reading was
conducted. He claims that he signed merely to evidence that he received a copy of the report.
Two days after the report, Engr. Agustin was dismissed. He was then informed that he could
get his two (2) weeks salary in the amount of ₱4,000, more or less, on the condition that he
will sign some documents which provides that the company has no more liability and that he
is voluntarily resigning from Aberdeen Court. Aware of his rights, he did not sign the offered
documents. The day after, he requested assistance from DOLE. Within the same month of
that year, respondent Agustin filed a complaint for illegal dismissal which was docketed as
NLRC NCR Case No. 00-01-00466-97.
In an undated decision, the labor arbiter rendered judgment in favor of herein respondent,
declaring that Agustin was illegally dismissed. The company asks for an appeal. The company
appealed the decision to the NLRC. the NLRC reversed the decision of the Labor Arbiter and
held that Agustin had not been illegally dismissed. From the NLRC decision, Agustin filed a
petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals. The
appellate court ruled in favor of Agustin. The company filed a motion for reconsideration dated
which the Court of Appeals denied in its Resolution of August 10, 2001. It appears that the
company violated due process in the dismissal of Agustin, by not affording him the required
notice. WHEREFORE, the petition is partly GRANTED and the assailed Decision and
Resolution of the Court of Appeals are MODIFIED in that respondent is declared dismissed
for just cause but petitioners are ordered to pay him nominal damages in the amount of
₱30,000.

- Dealing with the General Public

This is a petition to review on certiorari the decision of the Court of Tax Appeals which ruled
that respondent Avecilla Building Corporation was not, during the period in question, an
independent contractor within the meaning of Section 191 of the National Internal Revenue
Code as amended, with respect to its business of furnishing technical services in the
construction of buildings. The respondent court ruled that Avecilla is not subject to the
contractor's tax and ordered herein petitioner to refund to the respondent corporation the
P8,201.69 it had paid as taxes.
Private respondent is a domestic corporation engaged in the business of "general engineering
and contracting of all kinds of constructions and structures; employing and contracting with
architects, engineers, surveyors, chemists and other technical men, to perform engineering
and architectural work, including the preparation of surveys, plans, specifications, estimates,
etc. and to act as consulting and/or supervising engineers and architects, ... in connection with
the said contracting and building business."
The contractor's tax as contemplated by the Revenue Code is in the nature of an excise tax
on the exercise of a privilege. The tax is imposed on the sale of services or labor. It is an
indirect tax and whether or not the contractor is exempt from internal revenue taxes is
immaterial. The tax imposed on Avecilla Building Corporation is, therefore, a tax on its
business and privilege of selling the services and labor of its employees and not on the
professional services of those employees themselves.
The respondent corporation, which has a distinct and separate personality from its "work
engineers", rendered technical services to the Philippine National Bank, the Development
Bank of the Philippines and the Social Security System in connection with the construction of
their buildings. The law imposes a 3% percentage tax on among others, "building ... and other
construction work contractors." (emphasis supplied). The law does not distinguish actual from
technical services performed by the contractor. Where the law does not distinguish the court
should not distinguish. (Robles v. Zambales Chromite Mining Co., 104 PhiL 688) Hence, a
building or any other construction work contractor like the Avecilla Building Corporation
whether engaged in actual or technical services in relation to its construction business is liable
to the 3% contractor's tax under Section 191 of the National Internal Revenue Code, as
amended.
WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the Court
of Tax Appeals is SET ASIDE. The respondent corporation's claim for refund of overpaid
contractor's tax is DENIED.