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Social justice is the view that everyone deserves equal
economic, political and social rights and opportunities. Social
workers aim to open the doors of access and opportunity for
everyone, particularly those in greatest need.
1987 Constitution
Article 2 State Policies
Section 5. The maintenance of peace and order, the protection
of life, liberty, and property, and promotion of the general
welfare are essential for the enjoyment by all the people of the
blessings of democracy.
Section 9. The State shall promote a just and dynamic social
order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all phases
of national development.
Section 11. The State values the dignity of every human person
and guarantees full respect for human rights.
Section 13. The State recognizes the vital role of the youth in
nation-building and shall promote and protect their physical,
moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.
Section 14. The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality before the
law of women and men.
Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.
Article XIII
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common
good.
1
To this end, the State shall regulate the acquisition, ownership,
use, and disposition of property and its increments.
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on
freedom of initiative and self-reliance.
LABOR
Section 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
WOMEN
Section 14. The State shall protect working women by
providing safe and healthful working conditions, taking into
account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them
to realize their full potential in the service of the nation.
[G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL.,
Respondents.
Maximo Calalang, in his capacity as a private citizen and as a
taxpayer of Manila, brought before this court this petition for
a writ of prohibition against the respondents, A. D. Williams,
as Chairman of the National Traffic Commission; Vicente
Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works and Communications; Eulogio
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Rodriguez, as Mayor of the City of Manila; and Juan
Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic
Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along Rosario
Street extending from Plaza Calderon de la Barca to
Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30
p.m. to 5:30 p.m.; and along Rizal Avenue extending from the
railroad crossing at Antipolo Street to Echague Street, from 7
a.m. to 11 p.m., from a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Chairman of
the National Traffic Commission, on July 18, 1940
recommended to the Director of Public Works the adoption of
the measure proposed in the resolution aforementioned, in
pursuance of the provisions of Commonwealth Act No. 548
which authorizes said Director of Public Works, with the
approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations to
regulate and control the use of and traffic on national roads;
that on August 2, 1940, the Director of Public Works, in his first
indorsement to the Secretary of Public Works and
Communications, recommended to the latter the approval of
the recommendation made by the Chairman of the National
Traffic Commission as aforesaid, with the modification that the
closing of Rizal Avenue to traffic to animal-drawn vehicles be
limited to the portion thereof extending from the railroad
crossing at Antipolo Street to Azcarraga Street; that on August
10, 1940, the Secretary of Public Works and Communications,
in his second indorsement addressed to the Director of Public
Works, approved the recommendation of the latter that
Rosario Street and Rizal Avenue be closed to traffic of animal-
drawn vehicles, between the points and during the hours as
above indicated, for a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Mayor of
Manila and the Acting Chief of Police of Manila have enforced
and caused to be enforced the rules and regulations thus
adopted; that as a consequence of such enforcement, all
animal-drawn vehicles are not allowed to pass and pick up
passengers in the places above-mentioned to the detriment
not only of their owners but of the riding public as well.
It is contended by the petitioner that Commonwealth Act No.
548 by which the Director of Public Works, with the approval
of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national
2
roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere
been better stated than in the early Ohio case decided by
Judge Ranney, and since followed in a multitude of cases,
namely: The true distinction therefore is between the
delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised
under and in pursuance of the law. The first cannot be done;
to the latter no valid objection can be made. (Cincinnati, W. &
Z. R. Co. v. Commrs. Clinton County, 1 Ohio St., 88.) Discretion,
as held by Chief Justice Marshall in Wayman v. Southard (10
Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make
decisions of executive departments or subordinate officials
thereof, to whom it has committed the execution of certain
acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.)
The growing tendency in the decisions is to give prominence to
the necessity of the case."cralaw virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as
follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid
obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders
of the President of the Philippines, the Director of Public
Works, with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on
such roads and streets. Such rules and regulations, with the
approval of the President, may contain provisions controlling
or regulating the construction of buildings or other structures
within a reasonable distance from along the national roads.
Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the
public convenience and interest, or for a specified period, with
the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public
Labor Standards Notes and Cases 1st
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policy demands but merely to carry out the legislative policy
laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon and avoid obstructions on, roads
and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of
the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the
traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be,
but merely the ascertainment of the facts and circumstances
upon which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should
be closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience
and interest, is an administrative function which cannot be
directly discharged by the National Assembly. It must depend
on the discretion of some other government official to whom
is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said that
the exercise of such discretion is the making of the law. As was
said in Lockes Appeal (72 Pa. 491): "To assert that a law is less
than a law, because it is made to depend on a future event or
act, is to rob the Legislature of the power to act wisely for the
public welfare whenever a law is passed relating to a state of
affairs not yet developed, or to things future and impossible to
fully know." The proper distinction the court said was this:
"The Legislature cannot delegate its power to make the law;
but it can make a law to delegate a power to determine some
fact or state of things upon which the law makes, or intends to
make, its own action depend. To deny this would be to stop
the wheels of government. There are many things upon which
wise and useful legislation must depend which cannot be
known to the law-making power, and, must, therefore, be a
subject of inquiry and determination outside of the halls of
legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmea, G.R. Nos.
46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission,
G.R. No. 47065, promulgated June 26, 1940, this Court had
occasion to observe that the principle of separation of powers
has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern
governments. Accordingly, with the growing complexity of
modern life, the multiplication of the subjects of governmental
3
regulations, and the increased difficulty of administering the
laws, the rigidity of the theory of separation of governmental
powers has, to a large extent, been relaxed by permitting the
delegation of greater powers by the legislative and vesting a
larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations calculated to
promote public interest.
The petitioner further contends that the rules and regulations
promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful
interference with legitimate business or trade and abridge the
right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of the
state.
Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit
upon and avoid obstructions on national roads, in the interest
and convenience of the public. In enacting said law, therefore,
the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic. which is, to say the least, a
menace to public safety. Public welfare, then, lies at the
bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal
liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of
restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomez Jesus, 31
Phil., 218). To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing
without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The
citizen should achieve the required balance of liberty and
authority in his mind through education and personal
discipline, so that there may be established the resultant
equilibrium, which means peace and order and happiness for
all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the
residuum of liberty which resides in the people. The paradox
lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.
Labor Standards Notes and Cases 1st
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The scope of police power keeps expanding as civilization
advances. As was said in the case of Dobbins v. Los Angeles
(195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the
police power is a continuing one, and a business lawful today
may in the future, because of the changed situation, the
growth of population or other causes, become a menace to the
public health and welfare, and be required to yield to the
public good." And in People v. Pomar (46 Phil., 440), it was
observed that "advancing civilization is bringing within the
police power of the state today things which were not thought
of as being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of
public opinion, with an increasing desire on the part of the
masses and of the government to look after and care for the
interests of the individuals of the state, have brought within
the police power many questions for regulation which
formerly were not so considered."cralaw virtua1aw library
The petitioner finally avers that the rules and regulations
complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-
being and economic security of all the people. The promotion
of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of
salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition
of the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."cralaw virtua1aw
library
4
In view of the foregoing, the writ of prohibition prayed for is
hereby denied, with costs against the petitioner. So ordered.
Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
[G.R. No. 127598. February 22, 2000]
MANILA ELECTRIC COMPANY, petitioner, vs. Hon. Secretary
of Labor Leonardo Quisumbing and Meralco Employees and
Workers Association (MEWA), respondents.
RESOLUTION
YNARES_SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court
disposed of the case as follows:
"WHEREFORE, the petition is granted and the orders of public
respondent Secretary of Labor dated August 19, 1996 and
December 28, 1996 are set aside to the extent set forth above.
The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained
in the unaffected portions of the Secretary of Labors orders of
August 19, 1996 and December 28, 1996, and the
modifications set forth above. The retirement fund issue is
remanded to the Secretary of Labor for reception of evidence
and determination of the legal personality of the Meralco
retirement fund."[1]
The modifications of the public respondents resolutions
include the following:
January 27, 1999 decision Secretarys resolution
Wages -P1,900.00 for 1995-96 P2,200.00
Xmas bonus -modified to one month 2 months
Retirees -remanded to the Secretary granted
Loan to coops -denied granted
GHSIP, HMP and Housing loans -granted up to P60,000.00
granted
Signing bonus -denied granted
Union leave -40 days (typo error) 30 days
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High voltage/pole -not apply to those who are members of a
team not exposed to the risk
Collectors -no need for cash bond, no need to reduce quota
and MAPL
CBU -exclude confidential employees include
Union security -maintenance of membership closed shop
Contracting out -no need to consult union consult first
All benefits -existing terms and conditions all terms
Retroactivity -Dec 28, 1996-Dec 27, 199(9) from Dec 1, 1995
Dissatisfied with the Decision, some alleged members of
private respondent union (Union for brevity) filed a motion for
intervention and a motion for reconsideration of the said
Decision. A separate intervention was likewise made by the
supervisors union (FLAMES[2]) of petitioner corporation
alleging that it has bona fide legal interest in the outcome of
the case.[3] The Court required the "proper parties" to file a
comment to the three motions for reconsideration but the
Solicitor-General asked that he be excused from filing the
comment because the "petition filed in the instant case was
granted" by the Court.[4] Consequently, petitioner filed its
own consolidated comment. An "Appeal Seeking Immediate
Reconsideration" was also filed by the alleged newly elected
president of the Union.[5] Other subsequent pleadings were
filed by the parties and intervenors.
The issues raised in the motions for reconsideration had
already been passed upon by the Court in the January 27, 1999
decision. No new arguments were presented for consideration
of the Court. Nonetheless, certain matters will be considered
herein, particularly those involving the amount of wages and
the retroactivity of the Collective Bargaining Agreement (CBA)
arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per
month as ordered by the Secretary is allowed, it would simply
pass the cost covering such increase to the consumers through
an increase in the rate of electricity. This is a non sequitur. The
Court cannot be threatened with such a misleading argument.
An increase in the prices of electric current needs the approval
of the appropriate regulatory government agency and does
not automatically result from a mere increase in the wages of
5
petitioners employees. Besides, this argument presupposes
that petitioner is capable of meeting a wage increase. The All
Asia Capital report upon which the Union relies to support its
position regarding the wage issue can not be an accurate basis
and conclusive determinant of the rate of wage increase.
Section 45 of Rule 130 Rules of Evidence provides:
"Commercial lists and the like. - Evidence of statements of
matters of interest to persons engaged in an occupation
contained in a list, register, periodical, or other published
compilation is admissible as tending to prove the truth of any
relevant matter so stated if that compilation is published for
use by persons engaged in that occupation and is generally
used and relied upon by them therein."
Under the afore-quoted rule, statement of matters contained
in a periodical may be admitted only "if that compilation is
published for use by persons engaged in that occupation and
is generally used and relied upon by them therein." As
correctly held in our Decision dated January 27, 1999, the cited
report is a mere newspaper account and not even a
commercial list. At most, it is but an analysis or opinion which
carries no persuasive weight for purposes of this case as no
sufficient figures to support it were presented. Neither did
anybody testify to its accuracy. It cannot be said that
businessmen generally rely on news items such as this in their
occupation. Besides, no evidence was presented that the
publication was regularly prepared by a person in touch with
the market and that it is generally regarded as trustworthy and
reliable. Absent extrinsic proof of their accuracy, these reports
are not admissible.[6] In the same manner, newspapers
containing stock quotations are not admissible in evidence
when the source of the reports is available.[7] With more
reason, mere analyses or projections of such reports cannot be
admitted. In particular, the source of the report in this case can
be easily made available considering that the same is
necessary for compliance with certain governmental
requirements.
Nonetheless, by petitioners own allegations, its actual total net
income for 1996 was P5.1 billion.[8] An estimate by the All Asia
financial analyst stated that petitioners net operating income
for the same year was about P5.7 billion, a figure which the
Union relies on to support its claim. Assuming without
admitting the truth thereof, the figure is higher than the
P4.171 billion allegedly suggested by petitioner as its projected
net operating income. The P5.7 billion which was the
Secretarys basis for granting the P2,200.00 is higher than the
actual net income of P5.1 billion admitted by petitioner. It
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would be proper then to increase this Courts award of
P1,900.00 to P2,000.00 for the two years of the CBA award. For
1992, the agreed CBA wage increase for rank-and-file was
P1,400.00 and was reduced to P1,350.00, for 1993; further
reduced to P1,150.00 for 1994. For supervisory employees, the
agreed wage increase for the years 1992-1994 are P1,742.50,
P1,682.50 and P1,442.50, respectively. Based on the foregoing
figures, the P2,000.00 increase for the two-year period
awarded to the rank-and-file is much higher than the highest
increase granted to supervisory employees.[9] As mentioned
in the January 27, 1999 Decision, the Court does "not seek to
enumerate in this decision the factors that should affect wage
determination" because collective bargaining disputes
particularly those affecting the national interest and public
service "requires due consideration and proper balancing of
the interests of the parties to the dispute and of those who
might be affected by the dispute."[10] The Court takes judicial
notice that the new amounts granted herein are significantly
higher than the weighted average salary currently enjoyed by
other rank-and-file employees within the community. It should
be noted that the relations between labor and capital is
impressed with public interest which must yield to the
common good.[11] Neither party should act oppressively
against the other or impair the interest or convenience of the
public.[12] Besides, matters of salary increases are part of
management prerogative.[13]
On the retroactivity of the CBA arbitral award, it is well to recall
that this petition had its origin in the renegotiation of the
parties 1992-1997 CBA insofar as the last two-year period
thereof is concerned. When the Secretary of Labor assumed
jurisdiction and granted the arbitral awards, there was no
question that these arbitral awards were to be given
retroactive effect. However, the parties dispute the reckoning
period when retroaction shall commence. Petitioner claims
that the award should retroact only from such time that the
Secretary of Labor rendered the award, invoking the 1995
decision in Pier 8 case[14] where the Court, citing Union of
Filipino Employees v. NLRC,[15] said:
"The assailed resolution which incorporated the CBA to be
signed by the parties was promulgated on June 5, 1989, the
expiry date of the past CBA. Based on the provision of Section
253-A, its retroactivity should be agreed upon by the parties.
But since no agreement to that effect was made, public
respondent did not abuse its discretion in giving the said CBA
a prospective effect. The action of the public respondent is
within the ambit of its authority vested by existing law."
6
On the other hand, the Union argues that the award should
retroact to such time granted by the Secretary, citing the 1993
decision of St Lukes.[16]
"Finally, the effectivity of the Order of January 28, 1991, must
retroact to the date of the expiration of the previous CBA,
contrary to the position of petitioner. Under the circumstances
of the case, Article 253-A cannot be properly applied to herein
case. As correctly stated by public respondent in his assailed
Order of April 12, 1991 dismissing petitioners Motion for
Reconsideration---
Anent the alleged lack of basis for the retroactivity provisions
awarded, we would stress that the provision of law invoked by
the Hospital, Article 253-A of the Labor Code, speaks of
agreements by and between the parties, and not arbitral
awards . . .
"Therefore, in the absence of a specific provision of law
prohibiting retroactivity of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to
determine the effectivity thereof."
In the 1997 case of Mindanao Terminal,[17] the Court applied
the St. Lukes doctrine and ruled that:
"In St. Lukes Medical Center v. Torres, a deadlock also
developed during the CBA negotiations between management
and the union. The Secretary of Labor assumed jurisdiction and
ordered the retroaction of the CBA to the date of expiration of
the previous CBA. As in this case, it was alleged that the
Secretary of Labor gravely abused its discretion in making his
award retroactive. In dismissing this contention this Court
held:
"Therefore, in the absence of a specific provision of law
prohibiting retroactive of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to
determine the effectivity thereof."
The Court in the January 27, 1999 Decision, stated that the CBA
shall be "effective for a period of 2 years counted from
December 28, 1996 up to December 27, 1999."
Parenthetically, this actually covers a three-year period. Labor
laws are silent as to when an arbitral award in a labor dispute
Labor Standards Notes and Cases 1st
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where the Secretary had assumed jurisdiction by virtue of
Article 263 (g) of the Labor Code shall retroact. In general, a
CBA negotiated within six months after the expiration of the
existing CBA retroacts to the day immediately following such
date and if agreed thereafter, the effectivity depends on the
agreement of the parties.[18] On the other hand, the law is
silent as to the retroactivity of a CBA arbitral award or that
granted not by virtue of the mutual agreement of the parties
but by intervention of the government. Despite the silence of
the law, the Court rules herein that CBA arbitral awards
granted after six months from the expiration of the last CBA
shall retroact to such time agreed upon by both employer and
the employees or their union. Absent such an agreement as to
retroactivity, the award shall retroact to the first day after the
six-month period following the expiration of the last day of the
CBA should there be one. In the absence of a CBA, the
Secretarys determination of the date of retroactivity as part of
his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as
an agreement voluntarily entered into by the parties because
it requires the interference and imposing power of the State
thru the Secretary of Labor when he assumes jurisdiction.
However, the arbitral award can be considered as an
approximation of a collective bargaining agreement which
would otherwise have been entered into by the parties.[19]
The terms or periods set forth in Article 253-A pertains
explicitly to a CBA. But there is nothing that would prevent its
application by analogy to an arbitral award by the Secretary
considering the absence of an applicable law. Under Article
253-A: "(I)f any such agreement is entered into beyond six
months, the parties shal! agree on the duration of retroactivity
thereof." In other words, the law contemplates retroactivity
whether the agreement be entered into before or after the
said six-month period. The agreement of the parties need not
be categorically stated for their acts may be considered in
determining the duration of retroactivity. In this connection,
the Court considers the letter of petitioners Chairman of the
Board and its President addressed to their stockholders, which
states that the CBA "for the rank-and-file employees covering
the period December 1, 1995 to November 30, 1997 is still with
the Supreme Court,"[20] as indicative of petitioners
recognition that the CBA award covers the said period. Earlier,
petitioners negotiating panel transmitted to the Union a copy
of its proposed CBA covering the same period inclusive.[21] In
addition, petitioner does not dispute the allegation that in the
past CBA arbitral awards, the Secretary granted retroactivity
commencing from the period immediately following the last
day of the expired CBA. Thus, by petitioners own actions, the
7
Court sees no reason to retroact the subject CBA awards to a
different date. The period is herein set at two (2) years from
December 1, 1995 to November 30, 1997.
On the allegation concerning the grant of loan to a
cooperative, there is no merit in the unions claim that it is no
different from housing loans granted by the employer. The
award of loans for housing is justified because it pertains to a
basic necessity of life. It is part of a privilege recognized by the
employer and allowed by law. In contrast, providing seed
money for the establishment of the employees cooperative is
a matter in which the employer has no business interest or
legal obligation. Courts should not be utilized as a tool to
compel any person to grant loans to another nor to force
parties to undertake an obligation without justification. On the
contrary, it is the government that has the obligation to render
financial assistance to cooperatives and the Cooperative Code
does not make it an obligation of the employer or any private
individual.[22]
Anent the 40-day union leave, the Court finds that the same is
a typographical error. In order to avoid any confusion, it is
herein declared that the union leave is only thirty (30) days as
granted by the Secretary of Labor and affirmed in the Decision
of this Court.
The added requirement of consultation imposed by the
Secretary in cases of contracting out for six (6) months or more
has been rejected by the Court. Suffice it to say that the
employer is allowed to contract out services for six months or
more. However, a line must be drawn between management
prerogatives regarding business operations per se and those
which affect the rights of employees, and in treating the latter,
the employer should see to it that its employees are at least
properly informed of its decision or modes of action in order
to attain a harmonious labor-management relationship and
enlighten the workers concerning their rights.[23] Hiring of
workers is within the employers inherent freedom to regulate
and is a valid exercise of its management prerogative subject
only to special laws and agreements on the matter and the fair
standards of justice.[24] The management cannot be denied
the faculty of promoting efficiency and attaining economy by
a study of what units are essential for its operation. It has the
ultimate determination of whether services should be
performed by its personnel or contracted to outside agencies.
While there should be mutual consultation, eventually
deference is to be paid to what management decides.[25]
Contracting out of services is an exercise of business judgment
or management prerogative.[26] Absent proof that
Labor Standards Notes and Cases 1st
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management acted in a malicious or arbitrary manner, the
Court will not interfere with the exercise of judgment by an
employer.[27] As mentioned in the January 27, 1999 Decision,
the law already sufficiently regulates this matter.[28]
Jurisprudence also provides adequate limitations, such that
the employer must be motivated by good faith and the
contracting out should not be resorted to circumvent the law
or must not have been the result of malicious or arbitrary
actions.[29] These are matters that may be categorically
determined only when an actual suit on the matter arises.
WHEREFORE, the motion for reconsideration is partially
granted and the assailed Decision is modified as follows: (1)
the arbitral award shall retroact from December 1, 1995 to
November 30, 1997; and (2) the award of wage is increased
from the original amount of One Thousand Nine Hundred
Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the
years 1995 and 1996. This Resolution is subject to the
monetary advances granted by petitioner to its rank-and-file
employees during the pendency of this case assuming such
advances had actually been distributed to them. The assailed
Decision is AFFIRMED in all other respects.
SO ORDERED.
b. foundation: police power and state protection
[ GR No. L-26298, Sep 28, 1984 ]
CMS ESTATE v. SOCIAL SECURITY SYSTEM +
This appeal by the CMS Estate, Inc. from the decision rendered
by the Social Security Commission in its Case No. 12, entitled
"CMS Estate, Inc. vs Social Security System", declaring CMS
subject to compulsory coverage as of September 1, 1957 and
"directing the Social Security System to effect such coverage of
the petitioner's employees in its logging and real estate
business conformably to the provision of Republic Act No.
1161, as amended", was certified to Us by the defunct Court
of Appeals[1] for further disposition considering that purely
questions of law are involved.
Petitioner is a domestic corporation organized primarily for
the purpose of engaging in the real estate business. On
December 1, 1952, it started doing business with only six (6)
employees. It's Articles of Incorporation was amended on June
4, 1956 in order to engage in the logging business. The
Securities and Exchange Commission issued the certificate of
filing of said amended articles on June 18, 1956. Petitioner
likewise obtained an ordinary license from the Bureau of
8
Forestry to operate a forest concession of 13,000 hectares
situated in the municipality of Baganga, Province of Davao.
On January 28, 1957, petitioner entered into a contract of
management with one Eufracio D. Rojas for the operation and
exploitation of the forest concession. The logging operation
actually started on April 1, 1957 with four monthly salaried
employees. As of September 1, 1957, petitioner had 89
employees and laborers in the logging operation. On
December 26, 1957, pe-titioner revoked its contract of
management with Mr. Rojas.
On August 1, 1958, petitioner became a member of the Social
Security System with respect to its real estate business. On
September 6, 1958, petitioner remitted to the System the sum
of P203.13 representing the initial premium on the monthly
salaries of the employees in its logging business. However, on
October 9, 1958, petitioner demanded the refund of the said
amount, claiming that it is not yet subject to compulsory
coverage with respect to its logging business. The request was
denied by respondent System on the ground that the logging
business was a mere expansion of peti-tioner's activities and
for purposes of the Social Security Act, petitioner should be
considered a member of the System since December 1, 1952
when it commenced its real estate business.
On November 10, 1958, petitioner filed a petition with the
Social Security Commission pray-ing for the determination of
the effectivity date of the compulsory coverage of petitioner's
logging business.
After both parties have submitted their respective
memoranda, the Commission issued on January 14, 1960,
Resolution No. 91[2] , the dispositive portion of which reads as
follows:
"Premises considered, the instant petition is hereby denied
and petitioner is hereby adjudged to be subject to compulsory
coverage as of Sept. 1, 1957 and the Social Security System is
hereby directed to effect such cover-age of petitioner's
employees in its logging and real es-tate business conformably
to the provisions of Rep. Act No. 1161, as amended.
"SO ORDERED."
Petitioner's motion for reconsideration was denied in
Resolution No. 609 of the com-mission.
Labor Standards Notes and Cases 1st
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These two (2) resolutions are now the subject of petitioner's
appeal. Petitioner submits that respondent Commission erred
in holding -
(1) that the contributions required of employers and
employees under our Social Security Act of 1954 are not in the
nature of excise taxes because the said Act was allegedly
enacted by congress in the exercise of the police power of the
State, not of its taxing power;
(2) that no contractee -independent contractor rela-tionship
existed between peti-tioner and Eufracio D. Rojas during the
time that he was operating its forest con-cession at Baganga,
Davao;
(3) that a corporation which has been in operation for more
than two years in one business is immediately covered with
respect to any new and independent business it may
subsequently engage in;
(4) that a corporation should be treated as a single employing
unit for purposes of coverage under the Social Security Act,
irrespective of its separate, un-related and independent
busi-nesses established and operated at different places and
on dif-ferent dates; and
(5) that Section 9 of the Social Security Act on the ques-tion of
compulsory membership of employers should be given a
liberal interpretation.
Respondent, on the other hand, advances the following
propositions, inter alia:
(1) that the Social Security Act speaks of compulsory cover-age
of employers and not of businesses;
(2) that once an employer is initially covered under the Social
Security Act, any other business undertaken or estab-lished by
the same employer is likewise subject in spite of the fact that
the latter has not been in operation for at least two years;
(3) that petitioner's logging business while actual-ly of a
different, distinct, separate and independent nature from its
real estate business should be consider-ed as an operation
under the same management;
(4) that the amendment of petitioner's articles of
incorporation, so as to enable it to engage in the logging
business did not alter the juridical personality of pe-titioner;
and
9
(5) that petitioner's logging operation is a mere expansion of
its business activities.
The Social Security Law was enacted pursuant to the policy of
the government "to develop, es-tablish gradually and perfect
a social security system which shall be suitable to the needs of
the people throughout the Philippines, and shall provide
protection against the hazards of dis-ability, sickness, old age
and death". (Sec. 2, RA 1161, as amended) It is thus clear that
said enactment implements the general welfare man-date of
the Constitution and constitutes a le-gitimate exercise of the
police power of the State. As held in the case of Philippine
Blooming Mills Co., Inc., et al vs S S S[3] -
"Membership in the S S S is not a result of bilateral, consensual
agreement where the rights and obligations of the parties are
defined by and subject to their will. RA 1161 requires
compulsory coverage of employees and employers under the
System. It is actually a legal imposition on said employers and
employees, designed to provide social security to the
workingmen. Membership in the S S S is therefore, in
compliance with the lawful exercise of the police power of the
State, to which the principle of non-impairment of the
obligation of contract is not a proper defense."
"x x x x"
The taxing power of the State is exercised for the purpose of
raising revenues. However, under our Social Security Law, the
emphasis is more on the promotion of the general welfare. The
Act is not part of our Internal Revenue Code nor are the
contributions and premiums therein dealt with and provided
for, collectible by the Bureau of Internal Revenue. The funds
contributed to the System belong to the members who will
re-ceive benefits, as a matter of right, whenever the hazards
provided by the law occur.
"All that is required of ap-pellant is to make monthly
con-tributions to the System for covered employees in its
employ. These contributions, contrary to appellant's
contention, are not 'in the nature of taxes on employment.'
Together with the contributions imposed upon employees and
the Government, they are intended for the pro-tection of said
employees against the hazards of disa-bility, sickness, old age
and death in line with the consti-tutional mandate to promote
social justice to insure the well-being and economic se-curity
of all the people."[4]
Because of the broad social purpose of the Social Security Act,
all doubts in construing the Act should favor coverage rather
than exemption.
Labor Standards Notes and Cases 1st
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Prior to its amendment, Sec. 9 of the Act provides that before
an employer could be com-pelled to become a member of the
System, he must have been in operation for at least two years
and has at the time of admission at least six employees. It
should be pointed out that it is the employer, either natural or
juridical per-son, who is subject to compulsory coverage and
not the business. If the intention of the le-gislature was to
consider every venture of the employer as the basis of a
separate coverage, an express provision to that effect could
have been made. Unfortunately, however, none of that sort
appeared provided for in the said law.
Should each business venture of the employer be considered
as the basis of the coverage, an employer with more than one
line of business but with less than six employees in each, would
never be covered although he has in his employ a total of more
than six employees which is sufficient to bring him within the
ambit of compulsory coverage. This would frustrate rather
than fos-ter the policy of the Act. The legislative intent must
be respected. In the absence of an express provision for a
separate coverage for each kind of business, the reasonable
interpre-tation is that once an employer is covered in a
particular kind of business, he should be auto-matically
covered with respect to any new line of business he may
subsequently undertake even under a new name. Any
interpretation which would defeat rather than promote the
ends for which the Social Security Act was enacted should be
eschewed.[5]
Petitioner contends that the Commission cannot
indiscriminately combine for purposes of coverage two distinct
and separate businesses when one has not yet been in
operation for more than two years thus rendering nugatory
the period of stabilization fixed by the Act. This con-tention
lacks merit since the amendatory law, RA 2658, which was
approved on June 18, 1960, eli-minated the two-year
stabilization period as employers now become automatically
covered im-mediately upon the start of the business.
Sec. 10 (formerly Sec. 9) of RA 1161, as amended by RA 2658
now provides:
"Sec. 10. Effective date of coverage. - Compulsory cover-age of
the employer shall take effect on the first day of his operation,
and that of the emp-loyee on the date of his employ-ment."
(Italics supplied)
As We have previously mentioned, it is the intention of the law
to cover as many persons as possible so as to promote the
10
constitutional ob-jective of social justice. It is axiomatic that a
later law prevails over a prior statute and moreover the
legislative intent must be given effect.[6]
Petitioner further submits that Eufracio Rojas is an
independent contractor who engages in an independent
business of his own consisting of the operation of the timber
concession of the former. Rojas was appointed as operations
ma-nager of the logging concession;[7] he has no power to
appoint or hire employees; as the term implies, he only
manages the employees and it is petitioner who furnishes him
the necessary equipment for use in the logging business; and
he is not free from the control and direction of his employer in
matters connected with the per-formance of his work. These
factors clearly in-dicate that Rojas is not an independent
con-tractor but merely an employee of petitioner; and should
be entitled to the compulsory coverage of the Act.
The records indubitably show that peti-tioner started its real
estate business on December 1, 1952 while its logging
operation was actually commenced on April 1, 1957. Ap-plying
the provision of Sec. 10 of the Act, petitioner is subject to
compulsory coverage as of December 1, 1952 with respect to
the real estate business and as of April 1, 1957 with respect to
its logging operation.
WHEREFORE, premises considered, the appeal is hereby
DISMISSED. With costs against petitioner.
SO ORDERED.
c. limits of use
[G.R. No. L-53552. October 18, 1988.]
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
Petitioner, v. THE NATIONAL LABOR RELATIONS
COMMISSION and EDUARDO PANGAN, Respondents.
Petitioner assails the decision of the National Labor Relations
Commission (NLRC) ordering the reinstatement of private
respondent notwithstanding his having committed theft and
misappropriation of company properties.chanrobles law
library
Private respondent Eduardo Pangan was employed by the
Philippine Long Distance Telephone Company (hereinafter
referred to as PLDT) as lineman-helper with rank of Grade I in
1970.
Labor Standards Notes and Cases 1st
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At the time of his dismissal from service he was occupying the
position of lineman II. The nature of his job entails the
following duties and responsibilities: repairing of telephone
lines, canvassing telephone numbers affected by Estimates,
Job Orders and Routine Orders, and handling cable facilities for
various cable troubles.
Sometime in early 1977, it was discovered that Pangan with
three (3) other PLDT employees committed pilferages of
company properties. According to the Audit Report conducted
by a PLDT auditor on Small Tool Accountabilities of Installer-
Repairmen Personnel, Pangans audit tool accountability
record disclosed that he returned to stock and credited at cost
to his account worthless materials and items valued at
P2,402.00 to offset previous requisitions charged to him.
When asked to explain why he returned unserviceable
materials, Pangan admitted having sold two (2) new leather
belts and one (1) handset all costing P1,609.00. He pleaded as
an excuse his dire need for money to help defray his expenses
incurred in his goiter operation plus the cost of medicines he
had to purchase. Thus in the confrontation conducted by the
company Audit Supervisor, Pangan explained:chanrob1es
virtual 1aw library
Q In these requisitions, there are five (5) belt tool
leather. Did you recover all these?
A Im now using one. I sold 2 units and recovered the
rest.
Q How come then that you recovered defective units
everytime you requested when you supposedly sold 2 units?]
A We buy defective similar units which I recovered to
the Bodega.
Q How much did you sell each unit?
A P120.00 per unit.
Q How much did you buy defective items for
recoveries?
A P20.00 per unit.
Q There are 2 hand sets under your accountability. Did
you also sell one?
11
A Yes, for P100.00.
Q How did you recover this?
A Again, I buy defective similar item at a nominal cost
lower than my selling price.
Q Do you have something more to say?
A Last November 1976, I was operated with goiter. My
hospital bills were so big in amount and added to this I was in
dire need of money for my medicines. I was forced to sell some
of my accountabilities because of these needs. I have no
intention previously to do this irregularity had it not been for
my operation. [Labor Arbiters decision, p. 3, Rollo, p. 20.]
When informed of his eventual dismissal Pangan interposed no
opposition. Consequently, on May 31, 1977 PLDT filed an
application for clearance to terminate his services with
preventive suspension, on the ground of theft and
misappropriation of company properties. On September 27,
1977 the Department of Labor granted the same.
Thereafter, Pangan filed a letter-complaint with the
Department of Labor in opposition to the companys
application for clearance to terminate his services. The
complaint was certified for compulsory arbitration. On
December 14, 1978 the Labor Arbiter dismissed private
respondents complaint for lack of merit.
On appeal the NLRC reversed, with one commissioner voting
for the affirmance of the Labor Arbiters decision, and ordered
Pangans reinstatement without backwages, explaining in its
decision dated March 12, 1980, that:chanrob1es virtual 1aw
library
x x x
Concluding this Decision, We reiterate Our well considered
view that the Labor Arbiter gravely abused his discretion in
imposing the supreme industrial penalty of dismissal to the act
committed by herein complainant-appellant in the light of the
attendant circumstances of the instant case. In arriving at this
conclusion, however, it is believed and We hold that
complainant-appellant should be reinstated to his former
position as Lineman but without the usual backwages
attendant to it. To do so would in effect, be giving premium to
an act which is a legitimate ground for disciplinary action were
Labor Standards Notes and Cases 1st
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it not for the peculiar circumstances which to Our mind
mitigates the imposition of the supreme industrial penalty of
separation from the service. More so, as in the instant case
where the company acted in good faith in preventively
suspending an employee and followed it with an application
for clearance to terminate employment. [NLRC Decision, pp. 8-
9, Rollo, pp. 31-32.] (Emphasis supplied.)
x x x
As found by the NLRC the peculiar circumstances that mitigate
the imposition of the supreme industrial penalty of separation
from service are as follows:chanrob1es virtual 1aw library
a. On one occasion, Pangan had risked his life during an
emergency when the Pasay Central Office of PLDT caught fire
when he tried to protect company properties from being
totally destroyed that no less than the PLDT President and
Vice-President commended him for his exceptional courage
[NLRC Decision, p. 3, Rollo, p. 26.];
b. That Pangan sold the item valued at P1,600 for only
P100. This could only mean that he was in dire need of money
as in fact he needed it for an operation of his goiter [NLRC
Decision, p. 4, Rollo, p. 27.]; and,
c. Since the time Pangan had been placed under
preventive suspension and up to the writing of the NLRC
decision, considerable time had already elapsed as to
constitute his punishment [NLRC Decision, pp. 4-5, Rollo, p.
28.]
PLDT now files this special civil action of certiorari and
prohibition with preliminary injunction assigning the following
error:chanrob1es virtual 1aw library
RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A GRAVE ABUSE OF DISCRETION WHEN IT
ORDERED THE REINSTATEMENT OF RESPONDENT EDUARDO
PANGAN TO HIS FORMER POSITION NOTWITHSTANDING THE
FACT THAT HE COMMITTED A SERIOUS ACT OF MISCONDUCT
WHICH CONSTITUTES A JUST AND VALID CAUSE FOR HIS
DISMISSAL. [Rollo, p. 4]
On April 14, 1980 the Supreme Court issued a temporary
restraining order as prayed for by PLDT restraining the NLRC
from enforcing its decision.
12
The aforestated mitigating circumstances notwithstanding this
Court finds that petitioner had valid ground to terminate
private respondent and NLRC acted with grave abuse of
discretion in ordering his reinstatement.
Theft of company property is a recognized just and valid cause
for dismissing an employee as falling under the following
specific provision of the Labor Code.
Art. 282. Termination by employer. An employer may
terminate an employment for any of the following just
causes:chanrob1es virtual 1aw library
(a) Serious misconduct . . .;
x x x
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
x x x
(e) Other causes analogous to the foregoing.
In the case of Firestone Tire and Rubber Co. of the Phils. v.
Lariosa [G.R. No. 70479, February 27, 1987, 148 SCRA 187]
involving a factory worker who was apprehended at the gate
during a routine check by the company security guards with
possession of company properties, namely, sixteen (16) wool
flannel swabs, the Supreme Court set aside the NLRC decision
ordering the workers reinstatement without backwages,
stating that:chanrob1es virtual 1aw library
x x x
There is no gainsaying that theft committed by an employee
constitutes a valid reason for his dismissal by the employer.
Although as a rule this Court leans over backwards to help
workers and employees continue with their employment or to
mitigate the penalties imposed on them, acts of dishonesty in
the handling of company property are a different matter. [at
p. 192.] (Emphasis supplied.)
x x x
Labor Standards Notes and Cases 1st
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The reason for this rule is to protect both labor and
management. Labor, because:chanrob1es virtual 1aw library
x x x particularly when there is just cause for dismissing an erring
The dismissal of a dishonest employee is as much in the
interests of labor as it is of management. The labor force in any
company is protected and the workers security of tenure
strengthened when pilferage of equipment, goods, and
products which endangers the viability of an employer and,
therefore, the workers continued employment is minimized
or eliminated and consequently labor-management relations
based on mutual trust and confidence are promoted.
(International Hardwood and Veneer Co. of the Phils v.
Leogardo, G.R. No. 57429, October 28, 1982, 117 SCRA 967,
973-974.]
x x x CRESENCIANO B. TRAJANO in his capacity as the Acting
And management, because as this Court had consistently
held:chanrob1es virtual 1aw library
x x x Receiving salaries less than their counterparts hired abroad,
. . . an employer cannot legally be compelled to continue with
the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose
continuance in the service of the latter is patently inimical to
his interests. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the
employer . . . [Manila Trading and Supply Co. v. Zulueta, 69 Phil.
485, 486-487 (1940).]
x x x educational institution established primarily for dependents of
In the case at bar private respondent is admittedly guilty not
only of violating the law but also the company rules and
regulations as well imposing the penalty of dismissal on first
offense of an employee found guilty of selling or disposing of
company property without proper authority [Code of Conduct
of PLDT Employees, Labor Arbiter s decision, p. 5, Rollo, p.
22.]cralawnad
13
This Court is not unmindful of the plight of the workers
throughout the country nor of the Constitutional provisions,
laws and statutes protecting them. However, the Court must
likewise balance these with the rights given to management
employee.
WHEREFORE, the petition is GRANTED. The NLRC decision is
SET ASIDE and the temporary restraining order issued by this
Court on April 14, 1980 is hereby made PERMANENT.
SO ORDERED.
Legal Bases
a. International Labor Organization (ILO) Conventions
[G.R. No. 128845. June 1, 2000]
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE),
petitioner, vs. HON. LEONARDO A. QUISUMBING in his
capacity as the Secretary of Labor and Employment; HON.
Secretary of Labor and Employment; DR. BRIAN MACCAULEY
in his capacity as the Superintendent of International School-
Manila; and INTERNATIONAL SCHOOL, INC., respondents.
the local-hires of private respondent School, mostly Filipinos,
cry discrimination. We agree. That the local-hires are paid
more than their colleagues in other schools is, of course,
beside the point. The point is that employees should be given
equal pay for work of equal value. That is a principle long
honored in this jurisdiction. That is a principle that rests on
fundamental notions of justice. That is the principle we uphold
today.
Private respondent International School, Inc. (the School, for
short), pursuant to Presidential Decree 732, is a domestic
foreign diplomatic personnel and other temporary
residents.[1] To enable the School to continue carrying out its
educational program and improve its standard of instruction,
Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected
by it either locally or abroad, from Philippine or other
nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment,
Labor Standards Notes and Cases 1st
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except laws that have been or will be enacted for the
protection of employees.
Accordingly, the School hires both foreign and local teachers
as members of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires. The School employs four tests
to determine whether a faculty member should be classified
as a foreign-hire or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic allegiance?
d.....Was the individual hired abroad specifically to work in the
School and was the School responsible for bringing that
individual to the Philippines?[2]
Should the answer to any of these queries point to the
Philippines, the faculty member is classified as a local hire;
otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded
local-hires. These include housing, transportation, shipping
costs, taxes, and home leave travel allowance. Foreign-hires
are also paid a salary rate twenty-five percent (25%) more than
local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to
endure, namely: (a) the "dislocation factor" and (b) limited
tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from
his home country, leave his family and friends, and take the
risk of deviating from a promising career path-all for the
purpose of pursuing his profession as an educator, but this
time in a foreign land. The new foreign hire is faced with
economic realities: decent abode for oneself and/or for one's
family, effective means of transportation, allowance for the
education of one's children, adequate insurance against illness
and death, and of course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted
again with the same economic reality after his term: that he
will eventually and inevitably return to his home country
where he will have to confront the uncertainty of obtaining
suitable employment after a long period in a foreign land.
14
The compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in
terms of attracting competent professionals in the field of
international education.[3]
When negotiations for a new collective bargaining agreement
were held on June 1995, petitioner International School
Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members"[4]
of the School, contested the difference in salary rates between
foreign and local-hires. This issue, as well as the question of
whether foreign-hires should be included in the appropriate
bargaining unit, eventually caused a deadlock between the
parties.
On September 7, 1995, petitioner filed a notice of strike. The
failure of the National Conciliation and Mediation Board to
bring the parties to a compromise prompted the Department
of Labor and Employment (DOLE) to assume jurisdiction over
the dispute. On June 10, 1996, the DOLE Acting Secretary,
Crescenciano B. Trajano, issued an Order resolving the parity
and representation issues in favor of the School. Then DOLE
Secretary Leonardo A. Quisumbing subsequently denied
petitioner's motion for reconsideration in an Order dated
March 19, 1997. Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed
by the School is discriminatory to Filipinos and that the grant
of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its
faculty members, numbering 38 in all, with nationalities other
than Filipino, who have been hired locally and classified as
local hires.[5]The Acting Secretary of Labor found that these
non-Filipino local-hires received the same benefits as the
Filipino local-hires:
The compensation package given to local-hires has been
shown to apply to all, regardless of race. Truth to tell, there are
foreigners who have been hired locally and who are paid
equally as Filipino local hires.[6]
The Acting Secretary upheld the point-of-hire classification for
the distinction in salary rates:
The principle "equal pay for equal work" does not find
application in the present case. The international character of
the School requires the hiring of foreign personnel to deal with
Labor Standards Notes and Cases 1st
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different nationalities and different cultures, among the
student population.
We also take cognizance of the existence of a system of
salaries and benefits accorded to foreign hired personnel
which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to
entice them to render their services in the Philippines and in
the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have
limited contract of employment unlike the local hires who
enjoy security of tenure. To apply parity therefore, in wages
and other benefits would also require parity in other terms and
conditions of employment which include the employment
contract.
A perusal of the parties' 1992-1995 CBA points us to the
conditions and provisions for salary and professional
compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only
in accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit and
hire expatriate teachers from abroad, under terms and
conditions that are consistent with accepted international
practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas
Recruited Staff (OSRS) salary schedule. The 25% differential is
reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the
tenured status of Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties'
recognition of the difference in the status of two types of
employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to
justify its claim of parity. It is an established principle of
constitutional law that the guarantee of equal protection of
the laws is not violated by legislation or private covenants
based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply
to all members of the same class. Verily, there is a substantial
distinction between foreign hires and local hires, the former
enjoying only a limited tenure, having no amenities of their
15
own in the Philippines and have to be given a good
compensation package in order to attract them to join the
teaching faculty of the School.[7]
We cannot agree.
That public policy abhors inequality and discrimination is
beyond contention. Our Constitution and laws reflect the
policy against these evils. The Constitution[8] in the Article on
Social Justice and Human Rights exhorts Congress to "give
highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social,
economic, and political inequalities." The very broad Article 19
of the Civil Code requires every person, "in the exercise of his
rights and in the performance of his duties, [to] act with
justice, give everyone his due, and observe honesty and good
faith."
International law, which springs from general principles of
law,[9] likewise proscribes discrimination. General principles
of law include principles of equity,[10] i.e., the general
principles of fairness and justice, based on the test of what is
reasonable.[11] The Universal Declaration of Human
Rights,[12] the International Covenant on Economic, Social,
and Cultural Rights,[13] the International Convention on the
Elimination of All Forms of Racial Discrimination,[14] the
Convention against Discrimination in Education,[15] the
Convention (No. 111) Concerning Discrimination in Respect of
Employment and Occupation[16] - all embody the general
principle against discrimination, the very antithesis of fairness
and justice. The Philippines, through its Constitution, has
incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and
labor are often skewed in favor of capital, inequality and
discrimination by the employer are all the more reprehensible.
The Constitution[17] specifically provides that labor is entitled
to "humane conditions of work." These conditions are not
restricted to the physical workplace - the factory, the office or
the field - but include as well the manner by which employers
treat their employees.
The Constitution[18] also directs the State to promote
"equality of employment opportunities for all." Similarly, the
Labor Code[19] provides that the State shall "ensure equal
work opportunities regardless of sex, race or creed." It would
be an affront to both the spirit and letter of these provisions if
the State, in spite of its primordial obligation to promote and
Labor Standards Notes and Cases 1st
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ensure equal employment opportunities, closes its eyes to
unequal and discriminatory terms and conditions of
employment.[20]
Discrimination, particularly in terms of wages, is frowned upon
by the Labor Code. Article 135, for example, prohibits and
penalizes[21] the payment of lesser compensation to a female
employee as against a male employee for work of equal value.
Article 248 declares it an unfair labor practice for an employer
to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right
of everyone to the enjoyment of just and favourable
conditions of work, which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum,
with:
i.....Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for
equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries.[22] This rule applies
to the School, its "international character" notwithstanding.
The School contends that petitioner has not adduced evidence
that local-hires perform work equal to that of foreign-
hires.[23] The Court finds this argument a little cavalier. If an
employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the
employer pays one employee less than the rest, it is not for
that employee to explain why he receives less or why the
others receive more. That would be adding insult to injury. The
employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly.
16
The employer in this case has failed to discharge this burden.
There is no evidence here that foreign-hires perform 25%
more efficiently or effectively than the local-hires. Both groups
have similar functions and responsibilities, which they perform
under similar working conditions.
The School cannot invoke the need to entice foreign-hires to
leave their domicile to rationalize the distinction in salary rates
without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a
reward or recompense for services performed." Similarly, the
Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of
services." In Songco v. National Labor Relations
Commission,[24] we said that:
"salary" means a recompense or consideration made to a
person for his pains or industry in another man's business.
Whether it be derived from "salarium," or more fancifully from
"sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered.
(Emphasis supplied.)
While we recognize the need of the School to attract foreign-
hires, salaries should not be used as an enticement to the
prejudice of local-hires. The local-hires perform the same
services as foreign-hires and they ought to be paid the same
salaries as the latter. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve
as valid bases for the distinction in salary rates. The dislocation
factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them
which are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave travel
allowances.
The Constitution enjoins the State to "protect the rights of
workers and promote their welfare,"[25] "to afford labor full
protection."[26] The State, therefore, has the right and duty to
regulate the relations between labor and capital.[27] These
relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining
agreements included, must yield to the common good.[28]
Should such contracts contain stipulations that are contrary to
public policy, courts will not hesitate to strike down these
stipulations.
Labor Standards Notes and Cases 1st
batch
In this case, we find the point-of-hire classification employed
by respondent School to justify the distinction in the salary
rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the
services rendered by foreign-hires and local-hires. The practice
of the School of according higher salaries to foreign-hires
contravenes public policy and, certainly, does not deserve the
sympathy of this Court.
We agree, however, that foreign-hires do not belong to the
same bargaining unit as the local-hires.
A bargaining unit is "a group of employees of a given employer,
comprised of all or less than all of the entire body of
employees, consistent with equity to the employer indicate to
be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the
law."[29] The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest,
such as substantial similarity of work and duties, or similarity
of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status.[30] The basic test of an
asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining
rights.[31]
It does not appear that foreign-hires have indicated their
intention to be grouped together with local-hires for purposes
of collective bargaining. The collective bargaining history in the
School also shows that these groups were always treated
separately. Foreign-hires have limited tenure; local-hires enjoy
security of tenure. Although foreign-hires perform similar
functions under the same working conditions as the local-
hires, foreign-hires are accorded certain benefits not granted
to local-hires. These benefits, such as housing, transportation,
shipping costs, taxes, and home leave travel allowance, are
reasonably related to their status as foreign-hires, and justify
the exclusion of the former from the latter. To include foreign-
hires in a bargaining unit with local-hires would not assure
either group the exercise of their respective collective
bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition
is hereby GRANTED IN PART. The Orders of the Secretary of
Labor and Employment dated June 10, 1996 and March 19,
1997, are hereby REVERSED and SET ASIDE insofar as they
17
uphold the practice of respondent School of according foreign-
hires higher salaries than local-hires.
SO ORDERED.
[G.R. No. 146650. January 13, 2003]
DOLE PHILIPPINES, INC., petitioner, vs. PAWIS NG
MAKABAYANG OBRERO (PAMAO-NFL), respondent.
Before us is a petition for review filed under Rule 45 of the
1997 Rules of Civil Procedure, assailing the January 9, 2001
resolution of the Court of Appeals which denied petitioners
motion for reconsideration of its September 22, 2000
decision[1] which in turn upheld the Order issued by the
voluntary arbitrator[2] dated 12 October 1998, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the complainant. Respondent is hereby
directed to extend the free meal benefit as provided for in
Article XVIII, Section 3 of the collective bargaining agreement
to those employees who have actually performed overtime
works even for exactly three (3) hours only.
SO ORDERED. [3]
The core of the present controversy is the interpretation of the
provision for free meals under Section 3 of Article XVIII of the
1996-2001 Collective Bargaining Agreement (CBA) between
petitioner Dole Philippines, Inc. and private respondent labor
union PAMAO-NFL. Simply put, how many hours of overtime
work must a Dole employee render to be entitled to the free
meal under Section 3 of Article XVIII of the 1996-2001 CBA? Is
it when he has rendered (a) exactly, or no less than, three
hours of actual overtime work or (b) more than three hours of
actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining
Agreement for the period starting February 1996 up to
February 2001, was executed by petitioner Dole Philippines,
Inc., and private respondent Pawis Ng Makabayang Obrero-
NFL (PAMAO-NFL). Among the provisions of the new CBA is the
disputed section on meal allowance under Section 3 of Article
XVIII on Bonuses and Allowances, which reads:
Labor Standards Notes and Cases 1st
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Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of TEN PESOS (P10.00) to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
not exceeding TWENTY FIVE PESOS (P25.00) after THREE (3)
hours of actual overtime work.[4]
Pursuant to the above provision of the CBA, some departments
of Dole reverted to the previous practice of granting free meals
after exactly three hours of actual overtime work. However,
other departments continued the practice of granting free
meals only after more than three hours of overtime work.
Thus, private respondent filed a complaint before the National
Conciliation and Mediation Board alleging that petitioner Dole
refused to comply with the provisions of the 1996-2001 CBA
because it granted free meals only to those who rendered
overtime work for more than three hours and not to those who
rendered exactly three hours overtime work.
The parties agreed to submit the dispute to voluntary
arbitration. Thereafter, the voluntary arbitrator, deciding in
favor of the respondent, issued an order directing petitioner
Dole to extend the free meal benefit to those employees who
actually did overtime work even for exactly three hours only.
Petitioner sought a reconsideration of the above order but the
same was denied. Hence, petitioner elevated the matter to the
Court of Appeals by way of a petition for review on certiorari.
On September 22, 2000, the Court of Appeals rendered its
decision upholding the assailed order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase after three hours of
actual overtime work should be interpreted to mean after
more than three hours of actual overtime work.
On the other hand, private respondent union and the
voluntary arbitrator see it as meaning after exactly three hours
of actual overtime work.
The meal allowance provision in the 1996-2001 CBA is not new.
It was also in the 1985-1988 CBA and the 1990-1995 CBA. The
1990-1995 CBA provision on meal allowance was amended by
the parties in the 1993-1995 CBA Supplement. The clear
changes in each CBA provision on meal allowance were in the
amount of the meal allowance and free meals, and the use of
the words after and after more than to qualify the amount of
18
overtime work to be performed by an employee to entitle him
to the free meal.
To arrive at a correct interpretation of the disputed provision
of the CBA, a review of the pertinent section of past CBAs is in
order.
The CBA covering the period 21 September 1985 to 20
September 1988 provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of FOUR (P4.00) PESOS to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
after THREE (3) hours of actual overtime work.[5]
The CBA for 14 January 1990 to 13 January 1995 likewise
provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of EIGHT PESOS (P8.00) to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
not exceeding SIXTEEN PESOS (P16.00) after THREE (3) hours
of actual overtime work.[6]
The provision above was later amended when the parties
renegotiated the economic provisions of the CBA pursuant to
Article 253-A of the Labor Code. Section 3 of Article XVIII of the
14 January 1993 to 13 January 1995 Supplement to the 1990-
1995 CBA reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL SUBSIDY of NINE PESOS (P9.00) to all employees who
render at least TWO (2) hours or more of actual overtime work
on a workday, and FREE MEALS, as presently practiced, not
exceeding TWENTY ONE PESOS (P21.00) after more than
THREE (3) hours of actual overtime work (Section 3, as
amended).[7]
We note that the phrase more than was neither in the 1985-
1988 CBA nor in the original 1990-1995 CBA. It was inserted
only in the 1993-1995 CBA Supplement. But said phrase is
again absent in Section 3 of Article XVIII of the 1996-2001 CBA,
which reverted to the phrase after three (3) hours.
Petitioner asserts that the phrase after three (3) hours of
actual overtime work does not mean after exactly three hours
of actual overtime work; it means after more than three hours
Labor Standards Notes and Cases 1st
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of actual overtime work. Petitioner insists that this has been
the interpretation and practice of Dole for the past thirteen
years.
Respondent, on the other hand, maintains that after three (3)
hours of actual overtime work simply means after rendering
exactly, or no less than, three hours of actual overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase more than between after and three
hours in the present CBA spells a big difference.
No amount of legal semantics can convince the Court that after
more than means the same as after.
Petitioner asserts that the more than in the 1993-1995 CBA
Supplement was mere surplusage because, regardless of the
absence of said phrase in all the past CBAs, it had always been
the policy of petitioner corporation to give the meal allowance
only after more than 3 hours of overtime work. However, if this
were true, why was it included only in the 1993-1995 CBA
Supplement and the parties had to negotiate its deletion in the
1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can
only mean that the parties intended that free meals be given
to employees after exactly, or no less than, three hours of
actual overtime work.
The disputed provision of the CBA is clear and unambiguous.
The terms are explicit and the language of the CBA is not
susceptible to any other interpretation. Hence, the literal
meaning of free meals after three (3) hours of overtime work
shall prevail, which is simply that an employee shall be entitled
to a free meal if he has rendered exactly, or no less than, three
hours of overtime work, not after more than or in excess of
three hours overtime work.
Petitioner also invokes the well-entrenched principle of
management prerogative that the power to grant benefits
over and beyond the minimum standards of law, or the Labor
Code for that matter, belongs to the employer x x x. According
to this principle, even if the law is solicitous of the welfare of
the employees, it must also protect the right of the employer
to exercise what clearly are management prerogatives.[8]
Petitioner claims that, being the employer, it has the right to
determine whether it will grant a free meal benefit to its
employees and, if so, under what conditions. To see it
19
otherwise would amount to an impairment of its rights as an
employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is
subject to the limitations found in law, a collective bargaining
agreement or the general principles of fair play and justice.[9]
This situation constitutes one of the limitations. The CBA is the
norm of conduct between petitioner and private respondent
and compliance therewith is mandated by the express policy
of the law.[10]
Petitioner Dole cannot assail the voluntary arbitrators
interpretation of the CBA for the supposed impairment of its
management prerogatives just because the same
interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
b. Past practices
[G.R. No. 85073. August 24, 1993.]
DAVAO FRUITS CORPORATION, Petitioner, v. ASSOCIATED
LABOR UNIONS (ALU) for and in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and
NATIONAL LABOR RELATIONS COMMISSION, Respondent.
PHILIPPINE SUPREME COURT DECISIONS
FIRST DIVISION
[G.R. No. 85073. August 24, 1993.]
DAVAO FRUITS CORPORATION, Petitioner, v. ASSOCIATED
LABOR UNIONS (ALU) for and in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and
NATIONAL LABOR RELATIONS COMMISSION, Respondent.
This is a petition for certiorari to set aside the resolution of the
National Labor Relations Commission (NLRC), dismissing for
lack of merit petitioners appeal from the decision of the Labor
Arbiter in NLRC Case No. 1791-MC-X1-82.
On December 28, 1982, respondent Associated Labor Unions
(ALU), for and in behalf of all the rank-and-file workers and
Labor Standards Notes and Cases 1st
batch
employees of petitioner, filed a complaint (NLRC Case No.
1791-MC-XI-82) before the Ministry of Labor and Employment,
Regional Arbitration Branch XI, Davao City, against petitioner,
for "Payment of the Thirteenth-Month Pay Differentials."
Respondent ALU sought to recover from petitioner the
thirteenth month pay differential for 1982 of its rank-and-file
employees, equivalent to their sick, vacation and maternity
leaves, premium for work done on rest days and special
holidays, and pay for regular holidays which petitioner,
allegedly in disregard of company practice since 1975,
excluded from the computation of the thirteenth month pay
for 1982.
In its answer, petitioner claimed that it erroneously included
items subject of the complaint in the computation of the
thirteenth month pay for the years prior to 1982, upon a
doubtful and difficult question of law. According to petitioner,
this mistake was discovered only in 1981 after the
promulgation of the Supreme Court decision in the case of San
Miguel Corporation v. Inciong (103 SCRA 139).
A decision was rendered on March 7, 1984 by Labor Arbiter
Pedro C. Ramos, in favor of respondent ALU. The dispositive
portion of the decision reads as follows:jgc:chanrobles.com.ph
"WHEREFORE, in view of all the foregoing considerations,
judgment is hereby rendered ordering respondent to pay the
1982 13th month pay differential to all its rank-and-file
workers/employees herein represented by complainant
Union" (Rollo, p. 32).chanrobles virtual lawlibrary
Petitioner appealed the decision of the Labor Arbiter to the
NLRC, which affirmed the said decision and accordingly
dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for
review under Rule 45 of the Revised Rules of Court. This error
notwithstanding and in the interest of justice, this Court
resolved to treat the instant petition as a special civil action for
certiorari under Rule 65 of the Revised Rules of Court (P.D. No.
1391, Sec. 5; Rules Implementing P.D. No. 1391, Rule II, Sec. 7;
Cando v. National Labor Relations Commission, 189 SCRA 666
[1990]; Pearl S. Buck Foundation, Inc. v. National Labor
Relations Commission, 182 SCRA 446 [1990]).
The crux of the present controversy is whether in the
computation of the thirteenth month pay given by employers
to their employees under P.D. No. 851, payments for sick,
vacation and maternity leaves, premiums for work done on
20
rest days and special holidays, and pay for regular holidays may
be excluded in the computation and payment thereof,
regardless of long-standing company practice.
Presidential Decree No. 851, promulgated on December 16,
1975, mandates all employers to pay their employees a
thirteenth month pay. How this pay shall be computed is set
forth in Section 2 of the "Rules and Regulations Implementing
Presidential Decree No. 851," thus:jgc:chanrobles.com.ph
"SECTION 2. ...
(a) Thirteenth-month pay shall mean one twelfth (1/12) of
the basic salary of an employee within a calendar year.
(b) Basic Salary shall include all remunerations or earnings
paid by an employer to an employee for services rendered but
may not include cost-of-living allowances granted pursuant to
Presidential Decree No. 525 or Letter of Instructions No. 174,
profit-sharing payments, and all allowances and monetary
benefits which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975."cralaw
virtua1aw library
The Department of Labor and Employment issued on January
16, 1976 the "Supplementary Rules and Regulations
Implementing P.D. No. 851" which in paragraph 4 thereof
further defines the term "basic salary,"
thus:jgc:chanrobles.com.ph
"4. Overtime pay, earnings and other remunerations
which are not part of the basic salary shall not be included in
the computation of the 13-month pay."cralaw virtua1aw
library
Clearly, the term "basic salary" includes all remunerations or
earnings paid by the employer to the employee, but excludes
cost-of-living allowances, profit-sharing payments, and all
allowances and monetary benefits which have not been
considered as part of the basic salary of the employee as of
December 16, 1975. The exclusion of cost-of-living allowances
and profit sharing payments shows the intention to strip "basic
salary" of payments which are otherwise considered as
"fringe" benefits. This intention is emphasized in the catch-all
phrase "all allowances and monetary benefits which are not
considered or integrated as part of the basic salary." Basic
salary, therefore does not merely exclude the benefits
expressly mentioned but all payments which may be in the
Labor Standards Notes and Cases 1st
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form of "fringe" benefits or allowances (San Miguel
Corporation v. Inciong, supra, at 143-144). In fact, the
Supplementary Rules and Regulations Implementing P.D. No.
851 are very emphatic in declaring that overtime pay, earnings
and other remunerations shall be excluded in computing the
thirteenth month pay.chanrobles virtual lawlibrary
In other words, whatever compensation an employee receives
for an eight-hour work daily or the daily wage rate is the basic
salary. Any compensation or remuneration other than the
daily wage rate is excluded. It follows therefore, that payments
for sick, vacation and maternity leaves, premium for work
done on rest days and special holidays, as well as pay for
regular holidays, are likewise excluded in computing the basic
salary for the purpose of determining the thirteenth month
pay.
Petitioner claims that the mistake in the interpretation of
"basic salary" was caused by the opinions, orders and rulings
rendered by then Acting Labor Secretary Amado G. Inciong,
expressly including the subject items in computing the
thirteenth month pay. The inclusion of these items is clearly
not sanctioned under P.D. No. 851, the governing law and its
implementing rules, which speak only of "basic salary" as the
basis for determining the thirteenth month pay.
Moreover, whatever doubt arose in the interpretation of P.D.
No. 851 was erased by the Supplementary Rules and
Regulations which clarified the definition of "basic
salary."cralaw virtua1aw library
As pointed out in San Miguel Corporation v. Inciong,
(supra):jgc:chanrobles.com.ph
"While doubt may have been created by the prior Rules and
Regulations Implementing Presidential Decree 851 which
defines basic salary to include all remunerations or earnings
paid by an employer to an employee, this cloud is dissipated in
the later and more controlling Supplementary Rules and
Regulations which categorically, exclude from the definition of
basic salary earnings and other remunerations paid by
employer to an employee. A cursory perusal of the two sets of
Rules indicates that what has hitherto been the subject of a
broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming
tendency of the former rules to include all remunerations and
earnings within the definition of basic salary.
21
The all-embracing phrase earnings and other remunerations
which are deemed not part of the basic salary includes within
its meaning payments for sick, vacation, or maternity leaves,
premium for work performed on rest days and special
holidays, pay for regular holidays and night differentials. As
such they are deemed not part of the basic salary and shall not
be considered in the computation of the 13th-month pay. If
they were not so excluded, it is hard to find any earnings and
other remunerations expressly excluded in the computation
of the 13th-month pay. Then the exclusionary provision would
prove to be idle and with no purpose."cralaw virtua1aw library
The "Supplementary Rules and Regulations Implementing P.D.
No. 851," which put to rest all doubts in the computation of
the thirteenth month pay, was issued by the Secretary of Labor
as early as January 16, 1976, barely one month after the
effectivity of P.D. No. 851 and its Implementing Rules. And yet,
petitioner computed and paid the thirteenth month pay,
without excluding the subject item therein until 1981.
Petitioner continued its practice in December 1981, after
promulgation of the afore-quoted San Miguel decision on
February 24, 1981, when petitioner purportedly "discovered"
its mistake.chanrobles lawlibrary : rednad
From 1975 to 1981, petitioner had freely, voluntarily and
continuously included in the computation of its employees
thirteenth month pay, the payments for sick, vacation and
maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays. The considerable
length of time the questioned items had been included by
petitioner indicates a unilateral and voluntary act on its part,
sufficient in itself to negate any claim of mistake.
A company practice favorable to the employees had indeed
been established and the payments made pursuant thereto,
ripened into benefits enjoyed by them. And any benefit and
supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the
employer, by virtue of Section 10 of the Rules and Regulations
Implementing P.D. No. 851, and Article 100 of the Labor Code
of the Philippines, which prohibit the diminution or elimination
by the employer of the employees existing benefits (Tiangco
v. Leogardo, Jr., 122 SCRA 267, [1983]).
Petitioner cannot invoke the principle of solutio indebiti which
is a civil law concept that is not applicable in Labor Law.
Besides, in solutio indebiti, the obligee is required to return to
the obligor whatever he received from the latter (Civil Code of
the Philippines, Arts. 2154 and 2155). Petitioner in the instant
Labor Standards Notes and Cases 1st
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case, does not demand the return of what it paid respondent
ALU from 1975 until 1981; it merely wants to "rectify" the error
it made over these years by excluding unilaterally from the
thirteenth month pay in 1982 the items subject of litigation.
Solutio indebiti, therefore, is not applicable to the instant
case.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
WHEREFORE, finding no grave abuse of discretion on the part
of the NLRC, the petition is hereby DISMISSED, and the
questioned decision of respondent NLRC is AFFIRMED
accordingly.
[G.R. No. 155059. April 29, 2005]
AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES
UNION, petitioner, vs. AMERICAN WIRE AND CABLE CO., INC.
and THE COURT OF APPEALS, respondents.
Before Us is a special civil action for certiorari, assailing the
Decision[1] of the Special Eighth Division of the Court of
Appeals dated 06 March 2002. Said Decision upheld the
Decision[2] and Order[3] of Voluntary Arbitrator Angel A.
Ancheta of the National Conciliation and Mediation Board
(NCMB) dated 25 September 2001 and 05 November 2001,
respectively, which declared the private respondent herein not
guilty of violating Article 100 of the Labor Code, as amended.
Assailed likewise, is the Resolution[4] of the Court of Appeals
dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.
THE FACTS
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in
the manufacture of wires and cables. There are two unions in
this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American
Wire and Cable Daily-Rated Employees Union (Daily-Rated
Union).
On 16 February 2001, an original action was filed before the
NCMB of the Department of Labor and Employment (DOLE) by
the two unions for voluntary arbitration. They alleged that the
private respondent, without valid cause, suddenly and
unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are the
following:
22
a. Service Award;
b. 35% premium pay of an employees basic pay for the work
rendered during Holy Monday, Holy Tuesday, Holy
Wednesday, December 23, 26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.
A promotional increase was asked by the petitioner for fifteen
(15) of its members who were given or assigned new job
classifications. According to petitioner, the new job
classifications were in the nature of a promotion, necessitating
the grant of an increase in the salaries of the said 15 members.
On 21 June 2001, a Submission Agreement was filed by the
parties before the Office for Voluntary Arbitration. Assigned as
Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their
respective position papers with the Office of the Voluntary
Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision[5] was rendered by
Voluntary Arbitrator Angel A. Ancheta in favor of the private
respondent. The dispositive portion of the said Decision is
quoted hereunder:
WHEREFORE, with all the foregoing considerations, it is hereby
declared that the Company is not guilty of violating Article 100
of the Labor Code, as amended, or specifically for withdrawing
the service award, Christmas party and 35% premium for work
rendered during Holy Week and Christmas season and for not
granting any promotional increase to the alleged fifteen (15)
Daily-Rated Union Members in the absence of a promotion.
The Company however, is directed to grant the service award
to deserving employees in amounts and extent at its
discretion, in consultation with the Unions on grounds of
equity and fairness.[6]
A motion for reconsideration was filed by both unions[7]
where they alleged that the Voluntary Arbitrator manifestly
erred in finding that the company did not violate Article 100 of
the Labor Code, as amended, when it unilaterally withdrew the
subject benefits, and when no promotional increase was
granted to the affected employees.
Labor Standards Notes and Cases 1st
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On 05 November 2001, an Order[8] was issued by Voluntary
Arbitrator Angel A. Ancheta. Part of the Order is quoted
hereunder:
Considering that the issues raised in the instant case were
meticulously evaluated and length[i]ly discussed and
explained based on the pleadings and documentary evidenc[e]
adduced by the contending parties, we find no cogent reason
to change, modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR
RECONSIDERATION be, as they are hereby, denied for lack of
merit. Our decision dated 25 September 2001 is affirmed en
toto.[9]
An appeal under Rule 43 of the 1997 Rules on Civil Procedure
was made by the Daily-Rated Union before the Court of
Appeals[10] and docketed as CA-G.R. SP No. 68182. The
petitioner averred that Voluntary Arbitrator Angel A. Ancheta
erred in finding that the company did not violate Article 100 of
the Labor Code, as amended, when the subject benefits were
unilaterally withdrawn. Further, they assert, the Voluntary
Arbitrator erred in adopting the companys unaudited
Revenues and Profitability Analysis for the years 1996-2000 in
justifying the latters withdrawal of the questioned
benefits.[11]
On 06 March 2002, a Decision in favor of herein respondent
company was promulgated by the Special Eighth Division of
the Court of Appeals in CA-G.R. SP No. 68182. The decretal
portion of the decision reads:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED, for
lack of merit. The Decision of Voluntary Arbitrator Angel A.
Ancheta dated September 25, 2001 and his Order dated
November 5, 2001 in VA Case No. AAA-10-6-4-2001 are hereby
AFFIRMED and UPHELD.[12]
A motion for reconsideration[13] was filed by the petitioner,
contending that the Court of Appeals misappreciated the facts
of the case, and that it committed serious error when it ruled
that the unaudited financial statement bears no importance in
the instant case.
The Court of Appeals denied the motion in its Resolution dated
12 July 2002[14] because it did not present any new matter
which had not been considered in arriving at the decision. The
dispositive portion of the Resolution states:
23
WHEREFORE, the motion for reconsideration is hereby DENIED
for lack of merit.[15]
Dissatisfied with the court a quos ruling, petitioner instituted
the instant special civil action for certiorari,[16] citing grave
abuse of discretion amounting to lack of jurisdiction.
ASSIGNMENT OF ERRORS
The petitioner assigns as errors the following:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
COMPANY DID NOT VIOLATE ARTICLE 100 OF THE LABOR
CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE
BENEFITS OF THE MEMBERS OF PETITIONER UNION, TO WIT:
1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN
TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE
BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A MATTER
OF LONG ESTABLISHED COMPANY PRACTICE, WITH THE
FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON
PROFITS.
II
THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED
HOOK, LINE AND SINKER, THE RESPONDENT COMPANYS SELF
SERVING AND UNAUDITED REVENUES AND PROFITABILITY
ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED
TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY
AND SUDDENLY WITHDRAWING OR DENYING FROM THE
PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
YEARLY SERVICE AWARD IS NOT DEPENDENT ON PROFIT BUT
ON SERVICE AND THUS, CANNOT BE UNILATERALLY
WITHDRAWN BY RESPONDENT COMPANY.
ISSUE
Synthesized, the solitary issue that must be addressed by this
Court is whether or not private respondent is guilty of violating
Article 100 of the Labor Code, as amended, when the
Labor Standards Notes and Cases 1st
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benefits/entitlements given to the members of petitioner
union were withdrawn.
THE COURTS RULING
Before we address the sole issue presented in the instant case,
it is best to first discuss a matter which was raised by the
private respondent in its Comment. The private respondent
contends that this case should have been dismissed outright
because of petitioners error in the mode of appeal. According
to it, the petitioner should have elevated the instant case to
this Court through a petition for review on certiorari under
Rule 45, and not through a special civil action for certiorari
under Rule 65, of the 1997 Rules on Civil Procedure.[17]
Assuming arguendo that the mode of appeal taken by the
petitioner is improper, there is no question that the Supreme
Court has the discretion to dismiss it if it is defective. However,
sound policy dictates that it is far better to dispose the case on
the merits, rather than on technicality.[18]
The Supreme Court may brush aside the procedural barrier
and take cognizance of the petition as it raises an issue of
paramount importance. The Court shall resolve the solitary
issue on the merits for future guidance of the bench and
bar.[19]
With that out of the way, we shall now resolve whether or not
the respondent company is guilty of violating Article 100 of the
Labor Code, as amended.
Article 100 of the Labor Code provides:
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 the time of
promulgation of this Code.
The petitioner submits that the withdrawal of the private
respondent of the 35% premium pay for selected days during
the Holy Week and Christmas season, the holding of the
Christmas Party and its incidental benefits, and the giving of
service awards violated Article 100 of the Labor Code. The
grant of these benefits was a customary practice that can no
longer be unilaterally withdrawn by private respondent
without the tacit consent of the petitioner. The benefits in
question were given by the respondent to the petitioner
consistently, deliberately, and unconditionally since time
24
immemorial. The benefits/entitlements were not given to
petitioner due to an error in interpretation, or a construction
of a difficult question of law, but simply, the grant has been a
practice over a long period of time. As such, it cannot be
withdrawn from the petitioner at respondents whim and
caprice, and without the consent of the former. The benefits
given by the respondent cannot be considered as a bonus as
they are not founded on profit. Even assuming that it can be
treated as a bonus, the grant of the same, by reason of its long
and regular concession, may be regarded as part of regular
compensation.[20]
With respect to the fifteen (15) employees who are members
of petitioner union that were given new job classifications, it
asserts that a promotional increase in their salaries was in
order. Salary adjustment is a must due to their promotion.[21]
On respondent companys Revenues and Profitability Analysis
for the years 1996-2000, the petitioner insists that since the
former was unaudited, it should not have justified the
companys sudden withdrawal of the benefits/entitlements.
The normal and/or legal method for establishing profit and
loss of a company is through a financial statement audited by
an independent auditor.[22]
The petitioner cites our ruling in the case of Saballa v.
NLRC,[23] where we held that financial statements audited by
independent auditors constitute the normal method of proof
of the profit and loss performance of the company. Our ruling
in the case of Bogo-Medellin Sugarcane Planters Association,
Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this case,
we held:
The Court has previously ruled that financial statements
audited by independent external auditors constitute the
normal method of proof of the profit and loss performance of
a company.
On the matter of the withdrawal of the service award, the
petitioner argues that it is the employees length of service
which is taken as a factor in the grant of this benefit, and not
whether the company acquired profit or not.[25]
In answer to all these, the respondent corporation avers that
the grant of all subject benefits has not ripened into practice
that the employees concerned can claim a demandable right
over them. The grant of these benefits was conditional based
upon the financial performance of the company and that
conditions/circumstances that existed before have indeed
Labor Standards Notes and Cases 1st
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substantially changed thereby justifying the discontinuance of
said grants. The companys financial performance was affected
by the recent political turmoil and instability that led the entire
nation to a bleeding economy. Hence, it only necessarily
follows that the companys financial situation at present is
already very much different from where it was three or four
years ago.[26]
On the subject of the unaudited financial statement presented
by the private respondent, the latter contends that the cases
cited by the petitioner indeed uniformly ruled that financial
statements audited by independent external auditors
constitute the normal method of proof of the profit and loss
performance of a company. However, these cases do not
require that the only legal method to ascertain profit and loss
is through an audited financial statement. The cases only
provide that an audited financial statement is the normal
method.[27]
The respondent company likewise asseverates that the 15
members of petitioner union were not actually promoted.
There was only a realignment of positions.[28]
From the foregoing contentions, it appears that for the Court
to resolve the issue presented, it is critical that a determination
must be first made on whether the benefits/entitlements are
in the nature of a bonus or not, and assuming they are so,
whether they are demandable and enforceable obligations.
In the case of Producers Bank of the Philippines v. NLRC[29] we
have characterized what a bonus is, viz:
A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the
employers business and made possible the realization of
profits. It is an act of generosity granted by an enlightened
employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits. The
granting of a bonus is a management prerogative, something
given in addition to what is ordinarily received by or strictly
due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.
Based on the foregoing pronouncement, it is obvious that the
benefits/entitlements subjects of the instant case are all
bonuses which were given by the private respondent out of its
generosity and munificence. The additional 35% premium pay
for work done during selected days of the Holy Week and
25
Christmas season, the holding of Christmas parties with raffle,
and the cash incentives given together with the service awards
are all in excess of what the law requires each employer to give
its employees. Since they are above what is strictly due to the
members of petitioner-union, the granting of the same was a
management prerogative, which, whenever management sees
necessary, may be withdrawn, unless they have been made a
part of the wage or salary or compensation of the employees.
The consequential question therefore that needs to be settled
is if the subject benefits/entitlements, which are bonuses, are
demandable or not. Stated another way, can these bonuses be
considered part of the wage or salary or compensation making
them enforceable obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by
the employer and expressly agreed upon by the parties,[30] or
it must have had a fixed amount[31] and had been a long and
regular practice on the part of the employer.[32]
The benefits/entitlements in question were never subjects of
any express agreement between the parties. They were never
incorporated in the Collective Bargaining Agreement (CBA). As
observed by the Voluntary Arbitrator, the records reveal that
these benefits/entitlements have not been subjects of any
express agreement between the union and the company, and
have not yet been incorporated in the CBA. In fact, the
petitioner has not denied having made proposals with the
private respondent for the service award and the additional
35% premium pay to be made part of the CBA.[33]
The Christmas parties and its incidental benefits, and the giving
of cash incentive together with the service award cannot be
said to have fixed amounts. What is clear from the records is
that over the years, there had been a downtrend in the
amount given as service award.[34] There was also a
downtrend with respect to the holding of the Christmas parties
in the sense that its location changed from paid venues to one
which was free of charge,[35] evidently to cut costs. Also, the
grant of these two aforementioned bonuses cannot be
considered to have been the private respondents long and
regular practice. To be considered a regular practice, the giving
of the bonus should have been done over a long period of time,
and must be shown to have been consistent and
deliberate.[36] The downtrend in the grant of these two
bonuses over the years demonstrates that there is nothing
consistent about it. Further, as held by the Court of Appeals:
Labor Standards Notes and Cases 1st
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Anent the Christmas party and raffle of prizes, We agree with
the Voluntary Arbitrator that the same was merely sponsored
by the respondent corporation out of generosity and that the
same is dependent on the financial performance of the
company for a particular year[37]
The additional 35% premium pay for work rendered during
selected days of the Holy Week and Christmas season cannot
be held to have ripened into a company practice that the
petitioner herein have a right to demand. Aside from the
general averment of the petitioner that this benefit had been
granted by the private respondent since time immemorial,
there had been no evidence adduced that it had been a regular
practice. As propitiously observed by the Court of Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was
deliberately given and the same was in excess of that provided
by the law, the same however did not ripen into a company
practice on account of the fact that it was only granted for two
(2) years and with the express reservation from respondent
corporations owner that it cannot continue to rant the same in
view of the companys current financial situation.[38]
To hold that an employer should be forced to distribute
bonuses which it granted out of kindness is to penalize him for
his past generosity.[39]
Having thus ruled that the additional 35% premium pay for
work rendered during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with its
incidental benefits, and the grant of cash incentive together
with the service award are all bonuses which are neither
demandable nor enforceable obligations of the private
respondent, it is not necessary anymore to delve into the
Revenues and Profitability Analysis for the years 1996-2000
submitted by the private respondent.
On the alleged promotion of 15 members of the petitioner
union that should warrant an increase in their salaries, the
factual finding of the Voluntary Arbitrator is revealing, viz:
Considering that the Union was unable to adduce proof that a
promotion indeed occur[ed] with respect to the 15 employees,
the Daily Rated Unions claim for promotional increase likewise
fall[s] there being no promotion established under the records
at hand.[40]
26
WHEREFORE, in view of all the foregoing, the assailed Decision
and Resolution of the Court of Appeals dated 06 March 2002
and 12 July 2002, respectively, which affirmed and upheld the
decision of the Voluntary Arbitrator, are hereby AFFIRMED. No
pronouncement as to costs.
Company policies
CHINA BANKING CORPORATION, G.R. No. 156515
Petitioner, - versus - CALLEJO, SR.,
Respondent. October 19, 2004
Before the Court is the petition for review on certiorari filed by
China Banking Corporation seeking the reversal of the
Decision[1] dated July 19, 2002 of the Court of Appeals in CA-
G.R. SP No. 57365, remanding to the Labor Arbiter for further
hearings the complaint for payment of separation pay, mid-
year bonus, profit share and damages filed by respondent
Mariano M. Borromeo against the petitioner Bank. Likewise,
sought to be reversed is the appellate courts Resolution dated
January 6, 2003, denying the petitioner Banks motion for
reconsideration.
The factual antecedents of the case are as follows:
Respondent Mariano M. Borromeo joined the petitioner Bank
on June 1, 1989 as Manager assigned at the latters Regional
Office in Cebu City. He then had the rank of Manager Level I.
Subsequently, the respondent was laterally transferred to
Cagayan de Oro City as Branch Manager of the petitioner
Banks branch thereat.
For the years 1989 and 1990, the respondent received a highly
satisfactory performance rating and was given the
corresponding profit sharing/performance bonus. From 1991
up to 1995, he consistently received a very good performance
rating for each of the said years and again received the
corresponding profit sharing/performance bonus. Moreover,
in 1992, he was promoted from Manager Level I to Manager
Level II. In 1994, he was promoted to Senior Manager Level I.
Then again, in 1995, he was promoted to Senior Manager Level
II. Finally, in 1996, with a highly satisfactory performance
rating, the respondent was promoted to the position of
Assistant Vice-President, Branch Banking Group for the
Mindanao area effective October 16, 1996. Each promotion
had the corresponding increase in the respondents salary as
well as in the benefits he received from the petitioner Bank.
However, prior to his last promotion and then unknown to the
petitioner Bank, the respondent, without authority from the
Executive Committee or Board of Directors, approved several
Labor Standards Notes and Cases 1st
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DAUD/BP accommodations amounting to P2,441,375 in favor
of Joel Maniwan, with Edmundo Ramos as surety. DAUD/BP is
the acronym for checks Drawn Against Uncollected
Deposits/Bills Purchased. Such checks, which are not
sufficiently funded by cash, are generally not honored by
banks. Further, a DAUD/BP accommodation is a credit
accommodation granted to a few and select bank clients
through the withdrawal of uncollected or uncleared check
deposits from their current account. Under the petitioner
Banks standard operating procedures, DAUD/BP
accommodations may be granted only by a bank officer upon
express authority from its Executive Committee or Board of
Directors.
As a result of the DAUD/BP accommodations in favor of
Maniwan, a total of ten out-of-town checks (7 PCIB checks and
3 UCPB checks) of various dates amounting to P2,441,375 were
returned unpaid from September 20, 1996 to October 17,
1996. Each of the returned checks was stamped with the
notation Payment Stopped/Account Closed.
On October 8, 1996, the respondent wrote a Memorandum to
the petitioner Banks senior management requesting for the
grant of a P2.4 million loan to Maniwan. The memorandum
stated that the loan was to regularize/liquidate subjects
(referring to Maniwan) DAUD availments. It was only then that
the petitioner Bank came to know of the DAUD/BP
accommodations in favor of Maniwan. The petitioner Bank
further learned that these DAUD/BP accommodations
exceeded the limit granted to clients, were granted without
proper prior approval and already past due. Acting on this
information, Samuel L. Chiong, the petitioner Banks First Vice-
President and Head-Visayas Mindanao Division, in his
Memorandum dated November 19, 1996 for the respondent,
sought clarification from the latter on the following matters:
1) When DAUD/BP accommodations were allowed,
what efforts, if any, were made to establish the identity and/or
legitimacy of the alleged broker or drawers of the checks
accommodated?
2) Did the branch follow and comply with operating
procedure which require that all checks accommodated for
DAUD/BP should be previously verified with the drawee bank
and history if not outright balances determined if enough to
cover the checks?
3) How did the accommodations reach P2,441,375.00
when our records indicate that the borrowers B/P-DAUD line
27
is only for P500,000.00? When did the accommodations start
exceeding the limit of P500,000.00 and under whose
authority?
4) When did the accommodated checks start bouncing?
5) What is the status of these checks now and what
has the branch done so far to protect/ensure collectibility of
the returned checks?
6) What about client Joel Maniwan and surety Edmund
Ramos, what steps have they done to pay the checks
returned?[2]
In reply thereto, the respondent, in his Letter dated December
5, 1996, answered the foregoing queries in seriatim and
explained, thus:
1. None
2. No
3. The accommodations reach P2.4 million upon the
request of Mr. Edmund Ramos, surety, and this request was
subsequently approved by undersigned. The excess
accommodations started in July 96 without higher
management approval.
4. Checks started bouncing on September 20, 1996.
5. Checks have remained unpaid. The branch sent
demand letters to Messrs. Maniwan and Ramos and referred
the matter to our Legal Dept. for filing of appropriate legal
action.
6. Mr. Maniwan, thru his lawyer, Atty. Oscar Musni
has signified their intention to settle by Feb. 1997.
Justification for lapses committed (Item nos. 1 to 3).
The account was personally endorsed and referred to us by Mr.
Edmund Ramos, Branch Manager of Metrobank, Divisoria Br.,
Cagayan de Oro City. In fact, the CASA account was opened
jointly as &/or (Maniwan &/or Ramos). Mr. Ramos gave us his
full assurance that the checks that we intend to purchase are
the same drawee that Metrobank has been purchasing for the
past one (1) year already. He even disclosed that these checks
were verified by his own branch accountant and that Mr.
Maniwans loan account was being co-maked by Mr. Elbert Tan
Labor Standards Notes and Cases 1st
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Yao Tin, son of Jose Tan Yao Tin of CIFC. To show his sincerity,
Mr. Ramos signed as surety for Mr. Maniwan for P2.5MM.
Corollary to this, Mr. Ramos applied for a loan with us
mortgaging his house, lot and duplex with an estimated
market value of P4.508MM. The branch, therefore, is not
totally negligent as officer to officer bank checking was done.
In fact, it is also for the very same reason that other banks
granted DAUD to subject account and, likewise, the checks
returned unpaid, namely:
Solidbank P1.8 Million
Allied Bank .8
Far East Bank 2.0
MBTC 5.0
The attached letter of Mr. Ramos dated 19 Nov. 1996 will
speak for itself. Further to this, undersigned conferred with the
acting BOH VSYap if these checks are legitimate 3rd party
checks.
On the other hand, Atty. Musni continues to insist that Mr.
Maniwan was gypped by a broker in the total amount of
P10.00 Million.
Undersigned accepts full responsibility for committing an error
in judgment, lapses in control and abuse of discretion by
relying solely on the word, assurance, surety and REM of Mr.
Edmund Ramos, a friend and a co-bank officer. I am now ready
to face the consequence of my action.[3]
In another Letter dated April 8, 1997, the respondent notified
Chiong of his intention to resign from the petitioner Bank and
apologized for all the trouble I have caused because of the
Maniwan case.[4] The respondent, however, vehemently
denied benefiting therefrom. In his Letter dated April 30, 1997,
the respondent formally tendered his irrevocable resignation
effective May 31, 1997.[5]
In the Memorandum dated May 23, 1997 addressed to the
respondent, Nancy D. Yang, the petitioner Banks Senior Vice-
President and Head-Branch Banking Group, informed the
former that his approval of the DAUD/BP accommodations in
favor of Maniwan without authority and/or approval of higher
management violated the petitioner Banks Code of Ethics. As
such, he was directed to restitute the amount of P1,507,736.79
representing 90% of the total loss of P1,675,263.10 incurred
by the petitioner Bank. However, in view of his resignation and
considering the years of service in the petitioner Bank, the
28
management earmarked only P836,637.08 from the
respondents total separation benefits or pay. The
memorandum addressed to the respondent stated:
After a careful review and evaluation of the facts surrounding
the above case, the following have been conclusively
established:
1. The branch granted various BP/DAUD
accommodations to clients Joel Maniwan/Edmundo Ramos in
excess of approved lines through the following out-of-town
checks which were returned for the reason Payment
Stopped/Account Closed:
1. PCIB Cebu Check No. 86256 P251,816.00
2. PCIB Cebu Check No. 86261 235,880.00
3. PCIB Cebu Check No. 8215 241,443.00
4. UCPB Tagbilaran Check No. 277,630.00
5. PCIB Bogo, Cebu Check No. 6117 267,418.00
6. UCPB Tagbilaran Check No. 216070 197,467.00
7. UCPB Tagbilaran Check No. 216073 263,920.00
8. PCIB Bogo, Cebu Check No. 6129 253,528.00
9. PCIB Bogo, Cebu Check No. 6122 198,615.00
10. PCIB Bogo, Cebu Check No. 6134 253,658.00
2. The foregoing checks were accommodated through
your approval which was in excess of your authority.
3. The branch failed to follow the fundamental and
basic procedures in handling BP/DAUD accommodations
which made the accommodations basically flawed.
4. The accommodations were attended by lapses in
control consisting of failure to report the exception and failure
to cover the account of Joel Maniwan with the required Credit
Line Agreement.
Since the foregoing were established by your own admissions
in your letter explanation dated 5 December 1996, and the
Audit Report and findings of the Region Head, Management
finds your actions in violation of the Banks Code of Ethics:
Table 6.2., no. 1: Compliance with Standard Operating
Procedures
- Infraction of Bank procedures in handling any bank
transactions or work assignment which results in a loss or
probable loss.
Table 6.3., no. 6: Proper Conduct and Behavior -
Labor Standards Notes and Cases 1st
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Willful misconduct in the performance of duty whether or not
the bank suffers a loss, and/or
Table 6.5., no. 1: Work Responsibilities -
Dereliction of duty whether or not the Bank suffers a loss,
and/or
Table 6.6., no. 2: Authority and Subordination -
Failure to carry out lawful orders or instructions of superiors.
Your approval of the accommodations in excess of your
authority without prior authority and/or approval from higher
management is a violation of the above cited Rules.
In view of these, you are directed to restitute the amount of
P1,507,736.79 representing 90% of the total loss of
P1,675,263.10 incurred by the Bank as your proportionate
share. However, in light of your voluntary separation from the
Bank effective May 31, 1997, in view of the years of service you
have given to the Bank, management shall earmark and
segregate only the amount of P836,637.08 from your total
separation benefits/pay. The Bank further directs you to fully
assist in the effort to collect from Joel Maniwan and Edmundo
Ramos the sums due to the Bank.[6]
In the Letter dated May 26, 1997 addressed to the respondent,
Remedios Cruz, petitioner Banks Vice-President of the Human
Resources Division, again informed him that the management
would withhold the sum of P836,637.08 from his separation
pay, mid-year bonus and profit sharing. The amount withheld
represented his proportionate share in the accountability vis--
vis the DAUD/BP accommodations in favor of Maniwan. The
said amount would be released upon recovery of the sums
demanded from Maniwan in Civil Case No. 97174 filed against
him by the petitioner Bank with the Regional Trial Court in
Cagayan de Oro City.
Consequently, the respondent, through counsel, made a
demand on the petitioner Bank for the payment of his
separation pay and other benefits. The petitioner Bank
maintained its position to withhold the sum of P836,637.08.
Thus, the respondent filed with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. 10, in
Cagayan de Oro City, the complaint for payment of separation
pay, mid-year bonus, profit share and damages against the
petitioner Bank.
The parties submitted their respective position papers to the
Labor Arbiter. Thereafter, the respondent filed a motion to set
case for trial or hearing. Acting thereon, the Labor Arbiter, in
29
the Order dated January 29, 1999, denied the same stating
that:
... This Branch views that if complainant finds the necessity to
controvert the allegations in the respondents pleadings, then
he may file a supplemental position paper and adduce thereto
evidence and additional supporting documents, the soonest
possible time. All the evidence will be evaluated by the Branch
to determine whether or not a clarificatory hearing shall be
conducted.[7]
On February 26, 1999, the Labor Arbiter issued another Order
submitting the case for resolution upon finding that he could
judiciously pass on the merits without the necessity of further
hearing.
On even date, the Labor Arbiter promulgated the Decision[8]
dismissing the respondents complaint. According to the Labor
Arbiter, the respondent, an officer of the petitioner Bank, had
committed a serious infraction when, in blatant violation of
the banks standard operating procedures and policies, he
approved the DAUD/BP accommodations in favor of Maniwan
without authorization by senior management. Even the
respondent himself had admitted this breach in the letters that
he wrote to the senior officers of the petitioner Bank.
The Labor Arbiter, likewise, made the finding that the
respondent offered to assign or convey a property that he
owned to the petitioner Bank as well as proposed the
withholding of the benefits due him to answer for the losses
that the petitioner Bank incurred on account of unauthorized
DAUD/BP accommodations. But even if the respondent had
not given his consent, the Labor Arbiter held that the
petitioner Banks act of withholding the benefits due the
respondent was justified under its Code of Ethics. The
respondent, as an officer of the petitioner Bank, was bound by
the provisions of the said Code.
Aggrieved, the respondent appealed to the National Labor
Relations Commission. After the parties had filed their
respective memoranda, the NLRC, in the Decision dated
October 20, 1999, dismissed the appeal as it affirmed in toto
the findings and conclusions of the Labor Arbiter. The NLRC
preliminarily ruled that the Labor Arbiter committed no grave
abuse of discretion when he decided the case on the basis of
the position papers submitted by the parties. On the merits,
the NLRC, like the Labor Arbiter, gave credence to the
petitioner Banks allegation that the respondent offered to
pledge his property to the bank and proposed the withholding
of his benefits in acknowledgment of the serious infraction he
Labor Standards Notes and Cases 1st
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committed against the bank. Further, the NLRC concurred with
the Labor Arbiter that the petitioner Bank was justified in
withholding the benefits due the respondent. Being a
responsible bank officer, the respondent ought to know that,
based on the petitioner Banks Code of Ethics, restitution may
be imposed on erring employees apart from any other penalty
for acts resulting in loss or damage to the bank. The decretal
portion of the NLRC decision reads:
WHEREFORE, the decision of the Labor Arbiter is Affirmed. The
appeal is Dismissed for lack of merit.
SO ORDERED.[9]
The respondent moved for a reconsideration of the said
decision but the NLRC, in the Resolution of December 20, 1999,
denied his motion.
The respondent then filed a petition for certiorari with the
Court of Appeals alleging that the NLRC committed grave
abuse of discretion when it affirmed the findings and
conclusions of the Labor Arbiter. He vehemently denied having
offered to pledge his property to the bank or proposed the
withholding of his separation pay and other benefits. Further,
he argued that the petitioner Bank deprived him of his right to
due process because it unilaterally imposed the penalty of
restitution on him. The DAUD/BP accommodations in favor of
Maniwan allegedly could not be considered as a loss to the
bank as the amounts may still be recovered. The respondent,
likewise, maintained that the Labor Arbiter should not have
decided the case on the basis of the parties position papers but
should have conducted a full-blown hearing thereon.
On July 19, 2002, the CA rendered the Decision[10] now being
assailed by the petitioner Bank. The CA found merit in the
respondents contention that he was deprived of his right to
due process by the petitioner Bank as no administrative
investigation was conducted by it prior to its act of withholding
the respondents separation pay and other benefits. The
respondent was not informed of any charge against him in
connection with the Maniwan DAUD/BP accommodations nor
afforded the right to a hearing or to defend himself before the
penalty of restitution was imposed on him. This, according to
the appellate court, was contrary not only to the fundamental
principle of due process but to the petitioner Banks Code of
Ethics as well.
The CA further held that the Labor Arbiter, likewise, failed to
afford the respondent due process when it denied his motion
30
to set case for trial or hearing. While the authority of the Labor
Arbiter to decide a case based on the parties position papers
and documents is indubitable, the CA opined that factual
issues attendant to the case, including whether or not the
respondent proposed the withholding of his benefits or
pledged the same to the petitioner Bank, necessitated the
conduct of a full-blown trial. The appellate court explained
that:
Procedural due process, as must be remembered, has two
main concerns, the prevention of unjustified or mistaken
deprivation and the promotion of participation and dialogue
by affected individuals in the decision-making process. Truly,
the magnitude of the case and the withholding of Borromeos
property as well as the willingness of the parties to conciliate,
make a hearing imperative. As manifested by the bank, it did
not contest Borromeos motion for hearing or trial inasmuch as
the bank itself wanted to fully ventilate its side.[11]
Accordingly, the CA set aside the decision of the NLRC and
ordered that the records of the case be remanded to the Labor
Arbiter for further hearings on the factual issues involved.
The petitioner Bank filed a motion for reconsideration of the
said decision but the CA, in the assailed Resolution of January
6, 2003, denied the same as it found no compelling ground to
warrant reconsideration.[12] Hence, its recourse to this Court
alleging that the assailed CA decision is contrary to law and
jurisprudence in that:
I.
THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED
BY THE NATIONAL LABOR RELATIONS COMMISSION ARE
SUPPORTED BY SUBSTANTIAL EVIDENCE AND SHOULD HAVE
BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF
APPEALS IN ACCORDANCE WITH GOVERNING
JURISPRUDENCE.
II.
AT ALL TIMES, THE LABOR ARBITER ACTED IN ACCORDANCE
WITH THE REQUIREMENTS OF DUE PROCESS IN THE
PROCEEDINGS A QUO.
III.
THERE WAS NO VIOLATION BY PETITIONER BANK OF
RESPONDENTS RIGHT TO DUE PROCESS AS NO
ADMINISTRATIVE INVESTIGATION WAS NEEDED TO BE
CONDUCTED ON HIS ADMITTED MISCONDUCT.[13]
The petitioner Bank posits that the sole factual issue that
remained in dispute was whether the respondent pledged his
Labor Standards Notes and Cases 1st
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benefits as guarantee for the losses the bank incurred resulting
from the unauthorized DAUD/BP accommodations in favor of
Maniwan. On this issue, both the Labor Arbiter and the NLRC
found that the respondent had indeed pledged his benefits to
the bank. According to the petitioner Bank, this factual finding
should have been accorded respect by the CA as the same is
supported by the evidence on record. By ordering the remand
of the case to the Labor Arbiter, the CA allegedly unjustifiably
analyzed and weighed all over again the evidence presented.
The petitioner Bank insists that the Labor Arbiter acted within
his authority when he denied the respondents motion to set
case for hearing or trial and instead decided the case on the
basis of the position papers and evidence submitted by the
parties. Due process simply demands an opportunity to be
heard and the respondent was not denied of this as he was
even given the opportunity to file a supplemental position
paper and other supporting documents, but he did not do so.
The petitioner Bank takes exception to the findings of the
appellate court that the respondent was not afforded the right
to a hearing or to defend himself by the petitioner Bank as it
did not conduct an administrative investigation. The petitioner
Bank points out that it was poised to conduct one but was
preempted by the respondents resignation. In any case,
respondent himself in his Letter dated December 5, 1996, in
reply to the clarificatory queries of Chiong, admitted that the
DAUD/BP accommodations were granted without higher
management approval and that he (the respondent) accepts
full responsibility for committing an error of judgment, lapses
in control and abuse of discretion ... Given the respondents
admission, the holding of a formal investigation was no longer
necessary.
For his part, the respondent, in his Comment, maintains that
the DAUD/BP accommodations in favor of Maniwan were
approved, albeit not expressly, by the senior management of
the petitioner Bank. He cites the regular reports he made to
Chiong, his superior, regarding the DAUD/BP transactions
made by the branch, including that of Maniwan, and Chiong
never called his attention thereto nor stopped or reprimanded
him therefor. These reports further showed that he did not
conceal these transactions to the management.
The respondent vehemently denies having offered the
withholding of his benefits or pledged the same to the
petitioner Bank. The findings of the Labor Arbiter and the NLRC
that what he did are allegedly not supported by the evidence
on record.
31
The respondent is of the view that restitution is not proper
because the petitioner Bank has not, as yet, incurred any
actual loss as the amount owed by Maniwan may still be
recovered from him. In fact, the petitioner Bank had already
instituted a civil case against Maniwan for the recovery of the
sum and the RTC rendered judgment in the petitioner Banks
favor. The case is still pending appeal. In any case, the
respondent argues that the petitioner Bank could not properly
impose the accessory penalty of restitution on him without
imposing the principal penalty of Written
Reprimand/Suspension as provided under its Code of Ethics.
He, likewise, vigorously avers that, in contravention of its own
Code of Ethics, he was denied due process by the petitioner
Bank as it did not conduct any administrative investigation
relative to the unauthorized DAUD/BP accommodations. He
was not informed in writing of any charge against him nor was
he given the opportunity to defend himself.
The petition is meritorious.
The Court shall first resolve the procedural issue raised in the
petition, i.e., whether the CA erred in remanding the case to
the Labor Arbiter. The Court rules in the affirmative. It is
settled that administrative bodies like the NLRC, including the
Labor Arbiter, are not bound by the technical niceties of the
law and procedure and the rules obtaining in courts of law.[14]
Rules of evidence are not strictly observed in proceedings
before administrative bodies like the NLRC, where decisions
may be reached on the basis of position papers.[15] The
holding of a formal hearing or trial is discretionary with the
Labor Arbiter and is something that the parties cannot demand
as a matter of right.[16] As a corollary, trial-type hearings are
not even required as the cases may be decided based on
verified position papers, with supporting documents and their
affidavits.[17]
Hence, the Labor Arbiter acted well within his authority when
he issued the Order dated February 26, 1999 submitting the
case for resolution upon finding that he could judiciously pass
on the merits without the necessity of further hearing. On the
other hand, the assailed CA decisions directive requiring him
to conduct further hearings constitutes undue interference
with the Labor Arbiters discretion. Moreover, to require the
conduct of hearings would be to negate the rationale and
purpose of the summary nature of the proceedings mandated
by the Rules and to make mandatory the application of the
technical rules of evidence.[18] The appellate court, therefore,
committed reversible error in ordering the remand of the case
to the Labor Arbiter for further hearings.
Labor Standards Notes and Cases 1st
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Before delving on the merits of the case, it is well to remember
that factual findings of the NLRC affirming those of the Labor
Arbiter, both bodies being deemed to have acquired expertise
in matters within their jurisdiction, when sufficiently
supported by evidence on record, are accorded respect, if not
finality, and are considered binding on this Court.[19] As long
as their decisions are devoid of any arbitrariness in the process
of their deduction from the evidence proffered by the parties,
all that is left is for the Court to stamp its affirmation.[20]
In this case, the factual findings of the Labor Arbiter and those
of the NLRC concur on the following material points: the
respondent was a responsible officer of the petitioner Bank; by
his own admission, he granted DAUD/BP accommodations in
excess of the authority given to him and in violation of the
banks standard operating procedures; the petitioner Banks
Code of Ethics provides that restitution/forfeiture of benefits
may be imposed on the employees for, inter alia, infraction of
the banks standard operating procedures; and, the respondent
resigned from the petitioner Bank on May 31, 1998. These
factual findings are amply supported by the evidence on
record.
Indeed, it had been indubitably shown that the respondent
admitted that he violated the petitioner Banks standard
operating procedures in granting the DAUD/BP
accommodations in favor of Maniwan without higher
management approval. The respondents replies to the
clarificatory questions propounded to him by way of the
Memorandum dated November 19, 1996 were particularly
significant. When the respondent was asked whether efforts
were made to establish the identity and/or legitimacy of the
drawers of the checks before the DAUD/BP accommodations
were allowed,[21] he replied in the negative.[22] To the query
did the branch follow and comply with operating procedure
which require that all checks accommodated for DAUD/BP
should be previously verified with the drawee bank and
history, if not outright balances, determined if enough to cover
the checks?[23] again, the respondent answered no.[24] When
asked under whose authority the excess DAUD/BP
accommodations were granted,[25] the respondent expressly
stated that they were approved by undersigned (referring to
himself) and that the excess accommodation was granted
without higher management approval.[26] More telling,
however, is the respondents statement that he accepts full
responsibility for committing an error in judgment, lapses in
control and abuse of discretion by relying solely on the word,
assurance, surety and REM of Mr. Edmundo Ramos.[27] The
32
respondent added that he was ready to face the consequence
of [his] action.[28]
The foregoing sufficiently establish that the respondent, by his
own admissions, had violated the petitioner Banks standard
operating procedures. Among others, the petitioner Banks
Code of Ethics provides:
Table 6.2 COMPLIANCE WITH STANDARD OPERATING
PROCEDURES
VIOLATIONS
PENALTIES
1ST
2ND
3RD
4TH
1. Infraction of Bank procedures in handling any Bank
transaction or work assignment which results in a loss or
probable loss
Written Reprimand/ Suspension*
Suspension/ Dismissal*
Dismissal*
* With restitution, if warranted.
Further, the said Code states that:
7.2.5. Restitution/Forfeiture of Benefits
Restitution may be imposed independently or together with
any other penalty in case of loss or damage to the property of
the Bank, its employees, clients or other parties doing business
with the Bank. The Bank may recover the amount involved by
means of salary deduction or whatever legal means that will
prompt offenders to pay the amount involved. But restitution
shall in no way mitigate the penalties attached to the violation
or infraction.
Forfeiture of benefits/privileges may also be effected in cases
where infractions or violations were incurred in connection
with or arising from the application/availment thereof.
It is well recognized that company policies and regulations are,
unless shown to be grossly oppressive or contrary to law,
generally binding and
Labor Standards Notes and Cases 1st
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valid on the parties and must be complied with until finally
revised or amended unilaterally or preferably through
negotiation or by competent authority.[29] Moreover,
management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers
pursuant to company rules and regulations.[30] With more
reason should these truisms apply to the respondent, who, by
reason of his position, was required to act judiciously and to
exercise his authority in harmony with company policies.[31]
Contrary to the respondents contention that the petitioner
Bank could not properly impose the accessory penalty of
restitution on him without imposing the principal penalty of
Written Reprimand/Suspension, the latters Code of Ethics
expressly sanctions the imposition of restitution/forfeiture of
benefits apart from or independent of the other penalties.
Obviously, in view of his voluntary separation from the
petitioner Bank, the imposition of the penalty of reprimand or
suspension would be futile. The petitioner Bank was left with
no other recourse but to impose the ancillary penalty of
restitution. It was certainly within the petitioner Banks
prerogative to impose on the respondent what it considered
the appropriate penalty under the circumstances pursuant to
its company rules and regulations.
Anent the issue that the respondents right to due process was
violated by the petitioner Bank since no administrative
investigation was conducted prior to the withholding of his
separation benefits, the Court rules that, under the
circumstances obtaining in this case, no formal administrative
investigation was necessary. Due process simply demands an
opportunity to be heard and this opportunity was not denied
the respondent.[32]
Prior to the respondents resignation, he was furnished with
the Memorandum[33] dated November 19, 1996 in which
several clarificatory questions were propounded to him
regarding the DAUD/BP accommodations in favor of Maniwan.
Among others, the respondent was asked whether the banks
standard operating procedures were complied with and under
whose authority the accommodations were granted. From the
tenor thereof, it could be reasonably gleaned that the said
memorandum constituted notice of the charge against the
respondent.
Replying to the queries, the respondent, in his Letter[34] dated
December 5, 1996, admitted, inter alia, that he approved the
DAUD/BP accommodations in favor of Maniwan and the
amount in excess of the credit limit of P500,000 was approved
33
by him without higher management approval. The respondent,
likewise, admitted non-compliance with the banks standard
operating procedures, specifically, that which required that all
checks accommodated for DAUD/BP be previously verified
with the drawee bank and history, if not outright balances
determined if enough to cover the checks. In the same letter,
the respondent expressed that he
accepts full responsibility for committing an error in judgment,
lapses in control and abuse of discretion and that he is ready
to face the consequence of his action.
Contrary to his protestations, the respondent was given the
opportunity to be heard and considering his admissions, it
became unnecessary to hold any formal investigation.[35]
More particularly, it became unnecessary for the petitioner
Bank to conduct an investigation on whether the respondent
had committed an [I]nfraction of Bank procedures in handling
any Bank transaction or work assignment which results in a
loss or probable loss because the respondent already admitted
the same. All that was needed was to inform him of the
findings of the management[36] and this was done by way of
the Memorandum[37] dated May 23, 1997 addressed to the
respondent. His claim of denial of due process must perforce
fail.
Significantly, the respondent is not wholly deprived of his
separation benefits. As the Labor Arbiter stressed in his
decision, the separation benefits due the complainant (the
respondent herein) were merely withheld.[38] The NLRC made
the same conclusion and was even more explicit as it opined
that the respondent is entitled to the benefits he claimed in
pursuance to the Collective Bargaining Agreement but, in the
meantime, such benefits shall be deposited with the bank by
way of pledge.[39] Even
the petitioner Bank itself gives the assurance that as soon as
the Bank has satisfied a judgment in Civil Case No. 97174, the
earmarked portion of his benefits will be released without
delay.[40]
It bears stressing that the respondent was not just a rank and
file employee. At the time of his resignation, he was the
Assistant Vice- President, Branch Banking Group for the
Mindanao area of the petitioner Bank. His position carried
authority for the exercise of independent judgment and
discretion, characteristic of sensitive posts in corporate
hierarchy.[41] As such, he was, as earlier intimated, required
to act judiciously and to exercise his authority in harmony with
company policies.[42]
Labor Standards Notes and Cases 1st
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On the other hand, the petitioner Banks business is essentially
imbued with public interest and owes great fidelity to the
public it deals with.[43] It is expected to exercise the highest
degree of diligence in the selection and supervision of their
employees.[44] As a corollary, and like all other business
enterprises, its prerogative to discipline its employees and to
impose appropriate penalties on erring workers pursuant to
company rules and regulations must be respected.[45] The
law, in protecting the rights of labor, authorized neither
oppression nor self-destruction of an employer company
which itself is possessed of rights that must be entitled to
recognition and respect.[46]
WHEREFORE, the petition is GRANTED. The Decision dated July
19, 2002 of the Court of Appeals and its Resolution dated
January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED AND
SET ASIDE. The Resolution dated October 20, 1999 of the NLRC,
affirming the Decision dated February 26, 1999 of the Labor
Arbiter, is REINSTATED.
SO ORDERED.
[G.R. No. 114671. November 24, 1999]
AURELIO SALINAS, JR., ARMANDO SAMULDE, ALEJANDRO
ALONZO and AVELINO CORTEZ, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and ATLANTIC GULF AND
PACIFIC CO. of MANILA, INC., respondents.
This petition for review should have been properly initiated
and is therefore treated as a special civil action for certiorari
under Rule 65. The herein petitioners, Aurelio Salinas, Jr.,
Armando Samulde, Alejandro Alonzo and Avelino Cortez, assail
the Resolution[1] dated January 31, 1994 of the National Labor
Relations Commission (NLRC, for brevity) which dismissed
their complaint, and affirming, in effect, the Decision[2] of the
Labor Arbiter declaring them project employees and not
regular employees of respondent Atlantic Gulf and Pacific
Company of Manila, Inc. (hereinafter referred to as AG & P).
Petitioner Alejandro Alonzo had been employed with AG & P
in the several construction projects of the latter from 1982 to
1989, in the course of which he essentially performed the
same job, initially as a laborer, and later as bulk cement
34
operator, bulk cement plant/carrier operator, and crane
driver. Under similar circumstances, petitioner Avelino Cortez
had been employed with AG & P from 1979 to 1988 as
carpenter/forklift operator; petitioner Armando Samulde
served as lubeman/stationary operator from 1982 to 1989;
while petitioner Aurelio Salinas, Jr., used to work as
carpenter/finishing carpenter from 1983 to 1988.
On May 29, June 6, July 4 and July 5 of 1989, respectively,
petitioners Salinas, Samulde, Alonzo and Cortez filed against
the respondent corporation separate complaints for illegal
dismissal, which cases were consolidated and jointly heard by
Labor Arbiter Manuel P. Asuncion.
In his Order of dismissal, Labor Arbiter Asuncion found that
petitioners are project employees whose work contracts with
AG & P indicate that they were employed in such category;
that they have been assigned to different work projects, not
just to one and that their work relation with AG & P, relative
to termination, is governed by Policy Instruction No. 20.
On appeal, NLRC affirmed the said findings of the Labor Arbiter
and dismissed the complaint for want of merit, ratiocinating
thus:
In the first place, examining the contract of employment of
complainants herein presented as evidence by respondent, we
found that a) they were employed for a specific project and for
a specific period; b) that they were assigned to different
projects and not just one as earlier claimed by them. In short,
from the evidence adduced by respondent which
complainants miserably failed to rebut with their one page
position paper containing sweeping statements, there appears
to be no doubt that they are project employees hired for a
specific project. Their subsequent separation from service,
therefore, as a result of the completion of the project or its
phase did not result in illegal dismissal.[3]
Dissatisfied with the aforesaid disposition below, petitioners
found their way to this Court via the present petition posing as
the sole issue whether they are regular or project employee.
Petitioners principally argue that following the ruling in the
Caramol case,[4] NLRC gravely erred in dismissing their
complaint and declaring them project employees. According to
them, they had been covered by a number of contracts
renewed continuously, with periods ranging from five (5) to
nine (9) years, and they performed the same kind of work
through out their employment, and such was usually necessary
Labor Standards Notes and Cases 1st
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and desirable in the trade or business of the respondent
corporation; and their work did not end on a project-to-project
basis, although the contrary was made to appear by the
employer through the signing of separate employment
contracts.
Petitioners emphatically stressed that no report even a single
one, was ever submitted by the respondent corporation to the
nearest public employment office every time petitioners
employment was terminated pursuant to Policy Instruction
No. 20. There being no report, NLRCs insistence that they
(petitioners) were respondents corporations project
employees is without any legal basis; petitioners maintain.
In its Manifestation and Motion in Lieu of Comment,[5] the
Office of the Solicitor General agrees with the contention of
petitioners, to wit:
5. Thus, since petitioners had continuously performed the
same kind of work during the whole course of their
employment x x x their jobs were indeed necessary and
desirable to the private respondents main line of business. And
this should be the main consideration in classifying the nature
of employment afforded the herein workers.
6. Furthermore, if private respondent really employed the
herein petitioners on a project-to-project basis, it should have
submitted a series of reports to the nearest public
employment office every time the employment of the workers
were terminated, in line with Policy Instruction No. 20 of the
Department of Labor. (citation omitted) Private respondent
miserably failed to do its obligation under the set-up. This
failure effectively belies its assertion that herein petitioners
are project employees.[6]
Respondent corporation preliminary contends that the
present petition for review should have been brought under
Rule 65, Rule 45 not being the proper remedy. Assuming
arguendo that the petition should be treated under Rule 65,
the petition would still fail for failure of the petitioners to
present a motion for reconsideration. It maintains that the
instant petition should not be given due course due to non-
exhaustion of administrative remedies as required by Section
14, Rule VII (sic). It theorizes further that the questioned
Resolution had already become final and executory on March
20, 1994, ten days after receipt thereof by petitioners on
March 9, 1994. Respondent corporation also claims that the
present petition is insufficient in form, for failure to attach
thereto a duplicate original or certified true copies of the
35
complainants-petitioners position paper, respondent
corporations position paper, and the questioned resolution of
the public respondent.
AG & P staunchly claims that the petitioners are mere project
employees; that the questioned resolution of public
respondent is supported by substantial evidence and
therefore, conclusive and binding. According to respondent
corporation, factual findings of the NLRC are generally
accorded not only respect but, at times, finality as long as such
findings are based on substantial evidence; that the doctrinal
cases cited by petitioners have no applicability in the case
under scrutiny and that the Magante case[7] does not apply
because it was therein established that Magante was never
deployed from project to project but had been regularly
assigned to perform carpentry work; and on the other hand,
the Baguio Country Club case[8] pertains to entertainment-
service.
Meanwhile the De Leon case,[9] claims the respondent
corporation, bolsters instead, its position since it recognizes
the legality of project employment, which is not deemed
regular but a separate and distinct category, particularly in the
construction business. It also attempts to create a chasm
between the doctrinal case of Caramol and the present case,
allegedly due to different circumstances involved, and citing
the implementation of Department Order No. 19, amending
Policy Instruction No. 20, which allows the rehiring of project
workers on a project-to-project basis (Section 2.3.b), and
which considers the report of termination of employment a
mere indicator of project employment. (Section 2.2)
The petition is impressed with merit.
The present case is on all fours with the cases of Caramol vs.
NLRC (penned by Justice Bellosillo) and Samson vs. NLRC[10]
(with Justice Regalado as ponente), both of which involved the
same private respondent.
In the case of Caramol, petitioner Rogelio Caramol was hired
as a rigger by AG & P on a project-to-project basis but whose
employment was renewed forty-four (44) times by the latter.
In holding that Caramol was a regular worker, the Court
declared that the successive employment contracts where he
was made to perform the same kind of work as a rigger, would
clearly manifest that Caramols tasks were usually necessary or
desirable in the usual trade or business of AG & P.[11]
Labor Standards Notes and Cases 1st
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The Court likewise upheld the validity of a project-to-project
basis contract of employment, provided that the period was
agreed upon knowingly and voluntarily by the parties, without
any force, duress or improper pressure brought to bear upon
the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by
the former xxx.[12] However, this Court warned, where from
the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the
employee, they should be struck down as contrary to public
policy, morals, good custom or public order.[13]
The case of Samson on the other hand, concerned Ismail
Samson who served initially as a rigger, as a laborer and finally
as a rigger foreman for AG & P, for approximately 28 years. He
was also covered by successive employment contracts with
gaps of from one (1) day up to one (1) week. Noting the
successive contracts of employment, the repeated re-hiring,
and petitioners performance of essentially the same tasks, this
Court held that Samson was a regular employee, because
these were sufficient evidence that he was performing tasks
usually necessary and desirable in the ordinary course of
business of AG & P.[14] Thus the Court pronounced:
The mandate in Article 281 of the Labor Code, which
pertinently prescribes that the provisions of written
agreement to the contrary notwithstanding and regardless of
the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable
in the usual business or trade of the employer and that any
employee who has rendered at least one year of service,
whether such service is continuous or broken shall be
considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while
such actually exists, should apply in the case of petitioner
(Samson).[15]
In the case under consideration, the Court likewise rules that
failure to report the termination to Public Employment Office
is a clear indication that petitioners were not and are not
project employees.
When these consolidated complaints were filed in 1989, and
while petitioners were serving the respondent corporation,
the rule in force then was Policy Instruction (P.I.) No. 20, which
required the employer company to report to the nearest Public
36
Employment Office the fact of termination of project
employee as a result of the completion of the project or any
phase thereof, in which he is employed. Further, Department
Order (D.O.) No. 19, which was issued on April 1, 1993, did not
totally dispense with the notice requirement but, instead,
made provisions therefor, and considered it as one of the
indicators that a worker is a project employee.[16]
It is significant to note that the notice of termination
requirement has been retained under Section 6.1 of D.O. No.
19, viz:[17]
6.1. Requirements of labor and social legislations.--(a) The
construction company and the general contractor and/or
subcontractor referred to in Sec. 2.5 shall be responsible for
the workers in its employ on matters of compliance with the
requirements of existing laws and regulations on hours of
work, wages, wage-related benefits, health, safety and social
welfare benefits, including submission to the DOLE-Regional
Office of Work Accident/Illness Report, Monthly Report on
Employees Terminations/Dismissals/Suspensions and other
reports. x x x (Italics supplied)
In light of the cases of Caramol and Samson and the application
of P.I. No. 20 as amended by D.O. No. 19, the retroactive or
prospective effect of D.O. No. 19 is of no moment.
Nevertheless, it was held in Samson vs. NLRC that it is
prospective in effect. Otherwise, it would be prejudicial to the
employees and would run counter to the constitutional
mandate on social justice and protection to labor and
furthermore, such view is more in accord with the avowed
purpose of said Department Order.[18]
It is basic and irrefragable rule that in carrying out and
interpreting the provisions of the Labor Code and its
implementing regulations, the workingmans welfare should be
the primordial and paramount consideration. The
interpretation herein made gives meaning and substance to
the liberal and compassionate spirit of the law enunciated in
Article 4 of Labor Code that all doubts in the implementation
and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be
resolved in favor of labor.[19]
It is beyond cavil that petitioners had been providing the
respondent corporation with continuous and uninterrupted
services, except for a day or so gap in their successive
employment contracts. Their contracts had been renewed
several times, with the total length of their services ranging
Labor Standards Notes and Cases 1st
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from five (5) to nine (9) years. Throughout the duration of their
contracts, they had been performing the same kinds of work
(e.g., as lubeman, bulk cement operator and carpenter), which
were usually necessary and desirable in the construction
business of AG & P, its usual trade or business.
Undoubtedly, periods in the present case have been imposed
to preclude the acquisition of tenurial security by petitioners,
and must be struck down for being contrary to public policy,
morals, good customs or public order.
Anent the issue that the petition should have been brought
under Rule 65 and not under Rule 45 of the Revised Rules of
Court, this rule is not inflexible.[20] In the interest of justice,
often the Court has judiciously treated as special civil actions
for certiorari petitions erroneously captioned as petitions for
review on certiorari.[21]
With regard to the issue on non-exhaustion of administrative
remedies, the Court hold that the failure of petitioners to
interpose a motion for reconsideration of the NLRC decision
before coming to this Court was not a fatal omission. The
exhaustion of administrative remedies doctrine is not a hard
and fast rule and does not apply where the issue is purely a
legal one.[22] A motion for reconsideration as a prerequisite
for the bringing of an action under Rule 65 may be dispensed
with where the issue is purely of law, as in this case.[23] At all
events and in the interest of substantial justice, especially in
cases involving the rights of workers, procedural lapses, if any,
may be disregarded to enable the Court to examine and
resolve the conflicting rights and responsibilities of the parties.
This liberality is warranted in the case at bar, especially since it
has been shown that the intervention of the Court is necessary
for the protection of the herein petitioner(s).[24]
WHEREFORE, the questioned Resolution of the NLRC in NLRC
NCR Case No. 00-05-02489-89; NLRC NCR Case No. 00-06-
02621-89; NLRC NCR Case No. 00-06-02815-89; NLRC NCR Case
No. 00-07-03095-89; and NLRC NCR Case No. 00-07-03129-89,
is SET ASIDE and another one is hereby ENTERED ordering the
respondent corporation to reinstate petitioners without loss of
seniority and with full backwages. Costs against the
respondent corporation.
SO ORDERED.
[G.R. No. 154448. August 15, 2003]
DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS,
PHIL. MALAY POULTRY BREEDERS, INC. and LEONG HUP
37
POULTRY FARM SDN, BHD., Mr. Francis T.N. Lau, President
and Chairman of the Board and Mr. Chor Tee Lim, Director,
respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the Revised
Rules of Court are the January 28, 2002[1] and July 22, 2002[2]
Resolutions[3] of the Court of Appeals in CA-G.R. SP No. 67431,
which dismissed the petition for certiorari filed by petitioner
for failure to attach to the petition the duplicate original or
certified true copy of the Labor Arbiters decision as well as the
relevant pleadings.
The facts show that on August 24, 1989, respondent Leong
Hup Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its
Managing Director Francis T. Lau, appointed petitioner Pedrito
F. Reyes as Technical/Sales Manager with a net salary of
US$4,500.00 a month. His duties consisted of selling parent
stock day-old chicks and providing technical assistance to
clients of the company in Malaysia and other Asian
countries.[4] Sometime in 1992, the company formed
Philippine Malay Poultry Breeders, Inc., (Philmalay) in the
Philippines. Petitioner was appointed General Manager
thereof with a monthly salary of US$5,500.00.
In 1996-1997, respondents suffered losses which caused them
to reduce production and retrench employees in Philmalay. On
June 30, 1997, petitioner gave verbal notice to respondent
Francis T. Lau that he will serve as General Manager of
Philmalay until December 31, 1997 only.[5] In a letter dated
January 12, 1998, petitioner confirmed his verbal notice of
resignation and requested that he be given the same benefits
granted to retrenched and resigned employees of the
company, consisting of separation pay equivalent to 1 month
salary for every year of service and the monetary equivalent of
his sick leave and vacation leave. He likewise requested for the
following:
1. payment of underpaid salary for the period December 1989
December 31, 1997 together with the additional one month
salary payable in December of every year which was paid at
the rate of P26.00 instead of the floating rate;
2. brand new car (Galant Super Saloon) or its equivalent;
3. life insurance policy in the amount of US$100,000.00 from
December 1, 1989 to December 31, 1997, or the premiums due
thereon;
Labor Standards Notes and Cases 1st
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4. office rentals at the rate of US$300.00 or its peso equivalent
for the use of his residence as office of Philmalay for the period
December 1, 1989 to July 1996; and
5. retention of the services of the law firm Quasha Ancheta
Pena and Nolasco Law Firm, which was hired by respondents
to defend him in the illegal recruitment case filed against him
in connection with his employment with respondents.[6]
In a letter dated January 19, 1998, respondent Philmalay
retrenched petitioner effective January 20, 1998 and promised
to pay him separation benefits pursuant to the provisions of
the Labor Code.[7] He was, however, offered a separation pay
equivalent to four months only, or the total amount of
P578,600.00 (P144,650 x 4). The offer was not accepted by
petitioner and efforts to settle the impasse proved futile.
Petitioner filed with the Arbitration Branch of the National
Labor Relations Commission a complaint[8] for underpayment
of wages and non-payment of separation pay, sick leave,
vacation leave and other benefits against respondents.
On December 22, 1999, the Labor Arbiter rendered a
decision[9] in favor of petitioner, the dispositive portion of
which reads:
PREMISES CONSIDERED, judgment is hereby rendered in favor
of the complainant and against the respondents, as follows:
1. To order respondents to pay jointly and severally the
complainant, the following:
(a) Unpaid salary from January 1, 1998 to January 19, 1998, the
same to be computed in the following manner:
19 = days % 31 days of January 98
= 0.613 month x US$5,500.00
= US$3,370.00
(b) Underpayment of salary, the same to be computed at net
US$5,500.00 or its peso-equivalent from July 1, 1997 to
December 31, 1997, together with the additional one (1) salary
payable every year, the same to be paid at the rate of P26.30
instead of the following rate computed as follows:
July 1997 - P27.66 P1.36 - P7, 480.00
38
August 1997 - 29.33 3.02 - 16, 665.00
September - 32.39 - 6.09 - 33, 495.00
October 1997 - 34.46 - 8.16 - 44, 880.00
November 1997 - 34.51 - 8.21 - 45, 155.00
December 1997 - 37.17 - 10.57- 59, 785.00
P207,460.00
(c) 13th month pay for December 1997 computed as follows:
December 1997 P37.17 P10.57 P59,785.00.
2. To order respondents to pay jointly and severally the
complainant the following:
(a) Unused vacation and sick leaves from December 01, 1989
to December 31, 1997 based on the same salary, to be
computed as follows:
i) Vacation Leave Fifteen (15) days for every year of services x
9 years = 135 days
135 days % 26 working days a month
= 5.2 months
= US$28,600.00
ii) Sick Leave Fifteen (15) Days for every [year] of service x 9
years = 135 days
135 days % 26 working days a month
= 5.2 months x US$5,500.00 / month
= US$28,600.00
3) To order respondents to pay jointly and severally the
complainant his separation pay equivalent to one (1) month
pay for very year of service at the rate of US $5,500.00 or its
peso equivalent from December 1, 1989 to January 19, 1998,
computed as follows:
9 years x US$5,500.00 = US$49,500.00
Labor Standards Notes and Cases 1st
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4) To order respondents to pay jointly and severally the
complainants other claims and benefits:
a) A brand new car (Galant super saloon) or its equivalent in
the sum of P945,100.00;
b) Office rentals for the use of his residence situated at No. 38
Don Wilfredo St., Don Enrique Heights Diliman, Quezon City,
[from] 01 December 1989 to July 1996 at the rate of US$300.00
or its peso equivalent to US$23,700.00;
c) Life insurance policy for US$100,000.00 from December 1,
1989 to December 31, 1997, or if the same was not secured
the premiums due thereon for the above period, the same to
be computed as follows:
US$2,736.50 x 9 years = US$24,628.50
d) The services of the Law firm of Quasha Ancheta Pea and
Nolasco be continued to be retained by the two (2) companies
to represent complainant in the illegal recruitment case before
the Regional Trial Court of Quezon City, Branch 96, docketed
as Crim. Case No. Q-93-46421, entitled People of the
Philippines vs. Dr. Antonio B. Mangahas, et al., filed against
him in connection with his employment by Leong Hup, or in
default thereof to pay the attorneys fees of the new counsel,
that may be hired by the complainant to defend him in the said
case estimated in the sum of P200,000.00, more or less;
5) To order the respondents to pay jointly and severally the
complainant moral damages in the sum of P2.5 million and
exemplary damages of P2.5 million;
6) To order the respondents to pay jointly and severally the
complainant in the sum equivalent to ten percent (10%) of the
total claim as and for attorneys fees.
7) Respondents counterclaims are hereby dismissed for lack of
merit.
SO ORDERED.[10]
On appeal by respondents to the National Labor Relations
Commission (NLRC), the Decision of the Labor Arbiter was
modified by deleting the awards of (1) US$3,370.00
representing unpaid salary for the period January 1, 1998 to
January 19, 1998; (2) US$28,600.00 as vacation leave; (3)
brand new car or its equivalent in the sum of P945,100.00; (4)
US$23,700.00 as office rentals for the period of December 1,
39
1989 to July 1996; (5) US$100,000.00 life insurance policy or
the equivalent premium in the amount of US$24,628.50; (6)
P2.5 million as moral damages; and (7) P2.5 million as
exemplary damages. The NLRC likewise reduced the amount
of petitioners separation pay to US$44,400.00 after adjusting
its computation based on the length of service of petitioner
which it lowered from 9 years to 8 years; and by limiting the
basis of the 10% attorneys fees to the total of the awards of
underpayment of salary (P207,460.00), 13th month pay
differential (P59,785.00) and cash equivalent of sick leave
(US$28,600.00) only, and excluding therefrom the award of
separation pay in the amount of US$44,400.00. The decretal
portion of the said decision[11] states:
WHEREORE, premises considered, the Decision dated
December 22, 1999 is hereby MODIFIED as follows:
Respondents are hereby ordered to pay jointly and severally
the complainant, the following:
(a) underpayment of salary as computed in the appealed
Decision in the amount of P207, 460.00;
(b) 13th month pay differential as computed in the appealed
Decision in the amount of P59,785.00;
(c) monetary equivalent of complainants sick leave as
computed in the appealed Decision in the amount of
US$28,600.00;
(d) separation pay in the amount of US$44,000.00 as earlier
computed in this Decision;
(e) attorneys fees equivalent to ten (10%) percent of the total
award based on the awards representing underpayment of
salary, 13th month pay, [and] cash equivalent of sick leave.
Respondents are likewise directed to provide legal counsel to
complainant as defendant in Criminal Case No. Q-93-46421.
The awards of unpaid wages from June 1-19, 1998, vacation
leave in the amount of US$28,600, P945,000 for car,
US23,700.00, for office rentals, life insurance policy in the
amount of US$100,000.00 and moral and exemplary damages
in the amount of 2.5 million pesos are hereby DELETED on
grounds above-discussed.
SO ORDERED.[12]
Labor Standards Notes and Cases 1st
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Petitioner filed a motion for reconsideration, however, the
same was denied.[13] Undaunted, petitioner filed a petition
for certiorari with the Court of Appeals, which was dismissed
on January 28, 2002 for failure to attach to the petition the
following: (1) complainants (petitioner) Position Paper filed
before the Labor Arbiter; (2) Decision dated 22 December 1992
penned by Labor Arbiter Ariel Cadiente Santos; and (3)
Memorandum of Appeal filed by the petitioner.[14]
On February 21, 2002, petitioner filed a motion for
reconsideration, attaching thereto a copy of the Labor Arbiters
decision and the pleadings he failed to attach to the petition.
The Court of Appeals, however, denied petitioners motion for
reconsideration. Hence, the instant petition based on the
following grounds:
1. COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION
DISMISSING THE PETITION FOR CERTIORARI BASED ON
TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY WITH
SEC. 1, RULE 65, RULES OF CIVIL PROCEDURE FOR FAILURE TO
ATTACH THREE (3) DOCUMENTS CONSISTING OF:
Complainants (petitioner) Position Paper filed before the labor
arbiter;
Decision dated 22 December 1999 penned by Labor Arbiter
Ariel Cadiente Santos; and
Memorandum of Appeal filed by the petitioner.
WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS
MATERIAL PORTIONS OF THE RECORD DESPITE THE FACT THAT
THE SUBJECT DOCUMENTS SOUGHT TO BE PRODUCED HAVE
ACTUALLY BEEN REPRODUCED OR SUBSTANTIALLY COVERED
BY THE QUESTIONED JUDGMENT, ORDER OR RESOLUTION
FILED/SUBMITTED BEFORE IT.
2. COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN DISMISSING THE PETITION, AND IN DENYING
THE MOTION FOR RECONSIDERATION THEREOF ON THE
GROUND THAT THERE IS NO COGENT REASON FOR IT TO
OVERTURN ITS DISMISSAL, DESPITE CLEAR AND CONVINCING
EVIDENCE, EXTANT ON THE RECORDS SHOWING THAT THE
NATIONAL LABOR RELATIONS COMMISSIONS (NLRC) DECISION
AND RESOLUTION WERE FLAWED, A PALPABLE OR PATENT
ERROR, WHICH MAY BE SUMMARIZED, TO WIT:
40
(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM HIS
EMPLOYMENT, AND NOT RETRENCHED OR TERMINATED
DESPITE A DOCUMENTARY EVIDENCE EXTANT ON THE RECORD
ISSUED BY PRIVATE RESPONDENTS DATED JANUARY 19, 1998
GIVING FORMAL NOTICE TO YOU (PETITIONER) OF YOUR
TERMINATION DUE TO RETRENCHMENT EFFECTIVE JANUARY
20, 1998.
(B) IN HOLDING AGAIN, AND DENYING PETITIONERS VALID
CLAIMS DESPITE DOCUMENTARY EVIDENCE OR THE
EXISTENCE OF A CONTRACT OF EMPLOYMENT STATING THAT:
(1) EMPLOYEES (INCLUDING PETITIONER AS GENERAL
MANAGER) AS A MATTER OF COMPANY POLICY AND/OR
PRACTICE) WHO ARE RETRENCHED ARE ENTITLED TO
INCENTIVES INCLUDING 15-DAYS VACATION LEAVE AND 15-
DAYS SICK LEAVE WITH PAY; A FACT ADMITTED NO LESS BY
PRIVATE RESPONDENTS OWN WITNESS, MS. MA. ROWENA
LOPEZ (FORMER PERSONNEL MANAGER OR PHILMALAY) WHO
EXECUTED AN AFFIDAVIT ADMITTING THE SAME.
(2) PETITIONERS ENTITLEMENT AS PER CONTRACT TO A
BRAND NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT
THEREOF); $100,000.00 LIFE INSURANCE POLICY (OR IN
DEFAULT THEREOF AT LEAST TO THE PREMIUMS THEREIN),
AND OFFICE RENTALS FOR THE USE OF THE PETITIONERS
PRIVATE RESIDENCE AS OFFICE OF RESPONDENTS.
(3) PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY
DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD
FAITH IN REQUIRING PETITIONER TO EXECUTE A LETTER OF
RESIGNATION, WHEN IN FACT HE WAS ADMITTEDLY
TERMINATED THRU RETRENCHMENT, AND ITS REFUSAL TO
PAY HIM HIS VALID CLAIMS, DESPITE HIS CONTRACT OF
EMPLOYMENT, COMPANY POLICY, AND LETTER OF
TERMINATION ISSUED BY PRIVATE RESPONDENTS.
(4) PETITIONERS ENTITLEMENT TO 10% OF THE TOTAL
AMOUNT OF THE AWARD OF ATTORNEYS FEES AS PROVIDED
FOR BY LAW AND AS PER PETITIONERS CONTRACT WITH
COUNSEL, AND NOT ONLY 10% OF THE TOTAL AWARD
REPRESENTING UNDER PAYMENT OF SALARY, 13TH MONTH
PAY, AND CASH EQUIVALENT OF SICK LEAVE AND IN ORDERING
PRIVATE RESPONDENT TO PROVIDE LEGAL COUNSEL TO
PETITIONER IN CRIM. CASE NO. Q-93-46421, WHEN THE
SUBJECT CASE HAD ALREADY BEEN DISMISSED AT THE
EXPENSE OF PETITIONER WHO HAD PREVIOUSLY HIRED HIS
OWN COUNSEL OF CHOICE FOR THE PURPOSE.
Labor Standards Notes and Cases 1st
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The issues for resolution are: (1) whether or not the Court of
Appeals erred in dismissing the petition; and (2) whether or
not the decision of the Labor Arbiter should be reinstated.
The allowance of the petition on the ground of substantial
compliance with the Rules is not a novel occurrence in our
jurisdiction. As consistently held by the Court, rules of
procedure should not be applied in a very technical sense, for
they are adopted to help secure, not override, substantial
justice.[15] In Ramos v. Court of Appeals,[16] the Court of
Appeals dismissed a petition for review of the decision of the
Regional Trial Court because the petitioner failed to attach to
the petition a certified true copy of the Metropolitan Trial
Courts decision in addition to the certified true copy of the
assailed decision of the RTC. Holding that the Court of Appeals
should have given due course to the petition considering that
petitioner subsequently submitted a certified true copy of the
decision of the MeTC, we held:
Petitioner is right that the MeTCs decision cannot be
considered a disputed decision. The phrase is the equivalent of
ruling, order or decision appealed from in Rule 32, 2 of the
1964 Rules made applicable to appeals from decisions of the
then Courts of First Instance to the Court of Appeals by R.A.
No. 296, as amended by R.A. No. 5433. Since petitioner was
not appealing from the decision of the MeTC in her favor, she
was not required to attach a certified true copy but only a true
or plain copy of the aforesaid decision of the MeTC. The reason
is that inclusion of the decision is part of the requirement to
attach to the petition for review other material portion of the
record as would support the allegations of the petition.
Indeed, petitioner referred to the MeTC decision in many parts
of her petition for review in the Court of Appeals for support
of her theory.
Nonetheless, the Court of Appeals should have reconsidered
its dismissal of petitioners appeal after petitioner submitted a
certified true copy of the MeTCs decision. It was clear from the
petition for review that the RTC incurred serious errors in
awarding damages to private respondents which were made
without evidence to support the award and without any
explanation[17]
In Jaro v. Court of Appeals,[18] we applied the rule on
substantial compliance because the petitioner amended his
defective petition and attached thereto the relevant annexes
certified according to the rules. Thus
41
There is ample jurisprudence holding that the subsequent and
substantial compliance of an appellant may call for the
relaxation of the rules of procedure. In Cusi-Hernandez vs. Diaz
and Piglas-Kamao vs. National Labor Relations Commission, we
ruled that the subsequent submission of the missing
documents with the motion for reconsideration amounts to
substantial compliance. The reasons behind the failure of the
petitioners in these two cases to comply with the required
attachments were no longer scrutinized. What we found
noteworthy in each case was the fact that the petitioners
therein substantially complied with the formal
requirements[19]
The same leniency should be applied to the instant case
considering that petitioner subsequently submitted with his
motion for reconsideration the certified true copy of the Labor
Arbiters decision, the complainants position paper and the
respondents memorandum of appeal. Clearly, petitioner had
demonstrated willingness to comply with the requirements set
by the rules. If we are to apply the rules of procedure in a very
rigid and technical sense, as the Court of Appeals did in this
case, the ends of justice would be defeated.
The pleadings and documents filed extensively discussed the
issues raised by the parties. Such being the case, there is
sufficient basis to resolve the instant controversy.[20] Labor
laws mandate the speedy disposition of cases, with the least
attention to technicalities but without sacrificing the
fundamental requisites of due process.[21] Remanding the
case to the Court of Appeals will only frustrate speedy justice
and, in any event, would be a futile exercise, as in all
probability the case would end up with this Court.[22] We shall
thus rule on the substantial claims of the parties.
Was the termination of petitioners employment caused by
retrenchment or by voluntary resignation?
The Court finds that petitioners dismissal from service was due
to retrenchment. This is evident from the termination letter
sent by Philmalay to petitioner, to wit
We regret to inform you that in view of the prevailing market
conditions and the continuous losses being incurred by the
company, the management has decided to cut down on
expenses and prevent further losses through retrenchment of
some of our personnel effective January 19, 1998.
In compliance with the requirement of the law, this will serve
as a formal notice to you of your termination due to
Labor Standards Notes and Cases 1st
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retrenchment effective January 20, 1998. To provide you with
sufficient time to seek alternative employment, you need not
report for work (unless otherwise requested) starting January
20, 1998. Notwithstanding the above mentioned affectivity
date, you may come down to the office and receive your
separation benefits pursuant to the Labor Code[23]
While it is true that petitioner tendered his resignation letter
to respondents requesting that he be given the same benefits
granted by the company to resigned/retrenched employees,
there is no showing that respondents accepted his resignation.
Acceptance of a resignation tendered by an employee is
necessary to make the resignation effective.[24] No such
acceptance, however, was shown in the instant case. What
appears in the record is a letter terminating the services of
petitioner due to retrenchment effective January 20, 1998.
Verily, said letter should be interpreted as a non-acceptance of
petitioners resignation effective December 31, 1997. As
correctly pointed out by the Labor Arbiter, if respondents
considered petitioner resigned as of December 31, 1997, then
there would be no need to retrench him.
The length of service of petitioner, which the NLRC correctly
reduced to 8 years, as well as the solidary liability of
respondent corporations are no longer assailed here. Whether
petitioner is considered resigned on December 31, 1997 or
retrenched on January 20, 1998, his length of employment
reckoned from August 24, 1989 would still be 8 years.
Moreover, respondents did not appeal from the decision of the
NLRC and in fact sought its affirmance in their Opposition to
the motion for reconsideration[25] and Comment to the
motion for reconsideration[26] filed before the NLRC and the
Court of Appeals, respectively. So also, petitioner is estopped
from claiming that he was illegally dismissed and that his
retrenchment was without basis. His request for benefits
granted to retrenched employees during such time when
respondent was in the process of retrenching its employees is
tantamount to a recognition of the existence of a valid cause
for retrenchment. What remains to be resolved by the Court is
the validity of the NLRCs deletion/modification of the awards
of (1) unpaid salary; (2) vacation leave; (3) car and insurance
policy/premiums; (4) moral and exemplary damages; (5)
reimbursement for expenses for legal services; (6) rental
payment; and (7) attorneys fees.
As regards the award of unpaid salary, the NLRC was correct in
holding that petitioner is not entitled to compensation from
January 1, 1998 to January 19, 1998, because he was not able
to prove that he rendered services during said period. In the
42
same vein, there is no basis in awarding moral and exemplary
damages, inasmuch as respondents were not shown to have
acted in bad faith in initially refusing to award separation pay
equivalent to 1 month salary for every year of service.
Respondents even offered to pay petitioner separation pay,
albeit in an amount not acceptable to petitioner. Moral
damages are recoverable only where the act complained of is
tainted by bad faith or fraud, or where it is oppressive to labor,
and done in a manner contrary to morals, good customs, or
public policy. Exemplary damages may be awarded only if the
act was done in a wanton, oppressive, or malevolent
manner.[27] None of these circumstances exist in the present
case.
The NLRC also correctly ruled that the car and insurance
benefits are granted only during the course of employment;
hence, they should not be part of petitioners separation
package. Likewise, petitioners claim for payment of rental for
the use of his house as office of Philmalay should be denied for
having been ventilated in the wrong forum. Not all money
claims that may be asserted by an employee against his
employer are within the jurisdiction of the NLRC. Money claims
of workers which fall within the jurisdiction of Labor Arbiters
are those which arise out of employer-employee relationship.
Obviously, the demand for rental payment is not a labor
dispute; rather, it is based on contractual relations
independent of employer-employee relationship. Hence, the
jurisdiction thereon is with the regular courts.[28]
Since respondents did not appeal from the decision of the
NLRC, it is presumed that they are satisfied with the
adjudications therein, including the order of NLRC directing
them to provide legal services to petitioner in the illegal
recruitment case filed against the latter while he was still
employed by respondents. This is in accord with the doctrine
that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones
granted in the appealed decision.[29] Nonetheless,
respondents cannot be ordered to reimburse the amount of
P200,000.00 for the legal services of the law firm allegedly
hired by petitioner because he failed to establish that he
indeed hired the services of a law firm and that he spent
P200,000.00 as a consequence thereof.
Petitioner is, however, entitled to the award of vacation leave
as part of respondents retrenchment incentives. In granting
sick leave but deleting vacation leave benefits, the NLRC based
its ruling on the affidavit of one Ms. Rowena Lopez, a former
personnel of Philmalay, viz:
Labor Standards Notes and Cases 1st
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3. That based on company policy and/or practice the rank-and-
file employees are entitled to 15-days vacation leave and 15-
days sick leaves. However, the vacation leave must be availed
of within the year or applied to the remaining period of
employment for those who resigned or go on terminal leave.
In case of sick leaves all unused sick leaves are also
commutable to cash;
4. That employees who were retrenched are entitled to the
following incentives:
(a) One (1) month additional leave with pay effective after
their last day of employment to enable them to look for a new
job;
(b) Plus one (1) month separation pay for every year of service;
and
(c) 15-days vacation leave and 15-days sick leave with pay as
stated in paragraph 3 hereof.[30]
The foregoing expressly states that a retrenched employee is
entitled to 15-day vacation leave. Paragraph 4 is the
retrenchment package granted to retrenched employees,
whereas paragraph 3 refers to the feasibility of commutation
of unused sick and vacation leaves. Except for the sentence
entitling employees to vacation and sick leaves, the last 2
sentences in paragraph 3 have nothing to do with the
retrenchment benefits in paragraph 4. Note that the 15-day
vacation and sick leave with pay in paragraph 4(c) are not
qualified by the word unused. The 15-day vacation and sick
leaves are granted to retrenched employees as part of the
retrenchment benefits regardless of whether or not they have
unused sick and vacation leaves at the time of the
retrenchment. Moreover, the applicability of the said
provisions to petitioner was not disputed by respondents.
They even invoked the same in manifesting conformity to the
deletion by the NLRC of the award of 15-day vacation leave for
every year of service. At any rate, any ambiguity therein must
be resolved strictly against the respondents, who drafted
these provisions.[31] Hence, petitioner is entitled not only to
15 days sick leave but also to 15 days vacation leave with pay
The Labor Arbiters computation of petitioners 15-day sick
leave pay must be modified. The NLRC, which affirmed the
Labor Arbiters decision, reduced petitioners number of years
of service from 9 to 8 years but it did not make the
corresponding adjustment in the determination of petitioners
43
sick leave pay which used 9 years as the basis in the
computation thereof. Accordingly, the awards of 15-day sick
leave and 15-day vacation leave for every year of service must
be computed using 8 years as its basis.
Finally, the award of attorneys fees must also be modified. In
Traders Royal Bank Employees Union-Independent v. National
Labor Relations Commission,[32] it was held that there are two
commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer
by his client for the legal services he has rendered to the latter.
The basis of this compensation is the fact of his employment
by and his agreement with the client. In its extraordinary
concept, attorneys fees are deemed indemnity for damages
ordered by the court to be paid by the losing party in a
litigation. The instances where these may be awarded are
those enumerated in Article 2208 of the Civil Code, specifically
par. 7 thereof which pertains to actions for recovery of wages,
and is payable not to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as
additional compensation or as part thereof. The extraordinary
concept of attorneys fees is the one contemplated in Article
111 of the Labor Code, which provides:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding of
wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered
The afore-quoted Article 111 is an exception to the declared
policy of strict construction in the awarding of attorneys fees.
Although an express finding of facts and law is still necessary
to prove the merit of the award, there need not be any
showing that the employer acted maliciously or in bad faith
when it withheld the wages. There need only be a showing that
the lawful wages were not paid accordingly, as in this case.[33]
In carrying out and interpreting the Labor Code's provisions
and its implementing regulations, the employees welfare
should be the primordial and paramount consideration. This
kind of interpretation gives meaning and substance to the
liberal and compassionate spirit of the law as provided in
Article 4 of the Labor Code which states that [a]ll doubts in the
implementation and interpretation of the provisions of [the
Labor] Code including its implementing rules and regulations,
shall be resolved in favor of labor, and Article 1702 of the Civil
Code which provides that [i]n case of doubt, all labor
legislation and all labor contracts shall be construed in favor of
the safety and decent living for the laborer.[34]
Labor Standards Notes and Cases 1st
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In the case at bar, what was withheld from petitioner was not
only his salary, vacation and sick leave pay, and 13th month
pay differential, but also his separation pay. Hence, pursuant
to current jurisprudence, separation pay must be included in
the basis for the computation of attorneys fees. Petitioner is
entitled to attorneys fees equivalent to 10% of his total
monetary award.[35]
WHEREFORE, in view of all the foregoing, the instant petition
is GRANTED. The assailed Resolutions dated January 28, 2002
and July 22, 2002 of the Court of Appeals in CA-G.R. SP No.
67431, are REVERSED and SET ASIDE. The Decision of the
National Labor Relations Commission in NLRC NCR CA 023679-
2000, is MODIFIED. In addition to the awards of underpayment
of salary, 13th month pay differential, sick leave pay and
separation pay, respondents are ordered to pay petitioner
vacation leave pay and 10% attorneys fees, the basis of which
shall be the total monetary award. Petitioners vacation leave
and sick leave pay shall be computed on the basis of his 8 years
of service with respondents. For this purpose, the case is
ordered REMANDED to the Labor Arbiter for the computation
of the amounts due petitioner.
SO ORDERED.
G & M PHILIPPINES, INC., G.R. No. 162308
Petitioner, - versus ROMIL V. CUAMBOT,* Promulgated:
Respondent.
November 22, 2006
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Decision[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 64744, as well as the Resolution[2]
dated February 20, 2004 denying the motion for
reconsideration thereof.
The antecedent facts are as follows:
44
On November 7, 1994, respondent Romil V. Cuambot applied
for deployment to Saudi Arabia as a car body builder with
petitioner G & M Philippines, Inc., a duly licensed placement
and recruitment agency. Respondents application was duly
processed and he later signed a two-year employment
contract to work at the Al Waha Workshop in Unaizah City,
Gassim, Kingdom of Saudi Arabia. He left the country on
January 5, 1995. However, respondent did not finish his
contract and returned to the Philippines barely six months
later, on July 24, 1995. On July 26, 1995, he filed before the
National Labor Relations Commission (NLRC) a complaint for
unpaid wages, withheld salaries, refund of plane ticket and
repatriation bond, later amended to include illegal dismissal,
claim for the unexpired portion of his employment contract,
actual, exemplary and moral damages, and attorneys fees. The
complaint was docketed as NLRC-NCR Case No. 00-07-05252-
95.
Respondent narrated that he began working for Mohd Al
Motairi,[3] the President and General Manager of the Al Waha
Workshop, on January 8, 1995. Along with his Filipino co-
workers, he was subjected to inhuman and unbearable
working conditions, to wit:
1. [He] was required to work from 7:00 oclock in the morning
to 10:00 oclock in the evening everyday, except Friday, or six
(6) hours overtime work daily from the usual eight (8) working
hours per day.
2. [He] was never paid x x x his monthly basic salary of 1,200
[Riyals] including his overtime pay for the six (6) hours
overtime work he rendered every working day during his work
in Saudi Arabia except for the amount of 100 [Riyals] given
every month for his meal allowance;
3. [He] was subjected to serious insult by respondent Muthiri
everytime he asked or demanded for his salary; and,
4. [S]ome of complainants letters that were sent by his
family were not given by respondent Muthiri and/or his staff x
x x.[4]
When respondent asked Motairi for his salary, he was told that
since a huge sum had been paid to the agency for his
recruitment and deployment, he would only be paid after the
said amount had already been recovered. He was also told that
his salary was only 800 Saudi Riyals (SAR) per month, in
contrast to the SAR1200 that was promised him under the
contract. Motairi warned that he would be sent home the next
Labor Standards Notes and Cases 1st
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time he demanded for his salary. Due to his familys incessant
letters asking for financial support, however, respondent
mustered the courage to again demand for his salaries during
the second week of July 1996. True to his word, Motairi
ordered him to pack up and leave. He was able to purchase his
plane ticket only through the contributions of his fellow
Filipinos. Motairi even accompanied him to the airport when
he bought his plane ticket. In the meantime, his wife had been
making inquiries about him.
To corroborate his claims, respondent submitted the following
documents: an undated letter[5] he had written addressed to
the Philippine Labor Attach in Riyadh, with Arabic
translation;[6] his wifes letter[7] dated June 28, 1995
addressed to the Gulangco Monteverde Agency, Manila Head
Office, asking for a favor to help [her] husband to come home
as early as possible; a fax message[8] dated July 17, 1995 from
a representative of the Land Bank of the Philippines (LBP) to a
counterpart in Riyadh, asking for assistance to locate
respondent;[9] and the
reply[10] from the Riyadh LBP representative requesting for
contact numbers to facilitate communication with respondent.
Respondent further claimed that his employers actuations
violated Articles 83 and 103 of the Labor Code. While he was
entitled to terminate his employment in accordance with
Article 285 (b) due to the treatment he received, he did not
exercise this right. He was nevertheless illegally dismissed by
his employer when he tried to collect the salaries due him.
Respondent further claimed that the reduction of his monthly
salary from SAR1,200 to SAR800 and petitioners failure to
furnish him a copy of the employment contract before his
departure amounted to prohibited practices under Article 34
(i) and (k) of the Labor Code.
Respondent prayed for the following relief:
WHEREFORE, premises considered, complainant most
respectfully prays unto this Honorable Office that the instant
complaint be given due course and that a decision be rendered
in his favor and against
respondents G & M (Phils.), Inc., Alwaha (sic) Workshop and/or
Muhamd (sic) Muthiri, as follows:
(1) Ordering the respondents to pay, jointly and severally,
complainant the unpaid salaries and overtime pay in the
amounts of P61,560.00 and P66,484.80, respectively, including
interests, until the same will be fully paid;
45
(2) Ordering the respondents to pay, jointly and severally,
complainant[s] salary for the unexpired portion of the contract
in the amount of P184,680.00, including interests, until the
same will be fully paid;
(3) Ordering the respondents to pay, jointly and severally,
complainant[s] actual expenses which he incurred in applying
for the job, including expenses in leaving for the job, including
expenses in leaving for Saudi Arabia and plane ticket, as well
as repatriation bond and incidental expenses in going home to
the Philippines in the amounts of P49,000.00 and P20,000.00,
respectively, including interests, until the same will be fully
paid;
(4) Ordering the respondents to pay, jointly and severally,
complainant moral damages in the amount of P150,000.00 and
exemplary damages in the amount of P150,000.00, including
interests, until the same will be fully paid;
(5) Ordering the respondents to pay, jointly and severally,
complainant for and as attorneys fees in the amount of
P68,172.48 or the amount equivalent to 10% of the total
amount of the foregoing claims and damages that may be
awarded by the Honorable Office to the complainant.[11]
In its position paper, petitioner alleged that respondent was
deployed for overseas work as car body builder for its Principal
Golden Wings Est. for General Services and Recruitment in
Saudi Arabia for an employment period of 24 months, with a
monthly salary of US$400.00.[12] It insisted that respondent
was religiously paid his salaries as they fell due. After working
for a little over seven months, respondent pleaded with his
employer to be allowed to return home since there were
family problems he had to settle personally. Respondent even
submitted a resignation letter[13] dated July 23, 1995.
To support its claim that respondent had been paid his salaries
as they fell due, petitioner submitted in evidence copies of
seven payslip[14] authenticated by the Philippine Labor Attach
in Riyadh, Saudi Arabia. Petitioner asserted that since
respondent only worked for a little over seven months and did
not finish his contract, he should pay the cost of the plane
ticket. It pointed out that according to the standard
employment contract, the employer would provide the
employee with a free plane ticket for the flight home only if
the worker finishes his contract.
Labor Standards Notes and Cases 1st
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Respondent countered that his signatures in the purported
payslips were forged. He denied having received his salaries for
the said period, except only for the SAR100 as monthly
allowance. He pointed out that the authentication of the
alleged pay slips and resignation letter before the labor attach
in Riyadh is immaterial, since the documents themselves were
falsified.
Respondent further claimed that petitioner required him to
pay a P10,000.00 placement fee and that he had to borrow
P2,000.00 from a relative. He was then told that the amount
would be considered as an advance payment and that the
balance would be deducted from his salary. He was not,
however, given any receipt. He insisted that the employment
contract which he signed indicated that he was supposed to
receive a monthly salary of SAR1,200 for working eight hours
a day, excluding overtime pay. He was repeatedly promised to
be furnished a copy of the contract and was later told that it
would be given to his wife, Minda. However, she was also given
the run-around and was told that the contract had already
been given to her husband.
To counter the allegation of forgery, petitioner claimed that
there was a great possibility that respondent had changed his
signature while abroad so that he could file a complaint for
illegal dismissal upon his return. The argument that the stroke
and handwriting on the payslip was written by one and the
same person is mere conjecture, as respondent could have
requested someone, i.e., the cashier, to prepare the
resignation letter for him. While it is the employer who fills up
the pay slip, respondent could have asked another employee
to prepare the resignation letter, particularly if he
(respondent) did not know how to phrase it himself.
Moreover, it could not be presumed that the payslip and
resignation letter were prepared by one and the same person,
as respondent is not a handwriting expert. Petitioner further
pointed out that respondent has different signatures, not only
in the pleadings submitted before the Labor Arbiter, but also
in respondents personal documents.
On January 30, 1997, Labor Arbiter Jose De Vera ruled in favor
of respondent on the following ratiocination:
What convinced this Arbitration Branch about the unreliability
of the complainants signature in the payslip is the close
semblance of the handwritings in the payslips and the
handwritings in the purported handwritten resignation of the
complainant. It unmistakably appears to this Arbitration
Branch that the payslips as well as the handwritten letter-
resignation were prepared by one and the same person. If it
46
were true that the handwritten letter-resignation was
prepared by the complainant, it follows that he also prepared
the payslips because the handwritings in both documents are
exactly the same and identical. But [this] is quite unbelievable
that complainant himself as the payee prepared the payslips
with the corresponding entries therein in his own handwriting.
Under the circumstances, the only logical conclusion is that
both the payslips and the handwritten letter-resignation were
prepared and signed by one and the same person definitely
not the complainant.
With the foregoing findings and conclusions, this Arbitration
Branch is of the well-considered view that complainant was
not paid his salaries from January 5, 1995 up to July 23, 1995
and that he was unjustifiably dismissed from his employment
when he repeatedly demanded for his unpaid salaries.
Respondents are, therefore, liable to pay the complainant his
salaries from January 5, 1995 up to July 23, 1995 which amount
to US$2,640.00 (US$400 x 6.6 mos). Further, respondents are
also liable to the complainant for the latters salaries for the
unexpired portion of his contract up to the maximum of three
(3) months pursuant to Section 10 of RA 8042, which amount
to US$1,200.00. Respondents must also refund complainants
plane fare for his return flight. And finally, being compelled to
litigate his claims, it is but just and x x x that complainant must
be awarded attorneys fees at the rate of ten percent (10%) of
the judgment award.
WHEREFORE, all the foregoing premises considered, judgment
is hereby rendered ordering the respondents to pay
complainant the aggregate sum of US$3,840.00 or its
equivalent in Philippine Currency at the exchange rate
prevailing at the time of payment, and to refund complainants
plane fare for his return flight. Further, respondents are
ordered to pay complainant attorneys fees at the rate of Ten
percent (10%) of the foregoing judgment award.[15]
Petitioner appealed the Decision of the Labor Arbiter to the
NLRC, alleging that the Labor Arbiter, not being a handwriting
expert, committed grave abuse of discretion amounting to lack
of jurisdiction in finding for respondent. In its Decision[16]
dated December 9, 1997, the NLRC upheld this contention and
remanded the case to the Arbitration Branch of origin for
referral to the government agency concerned for calligraphy
examination of the questioned documents.[17]
The case was then re-raffled to Labor Arbiter Enrico Angelo
Portillo. On September 11, 1998, the parties agreed to a
resetting to enable petitioner to secure the original copies of
Labor Standards Notes and Cases 1st
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documents from its foreign principal. However, on December
9, 1998, the parties agreed to submit the case for resolution
based on the pleadings and on the evidence on record.
This time, the complaint was dismissed for lack of merit.
According to Labor Arbiter Portillo, aside from respondents
bare allegations, he failed to substantiate his claim of poor
working conditions and long hours of employment. The fact
that he executed a handwritten resignation letter is enough
evidence of the fact that he voluntarily resigned from work.
Moreover, respondent failed to submit any evidence to refute
the pay slips duly signed and authenticated by the labor attach
in Saudi Arabia, inasmuch as their probative value cannot be
impugned by mere self-serving allegations. The Labor Arbiter
concluded that as between the oral allegations of workers that
they were not paid monetary benefits and the documentary
evidence presented by employer, the latter should prevail. [18]
Respondent appealed the decision before the NLRC, alleging
that the Labor Arbiter failed to consider the genuineness of the
signature which appears in the purported resignation letter
dated July 23, 1995, as well as those that appear in the seven
pay slips. He insisted that these documents should have been
endorsed to the National Bureau of Investigation Questioned
Documents Division or the Philippine National Police Crime
Laboratory for calligraphy examination.
The NLRC dismissed the appeal for lack of merit in a
Resolution[19] dated December 27, 2000. It held that the
questioned documents could not be endorsed to the agency
concerned since mere photocopies had been submitted in
evidence. The records also revealed that petitioner had
communicated to the foreign employer abroad, who sent the
original copies, but there was no response from respondent. It
also stressed that during the December 9, 1998 hearing, the
parties agreed to submit the case for resolution on the basis of
the pleadings and the evidence on record; if respondent had
wanted to have the documents endorsed to the NBI or the
PNP, he should have insisted that the documents be examined
by a handwriting expert of the government. Thus, respondent
was estopped from assailing the Labor Arbiters ruling.
Unsatisfied, respondent elevated the matter to the CA via
petition for certiorari. He pointed out that he merely acceded
to the submission of the case for resolution due to the
inordinate delays in the case. Moreover, the questioned
documents were within petitioners control, and it was
petitioner that repeatedly failed to produce the original
copies.
47
The CA reversed the ruling of the NLRC. According to the
appellate court, a visual examination of the questioned
signatures would instantly reveal significant differences in the
handwriting movement, stroke, and structure, as well as the
quality of lines of the signatures; Labor Arbiter Portillo
committed patent error in examining the signatures, and it is
the decision of Labor Arbiter De Vera which must be upheld.
The CA also pointed out the initial ruling of the NLRC (Second
Division) dated December 9, 1997 which set aside the earlier
decision of Labor Arbiter De Vera included a special directive
to the Arbitration Branch of origin to endorse the questioned
documents for calligraphy examination. However, respondent
Cuambot failed to produce original copies of the documents;
hence, Labor Arbiter Portillo proceeded with the case and
ruled in favor of petitioner G.M.Phils. The dispositive portion
of the CA ruling reads:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby
GRANTED. Accordingly, the assailed Resolutions dated 27
December 2000 and 12 February 2001, respectively, of the
NLRC Second Division are hereby SET ASIDE and the Decision
dated 20 February 1997 rendered by Labor Arbiter Jose De
Vera is hereby REINSTATED.[20]
Petitioner filed a motion for reconsideration, which the CA
denied for lack of merit in its Resolution[21] dated February
20, 2004.
Hence, the present petition, where petitioner claims that
THE COURT OF APPEALS GRAVELY ERRED ON A MATTER OF
LAW IN HOLDING THAT LABOR ARBITER ENRICO PORTILLO
GRAVELY ABUSED HIS DISCRETION WHEN HE HELD THAT THE
SIGNATURES APPEARING ON THE QUESTIONED DOCUMENTS
ARE THOSE OF THE PETITIONER.[22]
Petitioner points out that most of the signatures which Labor
Arbiter De Vera used as standards for comparison with the
signatures appearing on the questioned documents were
those in the pleadings filed by the respondent long after the
questioned documents had been supposedly signed by him. It
claims that respondent affixed his signatures on the pleadings
in question and intentionally made them different from his
true signature so that he could later on conveniently impugn
their authenticity. Petitioner claims that had Labor Arbiter De
Vera taken pains in considering these circumstances, he could
have determined that respondent may have actually
intentionally given a different name and slightly changed his
signature in his application, which name and signature he used
Labor Standards Notes and Cases 1st
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when he signed the questioned letter of resignation and
payslips, only to conveniently disown the same when he came
back to the country to file the present case.[23] Thus,
according to petitioner, the CA clearly committed a palpable
error of law when it reversed the ruling of the NLRC, which in
turn affirmed Labor Arbiter Portillos decision.
For his part, respondent contends that petitioners arguments
were already raised in the pleadings filed before Labor Arbiter
De Vera which had already been passed upon squarely in the
Labor Arbiters Decision of January 30, 1997.
The determinative issues in this case are essentially factual in
nature - (a) whether the signatures of respondent in the
payslips are mere forgeries, and (b) whether respondent
executed the resignation letter. Generally, it is not our function
to review findings of fact. However, in case of a divergence in
the findings and conclusions of the NLRC on the one hand, and
those of the Labor Arbiter and the CA on the other, the Court
may examine the evidence presented by the parties to
determine whether or not the employee was illegally
dismissed or voluntarily resigned from employment.[24] The
instant case thus falls within the exception.
We have carefully examined the evidence on record and find
that the petition must fail.
In its Decision[25] dated December 9, 1997, the NLRC had
ordered the case remanded to the Labor Arbiter precisely so
that the questioned documents purportedly signed/executed
by respondent could be subjected to calligraphy examination
by experts. It is precisely where a judgment or ruling fails to
make findings of fact that the case may be remanded to the
lower tribunal to enable it to determine them.[26] However,
instead of referring the questioned documents to the NBI or
the PNP as mandated by the Commissions ruling, Labor Arbiter
Portillo proceeded to rule in favor of petitioner, concluding
that respondents signatures were not forged, and as such,
respondents separation from employment was purely
voluntary. In fine, then, the Labor Arbiter gravely abused his
discretion when he ruled in favor of petitioner without abiding
by the Commissions directive.
We note, however, that a remand of the case at this juncture
would only result in unnecessary delay, especially considering
that this case has been pending since 1995. Indeed, it is this
Courts duty to settle, whenever possible, the entire
controversy in a single proceeding, leaving no root or branch
48
to bear the seeds of future litigation.[27] Hence, the case shall
be fully resolved on its merits.
We find that petitioners failure to submit the original copies of
the pay slips and the resignation letter raises doubts as to the
veracity of its claim that they were actually signed/penned by
respondent. The failure of a party to produce the original copy
of the document which is in issue has been taken against such
party, and has even been considered as a mere bargaining
chip, a dilatory tactic so that such party would be granted the
opportunity to adduce controverting evidence.[28] In fact,
petitioner did not even present in evidence the original copy
of the employment contract, much less a machine copy, giving
credence to respondents claim that he was not at all given a
copy of the employment contract after he signed it. What
petitioner presented was a mere photocopy of the OCW Info
Sheet[29] issued by the Philippine Overseas Employment
Administration as well as the Personal Data Sheet[30] which
respondent filled up. It bears stressing that the original copies
of all these documents, including the employment contract,
were in the possession of petitioner, or, at the very least,
petitioners principal.
Moreover, as correctly noted by the CA, the opinions of
handwriting experts, although helpful in the examination of
forged documents because of the technical procedure
involved in the analysis, are not binding upon the courts.[31]
As such, resort to these experts is not mandatory or
indispensable to the examination or the comparison of
handwriting. A finding of forgery does not depend entirely on
the testimonies of handwriting experts, because the judge
must conduct an independent examination of the questioned
signature in order to arrive at a reasonable conclusion as to its
authenticity.[32] No less than Section 22, Rule 132 of the Rules
of Court explicitly authorizes the court, by itself, to make a
comparison of the disputed handwriting with writings
admitted or treated as genuine by the party against whom the
evidence is offered or proved to be genuine to the satisfaction
of the judge. Indeed, the authenticity of signatures is not a
highly technical issue in the same sense that questions
concerning, e.g., quantum physics or topology, or molecular
biology, would constitute matters of a highly technical nature.
The opinion of a handwriting expert on the genuineness of a
questioned signature is certainly much less compelling upon a
judge than an opinion rendered by a specialist on a highly
technical issue.[33]
Even a cursory perusal of the resignation letter[34] and the
handwritten pay slips will readily show that they were written
Labor Standards Notes and Cases 1st 49
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by only one person. A mere layman will immediately notice
that the strokes and letters in the documents are very similar,
if not identical, to one another. It is also quite apparent from a
comparison of the signatures in the pay slips that they are
inconsistent, irregular, with uneven and faltering strokes.
We also find it unbelievable that after having waited for so long
to be deployed to Saudi Arabia and with the hopes of
opportunity to earn a better living within his reach, respondent
would just suddenly decide to abandon his work and go home
due to family problems. At the very least, respondent could
have at least specified the reason or elaborated on the details
of such an urgent matter so as not to jeopardize future
employment opportunities.
That respondent also filed the complaint immediately gives
more credence to his claim that he was illegally dismissed. He
arrived in the Philippines on July 24, 1995, and immediately
filed his complaint for illegal dismissal two days later, on July
26, 1995.
Moreover, one who pleads payment has the burden of proving
it. The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents
which will show that overtime, differentials, service incentive
leave, and other claims of workers have been paid are not in
the possession of the worker but in the custody and absolute
control of the employer. Thus, the burden of showing with
legal certainty that the obligation has been discharged with
payment falls on the debtor, in accordance with the rule that
one who pleads payment has the burden of proving it.[38]
Only when the debtor introduces evidence that the obligation
has been extinguished does the burden shift to the creditor,
who is then under a duty of producing evidence to show why
payment does not extinguish the obligation.[39] In this case,
petitioner was unable to present ample evidence to prove its
claim that respondent had received all his salaries and benefits
in full.
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED for
lack of merit. The Decision of the Court of Appeals in CA-G.R.
SP No. 64744 is AFFIRMED. Costs against the petitioners.

We are not impervious of petitioners claim that respondent SO ORDERED.

could have asked another person to execute the resignation
letter for him. However, petitioner failed to present even an
affidavit from a representative of its foreign principal in order
to support this allegation.

Indeed, the rule is that all doubts in the implementation and

the interpretation of the Labor Code shall be resolved in favor
of labor,[35] in order to give effect to the policy of the State to
afford protection to labor, promote full employment, ensure
equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers, and to
assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions
of work.[36] We reiterate the following pronouncement in
Nicario v. National Labor Relations Commission:[37]

It is a well-settled doctrine, that if doubts exist between the

evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. It is a time-
honored rule that in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved
in the formers favor. The policy is to extend the doctrine to a
greater number of employees who can avail of the benefits
under the law, which is in consonance with the avowed policy
of the State to give maximum aid and protection of labor.