Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 71813

July 20, 1987

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE,
SR., respondents.
PARAS, J.:
This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor and Employment affirming
the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of granting separation pay to private respondents.
On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde, Negros Occidental, known
as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for another ten (10) years (Rollo,
pp. 16-20).
On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp. 26-27).
During the existence of the lease, she employed the herein private respondents. Private respondent Ricardo Dionele, Sr.
has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the other hand, private respondent
Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo in November of the same year.
Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the
owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm (Rollo, pp. 33;
89).
On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and
Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the
parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982
(Ibid, pp. 29-31), ruled that the dismissal is warranted by the cessation of business, but granted the private respondents
separation pay. Pertinent portion of the dispositive portion of the Decision reads:
In the instant case, the respondent closed its business operation not by reason of business reverses or losses.
Accordingly, the award of termination pay in complainants' favor is warranted.
WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the rate of half-month
salary for every year of service, a fraction of six (6) months being considered one (1) year. (Rollo pp. 29-30)
On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8, 1985 (Ibid, pp.
3940), affirmed the decision and dismissed the appeal for lack of merit.
On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same was denied in a Resolution
dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-8).
The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the respondents to
comment (Ibid, p. 58). In compliance therewith, private respondents filed their Comment on October 23, 1985 (Ibid, pp.
53-55); and the Solicitor General on December 17, 1985 (Ibid, pp. 71-73-B).
On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and public respondents (Ibid,
pp. 80-81).
The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to the petition; and to
require the parties to submit simultaneous memoranda (Ibid., p. 83). In compliance therewith, the Solicitor General filed
his Memorandum on June 18, 1986 (Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).
The petition is devoid of merit.
The sole issue in this case is
WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.
Petitioner claims that since her lease agreement had already expired, she is not liable for payment of separation pay.
Neither could she reinstate the complainants in the farm as this is a complete cessation or closure of a business
operation, a just cause for employment termination under Article 272 of the Labor Code.
On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private respondents is Batas
Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically provides:
Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

xxx

xxx

xxx

Art. 284. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establisment or undertaking unless the closing is for the
purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations
of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.1avvphi1
There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in this case.
Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor Arbiter does
not argue the justification of the termination of employment but applied Article 284 as amended, which provides for the
rights of the employees under the circumstances of termination.
Petitioner then contends that the aforequoted provision violates the constitutional guarantee against impairment of
obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27, 1960, neither she nor the
lessor contemplated the creation of the obligation to pay separation pay to workers at the end of the lease.
Such contention is untenable.
This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369 [1977]) where the
Supreme Court ruled:
It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and
unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The
prohibition is not to read with literal exactness like a mathematical formula for it prohibits unreasonable
impairment only. In spite of the constitutional prohibition the State continues to possess authority to safeguard the
vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts
already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the
parties but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of
the legal order. All contracts made with reference to any matter that is subject to regulation under the police
power must be understood as made in reference to the possible exercise of that power. Otherwise, important and
valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that
which otherwise maybe prohibited. ...
In order to determine whether legislation unconstitutionally impairs contract of obligations, no unchanging
yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be
measured or determined, has been fashioned, but every case must be determined upon its own circumstances.
Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the
general good of the people, and when the means adopted must be legitimate, i.e. within the scope of the reserved
power of the state construed in harmony with the constitutional limitation of that power. (Citing Basa vs.
Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November
19, 1974; 61 SCRA 93,102-113]).
The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated
because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents
in the case at bar will lose the benefits to which they are entitled for the thirty three years of service in the case of
Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda,
in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be
considered as new employees and the years of service behind them would amount to nothing.
Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of the parties with
reference to each other and not with reference to non-parties.
As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farm hands who
were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the
effect of annulling subsequent legislation designed to protect the interest of the working class.
In any event, it is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its
implementing regulations, the workingman's welfare should be the primordial and paramount consideration. (Volshel
Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and
substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which
states that "all doubts in the implementation and interpretation of the provisions of this Code including its implementing
rules and regulations shall be resolved in favor of labor." The policy is to extend the applicability of the decree 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 to labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA 422
[1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation
Commission, 109 SCRA 209).
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of the Labor Arbiter
and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48926 December 14, 1987
MANUEL SOSITO, petitioner,
vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J.:
We gave due course to this petition and required the parties to file simultaneous memoranda on the sole question of
whether or not the petitioner is entitled to separation pay under the retrenchment program of the private respondent.
The facts are as follows:
Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in charge of
logging importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with the consent of the company
2
on January 16, 1976. On July 20, 1976, the private respondent, through its president, announced a retrenchment
program and offered separation pay to employees in the active service as of June 30, 1976, who would tender their
resignations not later than July 31, 1976. The petitioner decided to accept this offer and so submitted his resignation on
3
July 29, 1976, "to avail himself of the gratuity benefits" promised. However, his resignation was not acted upon and he
was never given the separation pay he expected. The petitioner complained to the Department of Labor, where he was
4
sustained by the labor arbiter. The company was ordered to pay Sosito the sum of P 4,387.50, representing his salary
for six and a half months. On appeal to the National Labor Relations Commission, this decision was reversed and it was
5
held that the petitioner was not covered by the retrenchment program. The petitioner then came to us.
For a better understanding of this case, the memorandum of the private respondent on its retrenchment program is
reproduced in full as follows:

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM
As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) years
were adversely affected by the worldwide decline in the demand for and prices of logs and wood
products. Our company was no exception to this general decline in the market, and has suffered
tremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.

The company has made a general review of its operations and has come to the unhappy decision of the
need to make adjustments in its manpower strength if it is to survive. This is indeed an unfortunate and
painful decision to make, but it leaves the company no alternative but to reduce its tremendous and
excessive overhead expense in order to prevent an ultimate closure.
Although the law allows the Company, in a situation such as this, to drastically reduce it manpower
strength without any obligation to pay separation benefits, we recognize the need to provide our
employees some financial assistance while they are looking for other jobs.
The Company therefore is adopting a retrenchment program whereby employees who are in the active
service as of June 30, 1976 will be paid separation benefits in an amount equivalent to the employee's
one-half (1/2) month's basic salary multiplied by his/her years of service with the Company. Employees
interested in availing of the separation benefits offered by the Company must manifest such intention by
submitting written letters of resignation to the Management not later than July 31, 1976. Those whose
resignations are accepted shall be informed accordingly and shall be paid their separation benefits.
After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter, the
Company shall apply for a clearance to terminate the services of such number of employees as may be
necessary in order to reduce the manpower strength to such desired level as to prevent further losses.
(SGD.) JOSE G.
RICAFORT
Preside
nt
N.B.
For additional information
and/or resignation forms,
please see Mr. Vic Maceda
or Atty. Ben Aritao.

It is clear from the memorandum that the offer of separation pay was extended only to those who were in the active
service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the promised gratuity
as he was not actually working with the company as of the said date. Being on indefinite leave, he was not in the active
service of the private respondent although, if one were to be technical, he was still in its employ. Even so, during the
period of indefinite leave, he was not entitled to receive any salary or to enjoy any other benefits available to those in the
active service.
It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private respondent. He has
insulated himself from the insecurities of the floundering firm but at the same time would demand the benefits it offers.
Being on indefinite leave from the company, he could seek and try other employment and remain there if he should find it
acceptable; but if not, he could go back to his former work and argue that he still had the right to return as he was only on
leave.
There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the record shows
that he voluntarily sought the indefinite leave which the private respondent granted. It is strange that the company should
agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the
petitioner but the petitioner would have a right to resume his work as and when he saw fit.
We note that under the law then in force the private respondent could have validly reduced its work force because of its
financial reverses without the obligation to grant separation pay. This was permitted under the original Article 272(a), of
7
the Labor Code, which was in force at the time. To its credit, however, the company voluntarily offered gratuities to those
who would agree to be phased out pursuant to the terms and conditions of its retrenchment program, in recognition of
their loyalty and to tide them over their own financial difficulties. The Court feels that such compassionate measure
deserves commendation and support but at the same time rules that it should be available only to those who are qualified
therefore. We hold that the petitioner is not one of them.
While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights
which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with
less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.
WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-49582 January 7, 1986
CBTC EMPLOYEES UNION, petitioner,
vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant, and COMMERCIAL BANK & TRUST
COMPANY OF THE PHILIPPINES, respondents.
Francisco F. Angeles for petitioner.
Pacis, Reyes, De Leon & Cruz Law, Office for respondent CBTC.
Edmundo R. AbigaN, Jr. for respondent Union.

DE LA FUENTE, J.:
Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential Executive
1
Assistant affirming that of the Acting Secretary of Labor who reversed the decision of the National Labor Relations
Comission which upheld the Voluntary Arbitrator's order directing the private respondent bank to pay its monthly paid
employees their "legal holiday pay."
Petitioner Commercial Bank and Trust Company Employees' Union (Union for short) lodged a complaint with the Regional
Office No. IV, Department of Labor, against private respondent bank (Comtrust) for non-payment of the holiday pay
benefits provided for under Article 95 of the Labor Code in relation to Rule X, Book III of the Rules and Regulations
Implementing the Labor Code.
Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their dispute for voluntary
arbitration. The issue presented was: "Whether the permanent employees of the Bank within the collective bargaining unit
paid on a monthly basis are entitled to holiday pay effective November 1, 1974, pursuant to Article 95 (now Article 94) of
the Labor Code, as amended and Rule X (now Rule IV), Book III of the Rules and Regulations Implementing the Labor
Code. "

In addition, the disputants signed a Submission Agreement stipulating as final, unappealable and executory the decision
of the Arbitrator, including subsequent issuances for clarificatory and/or relief purposes, notwithstanding Article 262 of the
2
Labor Code which allow appeal in certain instances.
In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on "holiday pay" about to be
3
issued by the Department of Labor. Whereupon, the Union filed a Manifestation which insofar as relevant stated:
6. That complainant union . . . has manifested its apprehension on the contents of the said Interpretative
Bulletin in view of a well-nigh irresistible move on the part of the employers to exclude permanent workers
similarly situated as the employees of Comtrust from the coverage of the holiday pay benefit despite the
express and self-explanatory provisions of the law, its implementing rules and opinions thereon . . . .
7. That in the event that said Interpretative Bulletin regarding holiday pay would be adverse to the present
claim . . . in that it would in effect exclude the said employees from enjoyment of said benefit, whether
wholly or partially, complainant union respectfully reserves the right to take such action as may be
appropriate to protect its interests, a question of law being involved. . . . An Interpretative Bulletin which
was inexistent at the time the said commitment was made and which may be contrary to the law itself
should not bar the right of the union to claim for its holiday pay benefits.
On April 22, 1976, the Arbitrator handed down an award on the dispute. Relevant portions thereof read as follows:
The uncontroverted facts of this case are as follows:
(1) That the complainant Union is the recognized sole and exclusive collective bargaining representative
of all the permanent rank-and-file employees of the Bank with an existing Collective Bargaining
Agreement covering the period from July 1, 1974 up to June 30, 1977;
(2) That ... the standard workweek of the Bank generally consists of five (5) days of eight (8) hours each
day which, . . . said five days are generally from Monday thru Friday; and, as a rule, Saturdays, Sundays
and the regular holidays are not considered part of the standard workweek.
(3) That, in computing the equivalent daily rate of its employees covered by the CBA who are paid on a
monthly basis, the following computation is used, as per the provisions of Section 4, Article VII, of the
CBA (Annex "A"):
Daily Rate = Basic Monthly Salary plus CLA x 12 250
Basic Hourly Rate = Daily Rate 8
(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52 Saturdays, the 10
regular holidays and December 31 (secured thru bargaining), or a total of 115 off-days from the 365 days
of the year or a difference of 250 days.
Considering the above uncontroverted facts, the principal question to be resolved is whether or not the
monthly pay of the covered employees already includes what Article 94 of the Labor Code requires as
regular holiday pay benefit in the amount of his regular daily wage (100% if unworked or 200% if worked)
during the regular holidays enumerated therein, i.e., Article 94(c) of the Labor Code.
In its latest Memorandum, filed on March 26, 1976, the Bank relies heavily on the
provisions of Section 2, Rule IV, Book 111, of the Rules and Regulations implementing
particularly Article 94 (formerly Article 208) of the Labor Code, which Section reads as
follows:
SECTION 2. Status of employees paid by the month -Employees who are uniformly paid by the month,
irrespective of the number of' working days therein with a salary of not less than the statutory or
established minimum wage, shall be presumed to be paid for all days in the month whether worked or
not.
For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve. (Emphasis supplied).
While admitting that there has virtually been no change effected by Presidential Decree No. 850, which
amended the Labor Code, other than the re-numbering of the original Article 208 of said Code to what is
now Article 94, the Bank, however, attaches a great deal of significance in the above-quoted Rule as to
render the question at issue 'moot and academic'.
On the other hand, the Union maintains, in its own latest Memorandum, filed also on March 26, 1976, that
the legal presumption established in the above-quoted Rule is merely a disputable presumption. This
contention of the Union is now supported by a pronouncement categorically to that effect by no less than
the National Labor Relations Commission (NLRC) in the case of The Chartered Bank Employees
Association vs. The Chartered Bank. NLRC Case No. (s) RB-IV-1739-75 (RO4-5-3028-75), which reads,
in part, as follows:
. . . A disputable presumption was sea in that it would be presumed the salary of monthlypaid employees may already include rest days, such as Saturdays, Sundays, special and
legal holidays, worked or unworked, in effect connoting that evidence to the contrary may
destroy such a supposed legal presumption. Indeed, the Rule merely sets a presumption.

It does not conclusively presume that the salary of monthly-paid employees already
includes unworked holidays. . . .
The practice of the Bank of paying its employees a sum equivalent to Base pay plus
Premium on Saturdays, Sundays and special and legal holidays, destroys the legal
presumption that monthly pay is for an days of the month. For if the monthly pay is
payment for all days of the month, then why should the employee be paid again for
working on such rest days. (Emphasis supplied)
There is no reason at present not to adopt the above ruling of the Honorable Comission, especially
considering the fact that this Arbitrator, in asking a query on the nature of the presumption established by
the above Rule, from the Director of Labor Standards in the PMAP Conference held at the Makati Hotel
on March 13, 1976, was given the categorical answer that said presumption is merely disputable. This
answer from the Labor Standards Director is significant inasmuch as it is his office, the Bureau of Labor
Standards, that is reportedly instrumental in the preparation of the implementing Rules, particularly on
Book III of the Labor Code on Conditions of Employment, to which group the present Rule under
discussion belongs.
So, rather than rendering moot and academic the issue at hand, as suggested by the Bank, the more
logical step to take is to determine whether or not there is sufficient evidence to overcome the disputable
presumption established by the Rule.
It is unquestioned, and as provided for in the CBA itself, that the divisor used in determining the daily rate
of the monthly-paid employees is '250'.
xxx xxx xxx
Against this backdrop, certain relevant and logical conclusions result, namely:
(A) The Bank maintains that, since its inception or start of operations in 1954, all monthly-paid employees
in the Bank are paid their monthly salaries without any deduction for unworked Saturdays, Sundays,
legals and special holidays. On the other hand, it also maitains that, as a matter of fact, 'always conscious
of its employee who has to work, on respondent's rest days of Saturdays and Sundays or on a legal
holiday, an employee who works overtime on any of said days is paid one addition regular pay for the day
plus 50% of said regular pay (Bank's Memorandum, page 3, filed January 21, 1976). . . .
xxx xxx xxx
On the other hand, there is more reason to believe that, if the Bank has never made any deduction from
its monthly-paid employees for unworked Saturdays, Sundays, legal and special holidays, it is because
there is really nothing to deduct properly since the monthly, salary never really included pay for such
unworked days-and which give credence to the conclusion that the divisor '250' is the proper one to use in
computing the equivalent daily rate of the monthly-paid employees.
(B) The Bank further maintains that the holiday pay is intended only for daily-paid workers. In this regard,
the NLRC has this to say , in the same above-quoted Chartered Bank case:
It is contended that holiday pay is primarily for daily wage earners. Let us examine the
law, more specifically Article 95 (now Article 94) of the Labor Code to see whether it
supports this contention. The words used in the Decree are 'every worker', while the
framers of the Implementing Rules preferred the use of the phrase 'all employees.' Both
the decree itself and the Rules mentioned enumerated the excepted workers. It is a basic
rule of statutory construction that putting an exception limits or modifies the enumeration
or meaning made in the law. it is thus easy to see that a mere reading ofthe Decree and
of the Rules would show that the monthly-paid employees of the Bank are not expressly
included in the enumeration of the exception.
Special notice is made of the fact that the criteria at once readable from the exception
referred to is the nature of the job and the number of employees involved, and not
whether the employee is a daily-wage earner or a regular monthly-paid employee.
There is no reason at all to digress from the above-quoted observation of the Honorable Commission for
purposes of the present case.
xxx xxx xxx
Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-executing provisions,
conjointly with its corresponding implementing Rules, it is to be taken to have taken effect, as of
November 1, 1974, as per Section I (1), Rule IV, Book III , of the Implementing Rules.
WHEREAS, all the above premises considered, this Arbitrator rules that:
(1) All the monthly-paid employees of the Bank herein represented by the Union and as governed by their
Collective Bargaining Agreement, are entitled to the holiday pay benefits as provided for in Article 94 of
the labor Code and as implemented by Rule IV, Book III, of the corresponding implementing Rules,
except for any day or any longer period designated by lawor holding a general election or referendum;

(2) Paragraph (1) hereof means that any covered employee who does not work on any of the regular
holidays enumerated in Article 94 (c) of the Labor Code, except that which is designated for election or
referendum purposes, is still entitled to receive an amount equivalent to his regular daily wage in addition
to his monthly salary. If he work on any of the regular holidays, other than that which is designated for
election or referendum purposes, he is entitled to twice, his regular daily wage in addition to his monthly
salary. The 50% premium pay provided for in the CBA for working on a rest day (which has been
interpreted by the parties to include the holidays) shall be deemed already included in the 200% he
receives for working on a regular holiday. With respect to the day or any longer period designated by law
for holding a general election or referendum, if the employee does not work on such day or period he
shall no longer be entitled to receive any additional amount other than his monthly salary which is
deemed to include already his regular daily wage for such day or period. If he works on such day or
period, he shall be entitled to an amount equivalent to his regular daily wage (100%) for that day or period
in addition to his monthly salary. The 50% premium pay provided for in the CBA for working on that day or
period shall be deemed already included in the additional 100% he receives for working on such day or
period; and
(3) The Bank is hereby ordered to pay all the above employees in accordance with the above paragraphs
(1) and (2), retroactive from November 1, 1974.
SO ORDERED.
April 22, 1976, Manila, Philippines.

The next day, on April 23, 1976, the Department of Labor released Policy Instructions No. 9, hereinbelow quoted:
The Rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal
holidays. Before PD 850, the number of working days a year in a firm was considered important in
determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he
was considered definitely already paid. If he was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the
case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal
holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the
entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is
receiving not less than P 240, the maximum monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of holidays in months where they occur, then he
is still entitled to the ten (10) paid legal holidays.
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately.
After receipt of a copy of the award, private respondent filed a motion for reconsideration, followed by a supplement
thereto. Said motion for reconsideration was denied. A copy of the order of denial was received by private respondent on
July 8, 1976.
Said private respondent interposed an appeal to the National Labor Relations Commission (NLRC), contending that the
Arbitrator demonstrated gross incompetence and/or grave abuse of discretion when he entirely premised the award on the
Chartered Bank case and failed to apply Policy Instructions No. 9. This appeal was dismissed on August 16, 1976, by the
NLRC because it was filed way beyond the ten-day period for perfecting an appeal and because it contravened the
agreement that the award shall be final and unappealable.
Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting Secretary of Labor reversed
the NLRC decision and ruled that the appeal was filed on time and that a review of the case was inevitable as the money
5
claim exceeded P100,000.00. Regarding the timeliness of the appeal, it was pointed out that the labor Department had
on several occasions treated a motion for reconsideration (here, filed before the Arbitrator) as an appeal to the proper
appellate body in consonance with the spirit of the Labor Code to afford the parties a just, expeditious and inexpensive
disposition of their claims, liberated from the strict technical rules obtaining in the ordinary courts.
Anent the issue whether or not the agreement barred the appeal, it was noted that the Manifestation, supra, "is not of
slight significance because it has in fact abrogated complainant's commitment to abide with the decision of the Voluntary
6
Arbitrator without any reservation" and amounted to a "virtual repudiation of the agreement vesting finality" on the
arbitrator's disposition.
And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9, applied thesame
retrospectively, among other things.
In due time, the Union appealed to the Office of the President. In affirming the assailed decision, Presidential Executive
Assistant Jacobo C. Clave relied heavily on the Manifestation and Policy Instructions No. 9.
Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as private respondent, as a
consequence of the Articles of Merger executed by said bank and Commercial Bank & Trust Co. which inter
alia designated the former as the surviving corporate entity. Said motion was granted by the Court.
We find the petitioner impressed with merit.
In excluding the union members of herein petitioner from the benefits of the holiday pay law, public respondent predicated
his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the labor Code promulgated by the then
Secretary of labor and Policy Instructions No. 9.
7

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, this Court's Second Division, speaking
through former Justice Makasiar, expressed the view and declared that the aforementioned section and interpretative
bulletin are null and void, having been promulgated by the then Secretary of Labor in excess of his rule-making authority.
It was pointed out, inter alia, that in the guise of clarifying the provisions on holiday pay, said rule and policy instructions in
effect amended the law by enlarging the scope of the exclusions. We further stated that the then Secretary of Labor went
as far as to categorically state that the benefit is principally intended for daily paid employees whereas the law clearly
states that every worker shall be paid their regular holiday pay-which is incompatible with the mandatory directive, in
Article 4 of the Labor Code, that "all doubts in the implementation and interpretation of the provisions of Labor Code,
including its implementing rules and regulations, shall be resolved in favor of labor." Thus, there was no basis at all to
deprive the union members of their right to holiday pay.
8

In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople, this Court in an en bancdecision
had the occasion to reiterate the above-stated pronouncement. We added:
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction
No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'. While the
additional exclusion is only in the form of a presumption that all monthly paid employees have already
been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be
valid. An administrative interpretation which diminishes the benefits of labor more than what the statute
delimits or withholds is obviously ultra vires.
In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it was premised
principally on the same Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9. This being
the decisive issue to be resolved, We find no necessity to pass upon the other issues raised, such as the effects of the
Union's Manifestation and the propriety of applying Policy Instructions No. 9 retroactively to the instant case.
WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and the Acting Secretary of
labor are hereby set aside, and the award of the Arbitrator reinstated. Costs against the private respondent.
IT IS SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 78763 July 12,1989
MANILA ELECTRIC COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and APOLINARIO M. SIGNO, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Dominador Maglalang for private respondent.

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the resolution of the
respondent National Labor Relations Commission dated March 12, 1987 (p. 28, Rollo) in NLRC Case No. NCR-8-380883, entitled, "Apolinario M. Signo, Complainant, versus Manila Electric Company, Respondents", affirming the decision of
the Labor Arbiter which ordered the reinstatement of private respondent herein, Apolinario Signo, to his former position
without backwages.
The antecedent facts are as follows:
Private respondent Signo was employed in petitioner company as supervisor-leadman since January 1963 up to the time
when his services were terminated on May 18, 1983.
In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical services at his residence
at Peafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private respondent Signo facilitated the processing of the
said application as well as the required documentation for said application at the Municipality of Antipolo, Rizal. In
consideration thereof, private respondent received from Fernando de Lara the amount of P7,000.00. Signo thereafter filed
the application for electric services with the Power Sales Division of the company.
It was established that the area where the residence of de Lara was located is not yet within the serviceable point of
Meralco, because the place was beyond the 30-meter distance from the nearest existing Meralco facilities. In order to
expedite the electrical connections at de Lara's residence, certain employees of the company, including respondent
Signo, made it appear in the application that the sari-sari store at the corner of Marcos Highway, an entrance to the
subdivision, is applicant de Lara's establishment, which, in reality is not owned by the latter.
As a result of this scheme, the electrical connections to de Lara's residence were installed and made possible. However,
due to the fault of the Power Sales Division of petitioner company, Fernando de Lara was not billed for more than a year.
Petitioner company conducted an investigation of the matter and found respondent Signo responsible for the said
irregularities in the installation. Thus, the services of the latter were terminated on May 18, 1983.
On August 10 1983, respondent Signo filed a complaint for illegal dismissal, unpaid wages, and separation pay.
After the parties had submitted their position papers, the Labor Arbiter rendered a decision (p. 79, Rollo) on April 29,
1985, which stated, inter alia:
Verily, complainant's act of inducing the Meralco employees to effectuate the installation on Engr. de
Lara's residence prejudiced the respondent, and therefore, complainant himself had indeed became a
participant in the transactions, although not directly, which turned out to be illegal, not to mention that
some of the materials used therein belongs to Meralco, some of which were inferior quality. . . .
While complainant may deny the violation, he cannot do away with company's Code on Employee
Discipline, more particularly Section 7, par. 8 and Section 6, par. 24 thereof However, as admitted by the
respondent, the infraction of the above cited Code is punishable by reprimand to dismissal."
... . And in this case, while considering that complainant indeed committed the above-cited infractions of
company Code of Employee Discipline, We shall also consider his records of uninterrupted twenty (20)
years of service coupled with two (2) commendations for honesty. Likewise, We shall take note that
subject offense is his first, and therefore, to impose the extreme penalty of dismissal is certainly too
drastic. A penalty short of dismissal is more in keeping with justice, and adherence to compassionate
society.
WHEREFORE, respondent Meralco is hereby directed to reinstate complainant Apolinario M. Signo to his
former position as Supervisor Leadman without backwages, considering that he is not at all faultless. He

is however, here warned, that commission of similar offense in the future, shall be dealt with more
severely.
SO ORDERED.
Both parties appealed from the decision to the respondent Commission. On March 12, 1987, the respondent Commission
dismissed both appeals for lack of merit and affirmed in toto the decision of the Labor Arbiter.
On June 23, 1987, the instant petition was filed with the petitioner contending that the respondent Commission committed
grave abuse of discretion in affirming the decision of the Labor Arbiter. A temporary restraining order was issued by this
Court on August 3, 1987, enjoining the respondents from enforcing the questioned resolution of the respondent
Commission.
The issue to resolve in the instant case is whether or not respondent Signo should be dismissed from petitioner company
on grounds of serious misconduct and loss of trust and confidence.
Petitioner contends that respondent Signo violated Sections 6 and 7 of the company's Code on Employee Discipline,
which provide:
Section 6, Par. 24Encouraging, inducing or threatening another employee to perform an act constituting
a violation of this Code or of company work, rules or an offense in connection with the official duties of the
latter, or allowing himself to be persuaded, induced or influenced to commit such offense.
PenaltyReprimand to dismissal, depending upon the gravity of the offense.
Section 7, Par. 8Soliciting or receiving money, gift, share, percentage or benefits from any person,
personally or through the mediation of another, to perform an act prejudicial to the Company.
PenaltyDismissal. (pp. 13-14, Rollo)
Petitioner further argues that the acts of private respondent constituted breach of trust and caused the petitioner company
economic losses resulting from the unbilled electric consumption of de Lara; that in view thereof, the dismissal of private
respondent Signo is proper considering the circumstances of the case.
The power to dismiss is the normal prerogative of the employer. An employer, generally, can dismiss or lay-off an
employee for just and authorized causes enumerated under Articles 282 and 283 of the Labor Code. However, the right of
an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its
paramount police power. This is so because the preservation of the lives of the citizens is a basic duty of the State, more
vital than the preservation of corporate profits (Euro-Linea, Phil. Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156
SCRA 78).
There is no question that herein respondent Signo is guilty of breach of trust and violation of company rules, the penalty
for which ranges from reprimand to dismissal depending on the gravity of the offense. However, as earlier stated, the
respondent Commission and the Labor Arbiter found that dismissal should not be meted to respondent Signo considering
his twenty (20) years of service in the employ of petitioner, without any previous derogatory record, in addition to the fact
that petitioner company had awarded him in the past, two (2) commendations for honesty. If ever the petitioner suffered
losses resulting from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner's Power
Sales Division.
We find no reason to disturb these findings. Well-established is the principle that findings of administrative agencies which
have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect
but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate the sufficiency of the
evidence upon which the proper labor officer or office based his or its determination but is limited to issues of jurisdiction
or grave abuse of discretion (Special Events and Central Shipping Office Workers Union v. San Miguel Corporation, G.R.
Nos. L-51002-06, May 30,1983,122 SCRA 557).
This Court has held time and again, in a number of decisions, that notwithstanding the existence of a valid cause for
dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a
penalty if the latter has been employed for a considerable length of time in the service of his employer. (Itogon-Suyoc
Mines, Inc. v. NLRC, et al., G.R. No. L- 54280, September 30,1982,117 SCRA 523; Meracap v. International Ceramics
Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979, 92 SCRA 412; Sampang v. Inciong, G.R. No. 50992,
June 19,1985,137 SCRA 56; De Leon v. NLRC, G.R. No. L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines,
Inc. v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489).
In a similar case, this Court ruled:
As repeatedly been held by this Court, an employer cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of breach of trust towards his employer and whose
continuance in the service of the latter is patently inimical to its interest. The law in protecting the rights of
the laborers, authorized neither oppression nor self- destruction of the employer.
However, taking into account private respondent's 'twenty-three (23) years of service which undisputedly
is unblemished by any previous derogatory record' as found by the respondent Commission itself, and
since he has been under preventive suspension during the pendency of this case, in the absence of a
showing that the continued employment of private respondent would result in petitioner's oppression or
self-destruction, We are of the considered view that his dismissal is a drastic punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would therefore be served if private respondent is
reinstated but without backwages in view of petitioner's obvious good faith. (Itogon- Suyoc Mines, Inc. v.
NLRC, et al., 11 7 SCRA 528)
Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's
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 for in Article 4 of the New Labor Code which states 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" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140).
In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but without the award of
backwages, considering the good faith of the employer in dismissing the respondent.
ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed decision of the National Labor
Relations Commission dated March 12, 1987 is AFFIRMED. The temporary restraining order issued on August 3, 1987 is
lifted.
SO ORDERED.
SECOND DIVISION

[G.R. No. 143258. August 15, 2003]

PHILIPPINE AIRLINES, INC., petitioner, vs. JOSELITO PASCUA, ROBERT ABION, IRENEO ACOSTA, GARY
NEPOMUCENO, JASON PALAD, CEFERINO de la CRUZ, JOEL SALGADO, WILFREDO RIVERA,
ALEXANDER ANORE, FERNANDO BACCAY, EDILBERTO FAUNE, REYMAR KALAW, GARY G.
MARASIGAN, RODOLFO ODO, JONATHAN RENGO, ARTHURAPOSTOL, EDUARDO BALICASAN, MATHIAS
GLEAN, ALINORMAN HARANGOTE, CRISANTO CASTILLO, REX MARION CUERPO, EDGARDO del PRADO, RICARDO
HERNANDEZ, PEDRO MERCADO JR., CESAR PAYOYO, RONALDO QUEROL, MAURELIO SIERRA, MANUEL
VILLELA, LOUISEN FELIPE, LOBENEDICTO TIMBREZA, ANTONIO CABUG, ELISEO ESPIRITU, ARNEL
BAUTISTA, ANTHONY ROBLES, DENNIS ARANDIA, CHARLIE BALUBAL, RHODERIC BITAS, ORLANDO
CANDA, CHARLIE de la CRUZ, RIQUESENDO de la FUENTE, RENO DUQUE, JONATHAN FEBRE, ALVIN RIBERTA,
NATHANIEL MALABAS, JUANITO SERUMA, FREDERICH de ASIS, ROMMEL ESTRADA, SYDFREY
EVARISTO, ERICSON INTAL, FERDINAND GALANG, RUBEN PEROLINA, ROBERT McBURNEY, ENRIQUE
SORIANO, ALVIN MANALAYSAY, NEMESIO MAALA, RAUL NEPOMUCENO, SAMUEL REYES, ERWIN
MINA, MANUEL REYES, REYNALDO ORAPA, TEODORICO PADELIO, RANDY PIMENTEL, WILLIAM
PATRIMONIO, JOEL RAMOS, OLEGARIO REYES, RAUL OCULTO, ROGELIO OLQUINDO, and LARRY
VILLAFLOR. respondents.
DECISION
QUISUMBING, J.:
[1]

[2]

For review is the decision dated January 26, 2000 of the Court of Appeals and its May 23, 2000 resolution in CAG.R. SP No. 50351. The appellate court dismissed the petition for certiorari filed by petitioner to challenge the NLRC
[3]
decision dated January 23, 1998, in NLRC NCR CA No. 010598-96, and likewise denied their motion for
reconsideration.
The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:
In April, August, and September of 1992, PAL hired private respondents as station attendants on a four or six-hour work-shift a day at
five to six days a week.
The primary duty of private respondents who were assigned to PALs Air services Department and ASD/CARGO was to load cargo to
departing, and unload cargo from arriving PAL international flights as well as flights of Cathay Pacific, Northwest Airlines and Thai
Airlines with which PAL had service contract[s].
On certain occasions, PAL compelled private respondents to work overtime because of urgent necessity. The contracts with private
respondents were extended twice, the last of which appears to have been for an indefinite period.
On February 3, 1994, private respondent Joselito Pascua, in his and on behalf of other 79 part-time station attendants, filed with the
Department of Labor and Employment a complaint for:
(1) Regularization
(2) Underpayment of wages
(3) Overtime pay
(4) Thirteenth month pay
(5) Service incentive leave pay
(6) Full time of eight hours employment
(7) Recovery of benefits due to regular employees
(8) Night differential pay
(9) Moral damages and

(10) Attorneys fees,

which was docketed as NLRC NCR Case No. 00-02-00953-94.
During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & Corporate Executive Officer Carlos G.
Dominguez converted the employment status of private respondents from temporary part-time to regular part-time.
On February 24, 1995, private respondents dropped their money claim then pending before the Office of Executive Labor Arbiter
Guanio, thus leaving for consideration their complaint for regularization - conversion of their employment status from part-time to
regular (working on an 8-hour shift).
Finding private respondents remaining cause of action was rendered moot and academic by their supervening regularization and
denying their prayer that their status as regular employees be given retroactive effect to six months after their stint as temporary
contractual employees, the Executive Labor Arbiter dismissed private respondents complaint.
On appeal, the NLRC, finding for private respondents, declared them as regular employees of PAL with an eight-hour work-shift. The
pertinent portions of the NLRC decision reads:
Respondent admits that complainants have been performing functions that are considered necessary or desirable in the usual
business of PAL. There is no clear showing, however, that complainants employment had been fixed for a particular project or
undertaking the completion or termination of which has been determined at the time of their engagement. Neither is there a clear
showing that the work or services which they performed, was seasonal in nature and their employment for the duration of the
season. Complainants were simply hired as part-time employees at the ASD and at the ASD/CARGO to do ramp services.
Complainants can therefore be considered as casual employees for a definite period during the first year of their employment and,
thereafter, as regular employees of respondents by operation of law. As such, they should be entitled to the compensation and other
benefits provided in the Collective Bargaining Agreement for regular employees from or day after one year [of] service. Having been
paid less than what they should receive, complainants are therefore, entitled to the differentials.[4]
Petitioner promptly filed a motion for reconsideration of the NLRC decision, which was denied in an order dated
October 12, 1998. Consequently, petitioner filed with the Court of Appeals a special civil action for certiorari to annul the
NLRC decision. On January 26, 2000, the Court of Appeals dismissed the said petition and by resolution issued on May
23, 2000, denied petitioners motion for reconsideration.
Hence, this appeal by certiorari where petitioner assigns the following errors:
-ITHE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE NLRC DECISION WHICH RULED ON
THE MERITS OF THE COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF ACTION HAS ALREADY
BECOME MOOT AND ACADEMIC WHEN THE PETITIONER ACCORDED REGULAR STATUS TO THE
RESPONDENTS DURING THE ARBITRATION PROCEEDINGS.
- II EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE COMPLAINT HAS NOT BEEN
RENDERED MOOT AND ACADEMIC, STILL THE HONORABLE COURT OF APPEALS ERRED IN
UPHOLDING THE DECISION OF THE NLRC WHICH COMPELLED THE PETITIONER TO CHANGE THE
[5]
RESPONDENTS EMPLOYMENT STATUS FROM PART-TIME TO FULL-TIME.
Two principal issues need resolution: (1) Did petitioners act of converting respondents status from temporary to
regular employees render the original complaint for regularization moot and academic? (2) Did the appellate court err
when it upheld the decision of the NLRC to accord respondents regular full-time employment although petitioner, in the
exercise of its management prerogative, requires only part-time services?
Petitioner contends that the NLRC could not change respondents status from part-time to full-time employment
because respondents merely prayed in their original complaint for regular status as opposed to temporary or casual
employment. Respondents temporary part-time status was already converted by petitioner to regular part-time status at
the arbitration level, to put an end to the controversy. That being the case, the labor arbiter ordered the dismissal of the
complaint for having become moot and academic, because the relief sought was already granted even prior to the
termination of the dispute. Clearly, says petitioner, respondents cause of action for regularization had been extinguished
[6]
when petitioner accorded the respondents regular status. It was grave abuse as well as error for the NLRC to touch the
merits of an issue in effect already mooted at the arbiters level, according to petitioner.
On the second issue, petitioner argues that the NLRC could not lawfully impose the change of employment status of
[7]
respondents from part-time to full-time employees. It has no authority or power to do so. According to petitioner,
management of its business is a matter that falls within the exclusive domain of the employer. As such, only the
employer, and no one else, should determine the number of employees to be hired, the type of employees to be engaged,
and the qualifications of each and every employee. The employer could engage part-time employees if its operational
needs require such part-time employees. The NLRC should not substitute its judgment for that of the employer in this
[8]
regard, says petitioner.
Respondents, in their comment, aver that the conversion of their employment status from part-time temporary to parttime regular did not render inutile their original complaint, as in fact they have consistently asked for fulltime regularization. According to respondents, in their pleadings they repeatedly sought not only regularization but in fact
they also asked entitlement to benefits of regular full-time employees. Further, respondents claim that since petitioner
needs the services of private respondents for eight (8) hours or more a day, it is with evident bad faith that petitioner
continues to categorize them as mere part-timers rather than full-timers so the company could avoid payment of
[9]
corresponding benefits due to respondents.
On the first issue that the original complaint was rendered moot and academic by the subsequent regularization of
respondents while the action was pending before the labor arbiter, we find that the petitioners assertion is not entirely true
nor accurate. Petitioner insists that all respondents sought was the conversion of their temporary employment status to

regular employment, without asking for a change from part-time to full time status. This claim, however, is belied by the
very complaint initially filed with the labor arbiter. As stated by the OSG in its comment to the petition filed with the Court
of Appeals, which we now quote aptly:
However, a thorough scrutiny of the appeal reveals that despite its lack of preciseness, private respondents were, in fact, ultimately
assailing their part-time status, not just the retroactive date of their regularization as part-time employees. They contradicted the
Labor Arbiters perception that hiring of part-time employees was justified by the peculiar nature of airport operations. Besides, even
petitioner understood the heart of the appeal when it observed in their Answer to Appeal that [a]ll that they wanted is to be converted
to full time status.
The pleadings filed by private respondents consistently show that they wanted to become regular full-time employees, not only regular
part-time employees. Although they repeatedly said regular employees, not specifying whether it should be regular part-time or
regular full-time, their intention should be read from the entirety of all their pleadings. Private respondents have consistently alleged
that despite their part-time status, they actually work more than 8 hours daily. Private respondent Joselito Pascua confirmed this when
he testified on November 24, 1995 (TSN, November 24, 1995, pp. 35-36). Ultimately, they want to be entitled to the many collective
bargaining agreement (CBA) benefits which would be possible only if they were regular full-time employees since regular part-time
employees are covered by the Personnel Policies and Procedures Manual, the relevant portion of which was introduced only for the
first time in this Court. While regular part-time employees have their own package of benefits, it is safe to infer that the benefits under
the CBA are better, being a result of negotiation, than those provided under the Personnel Policies and Procedures Manual which are
unilaterally handed down by petitioner.[10]
An issue becomes moot and academic when it ceases to present a justiciable controversy, so that a declaration on
the issue would be of no practical use or value. In that situation, there is no actual substantial relief to which respondents
[11]
would be entitled and which would be negated by the dismissal of their original complaint. Here, it is readily apparent
that the dismissal of the original complaint by the labor arbiter would negate the substantial relief to which respondents
would have been entitled. They seek regular full-time employment and this claim is fully set forth in the original
complaint. They specifically prayed for entitlement to benefits due to a regular full-time employee with seniority
[12]
rights. The mere regularization of respondents would still not entitle them to all benefits under the CBA, which regular
full-time employees enjoy. In fact, regular part-time employees are covered by the benefits under Personnel Policies and
Procedures Manual, not the CBA. The dismissal then of the complaint by the labor arbiter is reversible error, and the
NLRC still acted within its power and authority as a quasi-judicial agency in finding that respondents deserve more than
just being regular employees but must be regular full-time employees.
We now come to the second issue, which touches on the valid exercise of management prerogative. According to
petitioner, NLRC encroached upon this exclusive sphere of managerial decision, when it ruled that respondents should be
made regular full-time employees instead of regular part-time employees, and the appellate court thereby erred in
sustaining the NLRC. This contention does not quite ring true, much less persuade us. It must be borne in mind that the
exercise of management prerogative is not absolute. While it may be conceded that management is in the best position
to know its operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public
policy on labor and social justice. That prerogative accorded management could not defeat the very purpose for which
our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over
the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each
other. By its very nature, encompassing as it could be, management prerogative must be exercised always with the
principles of fair play at heart and justice in mind.
Records show that respondents were first hired to work for a period of one year. Notwithstanding the fact that
respondents perform duties that are usually necessary or desirable in the usual trade or business of petitioner,
respondents were considered temporary employees as their engagement was fixed for a specific period. However,
equally borne by the records, is the fact that respondents employment was extended for more than two years. Evidently,
there was a continued and repeated necessity for their services, which puts to naught the contention that respondents,
beyond the one-year period, still continued to be temporary part-time employees. Article 280 of the Labor
[13]
Code provides that any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed, and his employment
shall continue while such activity actually exists.
The NLRC decision now assailed is one based on substantial evidence, which is that amount of relevant evidence
[14]
that a reasonable mind might accept as adequate to justify a conclusion. It bears stressing that findings of fact of quasijudicial agencies like the NLRC which have acquired expertise in the specific matters entrusted to their jurisdiction are
[15]
accorded by this Court not only respect but even finality if they are supported by substantial evidence. Here we find no
compelling reason to go against the factual findings of the NLRC. The parties had ample opportunity to present below the
necessary evidence and arguments in furtherance of their causes, and it is presumed that the quasi-judicial body
rendered its decision taking into consideration the evidence and arguments thus presented. Such being the case, it is
[16]
likewise presumed that the official duty of the NLRC to render its decision was regularly performed. Petitioner has not
shown any compelling justification to warrant reversal of the NLRC findings. Absent any showing of patent error, or that
the NLRC failed to consider a fact of substance that if considered would warrant a different result, we yield to the factual
conclusions of that quasi-judicial agency. More so, when as here, these NLRC conclusions are affirmed by the appellate
court.
It is basic to the point of being elementary that nomenclatures assigned to a contract shall be disregarded if it is
apparent that the attendant circumstances do not support their use or designation. The same is true with greater force
concerning contracts of employment, imbued as they are with public interest. Although respondents were initially hired as
part-time employees for one year, thereafter the over-all circumstances with respect to duties assigned to them, number
of hours they were permitted to work including over-time, and the extension of employment beyond two years can only
lead to one conclusion: that they should be declared full-time employees. Thus, not without sufficient and substantial
reasons, the claim of management prerogative by petitioner ought to be struck down for being contrary to law and policy,
fair play and good faith.
In sum, we are in agreement with the Court of Appeals that the NLRC did not commit grave abuse of discretion
simply because it overturned the labor arbiters decision. Grave abuse of discretion is committed when the judgment is
rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow just
because there is a reversal by the NLRC of the decision of the labor arbiter. Neither does variance in the evidentiary

assessment by the NLRC and by the labor arbiter warrant as a matter of course another full review of the facts. The
[17]
NLRCs decision, so long as it is not bereft of evidentiary support from the records, deserves respect from the Court.
WHEREFORE, the petition is DENIED for lack of merit. The decision dated January 26, 2000 of the Court of
Appeals and its resolution dated May 23, 2000, in CA-G.R. SP No. 50351 are AFFIRMED. Costs against petitioner.
SO ORDERED.

FIRST DIVISION

[G.R. No. 154448. August 15, 2003]

DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS, PHIL. MALAY POULTRY BREEDERS, INC. and
LEONG HUP 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.:
[1]

Assailed in this petition for review under Rule 45 of the Revised Rules of Court are the January 28, 2002 and July
[2]
[3]
22, 2002 Resolutions 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
[4]
assistance to clients of the company in Malaysia and other Asian countries. 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
[5]
Manager of Philmalay until December 31, 1997 only. 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;
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
[6]
with respondents.
In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner effective January 20, 1998 and
[7]
promised to pay him separation benefits pursuant to the provisions of the Labor Code. 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.
[8]

Petitioner filed with the Arbitration Branch of the National Labor Relations Commission a complaint 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
reads:

[9]

in favor of petitioner, the dispositive portion of which

PREMISES CONSIDERED, judgment is hereby rendered in favor of the complainant and against the respondents, as follows:
1.
(a)

To order respondents to pay jointly and severally the complainant, the following:
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

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)
2.

13th month pay for December 1997 computed as follows: December 1997 P37.17 P10.57 P59,785.00.
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
4)
a)

To order respondents to pay jointly and severally the complainants other claims and benefits:
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, 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
th
limiting the basis of the 10% attorneys fees to the total of the awards of underpayment of salary (P207,460.00), 13 month
pay differential (P59,785.00) and cash equivalent of sick leave (US$28,600.00) only, and excluding therefrom the award
[11]
of separation pay in the amount of US$44,400.00. The decretal portion of the said decision 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]
[13]

Petitioner filed a motion for reconsideration, however, the same was denied.
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
[14]
1992 penned by Labor Arbiter Ariel Cadiente Santos; and (3) Memorandum of Appeal filed by the petitioner.
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:
(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, 13THMONTH 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.
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
[15]
[16]
are adopted to help secure, not override, substantial justice.
In Ramos v. Court of Appeals, 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]
[18]

In Jaro v. Court of Appeals, 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
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,
[20]
there is sufficient basis to resolve the instant controversy.
Labor laws mandate the speedy disposition of cases, with
[21]
the least attention to technicalities but without sacrificing the fundamental requisites of due process.
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
[22]
probability the case would end up with this Court.
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 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
[24]
resignation. Acceptance of a resignation tendered by an employee is necessary to make the resignation effective.
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
[25]
[26]
Opposition to the motion for reconsideration and Comment to the motion for reconsideration 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 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
[27]
damages may be awarded only if the act was done in a wanton, oppressive, or malevolent manner.
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
[28]
independent of employer-employee relationship. Hence, the jurisdiction thereon is with the regular courts.
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
[29]
the appealed decision.
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:
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

(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]

job;

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
[31]
resolved strictly against the respondents, who drafted these provisions.
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 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.
[32]
National Labor Relations Commission, 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
[33]
that the lawful wages were not paid accordingly, as in this case.
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
[34]
legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.
In the case at bar, what was withheld from petitioner was not only his salary, vacation and sick leave pay, and
th
13 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
[35]
his total monetary award.

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
th
addition to the awards of underpayment of salary, 13 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.