You are on page 1of 36

Appeal

SPFL]) and Atty. Proculo Fuentes, Jr.[6] (in his capacity as


National President of SPFL).

PICOP RESOURCES, INCORPORATED (PRI), v. ANACLETO L.


TAECA, G.R. No. 160828, August 9, 2010
PICOP
RESOURCES,
INCORPORATED (PRI),
Pet
itioner,
-

versus

G.R. No. 160828

Respondents were regular rank-and-file employees of


PRI and bona fide members of Nagkahiusang Mamumuo
sa PRI Southern Philippines Federation of Labor (NAMAPRISPFL), which is the collective bargaining agent for the rankand-file employees of petitioner PRI.

Present:

ANACLETO
L.
TAECA,
GEREMIAS S. TATO, JAIME N.
CAMPOS, MARTINIANO A.
MAGAYON,
JOSEPH
B.
BALGOA,
MANUEL
G.
ABUCAY,
MOISES
M.
ALBARAN, MARGARITO
G.
ALICANTE, JERRY ROMEO T.
AVILA, LORENZO D. CANON,
RAUL P. DUERO, DANILO Y.
ILAN, MANUEL M. MATURAN,
JR., LUISITO R. POPERA,
CLEMENTINO
C.
QUIMAN,
ROBERTO
Q.
SILOT,
CHARLITO
D.
SINDAY, REMBERT
B.
SUZON ALLAN J. TRIMIDAL,
and NAMAPRI-SPFL,

CARPIO, J., Chairper


son,
NACHURA,
PERALTA

PRI has a collective bargaining agreement (CBA)


with NAMAPRI-SPFL for a period of five (5) years from May
22, 1995 until May 22, 2000.

The CBA contained the following union security


provisions:

ABAD, and
MENDOZA, JJ.

Article II- Union Security and Check-Off

Section
membership.

6. Maintenance

of

Promulgated:

Respo
ndents.

August 9, 2010

x---------------------------------------------------------------------------------------x

DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45
of the Rules of Court seeking the reversal of the
Decision[1] dated July 25, 2003 and Resolution [2] dated
October 23, 2003 of the Court of Appeals in CA-G.R. SP No.
71760, setting aside the Resolutions dated October 8,
2001[3] and April 29, 2002[4] of the National Labor Relations
Commission in NLRC CA No. M-006309-2001 and reinstating
the Decision[5] dated March 16, 2001 of the Labor Arbiter.
The facts, as culled from the records, are as follows:
On February 13, 2001, respondents Anacleto Taeca,
Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato,
Martiniano Magayon, Manuel Abucay and fourteen (14) others
filed a Complaint for unfair labor practice, illegal dismissal and
money
claims
against
petitioner
PICOP
Resources,
Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's
Vice President/Resident Manager), Atty. Romero Boniel (in his
capacity as PRI's Manager of Legal/Labor), Southern
Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes
(in his capacity as Secretary General of SPFL), Pascasio
Trugillo (in his capacity as Local President of Nagkahiusang
Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-

1 | L A B O R R E L AT I O N S C A S E T O D I G E S T

6.1
All employees within the
appropriate bargaining unit who are
members of the UNION at the time of
the signing of this AGREEMENT shall, as
a condition of continued employment
by the COMPANY, maintain their
membership in the UNION in good
standing during the effectivity of this
AGREEMENT.

6.2
Any employee who may
hereinafter be employed to occupy a
position covered by the bargaining unit shall
be advised by the COMPANY that they are
required
to
file
an
application
for
membership with the UNION within thirty
(30) days from the date his appointment
shall have been made regular.

6.3
The COMPANY, upon the
written request of the UNION and after
compliance with the requirements of
the New Labor Code, shall give notice
of termination of services of any
employee who shall fail to fulfill the
condition provided in Section 6.1 and
6.2 of this Article, but it assumes no
obligation to discharge any employee if it
has reasonable grounds to believe either
that membership in the UNION was not
available to the employee on the same
terms and conditions generally applicable to
other members, or that membership was
denied or terminated for reasons other than
voluntary resignation or non-payment of
regular union dues. Separation under the
Section is understood to be for cause,
consequently, the dismissed employee is not
entitled to separation benefits provided

under the New Labor Code and in this


AGREEMENT.[7]

On May 16, 2000, Atty. Proculo P. Fuentes (Atty.


Fuentes) sent a letter to the management of PRI demanding
the termination of employees who allegedly campaigned for,
supported and signed the Petition for Certification Election of
the Federation of Free Workers Union (FFW) during the
effectivity of the CBA. NAMAPRI-SPFL considered said act of
campaigning for and signing the petition for certification
election of FFW as an act of disloyalty and a valid basis for
termination for a cause in accordance with its Constitution
and By-Laws, and the terms and conditions of the CBA,
specifically Article II, Sections 6.1 and 6.2 on Union Security
Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo


requested the management of PRI to investigate those union
members who signed the Petition for Certification Election of
FFW during the existence of their CBA. NAMAPRI-SPFL,
likewise, furnished PRI with machine copy of the authorization
letters dated March 19, 20 and 21, 2000, which contained the
names and signatures of employees.

Acting on the May 16 and May 23, 2000 letters of


the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a
memorandum addressed to the concerned employees to
explain in writing within 72 hours why their employment
should not be terminated due to acts of disloyalty as alleged
by their Union.

Within the period from May 26 to June 2, 2000, a


number of employees who were served explanation
memorandum submitted their explanation, while some did
not.

In a letter dated June 2, 2000, Atty. Boniel endorsed


the explanation letters of the employees to Atty. Fuentes for
evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty.


Fuentes advised the management of PRI that the Union found
the member's explanations to be unsatisfactory. He
reiterated the demand for termination, but only of 46
member-employees, including respondents.

On October 16, 2000, PRI served notices of


termination for causes to the 31 out of the 46 employees
whom NAMAPRIL-SPFL sought to be terminated on the ground
of acts of disloyalty committed against it when respondents
allegedly supported and signed the Petition for Certification
Election of FFW before the freedom period during the
effectivity of the CBA. A Notice dated October 21, 2000 was
also served on the Department of Labor and Employment
Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor


Practice punishable under Article 248 (a), (b), (c), (d) and (e)

of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes


and Pascasio Trujillo were accused of violating Article 248 (a)
and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew


their membership from NAMAPRI-SPFL or submitted to PRI
any union dues and check-off disauthorizations against
NAMAPRI-SPFL. They claimed that they continue to remain on
record as bona fide members of NAMAPRI-SPFL. They pointed
out that a patent manifestation of ones disloyalty would have
been the explicit resignation or withdrawal of membership
from the Union accompanied by an advice to management to
discontinue union dues and check-off deductions. They
insisted that mere affixation of signature on such
authorization to file a petition for certification election was
not per se an act of disloyalty. They claimed that while it may
be true that they signed the said authorization before the
start of the freedom period, the petition of FFW was only filed
with the DOLE on May 18, 2000, or 58 days after the start of
the freedom period.

Respondents maintained that their acts of signing the


authorization signifying support to the filing of a Petition for
Certification Election of FFW was merely prompted by their
desire to have a certification election among the rank-and-file
employees of PRI with hopes of a CBA negotiation in due
time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was


lack of procedural due process. Both the letter dated May 16,
2000 of Atty. Fuentes and the follow-up letter dated May 23,
2000 of Trujillo addressed to PRI did not mention their names.
Respondents stressed that NAMAPRI-SPFL merely requested
PRI to investigate union members who supported the Petition
for Certification Election of FFW. Respondents claimed that
they should have been summoned individually, confronted
with the accusation and investigated accordingly and from
where the Union may base its findings of disloyalty and,
thereafter, recommend to management the termination for
causes.

Respondents, likewise, argued that at the time


NAMAPRI-SPFL demanded their termination, it was no longer
the bargaining representative of the rank-and-file workers of
PRI, because the CBA had already expired on May 22, 2000.
Hence, there could be no justification in PRIs act of
dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo


Fuentes and Atty. Boniel in giving in to the wishes of the
Union in discharging them on the ground of disloyalty to the
Union amounted to interference with, restraint or coercion of
respondents exercise of their right to self-organization. The
act indirectly required petitioners to support and maintain
their membership with NAMAPRI-SPFL as a condition for their
continued employment. The acts of NAMAPRI-SPFL, Atty.
Fuentes and Trujillo amounted to actual restraint and coercion
of the petitioners in the exercise of their rights to selforganization and constituted acts of unfair labor practice.

In a Decision[8] dated March 16, 2001, the Labor


Arbiter declared the respondents dismissal to be illegal and
ordered PRI to reinstate respondents to their former or
equivalent positions without loss of seniority rights and to

2 | L A B O R R E L AT I O N S C A S E T O D I G E S T

jointly and solidarily pay their backwages. The dispositive


portion of which reads:

ITS TERMS AND CONDITION INCLUDING ITS


UNION SECURITY CLAUSE, EVEN BEYOND
THE 5-YEAR PERIOD WHEN NO NEW CBA
HAS YET BEEN ENTERED INTO.

WHEREFORE, premises considered,


judgment is hereby entered:

II
WHETHER OR NOT AN HONEST ERROR IN
THE
INTERPRETATION
AND/OR
CONCLUSION OF LAW FALL WITHIN THE
AMBIT OF THE EXTRAORDINARY REMEDY OF
CERTIORARI UNDER RULE 65, REVISED
RULES OF COURT.[10]

1.
Declaring
complainants dismissal illegal; and

2.
Ordering
respondents Picop Resources Inc. (PRI) and
NAMAPRI-SPFL to reinstate complainants to
their former or equivalent positions without
loss of seniority rights and to jointly and
solidarily pay their backwages in the total
amount of P420,339.30 as shown in the
said Annex A plus damages in the amount
of P10,000.00
each,
or
a
total
of P210,000.00
and
attorneys
fees
equivalent to 10% of the total monetary
award.

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal


elected by respondents for the purpose of assailing the
decision of the NLRC. It claimed that assuming that the NLRC
erred in its judgment on the legal issues, its error, if any, is
not tantamount to abuse of discretion falling within the ambit
of Rule 65.

SO ORDERED.[9]
Petitioner is mistaken.

PRI and NAMAPRI-SPFL


Relations Commission (NLRC),
the Labor Arbiter; thus,
respondents from employment

appealed to the National Labor


which reversed the decision of
declaring the dismissal of
as legal.

Respondents filed a motion for reconsideration, but it


was denied on April 29, 2001 for lack of merit.

Unsatisfied,
respondents
filed
a
petition
for certiorari under Rule 65 before the Court of Appeals and
sought the nullification of the Resolution of the NLRC dated
October 8, 2001 which reversed the Decision dated March 16.
2001 of Labor Arbiter and the Resolution dated April 29,
2002, which denied respondents motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and


set aside the assailed Resolutions of the NLRC and reinstated
the Decision dated March 16, 2001 of the Labor Arbiter.
Thus, before this Court, PRI,
petitioner, raised the following issues:

I
WHETHER AN EXISTING COLLECTIVELY (sic)
BARGAINING AGREEMENT (CBA) CAN BE
GIVEN ITS FULL FORCE AND EFFECT IN ALL

as

The power of the Court of Appeals to review NLRC


decisions via Rule 65 or Petition for Certiorari has been
settled as early as in our decision in St. Martin Funeral Home
v. National Labor Relations Commission.[11] This Court held
that the proper vehicle for such review was a Special Civil
Action for Certiorari under Rule 65 of the Rules of Court, and
that this action should be filed in the Court of Appeals in strict
observance of the doctrine of the hierarchy of courts.
[12]
Moreover, it is already settled that under Section 9
of Batas Pambansa Blg. 129, as amended by Republic Act No.
7902[10] (An Act Expanding the Jurisdiction of the Court of
Appeals, amending for the purpose of Section Nine of Batas
Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals pursuant
to the exercise of its original jurisdiction over Petitions
for Certiorari is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues. [13]

We now come to the main issue of whether there


was just cause to terminate the employment of respondents.

PRI argued that the dismissal of the respondents was


valid and legal. It claimed to have acted in good faith at the
instance of the incumbent union pursuant to the Union
Security Clause of the CBA.

Citing Article 253 of the Labor Code, [14] PRI contends


that as parties to the CBA, they are enjoined to keep
the status quoand continue in full force and effect the terms
and conditions of the existing CBA during the 60-day period
and/or until a new agreement is reached by the parties.

3 | L A B O R R E L AT I O N S C A S E T O D I G E S T

Petitioner's argument is untenable.

Union security" is a generic term, which is applied


to and comprehends "closed shop," union shop,"
"maintenance of membership," or any other form of
agreement which imposes upon employees the obligation to
acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular
employees are required to join the union within a certain
period as a condition for their continued employment. There
is maintenance of membership shop when employees, who
are union members as of the effective date of the agreement,
or who thereafter become members, must maintain union
membership as a condition for continued employment until
they are promoted or transferred out of the bargaining unit,
or the agreement is terminated. A closed shop, on the other
hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their
representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a
member in good standing of a union entirely comprised of or
of which the employees in interest are a part.[15]

However, in terminating the employment of an


employee by enforcing the union security clause, the
employer needs to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for
the enforcement of the union security provision in the CBA;
and (3) there is sufficient evidence to support the decision of
the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee
based on the union security provision of the CBA.[16]

As to the first requisite, there is no question that the


CBA between PRI and respondents included a union security
clause, specifically, a maintenance of membership as
stipulated in Sections 6 of Article II, Union Security and
Check-Off. Following the same provision, PRI, upon written
request from the Union, can indeed terminate the
employment of the employee who failed to maintain its good
standing as a union member.

We are in consonance with the Court of Appeals when


it held that the mere signing of the authorization in support of
the Petition for Certification Election of FFW on March 19, 20
and 21, or before the freedom period, is not sufficient
ground to terminate the employment of respondents
inasmuch as the petition itself was actually filed during the
freedom period. Nothing in the records would show that
respondents failed to maintain their membership in good
standing in the Union. Respondents did not resign or withdraw
their membership from the Union to which they belong.
Respondents continued to pay their union dues and never
joined the FFW.

Significantly, petitioner's act of dismissing respondents


stemmed from the latter's act of signing an authorization
letter to file a petition for certification election as they signed
it outside the freedom period. However, we are constrained to
believe that an authorization letter to file a petition for
certification election is different from an actual Petition for
Certification Election. Likewise, as per records, it was clear
that the actual Petition for Certification Election of FFW was
filed only on May 18, 2000.[17]Thus, it was within the ambit of
the freedom period which commenced from March 21, 2000
until May 21, 2000. Strictly speaking, what is prohibited is the
filing of a petition for certification election outside the 60-day
freedom period.[18] This is not the situation in this case. If at
all, the signing of the authorization to file a certification
election was merely preparatory to the filing of the petition
for certification election, or an exercise of respondents right
to self-organization.
Moreover, PRI anchored their decision to terminate
respondents employment on Article 253 of the Labor Code
which states that it shall be the duty of both parties to
keep the status quo and to continue in full force and
effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new
agreement is reached by the parties. It claimed that
they are still bound by the Union Security Clause of the CBA
even after the expiration of the CBA; hence, the need to
terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is
particularly enlightening. It reads:

Secondly, it is likewise undisputed that NAMAPRISPFL, in two (2) occasions demanded from PRI, in their
letters dated May 16 and 23, 2000, to terminate the
employment of respondents due to their acts of disloyalty to
the Union.
However, as to the third requisite, we find that there
is no sufficient evidence to support the decision of PRI to
terminate the employment of the respondents.
PRI alleged that respondents were terminated from
employment based on the alleged acts of disloyalty they
committed when they signed an authorization for the
Federation of Free Workers (FFW) to file a Petition for
Certification Election among all rank-and-file employees of
PRI. It contends that the acts of respondents are a violation
of the Union Security Clause, as provided in their Collective
Bargaining Agreement.

We are unconvinced.

4 | L A B O R R E L AT I O N S C A S E T O D I G E S T

Article 256. Representation issue


in organized establishments. - In organized
establishments, when a verified petition
questioning the majority status of the
incumbent bargaining agent is filed before
the Department of Labor and Employment
within the sixty-day period before the
expiration of a collective bargaining
agreement,
the
Med-Arbiter
shall
automatically order an election by secret
ballot when the verified petition is
supported by the written consent of at least
twenty-five percent (25%) of all the
employees in the bargaining unit to
ascertain the will of the employees in the
appropriate bargaining unit. To have a valid
election, at least a majority of all eligible
voters in the unit must have cast their
votes. The labor union receiving the
majority of the valid votes cast shall be
certified as the exclusive bargaining agent
of all the workers in the unit. When an
election which provides for three or more
choices results in no choice receiving a
majority of the valid votes cast, a run-off

election shall be conducted between the


labor unions receiving the two highest
number of votes:Provided, That the total
number of votes for all contending unions is
at least fifty per cent (50%) of the number
of votes cast.

such a petition for certification election the employees are


given the opportunity to make known of who shall have the
right to represent them thereafter. Not only some, but all of
them should have the right to do so. What is equally
important is that everyone be given a democratic space in the
bargaining unit concerned.[24]

At
the
expiration
of
the
freedom period, the employer shall
continue to recognize the majority
status of the incumbent bargaining
agent
where
no
petition
for
certification election is filed. [19]

We will emphasize anew that the power to dismiss is a


normal prerogative of the employer. This, however, is not
without limitations. The employer is bound to exercise caution
in terminating the services of his employees especially so
when it is made upon the request of a labor union pursuant to
the Collective Bargaining Agreement. Dismissals must not be
arbitrary and capricious. Due process must be observed in
dismissing an employee, because it affects not only his
position but also his means of livelihood. Employers should,
therefore, respect and protect the rights of their employees,
which include the right to labor.[25]

Applying the same provision, it can be said that


while it is incumbent for the employer to continue to
recognize the majority status of the incumbent bargaining
agent even after the expiration of the freedom period, they
could only do so when no petition for certification election
was filed. The reason is, with a pending petition for
certification, any such agreement entered into by
management with a labor organization is fraught with the risk
that such a labor union may not be chosen thereafter as the
collective
bargaining
representative. [20] The
provision
for status quo is conditioned on the fact that no certification
election was filed during the freedom period. Any other view
would render nugatory the clear statutory policy to favor
certification election as the means of ascertaining the true
expression of the will of the workers as to which labor
organization would represent them.[21]

In the instant case, four (4) petitions were filed as


early as May 12, 2000. In fact, a petition for certification
election was already ordered by the Med-Arbiter of DOLE
Caraga Region on August 23, 2000. [22] Therefore, following
Article 256, at the expiration of the freedom period, PRI's
obligation to recognize NAMAPRI-SPFL as the incumbent
bargaining agent does not hold true when petitions for
certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which


provides for automatic renewal pertains only to the economic
provisions of the CBA, and does not include representational
aspect of the CBA. An existing CBA cannot constitute a bar to
a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as
the need to await the creation of a new agreement will not
apply. Otherwise, it will create an absurd situation where the
union members will be forced to maintain membership by
virtue of the union security clause existing under the CBA
and, thereafter, support another union when filing a petition
for certification election. If we apply it, there will always be
an issue of disloyalty whenever the employees exercise their
right to self-organization. The holding of a certification
election is a statutory policy that should not be circumvented,
[23]
or compromised.

An employee who is illegally dismissed is entitled to


the twin reliefs of full backwages and reinstatement. If
reinstatement is not viable, separation pay is awarded to the
employee. In awarding separation pay to an illegally
dismissed employee, in lieu of reinstatement, the amount to
be awarded shall be equivalent to one month salary for every
year of service. Under Republic Act No. 6715, employees who
are illegally dismissed are entitled to full backwages, inclusive
of allowances and other benefits, or their monetary
equivalent,
computed
from
the
time
their
actual
compensation was withheld from them up to the time of their
actual reinstatement. But if reinstatement is no longer
possible, the backwages shall be computed from the time of
their illegal termination up to the finality of the
decision. Moreover, respondents, having been compelled to
litigate in order to seek redress for their illegal dismissal, are
entitled to the award of attorneys fees equivalent to 10% of
the total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision
dated
July 25, 2003 and the Resolution dated October
23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760,
which set aside the Resolutions dated October 8, 2001 and
April 29, 2002 of the National Labor Relations Commission
in
NLRC
CA
No.
M-006309-2001,
are AFFIRMED accordingly.
Respondents
are
hereby
awarded full backwages and other allowances, without
qualifications and diminutions, computed from the time
they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor
Arbiter for proper computation of the full backwages due
respondents, in accordance with Article 279 of the Labor
Code, as expeditiously as possible.

Time and again, we have ruled that we adhere to the


policy of enhancing the welfare of the workers. Their freedom
to choose who should be their bargaining representative is of
paramount importance. The fact that there already exists a
bargaining representative in the unit concerned is of no
moment as long as the petition for certification election was
filed within the freedom period. What is imperative is that by

5 | L A B O R R E L AT I O N S C A S E T O D I G E S T

SO ORDERED.

Conclusiveness of Decision
Philippine Transmarine Carriers, Inc. Vs. John Melchor A.
Laurente,G.R. No. 158883. April 19, 2006
PHILIPPINE
TRANSMARINE CARRIERS,
INC.,

G. R. No. 158883
Present:

Petitioner,
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
- versus -

CALLEJO, SR., and

JOHN
MELCHOR
A.
LAURENTE, substituted by
JUAN A. LAURENTE, JR.
and
NATIVIDAD
A.
AQUINO,
Respondents.

CHICO-NAZARIO, JJ.

Promulgated:

Grade I. On 7 June 1994, he underwent kidney


transplant. He was subsequently paid sickness allowance in
the amount of P78,962.15 covering the period from 6 October
1993 to 2 February 1994.
On 30 March 1995, John Melchor filed a complaint
against petitioner, Pioneer Insurance and Surety Corporation,
and Lucky Ocean Marine Corporation for payment of disability
benefits on the basis of the amendment to the Philippine
Overseas Employment Administration (POEA) Standard
Employment Contract increasing the total disability benefit
from US$11,000.00 to US$50,000.00 effective 1 March 1994.
Petitioner disputed John Melchors claim for disability
benefit alleging that the latter did not disclose his actual
medical condition that he had hypertension and kidney
trouble during his pre-employment medical examination; that
John Melchor was on board the vessel for only a little over
three months such that his illness could not have been the
result of work; and that although John Melchor was declared
totally disabled only on 20 March 1994, his illness occurred on
or before 5 October 1993 when he disembarked from the
vessel, i.e., prior to the effectivity of the new rate of disability
benefits on 1 March 1994.
Labor Arbiter Pedro C. Ramos rendered a decision
ordering petitioner to pay the amount of US$50,000.00, or its
peso equivalent, as disability benefit.

April 19, 2006


x----------------- --------------------------------x

Petitioner appealed to the National Labor Relations


Commission (NLRC), which rendered a decision on 31 May
1999 reversing the Labor Arbiters decision and reducing the
disability benefit to US$11,000.00. However, on a motion for
reconsideration filed by respondent, the NLRC reinstated the
award of the disability benefit in the amount of US$50,000.00
in a Resolution dated 21 June 2000, which reads:
WHEREFORE, our decision dated
May 31, 1999 is reconsidered. In lieu of
US$11,000.00, respondents are hereby
directed to jointly and severally pay the
complainant
his
disability
benefit
of
US$50,000.00.[2]

DECISION

CHICO-NAZARIO, J.:

Petitioners motion for reconsideration thereof was denied in a


Resolution dated 29 December 2000.
Assailed in this Petition for Review under Rule 45 of
the Rules of Court is the Decision [1] dated 10 January 2003 of
the Court of Appeals dismissing petitioners Special Civil
Action for Certiorari under Rule 65, and the Resolution dated
30 June 2003 denying petitioners motion for reconsideration.
The factual and procedural antecedents of the case
are as follows:
John Melchor A. Laurente (John Melchor)
was
employed as Second Assistant Engineer by petitioner
Philippine Transmarine Carriers, Inc. for and in behalf of its
principal, Lucky Ocean Marine Corporation, after he
underwent a pre-employment medical examination at
Physicians Diagnostic Center, petitioners accredited clinic,
and was given a clean bill of health. John Melchorsigned a
twelve-month contract with a basic monthly salary of
US$739.00.
On 20 June 1993, John Melchor embarked the vessel
Standard Star, where he was assigned at the engine
room. After three months, he complained of dizziness and
nausea and requested for his repatriation. On 5 October
1993, he arrived in the Philippines and immediately reported
to petitioner, which referred him to a doctor for medical
treatment at its expense. John Melchor was diagnosed with
hypertension and chronic renal failure classified as disability

On 20 April 2001, petitioner filed a Special Civil


Action for Certiorari under Rule 65. This was dismissed by
the Court of Appeals in the assailed Decision dated 10
January 2003, and a motion for reconsideration thereof was
denied by the same court in the assailed Resolution dated 30
June 2003. The dispositive portion of the Decision of the
Court of Appeals reads:
WHEREFORE,
the
petition
DISMISSED for lack of merit.[3]

is

Hence, this appeal where petitioner raises but one


issue: petitioner claims that the 1 March 1994 amendment to
the POEA Standard Employment Contract, which increased
the disability benefits of seamen from US$11,000 to
US$50,000,
should
not
apply
to
John Melchors claim. John Melchor, on the other hand,
claims that he should be entitled to US$60,000 instead of the
US$50,000 awarded by the NLRC and the Court of Appeals,
citing Appendix 1-A of the schedule of disability allowances in
the POEA Standard Employment Contract, which entitles
those suffering from impediment Grade 1 to 120% of the
maximum rate of US$50,000.
On 30 October 2003, and during the pendency of
this appeal, John Melchor died of pulmonary congestion at 41
years of age.[4] A motion for substitution filed by
John Melchors parents,
Juan
A. Laurente,
Jr.

6 | L A B O R R E L AT I O N S C A S E T O D I G E S T

and Natividad A. Aquino, was granted by this Court on 29


March 2004.[5]

While it is true that private respondent was


repatriated on October 5, 1993 upon his
request because of his complaints of
dizziness and nausea, however, it was only
on May 20, 1994, after undergoing
complete
physical
and
laboratory
examinations, that he was diagnosed to
have hypertension and chronic renal failure
and was declared unfit to work due to total
permanent
disability. In
other
words,
private respondent was not yet considered
incapacitated for work when he was
repatriated on October 5, 1993.[10]

The 31 March
1994
amendment
that increased
the
disability
benefits
of
seamen should
apply
to
John Melchors
claim.
The NLRC ruled, and the Court of Appeals agreed,
that the 31 March 1994 amendment to the POEA Standard
Employment Contract increasing the disability benefits of
seamen from US$11,000 to US$50,000 should apply to
John Melchors claim. This is pursuant to Section 2 of the
primary contract between petitioner and John Melchor which
provides that the terms and conditions of the Revised
Employment
Contract
for
seafarers
governing
the
employment of all Filipino Seafarers approved by the
POEA/DOLE on July 14, 1989 under Memorandum Circular No.
41, series of 1989, and amending circulars relative thereto
shall be strictly and faithfully observed.[6]
The NLRC further ruled:
The employment contract of the
complainant was twelve (12) months (June
20, 1993 to June 1994). The illness of the
complainant was discovered on May 20,
1994, a date within the twelve-month
period of the employment contract and
already covered by the effectivityof the new
rate of disability benefits under the Revised
Employment Contract for seafarers. The
revision of the rate of disability benefits
under
the
amended
POEA
Standard
Employment Contract is corrective in nature
and favorable to the seafarers. To conform
with the prevailing rate, there is a need to
adjust the disability benefits awarded to the
complainant.[7]
Petitioner contests this ruling, asserting the
inapplicability of the 31 March 1994 amendment: (a) because
John Melchorscause of action, if any, arose at a time prior to
the effectivity of the amendment; and (b) because the
employment contract between John Melchor and petitioner
was no longer in force when the said amendment took effect.
[8]

Petitioner asserts that John Melchors employment


was deemed terminated when he was repatriated upon his
request, arriving in the Philippines on 5 October
1993. According to petitioner, the termination was in
accordance with Section H of the POEA Standard Employment
Contract which states:
SECTION H. TERMINATION OF
EMPLOYMENT. x x x The Master shall have
the right to discharge or sign off the
seaman at any place abroad in accordance
with the terms and conditions of the
contract and specifically for any of the
following reasons: (a) if the seaman x x x is
continuously incapacitated for the duties for
which he was employed by reason of illness
or injury.[9]
This argument had been raised in the Court of
Appeals, to which the latter ruled:

We rule in favor of John Melchor.


Findings of fact of administrative agencies such as
the NLRC are binding when supported by substantial
evidence[11]; moreover, they become conclusive when such
findings are affirmed by an appellate court.[12] Therefore, the
findings of the NLRC, sustained by the Court of Appeals, that
the illness of the complainant was discovered only on 20 May
1994,[13] is conclusive to this Court. It was only on 20 May
1994, after undergoing complete physical and laboratory
examinations, that John Melchor was diagnosed to have
hypertension and chronic renal failure and was declared unfit
to work due to total permanent disability. JohnMelchor was
not yet considered incapacitated for work when he was
repatriated on 5 October 1993. Consequently, the 31 March
1994 amendment should apply to John Melchors claim.
Petitioners claim that John Melchor was terminated
on 5 October 1993 goes against the evidence available on
record. In addition to the fact that the diagnosis declaring
him unfit to work came after said date, John Melchor was also
paid sickness allowance on 7 June 1994, covering the period
from 6 October 1993 to 2 February 1994. This goes to show
that petitioner still recognized John Melchor as an employee
even after he returned to the Philippines. Neither was
John Melchor given any notice of his termination prior to 20
May 1994, when Philippine labor laws and jurisprudence are
ripe with the mandate that notice must be given to employees
before their termination even when such termination is for
just and authorized causes.[14]
It is also an undeniable fact that, according to the
primary contract between petitioner and John Melchor, all
amendments to Memorandum Circular No. 41 shall be strictly
and faithfully observed. This provision was apparently
inserted to protect the rights of John Melchor, who, despite
the possible amendments to the POEA Standard Employment
Contract, cannot renegotiate the primary contract terms while
he is out of the country. As it is unclear whether such
amendments can be held applicable to obligations that have
already accrued but have not yet been paid, we are compelled
to
choose
the
interpretation
that
would
favor
labor. Therefore, even if we consider for the sake of
argument that John Melchor was terminated on 5 October
1993 as petitioner claims, this clause still makes the 31 March
1994 amendment applicable. As we held in Marcopper Mining
Corporation v. National Labor Relations Commission,
[15]
contracts relating to employment should be interpreted
keeping in sight the avowed policy of the State, enshrined in
our Constitution, to accord utmost protection and justice to
labor.
John Melchor is
entitled
to
120% of the
maximum rate
of US$50,000.
Even earlier, in his comment to petitioners appeal
with the Court of Appeals, until presently before this Court,

7 | L A B O R R E L AT I O N S C A S E T O D I G E S T

John Melchorhas consistently pointed out that a careful


perusal of the Appendix 1-A of the schedule of disability
allowances in the POEA Standard Employment Contract would
reveal that those suffering from impediment Grade 1 are
entitled to 120% of the maximum rate of US$50,000.[16]
There is no question that the chronic renal failure of
John Melchor, which eventually caused his death, is an
impediment Grade 1 under the POEA Standard Employment
Contract. Petitioner
never
disputed
such
fact. John Melchor is therefore entitled to 120% of the
US$50,000 maximum amount, or a total of US$60,000. The
terms of the POEA Standard Employment Contract on this
point is clear, and thus there is no room for interpretation.
No less than the Constitution requires the State to
afford full protection to labor, whether local or overseas.
[17]
Pursuant to such mandate, Executive Order No.
247[18] empowered the POEA[19] to secure the best terms and
conditions of employment of Filipino contract workers. [20] The
POEA, in compliance therewith, prescribed standard
employment contracts which provide the minimum terms and
conditions of employment for Filipino contract workers. These
minimum terms and conditions are deemed read into the
parties primary contracts, and as such must be complied with
in good faith.
WHEREFORE, the petition is DENIED. The Decision
dated 10 January 2003 and the Resolution dated 30 June
2003 of the Court of Appeals are hereby AFFIRMED, with the
modification that the award of disability benefit be increased
to US$60,000. Costs against petitioner.
SO ORDERED.
Unfair Labor Practice
1.

Skippers United Pacific vs. Jerry Maguad,G.R. No.


166363,August 15, 2006

SKIPPERS UNITED PACIFIC, INC.,


and J.P. SAMARTZSISMARITIME
ENTERPRISES CO., S.A.,

G.R.
166363

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review


on Certiorari seeking
to
review
and
set
aside
the
Decision[1] and Resolution[2] of the Court of Appeals dated 27
July 2004 and 14 December 2004, respectively, in CA-G.R. SP
No. 80651, which declared null and void the Resolutions of
the National Labor Relations Commission (NLRC) dated 26
May 2003[3] and 8 September 2003.[4]

The antecedent facts of the case are as follows:

Herein petitioners are Skippers United Pacific, Inc., the


former manning agency for the vessel MV Hanjin Vancouver,
and its foreign principal, J.P. Samartzsis Maritime Enterprises
Co.,
S.A. Herein
respondents
Jerry Maguad and Porferio Ciudadano were
recruited
by
petitioner Skippers United Pacific, Inc., to work on board the
afore-mentioned
vessel
as
4th Engineer
and Bosun,
respectively. Respondents lodged a complaint against
petitioners before the NLRC. In their Position Paper,[5] they
alleged, among other things, that:

Sometime
in
June
1998,
complainants [herein respondents] were
contracted by respondent [herein petitioner]
Skippers [United Pacific, Inc.], to work on
board the vessel MV Hanjin Vancouver, as
Fitter for a contract period of nine (9)
months plus or minus one (1) month pay
[by] mutual consent. In a POEA contract of
employment,[6] complainant had to work
under the following terms and conditions:

No.

Petitioners,
Present:
PANGANIBAN, C.J
.
Chairperson,
YNARESSANTIAGO,
AUSTRIAMARTINEZ,

- versus -

CALLEJO, SR.,
and
JERRY MAGUAD andPORFERIO CEUD
ADANO,

JERRY P. MAGUAD

POSITION
BASIC MO. SALARY

Respondents.
hours/week
Promulgated:

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

4th En

gineer

CHICO-NAZARIO,
JJ.

August 15, 2006

HOURS OF WORK

OVERTIME

FIXED
:

105/HRS

OT AFTER
:
US$3.22

PAY

LEAVE
:

8 | L A B O R R E L AT I O N S C A S E T O D I G E S T

US$160.80

US$107.20

US$536.00
:

48

OT (AFTER
:

105/HRS)

US$4.40

PORFERIO L. CIUDADANO
xxxx
POSITION

BASIC MO. SALARY

Bosu
US$451.00

HOURS OF WORK

On or about June 14, 1998,


complainants joined [their] vessel of
assignment at the port of Korea to work
thereon in accordance with the aforesaid
contract of employment. Thereafter, [they]
performed their official functions and duties
diligently and efficiently.

48

hours/week
OVERTIME

FIXED
:

105/HRS

OT AFTER
:
US$2.71

PAY

LEAVE
:

US$135.30

However, on July 29, 1998 at the


port of Osaka, Japan, [they were]
unceremoniously discharged from the
aforesaid vessel and immediately
repatriated to Manila without being given
any notice of the reason for their discharge
and without giving [them] an opportunity to
be heard. Despite earnest demands,
respondents unjustifiably failed and refused
to pay complainants unexpired portion of
[their] contract.[8]

US$90.20

xxxx

However, [these] contracts were


adjusted
by
respondent
Skippers
representative in the
person of their
General Manager, Ms. Gloria N. Almodiel,
and was further noted by the Owners
representative Mr. Filippos Karabatsis. The
adjustments made were as follows [7]:

JERRY P. MAGUAD

US$915.00
OVERTIME

BASIC MO. SALARY


FIXED
LEAVE

PAY
ALLOWANCE

OVERSEAS
:

105/HRS)

OT
:

Petitioners, on the other hand, contended that they


could not be held liable for illegal dismissal because the
respondents were dismissed for cause, that is, for
incompetence. The petitioners, in their Position Paper before
the NLRC, averred, among other things, that:

On or about 8 June 1998,


complainants [herein
respondents] Maguad and Ciudadano were
both contracted by respondent [herein
petitioner] Skippers United Pacific, Inc. (for
and in behalf of its principal,
J.P. Samartzsis Maritime Enterprises Co.
S.A.) to serve as 4thEngineer and Bosun,
respectively for the vessel MV
Hanjin Vancouver for a contract period of
nine (9) months plus or minus one (1)
month by mutual consent for the following
salaries:

US$681.00 (105 hrs)

US$214.00
US$126.00

(AFTER
US$6.61

JERRY P. MAGUAD
PORFERIO L. CIUDADANO
BASIC MO. SALARY
BASIC MO. SALARY

US$609.00
PAY

FIXED
OVERTIME

US$453.00 (105 hrs)


105/HOURS

LEAVE
PAY
ALLOWANCE

:
OVERSEAS
:

6.00

US$142.00

FIXED OVERTIME
US$160.80
OT AFTER
:

US$3.22

LEAVE
PAY

US$126.00

9 | L A B O R R E L AT I O N S C A S E T O D I G E S T

US$107.20

US$53

PORFERIO L. CIUDADANO

BASIC MO. SALARY

US$45

1.00
PAY

105/HOURS

FIXED OVERTIME
US$135.30
OT AFTER
:

US$2.71

On appeal by petitioners, the NLRC en banc in its


Resolution[11] dated 31 May 2001, remanded the case to the
Arbitration Branch of origin for immediate further proceedings
for failure of the Labor Arbiter to appreciate material evidence
such as: (1) the logbook extracts submitted by petitioners to
corroborate its defense that respondents were dismissed for
incompetence and (2) the confirmation letters presented by
the respondents showing that they were signed off to transfer
to another vessel due to crew reduction per Administrations
status and Owners Orders. Both parties had questioned the
authenticity and veracity of the documentary evidence
presented by the opposing party.

LEAVE
PAY

US$90.20

On or about 24 June 1998,


complainants
boarded
the
vessel
MV Hanjin
Vancouver; however, less
than one (1) month from their arrival on
board said vessel, the vessels Master
reported both complainants incompetence
and the Owners in a telex message dated
21 July 1998 informed herein respondent
Skippers United Pacific, Inc. of the urgent
need
to
replace
both
Maguad
and Ciudadano for their incompetence and
enormous difficulties produced thereof to
the work on board.

On or about 29 July 1998, both


complainants
were
repatriated
from Pusan, Korea with herein respondent
advancing their repatriation costs.[9]

To conform to the Resolution of the NLRC dated 31 May


2001, the Labor Arbiter conducted further proceedings. The
Labor Arbiter rendered a Decision [12] on 13 February
2002 dismissing the respondents for being unfit and
incompetent
to
perform
their
respective
functions,
overturning
his
previous
Decision
of 20
September
1999. The dispositive portion reads, thus:

WHEREFORE, in the light of the


foregoing premises, the above-entitled case
is hereby DISMISSED for being devoid of
legal merit.

To justify his findings, the Labor Arbiter made the


following discussions, thus:

After a careful re-evaluation of the


evidence
on
record,
this
Office
finds
that it indeed overlooked the
fact that there are pieces of evidence for
the respondents other than the telex
mentioned in the subject Decision. That
contrary
to
its
findings
in
the
questioned Decision dated 20 September
1999 that respondents evidence in support
of their defense in this case consists solely
of an uncorroborated telex message,
respondents actually have adduced other
pertinent evidence such as logbook extracts
and the Masters Statement supporting such
logbook entries. Be it emphasized at this
juncture that in our jurisdiction, it is settled
and recognized that logbook entries
constitute prima facie evidence of the facts
contained therein and have enjoy the stamp
of presumption of regularity.[13]

Consequently, upon repatriation, respondents filed a


Complaint for Illegal Dismissal on 14 August 1998 before the
Arbitration Branch of the NLRC with prayer for payment of
salaries for the unexpired portion of their contract, moral and
exemplary damages, and attorneys fees. The Labor Arbiter
issued
a
Decision [10] on 20
September
1999 finding
respondents
to
have
been
illegally
dismissed. The dispositive portion of which reads, thus;

WHEREFORE, premises considered,


judgment is hereby rendered declaring that
complainants [herein respondents] have
indeed been illegally dismissed from their
employment. Accordingly,
respondents
[herein petitioners] are hereby directed to
pay [herein respondents] their respective
three (3) months salaries, as follows:

(a)

For Jerry P. Maguad US$5,808.00

(b)

Porferio L. Ciudadano US$3,990.00

Aggrieved, it was the respondents turn to interpose


an appeal before the NLRC en banc. The NLRC rendered a
Resolution[14] on 26 May 2003 affirming the afore-quoted
findings of the Labor Arbiter, thus:

WHEREFORE, premises considered,


the
assailed
decision
is
hereby
affirmed. Complainants appeal is
dismissed for lack of merit.

10 | L A B O R R E L A T I O N S C A S E T O D I G E S T

II

Whether or not the Court of


Appeals may reinstate a Decision
of the Labor Arbiter, which the
latter
himself
reversed
and
considered flawed.[18]

Respondents moved for the reconsideration of the


foregoing decision of the NLRC. However, said Motion for
Reconsideration was denied through a Resolution [15] issued by
the NLRC on 8 September 2003. Consequently, respondents
filed a Petition for Certiorari before the Court of Appeals
docketed as CA-G.R. SP No. 80651.

The Court of Appeals rendered a Decision [16] on 27 July


2004 granting the petition and declaring null and void the
Resolutions of the NLRC dated 26 May 2003 and 8 September
2003, and reinstating the Decision [17] of the Labor Arbiter
dated 20 September 1999, to wit:

WHEREFORE, in consideration of the


foregoing, the petition for certiorari is
perforce
granted. Accordingly,
the
Resolutions of the public respondent NLRC
dated 26
May
2003 and 8
September
2003 are
hereby
declared
null
and
void. Accordingly, the Decision of the
Honorable
Labor
Arbiter
dated
20
September 1999 is hereby reinstated.

On 26 August 2004, petitioners filed a Motion for


Reconsideration of the 27 July 2004 Decision of the Court of
Appeals alleging that Skippers United Pacific, Inc., should not
be made liable because: (1) it is no longer the manning
agency responsible since Sea Power Shipping Enterprises,
Inc., and Evic Human Resources Management, Inc., had
executed Affidavits of Assumption of Responsibility, and (2) it
has complied with the legal requirements for the dismissal of
an employee.

In the Memorandum[19] filed by petitioners, they


maintain that there was just and valid cause for the dismissal
of the respondents. Thus, petitioners posit that the only issue
relevant to the dismissal of the respondents in this Petition is
the question on compliance with the two- notice requirement
mandated by the Labor Code, as amended.[20]

The petitioners argue that the Court of Appeals


seriously erred in not considering the warning notices issued
to respondents as substantial compliance with the
requirements laid down in the Labor Code, as amended, in
effecting a valid dismissal. According to petitioners, such
notices were issued days before respondents were signed-off
on 29 July 1998, so that ample opportunity was given to the
respondents to defend themselves and refute the accusations
against them. Thus, petitioners stand firm on their position
that the dismissal of the respondents was with cause and
there was compliance with the requirement of due process in
effecting a valid dismissal.

Petitioners further claim that it was reversible error on


the part of the Court of Appeals to reinstate a Decision of the
Labor Arbiter, which the latter himself reversed and
considered flawed for his failure to consider other pieces of
evidence which were presented by both parties.

In contrast, the respondents raise before this Court the


following issues:

The Court of Appeals denied the Motion for


Reconsideration in its Resolution dated 14 December
2004 because the grounds and arguments relied upon by the
petitioners were already heard and considered by the Court of
Appeals in their Decision promulgated on 27 July 2004.

I.

II.

Whether or not the


decision of the Court of Appeals is
erroneous.

III.

Whether
or
not
petitioner
Skippers
can
be
exempted from liability by the
execution
of
Affidavits
of
Assumption
of
Responsibility
executed by Sea Power Shipping
Enterprises, Inc. and Evic Human
Resources Management, Inc.

Hence, this Petition.

Petitioners submit that the Court of Appeals committed


a reversible error in rendering its Decision and Resolution
dated 27 July 2004 and 14 December 2004, respectively, for
they are contrary to law and existing jurisprudence. Hence,
petitioners presented before this Court the following issues:

Whether or not the warning notices


given to respondents substantially
[complied] with the requirements
of the Labor Code in effecting a
valid dismissal.

11 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Whether or not Rule


45 is proper in the instant case.

IV.

Whether or not private


respondents
Maguad
and
Ciudadano
are
entitled
to
indemnity
equivalent
to
the
unexpired
portion
of
their
employment contract.[21]

Respondents in their Memorandum[22] aver that


petitioners raised questions of facts when they contended that
the documents submitted to the Labor Arbiter already
constitute
the
notices
required
under
respondents
employment contracts, and that these notices served as
compliance with due process in effecting a valid dismissal;
hence, Rule 45 of the Rules of Court is not the proper mode of
appeal before this Court.

They also maintain that their alleged incompetence


was not properly proven and their dismissal was tainted with
illegality because they were not afforded due process. On
this basis, respondents are claiming entitlement to the
amount of their salary for the unexpired portion of their
employment contract.

Lastly, respondents aver that petitioner Skippers


United Pacific, Inc. cannot be exempted from liability despite
the execution of the Affidavits of Assumption of Responsibility
by Sea Power Shipping Enterprises and Evic Human
Resources Management, Inc. because the above-mentioned
affidavits are only valid and binding between the principal and
the manning agent. It should not affect petitioner Skippers
United Pacific, Inc.s liability towards the seamen, specifically
respondents, because the liabilities of the said petitioner as
manning agency is joint and solidary with its principal and
respondents
actual
employer,
co-petitioner
J.P.Samartzsis Maritime Enterprises Co., S.A.

Given the foregoing arguments raised by both parties,


this Court identifies the following issues for resolution in the
Petition at bar, viz:

I.

Can this Court take


cognizance of the Petition for
Review under Rule 45 of the Rules
of Court considering that the
petitioners raised issues of facts?

II.

Whether the ground


of incompetence as a just cause for
a valid dismissal has been proven
by substantial evidence.

III.

Whether the Court of


Appeals erred in its findings that
there was non-compliance with the
two-notice requirement in effecting
a valid dismissal as mandated by
the Labor Code, as amended.

IV.

Whether
the
respondents
are
entitled
to
indemnity
equivalent
to
the
unexpired
portion
of
their
employment contract.

Although as a rule, only legal issues may be raised in a


Petition for Review on Certiorari under Rule 45 of the Rules of
Court, the Court is not precluded from delving into and
resolving issues of facts,[23] particularly if the findings of the
Labor Arbiter are inconsistent with those of the NLRC and the
Court of Appeals; if the findings of the NLRC and the appellate
court are contrary to the evidence and the record; and in
order to give substantial justice to the parties. [24]

In this case, the Labor Arbiter and the NLRC en


banc ruled that the respondents were validly dismissed by the
petitioners because of incompetence in performing their
duties and responsibilities. In effecting such dismissal, the
petitioners complied substantially with the two-notice
requirement
for
procedural
due
process
in
labor
cases. However, the Court of Appeals stated in its27 July
2004 Decision that the respondents alleged incompetence if
any, was not properly proven, and these remained plain
allegations
without
any
proof
to
substantiate
the
same. Furthermore, petitioners failed to comply with the
two-notice requirement in effecting a valid dismissal. Since
there are conflicts in the findings of the Court of Appeals, on
one hand, and the Labor Arbiter and the NLRC, on the other,
it is incumbent upon this Court to resolve the issues of fact in
order to give substantial justice to both parties. Hence, this
Court can take cognizance of this Petition.

The general rule is that, factual findings of the NLRC,


particularly where the NLRC and the Labor Arbiter are in
agreement, are deemed binding and conclusive upon the
Supreme Court.[25] Such factual findings of labor officials are
conclusive and binding when supported by substantial
evidence, meaning, that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a
conclusion.[26] Thus, the Supreme Court will not uphold
erroneous conclusions of the NLRC as when it finds
insufficient or insubstantial evidence on record to support
those factual findings. The same holds true when it is
perceived that far too much is concluded, inferred, or
deduced from the bare or incomplete facts appearing of
record.[27]

Accordingly, the rule that the factual findings of the


administrative bodies are accorded great weight and respect
and even finality by this Court does not apply in the present
case because of the apparent conflict in the findings of the
administrative bodies and that of the appellate court. This
Court therefore finds it necessary to go over the records of
the case to determine whether the dismissal of the
respondents has been properly proven by substantial
evidence.

It must be noted that in termination cases, the burden


of proof rests upon the employer to show that the dismissal of
the employee is for just cause and failure to do so would
mean that the dismissal is not justified. This is in consonance
with the guarantee of security of tenure in the
Constitution[28] and elaborated in the Labor Code.[29] A
dismissed employee is not required to prove his innocence of
the charges leveled against him by his employer.[30] The
determination of the existence and sufficiency of a just cause
must be exercised with fairness and in good faith and after
observing due process.[31] Hence, there are two requisites
which must be complied with by an employer for a valid
dismissal, to wit:

12 | L A B O R R E L A T I O N S C A S E T O D I G E S T

I.

II.

the dismissal must


be for a just or authorized cause;
and,

the employee must be


afforded due process, i.e., he must
be given opportunity to be heard
and to defend himself.

The Labor Code, as amended, laid down the just or


valid causes in dismissing an employee, thus:

Art. 282. TERMINATION


BY
EMPLOYER. An employer may terminate
an employment for any of the following
causes.

(a)

Serious misconduct or willful


disobedience by the employee of
the lawful orders of his employer or
representative in connection with
his work;

(b)

Gross and habitual neglect by


the employee of his duties;

(c)

Fraud or willful breach by the


employee of the trust reposed in
him by his employer or duly
authorized representative;

(d)

Commission of a crime or
offense by the employee against
the person of his employer or any
immediate member of his family or
his duly authorized representative;
and

(e)

Other causes analogous to the


foregoing.

In the case before this Court, the ground relied upon


by
the
petitioners
in
dismissing
the respondents
is incompetence. Although incompetence or inefficiency as a
ground for a valid dismissal is not expressly written in Article
282 as one of the just causes in dismissing an
employee, this ground is considered as analogous to those
enumerated under said article. Additionally, incompetence is a
ground specifically provided for in Section H of the Philippine
Overseas Employment Administration (POEA) Standard
Employment Contract[32] to validly dismiss an erring

seaman. Such incompetence or inefficiency is understood to


mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable
period, or by producing unsatisfactory results.[33] In proving
the alleged incompetence of the respondents, the Labor
Arbiter as well as the NLRC, based their findings on
the telefax message,[34] logbook extracts, and the Masters
Statement Report.

While going over the records of the case, this Court


finds that the logbook extracts presented by the petitioners
before the administrative bodies failed to specify the
particular acts or omissions of the respondents which
apparently displayed their alleged incompetence. Such details
are vital in proving whether the respondents are indeed
incompetent to perform their assigned duties and
responsibilities. While the logbook extracts presented by the
petitioners
dated 22
July
1998,[35] mentioned
that
respondent Maguadwas inexperienced because he did not
operate E/R Machines satisfactorily, it did not particularly
described therein the manner howMaguad operated the
machine that would lead to the conclusion that he was
inexperienced. With regard to respondent Ciudadano, his
alleged incompetence was stated in the logbook extracts
dated 24 July 1998,[36] that he was unable to perform safety
duties in spite of advices given to him. Again, his alleged
incompetence was not specifically stated. Since a logbook
contains entries of the daily events in the vessel, it is irregular
that the act of the respondents showing their incompetence
were not stated therein with particularity. Hence, absent a
more detailed narration in the logbook entry of the
circumstances
surrounding
respondents
alleged
incompetence, the same cannot constitute a valid justification
for their dismissal.

Additionally, the entries in the logbook stating the


alleged incompetence of the respondents are contrary to what
was stated in the confirmation letters issued by the captain of
the vessel on the same date that the respondents were
repatriated to Manila. The said confirmation letters[37] contain
statements that the respondents were signed off in order to
transfer them to another vessel due to crew reduction. It was
not cited in those letters that respondents were signed off
because of their incompetence to perform their duties. Ship
Captain G. Aravadinos Karlatos duly signed such confirmation
letters, which also bear the seal of the vessel
M/VHanjin Vancouver.

Moreover, the Masters Statement Report, [38] presented


by the petitioners, to corroborate their claim that the
dismissal of the respondents was for just cause i.e.,
incompetence, was issued 17 days after the respondents were
repatriated to Manila and two months after the complaint for
illegal dismissal was instituted by the respondents before the
NLRC. Consequently, such report can no longer be a fair and
accurate assessment of the respondents competence as the
same was presented only after the complaint was
filed. Clearly, its execution was a mere afterthought in order
to justify the dismissal of the respondents, which had long
been effected before the report was made; hence, such report
is a self-serving one.

Accordingly, this Court agrees with the Court of


Appeals that it was not proven through substantial evidence
that the respondents were dismissed for just cause. The
incompetence of the respondents as just cause for their
dismissal was not properly proven and the evidence
submitted by the petitioners before the administrative bodies

13 | L A B O R R E L A T I O N S C A S E T O D I G E S T

are not enough to sustain the dismissal of the respondents.


For this reason, this Court is not convinced that the
respondents were legally dismissed.

Nonetheless, even if there is a valid ground in


dismissing the respondents, the petitioners cannot just
dismiss them outright. The petitioners must also comply with
the second requisite, which is, to afford the respondents due
process.

The second requisite that must be complied with by an


employer for a valid dismissal is to afford the erring employee
due process. The due process requirement is not a mere
formality that may be dispensed with at will. Its disregard is
a matter of serious concern since it constitutes a safeguard of
the highest order in response to mans innate sense of justice.
[39]
The Labor Code does not, of course, require a formal or
trial type proceeding before an erring employee may be
dismissed. This is especially true in the case of a vessel on
the ocean or in a foreign port. The minimum requirement of
due process in termination proceedings, which must be
complied with even with respect to seamen on board a vessel,
consists of notice to the employees intended to be dismissed
and the grant to them of an opportunity to present their own
side of the alleged offense or misconduct, which led to the
managements decision to terminate. [40] To meet the
requirements of due process, the employer must furnish the
worker sought to be dismissed with two written notices before
termination of employment can be legally effected, i.e., (1) a
notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the
subsequent notice after due hearing which informs the
employee of the employers decision to dismiss him.[41]

Now, in the case at bar, this Court is convinced that


the petitioners also failed to comply with the second requisite
in effecting a valid dismissal, which is to afford the
respondents due process. As previously discussed herein, to
meet the requirements of due process, it is indispensable
upon the employer to furnish the employee sought to be
dismissed
with
two
written
notices. The
warning
notices[42] given by the petitioners to the respondents cannot
be deemed as substantial compliance with the two-notice
requirement as mandated by the Labor Code in effecting a
valid dismissal. Those warning notices did not specify in
detail the particular acts or omissions committed by the
respondents which showed their incompetence. Worse still it
did not apprise them that their dismissal was sought. Such
notices were stated in a general manner. It was never
mentioned therein that the petitioners would dismiss the
respondents. Although the petitioners claimed that those
notices were given to the respondents days before they were
repatriated, the same leaves much to be desired.

second notice, which must be given after hearing to inform


the respondents of the petitioners decision to dismiss them,
was not complied with. In view of that, the Court of Appeals
correctly ruled that there was non-compliance with the twonotice requirement in effecting a valid dismissal.

Inasmuch as the respondents were illegally dismissed


because the ground relied upon by the petitioners were not
substantially proven and there was non-compliance with the
two-notice requirement in effecting a valid dismissal, they are
entitled to the payment of indemnity. However, this Court
does not agree with the findings of the Court of Appeals that
the provisions of Section 10 of Republic Act No. 8042,
otherwise known as the Migrant Workers Act of 1995, is the
law applicable in computing the amount of indemnity to be
paid to the respondents who have been illegally
dismissed. The said Section 10 of Republic Act No. 8042
partly provides:

In case of termination of overseas


employment
without
just,
valid
or
authorized cause as defined by law or
contract, the worker shall be entitled to
the
full
reimbursement
of
his
placement fee with interest at twelve
percent (12%) per annum, plus his salaries
for the unexpired portion of his employment
contract or for three (3) months for every
year of the unexpired term, whichever is
less.

This Court held in the case of Marsaman Manning


Agency, Inc. v. National Labor Relations Commission, [45] thus:

The Labor Code requires both notice and hearing;


notice alone will not suffice. The requirement of notice is
intended to inform the employee concerned of the employers
intent to dismiss him and the reason for the proposed
dismissal. On the other hand, the requirement of hearing
affords the employee an opportunity to answer his employers
charges
against
him
and
accordingly
to
defend himself therefrom before dismissal is effected. [43] In
this case, after the warning notices were given to the
respondents, the petitioners did not give the respondents an
opportunity to present their sides by conducting a hearing as
provided for in Section 17 of the POEA Contract. [44] Instead,
the petitioners, with breathless speed, ordered the
repatriation of the erring employees toManila. Therefore, the

14 | L A B O R R E L A T I O N S C A S E T O D I G E S T

A plain reading of Sec. 10 clearly reveals


that the choice of which amount to award
an illegally dismissed overseas contract
worker, i.e., whether his salaries for the
unexpired portion of his employment
contract or three (3) months salary for
every year of the unexpired term,
whichever is less, comes into play
only
when the employment contract
concerned has a term of at least one (1)
year or more. This is evident from the
words for every year of the unexpired
term which follows the words salaries
x x x for
three
months. To
follow
petitioners thinking that private respondent
is entitled to three (3) months salary only
simply because it is the lesser amount is to
completely disregard and overlook some
words used in the statute while giving effect
to some. This is contrary to the wellestablished rule in legal hermeneutics that
in interpreting a statute, care should be
taken that every part or word thereof be
given effect since the law-making body is
presumed to know the meaning of the
words employed in the statute and to
have
used
them
advisedly. Ut res magisvaleat quam pereat.

Furthermore, in the case of Phil. Employ Services and


Resources, Inc. v. Paramio,[46] citing the case of Skippers
Pacific, Inc. v. Skippers Maritime Service, Ltd.,[47] this Court
ruled that an overseas Filipino worker who is illegally
terminated should be entitled to his salary equivalent to the
unexpired portion of his employment contract if such contract
is less than one year.

This must be so, because the obligations


covenanted in the recruitment [manning]
agreement entered into by and between the
local agent and its foreign principal are not
coterminus with
the
term
of
such
agreement so that if either or both of the
parties decide to end the agreement, the
responsibilities of such parties towards the
contracted employees under the agreement
do not at all end, but the same extends up
to and
until the expiration of the
employment contracts of the employees
recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will
render nugatory the very purpose for which
the law governing the employment of
workers for foreign jobs abroad was
enacted.

Having said that, we apply the foregoing principles to


the present case. Since the contract period of the
respondents is less than one year, more particularly, nine
months plus or minus one month by mutual consent; and
they were illegally dismissed, then they are entitled to their
salaries equivalent to the unexpired portion of their contract,
and not just to three months salary.

With respect to the petitioner Skippers United Pacific,


Inc.s claim that it be exempted from liability because it is no
longer the manning agency responsible to the respondents
since Sea Power Shipping Enterprises, Inc. and Evic Human
Resources Management, Inc. had executed Affidavits of
Assumption of Responsibility, this Court will not sustain such a
claim. In Section 1 of Rule II of the POEA Rules and
Regulations, it states that:

Section 1. Requirements for Issuance


of License. Every applicant for license to
operate a private employment agency or
manning agency shall submit a written
application together with the following
requirements:
xxx

applicant:

f. A verified undertaking stating that the

Also, according to Section 10, paragraph 2 of


Republic Act No. 8042,[50] the agency which deployed the
employees whose employment contract were adjudged
illegally terminated, shall be jointly and solidarily liable with
the principal for the money claims awarded to the aforesaid
employees.[51] Therefore, petitioner Skippers Pacific United,
Inc. as the manning agency which hired the respondents is
jointly and solidarily liable with its principal and co-petitioner
J.P. Samartzsis Maritime Enterprises Co., S.A., for the money
claims of the respondents. The Affidavits of Assumption of
Responsibility, though valid as between petitioner Skippers
United Pacific Inc. and the other two manning agencies, are
not enforceable as against the respondents because the latter
were not parties to those agreements. The provisions of the
POEA Rules and Regulations are clear enough that the
manning agreement extends up to and until the expiration of
the employment contracts of the employees recruited and
employed
pursuant
to
the
said
recruitment
agreement. Hence,
despite
the
execution
of
the
aforementioned affidavits, petitioner Skippers United Pacific
Inc. cannot exempt itself from the liabilities and
responsibilities towards the respondents.

xxx

(3) Shall assume joint and


solidary liability with the
employer for
all claims and liabilities which may arise in
connection with the implementation of the
contract; including but not limited to
payment
of
wages,
death
and
disability compensation and repatriation.

Accordingly, despite the execution of the Affidavits of


Assumption of Responsibility by other manning agencies, the
petitioner Skippers United Pacific Inc. cannot exempt itself
from all the claims and liabilities arising from the
implementation of the contract executed between the said
petitioner and the respondents. It is very clear from the
above-cited provisions of the Rules and Regulations of the
POEA that the manning agency shall assume joint and
solidary liability with the employer. Joint and solidary liability
is meant to assure aggrieved workers of immediate and
sufficient payment of what is due them.[48] The reason for
this ruling was given by this Court in Catan v. National Labor
Relations Commission,[49] which is reproduced in part below:

WHEREFORE, premises considered, the instant


Petition is DENIED. The Decision and Resolution of the Court
of Appeals dated 27 July 2004 and 14 December 2004,
respectively, in CA-G.R. SP No. 80651, finding that
respondents had been illegally dismissed and that petitioners
failed to comply with the two-notice requirement of due
process
in
effecting
a
valid
dismissal,
are
hereby AFFIRMED with MODIFICATION. The
petitioners
Skippers United Pacific, Inc. and J.P. Samartzsis Maritime
Enterprises Co., S.A. are hereby ORDERED, jointly and
severally,
to
pay
respondents
Jerry Maguad and Porferio Ciudadano the amount of their
salaries corresponding to the unexpired portion of their
employment contract. Costs against petitioners.

15 | L A B O R R E L A T I O N S C A S E T O D I G E S T

SO ORDERED.

Strike

MANILA HOTEL EMPLOYEES ASSOCIATION and its


members, vs MANILA HOTEL CORPORATION, G.R.
No. 154591, March 5, 2007
MANILA
HOTEL
EMPLOYEES
ASSOCIATION and its members,
Petitioners,

- versus -

MANILA HOTEL CORPORATION,


Respondent
.

G.R.
154591

No.

Present:
YNARESSANTIAGO, J.,
Chairperson,
AUSTRIAMARTINEZ,
CALLEJO, SR.,*
CHICO-NAZARIO,
and
NACHURA, JJ.
Promulgated:

March 5, 2007
x-------------------------------------------------x
DECISION
CHICO-NAZARIO, J.:
This is a petition for review on certiorari under Rule 45
of the Rules of Court, assailing the Decision, [1]dated 31
October 2001, promulgated by the Court of Appeals, affirming
the Decision of the National Labor Relations Commission
(NLRC), dated 5 April 2000, declaring that the strike held by
the petitioner Manila Hotel Employees Association (MHEA),
herein represented by Ferdinand Barles, is illegal. The Court
of Appeals, in its assailed Decision, modified the Decision
rendered by the NLRC and ruled that both incumbent officers
and members of MHEA involved in the illegal strike lost their
employment status.
On 11 November 1999, the MHEA filed a Notice of
Strike with the National Conciliation and Mediation Board
(NCMB) in its National Capital Region office against Manila
Hotel on the grounds of unfair labor practices.[2] Upon the
petition of Manila Hotel, the Secretary of Labor and
Employment (SOLE) certified the labor dispute to the NLRC
for compulsory arbitration pursuant to Article 263(g) of the
Labor Code on 24 November 1999. Specifically, the Order
enjoined any strike or lockout and the parties were ordered to
cease and desist from committing any acts that may
exacerbate the situation.[3] The parties and their counsels
were served copies of the said Order.[4] MHEA filed a Motion
for Reconsideration dated 29 November 1999 assailing the
validity of said Order.
The case was set for mandatory conference on 8
February 2000 before Presiding Commissioner Rogelio
I. Rayala. During the conference, the parties were advised of
the certification order, which prohibited them from taking any
action that would exacerbate the situation. At the instance of
the MHEA officers, the hearing of the case was reset to 29
February 2000 due to the absence of the counsel for MHEA.[5]
On 10 February 2000, the MHEA conducted a strike
despite the clear terms of the Order issued by the SOLE on 24
November 1999, and despite the repeated reminders thereof.
[6]
On the same day, Commissioner Rayala called for a
mandatory conference.[7]Thereafter, several conferences were
conducted by the NLRC, wherein both parties were warned
against aggravating the already volatile situation. During its
hearing on 8 March 2000, the NLRC sought to have both

parties identify the issues and stipulate the facts, despite


their reluctance. It also allowed the parties sufficient time to
file their position papers, with which both parties failed to
comply.[8]
After the strike was conducted, both parties filed
various motions and pleadings before the NLRC. Manila Hotel
filed a complaint with Prayer for Injunction and/or Temporary
Restraining Order on 11 February 2000, alleging that MHEA
conducted an illegal strike, blocked all ingress and egress of
the hotel premises, harassed and intimidated company
officers, non-striking employees, customers and suppliers. In
addition, it sought a declaration that the strike was illegal
and that, consequently, the striking employees lost their
employment.[9]
The NLRC issued an Order dated 11 February
2000 directing the striking workers to return to work
immediately and the hotel to accept them back under the
same terms and conditions of employment. The NLRC further
instructed the parties to submit proof of compliance with the
instant order immediately after the lapse of twenty-four
hours.[10] The parties, through their counsels, received the
said Order before 4:00 pm of the same day. In their Urgent
Manifestation and Motion to Set Aside Order dated 14
February 2000, and Motion for Reconsideration dated 11 April
2000, MHEA admitted that a copy of the order was served on
the picket lines at 5:00 pm of 11 February 2000.[11]
The NLRC received a copy of the Compliance filed by
Manila Hotel on 14 February 2000, manifesting that only six
striking employees complied with the return-to-work Order
and were reinstated. The other striking employees had
openly defied the said Order.[12]
In response to the NLRCs return-to-work order, dated
11 February 2000, the MHEA filed an Urgent Manifestation
and Motion to Set Aside Order on 14 February 2000. It
alleged that the Motion for Reconsideration, dated 29
November 1999, questioning the validity of the Order of the
SOLE, dated 24 November 1999, which certified the case to
the NLCR, was still pending with the SOLE. The said motion
had prevented the said Order of the SOLE from becoming
final and executory. Thus, it alleged that the NLRC had not
acquired jurisdiction over the labor dispute pending the
resolution of the Motion for Reconsideration filed before the
SOLE.[13] On 17
February
2000,
the
NLRC
denied MHEAs Urgent Manifestation and Motion to Set Aside
Order.[14]
The NLRC also issued another Order on 17 February
2000, ordering MHEA to refrain from putting up a blockade or
barricade or any mode of preventing the free ingress to and
egress from the hotel. Parenthetically, it also ordered Manila
Hotel to respect the right of the striking workers to peacefully
picket in a designated area outside the hotel. [15] Manila Hotel
moved for the Reconsideration of the said Order on the
ground that the picket, which they were ordered to respect,
was an unlawful activity.[16]
Pending the resolution of its motion, MHEA filed a
Motion to Inhibit, dated 10 March 2000, seeking to inhibit
CommissionerRayala, [17] who voluntarily inhibited himself.
[18]
Likewise, the MHEA, through a Supplemental Motion,
dated 22 March 2000, sought the inhibition of all the
members
of
the
First
Division
of
the
NLRC.
[19]
Commissioner Veloso also
voluntarily
inhibited
himself. On 31 March 2000, the case was re-raffled to the
members of the Second and Third Divisions. The
Commissioners thus convened and agreed to resolve the
case per curiam. [20]
In the Decision promulgated on 5 April 2000, the NLRC
ruled that the 10 February 2000 strike held by MHEA was
illegal for its defiance of the return-to-work order. However, it
determined that only the union officers were deemed to have

16 | L A B O R R E L A T I O N S C A S E T O D I G E S T

lost their employment. It ruled that there was no evidence


showing who among the striking employees were actually
notified of the return-to-work order, and therefore, such
employees have not forfeited their employment. But in view
of the antagonism on both sides, the NLRC awarded a
severance pay equivalent to one-month salary to the
returning union members for every year of service, instead of
ordering
Manila
Hotel
to
reinstate
them. [21] In
[22]
the dispositive part of the Decision,
the NLRC decreed that:
WHEREFORE, premises considered,
the strike is declared illegal. Accordingly,
the incumbent officers of the union are
declared to have forfeited their employment
status. Further, no relief may be granted
the union with respect to their demands, in
view of the absence of a decision thereon by
a Voluntary Arbitrator.

Association v. NLRC, CA-G.R. S.P No. 59601.[30] Manila Hotel


sought the dismissal of the present petition on the ground
that petitioner Ferdinand Barles was not authorized to file
it. Manila Hotel alleged that Barles was no longer the
Chairman of MHEA and attached a certification [31] dated 5
March 2003 of the union Secretary General, stating that
Eduardo M. Saplan was the Chairman of the union, and that
he succeeded AntonioDumpit who held the position of
Chairman from 5 July 2000 to 19 December 2002. It further
alleged
that
the SPAs attached
to
the
Compliance
authorizing Barles and Potenciano to represent the union
pertained to a different case, and not the present case.
[32]
MHEA, however, insisted that it was the same case since it
involved the same parties, facts, and issues.[33]
In the present petition, MHEA raises the following
issues[34]:

In lieu of an order for the Hotel


and members of the union to maintain their
respective status previous to the strike,
Manila Hotel, Inc. is hereby ORDERED to
pay the returning union members, as an
alternative relief to continued employment,
severance compensation in an amount
equivalent to one (1) month salary for every
year of service, a fraction thereof, being
considered
as
one
whole
year. No
entitlement to backwages is however
decreed, pursuant to the no-work-no-pay
principle in strike cases.

I
WITH DUE RESPECT, THE HONORABLE
COURT OF APPEALS AND THE RESPONDENT
COMMISSION HAD ACTED WITH GRAVE
ABUSE OF DISCRETION AND THEY HAD
COMMITED REVERSIBLE ERRORS IN THEIR
QUESTIONED
DECISIONS
AND
RESOLUTIONS WHEN, OBVIOUSLY, BY LAW
AND
SETTLED
JURISPRUDENCE,
THE
INDIVIDUAL PETITIONERS, WHO ARE MERE
ORDINARY MEMBERS OF THE UNION, ARE
ENTITLED TO BE REINSTATED BACK (sic)
TO WORK WITHOUT LOSS OF SENIORITY
OR OTHER EMPLOYEES RIGHTS AND
BENEFITS AND WITH FULL BACKWAGES
FROM DATE OF DISMISSAL UNTIL ACTUAL
REINSTATEMENT.

Both parties filed their respective Motions for


Reconsideration. Manila Hotel filed a Motion for Partial
Reconsideration which sought the deletion of the award of
severance compensation to the union members who
participated in the illegal strike. [23] MHEA, on the other hand,
sought the reversal of the Decision on the ground that the
NLRC had no jurisdiction over the case and that they were
deprived of due process. [24] The NLRC denied both motions in
a Resolution dated 17 May 2000.[25]
On 6 July 2000, Manila Hotel filed a Petition for
Certiorari under Rule 65 before the Court of Appeals to assail
the Decision dated 5 April 2000, and the Resolution dated 17
May
2000,
both
issued
by
the
NLRC. [26] In
a
Decision[27] dated 31 October 2001, the Court of Appeals
granted the petition, to wit:
WHEREFORE, finding merit in the
petition,
the
same
is GRANTED. The
assailed Decision is MODIFIED in that both
the incumbent officers and members of the
Union involved in the illegal strike are
declared to have lost their employment
status. The
award
of
severance
compensation to the striking members of
the union is consequently DELETED.
On 26 November 2001, MHEA filed a Motion for
Reconsideration, which the Court of Appeals denied in a
Resolution, dated1 August 2002.[28]
MHEA filed a petition for review on certiorari before
this Court questioning the assailed decision of the Court of
Appeals dated 31 October 2000. Thereafter, the Court
ordered MHEA to submit proof that the Chairman/President of
MHEA, FernandoBarles, had been duly authorized to sign the
verification of the petition and certification of forum shopping.
[29]
In compliance thereof, MHEA submitted eight (8) special
powers of attorney (SPAs) executed by 138 union members
authorizing Atty. PotencianoFlores and Ferdinand Barles to
represent them in the case Manila Hotel Employees

II
WITH DUE RESPECT, THE COURT BELOW
AND THE RESPONDENT COMMISSION HAD
COMMITTED
REVERSIBLE
ERROR
IN
APPLYING THE DOCTRINE OF STRAINED
RELATIONSHIP IN THE CASE AT BAR.
This petition is devoid of merit.
Before discussing the substantial issues of this case,
this
Court
takes
notice
of
a
serious
procedural
flaw. Ferdinand Barles is not authorized to sign the
verification and certification of non-forum shopping in the
present case. The General Membership Resolution, dated 23
December 1998, affirmed that he was appointed as the
Chairman
of
MHEA,
in
place
of
Gonzalo Irabon.
[35]
Nevertheless, Barles failed to refute the facts that were
ascertained by the certification of the secretary-general of
MHEA: that at the time this petition was filed on 26
September 2002, and even at the time the petition was filed
before the Court of Appeals by Manila Hotel - on 10 July
2000, Ferdinand Barles was no longer the Chairman of
MHEA. The
certification
clearly
stated
that
Antonio Dumpit was the union Chairman from 5 July
2000 to 19 December 2000, and that he was succeeded by
Eduardo Saplan. Moreover, the SPAs that were submitted to
the Court in order to prove that Barles was authorized to sign
the verification and certification of non-forum shopping in this
case failed to establish that crucial fact. The SPAs had in fact
authorized Barles to represent the 138 members who signed
the SPA to represent them in a different case, Manila Hotel
Employees
Association
v.
National
Labor
Relations
Commission, CA-G.R. S.P No. 59601, which was raised on
appeal before the Supreme Court under G.R. No.
144879. The MHEAs assertion that there were the same
parties and issues involved in the two cases is self-defeating,
not only because these are clearly two distinct cases, but

17 | L A B O R R E L A T I O N S C A S E T O D I G E S T

because such will likewise violate the rule against non-forum


shopping.
The provisions of Supreme Court Circular Nos. 28-91
and 04-94 require a Certification of Non-Forum Shopping in
any initiatory pleading filed before the Supreme Court and the
Court of Appeals. In the case of Teoville Homeowners
Association v. Ferreira,[36] the Court emphatically underscored
the need to show to the satisfaction of the Court that the
person signing the verification and certification against nonforum shopping had been specifically authorized to do so. In
other similar cases,[37] it has been ruled that it is the partypleader, and not the counsel, who must execute the certificate
against forum shopping. The rationale for the rule is that the
counsel may be unaware of any similar actions pending with
other courts on the same matter. In this case,
Ferdinand Barles was no longer an officer of the union at the
time this petition was filed, and therefore was no longer privy
to the cases that may have been filed by MHEA. Absent the
specific authorization from the MHEA members that he sought
to represent, any statement he may make cannot bind the
MHEA herein named. For the foregoing reasons alone, this
petition should be dismissed.

compulsory or voluntary arbitration or


during the pendency of cases involving the
same grounds for the strike or lockout.
More to the point, the Court has consistently ruled in a
long line of cases spanning several decades that once the
SOLE assumes jurisdiction over a labor dispute, such
jurisdiction should not be interfered with by the application of
the coercive processes of a strike or lockout. Defiance of the
assumption order or a return-to work order by a striking
employee, whether a union officer or a member, is an illegal
act and, therefore, a valid ground for loss of employment
status.[39]
The assumption of jurisdiction by the SOLE over
labor disputes causing or likely to cause a strike or lockout in
an industry indispensable to the national interest is in the
nature of a police power measure.[40] In this case, the SOLE
sufficiently justified the assumption order, thus:
The Hotel is engaged in the hotel
and restaurant business and one of the
de luxe hotels operating in Metro Manila
catering mostly to foreign tourist groups
and businessmen. It serves as venue for
local and international conventions and
conferences. The
Hotel
provides
employment to more than 700 employees
as well as conducts business with entities
dependent on its continued operation. It
also provides substantial contribution to the
government coffers in the form of foreign
exchange
earnings
and
tax
payments. Undoubtedly, a work stoppage
thereat will adversely affect the Hotel, its
employees, the industry, and the economy
as a whole.

Aside from its procedural defects, the petition is also


substantially infirm. MHEA members seek their reinstatement
after participating in an illegal strike, that is, a strike that was
conducted after receiving an Order of assumption [38] by the
SOLE certifying the dispute to the NLRC for compulsory
arbitration. Worse still, the strikers failed to comply with
the 11 February 2000return-to-work Order, issued by the
NLRC, despite receipt thereof. The law explicitly prohibits
such acts.
ART. 263.
LOCKOUTS

STRIKES,

PICKETING,

AND

xxxx
(g)

When, in his opinion there exists a


labor dispute causing or likely to cause
a strike or lockout in an industry
indispensable to the national interest,
the Secretary of Labor and Employment
may assume jurisdiction over the
dispute and decide it or certify the
same
to
the
Commission
for
compulsory
arbitration. Such
assumption or certification shall have
the effect of automatically enjoining the
intended or impending strike or lockout
as specified in the assumption or
certification order. If one has already
taken place at the time of the
assumption or certification, all striking
or
locked
out
employees
shall
immediately return to work and the
employer shall immediately resume
operations and readmit all workers
under the same terms and conditions
prevailing
before
the
strike
or
lockout. The Secretary of Labor and
Employment or the Commission may
seek the assistance of law enforcement
agencies to ensure compliance with this
provision as well as with such orders as
he may issue to enforce the same.

At this critical time when efforts of


the present administration are seriously
focused on preserving the economic gains
achieved and ensuring that existing jobs are
maintained, it is the utmost concern of this
Office to avoid work disruption that might
result to the firms closure particularly so
when an alternative mechanism obtains to
resolve the parties differences.[41]
The allegation[42] that the strikers relied on their
honest belief that the filing of a Motion for Reconsideration of
the Order, issued by the SOLE on 24 November 1999, entitled
them to participate in a strike, cannot be sustained. In the
case of St.Scholasticas College v. Torres,[43] the Court
reiterated the rule that a return-to-work order is
immediately executorynotwithstanding the filing of a motion
for reconsideration. It must be strictly complied with even
during
the pendency of
any
petition
questioning
its
validity. Citing the case Philippine Airlines Employees
Association v. Philippine Airlines, Inc.,[44] it accounted for the
rationale of this rule, as thus:

ART. 264. PROHIBITED ACTIVITIES


(a)

xxxx

No strike or lockout shall be


declared after assumption of jurisdiction by
the President or the Minister or after
certification or submission of the dispute to

18 | L A B O R R E L A T I O N S C A S E T O D I G E S T

The very nature of a return-to-work order


issued in a certified case lends itself to no
other construction. The certification attests
to the urgency of the matter, affecting as it
does an industry indispensable to the
national interest. The order is issued in the
exercise of the courts compulsory power of
arbitration, and therefore must be obeyed
until set aside. To say that its [return-towork
order] effectivitymust
await affirmance on
a
motion
for
reconsideration is not only to emasculate it
but indeed to defeat its import, for by then

the deadline fixed for the return to work


would, in the ordinary course, have already
passed and hence can no longer be affirmed
insofar as the time element it concerned.
Returning to work in this situation is not a matter of
option or voluntariness but of obligation. The worker must
return to his job together with his co-workers so the
operations of the company can be resumed and it can
continue serving the public and promoting its interest. [45] This
extraordinary authority given to the Secretary of Labor is
aimed at arriving at a peaceful and speedy solution to labor
disputes, without jeopardizing national interests. Regardless
therefore of their motives, or the validity of their claims, the
striking workers must cease and/or desist from any and all
acts that tend to, or undermine this authority of the Secretary
of Labor, once an assumption and/or certification order is
issued. They cannot, for instance, ignore return-to-work
orders, citing unfair labor practices on the part of the
company, to justify their action.[46]
MHEA claims that the Court should consider as a
mitigating circumstance the fact that they held the strike
three months after filing their notice of strike. Such detail is
irrelevant. What is crucial is that they were apprised of the
assumption order of the SOLE wherein they were enjoined
from carrying out a strike. They were again reminded to
refrain from conducting a strike during the mandatory
conference on 8 February 2000. Pending the proceedings for
compulsory arbitration and for no apparent reason, they
staged the strike two days later and refused to obey the
return-to-work order issued on 11 February 2000. In the
case of Grand Boulevard Hotel v. Genuine Labor Organization
of Workers in Hotel, Restaurant and Allied Industries
(GLOWHRAIN),[47] the
Court
cautioned
against
the
unreasonable and indiscriminate exercise of the right to
strike:
[T]he decision to wield the weapon of strike
must therefore rest on a rational basis, free
from
emotionalism, unswayed by
the
tempers and tantrums of a few hotheads,
and firmly focused on the legitimate interest
of the union which should not however be
antithetical to the public welfare. In every
strike staged by a union, the general peace
and progress of society and public welfare
are involved. x x x.
MHEA alleges that the union members were not
served a copy of the assumption order issued by SOLE.
[48]
Such allegation is absurd considering that MHEA
repeatedly alluded in its Motion for Reconsideration dated 29
November 1999 to the assumption order, which they now
deny having received. The records also state that petitioners
and their counsels received a copy of the order on 24
November 1999 and 26 November 1999, respectively. On 8
February 2000, two days before the strike was undertaken,
MHEA officers had attended a mandatory conference before
the NLRC wherein they were advised not to take any action to
exacerbate the situation. They had even moved for the
postponement of the hearing to 29 February 2000 due to the
absence of their counsel. It is only too obvious that MHEA
conducted the 10 February 2000 strike knowing fully that an
assumption order had been issued.
They, likewise, imply that they were not served a
copy of the return-to-work order.[49] Such allegation loses
credence because MHEA, in its Urgent Manifestation and
Motion to Set Aside Order dated 14 February 2000, and
Motion for Reconsideration dated 11 April 2000, admitted that
a copy of the return-to-work order was served on the picket
lines. Records show that their counsel was likewise served a
copy thereof during the 11 February 2000 conference and

that he refused to acknowledge receipt.[50] During the 16


February 2000 conference, MHEAs counsel stated that the
reason that some of the strikers were unable to return to
work was the fact that the picket lines were violently
dispersed a few hours after the twenty-four hour period
expired.[51] This implies that during the twenty-four hour
period that they were allowed to be fully reinstated, they
failed to report to work.
MHEA cannot lean on the doctrine in the case of PNOC
Dockyard and Engineering Corporation v. National Labor
Relations Commission.[52] The Court, in the aforecited case,
ruled that there was no valid service of the certification order
which prohibited any strike or lockout since the said order
was served on the guard on duty instead of the president of
the union who was authorized to receive the same. As a
result, the strike undertaken after the issuance of the said
order
was
considered legal, hence
cannot
effectively
terminate the employment of workers who joined the
strike. In the present case, not only were the union officers
apprised of the order, a copy of the same was served on the
picket lines.
MHEA, likewise, assails the Decision of the NLRC for
having been determined without conducting any preliminary
hearingsnor requiring the submission of position papers.
[53]
Again, the records belie these statements. During the
mandatory conference held on 8 March 2000, the parties had
in fact identified the issues and made stipulations of facts.
[54]
During the same hearing, the Presiding Commissioner
required both parties to file their position papers. [55] The
parties, however, failed to present evidence or file the position
papers after they had been given ample opportunity to do so.
MHEA propounds the theory[56] that both parties had
acted in pari delicto and, therefore, the dismissal of its
members
who
participated
in
the
illegal strike, was
unwarranted, citing as its precedents Philippine Airlines Inc.
v. Brillantes[57] and PhilippinesInterfashion Inc. v. National
Labor Relations Commission.[58] In both cases, the
undisputed finding that the employer was guilty of an illegal
lockout while the union conducted an illegal strike, caused the
Court to order the reinstatement of the employees who
participated in the illegal strike. In Philippine Airlines Inc.
v. Brillantes,[59] the Court emphasized the unequivocal rule
that participating in a strike undertaken in defiance of the
order of the SOLE results in the loss of employment
status. It only made an exception of the said case because
the records clearly established that the employer, Philippine
Airlines, Inc., terminated the employment of 183 union
officers and members, in violation of the order issued by the
SOLE.[60] In Philippines Interfashion Inc. v. National Labor
Relations Commission, the return-to-work order was not
issued pursuant to an assumption or certification order.
[61]
More importantly, the employees complied with the
return-to-work order and reported back for work within one
day after receiving the same. Despite such compliance, the
employer refused to reinstate 114 employees, and, thus, such
refusal on the part of the employer amounted to an illegal
lockout.[62]
In the present case, nothing in the records shows that
Manila Hotel was guilty of an illegal lockout. It readmitted the
six (6) employees who complied with the return-to-work
order. MHEA made a vague reference to striking employees
who complied with the return-to-work order, but were
nevertheless refused re-admittance by Manila Hotel.
[63]
However,
they
failed
to
even
identify
these
employees. There is no allegation that MHEA filed any case
for illegal lock-out against Manila Hotel. What is clearly
shown by the records is that the strike or picketing was still
being conducted on 28 February 2000, way after the 24-hour
deadline set by the NLRC.[64] Thus, it is obvious that applying
the in pari delicto doctrine pronounced in Philippine Airlines
Inc.
v. Brillantes[65]and Philippines Interfashion Inc.
v.

19 | L A B O R R E L A T I O N S C A S E T O D I G E S T

National Labor Relations Commission[66] to this case would be


improper and without basis.

Young Achievers Learning Center with a monthly salary


of P15,000.00.

It would not be amiss to reiterate the Courts


pronouncement in the case Reliance Surety & Insurance Co.,
Inc. v. National Labor Relations Commission[67]:

It appears on record that respondent, on March 29,


2003, wrote a letter of resignation addressed to Violeta T.
Cario, directress of petitioner, which reads:

As a general rule, the sympathy of


the Court is on the side of the laboring
classes, not only because the Constitution
imposes sympathy but because of the onesided
relation
between
labor
and
capital. The Court must take care, however,
that in the contest between labor and
capital, the results achieved are fair and in
conformity with the rules. x x x.

Dear Madame:
I am tendering my irrevocable
resignation effective April 1, 2003 due to
personal and family reasons.
I would like to express my thanks
and gratitude for the opportunity, trust and
confidence given to me as an Acting
Principal in your prestigious school.

IN VIEW OF THE FOREGOING, the instant Petition


is DENIED. This Court AFFIRMS the assailed Decision of the
Court of Appeals, promulgated on 31 October 2001, declaring
the strike conducted by the MHEA on 10 February 1999 as
illegal and, thus, resulting in the loss of employment status of
the union officers and members who participated in the said
strike. No costs.

God bless and more power to you.


Sincerely yours,
(Signed)
Mrs. ADELAIDA P. MANALO[1]

SO ORDERED.

On March 31, 2003, respondent received a letter of


termination from petitioner, viz.:
Dear Mrs. Manalo:

Probationary Employee; Probationary Employment for


Academic Personnel; Security of Tenure of
Probationary Employees
1.

MAGIS YOUNG ACHIEVERS LEARNING CENTER and


MRS. VIOLETA T. CARIO v. ADELAIDA . MANALO, G.R.
No. 178835, February 13, 2009

MAGIS YOUNG ACHIEVERSLEARNING CENTER and


MRS. VIOLETA T. CARIO,
Petitioners,

- versus -

ADELAIDA P. MANALO,
Respondent.

Greetings of Peace!
The Board of Trustees of the Cario Group
of Companies, particularly that of Magis
Young Achievers Learning Center convened,
deliberated and came up with a Board
Resolution that will strictly impose all means
possible to come up with a cost-cutting
scheme. Part of that scheme is a
systematic reorganization which will entail
G.R. No. 178835
streamlining of human resources.
Present:

As agreed upon by the Board of Directors,


the position of PRINCIPAL will be abolished
YNARES-SANTIAGO,
next school year. Therefore, we regret to
Chairperson, inform you that we can no longer renew
AUSTRIA-MARTINEZ,
your contract, which will expire on March
CHICO-NAZARIO,
31, 2003. Thus, thank you for the input
NACHURA, and you have given to Magis during your term of
PERALTA,
office as Acting Principal. The function of
the said position shall be delegated to other
Promulgated: staff members in the organization.

x-----------------------------------------------------------------------------------x

February 13, 2009


Hoping for your understanding on this
matter and we pray for your future
endeavors.
Very truly yours,

DECISION

(Signed)
Mrs. Violeta T. Cario
School Directress

NACHURA, J.:

Noted by:

This is a petition for review on certiorari of the


Decision dated January 31, 2007 and of the Resolution dated
June 29, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
93917 entitled Magis Young Achievers Learning Center and
Violeta T. Cario v. National Labor Relations Commission,
3rd Division, Quezon City, and Adelaida P. Manalo.
The pertinent facts are as follows:
On April 18, 2002, respondent Adelaida P. Manalo
was hired as a teacher and acting principal of petitioner Magis

(Signed)
Mr. Severo Cario
President[2]
On April 4, 2003, respondent instituted against
petitioner a Complaint [3] for illegal dismissal and non-payment
of 13th month pay, with a prayer for reinstatement, award of
full backwages and moral and exemplary damages.

20 | L A B O R R E L A T I O N S C A S E T O D I G E S T

In her position paper,[4] respondent claimed that her


termination violated the provisions of her employment
contract, and that the alleged abolition of the position of
Principal was not among the grounds for termination by an
employer under Article 282[5] of the Labor Code. She further
asserted that petitioner infringed Article 283 [6] of the Labor
Code, as the required 30-day notice to the Department of
Labor and Employment (DOLE) and to her as the employee,
and the payment of her separation pay were not complied
with. She also claimed that she was terminated from service
for the alleged expiration of her employment, but that her
contract did not provide for a fixed term or period. She
likewise prayed for the payment of her 13 th month pay under
Presidential Decree (PD) No. 851.

pay and backwages, respectively. Petitioners motion for


reconsideration was denied in the NLRCs Resolution [11]dated
January 31, 2006.
Imputing grave abuse of discretion on the part of the
NLRC, petitioner went up to the CA via a petition
for certiorari. The CA, in its Decision dated January 31, 2007,
affirmed the NLRC decision and dismissed the petition. It
likewise denied petitioners motion for reconsideration in the
Resolution dated June 29, 2007. Hence, this petition
anchored on the following grounds
I. THE COURT OF APPEALS ERRED
WHEN
IT
CONCLUDED
THAT
THE
RESIGNATION OF RESPONDENT MANALO
DID NOT BECOME EFFECTIVE DUE TO
ALLEGED LACK OF ACCEPTANCE;

Petitioner, in its position paper,[7] countered that


respondent was legally terminated because the one-year
probationary period, from April 1, 2002 to March 3, 2003, had
already lapsed and she failed to meet the criteria set by the
school pursuant to the Manual of Regulation for Private
Schools, adopted by the then Department of Education,
Culture and Sports (DECS), paragraph 75 of which provides
that:

II. THE
COURT
OF
APPEALS
ERRED WHEN IT RULED THAT RESPONDENT
MANALO IS A PERMANENT EMPLOYEE;
III. THE COURT OF APPEALS ERRED
WHEN IT RULED THAT THE CONTRACT OF
EMPLOYMENT BETWEEN PETITIONER AND
RESPONDENT DID NOT STIPULATE A
PERIOD.[12]

(75) Full-time teachers who have


rendered three years of satisfactory service
shall be considered permanent.
On December 3, 2003, Labor Arbiter (LA) Renell
Joseph R. dela Cruz rendered a Decision [8] dismissing the
complaint for illegal dismissal, including the other claims of
respondent, for lack of merit, except that it ordered the
payment
of
her
13th month
pay
in
the
amount
of P3,750.00. The LA ratiocinated in this wise:
It is our considered opinion [that]
complainant was not dismissed, much less,
illegally. On the contrary, she resigned. It
is hard for us to imagine complainant would
accede to sign a resignation letter as a
precondition to her hiring considering her
educational background. Thus, in
the
absence of any circumstance tending to
show she was probably coerced her
resignation must be upheld. x x x
x x x The agreement (Annex 1 to
Respondents [petitioners] Position Paper;
Annex A to Complainants Position Paper)
by its very nature and terms is a contract of
employment with a period (from 01 April
2002 to 31 March 2003, Annex 1 to
Respondents
Position
Paper). Complainants observation that the
space reserved for the duration and
effectivity of the contract was left blank
(Annex A to Complainants [respondents]
Position Paper) to our mind is plain
oversight. Read in its entirety, it is a
standard contract which by its very terms
and conditions speaks of a definite period of
employment. The parties could have not
thought
otherwise. The
notification
requirement in the contract in case of
termination before the expiration of the
period confirms it. x x x

Before going to the core issues of the controversy, we


would like to restate basic legal principles governing
employment of secondary school teachers in private schools,
specifically, on the matter of probationary employment.
A probationary employee or probationer is one who is
on trial for an employer, during which the latter determines
whether
or
not
he
is
qualified
for
permanent
employment. The probationary employment is intended to
afford the employer an opportunity to observe the fitness of a
probationary employee while at work, and to ascertain
whether he will become an efficient and productive
employee. While the employer observes the fitness, propriety
and efficiency of a probationer to ascertain whether he is
qualified for permanent employment, the probationer, on the
other hand, seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for
permanent employment. Thus, the word probationary, as
used to describe the period of employment, implies the
purpose of the term or period, not its length. [13]
Indeed, the employer has the right, or is at liberty, to
choose who will be hired and who will be declined. As a
component of this right to select his employees, the employer
may set or fix a probationary period within which the latter
may test and observe the conduct of the former before hiring
him permanently.[14]
But the law regulates the exercise of this prerogative
to fix the period of probationary employment. While there is
no statutory cap on the minimum term of probation, the law
sets a maximum trial period during which the employer may
test the fitness and efficiency of the employee.
The general rule on the maximum allowable period of
probationary employment is found in Article 281 of the Labor
Code, which states:

On appeal, on October 28, 2005, the National Labor


Relations Commission (NLRC), Third Division, [9] in its
Decision[10]dated October 28, 2005, reversed the Arbiters
judgment. Petitioner was ordered to reinstate respondent as
a teacher, who shall be credited with one-year service of
probationary employment, and to pay her the amounts
of P3,750.00 and P325,000.00 representing her 13th month

21 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Art.
281. Probationary
Employment. Probationary
employment
shall not exceed six (6) months from the
date the employee started working, unless
it is covered by an apprenticeship
agreement stipulating a longer period. The
services of an employee who has been
engaged on a probationary basis may be
terminated for a just cause or when he fails

to qualify as a regular employee in


accordance with reasonable standards made
known by the employer at the time of his
engagement. An employee who is allowed
to work after a probationary period shall be
considered a regular employee.

The probationary period of three years for private school


teachers was, in fact, confirmed earlier in Labajo v.
Alejandro,[22] viz.:
The three (3)-year period of service
mentioned in paragraph 75 (of the Manual
of Regulations for Private Schools) is of
course the maximum period or upper limit,
so to speak, of probationary employment
allowed in the case of private school
teachers. This necessarily implies that a
regular or permanent employment status
may, under certain conditions, be attained
in less than three (3) years. By and large,
however, whether or not one has indeed
attained
permanent
status
in
ones
employment, before the passage of three
(3) years, is a matter of proof.

This upper limit on the term of probationary employment,


however, does not apply to all classes of occupations.
For academic personnel in private schools, colleges
and universities, probationary employment is governed by
Section 92 of the 1992 Manual of Regulations for Private
Schools[15] (Manual), which reads:
Section
92. Probationary
Period. Subject
in
all
instances
to
compliance with the Department and school
requirements, the probationary period for
academic personnel shall not be more than
three (3) consecutive years of satisfactory
service for those in the elementary and
secondary levels, six (6) consecutive regular
semesters of satisfactory service for those
in the tertiary level, and nine (9)
consecutive
trimesters
of
satisfactory
service for those in the tertiary level where
collegiate courses are offered on a trimester
basis.[16]
This was supplemented by DOLE-DECS-CHED-TESDA Order
No. 1 dated February 7, 1996, which provides that the
probationary period for academic personnel shall not be more
than three (3) consecutive school years of satisfactory service
for those in the elementary and secondary levels. [17] By this
supplement, it is made clear that the period of probation for
academic personnel shall be counted in terms of school
years, and not calendar years.[18] Then, Section 4.m(4)[c]
of the Manual delineates the coverage of Section 92, by
defining the term academic personnel to include:
(A)ll school personnel who are formally
engaged in actual teaching service or in
research assignments, either on full-time or
part-time basis; as well as those who
possess
certain
prescribed
academic
functions directly supportive of teaching,
such as registrars, librarians, guidance
counselors, researchers, and other similar
persons. They include school officials
responsible for academic matters, and
may include other school officials. [19]
The reason for this disparate treatment was
explained many years ago in Escudero v. Office of the
President of the Philippines,[20] where the Court declared:
However,
the
six-month
probationary period prescribed by the
Secretary of Labor is merely the general
rule. x x x
It is, thus, clear that the Labor
Code authorizes different probationary
periods, according to the requirements
of the particular job. For private school
teachers, the period of probation is
governed
by
the
1970
Manual
of
Regulations for Private Schools x x x.[21]

Over the years, even with the enactment of a new


Labor Code and the revision of the Manual, the rule has not
changed.
Thus, for academic personnel in private elementary
and secondary schools, it is only after one has satisfactorily
completed the probationary period of three (3) school years
and is rehired that he acquires full tenure as a regular or
permanent employee. In this regard, Section 93 of the
Manual pertinently provides:
Sec. 93. Regular or Permanent
Status. - Those who have served the
probationary period shall be made regular
or permanent. Full-time teachers who have
satisfactorily completed their probationary
period shall be considered regular or
permanent.
Accordingly, as held in Escudero, no vested right to a
permanent appointment shall accrue until the employee has
completed the prerequisite three-year period necessary for
the acquisition of a permanent status. Of course, the mere
rendition of service for three consecutive years does not
automatically ripen into a permanent appointment. It is also
necessary that the employee be a full-time teacher, and that
the services he rendered are satisfactory.[23]
The common practice is for the employer and the
teacher to enter into a contract, effective for one school
year. At the end of the school year, the employer has the
option not to renew the contract, particularly considering the
teachers performance. If the contract is not renewed, the
employment relationship terminates. If the contract is
renewed, usually for another school year, the probationary
employment continues. Again, at the end of that period, the
parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another
school year would then be the last year since it would be
the third school year of probationary employment. At the
end of this third year, the employer may now decide whether
to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the
reasonable standards of competence and efficiency set by the
employer. For the entire duration of this three-year period,
the teacher remains under probation. Upon the expiration of
his contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel the
employer to renew his employment contract.[24] It is when
the yearly contract is renewed for the third time that Section
93 of the Manual becomes operative, and the teacher then is
entitled to regular or permanent employment status.
It is important that the contract of probationary
employment specify the period or term of its effectivity. The

22 | L A B O R R E L A T I O N S C A S E T O D I G E S T

failure to stipulate its precise duration could lead to the


inference that the contract is binding for the full three-year
probationary period.[25]
All this does not mean that academic personnel cannot
acquire permanent employment status earlier than after the
lapse of three years. The period of probation may be reduced
if the employer, convinced of the fitness and efficiency of a
probationary employee, voluntarily extends a permanent
appointment even before the three-year period ends.
Conversely, if the purpose sought by the employer is neither
attained nor attainable within the said period, the law does
not preclude the employer from terminating the probationary
employment
on
justifiable
ground;[26] or,
a
shorter
probationary period may be incorporated in a collective
bargaining agreement.[27] But absent any circumstances
which unmistakably show that an abbreviated probationary
period has been agreed upon, the three-year probationary
term governs.
Be that as it may, teachers on probationary
employment enjoy security of tenure. In Biboso v. Victorias
Milling Co., Inc.,[28]we made the following pronouncement:
This is, by no means, to assert that
the security of tenure protection of the
Constitution does not apply to probationary
employees. x x x During such period, they
could remain in their positions and any
circumvention of their rights, in accordance
with the statutory scheme, is subject to
inquiry and thereafter correction by the
Department of Labor.
The ruling in Biboso simply signifies that probationary
employees enjoy security of tenure during the term of their
probationary employment. As such, they cannot be removed
except for cause as provided by law, or if at the end of every
yearly contract during the three-year period, the employee
does not meet the reasonable standards set by the employer
at the time of engagement. But this guarantee of security of
tenure applies only during the period of probation. Once that
period expires, the constitutional protection can no longer be
invoked.[29]
All these principles notwithstanding, we do not
discount the validity of fixed-term employment where
the fixed period of employment was agreed
upon knowingly and voluntarily by the
parties, without any force, duress or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent, or
where it satisfactorily appears that the
employer and employee dealt with each
other on more or less equal terms with no
moral dominance whatever being exercised
by the former over the latter.[30]
It does not necessarily follow that where the duties of the
employees consist of activities usually necessary or desirable
in the usual business of the employer, the parties are
forbidden from agreeing on a period of time for the
performance of such activities. [31] Thus, in St. Theresas
School of Novaliches Foundation v. NLRC, [32] we held that a
contractual stipulation providing for a fixed term of nine (9)
months, not being contrary to law, morals, good customs,
public order and public policy, is valid, binding and must be
respected, as it is the contract of employment that governs
the relationship of the parties.

There should be no question that the employment of


the respondent, as teacher, in petitioner school on April 18,
2002 is probationary in character, consistent with standard
practice in private schools. In light of our disquisition above,
we cannot subscribe to the proposition that the respondent
has acquired regular or permanent tenure as teacher. She
had rendered service as such only from April 18, 2002 until
March 31, 2003. She has not completed the requisite threeyear period of probationary employment, as provided in the
Manual. She cannot, by right, claim permanent status.
There should also be no doubt that respondents
appointment as Acting Principal is merely temporary, or one
that is good until another appointment is made to take its
place.[33] An acting appointment is essentially a temporary
appointment, revocable at will. The undisturbed unanimity of
cases shows that one who holds a temporary appointment
has no fixed tenure of office; his employment can be
terminated any time at the pleasure of the appointing power
without need to show that it is for cause. [34] Further, in La
Salette of Santiago v. NLRC,[35] we acknowledged the
customary arrangement in private schools to rotate
administrative positions, e.g., Dean or Principal, among
employees, without the employee so appointed attaining
security of tenure with respect to these positions.
We are also inclined to agree with the CA that the
resignation of the respondent[36] is not valid, not only because
there was no express acceptance thereof by the employer, but
because there is a cloud of doubt as to the voluntariness of
respondents resignation.
Resignation is the voluntary act of an employee who
finds himself in a situation where he believes that personal
reasons cannot be sacrificed in favor of the exigency of the
service, and that he has no other choice but to dissociate
himself from employment.[37] Voluntary resignation is made
with the intention of relinquishing an office, accompanied by
the act of abandonment.[38] It is the acceptance of an
employees resignation that renders it operative. [39]
Furthermore, well-entrenched is the rule that
resignation is inconsistent with the filing of a complaint for
illegal dismissal. [40] To be valid, the resignation must be
unconditional, with the intent to operate as such; there must
be a clear intention to relinquish the position. [41] In this case,
respondent actively pursued her illegal dismissal case against
petitioner, such that she cannot be said to have voluntarily
resigned from her job.
What is truly contentious is whether the probationary
appointment of the respondent on April 18, 2002 was for a
fixed period of one (1) year, or without a fixed term,
inasmuch as the parties presented different versions of the
employment agreement. As articulated by the CA:
In plain language, We are confronted with
two (2) copies of an agreement, one with a
negative period and one provided for a one
(1) year period for its effectivity. Ironically,
none
among
the
parties
offered
corroborative evidence as to which of the
two (2) discrepancies is the correct one that
must be given effect. x x x.[42]
The CA resolved the impass in this wise:

Now, to the issues in the case at bench.

23 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Under this circumstance, We can only apply


Article 1702 of the Civil Code which
provides that, in case of doubt, all labor
contracts shall be construed in favor of the
laborer. Then, too, settled is the rule that
any ambiguity in a contract whose terms
are susceptible of different interpretations
must be read against the party who drafted

it. In the case at bar, the drafter of the


contract is herein petitioners and must,
therefore, be read against their contention.

her probationary employment is deemed renewed for the


following two school years. [47]

[43]

Finally, we rule on the propriety of the monetary


awards. Petitioner, as employer, is entitled to decide whether
to extend respondent a permanent status by renewing her
contract beyond the three-year period. Given the acrimony
between the parties which must have been generated by this
controversy, it can be said unequivocally that petitioner had
opted not to extend respondents employment beyond this
period. Therefore, the award of backwages as a consequence
of the finding of illegal dismissal in favor of respondent should
be
confined
to
the
three-year
probationary
period. Computing her monthly salary ofP15,000.00 for the
next two school years (P15,000.00 x 10 months x 2),
respondent already having received her full salaries for the
year 2002-2003, she is entitled to a total amount
of P300,000.00.[48] Moreover, respondent is also entitled to
receive her 13thmonth pay correspondent to the said two
school years, computed as yearly salary, divided by 12
months in a year, multiplied by 2, corresponding to the school
years 2003-2004 and 2004-2005, or P150,000.00 / 12
months x 2 = P25,000.00. Thus, the NLRC was correct in
awarding respondent the amount of P325,000.00 as
backwages, inclusive of 13th month pay for the school years
2003-2004 and 2004-2005, and the amount of P3,750.00 as
pro-rated 13th month pay.

We agree with the CA.


In this case, there truly existed a doubt as to which
version of the employment agreement should be given
weight. In respondents copy, the period of effectivity of the
agreement remained blank. On the other hand, petitioners
copy provided for a one-year period, surprisingly from April 1,
2002 to March 31, 2003, even though the pleadings
submitted by both parties indicated that respondent was hired
on April 18, 2002. What is noticeable even more is that the
handwriting indicating the one-year period in petitioners copy
is different from the handwriting that filled up the other
needed information in the same agreement.[44]
Thus, following Article 1702 of the Civil Code that all
doubts regarding labor contracts should be construed in favor
of labor, then it should be respondents copy which did not
provide for an express period which should be upheld,
especially when there are circumstances that render the
version of petitioner suspect. This is in line with the State
policy of affording protection to labor, such that the lowly
laborer, who is usually at the mercy of the employer, must
look up to the law to place him on equal footing with his
employer.[45]

WHEREFORE, the petition is DENIED. The assailed


Decision dated January 31, 2007 and the Resolution dated
June 29, 2007 of the Court of Appeals are AFFIRMED.

In addition, the employment agreement may be


likened into a contract of adhesion considering that it is
petitioner who insists that there existed an express period of
one year from April 1, 2002 to March 31, 2003, using as proof
its own copy of the agreement. While contracts of adhesion
are valid and binding, in cases of doubt which will cause a
great imbalance of rights against one of the parties, the
contract shall be construed against the party who drafted the
same. Hence, in this case, where the very employment of
respondent is at stake, the doubt as to the period of
employment must be construed in her favor.
The other issue to resolve is whether respondent, even
as a probationary employee, was illegally dismissed. We rule
in the affirmative.
As above discussed, probationary employees enjoy
security of tenure during the term of their probationary
employment such that they may only be terminated for cause
as provided for by law, or if at the end of the probationary
period, the employee failed to meet the reasonable standards
set by the employer at the time of the employees
engagement. Undeniably, respondent was hired as a
probationary teacher and, as such, it was incumbent upon
petitioner to show by competent evidence that she did not
meet the standards set by the school. This requirement,
petitioner failed to discharge. To note, the termination of
respondent was effected by that letter stating that she was
being relieved from employment because the school
authorities allegedly decided, as a cost-cutting measure, that
the position of Principal was to be abolished. Nowhere in
that letter was respondent informed that her performance as
a school teacher was less than satisfactory.
Thus, in light of our ruling of Espiritu Santo Parochial
School v. NLRC[46] that, in the absence of an express period of
probation for private school teachers, the three-year
probationary period provided by the Manual of Regulations for
Private Schools must apply likewise to the case of
respondent. In other words, absent any concrete and
competent proof that her performance as a teacher was
unsatisfactory from her hiring on April 18, 2002 up to March
31, 2003, respondent is entitled to continue her three-year
period of probationary period, such that from March 31, 2003,

24 | L A B O R R E L A T I O N S C A S E T O D I G E S T

SO ORDERED.

benefits given them and those


granted to petitioners other regular
employees of the same rank; and
Abandonment
1.

(b)
PAL, Inc. vs. Enrique Ligan,
146408, February 29, 2008)

PHILIPPINE AIRLINES, INC.,

G.R.

Petitioner,

- versus -

No.

G.R. No. 146408

pay
respondent
BENEDICTO
AUXTERO salary
differential; backwages from
the
time of his dismissal until the finality
of this decision; and separation
pay, in lieu of reinstatement,
equivalent to one (1) month pay for
every year of service until the finality
of this decision.

There being no data from which this


Court
may
determine
the
monetary
liabilities
of petitioner, the case
is
REMANDED to the Labor Arbiter solely for
that purpose.

Present:

CARPIO, J.,
CARPIO MORALES,
SO ORDERED.[1]
CORONA,
TINGA, and
Synergy Services Corporation (Synergy) having been
VELASCO, JR.,
found to be a labor-only contractor, respondents were
consequently declared as petitioners regular employees who
are entitled to the salaries, allowances, and other
employment benefits under the pertinent Collective
Bargaining Agreement.
Promulgated:
Petitioner prays for a reconsideration of the Decision,
maintaining its position that respondents were employed by
Synergy, and to reinstate respondents as regular employees
April 30, 2009
is iniquitous since it would be compelled to employ personnel
more than what its operations require. It adds that the Court
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - should declare that reinstatement is no longer an appropriate
-------------x
relief in view of the long period of time that had elapsed.
ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE,
JOLITO OLIVEROS, RICHARD GONCER, NONILON
PILAPIL,
AQUILINO
YBANEZ,
BERNABE
SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS,
JR., ARTHUR M. CAPIN, RAMEL BERNARDES,
LORENZO BUTANAS, BENSON CARISUSA, JEFFREY
LLENES, ROQUE PILAPIL, ANTONIO M. PAREJA,
CLEMENTE
R.
LUMAYNO,
NELSON
TAMPUS,
ROLANDO
TUNACAO,
CHERIE
ALEGRES,
BENEDICTO AUXTERO, EDUARDO MAGDADARAUG,
NELSON M. DULCE and ALLAN BENTUZAL,
Respondents.

RESOLUTION
CARPIO MORALES, J.:
Before the Court are petitioners Motion for
Reconsideration and respondents Motion for Clarification
and/or Reconsideration of the Courts February 29, 2008
Decision in light of incidents bearing on the present case
which were not brought to light by them before the Court
promulgated said Decision.
The Decision of the Court affirmed with modification
the appellate courts September 29, 2000 Decision and
directed petitioner Philippine Airlines, Inc. to:
(a)

accept respondents ENRIQUE LIGAN,


EMELITO SOCO, ALLAN PANQUE,
JOLITO
OLIVEROS,
RICHARD
GONCER,
NONILON
PILAPIL,
AQUILINO
YBANEZ,
BERNABE
SANDOVAL, RUEL GONCER, VIRGILIO
P. CAMPOS, JR., ARTHUR M. CAPIN,
RAMEL
BERNARDES,
LORENZO
BUTANAS,
BENSON
CARESUSA,
JEFFREY LLENOS, ROQUE PILAPIL,
ANTONIO M. PAREJA, CLEMENTE R.
LUMAYNO,
NELSON
TAMPUS,
ROLANDO
TUNACAO,
CHERRIE
ALEGRES,
EDUARDO
MAGDADARAUG, NELSON M. DULCE
and ALLAN BENTUZAL as its regular
employees
in
their
same
or
substantially equivalent positions,
and pay the wages and benefits
due them as regular employees
plus salary
differentialcorresponding
to
the
difference between the wages and

For their part, respondents, deducing from the


Decision that their termination was found to be illegal, posit
that the portion of the Decision ordering petitioner to accept
them should also mean to reinstate them with backwages.
[2]
Respondents additionally pray for the award to them of
attorneys fees, albeit they admit that they failed to raise it as
an issue.
Both parties point out that the Courts Decision
presupposes or was based on the erroneous assumption
that respondents are still in the actual employ of petitioner.
Respondents disclose that except for those who have
either died, accepted settlement earlier, or declared as
employee of Synergy, the remaining respondents have all
been terminated in the guise of retrenchment. Joining such
account, petitioner reveals that 13 out of the 25 respondents
filed an illegal dismissal case, which is pending before the
appellate court stationed at Cebu City as CA-G.R. SP No.
00922.[3]
Respondents add that the appellate court, by
Resolution of April 22, 2008, held the illegal dismissal case in
abeyance until after this Court rules on the present case.[4]
Petitioner also urges the Court to examine the cases of
respondents Roque Pilapil (Pilapil) and Benedicto Auxtero
(Auxtero)
in
light
of
the
following
information, viz: Pilapil entered petitioners pool of regular
employees on September 1, 1991[5] but was later terminated
for submitting
falsified
academic
credentials. Pilapils
complaint for illegal dismissal was dismissed by the labor
arbiter, whose decision was reinstated with modification by
the appellate court by Decision of March 7, 2001 in CA-G.R.
SP No. 50578. On Pilapils appeal, this Court, by Resolution
of September 19, 2001 in G.R. No. 147853, declared the case
terminated when Pilapil failed to file his intended petition.

25 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Given its information in the immediately foregoing


paragraph, petitioner claims that it already complied with the
judgment awarding separation pay representing financial
assistance to Pilapil on September 23, 2003, during the
pendency of the present case. [6] Respondents do not dispute
petitioners information.[7]
Petitioner also informs the Court that Auxtero already
secured a favorable judgment from this Court in G.R. No.
158710 which effectively affirmed the appellate courts
Decision of February 26, 2003 in CA-G.R. SP No. 50480.[8] It
appears from the Joint Declaration of Satisfaction Of
Judgment[9] with Release and Quitclaim and Waiver,[10] both
dated November 29, 2007, that petitioner already satisfied
the judgment rendered in said G.R. No. 158710 in favor of
Auxtero in the amount of P1.3 Million, and that Auxtero had
waived reinstatement. Respondents essentially corroborate
this information of petitioner.[11]
In light of these recent manifestations-informations of
the parties, the Court finds that a modification of the Decision
is in order, the claims with respect to Pilapil and Auxtero
having been deemed extinguished even before the
promulgation of the Decision. That Pilapil was a regular
employee yields to the final finding of a valid dismissal in the
supervening case involving his own misconduct, while
Auxteros attempt at forum-shopping should not be
countenanced.
IN ALL OTHER RESPECTS, the Court finds no sufficient
reason to deviate from its Decision, but proceeds,
nonetheless, to clarify a few points.
While this Courts Decision ruled on the regular status
of respondents, it must be deemed to be without prejudice
to the resolution of the issue of illegal dismissal in the
proper case. The Decision thus expressly stated:
Finally, it must be stressed that
respondents, having been declared to be
regular employees of petitioner, Synergy
being a mere agent of the latter, had
acquired security of tenure. As such, they
could only be dismissed by petitioner, the
real employer, on the basis of just or
authorized cause, and with observance of
procedural due process.[12] (Underscoring
supplied)

for Reconsideration of October 10, 2000 before the appellate


court,[16] not by way of defense to a charge of illegal
dismissal but to manifest that supervening events have
rendered it impossible for petitioner to comply with the
order to accept respondents as regular employees.
[17]
Moreover, the issue of economic losses as a ground for
dismissing respondents is factual in nature, hence, it may be
determined in the proper case.
All told, the pending illegal dismissal case in CA-G.R.
SP No. 00922 may now take its course. The Courts finding
that respondents are regular employees of petitioner neither
frustrates nor preempts the appellate courts proceedings in
resolving the issue of retrenchment as an authorized cause
for termination. If an authorized cause for dismissal is later
found to exist, petitioner would still have to pay respondents
their corresponding benefits and salary differential up to June
30, 1998. Otherwise, if there is a finding of illegal dismissal,
an order for reinstatement with full backwages does not
conflict with the Courts declaration of the regular employee
status of respondents.
As to the belated plea of respondents for attorneys
fees, suffice it to state that parties who have not appealed
cannot obtain from the appellate court any affirmative reliefs
other than those granted, if any, in the decision of the lower
tribunal.[18] Since respondents did not file a motion for
reconsideration of the appellate courts decision, much less
appeal therefrom, they can advance only such arguments as
may be necessary to defeat petitioners claims or to uphold
the appealed decision, and cannot ask for a modification of
the judgment in their favor in order to obtain other positive
reliefs.[19]
WHEREFORE, the Decision of February 29, 2008 is, in
light of the foregoing discussions, MODIFIED. As MODIFIED,
the dispositive portion of the Decision reads:

Notably, subject of the Decision was respondents


complaints[13] for regularization and under-/non-payment of
benefits. The Court did not and could not take cognizance of
the validity of the eventual dismissal of respondents because
the matter of just or authorized cause is beyond the issues of
the case. That is why the Court did not order reinstatement
for such relief presupposes a finding of illegal dismissal [14] in
the proper case which, as the parties now manifest, pends
before the appellate court.
Respecting petitioners allegation of financial woes that
led to the June 30, 1998 lay-off of respondents, as the Court
held in its Decision, petitioner failed to establish such
economic losses which rendered impossible the compliance
with
the
order to accept
respondent
as regular
employees. Thus the Decision reads:
Other than its bare allegations,
petitioner presented nothing to substantiate
its impossibility of compliance. In fact,
petitioner waived this defense by failing to
raise it in its Memorandum filed on June 14,
1999 before the Court of Appeals. x
x x[15] (Underscoring supplied)
Petitioner, for the first time, revealed the matter of
termination and the allegation of financial woes in its Motion

26 | L A B O R R E L A T I O N S C A S E T O D I G E S T

WHEREFORE,
the
Court
of
Appeals Decision of September 29, 2000 is
AFFIRMED with MODIFICATION.
Petitioner PHILIPPINE AIRLINES,
INC., is ORDERED to recognize respondents
ENRIQUE LIGAN, EMELITO SOCO, ALLAN
PANQUE, JOLITO OLIVEROS, RICHARD
GONCER, NONILON PILAPIL, AQUILINO
YBANEZ,
BERNABE
SANDOVAL,
RUEL
GONCER, VIRGILIO P. CAMPOS, JR.,
ARTHUR M. CAPIN, RAMEL BERNARDES,
LORENZO BUTANAS, BENSON CARISUSA,
JEFFREY LLENES, ANTONIO M. PAREJA,
CLEMENTE R. LUMAYNO, NELSON TAMPUS,
ROLANDO TUNACAO, CHERIE ALEGRES,
EDUARDO MAGDADARAUG, NELSON M.
DULCE and ALLAN BENTUZAL as its regular
employees in their same or substantially
equivalent positions, and pay the wages and
benefits due them as regular employees
plus salary differential corresponding to the
difference between the wages and benefits
given them
and
those
granted
to
petitioners other regular employees of the
same or substantially equivalent rank, up to
June 30, 1998, without prejudice to the
resolution of the illegal dismissal case.
There being no data from which this
Court
may
determine
the
monetary
liabilities
of
petitioner,
the
case
isREMANDED to the Labor Arbiter solely for
that purpose.
SO ORDERED.

connect on GF155, and even if he did, the


hotel accommodation should be the
responsibility of delivering carrier which in
this case is Northwest.

GULF AIR, JASSIM HINDRI ABDULLAH and RESTY


AREVALO
v.
NATIONAL
LABOR
RELATIONS
COMMISSION and ROBERTO J.C. REYES, G.R. No.
159687, April 24, 2009

GULF AIR, JASSIM HINDRI


ABDULLAH and RESTY
AREVALO,
Petitioners,
- versus -

3.

That the passenger traveled on GF155/10


May 1992 and not GF155/10 June 1992 as
reported by [Reyes].

4.

That the passenger was accepted using an


Astro Airlines FREE TICKET not because of an
oversight on the part of the GHA check-in
staff but upon [Reyes'] direct instructions.

5.

That [Reyes] did not conduct an


investigation but rather had previous
knowledge of the case. Thus, his reply to
Revenue Department did not correct the
actual departure date.

6.

That based on the foregoing, it is clear that


this is an accommodation on [Reyes'] part to
provide free hotel and free travel to MR.
QUEROZ at the expense of the Company
and afterwards deliberately tried to cover it
up.[9]

G.R. No. 159687


Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

NATIONAL LABOR RELATIONS


COMMISSION and ROBERTO
J.C. REYES,
Promulgated:
Respondents.
April 24, 2009
x-------------------------- ------------------------------x

DECISION

Pending submission of his explanation, Reyes was placed


under preventive suspension.[10]
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, assailing the Decision [1] dated April 23,
2003 of the Court of Appeals (CA) which modified the Decision [2] dated
April 26, 1999 of the National Labor Relations Commission (NLRC);
and the August 6, 2003 CA Resolution[3] denying the motion for
reconsideration.

The relevant facts are of record.


Roberto J.C. Reyes (Reyes) had been employed with Gulf Air
as Airport Manager for around ten years when he was dismissed
onOctober 10, 1992 for serious misconduct and breach of trust and
confidence[4] arising from the following incidents:
In an office memorandum dated June 29, 1992, Aquel
Yousip Ishaq (Ishaq) of the Gulf Air Revenue Department instructed
Reyes to investigate the acceptance without prior authorization of an
Astro Airline ticket on FOC [free of charge] basis for travel from MNLBAH on GF 155 on June 10, 1992, in violation of Gulf Air's Manual of
Authority which provides that no FOC tickets of other airline (OAL)
should be honored for travel on GF without obtaining proper authority.
Astro Airline has no interline agreement with Gulf Air.[5]
In reply,[6] Reyes clarified that he ordered the acceptance of
the free ticket from Astro Airline to accommodate Philippine Civil
Aeronautics Board Executive Director Silvestre Pascual [7] (Pascual) who
had requested Gulf Air to assist Mr. Andy Queroz (Queroz), a Filipino
consultant in the Middle East, during the latter's stay in Manila.[8]
On October 1, 1992, Gulf Air Area Manager-Philippines,
Jassim Hindri Abdulla (Abdulla) required Reyes to explain in writing
why he should not be dismissed for dishonesty, serious misconduct
and willful breach of the trust and confidence reposed in him by Gulf
Air in view of the following results of the investigation into the matter:
1.

2.

That [Reyes] had authorized free hotel


accommodation for an overnight stay at
Philippine Village Hotel in favor of MR. A.
QUEROZ on 08 May 1992 as per Meal
Accommodation
Transport
Order
No.
376677.

In his explanation letter, Reyes insisted that he acted within


the bounds of authority [he] believed he had in accommodating the
request of [Pascual] to ASSIST AND ACCOMMODATE Mr. Andy Queroz
x x x.[11]
Not satisfied with Reyes' explanation, Gulf Air terminated his
employment.[12]
Reyes filed with the Labor Arbiter (LA) a complaint against
Gulf Air, Abdulla and Gulf Air Area Financial Controller Resty Arevalo
(hereinafter referred to as Gulf Air), alleging that he did not betray the
trust and confidence of his employer when he granted certain
privileges to Queroz upon the request of Pascual; rather, he acted in
the exercise of his public relations duties as Airport Manager and in
furtherance of Gulf Airs business interest.[13]
In their position paper, Gulf Air disclosed that Reyes was
previously issued a stern warning for failing to coordinate closely with
higher management;[14] and that in the incident which led to his
dismissal, Reyes again failed to coordinate with higher management
when he extended certain privileges to Queroz without seeking prior
authorization as required under company policies. [15] Gulf Air further
claimed that Reyes' conduct was tainted with malice for he attempted
to cover it up by filing a Memorandum dated July 17, 1992[16] in which
he denied knowledge of the incident.[17]
Reyes contested the authenticity of the July 17,
1992 Memorandum cited by Gulf Air.[18] He obtained Questioned
Document Report No. 338-598[19] issued on May 29, 1998 by the
National
Bureau
of
Investigation which states that,
in
comparison with the standard signature of Reyes, the signature
appearing on the questioned document was not the same.
In a Decision dated August 7, 1998, the LA declared that
Reyes was validly dismissed for he had no authority to extend
privileges to Queroz. The LA doubted that Reyes accommodated
Queroz upon the request of Pascual, the latter not having been
presented to attest to such claim. [20] The LA made no finding on
whether Reyes attempted to cover up the incident.
Reyes appealed[21] to the NLRC which, in a Decision
dated April 26, 1999, reversed the LA decision, thus:

That subject passenger did not travel on


Northwest Flight NO. 003/08 May 1992 to

27 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Wherefore, in view thereof, the


assailed decision is hereby Reversed and Set

Aside and new one entered finding the dismissal


of complainant illegal.
Consequently,
respondents
are
ordered to pay complainant's separation pay at
the rate of one (1) month salary for every year of
service.
Aside from this, backwages reckoned
from the time of dismissal up to the promulgation
of this judgment is also recoverable.
Likewise, the awards of P300,000.00
and P200,000.00
representing
moral
and
exemplary damages, respectively, are proper
because of the whimsical dismissal of
complainant.
Ten percent of the total monetary
award shall likewise be proper representing
attorney's fees.
SO ORDERED.[22]
The NLRC held that based on Reyes' job description, [23] he
was authorized to extend privileges to Queroz in order to maintain
Gulf Air's public relations. At one time, Reyes accommodated a
certain Mr. Sheikh M. Alkhalifa (Alkhalifa) and his entourage by
providing them passage through Gulf Air even when said passengers
were holding Cathay Pacific (CX) free of charge (FOC or ID 90 [90%
discount)] tickets which were non-endorseable to Gulf Airline or any
other airlines and which were also non-refundable. Gulf Air did not
rebuke or reprobate Reyes for such action; hence, there is no reason
for it to suddenly reverse its policy and dismiss Reyes for extending
the same treatment to Queroz. If in the meantime Gulf Air had
changed its policy by requiring Reyes to obtain prior authorization
from the Area Manager, then evidence of the policy change should
have been presented. As it were, Gulf Air failed to prove the
existence of such requirement; what it established was only a previous
warning issued to Reyes in 1989, but which was hardly relevant to the
present case, because said warning pertained to the handling of
accounting documents.[24]
Gulf Air filed a Motion for Reconsideration but the NLRC
denied the same.[25]
Upon Petition for Review on Certiorari[26] filed by Gulf Air, the
CA rendered the decision assailed herein, the dispositive portion of
which reads:
WHEREFORE, the instant petition is
PARTIALLY GRANTED. The questioned decision is
hereby MODIFIED, to the effect that the awards of
moral and exemplary damages and attorney's
fees are hereby DELETED. The same is hereby
AFFIRMED in all other respects.
SO ORDERED.[27]
The CA denied Gulf Air's motion for partial reconsideration.[28]
grounds:

Hence, the present petition by Gulf Air on the following


The Honorable Court of Appeals
grossly erred in that I.
Contrary to its findings that there is
allegedly no evidence on record that would show
that an accommodation in Gulf Air Flights is
exclusive to an airline which has an interline
agreement with Gulf Air, the following undisputed
evidence and admission of private respondent
himself, to wit:

(a)
Petitioner
company's
Finance Manual Volume III
and
Appendix
XXVII
(Annexes A and B of
Petitioners' Memorandum and
Annexes A and B of
Petitioners' Reply to Private
Respondent's
Motion
for
Reconsideration filed with
public respondent NLRC)
(b) Admission of private
respondent himself on crossexamination
Established beyond doubt that only
documents like free tickets of airlines with interline
agreements with petitioner company are accepted
in the latter's flights and subjected to the approval
of the Area Manager.
II.
There is no evidence on record,
except for the self-serving claim of private
respondent, that would show that private
respondent previously granted a similar
accommodation on his own. On the other hand,
unrebutted evidence on record clearly established
that on matter of requests for accommodation of
free passage, the prior approval of the Area
Manager (private respondent's superior) is
required as private respondent may only
recommend.
III.
Contrary to the manifestly erroneous
finding of the Honorable Court of Appeals, the
matter subject of the present case is not private
respondent's first offense that his actions were not
tolerated as he had already been previously
issued a warning regarding several irregularities
pertaining to the grant of Meal Accommodation
Transport Order (MATO); lack of exercise of
proper judgment on operational decision and
close liaison with the Area Manager, as evidenced
by the Memo addressed to him dated May 17,
1989 (Annex E to the Petition for Certiorari).
IV.
Private
respondent
who
was
occupying a managerial position as Airport
Manager does not deserve any degree of
sympathy in that despite his long years of service,
the previous written warning given to him
regarding the use of MATO and the clear rules on
interline agreement of which he is fully aware, he
willfully breached the trust and confidence
demanded of his position.
V.
As managerial employee, private
respondent is subject to a stricter standard than
that applicable to rank and file employees in that a
slight breach of trust reposed in him or the mere
existence of a basis for believing that he has
breached the trust of his employer is sufficient to
dismiss him for loss of trust and confidence.
VI.
The Honorable Court of Appeals
grossly erred in awarding separation pay and
backwages to private respondent who had willfully
breached the trust and confidence reposed in him
as a managerial employee by his acts of gross
dishonesty.[29]
The petition is partly meritorious.

28 | L A B O R R E L A T I O N S C A S E T O D I G E S T

The petition hinges on the question of whether Reyes


(respondent) committed willful breach of trust when he accepted the
Astro Airline ticket of Queroz and granted him a MATO without prior
authorization from his superiors in petitioner Gulf Air. This is
undoubtedly a question of fact the determination of which entails an
evaluation of the evidence on record of the scope of the authority of
respondent as Airport Manager and the nature of the privileges he
granted to Queroz. As a general rule, purely factual questions are not
passed upon in petitions for review under Rule 45, for this Court does
not try facts but merely relies on the expert findings of labor tribunals
whose statutory function is to determine the facts. In the present
case, however, in view of the conflicting factual findings of the LA on
the one hand and the NLRC and the CA on the other, the Court
is constrained to
resolve the factual question at hand.[30]
Petitioners attribute to respondent two separate acts of
breach of trust: one is the acceptance of the FOC Astro Airlines ticket
of Queroz; and the other is the grant of MATO to Queroz. For either
of these acts to constitute a valid cause for the dismissal of
respondent, there must be substantial evidence that he committed
said acts intentionally, knowingly, and purposely, without justifiable
excuse, to flout Gulf Airs policy regarding acceptance of tickets issued
by other airlines and prior warning against the arbitrary issuance of a
MATO, to the prejudice of its business interest and in betrayal of its
trust and confidence.[31]

petitioner
Arevalo
that
Pascual
had
offered
to
reimburse petitioner Gulf Air for the costs of the travel and hotel
accommodation of Queroz.[36]
However, the authority of respondent to promote public
relations by accommodating requests of officials of government
agencies for free or discounted passage on board petitioner Gulf Air is
subject to limitations.
In the same incident involving the discounted passage of
Bautista,
respondent
admitted[37] that
he
first
made
a
recommendation to petitioner Abdulla for the grant of the request,
[38]
and it was only when petitioner Abdulla issued a Reduced Rate
Travel & Cargo Authorization that he (respondent) allowed the
discounted passage of Bautista.[39] The significance of this
documentary evidence is clear: the authority of respondent to grant
passage to officials of government agencies as a form of public
relations promotion is circumscribed by company policy.
Gulf Air claims that when it comes to acceptance for passage
of persons holding tickets issued by other airlines, the company policy
is provided in Gulf Air Finance Manual, to wit:
2.16.2
Interline Carriers and Airlines Acting as
Gulf Airs CSAs
xxxx

In contrast to the findings of the LA, the concurrent view of


the CA and the NLRC is that petitioners failed to prove the existence of
a company policy prohibiting respondent from directly granting to
Queroz travel and accommodation privileges; they instead found that
the established company practice is that respondent may grant such
privileges without need of prior authorization.[32]

2.16.3

Gulf Air maintains, however, that they presented sufficient


evidence
of
company
policies
violated
by
respondent,
specifically petitionerGulf Air's Finance Manual and its May 17. 1989
Memorandum warning respondent against the arbitrary issuance of a
MATO, which documentary evidence have greater probative value
than the bare allegation of respondent that he was allowed to directly
grant travel privileges to a passenger named Alkhalifa. [33]
Indeed, the records reveal that while respondent has public
relations duties, the exercise thereof is subject to company policy.
Based on his Job Description as Airport Manager in Manila,
respondent has the duty to:
11. ensure GF standard are offered to VIP/CIP
and other government officials;
xxxx
13. ensure that GF relations (with) different
government entities at the airport is
maintained.
xxxx
19. coordinate
with
different
government entities at NAIA.[34]

Philippine

Gulf Air has interline agreements with


many airlines of the world. The list of
these airlines is distributed by Marketing
Division Pricing and Interline Affairs
(Appendix XXVII). The documents of
only these airlines are accepted by Gulf
Air and reversely Gulf Air documents
are drawn only on these airlines, for
international
purposes. Therefore,
before accepting documents of an
airline with whom Gulf Air has no
interline agreement, authority is
obtained
from
Marketing
Department under advice to
Revenue Department.[40] (Emphasis
added)

Astro Airlines is not among the airlines with whom petitioner


Gulf Air has an interline agreement; hence, under the foregoing
manual, acceptance of Astro Airlines tickets requires prior
authorization from Gulf Air Marketing Department and notice to the
Revenue Department. Nothing in the Manual provides for exemption
from this requirement.
Photocopy of the foregoing manual was presented by
petitioner before the NLRC[41] and the CA.[42] Respondent objected to
its admissibility on the ground that it is a mere photocopy and the
contents thereof were not testified to during the proceedings.
[43]
However, as cited by petitioners, respondent virtually
acknowledged the existence of a company policy on interline
agreements in relation to the processing of requests by government
officials for free passage, to wit:

It cannot be doubted that respondents public relations


duties include entertaining requests of officials of government agencies
for travel on board Gulf Air. In one incident cited by petitioners
themselves, respondent interceded for a certain Deputy Collector
Antonio Bautista (Bautista) of the Customs and Immigration
Department to obtain free passage on board a Gulf Air flight to
Singapore and Sydney; and acting upon the recommendation of
respondent, herein co-petitioner Abdulla granted discounted
passage to said government official.[35] The acceptance of the Astro
Airline ticket of Queroz was likewise respondents promotion of Gulf
Air's public relations with Pascual of the Civil Aeronautics Board. While
the LA had doubted that it was Pascual who requested passage for
Queroz, this fact was eventually established through the testimony of

29 | L A B O R R E L A T I O N S C A S E T O D I G E S T

ATTY. VILLANUEVA:
Q:
Now, what is the procedure when a
government official make a request to
you in particular for a free of charge
ticket?
MR. REYES:
A:
We request him to write a letter to Gulf
Air of his request to issue free ticket.
ATTY. VILLANUEVA:
Q:
Supposed this was addressed to you,
what do you do first?
MR. REYES:

A:

The request was forwarded to Area


Manager's Office and sent back to Ticket
Office for ticket issuance.

ATTY. VILLANUEVA:
Q:
At the time you accommodated
this, not a Gulf Air ticket, an Astro
Airlines free of charge ticket was
there a list or listing of airlines in
our office, Gulf Air Office, which
have an interline agreement with
Gulf Air?
MR. REYES:
A:
Yes.
ATTY. VILLANUEVA:
Q:
Now, a request by a Government
official or by a guest dignitary, to say,
was addressed to you, would you know
if that request was later approved or
disapproved, would you know that?
A:
In most cases it is always approved,
based on the strength of my
recommendation.[44] (Emphasis added)
Moreover, that a mere photocopy of the manual was
presented does not make said evidence any less significant. Labor
proceedings are non-litigious in nature; hence, the technicalities of law
and procedure and the rules obtaining in courts of law do not strictly
apply. Rather, the hearing officer is given much leeway to ascertain
for himself the facts of the case.[45]

Thus, the CA and the NLRC correctly observed that the


worst that respondent committed was an inadvertent infraction. For
that, the extreme penalty of dismissal imposed on him by petitioners
was grossly disproportionate. Taking into account the managerial
position he held and the prior warning issued to him for failing to
communicate with his superiors, the penalty commensurate to the
violation he committed should be suspension for three months.
[51]
The period of his suspension is to be deducted from the period for
which he is entitled to backwages as awarded by the NLRC and
affirmed by the CA.
WHEREFORE, the petition is PARTLY GRANTED. The
April 23, 2003 Decision and August 6, 2003 Resolution of the Court of
Appeals are MODIFIED to the effect that instead of dismissal from
service, respondent Roberto J.C. Reyes is deemed SUSPENDED for
three months, to be deducted from the total amount of backwages
awarded to him by the National Labor Relations Commission, as
modified by the Court of Appeals.
No costs.
SO ORDERED.

Retirement Pay Law (R. A. No. 7641)


Alberto Oxales vs. United Laboratories, Inc., G.R. No. 152991,
July 21, 2008

However, on the matter of the issuance of a MATO, the May


17, 1989 Memorandum of petitioner Gulf Air to respondent does not
specify the pertinent company policy. It merely invites respondent's
attention to several irregularities regarding MATO without filling out
the details.[46] It leaves much to surmises and speculations.

ALBERTO
152991

In sum, while it is established that respondent's public


relations duties include the accommodation of requests by
government officials such as Pascual of the Civic Aeronautics Board, in
the exercise thereof, respondent must comply with the requirement
under petitioner Gulf Air's manual that in accepting tickets issued by
airlines that have no interline agreement with Gulf Air, prior
authorization must be obtained from the Marketing Department, with
notice to the Revenue Department. Without question, respondent did
not comply with this requirement when he ordered the acceptance of
the Astro Airlines ticket of Queroz. However, there is no evidence that
respondent violated any company policy when he issued a MATO to
Queroz.

SANTIAGO, J.,

The question that follows then is whether the violation


committed by respondent amounts to willful breach of trust.
As Airport Manager, respondent occupies a position of such
extreme sensitivity that the existence of some basis or reasonable
ground for his involvement in any irregularity is enough to destroy the
trust and confidence which petitioner Gulf Air had reposed in him.
[47]
However, it is settled that for breach of trust to constitute a valid
cause for dismissal, the same must be willful. Ordinary breach of trust
will not suffice.[48]
To establish that respondent willfully betrayed Gulf Air's trust
and confidence by intentionally and knowingly disobeying its manual
on interline agreements, Gulf Air cited a July 17, 1992 Memorandum
in which respondent allegedly attempted to cover up the incident
involving Queroz.[49] But then, respondent obtained evidence,
consisting of NBI Questioned Document Report No. 338-598,
[50] that
said
Memorandum
did
not
emanate
from
him. Unfortunately, this matter was not threshed out in any of the
fora below. Neither did Gulf Air dispute said findings of the NBI. In
effect, there is no evidence that respondent acted with malice in
committing the violation of his employer's policies.

P.

OXALES,

G.R.

No.

Petitioner,
Present:
YNARES-

- versus
ISUMBING*

QU
AUSTRIA-MARTINEZ,
AZCUNA,**

and
REYES, JJ.
UNITED
INC.,

Promulgated:
LABORATORIES,
Respondent.

July

21,

2008
x-------------------------------------------------x
DECISION

REYES, R.T., J.:


HOW should a private company retirement plan for
employees be implemented vis--vis The Retirement Pay Law
(Republic Act No. 7641)?
Papaano ipapatupad ang isang plano ng
pribadong kompanya para sa pagreretiro ng mga
empleyado sa harap ng Batas ng Pagbabayad sa
Pagreretiro (Batas Republika Blg. 7641)?

30 | L A B O R R E L A T I O N S C A S E T O D I G E S T

We address the concern in this appeal by certiorari of


the Decision[1] of the Court of Appeals (CA) affirming the
Resolution[2] and Decision[3] of the Labor Arbiter and the
National Labor Relations Commission (NLRC), respectively,
dismissing petitioner Alberto P. Oxales complaint for
additional retirement benefits, recovery of the cash equivalent
of his unused sick leaves, damages, and attorneys fees,
against respondent United Laboratories, Inc. (UNILAB).

should have included in his basic pay the following, to wit: (a)
cash equivalent of not more than five (5) days service
incentive leave; (b) 1/12th of 13th month pay; and (c) all
other benefits he has been receiving.
Efforts were exerted for a possible amicable
settlement. As this proved futile, the parties were required to
submit their respective pleadings and position papers.
Labor Arbiter, NLRC and CA Dispositions

The Facts
Sometime in 1959, UNILAB established the United
Retirement Plan (URP).[4] The plan is a comprehensive
retirement program aimed at providing for retirement,
resignation, disability, and death benefits of its members. An
employee of UNILAB becomes a member of the URP upon his
regularization in the company. The URP mandates the
compulsory retirement of any member-employee who reaches
the age of 60.
Both UNILAB and the employee contribute to the
URP. On one hand, UNILAB provides for the account of the
employee an actuarially-determined amount to Trust Fund
A. On the other hand, the employee chips in 2% of his
monthly salary to Trust Fund B. Upon retirement, the
employee gets both amounts standing in his name in Trust
Fund A and Trust Fund B.
As retirement benefits, the employee receives (1)
from Trust Fund A a lump sum of 1 months pay per year of
service based on the members last or terminal basic
monthly salary,[5] and (2) whatever the employee has
contributed to Trust Fund B, together with the income minus
any losses incurred. The URP excludes commissions,
overtime, bonuses, or extra compensations in the
computation of the basic salary for purposes of retirement.
Oxales joined UNILAB on September 1, 1968. He
was compulsorily retired by UNILAB when he reached his 60th
birthday on September 7, 1994, after having rendered service
of twenty-five (25) years, eleven (11) months, and six (6)
days. He was then Director of Manufacturing Services Group.
In computing the retirement benefits of Oxales
based on the 1 months for every year of service under the
URP, UNILAB took into account only his basic monthly
salary. It did not include as part of the salary base the
permanent and regular bonuses, reasonable value of food
allowances, 1/12 of the 13th month pay, and the cash
equivalent of service incentive leave.

On June 30, 1998, Labor Arbiter Romulus A. Protasio


rendered a decision dismissing the complaint, thus:
WHEREFORE, premises
considered, judgment is hereby rendered
dismissing the instant complaint for lack of
merit.
SO ORDERED.[8]
The Labor Arbiter held that the URP clearly excludes
commission,
overtime,
bonuses,
or
other
extra
compensation. Hence, the benefits asked by Oxales to be
included in the computation of his retirement benefits should
be excluded.[9]
The Arbiter also held that the inclusion of the fringe
benefits claimed by Oxales would put UNILAB in violation of
the terms and conditions set forth by the Bureau of Internal
Revenue (BIR) when it approved the URP as a tax-qualified
plan. More, any overpayment of benefits would adversely
affect the actuarial soundness of the plan. It would also
expose the trustees of the URP to liabilities and prejudice the
other employees. Worse, the BIR might even withdraw the
tax exemption granted to the URP.[10] Lastly, the Labor Arbiter
opined that the URP precludes the application of the
provisions of R.A. No. 7641.[11]
Oxales appealed to the NLRC. On February 8, 1999,
the NLRC affirmed the decision of the Labor Arbiter, disposing
as follows:
WHEREFORE, in view thereof, the
instant appeal is hereby dismissed for lack
of merit and the appealed decision is
ordered affirmed.
SO ORDERED.[12]

Thus,
Oxales
received
from
Trust
Fund
A P1,599,179.00,
instead
of P4,260,255.70. He
also
received P176,313.06, instead ofP456,039.20 as cash
equivalent
of
his
unused
sick
leaves. Lastly,
he
received P397,738.33 from his contributions to Trust Fund
B. In
sum,
Oxales
received
the
total
amount
of P2,173,230.39 as his retirement benefits.

The NLRC ruled that the interpretation by Oxales of


R.A. No. 7641 is selective. He only culled the provisions that
are beneficial to him, putting in grave doubt the sincerity of
his motives. For instance, he claims that the value of the
food benefits and other allowances should be included in his
monthly salary as multiplicand to the number of his years of
service with UNILAB. At the same time, however, he does not
intend to reduce the 1 month salary as multiplier under the
URP to under R.A. No. 7641.[13]

On August 21, 1997, Oxales wrote UNILAB, claiming


that he should have been paid P1,775,907.23 more in
retirement pay and unused leave credits. He insisted that his
bonuses, allowances and 13th month pay should have been
factored in the computation of his retirement benefits.[6]

The NLRC agreed with the Labor Arbiter that the


provisions of R.A. No. 7641 do not apply in view of the
URP. The NLRC also took into account the fact that the
benefits granted to Oxales by virtue of the URP was even
higher than what R.A. No. 7641 requires.[14]

On September 9, 1997, UNILAB wrote [7] back and


reminded Oxales about the provision of the URP excluding any
commissions, overtime, bonuses or extra compensations in
the computation of the basic salary of the retiring employee.

His motion for reconsideration having been denied,


Oxales filed with the CA a petition for certiorari under Rule
65.

Disgruntled, Oxales filed a complaint with the Labor


Arbiter for
(1) the correct computation of his retirement
benefits, (2) recovery of the cash equivalent of his unused
sick leaves, (3) damages, and (4) attorneys fees. He argued
that in the computation of his retirement benefits, UNILAB

In a decision promulgated on April 12, 2002, the CA


dismissed the petition. The CA ruled that the petition of
Oxales calls for a review of the factual findings of the Labor
Arbiter as affirmed by the NLRC. It is not the normal function
of the CA in a special civil action for certiorari to inquire into

31 | L A B O R R E L A T I O N S C A S E T O D I G E S T

the correctness of the evaluation of the evidence by the Labor


Arbiter. Its authority is confined only to issues of jurisdiction
or grave abuse of discretion.[15]

6. WHETHER OR NOT THE COURT OF


APPEALS SERIOUSLY ERRED IN THE
INTERPRETATION OF R.A. NO. 7641 WHEN
IT CONCLUDED THAT THE SAID LAW IS
APPLICABLE ONLY IN THE ABSENCE OF
RETIREMENT
PLAN
OR
AGREEMENT
PROVIDING
FOR
THE
RETIREMENT
BENEFITS
OF
EMPLOYEES
IN
AN
ESTABLISHMENT;

Just like the Labor Arbiter and the NLRC, the CA also
held that R.A. No. 7641 is applicable only in the absence of a
retirement plan or agreement providing for the retirement
benefits of employees in an establishment.[16]
Finally, the CA denied the claim of Oxales to moral
and exemplary damages. According to the appellate court, he
failed to prove the presence of bad faith or fraud on the part
of UNILAB. His mere allegations of having suffered sleepless
nights, serious anxiety, and mental anguish are not
enough. No premium should be placed on the right to
litigate.[17]

7. WHETHER OR NOT THE COURT OF


APPEALS
SERIOUSLY
ERRED IN
NOT
FINDING THAT THE DEFINITION OF
SALARY UNDER THE IMPLEMENTING
RULES OF R.A. NO. 7641 SHOULD BE
INTERPRETED
TO
INCLUDE
THE
PERMANENT
AND
REGULAR
REMUNERATIONS OF PETITIONER IN THE
SALARY
BASE
FOR
COMPUTING
RETIREMENT BENEFITS;

Left with no other option, Oxales filed the present


recourse under Rule 45 of the 1997 Rules of Civil Procedure.
[18]

Issues

8. WHETHER OR NOT THE LABOR ARBITER,


THE NLRC, AND COURT OF APPEALS
COMMITTED
GRAVE
ABUSE
OF
DISCRETION IN
IGNORING
AND
NOT
RESOLVING
THE
ISSUES
REGARDING
PETITIONERS UNPAID CASH EQUIVALENT
OF THE UNUSED SICK LEAVE CREDITS;

In his Memorandum,[19] Oxales raises the following


issues for Our disposition, to wit:
1. WHETHER OR NOT THE COURT OF
APPEALS
SERIOUSLY
ERRED IN
NOT
FINDING THAT ACCORDING TO PREVAILING
JURISPRUDENCE, SUCH ERRORS IN THE
COMPUTATION OF RETIREMENT BENEFITS
OF PETITIONER SHOULD BE CORRECTED IN
A SPECIAL ACTION FOR CERTIORARI;
2. WHETHER OR NOT THE COURT OF
APPEALS
SERIOUSLY
ERRED IN
NOT
FINDING THAT THE NLRC COMMITTED
GRAVE
ABUSE
OF
DISCRETION
IN
INCORRECTLY INTERPRETING THE URP TO
EXCLUDE SEVERAL REMUNERATIONS FROM
THE SAID SALARY BASE;

9. WHETHER OR NOT THE COURT OF APPEALS


SERIOUSLY ERRED IN NOT RULING THAT THE NLRC
GRAVELY ABUSED ITS DISCRETION IN ITS FAILURE
TO
PROPERLY
INTERPRET
THE
URP
IN
DETERMINING THE EMPLOYMENT PERIOD OF
PETITIONER FOR THE PURPOSE OF COMPUTING
RETIREMENT BENEFITS;

3. WHETHER OR NOT THE COURT OF


APPEALS
SERIOUSLY
ERRED
AND
COMMITTED
GRAVE
ABUSE
OF
DISCRETIONIN TOTALLY IGNORING THE
ISSUE AND IN NOT FINDING THAT THE
NLRC COMMITTED GRAVE ABUSE OF
DISCRETION
IN
INCORRECTLY
INTERPRETING THE URP TO EXCLUDE
PERMANENT AND REGULAR ALLOWANCES
FROM THE SALARY BASE FOR COMPUTING
RETIREMENT BENEFITS OF PETITIONER;
4. WHETHER OR NOT THE COURT OF
APPEALS SERIOUSLY ERRED IN NOT
FINDING THAT THE NLRC COMMITTED
GRAVE
ABUSE
OF
DISCRETION IN
INCORRECTLY INTERPRETING THE URP TO
EXCLUDE
PERMANENT
AND
REGULAR
REMUNERATIONS
MISLABELED
AS
BONUSES FROM THE SALARY BASE FOR
COMPUTING THE RETIREMENT BENEFITS
OF THE PETITIONER;
5. WHETHER OR NOT THE COURT OF
APPEALS ERRED IN NOT FINDING THAT THE
NLRC COMMITTED GRAVE ABUSE OF
DISCRETION
IN
INCORRECTLY
INTERPRETING
THE
URP
TO
EXCLUDE ONE TWELFTH (1/12th) OF THE
STATUTORY THIRTEENTH MONTH PAY FROM
THE SALARY BASE FOR COMPUTING
RETIREMENT BENEFITS;

32 | L A B O R R E L A T I O N S C A S E T O D I G E S T

10. WHETHER OR NOT THE COURT OF


APPEALS
SERIOUSLY
ERRED IN
NOT
RULING THAT THE NLRC COMMITTED
GRAVE ABUSE OF DISCRETION IN NOT
REINSTATING THE MEDICAL RETIREMENT
BENEFITS OF PETITIONER;
11. WHETHER OR NOT THE COURT OF
APPEALS SERIOUSLY ERRED AND GRAVELY
ABUSED ITS DISCRETION IN TOTALLY AND
ARBITRARILY IGNORING THE ISSUE AND IN
NOT FINDING THAT THE NLRC COMMITTED
GRAVE
ABUSE
OF
DISCRETION
IN
RENDERING A DECISION IN VIOLATION OF
THE
CONSTITUTIONAL
REQUIREMENTS
WHICH IN EFFECT DENIED PETITIONERS
RIGHT TO DUE PROCESS;
12. WHETHER OR NOT THE COURT OF
APPEALS SERIOUSLY ERRED AND GRAVELY
ABUSED ITS DISCRETION IN LIKEWISE
RENDERING A DECISION IN VIOLATION OF
THE CONSTITUTIONAL REQUIREMENT THAT
DECISIONS SHOULD EXPRESS CLEARLY
AND DISTINCTLY THE FACTS OF THE CASE
AND THE LAW ON WHICH IT IS BASED;
13. WHETHER OR NOT THE COURT OF
APPEALS
SERIOUSLY
ERRED IN
NOT
GRANTING
MORAL
AND
EXEMPLARY
DAMAGES AND ATTORNEYS FEES TO
PETITIONER;
14. WHETHER OR NOT THE SUPREME
COURT SHOULD
GRANT
PETITIONER
UNPAID RETIREMENT PAY, UNPAID CASH
EQUIVALENT OF UNUSED LEAVE CREDITS,
REINSTATEMENT OF MEDICAL BENEFITS,
MORAL AND EXEMPLARY DAMAGES, AND

ATTORNEYS
supplied)

FEES.[20] (Underscoring

The issues posed by Oxales may be compressed as


follows: first, whether in the computation of his retirement
and sick leave benefits, UNILAB should have factored such
benefits like bonuses, cash and meal allowances, rice rations,
service incentive leaves, and 1/12 of the 13th month
pay; second, whether R.A. No. 7641 is applicable for
purposes of computing his retirement benefits; andthird,
whether UNILAB is liable for moral damages, exemplary
damages, and attorneys fees.

alterius. The inclusion of one is the exclusion of others. Ang


pagsama ng isa, pagpwera naman sa iba.
The URP is not contrary to law, morals, good
customs, public order, or public policy to merit its
nullification. We, thus, sustain it. At first blush, the URP
seems to be disadvantageous to the retiring employee
because of the exclusion ofcommissions, overtime, bonuses,
or extra compensations in the computation of the basic
monthly salary. However, a close reading of its provisions
would reveal otherwise. We quote with approval the
explanation of the NLRC in this regard, viz.:
x x x the United Retirement Plan
of the respondent [Unilab] has a one and
one-half months salary for every year of
service as the basis of entitlement. Under
the new law, only one-half month of the
retirees salary inclusive however, of not
more than five (5) days of service incentive
leave and one-twelfth (1/12) of the 13th
month pay are used as the bases in the
retirement benefits computation.

Our Ruling
The
clear
langua
ge of
the
URP
should
be
respect
ed.
A retirement plan in a company partakes the
nature of a contract, with the employer and the employee as
the contracting parties. It creates a contractual obligation in
which the promise to pay retirement benefits is made in
consideration of the continued faithful service of the employee
for the requisite period.[21]
The employer and the employee may establish such
stipulations, clauses, terms, and conditions as they may deem
convenient.[22] In Allgeyer v. Louisiana,[23] New York Life Ins.
Co. v. Dodge,[24] Coppage v. Kansas,[25] Adair v. United States,
[26]
Lochner v. New York,[27] and Muller v. Oregon,[28] the United
States Supreme Court held that the right to contract about
ones affair is part and parcel of the liberty of the individual
which is protected by the due process of law clause of the
Constitution.
The obligations arising from the agreement between
the employer and the employee have the force of law
between them and should be complied with in good faith.
[29]
However, though the employer and the employee are
given the widest latitude possible in the crafting of their
contract, such right is not absolute. There is no such thing as
absolute freedom of contract. A limitation is provided for by
the law itself. Their stipulations, clauses, terms, and
conditions should not be contrary to law, morals, good
customs, public order, or public policy.[30] Indeed, the law
respects the freedom to contract but, at the same time, is
very zealous in protecting the contracting parties and the
public in general. So much so that the contracting parties
need not incorporate the existing laws in their contract, as the
law is deemed written in every contract. Quando abest,
proviso parties, adest proviso legis. When the provision of
the party is lacking, the provision of the law supplies
it. Kung may kulang na kondisyon sa isang kasunduan,
ang batas ang magdaragdag dito.
Viewed from the foregoing, We rule that Oxales is
not entitled to the additional retirement benefits he is
asking. The URP is very clear: basic monthly salary for
purposes of computing the retirement pay is the basic
monthly salary, or if daily[,] means the basic rate of pay
converted
to
basic
monthly
salary
of
the
employee excluding any commissions, overtime, bonuses, or
extra
compensations.[31] Inclusio
unius
est
exclusio

Mathematically speaking therefore,


complainants [Oxales] benefits
received
amounting to P1,599,179.00 under Trust
Fund A together with the cash equivalent of
his unused leaves which has an amount
of P176,313.06 and his contribution in the
Trust Fund B amounting to P397,738.33 are
way above the entitlement he could have
received under Republic Act 7641, otherwise
known as the New Retirement Law.
[32]
(Underscoring supplied)
Both law[33] and jurisprudence[34] mandate that if the
terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its
stipulations shall control. Thus, if the terms of a writing are
plain and unambiguous, there is no room for construction,
since the only purpose of judicial construction is to remove
doubt and uncertainty.[35] Only where the language of a
contract is ambiguous and uncertain that a court may, under
well-established rules of construction, interfere to reach a
proper construction and make certain that which in itself is
uncertain.[36] Where the language of a contract is plain and
unambiguous, its meaning should be determined without
reference to extrinsic facts or aids.[37]
R.A. No. 7641 does not apply in view of the URP
which gives to the retiring employee more than
what the law requires; the supporting cases
cited by Oxales are off-tangent.
R.A. No. 7641, otherwise known as The Retirement
Pay Law, only applies in a situation where (1) there is no
collective bargaining agreement or other applicable
employment contract providing for retirement benefits for an
employee; or (2) there is a collective bargaining agreement or
other applicable employment contract providing for retirement
benefits for an employee, but it isbelow the requirements set
for by law. The reason for the first situation is to prevent the
absurd situation where an employee, who is otherwise
deserving, is denied retirement benefits by the nefarious
scheme of employers in not providing for retirement benefits
for their employees. The reason for the second situation is
expressed in the latin maxim pacta privata juri publico
derogare non possunt. Private contracts cannot derogate
from the public law. Ang kasunduang pribado ay hindi
makasisira sa batas publiko. Five (5) reasons support this
conclusion.
First, a plain reading of the Retirement Pay
Law. R.A. No. 7641 originated from the House of
Representatives as House Bill 317 which was later

33 | L A B O R R E L A T I O N S C A S E T O D I G E S T

consolidated with Senate Bill 132. It was approved


on December 9, 1992 and took effect on January 7, 1993.
[38]
Amending Article 287 of the Labor Code, it provides as
follows:

At present, however, such benefit


of retirement pay is no longer available
where there is no collective agreement
thereon or any retirement plan at all. This
is so because, in a decision of the Supreme
Court (Llora Motors vs. Drilon and NLRC, et
al., G.R. No. 82895, November 7, 1989), it
was held that the grant of such benefit
under the rules implementing the Labor
Code is not supported by any express
provision of the Labor Code itself. In short,
there is no specific statutory basis for the
grant of retirement benefits for employees
in the private sector reaching the age of 60
years.

Art. 287. Retirement. Any


employee may be retired upon reaching the
retirement age established in the collective
bargaining agreement or other applicable
employment contract.
In
case
of
retirement,
the
employee shall be entitled to receive such
retirement benefits as he may have earned
under existing laws and any collective
bargaining
agreement
and
other
agreements: Provided, however, that an
employees retirement benefits under any
collective bargaining and other agreements
shall not be less than those provided herein.
In the absence of a retirement plan
or agreement providing for retirement
benefits of employees in the establishment,
an employee upon reaching the age of sixty
(60) years or more, but not beyond sixtyfive (65) years which is hereby declared the
compulsory retirement age, who has served
at least five (5) years in the said
establishment, may retire and shall be
entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every
year of service, a fraction of at least six (6)
months being considered as one whole year.
Unless the parties provide for
broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more
than five (5) days of service incentive
leaves. (Underscoring supplied)
Second, the legislative history of the Retirement Pay
Law. It may be recalled that R.A. No. 7641 traces back its
history in the case of Llora Motors, Inc. v. Drilon.[39] In this
case, the Court held that the then Article 287 of the Labor
Code[40] and its Implementing Rules [41] may not be the source
of an employees entitlement to retirement pay absent the
presence of a collective bargaining agreement or voluntary
company policy that provides for retirement benefits for the
employee.[42]
Third, the legislative intent of the Retirement Pay
Law. A reading of the explanatory note of Representative
Alberto S. Veloso would show why Congress sought to pass
the Retirement Pay Law: many employers refuse or neglect
to adopt a retirement plan for their employees because of the
absence of any legal compulsion for them to do so, thus:
When the Labor Code came into
effect in 1974, retirement pay had, as a
matter of course, been granted to
employees in the private sector when they
reach the age of sixty (60) years. This had
practically been the rule observed by
employers in the country pursuant to the
rules and regulations issued by the then
Minister of Labor and Employment to
implement the provisions of the Labor Code,
more particularly, where there is no
provision for the same in the collective
bargaining agreement or retirement plan of
the establishment.

Since the time of such nullification


by the Supreme Court of said implementing
rules on retirement pay for private sector
employees, many employers simply refuse
or neglect to adopt any retirement plan for
their workers, obviously emboldened by the
thought that, after said ruling, there is no
longer any legal compulsion to grant such
retirement benefits. In our continuous quest
to promote social justice, unfair situations
like this, productive of grievance or irritants
in the labor-management relations, must
immediately be corrected or remedied by
legislation. (Underscoring supplied)
Fourth, the title of the Retirement Pay Law. The
complete title of R.A. No. 7641 is An Act Amending Article
287 of Presidential Decree No. 442, As Amended, Otherwise
Known as the Labor Code of the Philippines, By Providing for
Retirement Pay to Qualified Private Sector in the Absence of
Any Retirement Plan in the Establishment. Res ipsa
loquitur. The thing speaks for itself. Isang bagay na
nangungusap na sa kanyang sarili.
Fifth, jurisprudence. In Oro Enterprises, Inc. v.
National Labor Relations Commission,[43] the Court held that
R.A. No. 7641 is undoubtedly a social legislation. The law
has been enacted as a labor protection measure and as a
curative statute that absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer
can respond, in part at least, to the financial well-being of
workers during their twilight years soon following their life of
labor.[44]
In Pantranco North Express, Inc. v. National Labor
Relations Commission,[45] the Court held that Article 287 of
the Labor Code makes clear the intention and spirit of the
law to give employers and employees a free hand to
determine and agree upon the terms and conditions of
retirement,[46] and that the law presumes that employees
know what they want and what is good for them absent any
showing that fraud or intimidation was employed to secure
their consent thereto.[47]
Lastly, in Brion v. South Philippine Union Mission of
the Seventh Day Adventist Church,[48] the Court ruled that a
reading of Article 287 of the Labor Code would reveal that the
employer and employee are free to stipulate on retirement
benefits, as long as these do not fall below floor limits
provided by law.[49]
We are aware of the several cases cited by Oxales to
support his claim that the computation of his retirement
benefits should not have been limited to the basic monthly
salary as defined by the URP. However, these cases negate,
rather than support, his claim.
In Villena v. National Labor Relations Commission,
the compulsory retirement of Villena was, in fact, an
illegal dismissal in disguise. Thus, the Court ordered the
[50]

34 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Batangas, Laguna, Tayabas Bus Co. to pay Villena his full


backwages, allowances, and other benefits for a period of
three (3) years after his illegal dismissal on April 24, 1987,
until he reached the compulsory retirement age plus his
retirement benefits equivalent to his gross monthly pay,
allowances and other benefits for every year of service up to
age sixty (60), which is the normal retirement age for him.[51]
The distinction between Villena with the instant case
is readily apparent. The Court used the regular compensation
of Villena in computing his retirement benefits because the
provision
of
the CBA for
rank-and-file
employees
is inapplicable to
him, being
a
managerial
employee. The Villena case was also decided before the
passage of R.A. No. 7641.
In Planters Products, Inc. v. National Labor Relations
Commission,[52] the
petitioning
employees
were
given
termination benefits based on their basic salary. However,
Planters Products, Inc. had integrated the allowances of its
remaining employees into their basic salary. Thus, it was the
basic salary that increased. Also, it was the basic salary as
increased (not the basic salary and allowances) which still
formed the basis for the computation of the termination
benefits of the remaining employees of the company. The
Court held that fairness demanded that the terminated
employees receive the same treatment. [53] Clearly, such
situation is absent here.
In Manuel L. Quezon University v. National Labor
Relations Commission,[54] the issue raised was whether
respondents are entitled to the retirement benefits provided
for under R.A. No. 7641, even if petitioner has an existing
valid retirement plan. The Court held that the coverage of the
law applies to establishments with existing collective
bargaining or other agreements or voluntary retirement
plans whose benefits are less than those prescribed under the
proviso in question.[55]
Admittedly, this Court held in the case of Songco v.
National Labor Relations Commission[56] that not only the
basic salary but also the allowances (like transportation and
emergency living allowances) and earned sales commissions
should be taken into consideration in computing the
backwages and separation pay of the employee. However, a
closer examination of the case would show that
the CBA[57] between Zuellig and F.E. Zuellig Employees
Association, in which Songco was a member, did not contain
an explicit definition of what salary is. Neither was there any
inclusions or exclusions in the determination of the salary of
the employee. Here, the URP has an explicit provision
excluding any commissions, overtime, bonuses, or extra
compensations for purposes of computing the basic salary of
a
retiring
employee. Too, the Songco case was
decided
before the passage of R.A. No. 7641.
Clearly then, R.A. No. 7641 does not apply because
the URP grants to the retiring employee more than what the
law gives. Under the URP, the employee receives a lump sum
of 1 pay per year of service, compared to the minimum
month salary for every year of service set forth by R.A. No.
7641.

As
an
illustration, Complainant
claims that his monthly salary as the
multiplicand of his number of years in the
service should include the value of the food
benefits and other allowances he was
entitled
while
in
the
employ
of
respondent. However, he did not even, by
implication, intend to reduce the 1 month
salary as multiplier under the URP to
under the law he invoked. This is a sign of
covetousness, unfair both to the employer
and those employees who have earlier
retired under said plan.[58]
Oxales is not entitled to the reinstatement of his
medical benefits, which are not part of the
URP. Corollarily, he is not also entitled to moral
damages, exemplary damages, and attorneys fees.
Oxales claims that UNILAB unilaterally revoked his
medical benefits, causing him humiliation and anxiety. This,
he argues, entitles him to moral damages, exemplary
damages, plus attorneys fees.
We cannot agree. The records bear out that after
Oxales retired from UNILAB, he chose to join a rival company,
Lloyds Laboratories, Inc. As UNILAB correctly puts it, [i]f
any employer can legally and validly do the supreme act of
dismissing a disloyal employee for having joined or
sympathized with a rival company, with more reason may it
do the lesser act of merely discontinuing a benefit unilaterally
given to an already-retired employee.[59] As a retired
employee, Oxales may not claim a vested right on these
medical benefits. A careful examination of the URP would
show that medical benefits are not included in the URP.
Indeed, while there is nothing wrong in the act of
Oxales in joining a rival company after his retirement, justice
and fair play would dictate that by doing so, he cannot now
legally demand the continuance of his medical benefits from
UNILAB. To rule otherwise would result in an absurd situation
where Oxales would continue to receive medical benefits from
UNILAB while working in a rival company. We note that these
medical benefits are merely unilaterally given by UNILAB to
its retired employees.
We are not unaware of this Courts pronouncement
in Brion v. South Philippine Union Mission of the Seventh Day
Adventist
Church.[60] However,
Oxales
plight differs from Brion because the URP does not expressly
cover medical benefits to retirees. In contrast, the retired
employee in Brion had acquired a vested right to the withheld
benefits.
The claim of Oxales to moral damages, exemplary
damages, and attorneys fees must also be denied for want of
basis in law or jurisprudence. On this score, We echo the
pronouncement of the Court in Audion v. Electric Co., Inc. v.
National Labor Relations Commission,[61] to wit:

Oxales is trying to have the best of both worlds. He


wants to have his cake and eat it too: the 1 months formula
under the URP, and the inclusion of the value of food benefits
and other allowances he was entitled to as employee of
UNILAB with his monthly salary as the multiplicand of his
number of years in the service. This he should not be
permitted to do, lest a grave injustice is caused to UNILAB,
and its past and future retirees.
We agree with the NLRC observation on this score:

35 | L A B O R R E L A T I O N S C A S E T O D I G E S T

Moral and exemplary damages are


recoverable only where the dismissal of an
employee was attended by bad faith or
fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to
morals, good customs or public policy. The
person claiming moral damages must prove
the existence of bad faith by clear and
convincing evidence for the law always
presumes good faith. It is not enough that
one merely suffered sleepless nights,
mental anguish, serious anxiety as the
result of the actuations of the other
party. Invariably, such action must be
shown to have been willfully done in bad
faith or with ill motive, and bad faith or ill

motive under the law cannot be presumed


but must be established with clear and
convincing evidence. Private respondent
predicated his claim for such damages on
his own allegations of sleeplessnights and
mental anguish, without establishing bad
faith, fraud or ill motive as legal basis
therefor.
Private
respondent
not
being
entitled to award of moral damages, an
award of exemplary damages is likewise
baseless. Where the award of moral and
exemplary damages is eliminated, so must
the
award
for
attorneys
fees
be
deleted. Private respondent has not shown
that he is entitled thereto pursuant to Art.
2208 of the Civil Code. [62] (Citations
omitted)
Here, there was no dismissal, as Oxales was retired by
UNILAB by virtue of the URP. He was also paid his complete
retirement benefits.
Epilogue
It is not disputed that Oxales has worked tirelessly
for UNILAB. For one thing, he has spent a considerable
amount of years with the company. For another, he has
contributed much to its growth and expansion. However,
even as We empathize with him in his time of great need, it
behooves Us to interpret the law according to what it
mandates.
We reiterate the time-honored principle that the law, in
protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer. While the
Constitution is committed to the policy of social justice and
the protection of the working class, management also has its
own rights, which are entitled to respect and enforcement in
the interest of fair play. Out of its concern for those with less
privilege in life, this Court has inclined more often than not
toward the employee and upheld his cause with his conflicts
with the employer. Such favorable treatment, however, has
not blinded the Court to rule that justice is in every case for
the deserving. Justice should be dispensed in the light of the
established facts and applicable law and doctrine.[63]
WHEREFORE,
is AFFIRMED. No costs.

the

appealed

Decision

SO ORDERED.

36 | L A B O R R E L A T I O N S C A S E T O D I G E S T