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The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to
expansion and growth.
Section 4: Undertaking of agrarian reform
The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers who are landless, to own
directly or collectively the lands they till or, in the case of other farmworkers,
to receive a just share of the fruits thereof. To this end, the State shall
encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary landsharing.
Section 5: Right of farmers, farmworkers and landowners
The State shall recognize the right of farmers, farmworkers, and landowners,
as well as cooperatives, and other independent farmers organizations to
participate in the planning, organization, and management of the program,
and shall provide support to agriculture through appropriate technology and
research, and adequate financial, production, marketing, and other support
services.
Section 6: Disposition and utilization of other natural resources
The State shall apply the principles of agrarian reform or stewardship,
whenever applicable in accordance with law, in the disposition or utilization
of other natural resources, including lands of the public domain under lease
or concession suitable to agriculture, subject to prior rights, homestead
rights of small settlers, and the rights of indigenous communities to their
ancestral lands.
The State may resettle landless farmers and farmworkers in its own
agricultural estates which shall be distributed to them in the manner
provided by law.
Section 7: Right of subsistence fisherfolk
The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of the communal marine and fishing
resources, both inland and offshore. It shall provide support to such
fishermen through appropriate technology and research, adequate financial,
production, and marketing assistance, and other services. The State shall
also protect, develop, and conserve such resources. The protection shall
extend to offshore fishing grounds of subsistence fishermen against foreign
intrusion. Fishworkers shall receive a just share from their labor in the
utilization of marine and fishing resources.
Section 8: Industrialization, incentives to investment in CARP
The State shall provide incentives to landowners to invest the proceeds of
the agrarian reform program to promote industrialization, employment
creation, and privatization of public sector enterprises. Financial instruments
used as payment for their lands shall be honored as equity in enterprises of
their choice.
DECISION
LAUREL, J.:
Act
No.
548
reads
as
"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads
and streets designated as national roads by acts of the National Assembly or
by executive orders of the President of the Philippines, the Director of Public
Works, with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such
rules and regulations, with the approval of the President, may contain
provisions controlling or regulating the construction of buildings or other
structures within a reasonable distance from along the national roads. Such
roads may be temporarily closed to any or all classes of traffic by the
Director of Public Works and his duly authorized representatives whenever
the condition of the road or the traffic thereon makes such action necessary
or advisable in the public convenience and interest, or for a specified period,
with
the
approval
of
the
Secretary
of
Public
Works
and
Communications."cralaw
virtua1aw
library
The above provisions of law do not confer legislative power upon the Director
of Public Works and the Secretary of Public Works and Communications. The
authority therein conferred upon them and under which they promulgated
the rules and regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy laid down by
the National Assembly in said Act, to wit, "to promote safe transit upon and
avoid obstructions on, roads and streets designated as national roads by acts
of the National Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes of traffic
"whenever the condition of the road or the traffic makes such action
necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law
shall be, but merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To promulgate rules and
regulations on the use of national roads and to determine when and how long
a national road should be closed to traffic, in view of the condition of the road
or the traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly discharged by
the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the
proper occasion exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law. As was said in Lockes
Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is
made to depend on a future event or act, is to rob the Legislature of the
power to act wisely for the public welfare whenever a law is passed relating
to a state of affairs not yet developed, or to things future and impossible to
fully know." The proper distinction the court said was this: "The Legislature
cannot delegate its power to make the law; but it can make a law to delegate
a power to determine some fact or state of things upon which the law makes,
or intends to make, its own action depend. To deny this would be to stop the
wheels of government. There are many things upon which wise and useful
legislation must depend which cannot be known to the law-making power,
and, must, therefore, be a subject of inquiry and determination outside of the
halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077,
police power many questions for regulation which formerly were not so
considered."cralaw
virtua1aw
library
The petitioner finally avers that the rules and regulations complained of
infringe upon the constitutional precept regarding the promotion of social
justice to insure the well-being and economic security of all the people. The
promotion of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by
the State so that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social
equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or
extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi
est
suprema
lex.
Social justice, therefore, must be founded on the recognition of the necessity
of interdependence among divers and diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the greatest good to
the
greatest
number."cralaw
virtua1aw
library
In view of the foregoing, the writ of prohibition prayed for is hereby denied,
with
costs
against
the
petitioner.
So
ordered.
Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
Those who have less in life should have more in law. (PPA Employees
versus COA, G.R. No. 160396, 06 Sept. 2005), and the dole-outs
under the Burial Assistance Program of Makati as paragon of
pauperism (Hon. Jejomar Binay versus Eufemio Domingo and COA,
G.R. No. 92389, 11 September 1991).
PHILIPPINE PORTS AUTHORITY G.R. No. 160396
(PPA) EMPLOYEES HIRED AFTER
JULY 1, 1989, Present:
Petitioners,
Davide Jr., CJ,*
Puno,*
Panganiban,
Quisumbing,*
- versus - Ynares-Santiago,*
Sandoval-Gutierrez,
Carpio,
Austria-Martinez,
Corona,
COMMISSION ON AUDIT (COA); Carpio Morales,*
ARTHUR H. HINAL, in His Capacity Callejo Sr.,
as the Philippine Ports Authority Azcuna,*
Corporate Auditor; RAQUEL R. Tinga,
The Facts
The COA narrates the factual antecedents in this wise:
Records will bear that the PPA has been paying its officials and
employees COLA and amelioration allowance equivalent to 40% and 10%,
respectively, of their basic salary pursuant to various legislative and
administrative issuances. During the last quarter of 1989, the PPA discontinued
the payment thereof in view of Corporate Compensation Circular (CCC) No. 10
prescribing the implementing rules and regulations of R.A. No. 6758 otherwise
known as the Salary Standardization Law which integrated said allowances
into the basic salary effective July 1, 1989. However, the Supreme Court in the
case of Rodolfo de Jesus, et al. vs. COA, G.R. No. 109023 dated August 12,
1998, declared CCC No. 10 as ineffective and unenforceable due to nonpublication. Consequently, the PPA Board of Directors passed Resolution No.
1856 directing the payment of COLA and amelioration backpay to PPA
personnel in the service during the period July 1, 1989 to March 16, 1999, the
date of publication of CCC No. 10.
Doubting the validity of said Resolution, the PPA Auditor requested the
opinion of the General Counsel on the propriety of the payment of the backpay.
In fully concurring with the recommendation of the then Director, CAO II, the
General Counsel ruled that in order for a PPA employee to be entitled to
backpay representing COLA and amelioration pay equivalent to 40% and 10%
respectively, of their basic salary, the following conditions must concur:
1) he has to be an incumbent as of July 1, 1989; and
2) has been receiving the COLA and amelioration pay as of July 1, 1989.
Aggrieved, PPA sought reconsideration of the said advisory opinion which was
denied by the General Counsel in a 1 st Indorsement dated September 13,
2001, since she found no cogent reason to set aside the earlier opinion. The
PPA Auditor accordingly ruled against the grant of the subject backpay. Hence,
the instant petitions for review anchored on the following arguments:
1)
The unenforceability of CCC No. 10 did not alter the nature of COLA
and amelioration allowance into a not integrated benefit within the purview of
the second sentence of Section 12, R.A. No. 6758 but merely rendered them
unidentified as integrated allowances;
2)
The jurisprudence laid in PPA vs. COA, 214 SCRA 653 is not
applicable in the determination of who are entitled to the payment of
backpay for COLA and amelioration allowance;
3)
4)
PPA employees hired after July 1, 1989 are entitled to the payment
of backpay representing COLA and amelioration allowance.[6]
Ruling of the Commission on Audit
The COA ruled that in the absence of effective integration of the COLA and
amelioration allowance into the basic salary in 1989, the inevitable
conclusion is that they are deemed not integrated from the time RA 6758
was promulgated until DBM-CCC No. 10 was published in March 1999. During
that period, it thus disallowed the disputed allowances on the ground that
these fell under the second sentence of Section 12 of RA 6758. It held that
only officials hired on or before July 1, 1989 were entitled to receive back pay
equivalent to the additional compensation (COLA and amelioration
allowance) mentioned.
Hence, this Petition.[7]
The Issue
Petitioner raised this sole issue for our consideration:
Whether or not herein petitioners -- who were hired by the Philippine
Ports Authority on various dates after July 1, 1989 -- are entitled to the
payment of back pay for cost of living allowance (COLA) and
amelioration allowance.[8]
salary rates. In the present case, the subject matter refers to those deemed
included, but were placed in limbo as a result of this Courts ruling in De Jesus
v. COA.
To stress, the failure to publish DBM-CCC No. 10 meant that the COLA and
the amelioration allowance were not effectively integrated into the
standardized salaries of the PPA employees as of July 1, 1989. The
integration became effective only on March 16, 1999. Thus, in between those
two dates, they were still entitled to receive the two allowances.
Be it remembered that the other additional compensations not expressly
specified in Section 12 of RA 6758 had to be determined by the DBM before
they could be deemed included or not included in the standardized salary
rates. True, Section 12 could be considered self-executing in regard to items (a)
to (f) above, but it was not so in regard to item (g). It was only upon the issuance
and effectivity of the corresponding DBM Implementing Rules and Regulations
that the enumeration found in item (g) could be deemed legally completed.
As pointed out by the OSG, until and unless the DBM issued those
Implementing Rules categorically excluding the COLA and the amelioration
allowance, there could not have been any valid notice to the government
employees concerned that indeed those allowances were deemed included in
the standardized salary rates.[13] Consequently, there was no reason or
basis to distinguish or classify PPA employees into two categories for
purposes of determining their entitlement to the back payment of those
unpaid allowances during the period in dispute.
Hence, in consonance with the equal-protection clause of the Constitution,
and considering that the employees were all similarly situated as to the
matter of the COLA and the amelioration allowance, they should all be
treated similarly. All -- not only incumbents as of July 1, 1989 -- should be
allowed to receive back pay corresponding to the said benefits, from July 1,
1989 to the new effectivity date of DBM-CCC No. 10 -- March 16, 1999.
The principle of equal protection is not a barren concept that may be casually
swept aside. While it does not demand absolute equality, it requires that all
persons similarly situated be treated alike, both as to privileges conferred
and liabilities enforced. Verily, equal protection and security shall be
accorded every person under identical or analogous circumstances.[14]
WHEREFORE, the Petition is GRANTED and the assailed Decision and
Resolution of the Commission on Audit ANNULLED and SET ASIDE. No
costs.
SO ORDERED.
Before us are two Petitions under Rule 65 of the Rules of Court, challenging
Omnibus Resolution No. 3785i[1] issued by the Commission on Elections
(Comelec) on March 26, 2001. This Resolution approved the participation of
154 organizations and parties, including those herein impleaded, in the 2001
party-list elections. Petitioners seek the disqualification of private
respondents, arguing mainly that the party-list system was intended to
benefit the marginalized and underrepresented; not the mainstream political
parties, the non-marginalized or overrepresented.
The Factual Antecedents
With the onset of the 2001 elections, the Comelec received several Petitions
for registration filed by sectoral parties, organizations and political parties.
According to the Comelec, [v]erifications were made as to the status and
capacity of these parties and organizations and hearings were scheduled day
and night until the last party w[as] heard. With the number of these petitions
and the observance of the legal and procedural requirements, review of
these petitions as well as deliberations takes a longer process in order to
arrive at a decision and as a result the two (2) divisions promulgated a
separate Omnibus Resolution and individual resolution on political parties.
These numerous petitions and processes observed in the disposition of these
petition[s] hinder the early release of the Omnibus Resolutions of the
Divisions which were promulgated only on 10 February 2001.ii[2]
Thereafter, before the February 12, 2001 deadline prescribed under Comelec
Resolution No. 3426 dated December 22, 2000, the registered parties and
organizations filed their respective Manifestations, stating their intention to
participate in the party-list elections. Other sectoral and political parties and
organizations whose registrations were denied also filed Motions for
During the hearing on May 17, 2001, the Court directed the parties to
address the following issues:
1. Whether or not recourse under Rule 65 is proper under the premises. More
specifically, is there no other plain, speedy or adequate remedy in the
ordinary course of law?
2.Whether or not political parties may participate in the party-list elections.
3. Whether or not the party-list system is exclusive to marginalized and
underrepresented sectors and organizations.
4. Whether or not the Comelec committed grave abuse of discretion in
promulgating Omnibus Resolution No. 3785.xvi[16]
The Courts Ruling
The Petitions are partly meritorious. These cases should be remanded to the
Comelec which will determine, after summary evidentiary hearings, whether
the 154 parties and organizations enumerated in the assailed Omnibus
Resolution satisfy the requirements of the Constitution and RA 7941, as
specified in this Decision.
First Issue:
Recourse Under Rule 65
x x when the decision sought to be set aside is a nullity, or when the need for
relief is extremely urgent and certiorari is the only adequate and speedy
remedy available.xxvi[26]
Second Issue:
Participation of Political Parties
In its Petition, Ang Bagong Bayani-OFW Labor Party contends that the
inclusion of political parties in the party-list system is the most objectionable
portion of the questioned Resolution.xxvii[27] For its part, Petitioner Bayan
Muna objects to the participation of major political parties. xxviii[28] On the
other hand, the Office of the Solicitor General, like the impleaded political
parties, submits that the Constitution and RA No. 7941 allow political parties
to participate in the party-list elections. It argues that the party-list system is,
in fact, open to all registered national, regional and sectoral parties or
organizations.xxix[29]
We now rule on this issue. Under the Constitution and RA 7941, private
respondents cannot be disqualified from the party-list elections, merely on
the ground that they are political parties. Section 5, Article VI of the
Constitution provides that members of the House of Representatives may be
elected through a party-list system of registered national, regional, and
sectoral parties or organizations.
Furthermore, under Sections 7 and 8, Article IX (C) of the Constitution,
political parties may be registered under the party-list system.
Sec. 7. No votes cast in favor of a political party, organization, or coalition
shall be valid, except for those registered under the party-list system as
provided in this Constitution.
Sec. 8. Political parties, or organizations or coalitions registered under the
party-list system, shall not be represented in the voters' registration boards,
boards of election inspectors, boards of canvassers, or other similar bodies.
However, they shall be entitled to appoint poll watchers in accordance with
law.xxx[30]
During the deliberations in the Constitutional Commission, Comm. Christian
S. Monsod pointed out that the participants in the party-list system may be a
regional party, a sectoral party, a national party, UNIDO, xxxi[31] Magsasaka,
or a regional party in Mindanao." xxxii[32] This was also clear from the
following exchange between Comms. Jaime Tadeo and Blas Ople:xxxiii[33]
MR. TADEO. Naniniwala ba kayo na ang party list ay pwedeng paghati-hatian
ng UNIDO, PDP-Laban, PNP, Liberal at Nacionalista?
MR. OPLE. Maaari yan sapagkat bukas ang party list system sa lahat ng mga
partido.
Indeed, Commissioner Monsod stated that the purpose of the party-list
provision was to open up the system, in order to give a chance to parties that
consistently place third or fourth in congressional district elections to win a
seat in Congress.xxxiv[34] He explained: The purpose of this is to open the
system. In the past elections, we found out that there were certain groups or
parties that, if we count their votes nationwide, have about 1,000,000 or
1,500,000 votes. But they were always third or fourth place in each of the
districts. So, they have no voice in the Assembly. But this way, they would
have five or six representatives in the Assembly even if they would not win
individually in legislative districts. So, that is essentially the mechanics, the
purpose and objectives of the party-list system.
For its part, Section 2 of RA 7941 also provides for a party-list system of
registered national, regional and sectoral parties or organizations or
coalitions thereof, x x x. Section 3 expressly states that a party is either a
political party or a sectoral party or a coalition of parties. More to the point,
the law defines political party as an organized group of citizens advocating
an ideology or platform, principles and policies for the general conduct of
government and which, as the most immediate means of securing their
adoption, regularly nominates and supports certain of its leaders and
members as candidates for public office.
That political parties may participate in the party-list elections does not
mean, however, that any political party -- or any organization or group for
that matter -- may do so. The requisite character of these parties or
organizations must be consistent with the purpose of the party-list system,
as laid down in the Constitution and RA 7941. Section 5, Article VI of the
Constitution, provides as follows:
(1) The House of Representatives shall be composed of not more than two
hundred and fifty members, unless otherwise fixed by law, who shall be
elected from legislative districts apportioned among the provinces, cities,
and the Metropolitan Manila area in accordance with the number of their
respective inhabitants, and on the basis of a uniform and progressive ratio,
and those who, as provided by law, shall be elected through a party-list
system of registered national, regional, and sectoral parties or organizations.
(2) The party-list representatives shall constitute twenty per centum of the
total number of representatives including those under the party list. For three
consecutive terms after the ratification of this Constitution, one-half of the
seats allocated to party-list representatives shall be filled, as provided by
law, by selection or election from the labor, peasant, urban poor, indigenous
cultural communities, women, youth, and such other sectors as may be
provided by law, except the religious sector. (Emphasis supplied.)
Notwithstanding the sparse language of the provision, a distinguished
member of the Constitutional Commission declared that the purpose of the
party-list provision was to give genuine power to our people in Congress.
Hence, when the provision was discussed, he exultantly announced: On this
first day of August 1986, we shall, hopefully, usher in a new chapter to our
national history, by giving genuine power to our people in the legislature. xxxv
[35]
The foregoing provision on the party-list system is not self-executory. It is, in
fact, interspersed with phrases like in accordance with law or as may be
provided by law; it was thus up to Congress to sculpt in granite the lofty
objective of the Constitution. Hence, RA 7941 was enacted. It laid out the
statutory policy in this wise:
SEC. 2. Declaration of Policy. -- The State shall promote proportional
representation in the election of representatives to the House of
Representatives through a party-list system of registered national, regional
and sectoral parties or organizations or coalitions thereof, which will enable
Filipino citizens belonging to marginalized and underrepresented sectors,
organizations and parties, and who lack well-defined political constituencies
but who could contribute to the formulation and enactment of appropriate
legislation that will benefit the nation as a whole, to become members of the
House of Representatives. Towards this end, the State shall develop and
guarantee a full, free and open party system in order to attain the broadest
possible representation of party, sectoral or group interests in the House of
Representatives by enhancing their chances to compete for and win seats in
the legislature, and shall provide the simplest scheme possible.
The Marginalized and Underrepresented to Become Lawmakers Themselves
opened to those who have never gotten a foothold within it -- those who
cannot otherwise win in regular elections and who therefore need the
simplest scheme possible to do so. Conversely, it would be illogical to open
the system to those who have long been within it -- those privileged sectors
that have long dominated the congressional district elections.
The import of the open party-list system may be more vividly understood
when compared to a student dormitory open house, which by its nature
allows outsiders to enter the facilities. Obviously, the open house is for the
benefit of outsiders only, not the dormers themselves who can enter the
dormitory even without such special privilege. In the same vein, the open
party-list system is only for the outsiders who cannot get elected through
regular elections otherwise; it is not for the non-marginalized or
overrepresented who already fill the ranks of Congress.
Verily, allowing the non-marginalized and overrepresented to vie for the
remaining seats under the party-list system would not only dilute, but also
prejudice the chance of the marginalized and underrepresented, contrary to
the intention of the law to enhance it. The party-list system is a tool for the
benefit of the underprivileged; the law could not have given the same tool to
others, to the prejudice of the intended beneficiaries.
This Court, therefore, cannot allow the party-list system to be sullied and
prostituted by those who are neither marginalized nor underrepresented. It
cannot let that flicker of hope be snuffed out. The clear state policy must
permeate every discussion of the qualification of political parties and other
organizations under the party-list system.
Refutation of the Separate Opinions
But, as discussed earlier, the intent of the law is obvious and clear from its
plain words. Section 2 thereof unequivocally states that the party-list system
of electing congressional representatives was designed to enable
underrepresented sectors, organizations and parties, and who lack welldefined political constituencies but who could contribute to the formulation
and enactment of appropriate legislation that will benefit the nation as a
whole x x x. The criteria for participation is well defined. Thus, there is no
need for recourse to constitutional deliberations, not even to the proceedings
of Congress. In any event, the framers deliberations merely express their
individual opinions and are, at best, only persuasive in construing the
meaning and purpose of the constitution or statute.
Be it remembered that the constitutionality or validity of Sections 2 and 5 of
RA 7941 is not an issue here. Hence, they remain parts of the law, which
must be applied plainly and simply.
Fourth Issue:
Grave Abuse of Discretion
From its assailed Omnibus Resolution, it is manifest that the Comelec failed
to appreciate fully the clear policy of the law and the Constitution. On the
contrary, it seems to have ignored the facet of the party-list system
discussed above. The OSG as its counsel admitted before the Court that any
group, even the non-marginalized and overrepresented, could field
candidates in the party-list elections.
When a lower court, or a quasi-judicial agency like the Commission on
Elections, violates or ignores the Constitution or the law, its action can be
struck down by this Court on the ground of grave abuse of discretion. xlix[49]
Indeed, the function of all judicial and quasi-judicial instrumentalities is to
apply the law as they find it, not to reinvent or second-guess it.l[50]
In its Memorandum, Petitioner Bayan Muna passionately pleads for the
outright disqualification of the major political parties Respondents LakasNUCD, LDP, NPC, LP and PMP on the ground that under Comelec Resolution
No. 4073, they have been accredited as the five (six, including PDP-Laban)
major political parties in the May 14, 2001 elections. It argues that because
of this, they have the advantage of getting official Comelec Election Returns,
Certificates of Canvass, preferred poll watchers x x x. We note, however, that
this accreditation does not refer to the party-list election, but, inter alia, to
the election of district representatives for the purpose of determining which
parties would be entitled to watchers under Section 26 of Republic Act No.
7166.
What is needed under the present circumstances, however, is a factual
determination of whether respondents herein and, for that matter, all the
154 previously approved groups, have the necessary qualifications to
participate in the party-list elections, pursuant to the Constitution and the
law.
Bayan Muna also urges us to immediately rule out Respondent Mamamayan
Ayaw sa Droga (MAD), because it is a government entity using government
resources and privileges. This Court, however, is not a trier of facts. li[51] It is
not equipped to receive evidence and determine the truth of such factual
allegations.
Basic rudiments of due process require that respondents should first be given
an opportunity to show that they qualify under the guidelines promulgated in
this Decision, before they can be deprived of their right to participate in and
be elected under the party-list system.
Guidelines for Screening Party-List Participants
The Court, therefore, deems it proper to remand the case to the Comelec for
the latter to determine, after summary evidentiary hearings, whether the
154 parties and organizations allowed to participate in the party-list elections
comply with the requirements of the law. In this light, the Court finds it
appropriate to lay down the following guidelines, culled from the law and the
Constitution, to assist the Comelec in its work.
First, the political party, sector, organization or coalition must represent the
marginalized and underrepresented groups identified in Section 5 of RA
7941. In other words, it must show -- through its constitution, articles of
incorporation, bylaws, history, platform of government and track record -that it represents and seeks to uplift marginalized and underrepresented
sectors. Verily, majority of its membership should belong to the marginalized
and underrepresented. And it must demonstrate that in a conflict of
interests, it has chosen or is likely to choose the interest of such sectors.
Second, while even major political parties are expressly allowed by RA 7941
and the Constitution to participate in the party-list system, they must comply
with the declared statutory policy of enabling Filipino citizens belonging to
marginalized and underrepresented sectors x x x to be elected to the House
of Representatives. In other words, while they are not disqualified merely on
the ground that they are political parties, they must show, however, that
they represent the interests of the marginalized and underrepresented. The
counsel of Aksyon Demokratiko and other similarly situated political parties
admitted as much during the Oral Argument, as the following quote shows:
JUSTICE PANGANIBAN: I am not disputing that in my question. All I am saying
is, the political party must claim to represent the marginalized and
underrepresented sectors?
ATTY. KAPUNAN: Yes, Your Honor, the answer is yes.lii[52]
Third, in view of the objectionsliii[53] directed against the registration of Ang
Buhay Hayaang Yumabong, which is allegedly a religious group, the Court
notes the express constitutional provision that the religious sector may not
be represented in the party-list system. The extent of the constitutional
proscription is demonstrated by the following discussion during the
deliberations of the Constitutional Commission:
MR. OPLE. x x x
In the event that a certain religious sect with nationwide and even
international networks of members and supporters, in order to circumvent
this prohibition, decides to form its own political party in emulation of those
parties I had mentioned earlier as deriving their inspiration and philosophies
from well-established religious faiths, will that also not fall within this
prohibition?
MR. MONSOD. If the evidence shows that the intention is to go around the
prohibition, then certainly the Comelec can pierce through the legal fiction. liv
[54]
The following discussion is also pertinent:
MR. VILLACORTA. When the Commissioner proposed EXCEPT RELIGIOUS
GROUPS, he is not, of course, prohibiting priests, imams or pastors who may
be elected by, say, the indigenous community sector to represent their
group.
REV. RIGOS. Not at all, but I am objecting to anybody who represents the
Iglesia ni Kristo, the Catholic Church, the Protestant Church et cetera.lv[55]
Furthermore, the Constitution provides that religious denominations and
sects shall not be registered.lvi[56] The prohibition was explained by a
memberlvii[57] of the Constitutional Commission in this wise: [T]he prohibition
is on any religious organization registering as a political party. I do not see
any prohibition here against a priest running as a candidate. That is not
prohibited here; it is the registration of a religious sect as a political party. lviii
[58]
Fourth, a party or an organization must not be disqualified under Section 6 of
RA 7941, which enumerates the grounds for disqualification as follows:
(1) It is a religious sect or denomination, organization or association
organized for religious purposes;
(2)It advocates violence or unlawful means to seek its goal;
(3) It is a foreign party or organization;
The linchpin of this case is the clear and plain policy of the law: to enable
Filipino citizens belonging to marginalized and underrepresented sectors,
organizations and parties, and who lack well-defined political constituencies
Present:
- versus -
PUNO, C. J.,
CARPIO,
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE
CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.
COMMISSION
ON
Promulgated:
ELECTIONS,
Respondent.
April 8, 2010
x--------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
... [F]reedom to differ is not limited to things that do not matter much. That
would be a mere shadow of freedom. The test of its substance is the right to
differ as to things that touch the heart of the existing order.
Justice Robert A. Jackson
West Virginia State Board of Education v. Barnette1[1]
One unavoidable consequence of everyone having the freedom to choose is that
others may make different choices choices we would not make for ourselves,
choices we may disapprove of, even choices that may shock or offend or anger us.
However, choices are not to be legally prohibited merely because they are
different, and the right to disagree and debate about important questions of public
policy is a core value protected by our Bill of Rights. Indeed, our democracy is built
on genuine recognition of, and respect for, diversity and difference in opinion.
Since ancient times, society has grappled with deep disagreements about
the definitions and demands of morality. In many cases, where moral convictions
are concerned, harmony among those theoretically opposed is an insurmountable
goal. Yet herein lies the paradox philosophical justifications about what is moral are
indispensable and yet at the same time powerless to create agreement. This Court
recognizes, however, that practical solutions are preferable to ideological
stalemates; accommodation is better than intransigence; reason more worthy
than rhetoric. This will allow persons of diverse viewpoints to live together, if not
harmoniously, then, at least, civilly.
Factual Background
This is a Petition for Certiorari under Rule 65 of the Rules of Court, with an
application for a writ of preliminary mandatory injunction, filed by Ang Ladlad
1
LGBT Party (Ang Ladlad) against the Resolutions of the Commission on Elections
(COMELEC) dated November 11, 20092[2] (the First Assailed Resolution) and
December 16, 20093[3] (the Second Assailed Resolution) in SPP No. 09-228 (PL)
(collectively, the Assailed Resolutions). The case has its roots in the COMELECs
refusal to accredit Ang Ladlad as a party-list organization under Republic Act (RA)
No. 7941, otherwise known as the Party-List System Act.4[4]
Ang Ladlad is an organization composed of men and women who identify
themselves as lesbians, gays, bisexuals, or trans-gendered individuals (LGBTs).
Incorporated in 2003, Ang Ladlad first applied for registration with the COMELEC in
2006. The application for accreditation was denied on the ground that the
organization had no substantial membership base. On August 17, 2009, Ang
Ladlad again filed a Petition5[5] for registration with the COMELEC.
Before the COMELEC, petitioner argued that the LGBT community is a
marginalized and under-represented sector that is particularly disadvantaged
because of their sexual orientation and gender identity; that LGBTs are victims of
exclusion, discrimination, and violence; that because of negative societal
attitudes, LGBTs are constrained to hide their sexual orientation; and that Ang
Ladlad complied with the 8-point guidelines enunciated by this Court in Ang
Bagong Bayani-OFW Labor Party v. Commission on Elections.6[6] Ang Ladlad laid
out its national membership base consisting of individual members and
organizational supporters, and outlined its platform of governance.7[7]
On November 11, 2009, after admitting the petitioners evidence, the
COMELEC (Second Division) dismissed the Petition on moral grounds, stating that:
x x x This Petition is dismissible on moral grounds. Petitioner defines the Filipino
Lesbian, Gay, Bisexual and Transgender (LGBT) Community, thus:
x x x a marginalized and under-represented sector that is particularly
disadvantaged because of their sexual orientation and gender
identity.
and proceeded to define sexual orientation as that which:
x x x refers to a persons capacity for profound emotional, affectional
and sexual attraction to, and intimate and sexual relations with,
2
No substantial differentiation
In the United States, whose equal protection doctrine pervades
Philippine jurisprudence, courts do not recognize lesbians, gays,
homosexuals, and bisexuals (LGBT) as a special class of individuals. x x x
Significantly, it has also been held that homosexuality is not a
constitutionally protected fundamental right, and that nothing in the U.S.
Constitution discloses a comparable intent to protect or promote the social
or legal equality of homosexual relations, as in the case of race or religion or
belief.
xxxx
Thus, even if societys understanding, tolerance, and acceptance of
LGBTs is elevated, there can be no denying that Ladlad constituencies are
still males and females, and they will remain either male or female
protected by the same Bill of Rights that applies to all citizens
alike.
xxxx
IV.
Public Morals
Legal Provisions
But above morality and social norms, they have become part of the
law of the land. Article 201 of the Revised Penal Code imposes the penalty
of prision mayor upon Those who shall publicly expound or proclaim
doctrines openly contrary to public morals. It penalizes immoral doctrines,
11
12
13
14
15
16
17
18
19
Respondent mistakenly opines that our ruling in Ang Bagong Bayani stands
for the proposition that only those sectors specifically enumerated in the law or
related to said sectors (labor, peasant, fisherfolk, urban poor, indigenous cultural
communities, elderly, handicapped, women, youth, veterans, overseas workers,
and professionals) may be registered under the party-list system. As we explicitly
ruled in Ang Bagong Bayani-OFW Labor Party v. Commission on Elections,20[20]
the enumeration of marginalized and under-represented sectors is not exclusive.
The crucial element is not whether a sector is specifically enumerated, but
whether a particular organization complies with the requirements of the
Constitution and RA 7941.
Respondent also argues that Ang Ladlad made untruthful statements in its
petition when it alleged that it had nationwide existence through its members and
affiliate organizations. The COMELEC claims that upon verification by its field
personnel, it was shown that save for a few isolated places in the country,
petitioner does not exist in almost all provinces in the country.21[21]
This argument that petitioner made untruthful statements in its petition
when it alleged its national existence is a new one; previously, the COMELEC
claimed that petitioner was not being truthful when it said that it or any of its
nominees/party-list representatives have not violated or failed to comply with
laws, rules, or regulations relating to the elections. Nowhere was this ground for
denial of petitioners accreditation mentioned or even alluded to in the Assailed
Resolutions. This, in itself, is quite curious, considering that the reports of
petitioners alleged non-existence were already available to the COMELEC prior to
the issuance of the First Assailed Resolution. At best, this is irregular procedure; at
worst, a belated afterthought, a change in respondents theory, and a serious
violation of petitioners right to procedural due process.
Nonetheless, we find that there has been no misrepresentation. A cursory
perusal of Ang Ladlads initial petition shows that it never claimed to exist in each
province of the Philippines. Rather, petitioner alleged that the LGBT community in
the Philippines was estimated to constitute at least 670,000 persons; that it had
16,100 affiliates and members around the country, and 4,044 members in its
electronic discussion group.22[22] Ang Ladlad also represented itself to be a
national LGBT umbrella organization with affiliates around the Philippines
composed of the following LGBT networks:
Abra Gay Association
Aklan Butterfly Brigade (ABB) Aklan
Albay Gay Association
Arts Center of Cabanatuan City Nueva Ecija
Boys Legion Metro Manila
Cagayan de Oro People Like Us (CDO PLUS)
Cant Live in the Closet, Inc. (CLIC) Metro Manila
Cebu Pride Cebu City
Circle of Friends
Dipolog Gay Association Zamboanga del Norte
Gay, Bisexual, & Transgender Youth Association (GABAY)
Gay and Lesbian Activists Network for Gender Equality (GALANG)
Metro Manila
20
21
22
23
24
25
violation of the non-establishment clause for the COMELEC to utilize the Bible and
the Koran to justify the exclusion of Ang Ladlad.
Rather than relying on religious belief, the legitimacy of the Assailed
Resolutions should depend, instead, on whether the COMELEC is able to advance
some justification for its rulings beyond mere conformity to religious doctrine.
Otherwise stated, government must act for secular purposes and in ways that
have primarily secular effects. As we held in Estrada v. Escritor:26[26]
x x x The morality referred to in the law is public and necessarily secular,
not religious as the dissent of Mr. Justice Carpio holds. "Religious teachings
as expressed in public debate may influence the civil public order but public
moral disputes may be resolved only on grounds articulable in secular
terms." Otherwise, if government relies upon religious beliefs in formulating
public policies and morals, the resulting policies and morals would require
conformity to what some might regard as religious programs or agenda. The
non-believers would therefore be compelled to conform to a standard of
conduct buttressed by a religious belief, i.e., to a "compelled religion,"
anathema to religious freedom. Likewise, if government based its actions
upon religious beliefs, it would tacitly approve or endorse that belief and
thereby also tacitly disapprove contrary religious or non-religious views that
would not support the policy. As a result, government will not provide full
religious freedom for all its citizens, or even make it appear that those
whose beliefs are disapproved are second-class citizens.
In other words, government action, including its proscription of
immorality as expressed in criminal law like concubinage, must have a
secular purpose. That is, the government proscribes this conduct because it
is "detrimental (or dangerous) to those conditions upon which depend the
existence and progress of human society" and not because the conduct is
proscribed by the beliefs of one religion or the other. Although admittedly,
moral judgments based on religion might have a compelling influence on
those engaged in public deliberations over what actions would be
considered a moral disapprobation punishable by law. After all, they might
also be adherents of a religion and thus have religious opinions and moral
codes with a compelling influence on them; the human mind endeavors to
regulate the temporal and spiritual institutions of society in a uniform
manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots, but it must
have an articulable and discernible secular purpose and justification to pass
scrutiny of the religion clauses. x x x Recognizing the religious nature of the
Filipinos and the elevating influence of religion in society, however, the
Philippine constitution's religion clauses prescribe not a strict but a
benevolent neutrality. Benevolent neutrality recognizes that government
must pursue its secular goals and interests but at the same time strive to
uphold religious liberty to the greatest extent possible within flexible
constitutional limits. Thus, although the morality contemplated by laws is
secular, benevolent neutrality could allow for accommodation of morality
based on religion, provided it does not offend compelling state interests.27
[27]
26
27
29
30
31
society. We, of course, do not suggest that the state is wholly without authority to
regulate matters concerning morality, sexuality, and sexual relations, and we
recognize that the government will and should continue to restrict behavior
considered detrimental to society. Nonetheless, we cannot countenance advocates
who, undoubtedly with the loftiest of intentions, situate morality on one end of an
argument or another, without bothering to go through the rigors of legal reasoning
and explanation. In this, the notion of morality is robbed of all value. Clearly then,
the bare invocation of morality will not remove an issue from our scrutiny.
We also find the COMELECs reference to purported violations of our penal
and civil laws flimsy, at best; disingenuous, at worst. Article 694 of the Civil Code
defines a nuisance as any act, omission, establishment, condition of property, or
anything else which shocks, defies, or disregards decency or morality, the
remedies for which are a prosecution under the Revised Penal Code or any local
ordinance, a civil action, or abatement without judicial proceedings. 32[32] A
violation of Article 201 of the Revised Penal Code, on the other hand, requires
proof beyond reasonable doubt to support a criminal conviction. It hardly needs to
be emphasized that mere allegation of violation of laws is not proof, and a mere
blanket invocation of public morals cannot replace the institution of civil or criminal
proceedings and a judicial determination of liability or culpability.
As such, we hold that moral disapproval, without more, is not a sufficient
governmental interest to justify exclusion of homosexuals from participation in the
party-list system. The denial of Ang Ladlads registration on purely moral grounds
amounts more to a statement of dislike and disapproval of homosexuals, rather
than a tool to further any substantial public interest. Respondents blanket
justifications give rise to the inevitable conclusion that the COMELEC targets
homosexuals themselves as a class, not because of any particular morally
reprehensible act. It is this selective targeting that implicates our equal protection
clause.
Equal Protection
Despite the absolutism of Article III, Section 1 of our Constitution, which
provides nor shall any person be denied equal protection of the laws, courts have
never interpreted the provision as an absolute prohibition on classification.
Equality, said Aristotle, consists in the same treatment of similar persons.33[33]
The equal protection clause guarantees that no person or class of persons shall be
deprived of the same protection of laws which is enjoyed by other persons or other
classes in the same place and in like circumstances.34[34]
Recent jurisprudence has affirmed that if a law neither burdens a fundamental
right nor targets a suspect class, we will uphold the classification as long as it
bears a rational relationship to some legitimate government end.35[35] In Central
Bank Employees Association, Inc. v. Banko Sentral ng Pilipinas,36[36] we declared
that [i]n our jurisdiction, the standard of analysis of equal protection challenges x x
32
33
34
35
x have followed the rational basis test, coupled with a deferential attitude to
legislative classifications and a reluctance to invalidate a law unless there is a
showing of a clear and unequivocal breach of the Constitution.37[37]
The COMELEC posits that the majority of the Philippine population considers
homosexual conduct as immoral and unacceptable, and this constitutes sufficient
reason to disqualify the petitioner. Unfortunately for the respondent, the Philippine
electorate has expressed no such belief. No law exists to criminalize homosexual
behavior or expressions or parties about homosexual behavior. Indeed, even if we
were to assume that public opinion is as the COMELEC describes it, the asserted
state interest here that is, moral disapproval of an unpopular minority is not a
legitimate state interest that is sufficient to satisfy rational basis review under the
equal protection clause. The COMELECs differentiation, and its unsubstantiated
claim that Ang Ladlad cannot contribute to the formulation of legislation that
would benefit the nation, furthers no legitimate state interest other than
disapproval of or dislike for a disfavored group.
From the standpoint of the political process, the lesbian, gay, bisexual, and
transgender have the same interest in participating in the party-list system on the
same basis as other political parties similarly situated. State intrusion in this case
is equally burdensome. Hence, laws of general application should apply with equal
force to LGBTs, and they deserve to participate in the party-list system on the
same basis as other marginalized and under-represented sectors.
It bears stressing that our finding that COMELECs act of differentiating
LGBTs from heterosexuals insofar as the party-list system is concerned does not
imply that any other law distinguishing between heterosexuals and homosexuals
under different circumstances would similarly fail. We disagree with the OSGs
position that homosexuals are a class in themselves for the purposes of the equal
protection clause.38[38] We are not prepared to single out homosexuals as a
separate class meriting special or differentiated treatment. We have not received
sufficient evidence to this effect, and it is simply unnecessary to make such a
ruling today. Petitioner itself has merely demanded that it be recognized under the
same basis as all other groups similarly situated, and that the COMELEC made an
unwarranted and impermissible classification not justified by the circumstances of
the case.
Freedom of Expression and Association
Under our system of laws, every group has the right to promote its agenda
and attempt to persuade society of the validity of its position through normal
democratic means.39[39] It is in the public square that deeply held convictions and
differing opinions should be distilled and deliberated upon. As we held in Estrada
v. Escritor:40[40]
36
37
38
39
41
42
opinion, public institutions must show that their actions were caused by something
more than a mere desire to avoid the discomfort and unpleasantness that always
accompany an unpopular viewpoint.43[43]
With respect to freedom of association for the advancement of ideas and
beliefs, in Europe, with its vibrant human rights tradition, the European Court of
Human Rights (ECHR) has repeatedly stated that a political party may campaign
for a change in the law or the constitutional structures of a state if it uses legal and
democratic means and the changes it proposes are consistent with democratic
principles. The ECHR has emphasized that political ideas that challenge the
existing order and whose realization is advocated by peaceful means must be
afforded a proper opportunity of expression through the exercise of the right of
association, even if such ideas may seem shocking or unacceptable to the
authorities or the majority of the population.44[44] A political group should not be
hindered solely because it seeks to publicly debate controversial political issues in
order to find solutions capable of satisfying everyone concerned.45[45] Only if a
political party incites violence or puts forward policies that are incompatible with
democracy does it fall outside the protection of the freedom of association
guarantee.46[46]
We do not doubt that a number of our citizens may believe that homosexual
conduct is distasteful, offensive, or even defiant. They are entitled to hold and
express that view. On the other hand, LGBTs and their supporters, in all likelihood,
believe with equal fervor that relationships between individuals of the same sex
are morally equivalent to heterosexual relationships. They, too, are entitled to hold
and express that view. However, as far as this Court is concerned, our democracy
precludes using the religious or moral views of one part of the community to
exclude from consideration the values of other members of the community.
Of course, none of this suggests the impending arrival of a golden age for gay
rights litigants. It well may be that this Decision will only serve to highlight the
discrepancy between the rigid constitutional analysis of this Court and the more
complex moral sentiments of Filipinos. We do not suggest that public opinion, even
at its most liberal, reflect a clear-cut strong consensus favorable to gay rights
claims and we neither attempt nor expect to affect individual perceptions of
homosexuality through this Decision.
The OSG argues that since there has been neither prior restraint nor
subsequent punishment imposed on Ang Ladlad, and its members have not been
deprived of their right to voluntarily associate, then there has been no restriction
on their freedom of expression or association. The OSG argues that:
There was no utterance restricted, no publication censored, or any
assembly denied. [COMELEC] simply exercised its authority to review and
verify the qualifications of petitioner as a sectoral party applying to
participate in the party-list system. This lawful exercise of duty cannot be
said to be a transgression of Section 4, Article III of the Constitution.
43
44
45
46
xxxx
A denial of the petition for registration x x x does not deprive the
members of the petitioner to freely take part in the conduct of elections.
Their right to vote will not be hampered by said denial. In fact, the right to
vote is a constitutionally-guaranteed right which cannot be limited.
As to its right to be elected in a genuine periodic election, petitioner
contends that the denial of Ang Ladlads petition has the clear and
immediate effect of limiting, if not outrightly nullifying the capacity of its
members to fully and equally participate in public life through engagement
in the party list elections.
This argument is puerile. The holding of a public office is not a right
but a privilege subject to limitations imposed by law. x x x47[47]
The OSG fails to recall that petitioner has, in fact, established its
qualifications to participate in the party-list system, and as advanced by the OSG
itself the moral objection offered by the COMELEC was not a limitation imposed by
law. To the extent, therefore, that the petitioner has been precluded, because of
COMELECs action, from publicly expressing its views as a political party and
participating on an equal basis in the political process with other equally-qualified
party-list candidates, we find that there has, indeed, been a transgression of
petitioners fundamental rights.
Non-Discrimination and International
Law
In an age that has seen international law evolve geometrically in scope and
promise, international human rights law, in particular, has grown dynamically in its
attempt to bring about a more just and humane world order. For individuals and
groups struggling with inadequate structural and governmental support,
international human rights norms are particularly significant, and should be
effectively enforced in domestic legal systems so that such norms may become
actual, rather than ideal, standards of conduct.
Our Decision today is fully in accord with our international obligations to
protect and promote human rights. In particular, we explicitly recognize the
principle of non-discrimination as it relates to the right to electoral participation,
enunciated in the UDHR and the ICCPR.
The principle of non-discrimination is laid out in Article 26 of the ICCPR, as follows:
Article 26
All persons are equal before the law and are entitled without any
discrimination to the equal protection of the law. In this respect, the law
shall prohibit any discrimination and guarantee to all persons equal and
effective protection against discrimination on any ground such as race,
colour, sex, language, religion, political or other opinion, national or social
origin, property, birth or other status.
In this context, the principle of non-discrimination requires that laws of
general application relating to elections be applied equally to all persons,
47
49
Persons who are otherwise eligible to stand for election should not be
excluded by unreasonable or discriminatory requirements such as
education, residence or descent, or by reason of political affiliation. No
person should suffer discrimination or disadvantage of any kind because of
that person's candidacy. States parties should indicate and explain the
legislative provisions which exclude any group or category of persons from
elective office.50[50]
We stress, however, that although this Court stands willing to assume the
responsibility of giving effect to the Philippines international law obligations, the
blanket invocation of international law is not the panacea for all social ills. We refer
now to the petitioners invocation of the Yogyakarta Principles (the Application of
International Human Rights Law In Relation to Sexual Orientation and Gender
Identity),51[51] which petitioner declares to reflect binding principles of
international law.
At this time, we are not prepared to declare that these Yogyakarta Principles
contain norms that are obligatory on the Philippines. There are declarations and
obligations outlined in said Principles which are not reflective of the current state
of international law, and do not find basis in any of the sources of international law
enumerated under Article 38(1) of the Statute of the International Court of
Justice.52[52] Petitioner has not undertaken any objective and rigorous analysis of
these alleged principles of international law to ascertain their true status.
We also hasten to add that not everything that society or a certain segment
of society wants or demands is automatically a human right. This is not an
arbitrary human intervention that may be added to or subtracted from at will. It is
unfortunate that much of what passes for human rights today is a much broader
context of needs that identifies many social desires as rights in order to further
claims that international law obliges states to sanction these innovations. This has
the effect of diluting real human rights, and is a result of the notion that if wants
are couched in rights language, then they are no longer controversial.
Using even the most liberal of lenses, these Yogyakarta Principles,
consisting of a declaration formulated by various international law professors, are
at best de lege ferenda and do not constitute binding obligations on the
Philippines. Indeed, so much of contemporary international law is characterized by
the soft law nomenclature, i.e., international law is full of principles that promote
international cooperation, harmony, and respect for human rights, most of which
amount to no more than well-meaning desires, without the support of either State
practice or opinio juris.53[53]
As a final note, we cannot help but observe that the social issues presented
by this case are emotionally charged, societal attitudes are in flux, even the
psychiatric and religious communities are divided in opinion. This Courts role is not
50
51
52
53
J.,
COMMISSIONER OF
INTERNAL REVENUE,
Promulgated:
Respondent.
January 22, 2010
x------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
The clashing interests of the State and the taxpayers are again pitted
against each other. Two basic principles, the States inherent power of taxation and
its declared policy of fostering the creation and growth of cooperatives come into
play. However, the one that embodies the spirit of the law and the true intent of
the legislature prevails.
This Petition for Review on Certiorari under Section 11 of Republic Act (RA)
No. 9282,54[1] in relation to Rule 45 of the Rules of Court, seeks to set aside the
December 18, 2007 Decision55[2] of the Court of Tax Appeals (CTA), ordering
petitioner to pay deficiency withholding taxes on interest from savings and time
54
55
deposits of its members for taxable years 1999 and 2000, pursuant to Section
24(B)(1) of the National Internal Revenue Code of 1997 (NIRC), as well as the
delinquency interest of 20% per annum under Section 249(C) of the same Code. It
also assails the April 11, 2008 Resolution56[3] denying petitioners Motion for
Reconsideration.
Factual Antecedents
Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) is a credit
cooperative duly registered with and regulated by the Cooperative Development
Authority (CDA).57[4] It was established on February 17, 196858[5] with the
following objectives and purposes: (1) to increase the income and purchasing
power of the members; (2) to pool the resources of the members by encouraging
savings and promoting thrift to mobilize capital formation for development
activities; and (3) to extend loans to members for provident and productive
purposes.59[6] It has the power (1) to draw, make, accept, endorse, guarantee,
execute, and issue promissory notes, mortgages, bills of exchange, drafts,
warrants, certificates and all kinds of obligations and instruments in connection
with and in furtherance of its business operations; and (2) to issue bonds,
debentures, and other obligations; to contract indebtedness; and to secure the
same with a mortgage or deed of trust, or pledge or lien on any or all of its real
and personal properties.60[7]
On November 27, 2001, the Bureau of Internal Revenue (BIR) Operations
Group Deputy Commissioner, Lilian B. Hefti, issued Letters of Authority Nos. 63222
and 63223, authorizing BIR Officers Tomas Rambuyon and Tarcisio Cubillan of
Revenue Region No. 12, Bacolod City, to examine petitioners books of accounts
and other accounting records for all internal revenue taxes for the taxable years
1999 and 2000.61[8]
Proceedings before the BIR Regional Office
On June 26, 2002, petitioner received two Pre-Assessment Notices for
deficiency withholding taxes for taxable years 1999 and 2000 which were
protested by petitioner on July 23, 2002.62[9] Thereafter, on October 16, 2002,
56
57
58
59
60
61
62
63
64
65
66
67
68
However, the latter failed to act on the protest within the prescribed 180-day
period. Hence, on December 3, 2003, petitioner filed a Petition for Review before
the CTA, docketed as C.T.A. Case No. 6827.69[16]
Proceedings before the CTA First Division
The case was raffled to the First Division of the CTA which rendered its
Decision on February 6, 2007, disposing of the case in this wise:
IN VIEW OF ALL THE FOREGOING, the Petition for Review is hereby
PARTIALLY GRANTED. Assessment Notice Nos. 00026-2003 and 00027-2003
are hereby MODIFIED and the assessment for deficiency withholding taxes
on the honorarium and per diems of petitioners Board of Directors, security
and janitorial services, commissions and legal and professional fees are
hereby CANCELLED. However, the assessments for deficiency withholding
taxes on interests are hereby AFFIRMED.
Accordingly, petitioner is ORDERED TO PAY the respondent the
respective amounts of P1,280,145.89 and P1,357,881.14 representing
deficiency withholding taxes on interests from savings and time deposits of
its members for the taxable years 1999 and 2000. In addition, petitioner is
ordered to pay the 20% delinquency interest from May 26, 2003 until the
amount of deficiency withholding taxes are fully paid pursuant to Section
249 (C) of the Tax Code.
SO ORDERED.70[17]
Dissatisfied, petitioner moved for a partial reconsideration, but it was denied
by the First Division in its Resolution dated May 29, 2007.71[18]
Proceedings before the CTA En Banc
On July 3, 2007, petitioner filed a Petition for Review with the CTA En Banc,72
[19] interposing the lone issue of whether or not petitioner is liable to pay the
deficiency withholding taxes on interest from savings and time deposits of its
members for taxable years 1999 and 2000, and the consequent delinquency
interest of 20% per annum.73[20]
Finding no reversible error in the Decision dated February 6, 2007 and the
Resolution dated May 29, 2007 of the CTA First Division, the CTA En Banc denied
the Petition for Review74[21] as well as petitioners Motion for Reconsideration. 75
[22]
69
70
71
72
73
The CTA En Banc held that Section 57 of the NIRC requires the withholding
of tax at source. Pursuant thereto, Revenue Regulations No. 2-98 was issued
enumerating the income payments subject to final withholding tax, among which
is interest from any peso bank deposit and yield, or any other monetary benefit
from deposit substitutes and from trust funds and similar arrangements x x x.
According to the CTA En Banc, petitioners business falls under the phrase similar
arrangements; as such, it should have withheld the corresponding 20% final tax
on the interest from the deposits of its members.
Issue
Hence, the present recourse, where petitioner raises the issue of whether or
not it is liable to pay the deficiency withholding taxes on interest from savings and
time deposits of its members for the taxable years 1999 and 2000, as well as the
delinquency interest of 20% per annum.
Petitioners Arguments
Petitioner argues that Section 24(B)(1) of the NIRC which reads in part, to
wit:
SECTION 24.Income Tax Rates.
xxxx
(B) Rate of Tax on Certain Passive Income:
(1)
Interests, Royalties, Prizes, and Other Winnings. A final
tax at the rate of twenty percent (20%) is hereby imposed upon the amount
of interest from any currency bank deposit and yield or any other monetary
benefit from deposit substitutes and from trust funds and similar
arrangements; x x x
applies only to banks and not to cooperatives, since the phrase similar
arrangements is preceded by terms referring to banking transactions that have
deposit peculiarities. Petitioner thus posits that the savings and time deposits of
members of cooperatives are not included in the enumeration, and thus not
subject to the 20% final tax. To bolster its position, petitioner cites BIR Ruling No.
551-88876[23] and BIR Ruling [DA-591-2006]77[24] where the BIR ruled that
interests from deposits maintained by members of cooperative are not subject to
withholding tax under Section 24(B)(1) of the NIRC. Petitioner further contends
that pursuant to Article XII, Section 15 of the Constitution 78[25] and Article 2 of
Republic Act No. 6938 (RA 6938) or the Cooperative Code of the Philippines, 79[26]
74
75
76
77
78
79
e.g., income tax and sales tax, granted to cooperatives under P.D. No. 175
which were previously withdrawn by P.D. No. 1955 effective October 15,
1984 and restored by P.D. No. 2008 effective January 8, 1986. However,
implementation of said Executive Order insofar as electric, agricultural,
irrigation and waterworks cooperatives are concerned was suspended until
June 30, 1987. (Memorandum Order No. 65 dated January 21, 1987 of the
President) Accordingly, your tax exemption privilege expired as of June 30,
1987. Such being the case, you are now subject to income and sales taxes.
Moreover, under Section 72(a) of the Tax Code, as amended, every
employer making payment of wages shall deduct and withhold upon such
wages a tax at the rates prescribed by Section 21(a) in relation to section
71, Chapter X, Title II, of the same Code as amended by Batas Pambansa
Blg. 135 and implemented by Revenue Regulations No. 6-82 as amended.
Accordingly, as an employer you are required to withhold the corresponding
tax due from the compensation of your employees.
Furthermore, under Section 50(a) of the Tax Code, as amended, the tax
imposed or prescribed by Section 21(c) of the same Code on specified items
of income shall be withheld by payor-corporation and/or person and paid in
the same manner and subject to the same conditions as provided in Section
51 of the Tax Code, as amended. Such being the case, and since interest
from any Philippine currency bank deposit and yield or any other monetary
benefit from deposit substitutes are paid by banks, you are not the party
required to withhold the corresponding tax on the aforesaid savings account
and time deposits of your members. (Underscoring ours)
Very truly yours,
(SGD.) BIENVENIDO A. TAN, JR.
Commissioner
The CTA First Division, however, disregarded the above quoted ruling in
determining whether petitioner is liable to pay the deficiency withholding taxes on
interest from the deposits of its members. It ratiocinated in this wise:
This Court does not agree. As correctly pointed out by respondent in
his Memorandum, nothing in the above quoted resolution will give the
conclusion that savings account and time deposits of members of a
cooperative are tax-exempt. What is entirely clear is the opinion of the
Commissioner that the proper party to withhold the corresponding taxes on
certain specified items of income is the payor-corporation and/or person. In
the same way, in the case of interests earned from Philippine currency
deposits made in a bank, then it is the bank which is liable to withhold the
corresponding taxes considering that the bank is the payor-corporation.
Thus, the ruling that a cooperative is not the proper party to withhold the
corresponding taxes on the aforementioned accounts is correct. However,
this ruling does not hold true if the savings and time deposits are being
maintained in the cooperative, for in this case, it is the cooperative which
becomes the payor-corporation, a separate entity acting no more than an
agent of the government for the collection of taxes, liable to withhold the
corresponding taxes on the interests earned. 80[27] (Underscoring ours)
The CTA En Banc affirmed the above-quoted Decision and found petitioners
invocation of BIR Ruling No. 551-88 misplaced. According to the CTA En Banc, the
BIR Ruling was based on the premise that the savings and time deposits were
placed by the members of the cooperative in the bank. 81[28] Consequently, it
80
ruled that the BIR Ruling does not apply when the deposits are maintained in the
cooperative such as the instant case.
We disagree.
There is nothing in the ruling to suggest that it applies only when deposits
are maintained in a bank. Rather, the ruling clearly states, without any
qualification, that since interest from any Philippine currency bank deposit and
yield or any other monetary benefit from deposit substitutes are paid by banks,
cooperatives are not required to withhold the corresponding tax on the interest
from savings and time deposits of their members. This interpretation was
reiterated in BIR Ruling [DA-591-2006] dated October 5, 2006, which was issued
by Assistant Commissioner James H. Roldan upon the request of the cooperatives
for a confirmatory ruling on several issues, among which is the alleged exemption
of interest income on members deposit (over and above the share capital
holdings) from the 20% final withholding tax. In the said ruling, the BIR opined
that:
xxxx
3.Exemption of interest income on members deposit (over and above the share
capital holdings) from the 20% Final Withholding Tax.
The National Internal Revenue Code states that a final tax at the rate
of twenty percent (20%) is hereby imposed upon the amount of interest on
currency bank deposit and yield or any other monetary benefit from the
deposit substitutes and from trust funds and similar arrangement x x x for
individuals under Section 24(B)(1) and for domestic corporations under
Section 27(D)(1). Considering the members deposits with the cooperatives
are not currency bank deposits nor deposit substitutes, Section 24(B)(1)
and Section 27(D)(1), therefore, do not apply to members of cooperatives
and to deposits of primaries with federations, respectively.
It bears stressing that interpretations of administrative agencies in charge of
enforcing a law are entitled to great weight and consideration by the courts,
unless such interpretations are in a sharp conflict with the governing statute or the
Constitution and other laws.82[29] In this case, BIR Ruling No. 551-888 and BIR
Ruling [DA-591-2006] are in perfect harmony with the Constitution and the laws
they seek to implement. Accordingly, the interpretation in BIR Ruling No. 551-888
that cooperatives are not required to withhold the corresponding tax on the
interest from savings and time deposits of their members, which was reiterated in
BIR Ruling [DA-591-2006], applies to the instant case.
Members of cooperatives deserve a
preferential tax treatment pursuant
to RA 6938, as amended by RA 9520.
Given that petitioner is a credit cooperative duly registered with the
Cooperative Development Authority (CDA), Section 24(B)(1) of the NIRC must be
read together with RA 6938, as amended by RA 9520.
Under Article 2 of RA 6938, as amended by RA 9520, it is a declared policy
of the State to foster the creation and growth of cooperatives as a practical vehicle
81
82
for promoting self-reliance and harnessing people power towards the attainment
of economic development and social justice. Thus, to encourage the formation of
cooperatives and to create an atmosphere conducive to their growth and
development, the State extends all forms of assistance to them, one of which is
providing cooperatives a preferential tax treatment.
The legislative intent to give cooperatives a preferential tax treatment is
apparent in Articles 61 and 62 of RA 6938, which read:
ART. 61. Tax Treatment of Cooperatives. Duly registered cooperatives under
this Code which do not transact any business with non-members or the
general public shall not be subject to any government taxes and fees
imposed under the Internal Revenue Laws and other tax laws. Cooperatives
not falling under this article shall be governed by the succeeding section.
ART. 62. Tax and Other Exemptions. Cooperatives transacting business
with both members and nonmembers shall not be subject to tax on their
transactions to members. Notwithstanding the provision of any law or
regulation to the contrary, such cooperatives dealing with nonmembers
shall enjoy the following tax exemptions; x x x.
This exemption extends to members of cooperatives. It must be
emphasized that cooperatives exist for the benefit of their members. In fact, the
primary objective of every cooperative is to provide goods and services to its
members to enable them to attain increased income, savings, investments, and
productivity.83[30] Therefore, limiting the application of the tax exemption to
cooperatives would go against the very purpose of a credit cooperative. Extending
the exemption to members of cooperatives, on the other hand, would be
consistent with the intent of the legislature. Thus, although the tax exemption only
mentions cooperatives, this should be construed to include the members,
pursuant to Article 126 of RA 6938, which provides:
ART. 126. Interpretation and Construction. In case of doubt as to the
meaning of any provision of this Code or the regulations issued in pursuance
thereof, the same shall be resolved liberally in favor of the cooperatives and
their members.
We need not belabor that what is within the spirit is within the law even if it
is not within the letter of the law because the spirit prevails over the letter. 84[31]
Apropos is the ruling in the case of Alonzo v. Intermediate Appellate Court,85[32] to
wit:
But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking
the meaning of the law, the first concern of the judge should be to discover
in its provisions the intent of the lawmaker. Unquestionably, the law should
never be interpreted in such a way as to cause injustice as this is never
83
84
85
within the legislative intent. An indispensable part of that intent, in fact, for
we presume the good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we must keep
them so. To be sure, there are some laws that, while generally valid, may
seem arbitrary when applied in a particular case because of its peculiar
circumstances. In such a situation, we are not bound, because only of our
nature and functions, to apply them just the same, [is] slavish obedience to
their language. What we do instead is find a balance between the word and
the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not
unfeelingly apply the law as it is worded, yielding like robots to the literal
command without regard to its cause and consequence. Courts are apt to
err by sticking too closely to the words of a law, so we are warned, by Justice
Holmes again, where these words import a policy that goes beyond them.
While we admittedly may not legislate, we nevertheless have the power to
interpret the law in such a way as to reflect the will of the legislature. While
we may not read into the law a purpose that is not there, we nevertheless
have the right to read out of it the reason for its enactment. In doing so, we
defer not to the letter that killeth but to the spirit that vivifieth, to give effect
to the lawmakers will.
The spirit, rather than the letter of a statute determines its
construction, hence, a statute must be read according to its spirit or
intent. For what is within the spirit is within the statute although it is
not within the letter thereof, and that which is within the letter but not
within the spirit is not within the statute. Stated differently, a thing
which is within the intent of the lawmaker is as much within the
statute as if within the letter; and a thing which is within the letter of
the statute is not within the statute unless within the intent of the
lawmakers. (Underscoring ours)
It is also worthy to note that the tax exemption in RA 6938 was retained in
RA 9520. The only difference is that Article 61 of RA 9520 (formerly Section 62 of
RA 6938) now expressly states that transactions of members with the
cooperatives are not subject to any taxes and fees. Thus:
ART. 61. Tax and Other Exemptions. Cooperatives transacting business with
both members and non-members shall not be subjected to tax on their
transactions with members. In relation to this, the transactions of members
with the cooperative shall not be subject to any taxes and fees, including
but not limited to final taxes on members deposits and documentary tax.
Notwithstanding the provisions of any law or regulation to the contrary, such
cooperatives dealing with nonmembers shall enjoy the following tax
exemptions: (Underscoring ours)
xxxx
This amendment in Article 61 of RA 9520, specifically providing that members of
cooperatives are not subject to final taxes on their deposits, affirms the
interpretation of the BIR that Section 24(B)(1) of the NIRC does not apply to
cooperatives and confirms that such ruling carries out the legislative intent. Under
the principle of legislative approval of administrative interpretation by
reenactment, the reenactment of a statute substantially unchanged is persuasive
indication of the adoption by Congress of a prior executive construction.86[33]
86
87
April 1997 in the consolidated cases RAB VII-07-0082-94-D and RAB VII-080082-95-D.
Petitioner Philippine National Oil Company - Energy Development Corporation
(PNOC-EDC) is a government-owned and controlled corporation organized
under the Corporation Code of the Philippines, with Nazario Vasquez as its
president; Marcelino M. Tongco, Acting Manager, Project Development; Jesus
Quevenco, Jr., Resident Manager, Southern Negros Geothermal Plant
(SNGP)/PIPE; and Remegio Cornelio, Human Resource Officer, SNGP/PIPE.
Private respondent Frederick V. Abella is an employee of the petitioner
company, assigned as a Security Assistant.
The Facts of the Case
On 01 June 1989, herein private respondent Frederick V. Abella started
working with herein petitioner PNOC-EDC as a probationary Security
Assistant at its SNGP in Ticala, Valencia, Negros Oriental. Subsequently, he
became a regular employee.
Less than one year later, or on 20 April 1990, Abella was informed that his
employment with PNOC-EDC would be terminated effective 21 May 1990,
allegedly due to a company-wide reorganization pursuant to its Manpower
Reduction Program, wherein the position of Security Assistant at PNOC-EDC
SNGP had been abolished.
Aggrieved, Abella filed a case of illegal dismissal, and for actual, moral, and
exemplary damages with the NLRC, Regional Arbitration Branch No. VII at
Dumaguete City, docketed as NLRC RAB VII-05-364-90-D, against the PNOCEDC and its officers.
After hearing the parties, Labor Arbiter Geoffrey P. Villahermosa rendered a
Decision[4] dated 27 August 1991, holding that Abella was illegally dismissed
as the company and its officers failed to show a clear scheme and convincing
proof of reorganization, to wit:
WHEREFORE, premises considered judgment is hereby rendered ordering
respondents to reinstate complainant to his former position without loss of
seniority rights and privileges; his backwages from the time he was
terminated on 21 May 1990 up to his actual reinstatement; his withheld
second half salary for the month of May 1990 in the amount of P4,291.17;
moral damages amounting to P30,000.00; exemplary damages for public
good amounting to P20,000.00 and 10% attorneys fees from the total
adjudicated claims.
The computation of the award of the complainant is hereto attached and
forms as [an] integral part hereof.
All other claims are dismissed.
An appeal was timely filed with the NLRC.
Meanwhile, with said appeal still pending in the NLRC, the labor arbiter
issued an order[5] dated 20 November 1991, directing the company to admit
back to work or reinstate the complainant under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll.
Pursuant to the above order, Abella was reinstated in the payroll as a
General Services Assistant (PAL II), his original position of Security Assistant
having been abolished by virtue of the company-wide reorganization.
According to the company, the position is of the same level as Assistant
Security and had the same salary rate and benefits.[6]
On 11 February 1992, Abella, through counsel, wrote Quevenco, Resident
Manager at the SNGP, to protest his assignment in the payroll as General
Services Assistant (PAL II). Subsequently, he was again re-slotted in the
payroll as a Pipeline Maintenance Foreman, which, according to the
petitioners, is another position with the same salary and benefits[7] as
another Security Assistant. This change of position was classified as a lateral
transfer.[8]
hereby granted. After all Compromise being the essence of labor justice
should be honored.
WHEREFORE, in view of the foregoing, the instant joint motion to dismiss is
hereby granted. The appeal is hereby dismissed as prayed for by the parties.
Let the records of this case be forwarded to the Regional Arbitration Branch
of origin for proper disposition.[17]
An Entry of Finality of Judgment was subsequently entered in the books on 29
March 1993.
At this time, while carrying out security functions at MIGP, Kidapawan, North
Cotabato, Abellas official item or position in the payroll was Maintenance
Foreman, SNGP, Valencia, Negros Oriental. Said state of affairs prompted the
late Jerry T. Susas[18] to write Tongco about it and to recommend that proper
action be made in order to harmonize security-related support services at
MIGP.[19]
On 10 December 1993, Abella filed a motion for the issuance of a writ of
execution of the decision dated 27 August 1991, of the labor arbiter.
Corollary to the said motion, he informed Quevenco of his intention to report
back to SNGP, Ticala, Valencia, Negros Oriental, his original assignment prior
to the filing of the 1991 case[20] for illegal dismissal.
On 31 January 1994, Abella received a show cause memorandum dated 28
January 1994 for his alleged absence without official leave (AWOL) and
insubordination.
Responding to the above, Abella explained in a letter dated 02 February
1994 that his position as SGS Maintenance is in complete contravention of
the decision of the labor arbiter.[21]
On 01 March 1994, despite the above response, Abella was nevertheless
transferred to PNOC-EDC Leyte-A Geothermal Project, as a Security Assistant,
[22] a position that was vacant at that time. Said transfer was accompanied
by a Transfer or Change of Position Form[23] showing Abellas change of
official position from Pipeline Maintenance Foreman to Security Assistant to
be a lateral transfer.
On 24 May 1994, Tongco sent Abella a radiogram message instructing him to
present himself, this time at the Mt. Labo Geothermal Project, Camarines
Norte, as a Security Assistant. A second message followed emphasizing the
need for Abella to report at the said site not later than 25 May 1994. On 01
June 1994, Abella was once more instructed to report to the petitioner
companys Mt. Labo Geothermal Project. Said order was again accompanied
by a Transfer or Change of Position Form[24] stating the transfer of Abella as
a Security Assistant from Leyte to Mt. Labo to be a lateral transfer.
All the above-mentioned directives were disregarded or ignored.
In the intervening time, on 16 June 1994, the labor arbiter ruled on the
motion for execution filed by the complainant by issuing a Writ of Execution
directing the Sheriff, NLRC, Cebu City, to proceed to the premises of the
company at Ticala, Valencia, Negros Oriental, to effect and to cause the
reinstatement of Abella either by physical or by payroll reinstatement. On 17
June 1994, Sheriff Remegio B. Cornelio issued a certification that per
attached pay slip, private respondent had been reinstated in the payroll with
PNOC-EDC.
In the meantime, for failing to heed the directives of his supervisors, Abella
received another show cause memorandum dated 14 July 1994, from Tongco,
ordering him to explain in writing why no disciplinary action should be taken
against him for insubordination and for being AWOL.
Abella, in his reply[25] dated 16 July 1994, countered that he is not guilty of
insubordination since he was not reinstated to his former position as Security
Assistant at Ticala, Valencia, Negros Oriental, per Writ of Execution issued by
the labor arbiter.
On 18 July 1994, claiming unfair and prejudicial treatment, Abella filed a
complaint before the NLRC, Sub-Regional Arbitration Branch No. VII,
Dumaguete City, for unfair labor practice, illegal suspension, nonpayment of
mid-year bonus and 13th month pay for 1990 and 1991, claim for hazard pay,
and annual salary increase against the company and its officers, docketed as
NLRC Sub-RAB Case No. 07-0082-94-D.
Several months later, or on 06 October 1994, Abella received a notice[26] of
disciplinary action of Grave Suspension with Final Warning, dated 28
September 1994, against him.
In response, on 17 October 1994, Abella filed another complaint with the
NLRC, against the company and its officers, for unfair labor practice, illegal
suspension, and nonpayment of wages with damages, docketed as NLRC
Sub-RAB Case No. 010-0123-94-D.
Nevertheless, Abella continued working at SNGP, Ticala, Valencia, Negros
Oriental, until he was accordingly notified of his termination for cause.
Thereafter, he filed a third complaint with the NLRC against the company and
its officers, this time for unfair labor practice, illegal dismissal, and
nonpayment of wages, with prayer for reinstatement and payment of moral
and exemplary damages as well as attorneys fees docketed as NLRC SubRAB Case No. 08-0082-95-D.
After hearing the parties, Labor Arbiter Geoffrey Villahermosa[27] rendered a
consolidated Decision[28] dated 25 April 1997, the dispositive portion of
which states:
WEREFORE, in the light of the foregoing, judgment is hereby rendered
declaring the respondents not guilty of unfair labor practice and illegally
dismissing the complainant, but however, as a measure of social justice and
due to the afore-cited Supreme Court Ruling, the respondents are directed to
pay the complainant his separation pay computed from June 1, 1989 to April
30, 1997 at one (1) month pay for every year of service, . . .
In maintaining that Abella was not illegally dismissed, the labor arbiter
opined that the records of the case show that Abella was reassigned from his
position in Ticala, Valencia, Negros Oriental, to that in Cotabato province by
virtue of a memorandum issued by Tongco which Abella readily accepted and
agreed to said transfer, therefore there is no valid basis for the claim that he
was not validly reinstated. Thus, the charges of insubordination and AWOL
committed by Abella fall squarely within the provision of Rule 26 of the
petitioner companys rules and regulations as contained in the PNOC Rules
and Regulations on Discipline. Said rules provide for a penalty ranging up to
dismissal even for the first offense.
On appeal, the NLRC reversed and set aside the Decision[29] of the labor
arbiter and entered a new one, viz:
WHEREFORE, as above-disquisitioned the decision appealed from is
REVERSED and SET ASIDE and a new one ENTERED finding the dismissal
illegal, hence complainant should be ordered reinstated to his former position
as Security Assistant SNGP pursuant to the Decision of August 27, 1991 with
full backwages from December 1, 1991 when he was illegally declared as
AWOL up to his actual reinstatement.
The NLRC found that Abella was illegally dismissed considering that at bar,
the parties had reached a settlement without vacating the decision (of the
labor arbiter dated 27 August 1991), then the decision should be given its
full force and effect, and as the [r]ecords show that he was never reinstated
to his former position as admitted by the correspondence of J.T. Susas dated
25 March 1993, memorandum of complainant dated 17 September 1993 and
letter of complainants counsel to Engr. Quevenco, dated 03 January 1994.
The tribunal further held that a review of the facts and circumstances of the
case, we find that while the monetary consideration of the decision of 27
August 1991 has been satisfied the reinstatement aspect of the decision
remained unsatisfied which prompted counsel to file a motion for the
issuance of [a] writ of execution. The assignments of the complainants (sic)
to the various positions could not equate to full enforcement of the decision
of 27 August 1991 considering that these positions were not his former
position and his assumption to these positions were under protest.
therefore have the ministerial and mandatory duty to implement and enforce
it.[38] (Underlining supplied.) Hence, compromise agreements duly approved
by the courts are considered the decisions in the particular cases they
involve.[39]
In the case at bar, when both parties agreed to waive all other claims,
damages and causes of action arising out of NLRC RAB VII-05-364-90-D, a
compromise they entered into in good faith absent any allegation otherwise,
they did not only agree to dismiss the appeal pending before the NLRC.
Particularly, the private respondent also agreed to receive One Hundred
Twenty-Four Thousand Eight Hundred Twenty-Four Pesos and Thirty-One
Centavos (P124,824.31), thus, relinquishing his claim to the Decision[40]
dated 27 August 1991, rendered by the labor arbiter in his favor. In return,
the petitioner company, to put an end to the labor dispute, acquiesced to
have its appeal before the NLRC dismissed.
The waiver, executed by the private respondent and the petitioner company
in which mutual concessions were given and mutual benefits were derived,
was approved and considered by the NLRC when it promulgated its Order
dated 22 February 1993, dismissing the appeal of the petitioners.
Conformably, to cite jurisprudence, the Compromise Agreement approved by
the proper authority became the decision in this particular case.
Settlements of this kind not only are recognized to be proper agreements but
so encouraged as well.[41]
Undoubtedly, the allegations of invalid reinstatement on the part of the
petitioners are a mere afterthought on private respondents part in a
fascinating attempt to extricate himself from an assignment that brought him
to a far away place and caused him to be separated from his family.
It is well to note that even if each party agreed to something that neither
might have actually wanted, except for the peace that would be brought by
the avoidance of a protracted litigation, still, the agreement must govern
their relations. If the agreement was voluntarily entered into and represents
a reasonable settlement, it is binding on the parties and may not later be
disowned or conveniently forgotten, simply because of a change of mind. It is
only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking.[42] In the case at
bar, the Joint Motion to Dismiss was not only signed by the private
respondent, but by his counsel as well.
The resolution of the third issue hinges upon a determination of the validity
of the orders directing the transfer of the private respondent from one site to
another.
In this jurisdiction, we recognize that management has wide latitude to
regulate, according to his own discretion and judgment, all aspects of
employment, to the requirements of its business.[43] The scope and limits of
the exercise of management prerogative, however, should attain a state of
equilibrium when pitted against the constitutional right of labor to security of
tenure.
Of relevant significance in the case at bar is the right of the employer to
transfer employees in their work station. We have previously held that it is
the employers prerogative, based on its assessment and perception of its
employees qualifications, aptitudes and competence, to move them around
in the various areas of its business operations in order to ascertain where
they will function with maximum benefit of the company.[44] This right flows
from ownership and from the established rule that labor (laws) do not
authorize the substitution of judgment of the employer in the conduct of his
bad faith, as it was intended to punish him for refusal to heed his employers
unreasonable orders.
The records of the present case fail to show any hint of truth to the
declaration of the appellate court.
A thorough review of the records of the case shows that there is a valid
reason behind the transfer of the private respondent to MIGP in Kidapawan,
North Cotabato. As stated in the telegraphic message received by the private
respondent,
DMD-15
DMK-22
DEC 15/92
TO: ABC / SEP CC EBP / JLA / FVA / MBP / BMO
FR: MMT
IN VIEW OF APOS CRITICAL SECURITY SITUATION, AS DISCUSSED WITH
EBP, FVABELLA WILL BE ASSIGNED TO MIGP IMMEDIATELY TO STRENGTHEN
OUR APO SECURITY COVERAGE. FVA, WILL HANDLE OVERALL STRATEGIC
PLANNING. PLS ADVISE FVAS EARLIEST TRAVEL TO MIGP.
EMC[49]
Nothing in the above message alludes to any bad faith on the part of the
petitioners. In truth, it is quite apparent that the order of transfer of the
private respondent from Negros Oriental to Northern Cotabato was due to
the exigencies of the state of affairs in the geothermal plants of the
petitioner company. Other internal messages[50] between the petitioner
companys officers and employees also sustain the validity of the necessity
and lack of bad faith in ordering the transfer of the private respondent, to
wit:
DMK-35
JAN. 06, 1993
TO: JLA CC: FVA/MBP
FM: MMT CC: EBP
WITH FVAS PRESENCE IN M1GP, I EXPECT THAT WE WILL ATTAIN FF.
OBJECTIVES:
COMPLETE, FINALIZE AND PUT INTO EFFECT OUR CONTINGENCY PLANS,
SECUTIRY SOPS, ACCESS PROCEDURES AND CONDUCT QEKVTYXELI/NJETTQ.
2. EFFECTIVE COORDINATION BOTH WITH HIGHER KETEXYJM YVXBLJEXERQ
AND SITE LPPEARJQ.
3. EFFECTIVE MONITORING AND CONTROL OF OUR SECURITY PROVISIONS I.E.
DTVR ZVYJNQ, KETEXYJM.
4. IMPROVE RELATIONS WITH KETEXYJM.
5. ADDRESS CONCERNS OF OUR STAFF REGARDING QRAVJEXM ALCRJYZR. . . .
PLS. USE DAY 6 CODE.
2210H[51]
TO: JLA (KIDAP) FVA (DGTE) FR: MMT
CC: FCC (LABO) MBP (KIDAP)
AA. DUE TO THE ACCELERATED DRILLING AT LABO REQUIRING IMMEDIATE
SECURITY COORDINATION AND SETTING-UP, EFFECTIVE IMMEDIATELY
FVABELLA IS TRANSFERRED TO MT. LABO GEOTHERMAL PROJECT AS
SECURITY ASSISTANT. . .
BB. TO RDO. OPERATOR SNGP PLS ENSURE MESSAGE IS SENT TO FVA.
CC. TO FVA, ADVISE ME TRAVEL DETAILS.[52]
TO: FVA (DGTE) FR: MMT
CC: FCC (LABO)
THE SITUATION AT LABO IS CRITICAL AND YOU HAVE TO BE THERE
IMMEDIATELY. IT IS IMPERATIVE THAT YOU TRAVEL IMMEDIATELY, NOT LATER
THEN (sic) 25 MAY. ADVISE TRAVEL DETAILS.[53]
By virtue of the characteristic or nature of the functions of security
personnel, rotation and reassignment from one place to another, depending
on the security needs of the company, are well within the job description of
the private respondent.
SPIC N SPAN
CORPORATION,
Petitioner,
-
versus -
SERVICES
GLORIA
PAJE,
LOLITA
GOMEZ,
MIRIAM
CATACUTAN,
ESTRELLA
Promulgated:
ZAPATA, GLORIA SUMANG,
August 25, 2010
JULIET
DINGAL,
MYRA
AMANTE,
and
FE
S.
BERNANDO,
Respondents.
x---------------------------------------------------------------------------------------x
DECISION
BRION, J.:
Before the Court is the petition for review on certiorari88[1] filed by Spic
N Span Services Corporation (SNS) to seek the reversal of the October 25,
2004 Decision89[2] and the August 2, 2006 Resolution 90[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 83215, entitled "Gloria Paje, Lolita Gomez,
Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet Dingal, Myra
Amante and Fe S. Bernardo v. National Labor Relations Commission, Spic N
Span Service Corporation and Swift Foods, Inc.
BACKGROUND FACTS
Swift Foods, Inc. (Swift) is a subsidiary of RFM Corporation that
manufactures and processes meat products and other food products. SNSs
88
89
90
business is to supply manpower services to its clients for a fee. Swift and SNS
have a contract to promote Swift products.
Inocencio Fernandez, Edelisa F. David, Thelma Guardian, Juliet C.
Dingal, Fe S. Bernardo, Lolita Gomez, Myra Amante, Miriam S. Catacutan,
Gloria O. Sumang, Gloria O. Paje, and Estrella Zapata (complainants) worked
as Deli/Promo Girls of Swift products in various supermarkets in Tarlac and
Pampanga. They were all dismissed from their employment on February 28,
1998. They filed two complaints for illegal dismissal against SNS and Swift
before the National Labor Relations Commission (NLRC) Regional Arbitration
Branch III, San Fernando, Pampanga, docketed as Case Nos. 03-9131-98 and
07-9295-98. These cases were subsequently consolidated.
After two unsuccessful conciliation hearings, the Labor Arbiter ordered
the parties to submit their position papers. Swift filed its position paper; SNS
did not.91[4] The complainants position papers were signed by Florencio P.
Peralta who was not a lawyer and who claimed to be the complainants
representative, although he never showed any proof of his authority to
represent them.
In their position papers, the complainants alleged that they were
employees of Swift and SNS, and their services were terminated without
cause and without due process. The termination came on the day they
received their notices; thus, they were denied the procedural due process
requirements of notice and hearing prior to their termination of
employment.92[5] Swift, in its position paper, moved to dismiss the
complaints on the ground that it entered into an independent labor contract
with SNS for the promotion of its products; it alleged that the complainants
were the employees of SNS, not of Swift.93[6]
The Labor Arbiter94[7] found SNS to be the agent of Swift, and ordered
SNS and Swift to jointly and severally pay Edelisa David P115,637.50 and
Inocencio Fernandez P192,197.50, representing their retirement pay and
service incentive leave pay. He dismissed, without prejudice, the claims of
the other complainants because they failed to verify their position paper. He
also denied all other claims for lack of factual basis.95[8]
Both Swift and the complainants appealed to the NLRC. Swift filed a
memorandum of appeal, while the complainants filed a partial memorandum
of appeal.96[9]
91
92
93
94
95
The NLRC denied the complainants appeal for lack of merit. 97[10] It
dismissed the complaint against Swift, and ordered SNS to pay Edelisa David
a total of P256,620.13, and Inocencio Fernandez a total of P280,912.63,
representing backwages, separation pay, and service incentive leave pay. It
dismissed all other claims for lack of merit. Thereafter, Edelisa David and
Inocencio Fernandez agreed to a settlement, and their cases were thus
closed.98[11]
The complainants whose claims were dismissed, namely, Gloria Paje,
Lolita Gomez, Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet
Dingal, Myra Amante, and Fe S. Bernardo (respondents), moved for the
reconsideration of the NLRCs ruling. This time, they were represented by the
Public Attorneys Office. The NLRC denied their motion.99[12]
The respondents then sought relief with the CA through a petition for
certiorari, based on the alleged grave abuse of discretion committed by the
NLRC. The CA found the petition meritorious, in its assailed decision of
October 25, 2004, and ruled that the respondents failure to sign the
verification in their position paper was a formal defect that was not fatal to
their case. It concluded that SNS was merely an agent of Swift; thus, the
latter should not be exempt from liability. It ordered the remand of the case
to the Labor Arbiter for the computation of the respondents backwages,
separation pay, and service incentive leave pay. SNS and Swift filed their
motions for reconsideration which the CA denied.
SNS is now before us on a petition for review on certiorari, and submits
the following
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS ERROR WHEN IT RULED THAT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN DISMISSING THE CLAIMS OF HEREIN
RESPONDENTS ON THE GROUND OF NON-SIGNING OF THE POSITION
PAPER.
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR IN HOLDING THAT ALTHOUGH THE
RESPONDENTS WERE NOT REPRESENTED BY A LAWYER BUT BY ONE
WHO IS NOT A MEMBER OF THE BAR, SAID FACT IS SUFFICIENT
JUSTIFICATION FOR THE PETITIONERS FAILURE TO COMPLY WITH THE
REQUIREMENTS OF LAW.
III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR IN REMANDING THE CASE TO THE LABOR
ARBITER FOR THE COMPUTATION OF THE MONEY CLAIMS OF THE
RESPONDENTS, TO WIT: 1) BACKWAGES, 2) SEPARATION PAY, AND 3)
96
97
98
99
101
102
103
104
105
106
107
108
109
110
111
the acts of the latter on the same level as those of a member of the Bar. 112
[25] Our Labor Code allows a non-lawyer to represent a party before the
Labor Arbiter and the Commission, 113[26] but provides limitations: Nonlawyers may appear before the Commission or any Labor Arbiter only: (1) If
they represent themselves; or (2) If they represent their organization or
members thereof.114[27] Thus, SNS concludes that the respondents
representative had no personality to appear before the Labor Arbiter or the
NLRC, and his representation for the respondents should produce no legal
effect.
Our approach to these arguments is simple as the problem boils down
to a balance between a technical rule and protected constitutional interests.
The cited technical infirmity cannot defeat the respondents preferred right to
security of tenure which has primacy over technical requirements. Thus, we
affirm the CAs ruling on this point, without prejudice to whatever action may
be taken against the representative, if he had indeed been engaged in the
unauthorized practice of law.
2.SNS also claims serious error on the part of the CA in remanding the
case to the Labor Arbiter, for computation of the respondents backwages,
separation pay and service incentive leave pay despite the fact that nowhere
in the decisions of the Labor Arbiter, the NLRC, and CA was there any finding
that respondents had been illegally dismissed.
We find this to be the first argument of its kind from SNS, and, in fact,
is the first ever submission from SNS before it filed a motion for
reconsideration with the CA. To recall, SNS did not file its position paper
before the labor arbiter, nor did it file its appeal before the NLRC; only Swift
and the complainants did.115[28] It was only Swift, too, that filed its comment
to the herein respondents petition for certiorari.116[29]
The records do not show if SNS filed its memorandum before the CA,
although SNS filed a motion for reconsideration of the CA decision. It then
claimed that the CA erred in ruling that the NLRC committed grave abuse of
discretion when it dismissed respondents claim; that a petition for certiorari
under Rule 65 of the Rules of Court is not the proper remedy to correct the
NLRCs alleged grave abuse of discretion; and that the respondents were
bound by the mistakes of their non-lawyer representative. 117[30]
Significantly, SNS did not raise the question of the CAs failure to state that
112
113
114
115
116
117
the respondents had been illegally dismissed. At this point, it is too late for
SNS to raise the issue.
Nothing on record indicates the reason for the respondents termination
from employment, although the fact of termination was never
disputed. Swift denied liability on the basis of its contract with SNS. The
contract was not presented before the Labor Arbiter, although Swift averred
that under the contract, SNS would supply promo girls, merchandisers and
other promotional personnel to handle all promotional aspects and
merchandising strategy of Swift.118[31] We can assume, for lack of proof to
the contrary, that the respondents termination from employment was illegal
since neither SNS nor Swift, as employers, presented any proof that their
termination from employment was legal. Upon proof of termination of
employment, the employer has the burden of proof that the dismissal was
valid; absent this proof, the termination from employment is deemed illegal,
as alleged by the dismissed employees.
3.In order that a labor relationship can be categorized as
legitimate/permissible job contracting or as prohibited labor-only contracting,
the totality of the facts and the surrounding circumstances of the relationship
ought to be considered.119[32] Every case is unique and has to be assessed
on the basis of its facts and of the features of the relationship in question. In
permissible job contracting, the principal agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within or
outside the premises of the principal. The test is whether the independent
contractor has contracted to do the work according to his own methods and
without being subject to the principals control except only as to the results,
he has substantial capital, and he has assured the contractual employees
entitlement to all labor and occupational safety and health standards, free
exercise of the right to self-organization, security of tenure, and social and
welfare benefits.120[33]
The CA found SNS to be Swifts agent, and explained its ruling as
follows121[34]
To be legitimate, contracting or subcontracting must satisfy the
following requirements: 1) The contractor or subcontractor carries on a
distinct and independent business and undertakes to perform the job,
work or service on its own account and under its own responsibility,
according to its own manners and methods, and free from the control
and direction of the principal in all matters connected with the
118
119
120
121
December 23, 2003 are SET ASIDE in so far as the dismissal of the
petitioners case is concerned and in so far as Swift is found not liable
for the payment of the petitioners money claims.
The present case is hereby REMANDED to the Labor Arbiter for
the computation of the money claims of the petitioners, to wit: 1)
Backwages; 2) Separation Pay; and 3) Service Incentive Leave Pay.
The settlement of the claims of David and Fernandez is not
affected by this decision.
We fully agree with this ruling. What we have before us, therefore, is a
case of illegal dismissal perpetrated by a principal and its illegal contractoragent. Thus, we affirm the ruling of the CA with the modification that the
respondents are also entitled to nominal damages, for violation of their due
process rights to notice and hearing, pursuant to our ruling in Agabon v.
NLRC.122[35] We peg this amount at P30,000.00 for each of the respondents.
WHEREFORE, premises considered, we hereby AFFIRM the Court of
Appeals October 25, 2004 Decision and August 2, 2006 Resolution in CA-G.R.
SP No. 83215, with the modification that nominal damages in the amount of
P30,000.00 should additionally be paid to each of the respondents, for
violation of their procedural due process rights. Costs against the petitioner.
SO ORDERED.
PHILIPPINE
NATIONAL BANK,
Petitioner,
- versus -
122
VELASCO,
JR.,
Chairperson,
PERALTA,
ABAD,
PEREZ, and
MENDOZA, JJ.
J.,
DAN PADAO,
Respondent.
Promulgated:
November 16, 2011
X -------------------------------------------------------------------------------------X
DECISION
MENDOZA, J.:
These are two consolidated petitions for review on certiorari under Rule
45 of the Rules of Court.
In G.R. No. 180849, petitioner Philippine National Bank (PNB) seeks the
reversal of the December 14, 2006 Decision 123[1] and October 2, 2007
Resolution124[2] of the Court of Appeals (CA) in CA-G.R. SP No. 76584, which
upheld the ruling of the National Labor Relations Commission, Cagayan de
Oro City (NLRC) in its October 30, 2002 Resolution, 125[3] reversing the June
21, 2001 Decision126[4] of the Executive Labor Arbiter (ELA) which found the
dismissal of respondent Dan Padao (Padao) valid.
In G.R. No. 187143, PNB seeks the reversal of the December 9, 2008
Decision127[5] and February 24, 2009 Resolution128[6] of the CA in CA-G.R. SP
No. 00945, which allowed the execution of the October 30, 2002 NLRC
Resolution.
THE FACTS
A.
On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City
Branch. He was later designated as a credit investigator in an acting capacity
on November 9, 1993. On March 23, 1995, he was appointed regular Credit
Investigator III, and was ultimately promoted to the position of Loan and
Credit Officer IV.
Sometime in 1994, PNB became embroiled in a scandal involving behest
loans. A certain Sih Wat Kai complained to the Provincial Office of the
123
124
125
126
127
128
On October 11, 1999, after almost three (3) years of inaction on the
part of the Board, Padao instituted a complaint 129[7] against PNB and its then
AVP, Napoleon Matienzo (Matienzo), with the Labor Arbitration Branch of the
NLRC Regional Arbitration Branch (RAB) No. IX in Zamboanga City for 1]
Reinstatement; 2] Backwages; 3] Illegal Dismissal; and 4] Treachery/Bad
Faith and Palpable Discrimination in the Treatment of Employees with
administrative cases. The case was docketed as RAB 09-04-00098-01.
In a Decision dated June 21, 2001, the ELA found Padaos dismissal
valid. Despite the finding of legality, the ELA still awarded separation pay of
one-half (1/2) months pay for every year of service, citing PLDT v. NLRC &
Abucay.130[8] The ELA held that in view of the peculiar conditions attendant
to Padaos dismissal, there being no clear conclusive showing of moral
turpitude, Padao should not be left without any remedy.
Padao appealed to the NLRC, which, in its Resolution 131[9] dated
October 30, 2002, reversed and set aside the ELA Decision and declared
Padaos dismissal to be illegal. He was thereby ordered reinstated to his
previous position without loss of seniority rights and PNB was ordered to pay
him full backwages and attorneys fees equivalent to ten percent (10%) of the
total monetary award.
PNBs Motion for Reconsideration132[10] was denied by the NLRC in its
Resolution133[11] dated December 27, 2002.
Aggrieved, PNB filed a petition for certiorari 134[12] with the CA but it
was dismissed in a Decision135[13] dated December 14, 2006. PNB moved for
reconsideration136[14] but the motion was denied in the CA Resolution 137[15]
dated October 2, 2007.
129
130
131
132
133
134
135
136
B.
During the pendency of G.R. No. 180849 before the Court, the NLRC
issued an entry of judgment on September 22, 2003, certifying that on
February 28, 2003, its October 30, 2002 Resolution had become final and
executory.138[16]
On December 5, 2003, Padao filed a Motion for Execution of the NLRC
Resolution dated October 30, 2002. This was granted by the ELA on April 22,
2004.
On May 4, 2004, PNB and AVP Matienzo sought reconsideration of the
ELAs Order based on the following grounds: (1) the October 30, 2003
Resolution was inexistent and, thus, could not become final and executory;
and (2) Padaos motion for execution was granted without hearing.
Acting thereon, the ELA denied PNBs motion for reconsideration on the
ground that motions for reconsideration of an order are prohibited under
Section 19, Rule V of the NLRC Rules of Procedure.
Thus, Padao filed his Motion to Admit Computation 139[17] dated July 14,
2004. In its Comment,140[18] PNB alleged that the computation was grossly
exaggerated and without basis, and prayed for a period of thirty (30) days
within which to submit its counter-computation since the same would come
from its head office in Pasay City.
138
139
140
141
denied the same in its Order143[21] dated October 20, 2004 on the ground
that the motions for reconsideration of orders and decisions of the Labor
Arbiter are prohibited under Section 19, Rule V of the NLRC Rules of
Procedure. The ELA further stated that PNB had been given more than ample
opportunity to submit its own computation in this case, and the belatedly
submitted counter-computation of claims could not be considered. Thus, a
writ of execution144[22] was issued on October 21, 2004.
On November 11, 2004 and January 19, 2005, PNB filed its Motion to
Quash Writ of Execution and its Motion to Dissolve Alias Writ of Execution,
respectively. Both were denied by the ELA in an Order 145[23] dated February
8, 2005.
On February 18, 2005, PNB filed a Notice of Appeal with Memorandum
on Appeal146[24] with the NLRC. On September 20, 2005, however, the NLRC
issued a Resolution147[25] dismissing the banks appeal. PNBs Motion for
Reconsideration148[26] was also denied in the December 21, 2005
Resolution.149[27]
Thus, on March 7, 2006, PNB filed a Petition for Certiorari 150[28] with
the CA, assailing the findings of ELA Plagata and the NLRC.
142
143
144
145
146
147
148
149
150
B.
151
152
153
154
the bank, and a subordinate employee should not be faulted for his reliance
thereon. He argues that a person who acts in obedience to an order issued
by a superior for some lawful purpose cannot be held liable. PNB is bound by
the acts of its senior officers and he, like his fellow credit investigators,
having acted in good faith in affixing his signature on the reports based on
the instruction, order and directive of senior local bank officials, should not
be held liable.155[33]
Padao also claims that PNB cruelly betrayed him by charging and
dismissing him after using him as a prosecution witness to secure the
conviction of the senior bank officials, that he was never part of the
conspiracy, and that he did not derive any benefit from the scheme.156[34]
The Courts Ruling
In the 1987 Constitution, provisions on social justice and the protection
of labor underscore the importance and economic significance of labor.
Article II, Section 18 characterizes labor as a primary social economic force,
and as such, the State is bound to protect the rights of workers and promote
their welfare. Moreover, workers are entitled to security of tenure, humane
conditions of work, and a living wage.157[35]
The Labor Code declares as policy that the State shall afford protection
to labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations between workers
and employers. The State shall assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane
conditions of work.158[36]
While it is an employers basic right to freely select or discharge its
employees, if only as a measure of self-protection against acts inimical to its
interest,159[37] the law sets the valid grounds for termination as well as the
proper procedure to be followed when terminating the services of an
employee.160[38]
Thus, in cases of regular employment, the employer is prohibited from
terminating the services of an employee except for a just or authorized
155
156
157
158
159
160
(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 family member of
his family or his duly authorized representative; and
(e)
Further, due process requires that employers follow the procedure set
by the Labor Code:
Art. 277. Miscellaneous provisions.
xxx
b.
Subject to the constitutional right of workers to
security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant
to guidelines set by the Department of Labor and Employment. Any
decision taken by the employer shall be without prejudice to the right
of the worker to contest the validity or legality of his dismissal by filing
a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid
or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima
facie finding by the appropriate official of the Department of Labor and
Employment before whom such dispute is pending that the termination
may cause a serious labor dispute or is in implementation of a mass
lay-off. (As amended by Section 33, Republic Act No. 6715, March 21,
1989)
xxx
In this case, Padao was dismissed by PNB for gross and habitual
neglect of duties under Article 282 (b) of the Labor Code.
Gross negligence connotes want of care in the performance of ones
duties, while habitual neglect implies repeated failure to perform ones duties
for a period of time, depending on the circumstances. 162[40] Gross
negligence has been defined as the want or absence of or failure to exercise
slight care or diligence, or the entire absence of care. It evinces a
161
162
163
164
165
166
167
168
169
170
171
172
173
175
176
Under the policy of social justice, the law bends over backward to
accommodate the interests of the working class on the humane
justification that those with less privilege in life should have more in
law. (Antonio Serrano versus Vallant Maritime Services, G.R. No.
167614, 24 Mar. 2009)
ANTONIO M. SERRANO,
Petitioner,
177
- versus -
CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,
VELASCO, Jr.,
NACHURA,
LEONARDO-DE
CASTRO,
BRION, and
PERALTA, JJ.
GALLANT
MARITIME
SERVICES,
INC.
and
MARLOW
NAVIGATION
CO., INC.,
Promulgated:
Respondents.
March 24, 2009
x----------------------------------------------------------x
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families
and communities out of poverty. Their earnings have built houses, provided
health care, equipped schools and planted the seeds of businesses. They
have woven together the world by transmitting ideas and knowledge from
country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to
understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 2007178[1]
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5 th
paragraph of Section 10, Republic Act (R.A.) No. 8042,179[2] to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas
employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of 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.
x x x x (Emphasis and underscoring supplied)
178
179
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the
unexpired portion of their employment contract or for three months for every year
of the unexpired term, whichever is less (subject clause). Petitioner claims that the
last clause violates the OFWs' constitutional rights in that it impairs the terms of
their contract, deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner
assails the December 8, 2004 Decision180[3] and April 1, 2005 Resolution181[4] of
the Court of Appeals (CA), which applied the subject clause, entreating this Court to
declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation
Co., Ltd. (respondents) under a Philippine Overseas Employment Administration
(POEA)-approved Contract of Employment with the following terms and conditions:
Duration of contract
12 months
Position
Chief Officer
Basic monthly salary
US$1,400.00
Hours of work
48.0 hours per week
Overtime
US$700.00 per month
Vacation leave with pay
7.00 days per month182[5]
On March 19, 1998, the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000.00, upon the assurance and representation of
respondents that he would be made Chief Officer by the end of April 1998.183[6]
Respondents did not deliver on their promise to make petitioner Chief
Officer.184[7] Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines on May 26, 1998.185[8]
Petitioner's employment contract was for a period of 12 months or from
March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26,
1998, he had served only two (2) months and seven (7) days of his contract, leaving
an unexpired portion of nine (9) months and twenty-three (23) days.
180
181
182
183
184
185
Petitioner filed with the Labor Arbiter (LA) a Complaint 186[9] against
respondents for constructive dismissal and for payment of his money claims in the
total amount of US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days)
incl. Leave pay
June 01/30, 1998
July 01/31, 1998
US$
413.90
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
1,640.00
---------------------------------------------------------------------------25,382.23
TOTAL CLAIM
1,060.50187
[10]
----------------------------------------------------------------------------------------US$
26,442.7
3188[11]
186
187
188
The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
190
191
192
Petitioner also appealed193[16] to the NLRC on the sole issue that the LA erred
in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National
Labor Relations Commission194[17] that in case of illegal dismissal, OFWs are
entitled to their salaries for the unexpired portion of their contracts.195[18]
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
US$4,200.00
45.00
US$4,245.00
3.10% Attorneys fees
TOTAL
424.50
US$4,669.50
The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 does not provide for the award of overtime pay, which
should be proven to have been actually performed, and for vacation leave pay.197
[20]
193
194
195
196
197
I
The Court of Appeals and the labor tribunals have decided the case in
a way not in accord with applicable decision of the Supreme Court involving
similar issue of granting unto the migrant worker back wages equal to the
unexpired portion of his contract of employment instead of limiting it to three
(3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals
were merely applying their interpretation of Section 10 of Republic Act No.
198
199
200
201
202
203
204
8042, it is submitted that the Court of Appeals gravely erred in law when it
failed to discharge its judicial duty to decide questions of substance not
theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said
law, which unreasonably, unfairly and arbitrarily limits payment of the award
for back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of
Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding
from petitioners award the overtime pay and vacation pay provided in his
contract since under the contract they form part of his salary.205[28]
On February 26, 2008, petitioner wrote the Court to withdraw his petition as
he is already old and sickly, and he intends to make use of the monetary award for
his medical treatment and medication.206[29] Required to comment, counsel for
petitioner filed a motion, urging the court to allow partial execution of the
undisputed monetary award and, at the same time, praying that the constitutional
question be resolved.207[30]
Considering that the parties have filed their respective memoranda, the Court
now takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner
was illegal is not disputed. Likewise not disputed is the salary differential of
US$45.00 awarded to petitioner in all three fora. What remains disputed is only the
computation of the lump-sum salary to be awarded to petitioner by reason of his
illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum
salary of petitioner at the monthly rate of US$1,400.00 covering the period of three
months out of the unexpired portion of nine months and 23 days of his employment
contract or a total of US$4,200.00.
206
207
entire nine months and 23 days left of his employment contract, computed at the
monthly rate of US$2,590.00.208[31]
Moreover, petitioner argues that the decisions of the CA and the labor
tribunals are not in line with existing jurisprudence on the issue of money claims of
illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner
urges the Court to sort them out for the guidance of affected OFWs.213[36]
Petitioner further underscores that the insertion of the subject clause into R.A.
No. 8042 serves no other purpose but to benefit local placement agencies. He
marks the statement made by the Solicitor General in his Memorandum, viz.:
209
210
211
212
213
214
[37]
Lastly, petitioner claims that the subject clause violates the due process
clause, for it deprives him of the salaries and other emoluments he is entitled to
under his fixed-period employment contract.216[39]
214
215
216
217
The Solicitor General (OSG)218[41] points out that as R.A. No. 8042 took effect
on July 15, 1995, its provisions could not have impaired petitioner's 1998
employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract,
the provisions thereof are deemed part of the minimum terms of petitioner's
employment, especially on the matter of money claims, as this was not stipulated
upon by the parties.219[42]
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of
the nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over
whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor
Relations Commission220[43] and Millares v. National Labor Relations Commission,221
[44] OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the
OSG posits that there are rights and privileges exclusive to local workers, but not
available to OFWs; that these peculiarities make for a reasonable and valid basis for
the differentiated treatment under the subject clause of the money claims of OFWs
who are illegally dismissed. Thus, the provision does not violate the equal protection
clause nor Section 18, Article II of the Constitution.222[45]
Lastly, the OSG defends the rationale behind the subject clause as a police
power measure adopted to mitigate the solidary liability of placement agencies for
this redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under
decent and humane conditions.223[46]
219
220
221
222
223
When the Court is called upon to exercise its power of judicial review of the
acts of its co-equals, such as the Congress, it does so only when these conditions
obtain: (1) that there is an actual case or controversy involving a conflict of rights
susceptible of judicial determination;224[47] (2) that the constitutional question is
raised by a proper party225[48] and at the earliest opportunity;226[49] and (3) that
the constitutional question is the very lis mota of the case,227[50] otherwise the
Court will dismiss the case or decide the same on some other ground.228[51]
225
226
227
228
229
230
231
itself;232[55] thus, its foremost function is to administer and enforce R.A. No. 8042,
and not to inquire into the validity of its provisions. The CA, on the other hand, is
vested with the power of judicial review or the power to declare unconstitutional a
law or a provision thereof, such as the subject clause. 233[56] Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable.
The CA was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of
the case likewise obtains because the monetary claim of petitioner to his lump-sum
salary for the entire unexpired portion of his 12-month employment contract, and
not just for a period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the
subject clause.
Petitioner's claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed salary
package he will receive234[57] is not tenable.
The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation,235[58] and cannot affect acts or contracts
already perfected;236[59] however, as to laws already in existence, their provisions
232
233
234
235
are read into contracts and deemed a part thereof.237[60] Thus, the non-impairment
clause under Section 10, Article II is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the
subject clause, impaired the employment contract of the parties. Rather, when the
parties executed their 1998 employment contract, they were deemed to have
incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may
not be declared unconstitutional on the ground that it impinges on the impairment
clause, for the law was enacted in the exercise of the police power of the State to
regulate a business, profession or calling, particularly the recruitment and
deployment of OFWs, with the noble end in view of ensuring respect for the dignity
and well-being of OFWs wherever they may be employed.238[61] Police power
legislations adopted by the State to promote the health, morals, peace, education,
good order, safety, and general welfare of the people are generally applicable not
only to future contracts but even to those already in existence, for all private
contracts must yield to the superior and legitimate measures taken by the State to
promote public welfare.239[62]
237
238
239
Section 18,240[63] Article II and Section 3,241[64] Article XIII accord all
members of the labor sector, without distinction as to place of deployment, full
protection of their rights and welfare.
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however,
to be valid, the classification must comply with these requirements: 1) it is based on
substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not
limited to existing conditions only; and 4) it applies equally to all members of the
class.243[66]
There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the deferential or rational
basis scrutiny in which the challenged classification needs only be shown to be
rationally related to serving a legitimate state interest; 244[67] b) the middle-tier or
intermediate scrutiny in which the government must show that the challenged
classification serves an important state interest and that the classification is at
least substantially related to serving that interest;245[68] and c) strict judicial
scrutiny246[69] in which a legislative classification which impermissibly interferes
with the exercise of a fundamental right247[70] or operates to the peculiar
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
the Constitution and the rights it enshrines. This is true whether the actor
committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities. Oppressive acts will be struck down
regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the
salary grade or officer-employee status. It is akin to a distinction based
on economic class and status, with the higher grades as recipients
of a benefit specifically withheld from the lower grades. Officers of
the BSP now receive higher compensation packages that are competitive
with the industry, while the poorer, low-salaried employees are limited to the
rates prescribed by the SSL. The implications are quite disturbing: BSP rankand-file employees are paid the strictly regimented rates of the SSL while
employees higher in rank - possessing higher and better education and
opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all,
the rank-and-file employees consist of people whose status and
rank in life are less and limited, especially in terms of job
marketability, it is they - and not the officers - who have the real
economic and financial need for the adjustment . This is in accord with
the policy of the Constitution "to free the people from poverty, provide
adequate social services, extend to them a decent standard of living, and
improve the quality of life for all. Any act of Congress that runs counter
to this constitutional desideratum deserves strict scrutiny by this
Court before it can pass muster. (Emphasis supplied)
Imbued with the same sense of obligation to afford protection to labor, the
Court in the present case also employs the standard of strict judicial scrutiny, for it
perceives in the subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it
applies to all OFWs. However, a closer examination reveals that the subject clause
has a discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis
OFWs with employment contracts of one year or more;
In Marsaman, the OFW involved was illegally dismissed two months into his 10month contract, but was awarded his salaries for the remaining 8 months and 6
days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made
conflicting rulings on Section 10(5). One was Asian Center for Career and
Employment System and Services v. National Labor Relations Commission (Second
Division, October 1998),258[81] which involved an OFW who was awarded a twoyear employment contract, but was dismissed after working for one year and two
months. The LA declared his dismissal illegal and awarded him SR13,600.00 as
lump-sum salary covering eight months, the unexpired portion of his contract. On
appeal, the Court reduced the award to SR3,600.00 equivalent to his three months
salary, this being the lesser value, to wit:
256
257
258
The Marsaman interpretation of Section 10(5) has since been adopted in the
following cases:
259
260
261
Peri
od
App
lied
in
the
Co
mp
utat
ion
of
the
Mon
etar
y
Awa
rd
Case
Title
Co
ntr
act
Pe
rio
d
P
er
io
d
of
S
er
vi
c
e
Une
xpir
ed
Peri
od
Skippe
rs
v.
Magua
d261[84
]
6
mo
nth
s
2
m
o
nt
h
s
4
mon
ths
4
mon
ths
Bahia
Shippi
ng v.
Reynal
do
Chua
262
[85]
mo
nth
s
m
o
nt
h
s
mon
ths
mon
ths
Cente
nnial
Trans
marine
v. dela
Cruz
l263[86]
9
mo
nth
s
4
m
o
nt
h
s
5
mon
ths
5
mon
ths
Talidan
o
v.
Falco
n264[87
]
12
mo
nth
s
3
m
o
nt
h
s
9
mon
ths
3
mon
ths
Univan
v.
12
mo
nth
s
3
m
o
nt
h
s
9
mon
ths
3
mon
ths
12
mo
nth
s
m
or
e
th
a
n
2
m
o
nt
h
10
mon
ths
3
mon
ths
CA
265[88]
Orient
al v.
CA
266
[89]
262
263
264
265
266
s
PCL v.
NLR
C267[90
]
12
mo
nth
s
m
or
e
th
a
n
2
m
o
nt
h
s
mor
e or
less
9
mon
ths
3
mon
ths
Olarte
v.
Nayon
a268[91
]
12
mo
nth
s
2
1
d
a
y
s
11
mon
ths
and
9
days
3
mon
ths
JSS v.
12
mo
nth
s
1
6
d
a
y
s
11
mon
ths
and
24
days
3
mon
ths
12
mo
nth
s
9
m
o
nt
h
s
a
n
d
7
d
a
y
s
2
mon
ths
and
23
days
2
mon
ths
and
23
day
s
Ferre
r269[92]
Pentag
on v.
Adelan
tar270[9
3]
267
268
269
270
Phil.
Emplo
y
v.
Parami
o,
12
mo
nth
s
1
0
m
o
nt
h
s
2
mon
ths
Une
xpir
ed
port
ion
Flouris
h
Mariti
me v.
Alman
zor
272
[95]
2
yea
rs
2
6
d
a
y
s
23
mon
ths
and
4
days
6
mon
ths
or 3
mon
ths
for
eac
h
yea
r of
cont
ract
Athenn
a
Manpo
wer v.
Villano
s 273[96]
1
yea
r,
10
mo
nth
s
an
d
28
day
s
1
m
o
nt
h
1
year
, 9
mon
ths
and
28
days
6
mon
ths
or 3
mon
ths
for
eac
h
yea
r of
cont
ract
et al.271
[94]
As the foregoing matrix readily shows, the subject clause classifies OFWs into
two categories. The first category includes OFWs with fixed-period employment
contracts of less than one year; in case of illegal dismissal, they are entitled to their
salaries for the entire unexpired portion of their contract. The second category
consists of OFWs with fixed-period employment contracts of one year or more; in
case of illegal dismissal, they are entitled to monetary award equivalent to only 3
months of the unexpired portion of their contracts.
272
273
respondent OFWs in Oriental and PCL who had also worked for about 2 months out
of their 12-month contracts were awarded their salaries for only 3 months of the
unexpired portion of their contracts. Even the OFWs involved in Talidano and
Univan who had worked for a longer period of 3 months out of their 12-month
contracts before being illegally dismissed were awarded their salaries for only 3
months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical
OFW-A with an employment contract of 10 months at a monthly salary rate of
US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months
with the same monthly salary rate of US$1,000.00. Both commenced work on the
same day and under the same employer, and were illegally dismissed after one
month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00,
equivalent to his salaries for the remaining 9 months of his contract, whereas OFWB will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the
unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion
of 14 months of his contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995,274[97] illegally dismissed OFWs, no matter how long the period of their
employment contracts, were entitled to their salaries for the entire unexpired
portions of their contracts. The matrix below speaks for itself:
Cas
e
Title
Con
trac
t
Peri
od
Pe
rio
d
of
Se
rvi
ce
Unex
pire
d
Peri
od
Period
Applie
d
in
the
Comp
utatio
n
of
the
Monet
ary
Award
ATCI
v.
CA,
2
year
s
2
m
on
th
s
22
mont
hs
22
month
s
2
year
s
7
da
ys
23
mont
hs
and
23
23
month
s and
23
et
al.275
[98]
Phil.
Integ
rate
d v.
NLR
274
275
C276[
99]
276
277
278
279
280
281
days
days
JGB
v.
NL
C277[
100]
2
year
s
9
m
on
th
s
15
mont
hs
15
month
s
Agoy
v.
NLR
C278[
101]
2
year
s
2
m
on
th
s
22
mont
hs
22
month
s
EDI
v.
NLR
C, et
al.279
[102
]
2
year
s
5
m
on
th
s
19
mont
hs
19
month
s
Barr
os v.
NLR
C, et
al.280
[103
]
12
mon
ths
4
m
on
th
s
8
mont
hs
8
month
s
Phili
ppin
e
Tran
smar
ine v.
Carill
a281[
12
mon
ths
6
m
on
th
s
an
d
22
5
mont
hs
and
18
days
5
month
s and
18
days
104]
da
ys
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods
or the unexpired portions thereof, were treated alike in terms of the computation of
their monetary benefits in case of illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries multiplied by the entire unexpired
portion of their employment contracts.
The Court notes that the subject clause or for three (3) months for every year
of the unexpired term, whichever is less contains the qualifying phrases every year
and unexpired term. By its ordinary meaning, the word term means a limited or
definite extent of time.282[105] Corollarily, that every year is but part of an
unexpired term is significant in many ways: first, the unexpired term must be at
least one year, for if it were any shorter, there would be no occasion for such
unexpired term to be measured by every year; and second, the original term must
be more than one year, for otherwise, whatever would be the unexpired term
thereof will not reach even a year. Consequently, the more decisive factor in the
determination of when the subject clause for three (3) months for every year of the
unexpired term, whichever is less shall apply is not the length of the original
contract period as held in Marsaman,283[106] but the length of the unexpired
portion of the contract period -- the subject clause applies in cases when the
unexpired portion of the contract period is at least one year, which arithmetically
requires that the original contract period be more than one year.
282
283
Persons violating this clause shall be subject to indemnify the loss and
damage suffered, with the exception of the provisions contained in the
following articles.
284
285
There is a more specific rule as far as seafarers are concerned: Article 605 of
the Code of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew
with the agent should be for a definite period or voyage, they cannot be
discharged until the fulfillment of their contracts, except for reasons of
insubordination in serious matters, robbery, theft, habitual drunkenness, and
damage caused to the vessel or to its cargo by malice or manifest or proven
negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,287[110]
in
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of
their employment contracts.
While Article 605 has remained good law up to the present,288[111] Article
299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889,
to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers
hired for a certain time and for a certain work cannot leave or be
dismissed without sufficient cause, before the fulfillment of the contract.
(Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan289[112] read the disjunctive "or" in
Article 1586 as a conjunctive "and" so as to apply the provision to local workers who
are employed for a time certain although for no particular skill. This interpretation of
Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.290[113]
286
287
288
289
290
And in both Lemoine and Palomar, the Court adopted the general principle that in
actions for wrongful discharge founded on Article 1586, local workers are entitled to
recover damages to the extent of the amount stipulated to be paid to them by the
terms of their contract. On the computation of the amount of such damages, the
Court in Aldaz v. Gay291[114] held:
The doctrine is well-established in American jurisprudence, and
nothing has been brought to our attention to the contrary under Spanish
jurisprudence, that when an employee is wrongfully discharged it is his duty
to seek other employment of the same kind in the same community, for the
purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed
to make an effort to secure other employment of a like nature, and that other
employment of a like nature was obtainable, is upon the defendant. When
an employee is wrongfully discharged under a contract of
employment his prima facie damage is the amount which he would
be entitled to had he continued in such employment until the
termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs.
Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.) 292[115]
(Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on
fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and
Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title
VIII, Book IV.293[116] Much like Article 1586 of the Civil Code of 1889, the new
provisions of the Civil Code do not expressly provide for the remedies available to a
fixed-term worker who is illegally discharged. However, it is noted that in Mackay
Radio & Telegraph Co., Inc. v. Rich,294[117] the Court carried over the principles on
the payment of damages underlying Article 1586 of the Civil Code of 1889 and
applied the same to a case involving the illegal discharge of a local worker whose
fixed-period employment contract was entered into in 1952, when the new Civil
Code was already in effect.295[118]
More significantly, the same principles were applied to cases involving
overseas Filipino workers whose fixed-term employment contracts were illegally
terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,296[119]
involving seafarers who were illegally discharged. In Teknika Skills and Trade
291
292
293
294
295
296
298
299
300
301
the paramount interest of the state302[125] for which some individual liberties must
give way, such as the public interest in safeguarding health or maintaining medical
standards,303[126] or in maintaining access to information on matters of public
concern.304[127]
In the present case, the Court dug deep into the records but found no
compelling state interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure designed to
protect the employment of Filipino seafarers overseas x x x. By limiting the liability
to three months [sic], Filipino seafarers have better chance of getting hired by
foreign employers. The limitation also protects the interest of local placement
agencies, which otherwise may be made to shoulder millions of pesos in
termination pay.305[128]
302
303
304
305
306
However, nowhere in the Comment or Memorandum does the OSG cite the
source of its perception of the state interest sought to be served by the subject
clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio
Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;307[130] but the speech makes no reference to the underlying reason for
the adoption of the subject clause. That is only natural for none of the 29 provisions
in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on
money claims, to wit:
307
(1) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was
inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No.
8042. The Court examined the rationale of the subject clause in the transcripts of
the Bicameral Conference Committee (Conference Committee) Meetings on the
Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House
Bill No. 14314). However, the Court finds no discernible state interest, let alone a
compelling one, that is sought to be protected or advanced by the adoption of the
subject clause.
In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of the
discrimination against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is
to protect the employment of OFWs by mitigating the solidary liability of placement
agencies, such callous and cavalier rationale will have to be rejected. There can
never be a justification for any form of government action that alleviates the burden
of one sector, but imposes the same burden on another sector, especially when the
favored sector is composed of private businesses such as placement agencies,
while the disadvantaged sector is composed of OFWs whose protection no less than
the Constitution commands. The idea that private business interest can be elevated
to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary
liability of placement agencies vis-a-vis their foreign principals, there are
mechanisms already in place that can be employed to achieve that purpose without
infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes
administrative disciplinary measures on erring foreign employers who default on
their contractual obligations to migrant workers and/or their Philippine agents.
These disciplinary measures range from temporary disqualification to preventive
suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative
disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive
means of aiding local placement agencies in enforcing the solidary liability of their
foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.
Further, there would be certain misgivings if one is to approach the declaration
of the unconstitutionality of the subject clause from the lone perspective that the
clause directly violates state policy on labor under Section 3, 308[131] Article XIII of
the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,,309[132]
there are some which this Court has declared not judicially enforceable, Article
XIII being one,310[133] particularly Section 3 thereof, the nature of which, this Court,
in Agabon v. National Labor Relations Commission,311[134] has described to be not
self-actuating:
Thus, the constitutional mandates of protection to labor and security of
tenure may be deemed as self-executing in the sense that these are
automatically acknowledged and observed without need for any enabling
legislation. However, to declare that the constitutional provisions are enough
to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic.
The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and
"security of tenure", when examined in isolation, are facially unqualified, and
the broadest interpretation possible suggests a blanket shield in favor of labor
against any form of removal regardless of circumstance. This interpretation
implies an unimpeachable right to continued employment-a utopian notion,
doubtless-but still hardly within the contemplation of the framers.
308
309
310
311
313
of the law or the records of the deliberations leading to its enactment or the
pleadings of respondent that would indicate that there is an existing governmental
purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental
purpose; and it is for that precise reason that the clause violates not just petitioner's
right to equal protection, but also her right to substantive due process under
Section 1,314[137] Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries
for the entire unexpired period of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the
salary basis in the computation of his monetary award, because these are fixed
benefits that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay.
For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides
a Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime
pay is compensation for all work performed in excess of the regular eight hours, and
holiday pay is compensation for any work performed on designated rest days and
holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion
of overtime and holiday pay in the computation of petitioner's monetary award,
unless there is evidence that he performed work during those periods. As the Court
held in Centennial Transmarine, Inc. v. Dela Cruz,315[138]
However, the payment of overtime pay and leave pay should be
disallowed in light of our ruling in Cagampan v. National Labor Relations
Commission, to wit:
The rendition of overtime work and the submission of sufficient
proof that said was actually performed are conditions to be satisfied
before a seaman could be entitled to overtime pay which should be
computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the
unexpired portion of the contract is unwarranted since the same is
given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause or for
three months for every year of the unexpired term, whichever is less in the 5th
314
315
317
318
319
320
therein was a list of the names of the members of the Unions negotiating
panel.322[7]
In a Letter dated February 24, 1993, the Bank, through its Country Manager
Peter H. Harris, took note of the Unions proposals. The Bank attached its
counter-proposal to the non-economic provisions proposed by the Union. 323[8]
The Bank posited that it would be in a better position to present its counterproposals on the economic items after the Union had presented its
justifications for the economic proposals.324[9] The Bank, likewise, listed the
members of its negotiating panel.325[10] The parties agreed to set meetings
to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through
Divinagracia, suggested to the Banks Human Resource Manager and head of
the negotiating panel, Cielito Diokno, that the bank lawyers should be
excluded from the negotiating team. The Bank acceded. 326[11] Meanwhile,
Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the
National Union of Bank Employees (NUBE), the federation to which the Union
was affiliated, be excluded from the Unions negotiating panel. 327[12]
However, Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for the
negotiation. Diokno suggested that the negotiation be kept a family affair.
The proposed non-economic provisions of the CBA were discussed first. 328[13]
Even during the final reading of the non-economic provisions on May 4, 1993,
there were still provisions on which the Union and the Bank could not agree.
Temporarily, the notation DEFERRED was placed therein. Towards the end of
the meeting, the Union manifested that the same should be changed to
DEADLOCKED to indicate that such items remained unresolved. Both parties
agreed to place the notation DEFERRED/DEADLOCKED.329[14]
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
337
338
339
340
before the National Conciliation and Mediation Board (NCMB) on June 21,
1993, docketed as NCMB-NCR-NS-06-380-93.341[26]
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP)
and Damages before the Arbitration Branch of the National Labor Relations
Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-04191-93
against the Union on June 28, 1993. The Bank alleged that the Union violated
its duty to bargain, as it did not bargain in good faith. It contended that the
Union demanded sky high economic demands, indicative of blue-sky
bargaining.342[27] Further, the Union violated its no strike- no lockout clause
by filing a notice of strike before the NCMB. Considering that the filing of
notice of strike was an illegal act, the Union officers should be dismissed.
Finally, the Bank alleged that as a consequence of the illegal act, the Bank
suffered nominal and actual damages and was forced to litigate and hire the
services of the lawyer.343[28]
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R.
Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order
assuming jurisdiction over the labor dispute at the Bank. The complaint for
ULP filed by the Bank before the NLRC was consolidated with the complaint
over which the SOLE assumed jurisdiction. After the parties submitted their
respective position papers, the SOLE issued an Order on October 29, 1993,
the dispositive portion of which is herein quoted:
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank
Employees Union NUBE are hereby ordered to execute a collective bargaining
agreement incorporating the dispositions contained herein. The CBA shall be
retroactive to 01 April 1993 and shall remain effective for two years
thereafter, or until such time as a new CBA has superseded it. All provisions
in the expired CBA not expressly modified or not passed upon herein are
deemed retained while all new provisions which are being demanded by
either party are deemed denied, but without prejudice to such agreements
as the parties may have arrived at in the meantime.
The Banks charge for unfair labor practice which it originally filed with the
NLRC as NLRC-NCR Case No. 00-06-04191-93 but which is deemed
consolidated herein, is dismissed for lack of merit. On the other hand, the
Unions charge for unfair labor practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala NLRCNCR Case No. 00-06-04191-93 is pending for his guidance and appropriate
action.344[29]
The SOLE gave the following economic awards:
1.Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4 th year adjusted
salary
341
342
343
344
b)
345
346
347
349
350
to lack or excess of jurisdiction when she issued the assailed order and
resolutions; and, (c) whether or not the petitioner is estopped from filing the
instant action.
The Courts Ruling
The petition is bereft of merit.
Interference under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e.,
interference in the selection of the Unions negotiating panel, when Cielito
Diokno, the Banks Human Resource Manager, suggested to the Unions
President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the NUBE,
be excluded from the Unions negotiating panel. In support of its claim,
Divinagracia executed an affidavit, stating that prior to the commencement
of the negotiation, Diokno approached him and suggested the exclusion of
Umali from the Unions negotiating panel, and that during the first meeting,
Diokno stated that the negotiation be kept a family affair.
Citing the cases of U.S. Postal Service351[36] and Harley Davidson Motor Co.,
Inc., AMF,352[37] the Union claims that interference in the choice of the
Unions bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employers
violation of Section 8(a)(1) and (5) of the National Labor Relations Act
(NLRA),353[38] which pertain to the interference, restraint or coercion of the
employer in the employees exercise of their rights to self-organization and to
bargain collectively through representatives of their own choosing; and the
refusal of the employer to bargain collectively with the employees
representatives. In both cases, the National Labor Relations Board held that
upon the employers refusal to engage in negotiations with the Union for
collective-bargaining contract when the Union includes a person who is not
an employee, or one who is a member or an official of other labor
organizations, such employer is engaged in unfair labor practice under
Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd.
Employees Association NATU vs. Insular Life Assurance Co., Ltd., 354[39]
wherein this Court said that the test of whether an employer has interfered
with and coerced employees in the exercise of their right to self-organization
within the meaning of subsection (a)(1) is whether the employer has
engaged in conduct which it may reasonably be said, tends to interfere with
the free exercise of employees rights under Section 3 of the Act. 355[40]
Further, it is not necessary that there be direct evidence that any employee
was in fact intimidated or coerced by statements of threats of the employer if
351
352
353
354
355
357
358
359
360
aside from making it a policy to protect the rights of workers and promote
their welfare,361[46] devotes an entire section, emphasizing its mandate to
afford protection to labor, and highlights the principle of shared responsibility
between workers and employers to promote industrial peace.362[47]
Article 248(a) of the Labor Code, considers it an unfair labor practice when
an employer interferes, restrains or coerces employees in the exercise of
their right to self-organization or the right to form association. The right to
self-organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or
coerces the Union to exclude from its panel of negotiators a representative of
the Union, and if it can be inferred that the employer adopted the said act to
yield adverse effects on the free exercise to right to self-organization or on
the right to collective bargaining of the employees, ULP under Article 248(a)
in connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence
has been defined as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.363[48] In the case at bar, the
Union bases its claim of interference on the alleged suggestions of Diokno to
exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that the
suggestion made by Diokno to Divinagracia is an anti-union conduct from
which it can be inferred that the Bank consciously adopted such act to yield
adverse effects on the free exercise of the right to self-organization and
collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and
simultaneously with Divinagracias suggestion that the bank lawyers be
excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process,
with the inclusion of Umali in the Unions negotiating panel, the negotiations
pushed through. The complaint was made only on August 16, 1993 after a
deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation
occurred after the arguments and differences over the economic provisions
became heated and the parties had become frustrated. It happened after the
parties started to involve personalities. As the public respondent noted,
passions may rise, and as a result, suggestions given under less adversarial
situations may be colored with unintended meanings. 364[49] Such is what
appears to have happened in this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed
as part of the normal relations and innocent communications, which are all
part of the friendly relations between the Union and Bank.
361
362
363
364
The Union alleges that the Bank violated its duty to bargain; hence,
committed ULP under Article 248(g) when it engaged in surface bargaining. It
alleged that the Bank just went through the motions of bargaining without
any intent of reaching an agreement, as evident in the Banks counterproposals. It explained that of the 34 economic provisions it made, the Bank
only made 6 economic counterproposals. Further, as borne by the minutes of
the meetings, the Bank, after indicating the economic provisions it had
rejected, accepted, retained or were open for discussion, refused to make a
list of items it agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating
without any legal intent to reach an agreement. 365[50] The resolution of
surface bargaining allegations never presents an easy issue. The
determination of whether a party has engaged in unlawful surface bargaining
is usually a difficult one because it involves, at bottom, a question of the
intent of the party in question, and usually such intent can only be inferred
from the totality of the challenged partys conduct both at and away from the
bargaining table.366[51] It involves the question of whether an employers
conduct demonstrates an unwillingness to bargain in good faith or is merely
hard bargaining.367[52]
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show
that the Bank had any intention of violating its duty to bargain with the
Union. Records show that after the Union sent its proposal to the Bank on
February 17, 1993, the latter replied with a list of its counter-proposals on
February 24, 1993. Thereafter, meetings were set for the settlement of their
differences. The minutes of the meetings show that both the Bank and the
Union exchanged economic and non-economic proposals and counterproposals.
The Union has not been able to show that the Bank had done acts, both at
and away from the bargaining table, which tend to show that it did not want
to reach an agreement with the Union or to settle the differences between it
and the Union. Admittedly, the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the duty to bargain does not
compel either party to agree to a proposal or require the making of a
concession.368[53] Hence, the parties failure to agree did not amount to ULP
under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The
inference that respondents did not refuse to bargain collectively with the
complaining union because they accepted some of the demands while they
refused the others even leaving open other demands for future discussion is
correct, especially so when those demands were discussed at a meeting
called by respondents themselves precisely in view of the letter sent by the
union on April 29, 1960369[54]
365
366
367
368
369
In view of the finding of lack of ULP based on Article 248(g), the accusation
that the Bank made bad faith provisions has no leg to stand on. The records
show that the Banks counter-proposals on the non-economic provisions or
political provisions did not put up for grabs the entire work of the Union and
its predecessors. As can be gleaned from the Banks counter-proposal, there
were many provisions which it proposed to be retained. The revisions on the
other provisions were made after the parties had come to an agreement. Far
from buttressing the Unions claim that the Bank made bad-faith proposals on
the non-economic provisions, all these, on the contrary, disprove such
allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank
refused to furnish the information it needed.
While the refusal to furnish requested information is in itself an unfair labor
practice, and also supports the inference of surface bargaining, 370[55] in the
case at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to
validate its guestimates on the data of the rank and file. However, Umali
failed to put his request in writing as provided for in Article 242(c) of the
Labor Code:
Article 242. Rights of Legitimate Labor Organization
(c) To be furnished by the employer, upon written request, with the annual
audited financial statements, including the balance sheet and the profit and
loss statement, within thirty (30) calendar days from the date of receipt of
the request, after the union has been duly recognized by the employer or
certified as the sole and exclusive bargaining representatives of the
employees in the bargaining unit, or within sixty (60) calendar days before
the expiration of the existing collective bargaining agreement, or during the
collective negotiation;
The Union, did not, as the Labor Code requires, send a written request for the
issuance of a copy of the data about the Banks rank and file employees.
Moreover, as alleged by the Union, the fact that the Bank made use of the
aforesaid guestimates, amounts to a validation of the data it had used in its
presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal,
board, or officer exercising judicial or quasi-judicial functions has acted
without or in excess of jurisdiction and there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law for the purpose
of annulling the proceeding.371[56] Grave abuse of discretion implies such
capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction, or where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility which must be so patent
and gross as to amount to an invasion of positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law. Mere
abuse of discretion is not enough.372[57]
370
371
372
374
DECISION
PUNO, J.:
Brought up on this Petition for Review is the decision of the Court of Appeals
dismissing Alejandro Roquero as an employee of the respondent Philippine
Airlines, Inc.
Roquero, along with Rene Pabayo, were ground equipment mechanics of
respondent Philippine Airlines, Inc. (PAL for brevity). From the evidence on
record, it appears that Roquero and Pabayo were caught red-handed
possessing and using Methampethamine Hydrochloride or shabu in a raid
conducted by PAL security officers and NARCOM personnel.
The two alleged that they did not voluntarily indulge in the said act but were
instigated by a certain Jojie Alipato who was introduced to them by Joseph
Ocul, Manager of the Airport Maintenance Division of PAL. Pabayo alleged
that Alipato often bragged about the drugs he could smuggle inside the
company premises and invited other employees to take the prohibited drugs.
Alipato was unsuccessful, until one day, he was able to persuade Pabayo to
join him in taking the drugs. They met Roquero along the way and he agreed
to join them. Inside the company premises, they locked the door and Alipato
lost no time in preparing the drugs to be used. When they started the
procedure of taking the drugs, armed men entered the room, arrested
Roquero and Pabayo and seized the drugs and the paraphernalia used. 375[1]
Roquero and Pabayo were subjected to a physical examination where the
results showed that they were positive of drugs. They were also brought to
the security office of PAL where they executed written confessions without
the benefit of counsel.376[2]
On March 30, 1994, Roquero and Pabayo received a notice of administrative
charge377[3] for violating the PAL Code of Discipline. They were required to
answer the charges and were placed under preventive suspension.
Roquero and Pabayo, in their reply to notice of administrative charge, 378[4]
assailed their arrest and asserted that they were instigated by PAL to take
the drugs. They argued that Alipato was not really a trainee of PAL but was
placed in the premises to instigate the commission of the crime. They based
their argument on the fact that Alipato was not arrested. Moreover, Alipato
has no record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed
by PAL.379[5] Thus, they filed a case for illegal dismissal.380[6]
375
376
377
378
379
380
In the Labor Arbiters decision, the dismissal of Roquero and Pabayo was
upheld. The Labor Arbiter found both parties at fault PAL for applying means
to entice the complainants into committing the infraction and the
complainants for giving in to the temptation and eventually indulging in the
prohibited activity. Nonetheless, the Labor Arbiter awarded separation pay
and attorneys fees to the complainants.381[7]
While the case was on appeal with the National Labor Relations Commission
(NLRC), the complainants were acquitted by the Regional Trial Court (RTC)
Branch 114, Pasay City, in the criminal case which charged them with
conspiracy for possession and use of a regulated drug in violation of Section
16, Article III of Republic Act 6425, on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of
instigation. It ordered reinstatement to their former positions but without
backwages.382[8] Complainants did not appeal from the decision but filed a
motion for a writ of execution of the order of reinstatement. The Labor
Arbiter granted the motion but PAL refused to execute the said order on the
ground that they have filed a Petition for Review before this Court. 383[9] In
accordance with the case of St. Martin Funeral Home vs. NLRC and
Bienvenido Aricayos,384[10] PALs petition was referred to the Court of
Appeals.385[11]
During the pendency of the case with the Court of Appeals, PAL and Pabayo
filed a Motion to Withdraw/Dismiss the case with respect to Pabayo, after
they voluntarily entered into a compromise agreement.386[12] The motion
was granted in a Resolution promulgated by the Former Thirteenth Division
of the Court of Appeals on January 29, 2002.387[13]
The Court of Appeals later reversed the decision of the NLRC and reinstated
the decision of the Labor Arbiter insofar as it upheld the dismissal of
Roquero. However, it denied the award of separation pay and attorneys fees
to Roquero on the ground that one who has been validly dismissed is not
entitled to those benefits.388[14]
381
382
383
384
385
386
387
388
The motion for reconsideration by Roquero was denied. In this Petition for
Review on Certiorari under Rule 45, he raises the following issues:
1.Whether or not the instigated employee shall be solely responsible for an action
arising from the instigation perpetrated by the employer;
2. Can the executory nature of the decision, more so the reinstatement aspect
of a labor tribunals order be halted by a petition having been filed in higher
courts without any restraining order or preliminary injunction having been
ordered in the meantime?
3. Would the employer who refused to reinstate an employee despite a writ
duly issued be held liable to pay the salary of the subject employee from the
time that he was ordered reinstated up to the time that the reversed decision
was handed down?389[15]
I
There is no question that petitioner Roquero is guilty of serious misconduct
for possessing and using shabu. He violated Chapter 2, Article VII, section 4
of the PAL Code of Discipline which states:
Any employee who, while on company premises or on duty, takes or is under
the influence of prohibited or controlled drugs, or hallucinogenic substances
or narcotics shall be dismissed.390[16]
Serious misconduct is defined as the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. 391[17]
For serious misconduct to warrant the dismissal of an employee, it (1) must
be serious; (2) must relate to the performance of the employees duty; and
(3) must show that the employee has become unfit to continue working for
the employer.392[18]
It is of public knowledge that drugs can damage the mental faculties of the
user. Roquero was tasked with the repair and maintenance of PALs airplanes.
He cannot discharge that duty if he is a drug user. His failure to do his job
can mean great loss of lives and properties. Hence, even if he was instigated
to take drugs he has no right to be reinstated to his position. He took the
drugs fully knowing that he was on duty and more so that it is prohibited by
company rules. Instigation is only a defense against criminal liability. It
cannot be used as a shield against dismissal from employment especially
when the position involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL
complied with the twin-notice requirement before dismissing the petitioner.
The twin-notice rule requires (1) the notice which apprises the employee of
the particular acts or omissions for which his dismissal is being sought along
with the opportunity for the employee to air his side, and (2) the subsequent
389
390
391
392
notice of the employers decision to dismiss him. 393[19] Both were given by
respondent PAL.
II
Article 223 (3rd paragraph) of the Labor Code,394[20] as amended by Section
12 of Republic Act No. 6715,395[21] and Section 2 of the NLRC Interim Rules
on Appeals under RA No. 6715, Amending the Labor Code, 396[22] provide that
an order of reinstatement by the Labor Arbiter is immediately executory even
pending appeal. The rationale of the law has been explained in Aris (Phil.)
Inc. vs. NLRC:397[23]
In authorizing execution pending appeal of the reinstatement aspect of a
decision of the Labor Arbiter reinstating a dismissed or separated employee,
the law itself has laid down a compassionate policy which, once more,
vivifies and enhances the provisions of the 1987 Constitution on labor and
the working man.
xxxxxx
xxx
These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the
Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nations progress and stability.
x x xx x x x x x
x x x In short, with respect to decisions reinstating employees, the law itself
has determined a sufficiently overwhelming reason for its execution pending
appeal.
x x xx x x x x x
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is
designed to stop, although temporarily since the appeal may be decided in
favor of the appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and his family.
The order of reinstatement is immediately executory. The unjustified refusal
of the employer to reinstate a dismissed employee entitles him to payment
of his salaries effective from the time the employer failed to reinstate him
despite the issuance of a writ of execution. 398[24] Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement
the order of reinstatement. In the case at bar, no restraining order was
393
394
395
396
397
398
399
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